Page 15 - CooperatorNews Chicagoland Winter 2022

chicago.cooperatordirectory.com Your one source for all the businesses and services essential to your co-op, condo or HOA COOPERATORNEWS CHICAGOLAND DIRECTORY OF BUILDING SERVICES CHICAGO.COOPERATORNEWS.COM COOPERATORNEWS CHICAGOLAND — WINTER 2022 15 intensity, given everyone’s increased time at home), patience and empathy probably left the building some time ago. With morato- ria on evictions expiring across jurisdic- tions, this is an area that managers and attorneys are keeping a close eye on; this publication is as well. The Communal Spirit As the world enters its third year of CO- VID, it’s clear that the effects of the pan- demic are far-reaching and exponential. And as microcosms of the broader human condition, co-op and condo communities reflect this reality. The harshness of fear, un- certainty, and isolation drives some people to act in antisocial—even harmful—ways. But many others are driven to look for new ways of coping, helping, and reinventing. Because the communal and social aspect of living in a multifamily community is part of its appeal, its residents are more apt to reach out to neighbors, create safe commu- nity activities, and demonstrate patience and flexibility with ever-changing rules and guidance. Just like in the rest of the world, there are the outliers who disrupt, but with the right policies and professionals, co-ops and condo associations have the means to handle them, even if COVID continues to present additional challenges. n Darcey Gerstein is Associate Editor and a Staff Writer for CooperatorNews. had\] a reasonable time and chance to cor- rect any deficient behavior.” He adds that “another essential provision is requiring the managing agent to notify the board of violations placed on the property, and of any condition in the building or property which is known to be unsafe, or would be a violation if noted by any governmental agency.” Parting Ways Breaking a management agreement is never an easy decision, but it’s a contin- gency that should be included in every contract nonetheless. “The management contract should provide that the associa- tion has the right to terminate the con- tract if the management company breach- es the contract,” says Kasten. “However, an association may consider negotiating a broader right of termination. Generally, terminating a contract prior to the end of the current term for the convenience of the terminating party will subject the terminating party to damages, unless the contract provides that the contract can be terminated without cause. Those damages could include the fee that would have been paid during the remainder of the current term or possibly liquidated damages, if provided for in the contract. “Some contracts may expressly provide for a termination fee,” continues Kasten. “Also, some contracts may include provi- sions allowing the management company to deduct from association funds unspeci- fied amounts after termination, which amounts can be significant and the pur- poses of which may be unclear.” But before breaking a management agreement, says Hakim, “we always sug- gest having a frank conversation with the upper management of the company, and perhaps even having the property manag- er reassigned. However, when it becomes necessary, the exit agreement must be re- viewed to ensure that a timely termina- tion is sent. Generally, a building will have a right to terminate upon 30- or 60-days’ notice without cause. The building is gen- erally only liable for the costs to the date of termination. It’s quite rare in a manage- ment agreement for a co-op or condomin- ium to see any penalties, but again, the agreement must be reviewed.” Greenstein points out that “breach of the terms of the agreement, such as the agent acting outside the scope of their authority under the contract, mismanage- ment (or worse) of funds, or willful de- fault of the agreement,” can lead the board of a co-op or condominium to dissolve a management agreement before its end. As to what legal or financial penalties might be incurred, “someone can always assert a claim against another person or entity,” Greenstein says. “The board would have to prove there was a breach or default and then damages. And if successful, then they would have to seek to enforce a judgment if obtained.” Proceed With Caution Kasten cautions boards to be vigilant about what exactly their contracts con- tain, and what responsibilities—and li- abilities—may fall to board members themselves. “Most if not all management contracts provide that the managing agent will take direction from a single designat- ed board member—or, in the absence of such designation, the board president,” he says. “This type of provision makes sense, because it ensures efficient communica- tion and avoids a situation where multiple board members could give the managing agent conflicting directions. However, an association may want to review the lan- guage of such a provision carefully, and make appropriate changes to ensure that a less than honest board president doesn’t use the exclusivity of his or her commu- nication with the managing agent to hide impropriety from other board members. I have seen that type of provision become the focus of a dispute between an associa- tion and management company where a board president used association funds for personal purposes.” When changing managing agents or firms, say the pros, keep in mind that you’re seeking a seamless—or near seam- less—transition. Hakim relates one not- so-seamless example that demonstrates why it’s important to keep things cordial: “One of our condominiums terminat- ed its managing agent,” he says. “The old MANAGEMENT 101 continued from page 8 company refused to assist in the turnover/ transfer process, and didn’t deliver the books and records of the condominium to the new agent. So for an extended pe- riod, the association was unable to access its bank accounts. Imagine a condomini- um unable to pay its bills? Or not having access to its own books and records? We worked with the board and new manage- ment, and the bank, and we were ultimate- ly able to assist in facilitating the transfer of the accounts, and the books and re- cords—but obviously, it took the threat of legal action to do so.” To minimize the chance of such headaches, Hakim says, “Especially in this day and age of digitized records, we recommend that a board have real-time access to its files, and also that a current board member always be a signa- tory to any account.” Management contracts are a critical cog in the co-op/condo machine. Even if your board includes members with con- tract negotiation experience, it’s always wise to seek the advice of legal counsel— and to always read the small print. Most importantly, identify your wants and ex- pectations and make sure they all get into the document in clear, concise language to avoid troubles later. n A J Sidransky is a staff writer/reporter for CooperatorNews, and a published novelist. He can be reached at alan@yrinc.com. per building records. At 4504 N. Clark St., Raftery Construc- tion is working to convert a years-vacant building to a 12-unit condo by adding four stories to the property. The existing first floor will house 23 parking spaces, according to building permit records. The residences on floors two through four will have balconies, and there will also be a second-story and a rooftop deck. A 56-unit apartment building at 4511 N. Clark St. and mixed-use development with 24 apartments at 4533 N. Clark round out the unit total. An additional 25-unit apart- ment development one block south at 4410 N. Clark was also recently approved. Block Club adds that the city has since an- nounced it will do a study of this stretch of Clark Street to see how it can be reconfigured to be more pedestrian-, resident-, and busi- ness-friendly. n PULSE continued from page 4 Please submit Pulse items to Darcey Gerstein at darcey@cooperatornews.com