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Subject: Change MC before or after transition?

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JimF2
(New Jersey)

Posts:7

08/03/2008 12:10 PM
Hello everyone! We are a 262 unit townhouse-style condo development that is roughly 95% built but is fully sold. Naturally we're beginning to think about the transition process from the developer. Our current management company came as a "package deal" from our developer, and the community is not happy with them. As a board member, I am constantly amazed at how poorly they do their job. Because of all this, we've also begun looking for new management. My question is this - should we wait for the transition process to complete before replacing our MC? I'd like to hear from people who have replaced theirs before their developer transition or were in a similar situation as us and decided to wait until after transition to replace their MC, and the pros and cons of each approach. Our attorney has advised us that it's usually better to stick with the original management company during transition, since they're familiar with the developer and all of the existing issues. My theory is that the current MC is beholden to the developer, and wouldn't want to jeopardize their business relationship with the developer by pressing on certain issues, and that it would be best to have new eyes looking at everything. Does anyone have any experience or advice they can share? Thanks, -JF

KirkW1
(Texas)

Posts:1190

08/03/2008 1:31 PM
Well if you are like our community the developer retains veto power in your situation. And chances are the developer uses the same management company for all the developments. I would let things transition and then once you have complete control replace the management company. One thing you might do though in the meantime is fight for better service from the company.

SusanW1
(Michigan)

Posts:2316

08/03/2008 4:44 PM
Do you have the option OR responsiblity for assuming the contract? For the MC or ANY contract the developer has? You may be "stuck" for longer than you think. Make sure this a discussed transition item!

GlenL
(Ohio)

Posts:1466

08/03/2008 5:55 PM
I would keep them through transition and change as soon after as possible. As Susan mentioned do you know the terms of the contract and how it can be cancelled? Very often the Declarant will obligate the property in long term deals so they can get a favorable price. This is something Ohio changed mandating that a management contract cannot last more than 90 days past transition unless renewed by the Association.

RogerB
(Colorado)

Posts:3725

08/04/2008 7:40 AM
Jim, I suggest the Board start the process of selecting a management company immediately. I suggest you do it before the transition is completed. Attached is information to consider during the transition from the developer.

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

RogerB
(Colorado)

Posts:3725

08/04/2008 7:41 AM
Hit the wrong button. Attached is the transition info.
Attachment: 184412758071.doc
Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

GeraldT4

Posts:934

08/04/2008 7:43 AM
JimF2 - North NJ HOA/COA guy here. As such, there is a wealth of experience, and information I can provide you in addition to Transitional related matters. Information you may or may not be aware of. For example, have you heard of the NJ Municipal Services Reimbursement Act? If you provide HOATalk your email address to send to me we can begin a dialog if you wish. It's wonderful that you are thinking about Transition. The MC was originally employed by the Developer. Until the Developer is off the Board I don't believe the Board can do anything without the support of the Developer to hire a new MC. Please explain the role of the Developer on the Board, if any? Does the Developer retain a seat, since the association is only 95% built? If so, who exactly does the attorney work for? Has your attorney advised you that Transition is a long process that can take years to resolve? My HOA/COA (single-family, and townhouses) was completed in 2004 and we have the Developer making good on work, we are still negotiating Transition matters. This is normal. I appreciate the spirit of what your attorney is recommending. Change is the only thing that is constant, so it's wise to try to have consistency. However, if your Board is unhappy with the present MC, the attorney's advice means everyone should stick with the MC, perhaps for years?? That's questionable, and leads me to believe, dare I say, that the attorney may need to be switched as well.

GeraldT4

Posts:934

08/04/2008 7:49 AM
Folks who think it's wise to stay with the MC through Transition: You are aware that Transition can take years, correct? Our owner controlled, Board hired attorney made a very wise recommendation regarding Transition, "It's best to take things slowly, not rush Transition matters, let the problems occur and show themselves without prematurely settling or agreeing to accept quality of workmanship or lack thereof.".

JimF2
(New Jersey)

Posts:7

08/05/2008 8:53 AM
Gerald, I think I've seen your posts on the CAI-NJ web forum... thanks for your reply here. I am aware of the Kelly Bill, and my email address is available in my profile. The developer retains 1 of the 5 seats on the board. I've consulted with our attorney on whether the developer has veto power on this, and he says that they don't. I've also reviewed the necessary documents as pertains to the employ of the management company and indeed we are able to terminate the relationship, as the agreement expires at the end of August. Prior to that we can terminate w/ 60-days advance notice. The Management Contract didn't seem particularly binding.... The attorney came 'by default', just like the Management Company, and he is retained by our Association. Roger - thanks for the info. I look forward to reading the document. -Jim F

GeraldT4

Posts:934

08/05/2008 9:29 AM
JimF2 - I've never posted on CAI-NJ web forum. If the atty came with the original association, than the atty was an employee of the developer. What do your documents state as to veto power of the developer, forget what the atty. states for now?

RobertR1
(South Carolina)

Posts:2513

08/05/2008 6:00 PM
Jim, Gerald sounds Golden with his advice, don't fall in love with a developers lawyer. On the other hand, you seem to have a good sense about what is going on and are watching closely, so I might suggest you get a Board ready and prepped so the day the big change comes you can move in and move on.

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