If a board or board member does decide to get involved in responsibilities delineated in the management agreement at those of the property manager, the board needs to keep the manager in the loop regarding all communications and decisions as these may impact other property manager responsibilities/tasks.
Rinaldo Acri
ACRI Commercial Realty
290 Perry Highway, Suite 1
Pittsburgh, PA 15229-1864
(412) 459-0111
rinaldo.acri@acrirlty.com
www.acrirlty.com
ACRI Commercial Realty
290 Perry Highway, Suite 1
Pittsburgh, PA 15229-1864
(412) 459-0111
rinaldo.acri@acrirlty.com
www.acrirlty.com
In a traditional full management situation, these duties are delegated to the property manager/property management company. Ultimately, the board is responsible for approving the vendor and overseeing the manager to ensure that the work is performed to the satisfaction of the owners.
The most common best practice is that the manager communicate the requests for proposals (“RFPs”) to, and obtain bids, from multiple bidders for the work needed for the association. The manager should vet the bidders (i.e. conduct due diligence) to make sure that they have a good reputation of providing quality work and should also check their references before offering them an opportunity to bid the project. After conducting due diligence, vetting the bidders, and obtaining RFPs, the manager should provide a recommendation to the Board of Directors for discussion and approval.
The most common best practice is that the manager communicate the requests for proposals (“RFPs”) to, and obtain bids, from multiple bidders for the work needed for the association. The manager should vet the bidders (i.e. conduct due diligence) to make sure that they have a good reputation of providing quality work and should also check their references before offering them an opportunity to bid the project. After conducting due diligence, vetting the bidders, and obtaining RFPs, the manager should provide a recommendation to the Board of Directors for discussion and approval.
David Hellmuth
Hellmuth & Johnson, PLLC
8050 West 78th Street
Minneapolis, MN 55439
(952) 746-2107
dhellmuth@hjlawfirm.com
www.hjlawfirm.com
Hellmuth & Johnson, PLLC
8050 West 78th Street
Minneapolis, MN 55439
(952) 746-2107
dhellmuth@hjlawfirm.com
www.hjlawfirm.com
The answer depends in large part on the provisions of the manager’s contract. If it provides that the manager is to negotiate all vendor contracts and have all dealings with vendors, then the president should remove him/herself from the chain. If, however, the manager’s contract is silent or does not provide for exclusivity to the manager in dealing with vendors, then the president’s actions might be appropriate.
Sara Austin
Austin Law Firm, LLC
226 E. Market Street
York, PA 17403
(717) 846-2246
saustin@austinlawllc.com
www.austinlawllc.com
Austin Law Firm, LLC
226 E. Market Street
York, PA 17403
(717) 846-2246
saustin@austinlawllc.com
www.austinlawllc.com
The best way for any Board to deal with vendors is to allow the managing agent to function as the prime intermediary between vendors and the Association. Why? First, you are already paying the agent to do this as part of their job. Second, the agent may have multiple contracts with the vendor, which enhances their negotiating power. Third, having two layers enhances your flexibility in negotiations; the agent can always defer a decision by checking with his principals (an option not available if the principal is negotiating directly). And fourth, having the agent represent you avoids accusations of impropriety against the Association officer who participates in the negotiation.
The Board President may have several reasons for dealing directly with vendors. He or she may be impatient to conclude a contract. They may have some special expertise that might assist in bargaining. Or they simply may not trust the judgment or the effectiveness of the agent. While all of these have some validity, they are largely offset by the longer-term negative consequences. The Board makes the final decisions on contracts, so other Board members can feel frustrated if they are left out of the process. The Board President may not have as much experience as they believe, and the Board or the agent can provide a reality check. And if the Board does not trust the agent’s judgment, that is a symptom of a bigger problem that the Association needs to address, rather than passively delegating responsibility to a single officer while reserving the right to complain.
Best practice would have at least one other person sharing the line with an officer who insists on negotiating directly with vendors, or to bar that officer from making decisions on behalf of the Association without Board approval. Board policies should be made clear to vendors early in the process to avoid the vendor relying on the apparent authority of the officer to bind the Association to a controversial arrangement.
The Board President may have several reasons for dealing directly with vendors. He or she may be impatient to conclude a contract. They may have some special expertise that might assist in bargaining. Or they simply may not trust the judgment or the effectiveness of the agent. While all of these have some validity, they are largely offset by the longer-term negative consequences. The Board makes the final decisions on contracts, so other Board members can feel frustrated if they are left out of the process. The Board President may not have as much experience as they believe, and the Board or the agent can provide a reality check. And if the Board does not trust the agent’s judgment, that is a symptom of a bigger problem that the Association needs to address, rather than passively delegating responsibility to a single officer while reserving the right to complain.
Best practice would have at least one other person sharing the line with an officer who insists on negotiating directly with vendors, or to bar that officer from making decisions on behalf of the Association without Board approval. Board policies should be made clear to vendors early in the process to avoid the vendor relying on the apparent authority of the officer to bind the Association to a controversial arrangement.
Kenneth Jacobs
Spolzino Smith Buss & Jacobs LLP
733 Yonkers Ave
Yonkers, NY 10704-2635
(212) 688-2400 ext 4102
kjacobs@ssbjlaw.com
www.ssbjlaw.com
Spolzino Smith Buss & Jacobs LLP
733 Yonkers Ave
Yonkers, NY 10704-2635
(212) 688-2400 ext 4102
kjacobs@ssbjlaw.com
www.ssbjlaw.com