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Management company screw up...what can weJun 02, 2014

Our management company is woefully terrible...but the recent issue is big. It looks like they failed to pay several months worth of water bills...in addition to now being hit with a huge comprehensive bill, there are also late fees. Since they manage our accounts, bills, vendors, etc., and we hired them to do that...I feel that this is their responsibility...their lack of oversight (this started with a poor manager, who was let go, followed by a new manager who has not been trained properly) and I feel that they should eat a portion of the bill...particularly those that were unpaid. I am not sure how to proceed. I suppose we could also let them go and find a new company, and then bring the old one to small claims court. I need advice.

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Water Bills - Mark B. Levine, RAM (Excel Bradshaw Management Group) Jun 02, 2014

Hi,

I had a similar situation with a building that I took over management of last year - the previous management company wasn't paying water or real estate taxes. I went to the Water Dept. with my hat in my hand and we were able to make out a payment plan to stop the penalties that were accruing and to budget it out on installments so that it would be less of a burden on the Board.

Finding a new company may indeed be the way to go. These are expected expenses that should be escrowed every month and no coop should be left without paying the real estates, insurance and water.

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Thank you - malamu Jun 02, 2014

Hi Mark...thanks so much for responding. Is it reasonable to ask the management company to pay for the months that they failed to pay and to recognize? Or, is ultimately up to the board to catch those errors? I feel like they need to pay for this...but my husband says that it is on us, as as a board, because, as you said, we should have set the money aside...and perhaps been following more closely...but we never really get notices of when things come in and when they are paid. What do you think?

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Management Company - Steve-Inwood Jun 02, 2014

I like Mark’s answer. Assuming that the co-op had the funds available to pay the bills, I would say that the management company should pay whatever penalties and interest were ultimately paid to the water board, after negotiations.

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Follow up - Mark B. Levine, RAM (Excel Bradshaw Management Group) Jun 02, 2014

It's reasonable to ask them to pay for the outstanding charges - but there may be an issue with you collecting. If they refuse, you could go to another company. If you go to another company, they'll have to be sued to recoup the losses.

If you go to another company and they refuse to pay, it might be worth taking it on the chin, learning the lesson and then moving on. You'll learn, as a Board, to check up on these things in the future and not let them get out of hand such as this. The budget should be made at the beginning of your fiscal year and from that budget the escrowed amounts will take shape. From hereon in, escrow out 1/12 of the major expenses so that you don't have this happen to you again.

If they refuse to pay and you move on, you'll have to do a cost-benefit analysis to see if it is worth it to pursue legal and the various costs that this will bring.

Hope that help and reach out to me if you want to speak more privately about the matter.

Mark

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Video Answer on this question - Mark B. Levine, RAM (Excel Bradshaw Management Group) Jun 03, 2014

This was a good question and answer so I took this and made it into a video response for our YouTube channel.

http://ebmg.com/2014/06/question-answered-our-property-manager-screwed-up-our-water-payment-and-now-were-stuck-with-penalties-and-late-fees-what-can-we-do/

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End result - malamu Jun 04, 2014

Thanks Mark and others...so, the management company did own up to the error...and agreed to pay for the late fees/interest...but no go on paying for the bill. They did however organize a payment plan with the DEP (unfortunately, we have to dip into our reserve a bit). The company has a comptroller (finally) and actually is doing what some of Mark suggests in the video (thanks for that, too). Lessons learned...though we are still in the market for a new management company. Mark how can I reach you?

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Reaching Me - Mark B. Levine, RAM (Excel Bradshaw Management Group) Jun 04, 2014

Hey, you can email me at mblevine@ebmg.com or directly on the phone at 212-502-7048 x.201.

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management not paying bills - Kaye Jun 06, 2014

We had that situation a few years ago, management company did not pay our total withholding taxes for 6 months +, our union dues, our RE taxes, etc - This eventually cost us at least $300,000+; Our former accountant and certain board members said they knew about the withholding taxes but did nothing about it - the Union dues not being paid was a secret and in minutes said it was because of not paying for the guards which was not true. All I know is that the management company had all our money and by contract was obligated to pay our bills, especially withholding taxes,
RE and union dues. I don't know if putting the money into escrow helps, it all depends who has access to that account. When management does not pay the bills and the building has the money where did that money go, but our coop would not sue the management company. I definitely believe that they should have been sued because we not only had to pay what was owed but interest and penalties and with 32BJ that is over 100% - I believe you have to go through the managements insurance company - but they definitely should be sued. Unfortunately there is no agency that will help in this situation; getting NYS to license management companies would be a big plus; now they are only licensed as RE brokers

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Management company screw up - csuarez8449 Jun 06, 2014

You need to take a good look at your finances. What started as some failed to pay bills in our Co-op ended as theft on a large scale by our managing agent.

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MOLD - JS Jun 18, 2014

Chetrit Sold $1.6M Condo Full of Mold and Mice, Resident Claimshttp://www.dnainfo.com/new-york/20140324/midtown/chetrit-sold-17m-condo-full-of-mold-mice-resident-claims-lawsuit
""They defrauded me," Schottenstein, who has the autoimmune disease lupus and cannot enter the apartment without wearing a surgical mask, told DNAinfo New York. "This was supposed to be all new plumbing, new electrics, new mechanics. And that was not the case."

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