Key deadlines, working with the bank and relying on staff all need to be considered
Monday, June 8, 2020
By Eric Plant
When most people run for their condo board, the last thing they imagine is a situation where they’re actually running the condominium. A condominium is a multimillion-dollar business with hundreds of moving parts, something that a management company is specially trained and licensed to handle. But time and time again, a board of directors is thrown into the role of property manager.
One of the most common instances occurs when a management company is fired. While most management contracts have a sixty-day termination clause, which should allow the board time to find another company, some boards prefer not to have their manager stick around. In these cases, boards may choose to pay the sixty days, “walk them out” and end the relationship early. If this is the case, the board may temporarily find itself signing up for a new (unpaid) job.
Sadly, the condominium does not stop running if there is no property manager. Units still have leaks, fees need to be collected, and contractors continue to show up to work on different parts of the building. So how does a volunteer board of directors suddenly take on this role?
The absolute worst thing the board can do at this time is point fingers and blame each other for the condominium’s current situation. This not only takes up valuable time, but also makes it difficult for the board to get anything done. The best approach is to start focusing on moving forward. Identify the condo board members’ different skills and put them to use. For example, if there is an engineer on the board, that person may be best suited to look after the maintenance contracts. If one of the board members is an accountant, he or she may want to speak with the bank to ensure the banking is under control. Divide up the roles to keep the tasks manageable and avoid any overlap, and then put together a plan of action. Make note of critical deadlines and make sure each person is clear on their responsibility.
- Pre-authorized payments must be collected at the beginning of each month.
- Vendors need to be paid.
- The Annual General Meeting must be held within six months of the fiscal year-end, although this has been extended during the pandemic.
- Periodic information certificates are due after the first and third quarter of the fiscal year.
- Insurance must be renewed annually.
If the previous property manager was fired and walked out, there is a good chance that things were not going so well in the condominium. Important records may not have been kept in order, and the condo board may need to do some work in getting organized. Focus on the documents that are most recent and most important, like past audits and budgets, insurance certificates, contracts, fire safety reports and, of course, copies of paid invoices. An owner or real estate agent may request a Status Certificate at any time, and the condominium should be able to produce it. Once the documents have been sorted and organized, the board should have a much clearer picture of their operations. For example, a quick pass through the financial reports will show who the main contractors are. From there, the board can start looking for signed contracts. This is also a great opportunity to scan some of these documents to make them easier to find and organize in the future.
Talk to the Bank
Once you have the corporate documents sorted and you know who the suppliers are, calls can be made to clarify any outstanding questions. Most important at this time are the banks, as the board will need to ensure that they have sole signing authority to pay bills and that they can collect maintenance fees from the homeowners. It is also important to know the location of the condominium’s investment accounts and the terms of these investments.
Rely on the staff
If the condominium has a staff, they’re already handling many of the day-to-day operations and minor problems. Have one or two board members speak with staff members and go over their routines. A lot can be learned from the on-site personnel. In some cases, certain responsibilities of the previous manager can even be delegated to the superintendent. However, it is best to consult a lawyer before making any major changes to staff routines.
While all of this is happening, the main focus should be on hiring a new management company. Most companies have handled difficult transitions and are well equipped to get the major pieces moving on a tight timeline. The sooner a new company can start, the sooner they can take the pressure off of the board. Just be sure to pick the right company so that you don’t have to start all over again in a few months.
Eric Plant is director of Brilliant Property Management