The Hidden Challenges of Switching Management Companies

Changing managing companies can be a fraught endeavor, but it’s a hurdle many boards will face at least once. Habitat’s Emily Myers sits down with three seasoned NYC property management experts: Mark Levine (Principal, EBMG), Robert Ferrara (President, Ferrara Management Group), and Evangelos Fantakos (CEO, Highrise Property Management) to reveal the hidden challenges that emerge during transitions and share stories from the trenches — including one building facing $70,000 in compliance fines and another caught in litigation during a board coup attempt. These industry veterans discuss everything from navigating sponsor conflicts to rebuilding trust with residents, plus the critical mistakes that can cost your building dearly. Whether you're unhappy with current management or simply want to understand what makes transitions successful, their insider perspectives will help you avoid costly pitfalls and make informed decisions for your building's future.

How To Run Your Building: For Co-ops and Condos

Transcript

Emily Myers (00:43)
Welcome to Habitat's Management Series. I'm Emily Myers, and this is one of several round table conversations with the principals and founders of leading New York City property management firms. The topic for this discussion is management transitions, how to address serious problems of new co-op and condo clients. We'll explore compliance challenges, communication hurdles, and the process of restoring trust with boards. And I'm delighted to be joined for this 
by Mark Levine, Principal at EBMG, Robert Ferreira, President of Ferreira Management Group, and Evangelos Fantakos, CEO at Highrise Property Management. Thank you all for being here, guys.

Robert Ferrara (01:25)
Thanks for having us.

Mark Levine (01:25)
Thank you.

Evangelos Fantakos (01:25)
Thanks for having us.

Emily Myers (01:27)
start our conversation fairly broadly and get into some examples a little later in the discussion. Because I think the details of specific buildings can often help illustrate the broader picture. But first, Mark, what are some of the most common challenges you face with these transitions? And when do the difficulties emerge?

Mark Levine (01:47)
Sure. Well, again, thanks for having me and everybody else on the show. we're talking about changing management, it usually comes from a place of the

building and the board not being happy with their present situation. So from the get-go, you're stepping into a relationship that may have turned sour over a period of years. There's a lot of built-up mistrust, perhaps, from a lot of the residents there. So one of the first things that we try to bring out on a change when we're talking about a management switch is to restore that trust to make sure that everybody is super familiar with the new company that's coming in, who they can contact, being responsive.

cataloging all the outstanding issues both from a building-wide perspective and also from the unit owner or shareholder perspective just so that they can see before we've even taken over that we're interested in solving problems and moving forward and that's really the first step beyond setting up all of the accounting on the back end is to just coordinate.

Mark Levine (02:44)
⁓ effective communication style with the residents so that they see, okay, there's somebody new here that's here to help us and to move through all of the challenges that we're both facing in the past that haven't been resolved, but also coming up in the future.

Emily Myers (02:56)
Interesting. Evangelos, are there pre-transition checklists or red flags to assess perhaps how challenging a transition might be? And have you found ways to depersonalize these transitions to make them a bit smoother?

Evangelos Fantakos (03:09)
Yeah, I think the first things that we asked for are obviously governing docs, understanding the financials, so asking for statements, part of the management reports that we asked for

have all the financials of the buildings. We'll ask for ⁓ compliance filings. basically any recent compliance filings that we need to know of.

General ledger data, shareholder or condo owner data, any data that pertains to the contact information and common element percentage interest of shares, that kind of stuff. We'll usually compose an email and a letter and then we'll send it to the prior managing agent and we'll ask for all these stocks to be transitioned over to us. We'll go through everything.

