Much like traditional corporations, it is not uncommon for a condominium to go through periods of trouble. A number of issues may be responsible, including an ineffective management company, poor communication, misguided directors, or any combination of the above.
For newly elected Directors looking to put things back on the right track, the task can be overwhelming. More often than not the building is left is a state of physical disrepair with little or no money left in the Reserve Fund to solve the problems, and a deep sense of mistrust among the owners and the Board or management.
The good news is there are simple proactive steps that can be taken to remedy the problem. While every building faces different challenges, the following are 5 helpful tips to get your building back on the right track:
Use Engineers
Large scale projects can be a daunting task. A large portion of the Reserve Fund will be spent in one shot, and meeting budget targets is absolutely crucial. While contractors are knowledgeable enough to run the project, it is almost always a better idea to use a third party engineer. These independent engineers will oversee the project, while never having an option to bid on the work itself. They will define the scope of work, write the specifications, oversee the tender process, and monitor the work of the contractors. Most importantly, they will ensure that no unnecessary work is performed. Having an expert on your side is a small price to pay for the value they will add, and the money they can save.
A Reserve Fund Study That is Right for You
A Reserve Fund Study is one of the most important documents you will sign as a Director. This 30 year plan of all of your building’s major expenditures spells out exactly what needs to be done and when. When looking to commission the Study, it is always important to shop around for the right engineering firm. Many engineering firms will fail to build a plan that takes the corporations specific financial needs to heart. It is important to remember that you always have options. A good plan can sometimes avoid what seem like necessary fee increases, and still keep the building in good repair. It is worth the extra time to have a plan that makes sense and that you are more likely to follow.
A Sound Business Policy
Trust is an important part of any corporation. Owners must trust that the Board is acting in their best interest and Board members must trust each other. The best way to do this is to tighten the rules around how you do business. Good management companies will often have set procedures that go beyond the regular contract, and spell out exactly how business will be done. For example, how to handle the approval process, when to use an outside engineer, how aesthetic changes to the common elements should be handled, and so on. It is always a good idea for a Board to review their management company’s procedures, and sign off on them. This will define the roles of both the Board and Management, and will ensure that everybody is acting in the best interest of the owners.
Transparency
Honest communications with owners is absolutely necessary, even when the news may not be taken well. Most homeowners would prefer to know there is a problem and that it is being handled, than to find out that something is wrong through rumors and gossip. Ask your management company to host an owners meeting to go over some of the major points with interested residents. This will go a long way towards building trust.
A Good Management Company
Your management company should be active every step of the way, ensuring that the Corporation stays on the right track. They should be the ones working with the engineers, coordinating projects, keeping an eye on the budget, and communicating with owners. A good company will prepare for and run the AGM, and will encourage owner involvement by keeping an open relationship with residents.