SHOULD MANAGEMENT COMPANIES JUST MANAGE?

Although it may be hard to believe, there may be more complaints by associations about management companies than complaints by associations against the lawyers who represent the associations.  At a minimum though, board members should be aware that the contracts between the management company and the condominium association must meet certain minimum requirements.  The statute states:

 

(1) No written contract between a party contracting to provide maintenance or management services and an association which contract provides for operation, maintenance, or management of a condominium association or property serving the unit owners of a condominium shall be valid or enforceable unless the contract:

(a) Specifies the services, obligations, and responsibilities of the party contracting to provide maintenance or management services to the unit owners.

(b) Specifies those costs incurred in the performance of those services, obligations, or responsibilities which are to be reimbursed by the association to the party contracting to provide maintenance or management services.

(c) Provides an indication of how often each service, obligation, or responsibility is to be performed, whether stated for each service, obligation, or responsibility or in categories thereof.

(d) Specifies a minimum number of personnel to be employed by the party contracting to provide maintenance or management services for the purpose of providing service to the association.

(e) Discloses any financial or ownership interest which the developer, if the developer is in control of the association, holds with regard to the party contracting to provide maintenance or management services.

(f) Discloses any financial or ownership interest a board member or any party providing maintenance or management services to the association holds with the contracting party.

 

A thru E seem pretty straight forward.  F is the interesting issue.  As many of you know, management companies often times offer their association clients more than just typical bookkeeping management services through affiliated landscaping companies, concierge companies, appliance repair companies, exterminating companies and more.  Believe it or not, not too long ago, the relationship between the management company and the service provider did not have to be disclosed to the condominium association.  Today at least, it does.

The question though is whether or not a management company should be in the business of providing these other services, or if they should strictly manage and look for other unrelated companies to perform these other services for the associations they manage.  Many associations simply are not comfortable having an affiliated company of the management company also performing additional work in the community.  Other associations are all in favor of it and believe they are saving money.

 

Interestingly enough, the condominium statute even allows the association to contract and do business with companies wherein one of the Board’s own directors have a financial interest.  Pursuant to the statute though, the director who is interested must refrain from voting on the contract, the relationship must be disclosed and put in the minutes and two-thirds of the other directors must vote in favor.  So if the Board can contract with a company related to its own director, there certainly is nothing illegal about the association hiring the services of a company related to the association’s management company.

 

The question always is though………….while it may be legal, does it make it right?  What are some of your experiences when your management company was also your landscaper, valet company, painting company or the like?

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