And then, you know, in the 30 day period of transition time that we tell the new client that it's going to take for us to complete a successful transition, we're kind of just, you know, going through each item to make sure that everything is, you know, exactly what it's supposed to be. And we'll ask the board at times to help us if there's any kind of discrepancies in any of the files that

over. There are times where we

Sometimes find that there's a previous shareholder data that was sent to us, but there was a new buyer, for example, within the building. So those are the main items that you really want to get ⁓ through with the transition. But then you also are asking about, you know, and I think Mark kind of touched base on this, like what kind of issues they faced, what things that they want us to prioritize so that way, you know, are met.

we know that if okay, they were neglected and this property didn't have a lot of help and handholding through one of their latest local laws, we're going to kind of try to see if we can help them with that.

Emily Myers (04:54)
Yeah, mean compliance obviously a big issue. Robert, what can be the consequence if records are incomplete and how do you navigate this?

Robert Ferrara (05:02)
So ultimately we have a transition team that goes through the process similar to evangelist stating we have a checklist. We set up everything electronically along the way and we hold zoom meetings with our new clients on a weekly basis to update them on how the transition is going. Now we run into a situation where we're not getting all the information as you mentioned which unfortunately does happen at times and some of that we're going to have to rebuild. We're to have to reach out to either the vendors

reach out to the city or the local municipality and try to start rebuilding that information along the way, which is time consuming. But ultimately, in order to effectuate a good transition, you're going to want to make sure that you're getting everything in order, updating what we call PR key, which is a resource key for that specific property. And

Robert Ferrara (05:48)
to Mark's point earlier about gaining the trust, know, the board ultimately want the trust of the board.

Emily Myers (05:51)
Okay.

Robert Ferrara (05:55)
and then it transitions down to the unit under the shareholder.

Emily Myers (05:59)
So in these situations, I mean, I think you've all touched on this, that one of the big challenges is communicating to the board what their responsibilities are. how do you address that Mark?

Mark Levine (06:08)
Yeah, so I always like to go in from the point of view that the board should not be an unpaid employee of the building. Yes, you're there to direct management. You're there to oversee to make sure that our objectives are aligned. But after the board says we would like to do X, then it is now on to the management company and to the entire team behind us to make sure that that gets put into place and that could.

be setting up new protocols that could be getting proposals or initiating projects. And those obviously come with board approvals beyond that. But from our sake, I don't like the board to be too involved to the point that they feel like they're working for me. If we have any issues as we're coming on board with the building, we will have just, I believe, like Robert said, it's the regular check-ins, the regular meetings with the board while we're transitioning to let you know where we stand.

Mark Levine (06:59)
This is a process that doesn't have to be scary from the management point of view when you're changing because this is a very normal and organized, it feels like chaos sometimes, but this is a monthly transition that happens with every company. And while a building may only go through a change once every five to 10 or sometimes 15 or 20 years, it feels scary for the board. But in our world, this is just part of the deal. We all have our transition departments that handle this on a monthly basis.

So it's up to us as management to really carve out what the items that we need are because when we're coming from an older company that may not be as technology based, they may have been there for a long time, they may not have certain systems that we have. We're now bringing those buildings into our fold with our technology, our systems, our protocols. So the board may see it from a very small

Mark Levine (07:51)
view, but we have a larger view to look at from a 10,000.

you know, but view down where we've seen this before, we've enacted these policies and changes. This is what all of our companies could bring to the table in the sense of, you know, how can we change the path moving forward? And from my side of things, unless we're missing something that's really can't be cobbled together through the accountant or the architect or the engineer or any of the other professionals that we're using, we really don't necessarily have to go to the board for those things. And then we could really start fresh.

From day one, when we have the whole new team in place and we've kind of moved on from the past experience, as long as the board can let go of the past, then we can move forward. You know, we're proving ourselves every day, of course, but if there's a new team in place, let's move forward in a constructive way

Mark Levine (08:39)
together.

Emily Myers (08:39)
So, I mean, you've all mentioned that sort of perhaps trust is often broken down when boards are switching their management. Robert, how do you rebuild confidence when a board feels let down by their previous company? And can you sense that switch

Emily Myers (08:55)
it happens, when they kind of have their faith in you?

