getting rid of the management company?

Started by ThomasD2 • 14 replies • 4951 views

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ThomasD2 (California)
Posts: 208

Posted:

I am on the board of our HOA, and in Southern Califronia, where I know the rules are a bit different. Nevertheless ..... we are having plenty of troubles with our property manager. And it is not the first company we have had trouble with. It is the third, largely because of our own dis-functionality. Partly because no one really wants to face the problem head on, we haven't really decided what to do.

At the last meeting I said we might consider having no management company, and doing the management on our own. A board member quickly chimed in and said "Oh, we can't, that is illegal." Baring the discussion of whether or not it is the best idea, that isn't true , is it? I disagreed and she said "well even if it were legal we are opening ourselves up to having all of the legal liability." I disagree with that too, isn't the HOA as an entity liable?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Hi Thomas,

Unless your governing documents specifies that the Association use a management company then it is perfectly legal to become self managed. Here are a couple of links from Davis-Sterling.com about management:

Types of Management

Management Issues

You are also correct that the Association is ultimately responsible for any liability. They may or may not have recourse against a management company on certain issues. However, that would not always be possible.

I equate this to a contractor working on your roof who doesn't have proper insurance. If an employee is injured, the individual can bring legal action against you for being injured on your property. You can then turn around and bring legal action against the contractor but that may or may not be won depending on the specifics in the contract.

If you are considering becoming self managed, make sure you have people willing to do the work that is involved and be willing to hire an independent contractor to assist. I serve in a self managed Association and am surprised about the number of things that are not properly done or not done at all just because people thought they knew how to do things or didn't have the time to do them properly. Just a word of caution.

Tim

Tim

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The only way our HOA could be run by a management company is IF we disbanded. Otherwise, we self-managed ourselves with an accounting service. It's NOT illegal unless your CC&R's dictate you must be run by a management company. Management companies are typically paid contractors of the HOA controlled by the Board.

I suspect that board member who objected just doesn't know any better and is going with the status quo. Most people in a HOA have little or no business experience at all. It's all non-paid volunteers and you get what you get.

If your HOA thinks it can run itself with the board and officers, then go for it. Just understand it's not easy and the problems won't go away but be on your laps instead...

Former HOA President

ThomasD2 (California)
Posts: 208

Posted:

Thanks for the input. Our CCR's don't address the issue, and seem to leave it entirely up to us. I think what the board member who objected to self management really wanted to say was "I don't like the idea." Unfortunately, I am not sure I like the idea a whole lot either. I'll listen to those words of warning ... But Lord we have to do something, something has to give; the property manager is giving us nothing now. The board is composed of well meaning, intelligent people who are burned out. Nobody really wants to call the shots. Like a couple of other people I was president and will never, ever occupy the position again. Ultimately, it feels like a broken machine. There are all the residents who will never,ever participate, or support the board members. Am I the only one who thinks often of the fable about the Little Red Hen? "Who will help me plant the vegetables? " "Who will help me mill the flour?"

ThomasD2 (California)
Posts: 208

Posted:

The link to "management issues" I have not seen before , thanks.
-Tom

DanaB1 (Connecticut)
Posts: 319

Posted:

Quote:

Posted By ThomasD2 on 04/24/2011 10:28 AM
I am on the board of our HOA, and in Southern Califronia, where I know the rules are a bit different. Nevertheless ..... we are having plenty of troubles with our property manager. And it is not the first company we have had trouble with. It is the third, largely because of our own dis-functionality. Partly because no one really wants to face the problem head on, we haven't really decided what to do.

At the last meeting I said we might consider having no management company, and doing the management on our own. A board member quickly chimed in and said "Oh, we can't, that is illegal." Baring the discussion of whether or not it is the best idea, that isn't true , is it? I disagreed and she said "well even if it were legal we are opening ourselves up to having all of the legal liability." I disagree with that too, isn't the HOA as an entity liable?

Tom,

Three management companies and three that failed. You admit that the problem is with your board being unable to make decisions; management companies do as they're directed by the board. What is a manager to do with no leadership? Your board is in a tough spot if no one is willing to lead it.

Do they offer D&O insurance (Director & Officer's Liability) in California? This insurance covers the board for poor decisions that they may make. It does not cover a board member for gross negligence.

Your board needs to resolve its internal issues and learn to move forward. I feel sorry for any manager that tries to manage your association. They are doomed to fail.

Best of luck.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It does sound like an internal problem with the HOA. Most likely due to misunderstanding of what you got. It's like seeing the forrest for the trees syndrome...My suggestion is start having INFORMAL meetings where whoever is interested can attend to just read the CC&R's, by-laws, and Incorporation. Not at one setting of course. Get everyone on the same page and understanding of some sort. Plus it's an oportune time to start updating the documents. Which should be done every few years anyways in my opinion.

You can't get lost in those who won't follow or don't attend. The concentration has to be on those who want to succeed. The other's will eventually fall in because they will get angry for being "shut out". This is how interest is created in a HOA.

It's just time to do a reboot of your HOA. This time with education and understanding. Your managment company can only lead you by the nose for so long when your the rider...

