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Basic procedural question here.
I'm under the impression that in most co-ops, the counsel and accountant are hired by the board and are answerable to the board, rather than to the management company. The management company usually has no role in hiring a co-op's counsel or accountant.
Is that indeed the case?
If so, why?
Thanks in advance for any feedback.
Thanks so much for your response. That's what I thought.
And why is it a good practice to have those two entities (management on the one hand, counsel + accountant on the other hand) at a remove from each other?
Did you change management companies, or did you just get a different agent with the same company? What do you mean when you say that no one squawked?
Thanks again.
Keeping management, attorney, and accountant as three separate entities ensures that there is no hint of a conflict of interest. For example, if your attorney is your managing agent's brother, and your managing agent recommends a lengthy and costly consultation with his attorney-brother, that doesn't look so great -- even if everything is completely in order. You should avoid even the *appearance* of possible impropriety.
Yes, we did change management companies and not just agents. We've been very happy with the change. "No one squawked" in the sense that our new agent, old lawyer, and old accountant all made the transition very smoothly and professionally -- no problems and no complaints.
By the way, I like Bill S's comment about having an in-house lawyer. Our former Board president is a real-estate lawyer and he's a great first resource before we go to the coop's official lawyer.
Keeping management, attorney, and accountant as three separate entities ensures that there is no hint of a conflict of interest.
Yes. Exactly. Thank you.
You should avoid even the appearance of possible impropriety.
Exactly.
We have a CPA firm that is just dynamite. We did employ one of the big name accounting firms, and we switched several years ago. The new firm specializes in co-op and condos and I see a night a day difference in knowledge and diligence.
We have a house counsel. In actuality it is an attorney who lives in the building and who handles the tasks such as closings and letters to those residents who violate rules or who are in arrears (very few and very low amount). Occasionally, this attorney will handle some litigious matters. For unusual cases, we may obtain the services of a specialty law firm, but not in all situations.
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Yes, you're right on all points. Although a managing agent is certainly free to suggest a good lawyer or accountant, the final choice is the Board's. The lawyer/accountant is answerable only to the Board, though you may want to have your managing agent talk with them on occasion: "Please have our accountant take a look at the so-and-so problem."
On a related point, we changed our managing agent two years ago but kept both our lawyer and our accountant. No one squawked and everything has been fine.
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