Robert Ferrara (08:57)
Yeah, you know, it's one of those things where when we're meeting with them, we explain to them that we have to build that trust and it's only going to come over time. And ultimately what we'll do with the properties that we're transitioning in, we'll hold a meet and greet with the residents or shareholders and ultimately board members. And they'll meet other people within our back office because they normally see the face, the property manager. On occasion, they'll see the assistant property manager.

there's a whole team behind them that work to make sure their property is running in the right direction. So we'll bring these other individuals to a meet and greet. They'll get to meet the shareholders, get to meet the unit owners, able to explain what people's roles are within our company. And it puts a face to the name. And that's a way that we slowly start gaining that trust. And as Mark brought up, we're only as good as we are that day. So each day that we keep adding up those positive impacts,

only keeps making our reputation and the board's comfortability level rise. And that's what we all try to do.

Emily Myers (09:55)
Evangelo, obviously there's a transition period. How do you manage that overlap with an outgoing firm? know, especially obviously when service quality drops with an outgoing firm and you're not yet in place, is that a tricky position to be in?

Evangelos Fantakos (10:11)
Yeah,

it definitely is ⁓ or it can be. And it really depends. You you have transitions that are a little emotional because perhaps the managing agent before you managed the property for 10 years or more. And then you have some situations where perhaps that board had already changed management companies two or three times within the past five years. And it's not so emotional. I think either way,

We want to carry ourselves as respectful as possible. We understand it's not fun losing a building. It's not something, any of us want to endure, but it's how the business goes. So we try to be courteous and respectful. We try share that we are really in need of perhaps, you know, items one through five on our list.

and we can perhaps wait a little longer for the rest of the items. We understand that their office may be busy and transition is an additional process that is outside of the normal week to week that you have within the business. So there's definitely

times where we had to kind of tread lightly because if we push too hard, perhaps the managing agent wouldn't want to give the documents until the very last second

and that would make things very tough. But I think what we try to do most is be very transparent and vocal to the board and let them know we're very open with the communication without bashing the company. I usually will try to relay to them that we're having a hard time and if they happen to have a relationship with the managing agent, perhaps we could use their assistance in the process.

there are times where we feel things are going pretty smooth and the company is reciprocating and sending us docs right away. at that point, we won't bother the boards in that case and we'll try to handle the whole thing on our own. But each case is a little bit different.

Emily Myers (12:07)
course, some dysfunction is often board related. Robert, what early warning signs do you look for that a building might have internal governance issues? And do you have an example of this that you might be able to share?

Robert Ferrara (12:22)
Yeah, recently we're in the process of still transitioning the property in. The board had hired us. They ultimately were having an annual meeting very close to the hire date. And during that meeting, they didn't achieve a quorum, but some of the owners of --it's a condominium building-- and some of the owners came out and went for a petition to remove the board. And ultimately the attorney.

Mark Levine (12:30)
you

Robert Ferrara (12:46)
for the property advisor, it wasn't held in a proper way and it went to litigation. So they ultimately moved it along to litigation. ⁓ Court determination was just recently made to effectuate another meeting to try to remove the board if they can get ⁓ enough of people. And on the same day to have an election right immediately after that meeting. And the board members, if they were removed,

still have the right to run for the board. So the court is trying to achieve both ends of the stick in a sense to keep the property moving, but that becomes a challenge. instead of us focusing on the main goals of solving some of the problems early on, we also now have this on our plate that we're dealing with. And ultimately it's moving in the right direction. We're trying to bring cohesiveness to the community.

Meet and greet, think I achieved that a little bit by having our team members there and talking about the need for all of us to work as a community, as an association, and ultimately as a team. And that team is the unit owners, the board members, management, and the vendors all working towards that same goal.

Emily Myers (13:53)
So if this board conflict stalls progress, what's your plan to avoid being caught in the middle?

