House corporations manage chapter houses and related real estate. Part of that management role is being a landlord to active members that occupy the chapter house. This responsibility includes all the normal things landlords do like enforcing the terms of the rental agreement, collecting rents and maintaining the property. But there is one major fly in this landlord ointment which has profound effect on the success of the operation: the landlord doesn’t control the number or
quality of prospective renters. It’s up to the Active Chapter to recruit new members and recruitment standards for the Active Chapter are very different than those of a landlord screening qualified tenants.
Landlords usually have the ability to advertise in an open market to all genders, cultures, faiths and family status. Not so in the chapter house environment where the landlord depends on others to find suitable tenants among a narrow segment of the population of men who would be Sigma Chis. And even this fact is fickle. With chapters at large population universities, getting members is much less of a challenge than those with small populations. Larger university chapters sometimes enjoy competition for chapter house occupancy because demand exceeds supply.
But whether the university or chapter is large or small, financial qualification of prospective members is non-existent. Decisions to recruit are more often based on “good guy”, “great athlete” and “legacy”. Whether the prospect has money or not isn’t even on the application. Yet no competent landlord would ever rent property to someone without a verifiable and adequate source of revenue to pay the rent. So the conundrum of house corporation landlording is how to manage a rental property with a tenant mix that doesn’t have traditional renter qualifications.
If that fact isn’t challenge enough, some house corporations execute rental agreements with the Active Chapter and leave it totally up to the Quaestor to collect the rent from individual brothers. There are several problems with this scenario:
a. If the Quaestor fails, the Active Chapter is not a legal entity which can be processed for collection like a business or individual.
b. Active Chapter officers cannot be held individually financially accountable because they rarely the have money, job and legal standing.
c. Some Active Chapters have substantial annual budgets, sometimes running into the tens of thousands of dollars. The officers rarely have the maturity, training or experience to manage finances of this magnitude.
So, is it any wonder that many Active Chapters fail to collect full rent and pay their bills year after year? This is simply a business model that is prone to failure. Yet many house corporations repeat the same arrangement year after year expecting different results.
And then there is the “brother factor” which clouds the Landlord-Tenant relationship. When things go wrong, some house corporations allow the Active Chapter way too much slack because inexperience is a given and falling short is presumed. Statements like, “Rent collections only fell short $5,000 this year. Last year it was $10,000! They’re making progress!” is a mind set that allows a house corporation to justify being less than a stellar landlord. What landlord managing his own property and money would stay in business long with that kind of thinking? Yet it is common with house corporation thinking because they’re handling OPM (Other People’s Money).
That said, all is not lost. There are a number of things the house corporation can do to improve the chances of success under these adverse conditions:
Individual Rental Agreements. Rather than sign a rental agreement only with the Active Chapter, have individual tenants sign one that includes all the expectations and consequences for failure to pay rent, damaging the property, failure to clean and maintain or follow university, Sigma Chi or Active Chapter rules. Go one step further and have a parent or guardian co-sign the rental agreement just as they would have to do if their college student son rented an apartment. That way, if rent is not paid or damage is done to the chapter house, the notice to pay goes to both the brother and his folks. Since the folks often pay most college expenses, having them on the hook for their son’s actions or inactions goes a long way.
Third Party Collection Options. There are a number of third party entities available to collect house bills.
a. House Bill Processing Companies. Companies like Omega Financial www.omegafi.com provide a house bill collecting service. When provided a list of members and house bills to collect, Omega’s internet based platform executes automated credit card and auto pay options. Omega claims to improve average collections by 25%. This service can also be used by Alumni Chapters. Search the internet for “fraternity bill collecting”.
b. University Collects House Bills. Some universities provide a similar for fee service. The university has the added advantage of being able to withhold grades and transcripts until the bill is paid. To investigate this option, start with your university’s Greek Life office.
