Rather than distributing those funds into the appropriate associations’ accounts, he used them to open a restaurant, remodel his house, join a health club, and to buy a new car and a home in New Mexico. Under federal sentencing guidelines, Koger is eligible for six to eight years in prison.
Not only can you protect your association from managers like Koger, but you can build a positive working relationship with your management company. Here’s how.
1) Identify your needs. Know what you need a management company to do for your association. For example, many managers offer a range of services, including full-blown management of an entire community, oversight of the basics, or project management for such infrequent but complex tasks as determining a special assessment plan or helping with a bid process to control costs and identify quality vendors. Determine what services you need, and then interview at least three companies to choose the one that can provide just what you need at the most reasonable cost.
2) Consider a trial period. If you’ve never worked with a management company, or you’ve recently switched companies, consider a short-term contract of three to six months so that both sides can get a better feel for the work involved, the services provided, and the fees before committing long term.
3) Have a contract. Regardless of the length of your agreement, make sure it’s in writing and spells out which services your management company will and will not provide, how often if will provide the services, and the fees the company will charge. “The most common complaint I get is the management company’s failure to provide accurate and timely financial reports,” says Michael S. Hunter, an attorney and partner at Horack Talley in Charlotte, N.C. To avoid that, state in the contract that your association needs accurate financial reports by specific dates—such as the 10th of every month—and that the failure to meet that requirement will be considered a material breach of the contract. Also make sure you carefully review the termination provision. “If the association isn’t happy with the services provided, make sure you can quickly and inexpensively terminate the contract,” explains Hunter. “In some cases, the management company will insist on an early termination fee during the first 12 months usually totaling one to three months of its fee.”
4) Spell out when to contact the manager. No property manager should have to field calls from every resident on every issue. Ask the management company which calls you should tell residents to direct to the board and which should be directed to the management company. For example, it may be fine for residents to contact the management company about improperly parked vehicles. However, it’s inappropriate for residents to call the management company to discuss budget issues or complain about contractors or maintenance workers. Those calls should be fielded by the board and, if necessary, later addressed by the board with the property management company.
5) Build a positive relationship. Always be professional with your management company. But remember that some personalities simply don’t gel. If you find that the person overseeing your account just doesn’t seem to click with your board or owners, it may be time for a change. “If you can’t resolve issues directly with the manager,” advises Hunter, “go to the president of the management company and ask for a new manager to be assigned to your association.” Consider including a provision in your contract stating you can request a new manager for any reason.