Robert Ferrara (13:58)
we tread on a difficult slope with situations like that. And I think the best way is to be straightforward with all involved, not select sides, select what is the requirements of the law and what is the requirements of the industry. And ultimately, at the end of the day, if I'm working with Board A or Board B, our objective is to run the property in a transparent manner, respectful manner, and a professional manner.

Evangelos Fantakos (14:24)
So,

Mark Levine (14:13)
you

Robert Ferrara (14:24)
And, you know, sometimes

Evangelos Fantakos (14:25)
I'm

Robert Ferrara (14:26)
management companies, they feel that there was an alliance with one board or another board. And I know we never try to do that. I know most management companies try to be there for the overall association, not for a specific board or a specific board member.

Evangelos Fantakos (14:28)
So

Robert Ferrara (14:42)
that's when you really run into trouble if you look like you're tending to lean towards someone who may not be doing the right approach to a situation. So we try to be as transparent.

and straightforward as possible.

Emily Myers (14:55)
And can I just ask what was it that flagged the current political tension?

Robert Ferrara (14:59)
You know, we're still trying to understand that. So we don't have a full wrap around of what it is. Is it a personality issue? There was a sponsor that had been involved and unfortunately he had passed away. So I know there's some tensions from the sponsor's time on the board. So we're still trying to wrap our head all around what may or may not. But our main focus is the transition, is effectuating what the court stated and

Robert Ferrara (15:23)
making sure that we're following the bylaws of the association.

Emily Myers (15:27)
You mentioned sort of sponsor involvement and of course not all transitions are from one managing agent to another. There are some situations where there hasn't been a recognized management company involved at all. Evangelos, how do you navigate the transition when there's no precedent or cooperation from a sponsor?

Evangelos Fantakos (15:45)
The hardest challenge is getting the sponsor or whoever the prior entity was that was overseeing the property to at least, at the very least cooperate in the form of communication. We recently had a situation where we were transitioning a condominium where the sponsor actually

at full board control, but was also the managing agent for the past 10 years. As for the governing docs, the bylaw stated that within the first five years, within the first few sales, they should have already started offering seats on the board to elected board members allowed for the owners to get together and form a meeting where they can elect their own and appoint their own board officials.

We ended up going through the legal system and ⁓ we got an attorney involved. Rather quickly, I escalated it to an attorney. I advised the self-appointed board that was trying to take over from the sponsor that the owners did hold a meeting and elect representatives to represent the board. I advised them that this was something beyond management that

that there was no managing agent that's going to be able to enforce that the sponsor give all these documents as they had already ignored tons of emails and all kinds of communication. So once the attorney got involved after a few legal notices and it escalated into getting filed with the attorney general's office and going through the courts.

It looks like the sponsor finally gave in and started sending over documents. They sent us a formal letter explaining that they would now abide by the transition and start sending us all the documents needed. I would say that if any board out there was ever facing such a situation, getting legal involved immediately is definitely the right way to go.

Emily Myers (17:31)
Okay, so I imagine, the governing documents of the condo, assume, ⁓ they often favor the sponsor. Was that part of the problem or was the sponsor just sort of ignored

Evangelos Fantakos (17:36)
Yes.

Emily Myers (17:42)
just flouted the bylaws?

Evangelos Fantakos (17:44)
Yeah, typically,

know, especially in

if the building was built in the 1940s or 30s, you know, you have these antiquated bylaws that were put together by the sponsor at that time. And of course, they were put together in favor of the sponsor and what was perhaps appealing to the sponsor at that time. In this case, this was a bit of newer building, but nonetheless, the sponsor definitely

had verbiage in the bylaws that allowed them to stay on as official board members for a much longer period of time than usual. but even in their bylaws, five years was the max amount of time that they were allotted. in essence, I do think that overall the bylaws are, put together in favor of the sponsor, or the developer of the building and,

Oftentimes we find that boards do have issues with certain rules that, you know, apply that perhaps is not the most appealing to the building overall. For example, in many cases, buildings allowed sponsors to rent out units and sublet apartments without having to go through the same procedures that a normal shareholder or owner would,

having the management company put together the application, review it, present it to the board. That whole process is in many cases, what I've experienced, kind of forego because the sponsor, verbiage in the bylaws that allow them to supersede all that.