c. Professional Property Manage-ment. A fraternity house is not all that different from an apartment building. There are companies that specialize in apartment management willing to execute rental agreements and enforce them, collect rent, do maintenance inspections and arrange repairs like they do for other landlords. While many house corporations don’t think they can afford them, it is often because rent collections fall short year after year. With improved collections, money will be there to pay for the management service. Using a professional improves rent collections and frees house corporation members to oversee the manager, not do the work.
d. Mentoring the Quaestor. With proper, consistent and adequate oversight, a Quaestor can be successful in collecting house bills and paying the rent. Working under the supervision of the Chapter Advisor, an alumni mentor needs to be willing to meet at least monthly with the Quaestor to review collections and assist with indicated action (like issuing a 72 Hour Notice to Vacate). It is essential that consequences be processed in a timely way. As many house corporations know, it’s easy for the Quaestor to put off aggressive collection for months or forever since the task is disagreeable. An alum assisting the process will not only improve results, it will instruct the Quaestor how businesses succeed and fulfill Sigma Chi’s mandate to “build leaders”.
The message here is leaving house bill collection entirely up to the Active Chapter has a high likelihood of failure. The house corporation should insist on some third party involvement.
Improved Recruitment Techniques. While house corporations shouldn’t directly control how the Active Chapter recruits new members, they definitely will suffer the consequences of bad recruiting. The traditional recruitment at Fall Rush is often party based, extremely competitive as other fraternities fish the same prospect pool and as the title suggests, “rushed”. In other words, Rush is not the best time to carefully consider a prospective member’s qualifications. Sigma Chi International offers a great recruitment training program called Mission 365 which teaches how to recruit year round according to the standards which Sigma Chi strives for such as the Jordan Standard. Active Chapters that have undergone this training report dramatic improvement in numbers and quality.
When the Active Chapter is successful in attracting worthier members outside of a party atmosphere, it is more likely to recruit members that are more responsible, pay their house bill, get good grades and do no damage. This is good for all involved so it behooves each house corporation to help the Active Chapter arrange this training. For more information, see www.sigmachi.org>Members> Undergraduate Resources > Recruitment & Pledging > Recruitment and Mission 365, email email@example.com or call Sigma Chi Headquarters at 847.869.3655.
Encourage Active Chapter Leaders. While the hope is that the Active Chapter will elect its brightest and best as officers, this can be a hit and miss proposition. Elections are often swayed by popularity and not ability. When the Active Chapter officers don’t have the ability or willingness to learn, the house corporation is bound to suffer the consequences. Since the house corporation has an ongoing relationship with the Active Chapter, there is an opportunity for board members to personally meet and encourage undergraduates that have leadership potential or ability to step up for election. Such encouragement from an older brother cannot be understated. Getting the right brothers into office can make or break a chapter.
To get acquainted with the occupants of the chapter house, it’s important for the house corporation to coordinate regular events at the chapter house so house corporation members can actually get to know them. House corporation board meetings should be held at the chapter house. Then, coordinating events like Homecoming, Sweetheart Ball, golf tournaments and barbecues with the Active Chapter creates an atmosphere where actives and alums can get to know each other outside the Landlord-Tenant roles. When a potential Active Chapter officer is identified, a simple “Have you thought of running for Consul, Quaestor or [fill in the blank]?” often encourages action. The more encouraged and inspired the top officers are, the better money will be handled and the easier the house corp’s job becomes.
Assist in an Active Chapter Membership Review. From time to time, academic, discipline and financial accountability issues point to the need for an Active Chapter Membership Review. Membership Reviews are designed to identify and deal with the bad behavior of individual members. Membership Reviews are authorized by Sigma Chi’s Executive Committee upon request of the Grand Praetor. House corporation members and other alumni are often asked to participate to provide credibility to the process. If your chapter is experiencing issues that point to a possible Membership Review, ask your Chapter Advisor to evaluate the situation with your Grand Praetor to begin the process. Membership Reviews can result in sanctions that may include suspension from the chapter.
House corporations are in a key position to influence productive outcomes from the Active Chapter. Managing that influence is not only a good idea, but essential to ensure the chapter house is there for future Sigma Chis. Guard well.