HOA Management

Started by GordonS • 8 replies • 1361 views

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GordonS (Florida)
Posts: 10

Posted:

Our current HOA President (who obtained his CAM license) and is a resident in our community, has suggested he wants to be our property manager, and be able to draw a salary, once our present management company's contract is up. Isn't this a conflict of interest? And, is it legal?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Gordon,

It could be a conflict of interest. The way to prevent it from being a conflict would be the following:

1) The position should go out for bids
2) The President should have zero to do with those bids and should not know the amount of the other bids
3) The President should not vote on who to award the contract to
4) As a stipulation of the contract (if offered)the President should resign from the Board and not seek reelection as long as they are serving as the Associations CAM.
5) The membership should be made aware of these safeguards being implemented (as it minimizes the appearance of impropriety).

JanetB2 (Colorado)
Posts: 4,219

Posted:

LOL … just keep in mind at some point there might be an issue where your board may be required to FIRE their neighbor. If this becomes necessary (1) are they willing do it and (2) how much hate and discontent will it cause throughout the membership.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Yes and no this is possible. However, it may require the entire disbanding of your HOA and agreeing to be controlled under Property Management company from now on. This means the homeowner LOSE their right to vote or control the rules themselves. The Property Management can set the dues and rules.

Our HOA the documents state that the HOA may disband but it must be managed by Property managent if it is disbanded due to the set up of the property. You may want to look into the section of your CC&R's about HOA's disbanding.

This may be a good idea IF there is a complete lack of participation or apathy of the owners. It means someone will be there to take care of the property on their dime and on their behalf without all the politics involved. If having someone paid to take care of the property and givng up having a board is your HOA's cup of tea, then look into this option. Otherwise, I say leave the position a voluntary as it ever was designed to do. I worry when someone wants to be paid for it...Is their heart really in the right place or is it their pocket?

Former HOA President

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Melissa:

I believe you may have misread the OP’s post. He is asking about hiring a new Management Company (owned by a member). To hire the company would not require eliminating or disbanding the HOA. The company would be an employee of the Board (which granted the owner of the company is part of said board). However, the Board would still have ultimate control and responsibility.

RogerB (Colorado)
Posts: 5,067

Posted:

Gordon, His management company can be allowed to submit a sealed bid along with other management companies. That companuy would be treated like any other independent contractor. FYI, independent contractors do not "draw a salary" as they are not employees. I would ask him to resign from the Board prior to submitting a bid.

MartinH2 (Florida)
Posts: 24

Posted:

Gordon,
You are on the right tract.
I suggest that the Board of Directors set up a committee to writhe the "Proposal for Management Company Bids".
The search for as many bids from real management companies in your area as possible.
Then the committee can open the sealed bids at a BOD meeting.
The Board then can select at least three of the bids to invite a representative from the bidder be interview by the BOD at the next meeting.
After this open and public process, the BOD can vote to select one of the companies.
I also suggest that the length of the contract be three years.
Good luck

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I would suggest if he does want to be the Property Manager then he resign his position of President on the board. That relationship could be a conflict of interest. However, I don't see why he couldn't be a board member. Our Treasurer was our accountant. They did live in our HOA and was a member. Their company did NOT make the financial decisions. The board made the decisions and instructed the accountant on how to direct the funds. The owner being a member of the HOA/Board allowed them to vent their opinions and be involved in the decision making but not to the point of control.

Most management companies don't hold board positions but are present during the meetings. It would be up to the members of course to agree to re-elect this person to the board anyways. So there is a chance he may not get elected to the board due to his management position.

Former HOA President

BradP (Kansas)
Posts: 2,640

Posted:

Roger hit is on the head, he is allowed to submit a sealed bid if that is what you want ut I would also ask him to step down from the board for this reason...at some point there will be discussion on the performance of your MC, it would be awkward even if he recused himself for the board to do that. Furthermore it just eliminates any appearance of impropriety...

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