Our building has a property manager and a lawyer. What's the best way to define their roles?
Consider the lawyer as the chief advisor to the board (and property manager).
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Our building has a property manager and a lawyer. As a new member to the board, I’m a little uncertain about how they’re supposed to work together.
Joining a board as a new member can sometimes feel overwhelming as you figure out how the entities in the building work together.
“Your property manager and attorney are both important parts of the support system in place to help the board navigate the practical and legal complexities involved in operating a residential building in New York City,” says Bonnie Reid Berkow, founding partner of Wagner, Berkow & Brandt who has more than 30 years of litigation experience representing condominium and co-op boards.
“Your building’s lawyer provides the legal advice while the property manager puts in place the system by which the board has agreed to run the building,” she says.
Communication is key
Building strong lines of communication between board members, the managing agent and the attorneys is crucial.
“As in all other facets of life and of business, keeping an open dialogue is very important,” Berkow says.
Your lawyer and property manager will frequently have to work together but their roles are distinct. Consider the lawyer as the chief advisor to the board (and property manager). He or she will also advise on bylaws and other governing documents; review contracts and business relationships; advise on annual elections, and deal with any disputes with shareholders or apartment owners.
If the property manager is very experienced, they may also offer advice, but their role is principally in collecting maintenance or common charges; reviewing and paying bills subject to approval of the board; maintaining proper books of account; managing renovation and construction projects at the building; supervising staff; and enforcing building rules and regulations.
Cooperation on litigation
If there’s a legal dispute, the lawyer and property manager will work closely to resolve it. For example, in a co-op, the property manager should let the lawyer know if a shareholder is in default in the payment of maintenance or other obligations under the proprietary lease.
“The property manager will provide an arrears report or other information documenting the default and is responsible for providing correct information,” she says. The lawyer will then work with the property manager to make sure all required notices are sent out before legal proceedings are commenced.
The managing agent may be required to sign an affidavit or to testify in court if there is a trial.
In a condo, the lawyer and the managing agent will also work together if an apartment owner is in default in the payment of common charges. “The managing agent will provide the information to the lawyer, who will file a notice of lien and, if necessary, commence an action to foreclose on the unit,” Berkow says.
If an owner is not obeying the bylaws or other building rules or regulations, the role of the property manager is to inform the lawyer, so proper legal action can be started to enforce compliance.
“The managing agent will assist the lawyer in providing documents and other information that may be needed in a legal proceeding,” Berkow says.
Contracts and other business relationships
If a laundry room or other contract is up for renewal, the property manager agent will discuss this with the board and determine what terms are required. The lawyer will then negotiate and draft the contract.
“The lawyer may assist the board and the managing agent with drafting alteration agreements, sublet or leasing agreements, parking or storage agreements or other legal documents that may need to be prepared or updated from time to time,” Berkow says.
At some point every building will need repairs or improvements, such as roof or façade maintenance, or an elevator or boiler upgrade. A managing agent’s job is to keep track of the status of major building components. The contract documents will be negotiated and prepared by the building’s lawyer. “The lawyer will also advise on Building Code and other regulatory requirements or laws that need to be followed,” she says.
There may be other more complex legal issues facing the board where legal advice will be necessary. These include zoning and land use issues, sale of development rights, and refinancing the underlying mortgage.
Sales and leasing
“When there is an apartment sale within a co-op building, the property manager and attorney work together to close the deal,” Berkow says. The property manager will prepare and maintain an application to purchase, which is completed by the prospective buyer. In a co-op, the board will review the package and schedule an interview and the closing will be scheduled once the buyer is approved.
“The lawyer or a paralegal will prepare the new stock and lease and other documents required for the closing and attend the closing,” Berkow says.
Most condos also have an application package that a purchaser must submit to the managing agent. “The attorney for a condo will have little to no role in the actual closing unless an issue arises with regard to the waiver of the right of first refusal,” Berkow says.
Conducting annual meetings
When a board calls an annual meeting, the notice and proxies will be prepared and sent out by the property manager. “The lawyer may review the bylaws if requested by the board, recommend language if the bylaws need to be amended and prepare the language to be inserted in the notice of annual meeting to be voted on,” Berkow says.
The lawyer may also advise on the election of board members and how votes are to be tabulated. “In some cases it can be helpful if a lawyer attends the annual meeting to report on pending legal matters,” Berkow says.
Shareholder or unit owner disputes
The managing agent may need to call on the lawyer to assist with resolving shareholder or apartment owner disputes. For example, there may be a noise complaint or issues with second hand smoke between apartments, or water leaks.
“The lawyer will advise on the applicable law and steps that may be taken to assist in resolving the dispute before it escalates to litigation,” Berkow says. A lawyer can also help in bringing in experts like an acoustic consultant or environmental professionals to provide the type of documentation and expertise needed in responding to these kinds of complaints.
New York City real estate attorney Bonnie Reid Berkow is a founding partner of Wagner, Berkow & Brandt with more than 30 years of experience litigating in state and federal courts in New York state, including cases involving breach of contract, fraud and breach of fiduciary duty, in addition to real estate disputes and commercial actions. To submit a question for this column, click here. To ask about a legal consultation, send an email or call (646) 780-7272.
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