Former HOA President

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Thomas:

As Tim stated in order to be self managed you must have individuals willing to step up to the plate and perform the job(s) necessary for self management. On the other side of the coin even though you may hire a management company the board needs to realize that the management company is only there to supposedly take certain everyday issues off the board such as collecting dues, monitoring violations, etc. The board needs to keep in mind that they are in essence the ultimate responsible party for the HOA, whether they have a management company or not. The management company is a hired employee of the board and performs duties as specified by the board and governing documents.

ThomasD2 (California)
Posts: 208

Posted:

" Your board needs to resolve its internal issues and learn to move forward. I feel sorry for any manager that tries to manage your association. They are doomed to fail. "

It is unfortunate, but I agree and that is why I made the suggestion of not having a management company. I do think it is option that might be better for us. thanks, Tom

ThomasD2 (California)
Posts: 208

Posted:

I am sure the reply I wrote is here somewhere, but I will repeat , even at the risk of being redundant. Thanks for replies, especially the appropriate sections of the Davis Stirling act , and recommendations on CCR's. As is so often the case, these are good people tangled up in a bad situation.
Tom

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Thomas:

Give it a try ... you always have the choice of going back to a management company if it does not work out. Thing is you never know until you give it a go and see what happens. How many homes do you have in the association?

CharlesB17
Posts: 112

Posted:

We had basically the same issue. So, We assembled ourselves and became self managed. We did a lot of research and recognized we needed some type of software to help us. We use mycomplus software that has automated our billing and collections, up to filing the lien. It auto bills, send second reminders, then the demand for past due assessments and intent to lien. If all those fail, the system then sends the lien, completely filled in, for the attorney to file. The system gave us communications between members and BODs. It provided us easy BOD turn overs, along with total transparency.

The current president is sitting her second term because all of the BODs attention is directed at resolving other issues. And with improved communications, this has become simple. We recently had a member on the BOD have a family issue and need to resign. Their permissions were reset and the new member's permissions were set within the system and they had access to continue.
The fact that the software runs in the clouds has made the situation a lot more simplistic as well.
The largest reason most BODs resign is because they become overwhelmed. Find you some software, and many are listed on this forum to ease this burden. And the largest burden id communication and dues collection. That has been our experience.

If you find some software that will assist your BODs and make their lives easy, like the software we use, then the burden becomes much easier. Our BODs oversees approximately 2000 owners. Our BODs can set in their easy chair at home in the evening and address issues via the software. Including the alerts that the property has changed owners or the owner's mailing address has changed.

This software is a no brainer.
Simple point and click. For ppl like myself that has little computer skills :-)

Just make sure the reason for becoming a self managed HOA is for the right reasons. I am a self managed HOA advocate. I pay enough dues and fees, I don't need to support another Company, their employees, and an attorney.
'nuff said - my2cents

ThomasD2 (California)
Posts: 208

Posted:

There are 22 townhouses and I think we should be able to do business better than we have with such a low number. thanks for the encouragement.

ThomasD2 (California)
Posts: 208

Posted:

Quote:

Posted By CharlesB17 on 04/30/2011 9:50 AM
We had basically the same issue. So, We assembled ourselves and became self managed. We did a lot of research and recognized we needed some type of software to help us. We use mycomplus software that has automated our billing and collections, up to filing the lien. It auto bills, send second reminders, then the demand for past due assessments and intent to lien. If all those fail, the system then sends the lien, completely filled in, for the attorney to file. The system gave us communications between members and BODs. It provided us easy BOD turn overs, along with total transparency.

The current president is sitting her second term because all of the BODs attention is directed at resolving other issues. And with improved communications, this has become simple. We recently had a member on the BOD have a family issue and need to resign. Their permissions were reset and the new member's permissions were set within the system and they had access to continue.
The fact that the software runs in the clouds has made the situation a lot more simplistic as well.
The largest reason most BODs resign is because they become overwhelmed. Find you some software, and many are listed on this forum to ease this burden. And the largest burden id communication and dues collection. That has been our experience.

If you find some software that will assist your BODs and make their lives easy, like the software we use, then the burden becomes much easier. Our BODs oversees approximately 2000 owners. Our BODs can set in their easy chair at home in the evening and address issues via the software. Including the alerts that the property has changed owners or the owner's mailing address has changed.

This software is a no brainer.
Simple point and click. For ppl like myself that has little computer skills :-)

Just make sure the reason for becoming a self managed HOA is for the right reasons. I am a self managed HOA advocate. I pay enough dues and fees, I don't need to support another Company, their employees, and an attorney.
'nuff said - my2cents

Really interesting description of your affairs. Thanks for the encouragement, your tale is certainly encouraging and sounds more business like than our current state of affairs. Our biggest problem is indeed that our property manager is more and more lax about proper financial reporting, keeping up on billing, notifying us about delinquent homewowners, etc.. We would be better off without him, but as you might suspect, it is our lax follow through in the past that got us here.

ThomasD2 (California)
Posts: 208

Posted:

Quote:

Posted By JanetB2 on 04/27/2011 10:26 PM
Hi Thomas:

Give it a try ... you always have the choice of going back to a management company if it does not work out. Thing is you never know until you give it a go and see what happens. How many homes do you have in the association?

There are 22 townhouses and I think we should be able to do business better than we have with such a low number. thanks for the encouragement.

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