Posted:
Alex - The operative word here is "contract". Contracts can be negotiated. If the BOD doesn't like something that has been included in the PMC contract, contact your PM's boss (probably a district manager) and ask him to meet with the BOD in a closed meeting to discuss the terms of the contract. Then, negotiate with him (or her) to change whatever you want changed. It's been my experience that most DM's will work with an Association in order to retain their business. The first thing that I'd say to the DM is "We know what XYZ Management Company is gaining from our signing your proposed contract. If you want us to sign a contract for more than one year (max. 3), the Association has to profit from making such a long-term commitment to your company. We'll consider signing a 2 or 3 year contract if you'll agree to not increase the management fees from their present level for the duration of this multi-year contract." More than likely, you'll get what you're asking for. Note: It is very important to have a 60 or 90 day "dissolution" clause in any PMC's contract.
In response to the comment about a PM having to work with a bad or dysfunctional BOD . . . yes, it's truly awful and very, very frustrating!! The best example that I've had to deal with was a BOD that sought a $300K loan in order to complete a number of necessary capital replacement projects. The projects and the contractors and their estimates had to be complete before the loan application could be made. In order to "hold" the estimate prices, the BOD voted to execute Intents To Proceed documents with each of the selected contractors. These agreements said, in essence, "your proposal has been accepted contingent upon receiving loan approval from XYZ Bank on or before 7/31/07." The BOD president signed all the contingent acceptance documents and they were mailed to the contractors. The total of the accepted contracts was $309,000. If you know anything about contract law, you know that what the BOD president signed were legally binding contracts.
The BOD president started getting cold feet in June. He started having truly "secret" meetings with some, but not all, of the other BOD members and talked 3 other BOD members into changing their minds about borrowing the money. These "secret" meetings were impromptu and not all BOD members were invited to attend them. Nor, were all BOD members notified in writing that these meetings were taking place.
The PM (me) explained to the BOD that the contingent acceptances that the BOD president had signed were indeed legally binding contracts, if XYZ Bank approved the Association's loan prior on or before 7/31/07. I also explained to them that if they failed to proceed with the contracts that the contractors had the right to sue them for "non-performance" and win. And, that the Association could end up paying these contractors the agreed on contract amount. Needless to say, I wasn't popular. In addition, from February through mid-June, the BOD had been very busy spending the reserve funds that they did have on repairs that could have waited, that by the time that they developed cold feet, the Association was literally broke! I explained to them that they no longer had any choice whether to close on the loan.
The BOD's solution was to have the Association apply for a loan through a different bank, thinking (mistakenly) that this would somehow make the contingently accepted contracts null and void. In the meantime, prior to 7/31/07, XYZ Bank approved the Association's loan, which meant that as soon as the loan was approved that the BOD had $309,000 worth of signed contracts.
The BOD refused to close on the loan with XYZ Bank. When the excluded Board members began to understand what had been transpiring in the secret Board meetings and started exercising their right to call for and schedule a special Board meeting, the president got mad and walked out in the middle of the first special meeting.
Chaos was the order of the day with this Board for the remainder of the year! They eventually did close the $300K loan with the second bank. Once they had the money, they didn't want to spend it!! I explained to them that if they didn't spend the money on the contracts that the BOD had executed, that they would be just using the money to make the monthly loan payments to the bank . . . plus another $100,000 . . . and wouldn't have gotten anything productive out of going to the trouble to borrow the money! They finally (in late October in Ohio)agreed to roof 4 of the 21 buildings that needed new roofs.
Needless to say, once word of this BOD's collective incompetence started to leak out into the community, there was a total change in BOD membership at the Association's annual meeting in December. During 2008, the new BOD used the loan money and completed all the projects that had been contracted during the prior year. Of course, during that 8 month delay, shingle prices had increased, etc., etc. The Association ended up spending more than the original $309,000 to get these projects completed. While all this work was being completed, the old BOD members were constantly trying to keep trouble stirred up. Their feelings were hurt that the majority of the owners did not want them to be on the BOD anymore and were very vindictive to the new BOD members and the PM. Two of the old BOD members even tried to get me fired, claiming that it was my fault that they didn't know what they were doing! Fortunately, I had reams and reams of documentation showing that they had been correctly and properly advised about their actions many, many times during their entire 12-month tenure on the BOD.
So, yes, I truly know what it's like to work with a bad and/or dysfunctional BOD. In fact, at the called meeting, I had to physically insert myself between the BOD president and another male Board member, who were both up out of their chairs yelling at each other with balled fists and puffed chests . . . you know, like two old roosters!!