HOA MANAGEMENT FEES

Started by RhonaH • 14 replies • 4045 views

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RhonaH (Florida)
Posts: 3

Posted:

I am a new board member and have asked for a copy of every contract to review and bring myself up to date. I've only been on the board for 2 months but notice that there are many of our HOA manager's responsibilities in our management contract that are not being met. There may be a good reson as they are a good company and have an excellent reputation and the past board members seem to be satisfied with what the manager is doing. This is an EXTREMELY active board. Even the mangement company manager says he has never worked with a board that is so actively involved. This makes his job easier and so I would think our costs should be lower than the
average costs but I do NOT know what the average costs are.
Our HOA consists of 240 homes and we are a 55+ adult community. We are paying them a flat monthly fee of $2,500.00.
How do I know if this amount of money is low, high or responable. I have searched the internet and cannot seem to find anyone who actually provides a fee range.
Thanks, in advance, for any help or enlightenment you can give me on this subject.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Why rock the boat your in if it's not yet sinking? Is this a cost that is too high to afford? That is when I would be shopping around. Otherwise there is more to some relationships than money.

Knowing the relationship between board and management company is important. The board is the boss. The management company is the subcontractor (in most cases). So you may see an area where the board may just do what the MC may be contracted for because they choose to do it instead. It may just work for them. Doesn't mean you toss out the MC for it or pay less. It is just the symbionic relationship can form when a HOA works well with their MC.

Former HOA President

RhonaH (Florida)
Posts: 3

Posted:

Thank you VERY much for your response. I was just trying to get a point of reference regarding how HOA managements companies determine their fees since I have nothing to compare our cost to and although I have served on many healthcare boards, this is my first HOA board. By the way, my husband was born in Carbon Hill and grew up in Alabama and I will be visiting there for a family wedding in June.
Again, thanks for your valued input.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Welcome back! LOL! It is okay to shop around a bit. It is good to have a backup or some competition. Each management company is different as they may offer different services. I am not a fan of MC's writing notices but many HOA's use them for this. I believe that is a board responsibility. It is also something that the HOA would pay for as an option. So consider these type of activities when you look at a MC. What options do you want them to do and how much are you willing to pay for it? It sounds the amount may be appropriate if they are managing your HOA because they seem to know what to charge you...Having the budget in hand and all...

Former HOA President

SusanW1 (Michigan)
Posts: 5,202

Posted:

As a new board member, I feel that for these first 6 months, your job should be to be a good listener and observer.

Since you don't know what is a "reasonable" fee to be charged, then set back and see just what is accomplished by your management company. Be sure to track revenues and expenses, as provided by the monthly reports from your treasurer.

I agree; don't rock the boat.

FredS7 (Arizona)
Posts: 927

Posted:

A few thoughts:

It is unlikely you will get good numbers to compare with because of wide disparities in what the management company does and costs in different parts of the country.

Is the management fee a large percentage in the total budget? If not it is not the first thing to look at, and if anything should be looked at the next time contract renewal comes around.

You could advocate going out for bids the next time contract renewal occurs. However this could be time-consuming (the HOA would have to write a request for proposals, answer questions from bidders, interview and evaluate proposers). And if you DID change companies there could be a traumatic startup period.

> many of our HOA manager's responsibilities in our management contract that are not being met

Are these important responsibilities? Is it possible they are doing other things that are NOT specified in the contract? Maybe some mutually agreed changes have been made?

RhonaH (Florida)
Posts: 3

Posted:

Thank you all for your wise cousel. I am very appreciative and so glad I found this site. I hope, in the future, I may be able to help others as I settle into this new role and have some additional experiences to share.

JonD1
Posts: 2,350

Posted:

Rhona:

As suggested better to sit back listen and learn.

We have fewer units and pay a higher amount. Looks like you are being charged about $10 per unit per month. Now not knowing what your contract calls for I will guess this amount is NOT out of line.

Just what in the contract is not being done? To be honest the contract is a set of guidelines each side uses to establish performance and expectations. It is not the letter of the law UNLESS a dispute makes that necessary.

We have had our MC for almost 10 years. I have looked at their contract less then 5 times during those years. Somethings in the contract aren't held to and other things NOT in the contract are provided. It is a give and take.