Emily Myers (19:07)
Interesting. mean, talking of following rules, of course, we mentioned compliance earlier. Mark, do you have an example of a transition involving this issue and the steps that you took to remedy the situation?

Mark Levine (19:19)
Yes, this is a one building in particular that we took over about six months ago from a very large company and when I was going through their initial review when I was on boarding their entire property and looking at compliance issues, I noted that they completely missed their local 11 cycle nine filing. ⁓ So any building that's at or taller than six stories in New York City have to go through a periodic every five year inspection. And if you don't

do that on time or if you just don't do it at all, you'll be hit with very large penalties and fines as a way for the city to enable you to do that on time to make sure that your buildings are safe. So I brought it to their attention and presently there's about close to $70,000 of fines on this one building in particular that was really only for missed filings

missed compliance issues. the local 11 is the largest one.

But then, and this is kind of representative of every building that I've taken over in the last two or three months has had a similar issue where if you look through the penalties owed, you'll find a lot of boiler issues and also elevator issues. Now these sound like, you know, year to year, they're not so expensive, but if you miss an elevator filing, it's $3,000 per year, per elevator. So if you have three or four elevators and you miss two years, that's significant. That's three times four times two. So that's $24,000 off the bat.

⁓ Same goes with Boiler and same goes with that. So right now we're going through the process of having to do the next cycle of filing on this particular building. And in order to do that, we are going to have to pay off the fines. You really can't go to court and say, you know, the ignorance is not kind of an excuse in this case. The city kind of mandates that you have to file through with ⁓ all sorts of compliance laws. And that's New York state also.

⁓ So in this case, what we're doing is we're getting ⁓ the next architect involved to do the next filing. We're going to have to take care of the last penalties that

on there. With regards to any boiler or elevator, you just pay them and you kind of affirm that you've done the next test and you can get away with that without reopening the entire case. But from a building standpoint, a lot of the things that we talk about with new clients is how are we going to afford the next few years? So you're looking at it from a five to 10 year

process. Everything that we know about today on your normal operating expenses is continued to drive up and insurance and property taxes, especially for the co-ops. Those are two areas, energy. So if you're not even taking into account that you've got close to six figures of penalties just hanging out there, how can you as a board make correct decisions on both the maintenance level, any operating assessments or capital assessments that come through? So really taking stock of your building as a board member.

understanding what kind of issues you're having in terms of compliance, what penalties are sitting out there, if any, what can you challenge, what can you just have to go and pay them out just to get them off your record. That's part of the transition process and going through with everything that we can find. The one thing that I will say is when you look at a building and,

Maybe the multiple dwelling registration has expired for the last year. That's kind of an inkling that things may not be taken care of. That's a simple administrative task. It's $13 a year. Same with the New York State biennial. as a company or an LLC or a corporation, every other year you have to file with New York State. I find a lot of those that are expired for six, eight years. These are the administrative tasks that kind of drive the engine of every building and corporation. So if you're missing those simple things.

it's going to get a little scarier as you pull back the onion, you know, and see what's out there. So an attention to detail. And it sounds like all three of us have that, you know, kind of going for us where you look at a building from a realistic approach of are they up to date with everything? What do we have to tackle in the next few years? Making sure that the building has.

