2008 Jun 11th

Should Your Hoboken Grandma Run Your Hoboken Condo Association?

Grandma Ran the Building in the Old Days

Before I say anything else let me make it perfectly clear that I have nothing against Hoboken grandmothers.  In fact, for some things, like watching the grand kids, making Sunday supper, there is simply no one better.  I’m using grandma to make a point so hear me out.  There are lots of small 4 or 5 family buildings in Hoboken that were at one time owned by Grandma.  Originally, the extended family lived in them.  Then they became rentals with Grandma as the landlord.  Eventually the tenants moved out when a smart cookie advised Grandma to condo her building which is now worth millions.  So Grandma sold off all the units but one.  Now she lives in that unit with her new neighbors, the other unit owners around her.  Her handsome profit is safely deposited in the bank.  Since it was her building, she kept on  ‘taking care’ of the building as she always had.  At first, the other unit owners were happy to have her to look after things they just didn’t have time to deal with.  Whether it was getting someone to shovel snow, clean the hallways or paint the front door, Grandma had the Hoboken connection and knew who to call and how to get it done.

Times Change – Grandma is in Over Her Head

Fast forward 10 years.  Now each unit sells for close to half a million.  One is for sale, has an accepted offer, and during attorney review the buyer’s attorney naturally asks the seller for the finanical statements and condo documents.   Seller goes to Grandma but all she has is last month’s bank statement.  There really haven’t been any formal condo association or board meetings.  In fact, there really is no formal board.  Grandma, 100% honest, just took care of things as they came up.  The seller has nothing to produce for the buyer to show the history of the building, how it’s been maintained, whether it’s being run according to its budget since there is no budget.  There is no real reserve fund and no real records of what maintenance has been collected or how it has been spent.  Buyer walks away from the deal.

Let’s Teach Grandma a Lesson – Here’s What She (and the Condo Owners) Needs To Do:

1.  Elect a board.

When a building goes condo, as soon as a majority of the units are sold, a condo board should be elected.  Typically the legal documents that create the condo will dictate what that board has to look like.  In small buildings there is usually one person elected president, another treasurer and a third may be secretary.  Remember 8th grade history – checks and balances?  The same idea applies here.  You need a board to run the building.  It’s typically required by the documents that created your condo association.  If you don’t do it, a disgruntled condo owner could potentially cause problems for everyone.

2.  Hold regular meetings.

Sure it’s difficult to find a day or evening when everyone can attend but serving food and beer often helps.  Not only will the unit owners get to know each other, you are neighbors after all, but you can talk about what is going on in the building and what you would like to see happen going forward and make plans and develop a budget.  Whether it is shopping for a better, more affordable insurance policy (your condo association does have insurance on the building, I hope) or deciding to put flower boxes in front of the building, meetings provide a forum to voice these issues.  Again, the condo docs are going to tell you how often and what type of meeting are supposed to be held, and what notice of these meetings needs to be given to the condo owners.

3.  Keep records.

The secretary is the one assigned with the task of keeping records of the board meetings and condo association meetings.  In a small condo building, the board may actually comprise a person from each unit so there’s not a real difference between the board and the association.  Not every word of the meeting needs to be documented, just the general subject of the discussion and any decisions that were made by the board.

Equally important is keeping financial records.  Even if it’s as simple as writing it down in a notebook, you want to know where the money is coming from and where it is going to.  Did everyone pay their maintenance?  Late fees?  Any special assessments?  Have the bills been paid?  There is insurance, utilities for the common areas, possibly snow removal, exterminators, handymen, an accountant.  Did you know that condo associations have to file an annual tax return?  Someone has to do the paperwork.  As much as Grandma tried, you need real books and records.

Why, If You Own a Hoboken Condo, You Should Care

You Will Need Records To Sell Your Condo

Remember that a buyer is going to ask for these records.  Hoboken buyers want to see how a condo building is being run.  They want to assess the risk of maintenance increases and special assessments in the future.  Has the condo association done renovations?  For example, if the roof been replaced or common areas redone, showing that to the buyer and being able to account for how big (and small) items are paid for helps you sell your condo!

Buyers Will Want Your Condo More Than Other Hoboken Condos for Sale

There are literally hundreds of condos for sale in Hoboken at any given time.  With so many units competing with yours, do you think a buyer is going to choose a unit in a well run condo with books and records showing the history of the building and its finances or a condo where Grandma just pays the bills as they come and can’t find the bank statements when asked?  Buyers – here is a tip:  when a building is professionally managed, there will be a sign in the lobby of the building with the name and contact info for the management company.  Look for it when you are out looking at condos.

