What has to happen to turn an HOA over to a management company?

I live in WV in a self managed HOA. There has been some talk that certain people within our community are trying to have our community turned over to a management company.

The HOA president assured me that to do that we would have to dissolve "the corporation" that is our HOA. To do that would require 100% of the eligible vote of the HOA.

There is nothing in our By-Laws that addresses this issue.

WV law might address this but I'm hoping that someone knows as Chapter 36B that deals with HOA's in WV is long and I'm feeling a bit lazy

My feeling is that getting 368 lots to agree on ANYTHING would be like, well, impossible.

You said:

"The MC is hired as the managing agent by the association."

Who is "the association?" Are you saying the BoD could hire a management company by a simple vote of the BoD majority?

ChrisB4 - you've been misinformed by the Pres. to say the least. The last thing that would happen is to dissolve the HOA. As is always the case, check your by-laws, because the board may be limited in their spending a certian amount over and above the current budget. In that event, a vote of the owners would be needed, your by-laws should spell this out. the first thing you should do is get your hands on the budget. then ask some questions like how much it would cost. If you have 368 lots I'm leaning towards a management company. however, it depends on the elements that need to be maintained. it's always important to remember that an MC is only as good as a strong board.

I was part of the committee that re-wrote our by-laws (the originals were horrid).....I'm also very fimilar with our budget. There is nothing that addresses the question of management companies....

Chris, one item which should have be included in the By-laws under the duties and powers of the Board was:

j) hire and terminate a managing agent or other contractors as they deem necessary, and to prescribe their duties. All of the powers and duties granted to the Board hereunder may be delegated to a managing agent; provided however that such delegation shall not relieve the Board of Directors of responsibility thereof;

Patrick,

Thanks for talking your time to answer and ask questions....

First we have an all volunteer board and no one on our board is paid for their services.

Our dues are currently just over $10 a month. Frankly this amount is WAYYYY to low to provide the standard that we live by at this time.

Our community is relitivly new, the average age of our lots is 6yrs (oldest are 10yrs newest are 2 years old).

The community looks ok, mostly because our largest asset, our roads, havent aged enough to need resurfacing, though I have assured our residents that the time will come, in about 4-7 years when we will need to resurface the roads and wont have the money to pay for it. I have worked hard to bring this to the attention of our residents. I'm running for the board (member-at-large) in hopes that I can reach a wider audience.

The issue for this post is that a member of our community is running for the BoD (as president) who owns a management company (I belive he is the only employee of his company). The current President (not the same guy as the guy who is running for prez) has convinced our membership that they have nothing to worry about (that is that his management company could never take over) because, as I stated in my first post, it would take a full vote of the association to turn our community over to a management company.

I don't like the misinformation......

It's not that I have ruled out a management company, I think it's possible that there could be positive benefit, but if we are to have one, I think the membership should press the BoD to complete an exhaustive search of possibilities before choosing such a company.

It takes money to hire a Management company. That means the residents would have to raise the dues to pay for this service. A HOA is ONLY funded by it's members FOR it's members. It only has the money everyone puts into it!
MOST HOA's board members ARE UNPAID volunteers. There may be liability insurance (again paid by the HOA with dues money) that would "protect" board member from being sued PERSONALLY for their actions. That's about it as for "benefits".
This guy running for president with his own management company would "worry" me a bit. That's because because he would be a "PAID" participant in the HOA. Normally, Presidents are NOT paid. However, if the members are paying the management company, and he owns the company, the members would be paying his salary. He would still have to pay dues like everyone else. Board members should NEVER be paid nor be exempt from paying dues.
This scenerio also is dangerous due to the fact that the management company could/would run the budget of the HOA. That means that the management company could "validate" raising the dues to accommodate their agenda. It would need board approval of course. However, the president is their owner. Who do you think would vote down the management companies raises?
I admit I thought about opening my own management company and running my former HOA. However, in my case the HOA would have to legally disband for it to be turned over to a management company. That makes a difference than having BOTH managment company/board member being the same entity.
Keep reading posts in here. It will give you some great education in running a HOA. I think it could help you in educating others in your community as well.

I called the current Prez after taking the time to look up WV code on common interest communities and I found a section I believe deals with this subgect...

WVC 36 B- 3 - 102 (http://www.legis.state.wv.us/WVCODE/36B/masterfrmFrm.htm)

This section is under "§36B-3-102. Powers of unit owners' association."

"(3) Hire and discharge managing agents and other employees, agents, and independent contractors;"

This is part 3 of several other parts none of which I believe have anything to do with the hiring of managing agents....

