Board members should not be building managers.

Being one of New York City's top 20 residential management firms, we at Tudor Realty Services often interview with boards considering making a management change.

There are myriad reasons why boards make changes, ranging from fees to new boards seeking new relationships.

But, lately, we have noticed a fairly disturbing trend: buildings are looking for new management because they realized they haven't been managed--or at least not in the way they envisioned or need to be.

In ten buildings in which Tudor Realty Services did recent walk throughs, in at least six we found the board has been doing the manager's job, running plumbing, boiler replacement and exterior repair projects, among other responsibilities.

The results of a number of board-run projects we experienced were fairly astounding.

In one building, the board had installed a new heating system for a 100-unit building that has the capability to heat Grand Central Station.

Does it work? Yes. Was it wasteful and much more expensive than it needed to be? Absolutely.

In another building, the board removed the roof water tank and put in a pump system that was so unnecessarily elaborate and complex that nobody knows how to run it. Beyond that, the system is about 100 times more than the building required.

Adding to the sense of living in an alternative universe, many walk throughs were done by board members.

Occasionally, the building's superintendent would join the discussions and volunteer that he had not been consulted about plumbing, electrical or other improvements projects. This is not to say that boards are incapable of overseeing capital improvements. But why would they or should they? In a building with good management, it is not the board's job to oversee such improvements.

Nor is it the board's job to do walk throughs or have unit owners directly contact the board for services.

Yet, we have seen all of this, and much more, occurring on a regular basis.

Boards should decide policy and budgets; managers should oversee and implement.

Board members have full-time jobs and serve on a volunteer basis; managing a building is the full-time job of the agent who should bring a wealth of experience to every aspect of its management.

A number of factors can contribute to a board inappropriately assuming the role of managing agent. For one, boards may not be aware of the scope of services the managing agent is contracted to provide, or may not have included certain services in a contract.

For another, although the tendency to do so is presently reversing, there was a trend by multidisciplinary companies to low-ball the cost of management fees as a strategy to obtain that building's residential brokerage business, the latter being a lucrative source of revenue.

Boards have begun to discover that the package which financially benefitted the building through low or reduced-cost management impacted not only the bottom line but the level, scope and quality of management services received.

A contributing factor to reversal of the trend has been solid (and sterling) competition by residential management companies such as Tudor Realty Services whose core business is management, not brokerage; where the appropriate fee is established, upfront, which translates to the delivery of real services; and where the company's entire focus is on providing superior asset, building and relationship management services.

Another contributing factor leading large brokerage firms with management divisions to reconsider their corporate strategies is that management, unlike brokerage, fees are not subject to the vagaries of market conditions.

A board seeking to select a management company would be wise to remember the advisement of caveat emptor--let the buyer beware.

If it sounds too good to be true, it is, because with building management services, as with every other aspect of life, you get what you pay for.

DAVID GOODMAN,

DIRECTOR OF BUSINESS DEVELOPMENT

TUDOR REALTY SERVICES CORP.