Too Much on Your Plate – Not Enough Time For Condo Business?

Hire a management company.  There are lots of them that do a good job.  They are not very expensive.  They will add value to your condo.

The board still has to decide on a budget and only the board can decide on things like how much maintenance charges should be or whether to incur any significant expenditure.  Someone from the board will also keep minutes of the meetings and they can be emailed to the management company for record-keeping purposes.

There are lots of more little things a management company can help a condo association do.  For example, every time a unit is sold and there is a mortgage, someone from the condo association has to fill out a questionnaire for the bank.  The management company does this.

Why A Well Run Hoboken Condo Pays for Itself

When it is time for you to sell, you can advertise to potential sellers that you have a “strong condo association”.  Having a “strong condo association” and “professionally managed building” are very big selling points in the Hoboken condo market.  It is equally or more important than having stainless steel appliances.  Don’t kid yourself, the days of Grandma running the building are over.  Do yourself a favor and get your condo in order.

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  1. JC

    any idea of the average monthly cost for a property management company? is cleaning included or additional cost and if so what price normally? snow removal average price? thank you!

  2. Lori

    JC
    It depends on who you hire and what you ask them to do for your condo – not every condo assn. has the same services. I can recommend some mgmt. companies if you like and you can call them and ask them what they charge and what is included. That’s probably the best route to go.
    – Lori

  3. JC

    great, id love some recomendations. You can email me directly if you choose.

  4. JC

    Hey Lori,

    When you have a chance can you plz let me know of some management companies.

    thank you
    JC

  5. Lori

    JC
    Personally, we’ve been very pleased with Harold Berlowe at MLB Inc. 220 Willow Ave. in Hoboken. 201 222 0600 or harold@mlbinconline.com. They will manage a smaller building, too, which many mgmt. companies will not do. I also have had good experiences with Peter Johnson at Progressive Management 973 299 4444. They can handle bigger buildings.
    – Lori

  6. DJ

    Does anyone have any suggestions on how to create an association for a 2-unit condo?
    I recently purchased a condo in a newly build two family house. Each unit was sold as a separate condo. I was the first one to move in and until the upstairs unit was sold, I was paying a hefty maintenance to a management company. I was told that that when both units are sold, we can create our own association and will not have to pay the management company anymore. Well the top unit is sold and we are looking to create our own association. There are only three bills to pay: Insurance, PSE&G and common water for sprinklers. So it’s not worth paying a management company to do this. We take turns cleaning the front of the house and each takes out its own garbage. We do want to put money aside for emergency case but we want to open an account under the associations name> How do we go about it without having to pay hefty attorneys costs or accountants?
    Any suggestions?
    Thanks,
    DJ

  7. Lori

    DJ
    You raise several different issues in your question. The first thing you need to do is look at your ‘condo docs’. The certificate of incorporation and bylaws will set forth your rights as a unit owner and the structure your condo association may take. In most cases, once a majority of the units are owned by the new buyers (as opposed to the developer) there is a transition by which the unit owners take over the association. You should probably obtain legal advice in this regard unless you are an attorney.

    There is rarely any requirement that a condo assn. retain a management company. That is a decision typically left to the board of the condo association to decide. There are many advantages to having your building be professionally managed.

    A condo association also needs to file an annual tax return. If you don’t wish to hire an accountant to do that you can do it yourself or some management companies do it for you.

    There is more to running a condo correctly than taking out the trash. It sounds like you don’t have much experience and having a management company to guide you, at least to start out, is probably wise. Spending a few dollars a month to protect your many hundreds of dollar investment makes good sense.

    Do you and the other unit owner have 50/50 voting rights? Sometimes in smaller buildings the voting is equal. Other times, it is proportional to square footage owned. In these cases, one unit owner basically rules the building since that owner has a majority of the votes. You need to know what your condo docs say about this.

    So, as you can see, it can be a bit complex. Get a professional to work with you and do it right to protect your investment and the marketability of your unit.

    – Lori

  8. Steven Porada

    Hello. I noticed some questions about building services in relationship to management companies. Management companies subcontract out services such as cleaning, trash take out, snow removal, painting etc to local contractors such as myself. I operate Hudson Building Services and we offer all these services and more in the Hoboken/Jersey City area. If you have questions or want to compare pricing/services etc you can reach me at 201-463-6607 or check out my company website at http://www.HudsonBuildingServices.com

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