Drawing up a contract for management services looks at first glance like a simple task. Such contracts usually follow a particular format and outline similar services for both co-ops and condos, regardless of size. But what about contract areas where there’s room for negotiation? How can a board and a management company arrive at a contract that helps foster a cooperative relationship?
Tough Times, High Expectations
Even in a turbulent economic situation, the job of a manager comes down to a set of key functions, says Herb Rose, president of Herb Rose Consulting, a management consulting firm in Manhattan. "A management company has two functions, basically," he says. "They have to collect the maintenance and whatever other income is due to the co-op or condo, and they have to pay the bills. Everything else is a variation of these two things, but when you make a contract with the managing agent, certain services can be delineated, and there are special contracts that are not going to be included in the services."
Negotiating those variations is where—as with so many things, communication is the key to success. The discussions that take place before anyone signs on the dotted line can help fill in the gaps on boilerplate management contracts. It’s also helpful to understand what expectations each side brings to the table, says Greg Carlson, founder of Carlson Realty, Inc. in Forest Hills and the executive director of the Federation of New York Housing Cooperatives & Condominiums (FNYHC).
"I think that a lot of the work and the homework that needs to be done when you're doing a management contract is way before you even get to the contract stage," says Carlson, who is himself a certified property manager. "You should know what you want—the detail items that you want the managing agent to perform—so that when you get to the contract stage, it's just a matter of fact."
"The board of directors has to speak with one voice," adds Rose. "Otherwise, you'll have somebody from the board saying, 'We want this,' and somebody else from the same board saying the exact opposite. Beyond that, there should be an understanding as to what the fees would be for special projects. Will they be paid by time, or will they be paid by project? Because there are all kinds of miscellaneous projects that have come up that are not part of regular work. The list is endless, but I still come back to the first thing, which is that the board has to speak with one voice and work with their management contact."