Mark Levine (23:05)
enough information so that they can make the decisions as a whole and not dropping anything. And in order to be in this business with as many buildings as we have, you have to be exceptionally organized with all of the compliance details, knowing who is up for what when in terms of every single local law, federal law, state law. And it gets a little chaotic and it's a full-time job within itself, but it's something that you have to do in order to not put the building on the back foot. And the last point I would say about this is

Mark Levine (23:32)
You know, we go through the contracts and see who's responsible for what

management contracts that were drawn up 20 years ago may look a little bit different than they do today because of the increase in that. So a lot of the discussions that we're having the ⁓ legal counsel for all of these buildings and with the boards is what's worth going after the prior management company because they should have been overseeing this and suddenly we're in this penalty violation that's going to cost us basically a full year's worth of management or more.

they didn't expect to pay. they want some satisfaction as to, we don't want to pay for that. Who is responsible for this? Can we put this on them? And you have to weigh the cost of going out to legal versus should we just pay this and get it off our record? Those are the things that we look at as a holistic approach on a compliance basis for all of the buildings that we're taking.

Emily Myers (24:19)
Interesting. And the building that didn't file for, I think you said missed inspections. Did you, how do you then kind of create a compliance structure and schedule for the building? What are the takeaways here?

Mark Levine (24:24)

Yeah, so, and I can only speak for myself and whenever we take over a building, I have a massive database that every local law fits into that spreadsheet. Essentially, every time a new law comes out, I keep a new tab and I put every building that is required for that specific thing on there. We're very proactive from the sense

Mark Levine (24:51)
is a building actually that I personally manage. So I'm going through it with the board and we like to call out these things on our agendas.

Every time we have an agenda, every month, I keep those dates on there. Here's when your local 11 is due. Here's when your gas inspection is due. Here's when your back flow inspection. Here's when your insurance expires. Here's when, you know, whatever that looks like, just so that they have eyes on it. They have ⁓ knowledge of what's coming up. They know when our important dates are. And then moving forward as we continue to grow out our portfolio and the local laws continue to expand, we're going to keep doing that throughout.

and hopefully nothing will be missed because that's our job. It's our job to oversee it. We work with our compliance partners are some companies that have in-house compliance. Most companies use somebody that's a third party, such as what we do. And we're a partnership working together on all these things. So whether or not we're managing a building that is fresh for us, or we've been there for 20 years, this process is the same. We're making sure that every I is dotted and every T is crossed.

Emily Myers (25:50)
Yeah, I mean, you touch on sort of strategic planning, which is a whole other

But Robert, mean, in terms of planning for the future, what are your takeaways for boards in terms of, working with management to achieve the goals that you both want, which is a strong building?

Robert Ferrara (26:11)
You know,

ultimately anybody in the management world, especially the New York City area, Westchester County area, you need to be organized as Mark had mentioned. We take a proactive approach where every property has a calendar set up. is part of the agenda, similar to what Mark does with his issue for compliance issues. We have a compliance division that we do use a third party outsider, but we have our internal people that monitor that work with the different vendors to make sure.

that they're set up for the next schedule. Everything that you do from maintenance issues to compliance issues, you have to be on the proactive side of the approach. And we try to bring that up in board meetings well in advance so it's not a surprise to the board from boiler overhauls to tube cleanings to those gas inspections, whatever it may be to make sure everybody is on the same side. And it's all part of that transparency.

When you're dealing with local law 11, especially now because the vendors that are properly insured, the architects or engineers that also have that proper knowledge and the proper insurance behind them, they're limited and they're very, very busy. So if you think that you're going to get something started now for the spring of 2026, you better have already had that ball rolling in that direction

allow the boards enough time to

different pricings, make sure they're comparing apples to apples, and ultimately to negotiate the final numbers, because if you're starting this in November or December, you're way behind the eight ball.

Emily Myers (27:40)
Interesting. So the long lead times for all these mechanical upgrades or efficiency, especially they present problems or complexity when a management changes hands. ⁓

Robert Ferrara (27:53)
It all comes down to the budget in the long run as well.

Emily Myers (27:56)
Yeah. do you have, or perhaps Robert, perhaps you want to finish, any advice for boards on that? I strategic financial planning obviously is a big part of this.

Robert Ferrara (28:06)
I'm

Evangelos Fantakos (28:07)
I would just say that.

