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10 Nov 2014
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CONDO AND COOP RULES OF THUMB: MANAGING AGENTS VS. SELF-MANAGED BUILDINGS

The relationship between a coop or condo board, unit owners/shareholders and a building’s managing agent can be a bit like a family relationship.  In the worst of times, otherwise courteous and professional interactions between the board, unit owners and managing agent can dissolve into the semblance of a daytime talk show.

That said, different buildings have different economic priorities and there are varying degrees of managing agent participation.  In some instances, managing agents limit their activity to collecting common charges or maintenance fees and paying bills.  In other instances, managing agents only handle large construction projects.  Some other buildings do not have any outside help.  For them, management tasks are handled by the board or a committee of owners or shareholders.

While you may save money operating entirely from a volunteer basis, tread carefully.  A self-managed building handles everything, including all building supervision and administration.  This means, generally, providing back-office support, transfer agent functions and on-site property management.  Self-managed buildings balance the books, hire contractors, take out the trash, shovel snow, keep records up to date, file documents and permits required by the city’s various departments, enforce building rules, hire attorneys and accountants, handle insurance issues, manage staff and much more.  It is like having a second full time job and finding yourself noncompliant with a city, state or federal regulation, or missing a permit deadline, or miscalculating certain payments can have expensive consequences.  Additionally, where a managing agent will already have relationships with experienced architects, engineers, contractors, city departments, attorneys and accountants, a building’s board may not.  Perhaps one of the more difficult issues for a self-managed building relates to problems with fellow unit owners/shareholders as it is undoubtedly awkward to approach your neighbor about unpaid common charges or building rules violations.

For buildings that have gone the self-management route and found it a bit cumbersome or would like the advice of more experienced individuals, there are options.  In addition to managing agents that only handle more complex tasks, there are also firms that specialize in helping self-managed co-ops and condo buildings.  Typically, for an annual fee, such firms provide back-office services and step-by-step solutions for on-site problems.  Regardless of the route your building chooses, remember:  consulting with experienced professionals before embarking on self-management may have a cost, but similar to a slow leak that turns into a waterfall, it will certainly be worth avoiding the consequences of dealing with a larger problem later on down the road.

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Guzov sends quarterly emails that highlight industry trends and updates to our News & Press.
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