Can Homeowners Sue Management Company?

Our management company is putting our community at risk for a potential lawsuit. There have been several major oversights by our management company, the most recent are the following:

1. One of the primary contractors has a suspended license (for the past 4 months).
2.The management company has issues with employee retention and we have had 3 property managers in less than a one year time period. Our management company does not do background checks on new hires. The person they hired 2 weeks ago to handle our account pled guilty 3 months ago to Driving Under the Influence of Drugs and Alcohol. Our community has 416 units with monthly assessments of $160,000. I certainly am not comfortable in their decision to put a convicted felon, with a suspended license, who is on probabation, in charge of managing our community and finances.

I personally checked public records to find out the above items. I presented it to the board and all BOD have been in agreement that we need to fire the management company. For some reason however, they keep putting it off. It has now been 7 months and still no board action on this. We are in a month to month contract so the board's procrastinion on firing them is unwarranted.

As a homeowner, can I take legal action to have the management company removed? What are my rights? If the board is notified of gross negligence by the management company, dont they have a responsibility to the homeowners to take action?

thank you

Ann,

I am not a lawyer and I do not work in the legal profession. Personally, I do not see anything that you could bring legal action for. The Board is the Associations elected representatives to oversee he contracts of the Association. The decision to fire/hire is theirs.

Do you know why the Board is hesitating? There are many reasons why Boards chose to not change contractors, be it landscaping, trash removal or management services. A few I can think of off the top of my head are:

Board members lack of time to solicit bids.
Contract specifics preventing a simple termination.
Cost (this is who they can afford)
Split decisions on the Board (a majority desires to keep current contract)
Concerns over the devil known vs. the devil unknown (familiarity with the company)
Perhaps the need to regain control of records, etc. prior to termination of an employee/company.
Board members are unaware of any problems

As a member of the Association there are options other then bringing legal action available to you. They are:

1. Offer your time to the Board to head a committee to review the current contract, draw up requirements, solicit bids, check references and make recommendations to the Board.

2. Solicit a petition to call a special meeting to discuss terminating the management contract. Check your governing documents to see about the procedure and the number of signatures required. You can also visit the davis-stirling.com website for information

3. Submit your name to serve on the Board. Since it's been 7 months since you initially contacted the Board, I suspect that your Association will have an election sometime within the next 5 months. This would be plenty of time to gather support and run on the platform of replacing the current management company.

I would like to point out that based on the information you posted I do not see anything that would indicate negligence. Allow me to explain:

You indicated that background checks are not done by the Management Company. Depending on the specific job, background checks are not always required. Depending on the job, refusing to hire someone based on a background check or firing someone based on what the individual does in their off time is not always legal to do (unless it's stipulated in the employment contract). If an individual is convicted of DUI but has no need to drive a vehicle to perform their job and has never drank on the job there is zero basis to fire the individual. If an individual is convicted of embezzlement but the job doesn't require handling cash - is it wrong if the individual is hired to mow the common area?

Typically after a contractor is hired, reviewing the companies license is not usually done. I don't think anyone would check the license of the contractor you hired to redo their kitchen every day they are on the job. More then likely, they would just check it out once prior to hiring them. Now if the contractor is still on the job after the license was suspended and the company was made aware of it, that's a different issue.

Employee rotation within a company is not necessarily a bad thing. Why an individual is replaced is not always known. It could be that they left for a better job. It could be the personalities between the individual and the client did not work out. It could be that there were multiple complaints about the individual. It could be a background check was finally completed and something was discovered. It's easy to speculate as typically a member or even the board does not always know the reason why a property manager was replaced.

Please don't misunderstand. I'm not saying that your concerns are not valid. I'm just trying to point out that I don't really see anything within your posting that would be considered negligence. Personally, I believe that the contractor licensing issue could be a liability if they are still working there on a suspended license. However, without specifics as to why the license was suspended one can only speculate. Personally, I know that my speculations are usually far different then the actual facts. This is why I caution people on speculating.

Hopefully the suggestions I provided will provide you some assistance.

Tim

The board hired the MC.

There is a contract between the two.

An individual member has no right or power to interfer between the two.

Work only as a board member to get what you want done.

Thanks MilesT. The battle has been won and the management company will be fired today. I believe it IS our business if the property manager does not have a valid drivers license. Our contract mandates one visit per week to the association. How can our manager effectively do this without a driver's license? If she ignores the law and drives her car without a license, she has no valid insurance. If something were to happen, the association would potentially be liable - especially since we knew this already. My intentions were not to stir up a lawsuit, but to bring attention to homeowners in order to push the board forward with something they claim they wanted to do anyway. If part of a person's job involves driving, how can they perform their job functions without a license? If this job didnt involve driving, it would not be my business and I wouldnt care.

Either way, my assumptions were correct. She attended the board meeting after having a drink (per her own admission) AND she drove herself. She is a self proclaimed "party girl" with a second job as a bartender. Result - unanimous vote to terminate. Letters go out certified mail tomorrow and I will hand deliver a copy as well. I do appreciate the feedback, whether I agree or not.

AnnT3 - I'm glad that this worked out in the best interest of your property, but JonD1 has a valid point. You must run the traps on any long term impact this may have on your HOA. Regardless of her verbal confession, you need to look for applicable cause noted in your contract and cite it for termination and abide by any notice required. I'm sure you have done this, but just say'n.

Jon,

Based on Ann's previous posts in other threads, she is an elected member of her Board.

I understood that since she was having problems getting the rest of her board to decide (one way or the other) she started this thread to see what could be done as just a homeowner/member.

Ann,

As more specifics came out, I do support your efforts. Jon did make a point about the suspended license. The property manager could have gotten an exception for work and/or had someone else drive them - thereby still able to fulfill that section of the contract.

As Miles pointed out, it's important that the Association complies with any termination clause. I know you had posted that they were on a month to month contract, so there probably isn't too much concern except perhaps for notice requirements (x days notice).

Keep us posted with what happens and please continue to participate in this forum so you can provide insight to others going through similar issues.

I'm glad it worked out.

Tim