Robert made a good point. I would say the financial planning is just as important as anything at letting the boards know well in advance because of the lead times to get certain items like gas detectors that, were for compliance and ⁓ starting May 1st and tons of different local laws and all eventually to comply with the great big local law 97.

I would say that the best thing that you can do to prepare your boards is give them as much information as possible as to what to prepare for so that they can financially plan. And along with the annual budget that you prepare, what we try to do is also give them a budget, much like an MCI budget or capital expenditure budget, you're also preparing them to allot funds for what is gonna be needed.

⁓ with regards to what they're going to have to purchase or spend to comply with these compliance items.

Emily Myers (29:07)
Yeah. Robert.

Robert Ferrara (29:08)
Ultimately, New York State, we're anticipating at some point, they're also going to require reserve studies for properties. And that's also going to change the whole dynamics of the budget approach. We look now out five, seven and 10 years for many of the properties capital budgets and try to look at the financing for it and how they're going to achieve what we anticipate those costs being. If the state ends up passing that reserve study,

you're then going to have to show how you're going to be able to fund those projects. And ultimately it leads down to mortgages, being able to obtain a mortgage to move into one of these properties and for co-ops being able to get their underlying mortgage. So as we've all seen out there in the different articles that we read, as well as some of the forums that we go to, lot of the banks will not offer financing to properties and they're blacklisting a lot of properties.

Robert Ferrara (29:59)
So we have to be prepared for that now and costs are only getting higher and higher as the economy changes, the world is changing, and also the number of vendors that are out there doing this type of work is limited.

Emily Myers (30:12)
Yeah and reserve studies are obviously these comprehensive look at the building's mechanical systems and a plan to address

any

Emily Myers (30:21)
issues. Mark do you have thoughts on this?

Mark Levine (30:23)
I do. You one of the things in a financial statement that is a note is if a building has gone through or has not gone through a comprehensive reserve study, similar to what Robert was just talking about. And I actually prefer when a board can say that they have not. And whether you do or you don't, you can keep it in draft form so that you have that information, but you don't have to necessarily publish and make it finalized.

And what I worry about is if we are forced by the government to do those capital studies or forced by the banks, now we have to disclose that in the financial statements. The information is only as good as the day that it was presented because you can say in this study itself, okay, this component is an expected lifespan of this long and this is the anticipated cost for the replacement. But that's only as good as the day that it was printed. So if we're presenting...

Mark Levine (31:13)
Let's

call it a million dollars of upgrades in the next 10 years for any specific building. But by the time you get to those upgrades five or six years from now, the price has ballooned to two million. But yet everybody bought into the building based on the fact that they anticipated paying a million dollars over the life span or over the totality of all the shares, the common interest. Suddenly you're in a negative position. I would, I guess that would be more of a legal question as to if the representation was only half of what it actually was.

Do any of those people who bought under the assumption of that initial dollar amount could they go against the building and say, you gave me false information and now that's a legal issue. So that's my main concern. Putting hard numbers to things that are gonna happen in the future, I think you can do a good job of estimating that without finalizing that and try to bring that into more of a closed executive session versus advertising that to anybody who's interested in buying into the building.

Emily Myers (32:05)
Yeah, from the board's perspective, the concern is that they may be liable if they have put numbers and all that data out in the public space and then buyers are buying based on that information. really interesting. I mean, very thoughtful and interesting contributions here. Any final thoughts?

Evangelos Fantakos (32:23)
Yeah, I would just say that, you know, I think we all three of us gave a lot of great insiders as to, know, what goes on and how we prepare for these things. But I would just say that, you a board member to just be aware

do some research online, a lot of stuff that we learn is on the net and they can, you know, search a lot of these compliance codes themselves and understand them better.

