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Management Company Subsidiaries May Have Conflicts Of Interest



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By : John R Math    99 or more times read
We are often asked if we have or own subsidiaries that will provide landscape, janitorial, pool, irrigation and tree trimming services to prospective clients. Though it sounds like a logical step to have all of those services under the same property management umbrella, I will explain why this is unwise for an association to consider.

When we first began in 1988 we did offer those services as part of our management agreement. We soon found out that type of arrangement was difficult to completely supervise on the association's behalf, as we discovered there is a potential of a conflict of interest in this type of corporate set-up.

How can a property manager objectively supervise and manage a contractor/vendor that is paying part of that manager's salary? What if that subsidiary is doing a poor job of, let's say landscaping? Can you objectively supervise that landscape supervisor/fellow employee, in the same manner as you would with an independent contractor? What if that subsidiary is doing a poor job and it is affecting the property manager's ability to do a good job elsewhere for the association? What is a property manager to do? The property manager will make excuses to the association as he cannot bad mouth or complain about his company to the Board. Nor can he go to his company supervisor and ask for another company! Who wins and who loses in this situation? Of course, the association is the loser here!

The association is not getting the job that they are paying for, nor are they getting the management supervision that they are paying for as well. A professional property manager should be able to supervise and monitor the contracts for the association. When problems arise in regards to the contractor's performance and results, that property manager should first be able to discuss this issue with the contractor and provide a reasonable period of time to correct. If this problem or additional problems persist or appear, it is then time for the property manager to suggest to the Board that a change should be made with that contractor. I doubt very much that the type of scenario that I just described will take place with a large "full service" management company.

Remember, the next time your association is considering a contract with a "full service" management company, the property manager assigned to your property will not be able to "serve two masters" and that the association could be the loser if this arrangement does not work as promised.
As one of the oldest property management company specializing in community association management in Palm Beach County, Florida since 1988. Currently, APM provides management, maintenance, supervision, bookkeeping and administrative services for more than 130 community associations. Our Website www.assocpropmgt.com Our weekly newsletter www.apmnews.org

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