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THE GREED BEGINS – IT MAY BE TIME TO REVIEW YOUR MANAGEMENT
CONTRACT OR PUT YOUR MANAGEMENT COMPANY IN PLACE
By
Eric Glazer, Esq.
Published March 20, 2023
Last week I blogged about the possibility of Board members
walking off with your association bank accounts. Bank accounts
that are about to explode with mandatory reserves and huge
construction contracts that are on the way. Today, let’s talk
about what you need to know about your management company.
Often times our firm is asked to review new potential management
contracts between the association and a management company.
Many times these contracts contain clauses that basically state
that if the condominium undergoes major construction, the
management company is entitled to 2% of the construction project
if the association wants the management company to assist in
supervising the construction. Now, many of you are about to
enter into contracts worth millions of dollars. Some of you may
be entering into contracts worth ten million dollars or more.
If you overlook that clause and keep that clause in your
management contract, you just added a lot of money to all of
your construction contracts for something that you may not have
wanted in the first place.
So, normally I take that clause out of the contract and make it
require the future written permission of the association to
assist in supervising the construction. Or, I remove it
completely. You can always negotiate it later on.
And twice in the last few weeks I was told by contractors that
they were specifically told by managers that if the contractor
does not agree to pay the manager two percent of the contract
--- THEY ARE NOT GETTING THE CONSTRUCTION CONTRACT WITH THE
ASSOCIATION. In other words the management company wanted
2% from the association and 2% from the contractor. One manager
put this in writing.
Florida Statute 718.111(1)(a) states:
An
officer, director, or manager may not solicit, offer to accept,
or accept anything or service of value or kickback for which
consideration has not been provided for his or her own benefit
or that of his or her immediate family, from any person
providing or proposing to provide goods or services to the
association. Any such officer, director, or manager who
knowingly so solicits, offers to accept, or accepts any thing or
service of value or kickback is subject to a civil penalty
pursuant to s. 718.501(1)(d) and, if applicable, a criminal
penalty as provided in paragraph (d)
Any manager who asks a contractor for money in order to get the
association’s construction contract is breaking the law. At a
minimum, they should immediately lose their license. Yet, these
things are happening.
There is no doubt that money is going to begin flying in Florida
because of the massive number of construction projects that are
on the way. No doubt, along with that, many people are going to
want a share of these funds, legally or illegally. Clearly
however, when a manager demands a kickback for awarding a
contract, that manager needs to be punished.
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About
HOA & Condo Blog
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Eric Glazer graduated
from the University of Miami School of Law in 1992 after
receiving a B.A. from NYU. He has practiced community
association law for three decades and is the owner of
Glazer and Sachs, P.A. a five attorney law firm with
offices in Fort Lauderdale and Orlando.
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Eric is Board Certified by The Florida Bar in
Condominium and Planned Development Law.
Since 2009, Eric has been the host of Condo Craze
and HOAs, a weekly one hour radio show that airs at 11:00 a.m.
each Sunday on 850 WFTL.
See:
www.condocrazeandhoas.com.
Eric is the first attorney in the State of
Florida that designed a course that certifies condominium and
HOA residents as eligible to serve on a Board of Directors and
has now certified more than 20,000 Floridians all across the
state. He is certified as a Circuit Court Mediator by The
Florida Supreme Court and has mediated dozens of disputes
between associations and unit owners. Eric also devotes
significant time to advancing legislation in the best interest
of Florida community association members.
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