Debt Collection Tips

For Working With Property Management Firms In NYC

Working with property management firms in New York?  Here are some debt collection tips for vendors who do work for multifamily owners, including coops and condos, when it comes to working with property managers.

Many of the buildings in NYC are managed by an outside agent known as a property manager. The property management firm receives a management fee in return for managing the building. Managing buildings as an agent is a business like any other – you collect a fee for providing a service. A successful property management firm will likely manage many buildings.

The building and the property manager will have an underlying agreement that gives the agent the authority to act on behalf of the building owner, or in the case of coops and condos, as instructed by the coop or condo board, and may limit the dollar amount for any and all transactions.

Working With Property Managers in New York City

Property managers secure goods and services for the building(s) they manage, as instructed by the coop or condo board. The property manager may issue a formal request for vendors to bid to work with one or more of their buildings, or look to providers they regularly use for other buildings they manage. They may use different vendors at different buildings.

Our clients who provide goods and services to buildings in NYC look to solidify relationships with property managers because of the agent’s ability to contract the services for more than one building. The service provider can increase their book of business exponentially by having a successful relationship with a property manager and their various representatives.

Billing, Invoicing, and Debt Collection

Generally, when working through property managers, vendors bill the agent for the services or goods provided to the building.

If working with more than one building, the various balances may be broken down by property manager and/or building. More often than not the invoice goes to only the property manager and not directly to the building. The client’s internal collection efforts are also generally targeted towards the property manager.

Here’s the problem. A property manager is simply acting on behalf of the building. Although the agent contracted you to provide goods and/or services to the building, they are not ultimately responsible for payment, assuming the property manager acted within the scope of their agreement with the building.

What does this mean for collection efforts? It means that your customer is the building that benefited from your product or service. Debt collection efforts should be directed towards the building or buildings individually, not the property managers.

Mechanic Liens and Litigation

If timely, you can file a mechanics lien against the building if your services improved the value of the property, regardless of whether it was the building or property manager that contracted your services. Doing so will not preclude you from filing a civil suit for money owed from the building. You do not need to foreclose on the lien to collect from the building and, sometimes, to increase your chances of collection, it’s best not to.

This article was contributed by Jocelyn Nager, partner at Frank, Frank, Goldstein & Nager, a well-recognized collection law firm representing creditors in various industries. Jocelyn and her team represent many subcontractors working with NYC coop and condo boards and multifamily property owners that are not getting paid.

Need help with a construction project for your building? The Folson Group provides construction project management services that makes co-op and condo board engagement filled with a feeling of accomplishment. Set up a strategy call with us.