Does your co-op or condo pay for services they don’t use?

We often find that co-op, condo and homeowners associations are paying for services that they are not using.

How do we know that? Because we have reviewed financial statements for thousands of buildings. So, when we see an outlier, such as an expense that we normally do not see, we ask what it is for.

I bet that you can relate to this. If you are anything like me, there has probably been a time when you decided to cancel a service, but then either forgot or got too busy to follow through. And, in many cases, you are one person making the decision and taking the action. Every now and again, I hear that businesses have the same problem. This is understandable because businesses have even more moving parts.

Homeowners associations are even more complex, with even more parties involved. There’s a daisy chain involving the property manager (with its many departments), the super or resident manager, and then there’s the board. It is not difficult to see how communications can break down and then unused services don’t get cancelled.

One example we found involved a building that was paying for a media subscription service, something that we do not usually see. We asked the super, who said that it was for music in the elevators. I thought about that and realized that besides retail stores, I had never heard music in elevators, certainly not in residential buildings. We asked the superintendent if he minded if we cancel the service, he said that it didn’t matter to him because “it hasn’t worked for years.” The next step was to speak with the board, who decided to cancel the service. As part of our services, we implement all approved actions and so cancelled the subscription on their behalf.

A more common example is on the agreement with the auditor, or CPA. We often see CPA agreements that include budgeting. However, most boards get the annual budget from their property management firm. Incidentally, this is the budget that the managing agent provides to the CPA firm that is used to prepare their version of the annual budget!

Our Tip:

If you are on your coop or condo board, ask to see your CPA agreement. If the agreement includes budgeting, and if your property management firm provides you with an annual budget, you can always ask you CPA to remove it and reduce the agreed upon fee.

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And if you are on your board and you are ready to make a positive change in your building, give me a call at (917) 648-8151