Many new Board members jump the gun hoping to find some undiscovered gem that opens up the flood gates of savings or change. You contend you have an active Board well let them do their jobs and allow time to see for yourself if this is working or not. You imply the MC is doing a good job but your actions seem to be second guessing their role on your property.

Sure way to get on the wrong side of people is to question their actions when everything is going well. That includes the MC.

As Judge Judy would say "Put your listening ears on." Ask questions but don't insult the people who work to maintain your property either intentionally or by accident.

PaulM18 (Virginia)
Posts: 46

Posted:

To the point of your actual question...

I think its a magic number generator

Actually it all depends on how much they actually do... Its really hard to figure out how they came up with thier costs...

We have a bare bare bare bones contract... all they do is inspections... and not even monthly... and we pay about $337/month for a 71 home HOA...

All based on time... time to the site, time at the site, time back to the office, time writing up the inspection... time answering calls on about the inspection... etc...etc..

Think... Lawyer

Paul

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Rhona,

Watch the contract but don't "mess" where everyone is highly satisfied. That said, all vendors tend to "creep" their fees upward and eventually make themselves not such a good financial option.

Property management fees can vary widely depending on community needs.

BradP (Kansas)
Posts: 2,640

Posted:

I don't necessarily agree that a new board member should listen and observe for the first 6 months. I think the value of new people is new points of view and questions as to why we do things this way. Honestly, if you don't have a good answer then maybe you need to rethink things.

As to this case, if there are things that are in the contract that are not being done then someone needs to bring that to their attention. Whether you like them or not contracts are written for a reason, to have a clear understanding of each parties' responsibilities and costs are then determined off of that. I think this is a legit question and I think it can be handled in a professional manner but needs to be addressed.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Brad

I agree with you but the issue we see out here quite a bit is that someone charges in with an agenda and confronts people from the get go.

While I do not advocate be quiet, I think one can take the innocent, sorry but I do not understand so and so, can you explain it to me. Maybe even more on a one to one with another BOD Member.

I think we are saying the same thing, and that is learn the ropes first..LOL

BradP (Kansas)
Posts: 2,640

Posted:

The delivery of the inquiry is the key...having predetermined notions is bad...having an open mind is good

JonD1
Posts: 2,350

Posted:

IMO to many folks view contracts as the letter of the law.
Contracts in my view are guidelines open to interpretation and adjustment if and when both parties might agree.

As I used to say if we both pull out our contracts either one of us or both of us is going to be unhappy. IMO better to focus on how the property is being served not whether the letter of each and every contract is being followed.

Just a few days ago someone here decided to disgard their old stove. Under the contract of the garbage removal service household items ONLY not including appliances. I would need to set up a special pickup and that costs the property more $$$. I took the time to approach the driver of the truck who picks up at our property. I asked if it was posssible he could handle the stove. We carried it to the truck and away it went.
He didn't quote me the contract or the limitations of his obligations and we both left happy. I hate that.

Last year with the freak October snow storm our contract for snow removal begins in NOVEMBER. Gee according the letter of the contract we were out of luck. The contractor who I have worked with for many years and developed a relationship with arrvied and cleared the property for two days. Never got a bill for his time or effort. Few months into the season after a mild Winter here I ran into the owner of the comapny on the property and brought up the October storm and what our cost would be. His response due to our long standing relationship and the mild Winter, which under his contract he was paid for little work, he decided not to charge us for his services in October in the name of good business.Now if we both entered this discussion with paperwork in hand we would not have been covered and the property ( yes that's the important thing remember) would have not been served.

Having worked 30+ years under labor contracts in NYC construction industry I understand how they best serve both parties. My suggestion before jumping in with both feet and rocking a boat that most seem to agree is floating along just fine make sure it's not about something you don't understand or just might not be the end of the world.

As to new Board members. Some folks think you walk in sit down and by some magic have all the knowledge you need to make decisions and reform the system. Common sense tells me this is not the case. The OP has served for 2 months. Depending on the meeting dates that might at the most have them attending 2 meetings. hardly, in my view enough to scratch the surface when it comes to whos, whats, wherefores and whys.
Do you need to ask questions certainly. Do you need to start questioning a system that by your own account seems to be working rather well? IMO NO.