And being a board member is a pivotal role for the community. It's essentially an opportunity to do better for the community. And the only way to do that is by being informed and studying up on some compliance codes, not just relying on the management company. There are times where we could do the best we can to prepare for a certain local law.

and we can help to the best of our ability, but perhaps we are limited. Perhaps there is not enough funding and there just maybe there wasn't even enough time to prepare for it because it was such a new item. again, when you're managing so many properties, there's not so much your managing agent can do. No one is perfect. So I would just say that if a board can learn and study up on some of these compliance codes themselves,

you're doing a justice to yourself and it can go a long way.

Emily Myers (33:38)
Yeah, I mean, Mark, you made that point about the building that was over six stories. know, they just should have known that the facade required inspections. Yeah. Robert, any final thoughts?

Mark Levine (33:47)
Correct.

Robert Ferrara (33:50)
Yeah, I think we deal with a lot of great board members that have been on the board for many, many years. So there's a lot of institutional knowledge. One of the things that I see that's lacking for many property, which would go hand in hand with working with management is a grooming process, grooming for new board members, because a lot of people don't have the time to volunteer. And I think it's important, you know, people get on a board, they participate.

And ⁓ before you know it, it's 20 years they're on the board and now they decide they're going to move their retirement's approachomg, whatever it may be. And we don't have people that have been groomed. So I would encourage that because the board has to be able to make decisions that management is presenting them with different proposals, different options. And ultimately the board members need to feel comfortable to make a determination at board meetings.

And if there's a newer board member who may not have experienced some of this, they look to the guidance of those that have been there for a while. So I would recommend boards to have a room in process and bring more people involved.

Emily Myers (34:51)
Yeah, the transfer of knowledge.

Emily Myers (34:54)
Yeah, so your point being that there is knowledge that is lost and we want to kind of retain the knowledge of the older outgoing board members and make sure that knowledge isn't lost. Mark, I'll give you the opportunity to

close us out here.

Mark Levine (35:12)
Thank you. Yeah, so when we do interviews and we talk about the differences of different companies and whether it's my company or Robert or Evangelos, you go and you sell yourself, but you're also selling the process and procedures that you have in place as a company. So I think the best thing that a board could do during a transition, and while it's hard and it's personal and it could be emotional at times, is to kind of take off the past. You're coming into a fresh relationship.

Mark Levine (35:41)
you've potentially been burned by a prior company or prior companies. And I think when you get to the stage of hiring and then onboarding and taking on a new client and working with a new professional company, I like to see that in a perfect world, you could let go of the past and really just try to throw faith into the process

and move forward in a constructive way. Because we could have all the ideas and we could have all the processes, but if the board is still

in a nice way hung up on what happened in the past, you really can't move forward. It's like going to therapy. you talk through it. Okay, we know what the issues are. We've gone through the interview a few times. We know exactly what your problems arose from. We know how to solve them. And now let's work constructively as a team together to get through them and create a new relationship and new space and a little bit more freedom. And the one common complaint that I and probably everybody else on this panel gets is at an interview, well, we're doing all the work.

We're unpaid, but we're doing all the work. The management company isn't doing anything. So let us pick that ball up and let us run with it. And I always say, let us prove ourselves until you have reason to think otherwise. And I think that statement really goes a long way to crafting a relationship that can grow from the beginning. as I said in my opening remarks with ⁓ how we communicate with residents is to let them know that, OK, you have somebody in your corner that can help you on behalf of the building.

Mark Levine (37:03)
Let's prove it. And then we're going to start there. We're going to have a new relationship. We're going to move forward with this great, hopefully open and transparent communication style.

Emily Myers (37:11)
Interesting. So, well, it's clear that taking over a new property isn't always smooth sailing, but with transparency, communication, and sort of a compliance structure and some financial planning, I'm sure the list goes on, but I'm going to try and keep it short. Perhaps even the most troubled buildings can get back on track. Well, to you guys, thank you so much for sharing your expertise and your stories here. Thank you for watching and listening and stay tuned for more insights from Habitat on the topic of co-op and condo property management.