Change of Administration

Change of Administration
This is a summary of the reasons, real or not, of why a Community of Owners might choose
to change their administrator/administration company.
The issues can be multiple and varied and can include both objective and subjective reasoning.
Invariably, however, the rationale can sometimes be purely political bias without substantiated
Political/cultural /rational
· Developer: The developer delivered your project- your urbanisation and your
apartment/villa along the lines of a project that many owners may have purchased off
plan. Culturally, owners expect a completion level as per the sales brochure. Sometimes
this simply does not happen as the developer is able to sell by private contract conditions
according to completion being granted as per the development’s first occupancy license.
The purchaser, in believing completion will take place, signs off their contract with their
lawyer not realising then that the developer can leave the complex without finishing some
things off properly e.g. fencing, gardens, pool equipment and signage. It is then left to the
community of owners to resolve these matters. Incensed owners tend to find a scapegoat
with the administration by falsely relating the administrator to the “developer”.
· Mature developments: Multicultural ownership in developments has varied perspectives
as to how the project is managed. Cultural differences have distinct perspectives as do
other cultures i.e. rather like Anglo Saxons and Catholics. For example, some leave towels
on sun beds at 6am in order to reserve them for the day; others might object to when the
gardeners are able to mow the lawn and so forth. When these complexes start to suffer
the insufferable subjective fighting issues invariable in a brokered resolution, neighbours
whether from the cultural area or another come to an agreement in a brinksmanship
style. In this case, the scapegoat is usually the administration. This resolution is most
common when communities have managed themselves on the razor’s edge of legality. It is
easier to dismiss the administration and “flush” the documentation of the administrations
knowledge down the toilet, so to speak, in order to protect one’s political face.
· Debtors: This is the singular most sensitive issue among communities especially in these
early days of the mid-late 2000s recession. At the first indication of recession, second
resident properties and owners renege on their community fees. This is in spite of the fact
that a community debt when correctly legally proceeded against can actually take
preference over a mortgage debt. Owners renege and link the administrator’s role to his
ineffectiveness to collect a debt in time. An administration may have dealt procedurally in
a wholly correct manner but it cannot control the local courts procedures that can be
exasperatingly long to place real liens/embargos against a property. When making such
decisions then, an ownership should check to see if the administration has been proactive
in pursuing debtors or “ineffective” by being “passive”, hence certain owners’ rationale to
“fire” the administration. In some cases therefore the ownership is correct and in others it
is incorrect.
· Project management: In some circumstances with old buildings that do not complete to
ITE standards (Inspection Tecnica de Edificios), owners believe that the administration is
responsible for the technical collation and project management to review and put in
place all quotations to be able to “rebuild” the buildings and systems infrastructures. The
general professional fees of an ordinary administration do not extend to these costs and a
community should therefore look towards employing an independent civil engineer to
assess and later oversee the execution of these major works. Unfortunately, many
communities base their simple economics on issues “cheap for the sake of cheap” which
invariably ends up more expensive just 2 or 3 years later. Hence, the dismissal of the
Conflict of interests
· Private property management: Some administration companies use a fully backed
community administration against database protection laws to openly solicit further
services of a private property nature. Database laws allow an administration to passively
receive information to garnish extra services but do not allow them to “sell” the
community database to estate agents and so on. There are strong mixed feelings regarding
administration companies using their community database to exclusively sell extra private
services within a community of owners. Hence, already heated community meetings may
erupt in respect of these “grey” areas of responsibilities. The administration is often the
scapegoat when the lack of transparency is discovered.
· Insurance: It is not uncommon for owners to neglect to take out correct private insurance
for their property and its contents. Disaster can occur when an owner is underinsured or
when their policy only extends to a limited amount of cover. They then ask to see if the
community insurance covers their problem and become very irate when they find that it
does not and indeed should not. They might then politically take out their anger and
frustrations on the administration. This situation is of course a no-win position for
everyone concerned i.e. the community, the owner, and the administration.
Unfortunately, the owner will pursue a rationale of responsibility against the
administration as this is their only scapegoat when the insurance company negates their
claim as they just don’t have in place sufficient or adequate private cover. This can cause a
great deal of tension between the owner and the administration company.
· Accounts
: All owners dislike accounts- accounts mean expenditures and expenditures
mean money. Then there is the question of where the money is and why has it been spent
already. The answer is that it has been spent because there is a contract and a need for
expenditure. Nobody likes expenditure. Certain administrations are proactive and act
according to law and attend to repairs and replacements in an immediate fashion; others
wait for the approval of their president; and others defer approval until the next general
meeting. Politics takes over in these situations and when the whole structure is argued,
whatever decision is taken by the ownership, the administration can often be dismissed
and made a scapegoat for management issues owners just don’t like although the
expenditure was necessary and reasoned for.
· Deficit: It is quite common for a community to under budget their income requirements
with a view to maintaining strict economical control. Ultimately this can often be a
mistake and can cost the community more money than it should have done in the first
place. Although an administration might have told its president/committee
members/owners or their representatives at a general meeting that a deficit must be
settled or that community fee debtors are strangling the community’s cash flow, a
community frequently chooses to brush this aside or act “deaf” and dismiss the
administration as they wrongly believe that this will keep their “economy” in order. They
therefore under budget income required and wait for year one or year two to start
“digging” themselves out of a “black hole”. The cost of this is like having an overdraft rate
of 25%.
In conclusion, a sensible ownership should carefully weigh the rationale of why a change is being
made. Sometimes a change is well merited, and in other occasions not, and is only a by product of
vindictive self interested owners.