It pays to have a competent, active board at the helm of a building community - a strong, stable board translates to better value for shareholders. But just how hands-on should a board be? Sometimes the daily management of a co-op or condo is best left in the hands of a managing agent. However, other situations may require not only the board's involvement, but also that of outside legal counsel. Effective management ultimately comes down to teamwork and communication.
Standard management agreements state what the managing agent can and cannot do without consulting the board. Some managing agents have the authority to enter into service contracts or issue checks up to a certain dollar limit, which also is dictated by contract. However, when it comes to matters beyond the daily call of duty, the board must be called in.
A good managing agent knows when to consult the board. However, when it comes to daily operations, he or she operates unilaterally. "It's the board's responsibility to oversee the managing agent," explains Lynn Whiting, director of management for the Argo Corporation, a management firm based in Manhattan. "The board shouldn't have to be involved in routine activities - there should be building policies in place."
The amount of interaction between a manager and a board must be of a certain comfort level, says Neil Binder, a veteran property manager with Bellmarc Property Management in Manhattan. "It's very much a perception of what the board's level of comfort is," says Binder. "If the board is uncomfortable, the manager's interaction should be heightened. If the board is very comfortable, the manager's involvement should be at board meetings, which occur once a month."
Sometimes increased interaction occurs because of ongoing board activity, Binder says. A capital improvement project that is commencing, for example, might require "an increased need for communication between a manager and a board."