|CONDOCENTRIC: How To Select A Property Manager|
Condominium Corporations are uniquely defined entities in the Province of Ontario, specifically their existence is derived from the Condominium Act, 1998. The management of a condominium corporation’s day-to-day is the joint task of the direction of the Board of Directors comprised primarily of unit owners (i.e. the equivalent of Shareholders) and the execution of that direction by condominium managers.
In our years of practice, we have seen a range of skills in the property management industry. Due to the fact that there is no mandatory minimum for performance by property managers either voluntarily or otherwise imposed, some of our clients have been on the losing end of disastrous property management arrangements. One case in recent history was in respect of a breach of fiduciary duty where a property manager misappropriated funds that were the property of the condominium corporation. When things like this happen, it reflects poorly on those property managers who work with integrity and honesty to earn their livelihood
To try and avoid a negative experience, the following is advice on how to seek out appropriate candidates to manage the property and assets of the condominium corporation. But first, the condominium corporation has to do a bit of homework on its’ own to define its needs, goals and service requirements.
Remember, you get what you pay for, and be wary of characters with no evidence to back up their lofty claims whether they are property managers, trades people or other potential service providers. Expect to pay for service that is a cost commitment in choosing to live in a condominium corporation.
Once you have identified these values, then you are ready to start seeking out your condominium corporation’s property manager. While it is quite easy to obtain numerous proposals, how do you figure out which one is the right one for your condominium corporation? Here are some suggestions, look for the following in respect of your proposed candidates for property management.
1. The corporate structure or organization of the property management company. Does it have a professional management and team in place who are experienced? Often Boards put too much emphasis on the on-site person without asking about the back office processes and operations (e.g., the property manager who stole from the condominium corporation had great personal interactions with the Board). If it is very “mom and pop” in its structure, will it adequately service your community in a professional way? (The author here assumes that professionalism is a requirement for most condominium corporations).
2. Have the proposed candidates explained how they undertake financial management. Ask them about how their lien processes are conducted pursuant to Section 85 of the Condominium Act, 1998.
3. How does property management address budgeting?
4. How does property management address maintenance and repair issues?
5. What is the monthly reporting packaging look like, that is produced by the management firm and property manager for the review of the Board? Ask to see an example. Take a look at the report and see if the information there is valid.
6. Ask the property management companies the following questions when they are interviewed with you:
While price per door is often a huge driver for a lot of condominium corporations, nobody wants to pay, it is unreasonable to expect not to pay market rate.
Condominium corporations must be very cognizant to make sure that they paying for something and getting it. They should also ask themselves whether it is reasonable what they are paying for what they are getting. If somebody promises you the moon, but you are paying them a very low rate, chances are all you may initially receive the anticipated service, but this will likely not last. Thus, be realistic as to the cost of operating your business. Churn, or property management turnover, is costly for many reasons- loss of intellectual property (what the property manager knows, relationships, etc.), loss of momentum on achieving results, re-training staff, etc. As a result, take the time, energy, and possibly money by hiring a condominium consultant to assist with the recruitment of a property management firm to ensure that the best choice is made based on many criteria, rather than only on the price, as you don’t want to repeat the process again for a long time!
A condominium corporation operates much like any business and it requires professionalism to ensure it runs smoothly. For example, the budget must balance every year so that your duties as the Board of Directors is effectively executed. Ask yourself – do you want your investment protected or not? If you want market value to go up, is it not crucial to put in place the right players, structure and processes so that the condominium corporation, a multi-million dollar investment is properly taken care of. Care for your condominium as you would yourself; after all it is a place you choose to call home.
By Patricia E. Elia - April 2010
By Patricia E. Elia - April 2010
All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.