Many associations in the state of Florida manage their properties by hiring a property management company. A property management company is a third-party entity that is contracted to handle the day-to-day operations of a real estate asset. Whether or not to hire a property management company depends on a number of factors that includes the size of the property an association has responsibility for and the association members’ areas of expertise. If an association lacks the time and experience to manage every aspect of the property for which they are responsible, then it makes sense to look for a property management company to help carry the workload.
When searching for and selecting a property management company, there are important factors for an association to consider.
- What is this property managers area of expertise?
Property management companies have different levels of experience handling different property types. Some excel at single-family homes like those governed by a homeowners association, while others are experts at multi-unit dwellings such as those under a condo association.
Other managers are highly proficient at marketing unoccupied properties for sale and could be ideal for newer complexes and buildings. Others still are experienced in managing properties that are largely occupied by renting tenants. These property managers are highly proficient at finding new tenants, vetting them and collecting monthly rent. Many property managers will claim to be experts in all areas including those that they may not have extensive experience in managing. If you are a member of an association that is looking for a property management company, then ask them if you can visit properties that they currently manage. Are these properties like the one you are looking for them to manage? If so they may be a good fit.
2. What qualifications does their team have?
Many property managers rely on a task force made up of differently skilled employees or contractors to accomplish what they are hired to do. Different professional qualifications and certifications mark individual employees as experts in these specific areas of property management. If you are hiring a property management company be sure to ask whether any of the following professional titles are held by members of their staff:
- Real Estate Sales Associate License
Can work as an employee of a company that has a real estate brokerage license and share it the commission from a real estate sale or the completion of a lease agreement transaction
- Real Estate Broker’s License
Can receive commissions directly from an employer for sale of a property or the completion of a lease agreement transaction.
- Community Association Manager (CAM) License
This allows a professional to manage the day-to-day operations of a ten or more unit association or one with a greater than a $99,999 budget.
- Licensensing By the Division of Hotels and Restaurants
Allows professionals to manage vacation rentals and timeshares
“Many property managers will claim to be experts in all areas including those that they may not have extensive experience in managing.”
3. What vendor relationships do they have?
A property management company will typically have extensive experience in dealing with landscapers, janitorial services, maintenance services, roofing contractors and other purveyors of property-related services. If you are looking to bring on a property management company to manage your associations property, be sure to understand whether you will be expected to change suppliers in any of the above mentioned areas. Keep in mind that, oftentimes, the bargaining power and experience that a property manager brings to the table can result in better pricing and more value to the association. Nevertheless, the association is likely to be the end decision maker of and payer to the vendors selected therefore it is important that the contracts are vetted by the association’s attorney’s and pricing and value propositions are acceptable to the association.
4. Are the terms and conditions of the contract acceptable?
Property management contracts should protect the business interests of both the association and its property owners as well as the property management itself. Fees and deliverables should be outlined explicitly in the contact. Beware of generalized statements and fees that are given without context. An association should be able to see, for example, the exact services that will be rendered and their respective costs.
Many contracts also outline the responsibilities of and restrictions on the association. An association may be contractually required to maintain a certain budget for property services each month. Other contracts may prohibit associations from selling (or renting out) units directly, exacting that all such transactions go through the management company. Standard language for all contracts include references to state and Federal Equal Opportunity Housing laws, liability, duration of contract, venue and jurisdiction and terms under which the contract can be terminated.
The Importance of an Attorney
As an association looking for a property management company, you and your team are volunteers that may or may not have the expertise and experience to properly ensure that the associations best interests are represented in the contract presented by your potential partner. Once signed, it is important to understand that you may be bound by law to resolve conflicts in ways that are not in the association’s best interests. However, property management companies want your business and may be willing to make extensive changes to their boilerplate contracts in order to work with you. As such, it is important that before any contract is signed your association has it thoroughly reviewed by an attorney that has extensive experience dealing with real estate law in the State of Florida.
South Florida Law
The complexities of Florida’s HOA and condo association law make it difficult to navigate for even experienced HOA board members. Be sure not to “go it alone”. Here at South Florida Law we have boutique firm attention to detail with the big firm resources necessary to draft and review HOA documents and represent HOAs and Condo associations. Call us today at 305.900.8885 or reach out via our contact form.