Menage-a-trois: The Association-Manager-Attorney Relationship

Published on: April 29, 2001

As usual, this title is far more interesting than the article. However, associations, association managers and association practitioners should reexamine the unique relationship among the three parties. Obviously, everybody knows that the attorney’s client is the condominium association and not the property manager. Therefore, the duty of loyalty is only to the condominium association. However, the reality is that the association practitioner typically deals with the property manager and not the condominium board members on a regular basis. Since one of the roles of the property manager is typically to act as liaison to association counsel, this is perfectly legitimate even very desirable for the board which would usually not want to become involved in the day-to-day operations of the association. Because of this unique relationship, it is common and beneficial for a good rapport to be developed between the property manager and the attorney and a good working relationship among the team of professionals dealing with the condominium association is fundamental to the success of the association. In addition, the property manager who enjoys a good relationship with the association’s attorney may very well be in a position to refer that attorney to other associations and vice versa.

Although generally this relationship works to the benefit of all parties concerned, there appear to be at least two areas where an appearance of impropriety could arise if the association attorney does not distance him or herself from the association and its manager. The first relates to the negotiation of the management contract. Since the attorney’s duty of loyalty is to the association, he or she must zealously represent the interests of the association and the negotiation of the management contract. However, because it is common for certain provisions such as indemnification to be negotiated, the attorney may be put in an awkward position if he or she must vigorously fight for certain provisions which benefit the client. In doing so, it would seem that either the attorney’s relationship with the manager would suffer or if a problem arose based upon the management contract in the future, the association might be skeptical as to how well the attorney represented the interests of the association versus the interests of the manager. Although it does not appear to be common practice, we have recently taken the position that the association would be better served retaining independent outside counsel to negotiate the management contract in order to preserve the sanctity of the negotiations and to preserve the working relationship between the attorney and the manager. Although this occasionally raises questions with associations, we have found that once the appearance of impropriety problem has been expressed to the board that the board understands that their best interests may be best served by using independent counsel for negotiation of the management contract.

A similar problem may arise when an association decides that it should seek to replace its management company and to terminate the management contract. Although the provisions for termination if termination is without cause are provided for by statute (at least in Massachusetts), termination for cause is a tougher issue. In addition, because emotions may run high at the time of termination, there may be issues with refusal to turn over records which are the property of the association. Again, our approach has been to first attempt to mediate the dispute but if litigation might be necessary to determine the issue, we believe we have a duty to the association to advise them that independent counsel may, in fact, be the best approach for them to take.

In the final analysis, a good working relationship with the property manager is too important and a benefit to the association to have it damaged by putting the manager and the attorney against each other.