Relationship Between the Chapter & House Corporation
Many times the chapter views the house corporation as a man or a group of men who only come around to get money. Often, the house corporation views the chapter as a bunch of kids always late on their rent who constantly trash the house. Both sides may have valid points, but the relationship does not need to be adversarial. Adopting some of the practices below could help improve the relationship and result in both sides managing their housing responsibilities more efficiently.
Top Three Relationship Building Practices:
Have a Written Lease Between the Chapter & House Corporation
A simple first step is to have a written lease between the chapter and the house corporation (go to the Leases and Room Contracts Resource), which avoids having chapter members renting individually from the house corporation. It is more efficient to have the chapter rent directly from the house corporation at a flat annual rate (i.e. does not fluctuate with actual occupancy). In this system, the Chapter Treasurer or Chapter House Manager collects all the rent and one check is written by the chapter payable to the house corporation for the entire amount. Additionally, this lease should also include an operating agreement that explains which party is responsible for what type of repairs.
Maintain Consistent Communication
Many problems between house corporations and chapters result from poor communication. The following are some simple steps that will improve the communication between the two groups:
Have the Chapter House Manager sit on the house corporation board with a full vote. This will allow both sides to air any complaints and hopefully foster a greater understanding of the problems each side faces.
Have a house corporation representative conduct a house management presentation with every new member class to improve the education of chapter members on the role of the house corporation and the general expectation of tenants living in the chapter house.
Have a house corporation officer attend at least one chapter meeting per school term to answer questions and update the chapter on the operations of the house corporation.
Have the house corporation board of directors meet with the new chapter officers soon after the election. The lease could then be signed and discussed with the new officers and the long-term plans of the house corporation could be reviewed.
Build Reserves & Keep "Open Books"
Mistakenly, some house corporations do not disclose their financial statements to the chapter because they’re concerned that the chapter will not understand the corporation’s need to make a profit and build adequate financial reserves. Chapters must understand that well-managed house corporations do make profits that go into reserves for future housing needs. The greatest housing problem the fraternity system faces today is that too many house corporations are not charging a market rental rate that will enable the house corporation to build financial reserves. It is encouraged that all financial statements be disclosed and explained to the chapter. This helps avoid mistrust that is created by keeping this information secret.
Who is Usually Responsible for What?
- Loan Payments
- Property Insurance (excluding liability)
- Property Taxes
- Reserves for the Future
- Roof, Mechanical & Structural Repairs
- Long-term Competitive Housing for Chapter
- Building Maintenance
- Yard Maintenance
- Collecting Rent
- Leasing Rooms
- Paying the House Corporation