Management keeping fines & fees

Started by RebeccaT2 • 10 replies • 1609 views

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RebeccaT2 (California)
Posts: 2

Posted:

Is it common for a management company to keep all collected fines and fees? How about 50%? Our association would like all fees collected returned to the association. If the new contract says they will take 50%, can the board negotiate this?

TimB4 (Tennessee)
Posts: 21,059

Posted:

The Board can try to renegotiate the contract. However, it takes both sides to agree to amend the terms of an existing contract. If your taking money away from the MC, I don't think that they would agree.

You will probably do better to start looking now for a new MC when this contract runs out.

Personally, I don't think a MC should get any percentage of fines/fees. If the enforcement committee/MC is going to get a percentage of the fines, they will most likely go after every little thing which can be both good and bad. The good is that violations are being identified and brought into compliance. The bad is the perception of the membership toward the Board or MC if they become over zelous in attaching fines (possibly because they could use the income).

The goal is to have people comply with the covenants. The MC is contracted to do xyz. If xyz includes identifying violations then pay them the salary to identify them. Don't pay them based on number of violations (which I think is what giving them a percentage of the fine is). If the MC doesn't comply by identifying the violations then break the contract for non-performance and hire a new company.

Thats my 2 cents.

RebeccaT2 (California)
Posts: 2

Posted:

Thank you very much. The current managing co. is keeping all the fees, and writing way too many violations. So a potential new co. wants to share the fees 50/50. Hopefully the board can negotiate with the new co. giving the assoc. all the fees collected.

PetunkaM (Florida)
Posts: 1,009

Posted:

Rebecca,
all I can say is that you have a weird contract, if in fact this is stated in the contract.
The MC should not keep ANY money for fees or fines. You pay them to perform certain duties.Not only it is unethical but could be viewed as conflict. You pay them to perform certain duties. No commissions of ANY kind or, kickbacks. Please be firm about that.

RichardP13 (California)
Posts: 1,767

Posted:

It is typical for a management company to keep fees (late fees come to mind). It's also not unheard of for a management company to split violation income (as they typically write and send out all violation notices. Read the contract, start to finish. Good luck negotiating, you may need to find a another MC.

SusanW1 (Michigan)
Posts: 5,202

Posted:

If you hired a collection agency, you'd pay more than that.

Extra time, paperwork and followup is involved with collecting past due account. Man up and be prepared to pay for getting the dues paid.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By RebeccaT2 on 09/26/2011 3:38 PM
Thank you very much. The current managing co. is keeping all the fees, and writing way too many violations. So a potential new co. wants to share the fees 50/50. Hopefully the board can negotiate with the new co. giving the assoc. all the fees collected.

It sounds to me like your management company has found a way to line their own pockets in the name of the HOA. Our management company doesn't get a penny extra for sending violation notices or collecting fines or fees. Their services are for a fixed base cost plus a fixed cost per unit (with price breaks so as the number of units increases, the cost per unit decreases).

PetunkaM (Florida)
Posts: 1,009

Posted:

Our management company doesn't get a penny extra for sending violation notices or collecting fines or fees. Their services are for a fixed base cost plus a fixed cost per unit (with price breaks so as the number of units increases, the cost per unit decreases). (Bruce)

Bruce, this makes perfect sense to me. I admit, the last time I reviewed a contract with MC was about 3 years ago. The only extra charge MS listed was for attending Association meetings and only when these meetings were held after 4:00 pm or, during week-ends.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

To me, allowing the management company to keep the money from fines is like allowing a state trooper to keep the fines from the traffic tickets he/she writes.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I've heard of some HOA's allowing their Management companies to enforce the violations. What they forget in that agreement is that it's not done necessarily for "free". It is the BOARD's responsibility to send out notices of violations and enforce them. The Management Company is to do the bidding of of that Board. The way it should work is the BOD recognizes a violation and asks the Management company to send out a notice to that owner. The Management Company typically isn't supposed to go and find violations to write up.

What sounds like has happened here, that either the HOA is controlled by the Management company or the HOA has created a contract with a Managemement company to handle issues on their behalf. It's time to take a look at your contract and decide what situation your HOA is in. Sounds like either your HOA has agreed for the MC to take control of violations or your BOD needs to look for a new arrangements.

Former HOA President

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By MelissaP1 on 09/27/2011 11:03 AM
I've heard of some HOA's allowing their Management companies to enforce the violations. What they forget in that agreement is that it's not done necessarily for "free". It is the BOARD's responsibility to send out notices of violations and enforce them. The Management Company is to do the bidding of of that Board. The way it should work is the BOD recognizes a violation and asks the Management company to send out a notice to that owner. The Management Company typically isn't supposed to go and find violations to write up.

Not true...there are management companies who offer services of driving around, spotting violations, sending letters and following up. In fact we have three in our town alone and as slow as Kanas is to get ahead of the curve I imagine there are more nationwide.

In reality it depends on what your contract says with the management company. Sounds like that may not have been addressed when the contract was drawn up. I personally don't see an issue with them keeping some of the fine, especially if they are doing the legwork to enforce and collect. That needs to be a negotiation topic.

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