Legal Questions Answered By Griffin & Murphy, LLP

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Griffin & Murphy, LLP, is a boutique law firm in Washington, D.C. concentrating its practice in real estate law (including development, finance, leasing, zoning and condominium conversions), as well as estate planning and probate, civil litigation, and business law. The attorneys of Griffin & Murphy, LLP are licensed to practice law in the District of Columbia, Maryland and Virginia. Griffin and Murphy, LLP was founded in 1981.

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Question:

I need some help that may benefit other readers as well. I bought a condo in a small 14-unit condo building in Mount Pleasant almost 2 years ago and everything has been good except for our management company. They do not respond to requests in a timely manner and often not at all. They have been terrible about simple things like sending bank statements for the condo’s bank accounts and cashing condo fee checks – even worse they ignore serious requests about leaks and a mice issue we had a few months ago. We have complained and have sent them a series of very firm emails but there has been no change. It has gotten to the point where our condo president is fielding all complaints and requests, which is ridiculous because we are not paying her, we are paying them. We pay the company $500 a month to manage the condo. Is this a super cheap rate compared to what other readers pay to management companies to manage buildings of a similar size? And have any other readers ever had to “fire” a management company? Last would anyone suggest a good and reasonably priced company that our condo board could approach? Thanks so much for your help!

MegDC

Answer:

MegDC,

You are right that your association president should not be fielding complaint calls. You are paying the management company to field calls, respond to issues, and solve problems regarding the operation of your building. While the management company is slow to pay contractors to fix problems in the building, our guess is that they have no problem paying themselves.

Does your association have a contract with the management company? If there is no contract, you can fire them at any time. If you have a management contract in place, you will need to review it and see what it says about the “term” of the relationship, any dispute resolution process, and finally what can be done to terminate the contract. You will want to look to make sure the contract was signed by the association, because sometimes an association will “inherit” a management company from the developer and the developer may have overlooked the actual paperwork to establish a contractual relationship between the management company and the association (i.e., the contract may be with the developer and not with the association). Continues after the jump.

Your association should immediately send a written letter by certified mail to the management company (preferably to the owner or president of the company) putting them on notice that their services are not satisfactory. The emails you sent are fine, but a written letter will carry more weight. Writing the owner or president of the company may help you if the problem is that you just happen to have a bad manager at an otherwise good company. The letter should succinctly outline the problems and give a reasonable timetable for the management company to cure them. Most importantly, the letter should give the management company a very short deadline for providing you with clear written statements of the association’s finances. It is one thing if the management company is slow to respond to calls or is a poor problem solver, but it is completely inexcusable if the company is mismanaging funds and not providing clear documentation of expenses to the association. A management company could lose its license and be out of business if they are not appropriately managing their clients’ funds.

Finally, if the letter does not change the management company’s ways and no documentation of the association’s finances shows up by the deadline, you would have a great case for terminating the contract. Based on your letter, it sounds as though the association has its own bank accounts. At a minimum the president, treasurer or some other signer on the account should call the bank and ask for either copies of back statements or how to get online so that you can access this information quickly. Look at every check and make sure the disbursements from the account seem correct.

Regarding your question as to whether the management company is charging the association a cheap rate, at $500 per month your association is paying a little over $35 per door. While other factors can come into play, that is on the lower end of the spectrum that we have seen (note: we are also involved in running a commercial property management business). A management company that provides quality service, responds quickly, solves problems, and sends timely financial information will probably be more in the $630-$700 per month range ($45-$50 per door) for a building the size of yours.

This response was prepared by Mark G. Griffin and Patrick D. Blake of Griffin & Murphy, LLP. The material contained in this response has been prepared for informational purposes only and should not be relied upon as legal advice or as a substitute for a consultation with a qualified attorney. Nothing in this response should be considered as either creating an attorney-client relationship between the reader and Griffin & Murphy, LLP or as rendering of legal advice for any specific matter.