Some years ago a woman joined our Board and reviewed the budget. At her second meeting she suggested in front of our MC we do away with them and save all this money. Her first of many brilliant ideas. After making her case I asked her "do you have ANY idea what services the MC provides?"
She had none. Needless to say the MC is still here and she is long gone off to apply her knowledge and vast education elsewhere.

More important than reading contracts, by-laws, laws and state regulations I would suggest you learn how the system works on your property. Who does what and why. And most importantly whether it works or not. Get to know the people you serve with, the service providers, the property owners that knowledge will be of more use than being able to quote chapter and verse the federal housing regulations or by-laws which in many cases people don't comprehend. Or they are simply misinformed.

Education is great but I prefer common sense. Without one the other is useless.

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By JonD1 on 04/05/2012 9:48 AM
IMO to many folks view contracts as the letter of the law.
Contracts in my view are guidelines open to interpretation and adjustment if and when both parties might agree.

As I used to say if we both pull out our contracts either one of us or both of us is going to be unhappy. IMO better to focus on how the property is being served not whether the letter of each and every contract is being followed.

Just a few days ago someone here decided to disgard their old stove. Under the contract of the garbage removal service household items ONLY not including appliances. I would need to set up a special pickup and that costs the property more $$$. I took the time to approach the driver of the truck who picks up at our property. I asked if it was posssible he could handle the stove. We carried it to the truck and away it went.
He didn't quote me the contract or the limitations of his obligations and we both left happy. I hate that.

Last year with the freak October snow storm our contract for snow removal begins in NOVEMBER. Gee according the letter of the contract we were out of luck. The contractor who I have worked with for many years and developed a relationship with arrvied and cleared the property for two days. Never got a bill for his time or effort. Few months into the season after a mild Winter here I ran into the owner of the comapny on the property and brought up the October storm and what our cost would be. His response due to our long standing relationship and the mild Winter, which under his contract he was paid for little work, he decided not to charge us for his services in October in the name of good business.Now if we both entered this discussion with paperwork in hand we would not have been covered and the property ( yes that's the important thing remember) would have not been served.

Having worked 30+ years under labor contracts in NYC construction industry I understand how they best serve both parties. My suggestion before jumping in with both feet and rocking a boat that most seem to agree is floating along just fine make sure it's not about something you don't understand or just might not be the end of the world.

As to new Board members. Some folks think you walk in sit down and by some magic have all the knowledge you need to make decisions and reform the system. Common sense tells me this is not the case. The OP has served for 2 months. Depending on the meeting dates that might at the most have them attending 2 meetings. hardly, in my view enough to scratch the surface when it comes to whos, whats, wherefores and whys.
Do you need to ask questions certainly. Do you need to start questioning a system that by your own account seems to be working rather well? IMO NO.

Some years ago a woman joined our Board and reviewed the budget. At her second meeting she suggested in front of our MC we do away with them and save all this money. Her first of many brilliant ideas. After making her case I asked her "do you have ANY idea what services the MC provides?"
She had none. Needless to say the MC is still here and she is long gone off to apply her knowledge and vast education elsewhere.

More important than reading contracts, by-laws, laws and state regulations I would suggest you learn how the system works on your property. Who does what and why. And most importantly whether it works or not. Get to know the people you serve with, the service providers, the property owners that knowledge will be of more use than being able to quote chapter and verse the federal housing regulations or by-laws which in many cases people don't comprehend. Or they are simply misinformed.

Education is great but I prefer common sense. Without one the other is useless.

Dealing with over 100 contracts a year I agree to a point but also disagree. Common sense prevails and if the action in question doesn't cost or cause issues I have let those go. However, if there are specific duties the company shoudl be performing according to their contract then they more than likely built that into their pricing structure. If they don't want to do them that is fine, adjust the price. The goal of a business is to make a profit, if you can cut corners and still keep your customers then you will. Sometimes businesses need to be called on it. Without knowing the specifics of what they are not doing a simple reminder that hey according to our contract you should be doing x, y and z is not out of line at all.

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