After confronting our current HOA Prez with this information and the information I have obtained here he still insists there is another chapter that states that we need to dissolve the corporation with a 100% vote......

Interestingly I found another chapter that deals with dissolving the corporation, and the vote is 80% not 100%.....

Bottom line is I'm not blowing the whistle on some vague rule under 36B (see above) or someones opinion.....If I take the Prez on with this stuff Ill get creamed.....

I need something more definitive......

I really, really, appreciate everyones help, I just need some more......Think I'll try to call some local management companies...see what they say....

I am seriously considering bringing this up with our HOA and its BOD. Can someone direct me on how to find a Management Company in the Atlanta, GA area?

lance, i think we are working under two differing assumptions. I believe that when you dissolve an HOA, you sell all the assets that HOA is responsible for, close out the deed restrictions, and thus, what is there to manage? If you still have something to manage, then you can't dissolve the HOA.. you can go into receivership, you can disband the board, even stop electing boards, but the deed restrictions remain. So you are correct too, if "dissolve" simply means they are wanting to stop running an HOA, but still plan to have community property, assets, etc..

LanceT - you stated, "The real difference between having a HOA and having a management company is that the homeowner's are responsible for developing and setting up the rules. It's NOT a hired outside entity who can charge and enforce what they decide and NOT the residents.".

in response to your statement, the homeowners are perpetually responsible for developing and setting up the rules. the management company enforces the rules and assists the board and community in voting to change the rules. the management company is not supposed to randomly enforce what it wishes.

Lance,
I take offence with your statement "They (MC)are to be "puppets" of the HOA/homeowners." This is a rediculous statement. If the Board wants us to do anything which is not legal or proper we terminate the Agreement. As a Managing Agent we are professionals who provide services which are authorized under the management agreement. One function is to enforce the restrictions in the Covenants and the Rules and Regulations established by the Board or the Association.

If an HOA may be dissolved (usually a manditory HOA can not be dissolved) there is no HOA; and with no HOA there can be no management company. If the HOA goes into receivership it is not dissolved. In which case a managing Agent could be assigned by a judge and authorized to perform all management functions under the supervision of the court.

Lance, I presume by dissolved you mean not having a Board of Directors but still having a common interest community which is managed by a managing Agent. The association and the documents remain intact, it is only the Board which no longer exists.

Perhaps "strings" and "puppets" reflect your attitude but would not reflect the attitude of a client with whom we would chose to work. One important service a managing Agent can provide is the expertise and continuity to guide Board members.

Lance, i think you just mentioned part of the entire problem with many HOA's. People think they are mini-governments, and treat them as such, when in fact, they are COMPANIES. An HOA is a not for profit CORPORATION, and as you mention, should be run as a corporation. They should be managed in a business like manner, with the goal of making the shareholders happy.

chrisB4;
Go on the website to the right of this menu page shown in yellow--Community Associations Network. It is a wealth of information. Just key in your state at the top and bring up Planned Community document, creation, etc. You will read the state requirements for the HOA in your state. You may find what you are looking for and that there is a difference between:
having a management company manage your community association
(process and how-to should be stated in your covenant docs)
vs.
a legal process to turn over your association to 'receivorship'
as Roger stated.

I would suggest you question the Board and ask them to again define the term 'turn over' and its explanation as they understand it.
Best of Luck.

PaulM

by george I think you got it! Good job! Hiring a MC may be your best choice instead of dissolving . That way, in the future when things get straightened out and understood, the homeowners still have the option of running things and making decisions.

Chris:
'to hire managing agents and employees...' means what it says--the association (BoD signs the contract) can hire a managing agent (employee/s) to do certain tasks. Check out the link Roger sent which describes all that an agent can do, but not necessarily all
they must do. That's between your BoD and the agent and what your association is willing to pay for. It probably will require an increase in monthly fees required from the residents.

I would caution you to bring this before the BoD at a special meeting for community vote since it would require an additional line item to the budget. If your budget for 2007 has already been approved, all the more reason to bring it before the community. I am sure if the BoD explains the value an agent can bring to their association, the residents will see the value in hiring them. Once hired, you could even ask the agent to come and speak at a community meeting--introduce themselves, give their contact number, advise what resident issues they can alert the agent about, and generally promote goodwill.

As I heard a lawyer once state, ...'just because the Board can, does not mean they should...' If BoDs would just adhere to this adage, there would be fewer problems between residents and BoD members after the 'dreaded deed' was done. ...And I'm not talking about the BoD resorting to micro-managing either.
Good Luck!
PaulM