Is It Time?

How to Tell If It’s Time for Your Homeowner/Condominium Association to Change Property Managers

Your association’s board meetings have gone well for a long time, but recently a new tension has entered the room. You notice body language around the table after your management company reports that all is good but lacks data. Board members start asking questions, searching for more detail, and answers are vague. Perhaps you are surprised by the lack of funds to pay for recent capital expenses and wonder why we aren’t better prepared for this. So, you return to historic Board Minutes to refresh your memory of earlier decisions and notice a lack of information. Later, you notice homeowner complaints about vendor performance are rising, and you all start to wonder what’s happening. 

While no property management team or association board is perfect, these are telltale signs that something’s up and warrants further investigation. Hopefully, if both teams are willing to be transparent and trust remains intact, they can work through these issues and improve the business relationship. However, if distrust, vagueness, and dissatisfaction aren't resolved, you would be wise to interview other management companies and get perspective, because changing property managers isn't something to take lightly. At the same time, don’t let inertia tempt you to avoid the work of making a necessary change. Once you find the right property management company for this season in your association’s history, you will make great strides toward today’s priorities and protect homeowner values in the future.
 

How to Evaluate – The Scorecard

One approach to determining whether it's time to replace your current property manager is “the scorecard.” When you entered into an agreement with your current management company, you received a proposal and a contract. Create a list of the services your board required of the property manager in the contract and have each board member rate how well these services have been met. You can use a numeric value or pass/fail. Either way, it keeps your team focused on the issues rather than an emotional rationale that’s been brewing or a personal agenda that doesn’t serve the association’s best interest. Be sure to identify real situations and not just opinions. 

In addition, be sure you are not requiring effort from your property manager that was never part of the contract. Undefined expectations will never be met and can ruin any relationship, so evaluate wisely. If there is clear, consistent failure found in your assessment that was appropriately addressed yet left uncorrected by the property manager, you have your answer – move on. But if there were a few one-time failures that were amended, keep evaluating the criteria objectively while paying attention to the other stakeholders’ level of trust. If trust has eroded to the point that the board and homeowners fear risking more failures and have lost confidence and respect for your management team, it’s probably time to move on.

Remember, as a board, you have the fiduciary responsibility to oversee and make decisions for the association. Partnering with the right management company is critical to your community’s success.

What to Evaluate – Non-negotiables in Property Management Services

In many cases, associations grow dissatisfied with their management firm because the original requirements and expectations were ill-defined from the start. As we meet with board members to find a new Property Management partner, we learn how they selected their current management company. Often, they did so many years ago, with different board members who lacked understanding and experience in association management.
 

Listed below are the non-negotiable services of an association property manager. If you’ve already included this criterion in your current contract, your evaluation process should be straightforward. However, if any of these critical components are missing, your association should update your current contract, if possible, or start interviewing other candidates.

•Financial Expertise: Your Property Manager should have a clear and proven record of leading and supporting the board in Budgeting and Reserve planning. Oftentimes, associations struggle with significant deferred maintenance with looming capital projects while Reserve Funding may be grossly insufficient. A financially savvy Property Manager can offer your association corrective options and make recommendations when securing funds is necessary. Young communities must plan appropriately for the future to avoid these costly situations. 
 

•Reserve Studies: Is there an updated Reserve Study (within 3-5 years) that gives guidance to the Board relative to funding levels and replacement timetables? Your management team should frequently reference Reserve plans and advise on potential shortfalls and strategies for stabilization. In addition, a knowledgeable management team should be able to explain the mechanics and necessity of a Reserve Study.

•Board Actions/Minutes: Your property manager must capture and create consistent accessibility to monthly board “action items” by clearly noting them on the Board Minutes. The Board should not have to “dog” the management team for follow-up, nor should the discussion outcomes be too vague when referenced in the future.
 

•Transparency: Does the management team consistently convey an attitude of transparency? Is bid management handled professionally? Wanting to keep the Board as well as the community informed on progress of major projects, plans, and budgets is what builds trust and accountability.

•Maintenance Work Orders: Are they being addressed in a timely manner and meeting Board and community expectations? Some management teams have their own maintenance crews while others may contract with vendors. Either way, your property manager is responsible for the quality and delivery of those services.

•Routine Guidance: Is your property management team conversant with governance issues? Have they read your covenants, conditions, and restrictions, and do they follow best practices? Experience managing your type of association opens the door to creative solutions, minimizes Board research, and saves your community money.

•Collaboration: If your manager or the Board has an “us vs. them” attitude, all teamwork will dissolve, and everyone will dread monthly meetings. The board has clearly defined legal responsibilities, and your Property Manager should have ample experience working with other associations, which can spare you typical, costly mistakes, so engage in collaborative teamwork. Everyone will win! 

Evaluating your property management situation objectively and making necessary changes will help keep your community financially healthy, build confidence among owners, protect property values, and make your home a pleasant community. Realty Management Partners provides complete services to meet the community’s shared property management needs.

Working with more than 30 communities in New England, representing over 3000 units, our team is well-versed in association living and is a collaborative team on a mission to satisfy our valued communities.

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