Getting rid of a managment company

Started by JimR • 7 replies • 2972 views

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JimR (Colorado)
Posts: 21

Posted:

This is really a reply to EdR's not yet posted.

Most Associations Boards have the power to hire and fire the managment company, because they are usually contracted by the Board. If the Board is in bed with the managment company as my board was, you will have a long battle. As president of my board it took me 5 months to rid our association of the managment company, and all of the board members that were against the move, which was 3 of the other board members.

1. The question needing an answer is, does your associations legal documents allow for home rule? (meaning; can your Association can be managed by the Board of Directors?) Or that the Association has the choice of self managment or the hiring a managment company.

2. If the answer is yes that your association can be self managed, hold a special meeting of the members notifying them of the purpose and establish a quorum and vote to terminate the managment company with the required notice that is in their contract. If you have a majority of the board seeing things your way the board can force the president, or vice-president or even the Secretary to force the call of the special meeting. If you do not have a majority of the board seeing your way, then you need to get a quorum of homeowners to attend a meeting and make the motion and get it passed by the quorum and force the board to call the special meeting.

3. If the answer is NO to question #1, that your association can not be managed by home rule and that you have to be managed by a management company, the only thing that you can do is petion the board to get a new company, or get a majority of homeowners to sign a petion to force the issue, which is almost impossible to do.

As the president of my associations board of 5, I had a Secretary, a Vice-president and member at large, that was against the removeal of the management company. The secretary was an employee of the very same management company and was instrumental in getting them the contract in the first place in Oct of 2004, and I was elected in January of 2005. The company was twice as expensive than our previous one and did not perform any better. Our budget that was prepared by the 2004 Secretary and approved by the management company and ratified at our annual meeting was a $18,000 bust and the only place that I could cut was by eliminating the managment company. I was first censured by the member at large and the vicepresident. Then the secretary and the vice president called for a special meeting for my removal, and 3 hours before the meeting time, the secretary resigned from pressure from her employer (the managment company) and my presidency lived on. I called for a special meeting of the members, got a quorum, got the requirement removed, that stated that we had to be managed by a management co. and that we could go back to a home rule system, the vice-president then resigned. I wrote the president of the management company about the colusion between their rep. and our board, and he agreed to release us from the contract. I appointed new replacements to the board and we had a good last half of my presidency and accomplished some necessary changes. We put in place an accounting firm to keep the books and the board did everything else. And it worked great.

There is hope if you have the stomach for controversy..and I wish EdR the best and you will get writers cramp from the 1500 pages of emails that it took to get the job done.

EdR (Texas)
Posts: 170

Posted:

Jim:

Thanks for your reply. I know that not all MCs are like this and I I going to be on a mission to find out what can be done. Any other info you have would be helpful. Since I posted my question, etc. as a reply to a post re. another corrupt president site, I am copying it below so it will be convenient for future use to me too. Wish me luck!
EdR

WOW! Sounds like some of these directors/presidents are cloned. There has got to be an agency/organization somewhere to report these corruptions to. I cannot imagine a board allowing a president to do such a thing, but then ___ happens! The president of our HOA gives the association's pool to the swim team at a whim and closes it to members for a ST meet when 1/3 of the ST are from outside of the association (against the assn's wishes to begin with) -- without ever speaking to the rest of the board, much less any of the members (the president's children are on ST too)! What's up with all this? I'll answer it myself--power trips, favoritism, nepotism and corruption! The president of our HOA and the sports committee person just spent $50K on renovating a pool mainly for their ST cronies, but that wouldn't need renovating in the first place if not for the extra wear and tear from too many outsiders using it. $75K was spent on it last year too. Further, unfortunately, the management company (MC) is (I'd like to say apparently) in cahoots with our president. They protect her from the laws and she protects them by keeping them so they can protect her. She signed a contract with them for another year without consulting the board and the MC, in return, donate to the swim team and protect her by ignoring complaints from the homeowners where they are supposed to be buffers. The MC threatens any member who complains about them, and in fact, claim this is why we cannot get a new MC (because they found out the board was interviewing other MCs)and claimed it was because the information leaked out and they weren't included in getting to bid. They, and the president worked out a deal for them to stay (obviously not because they are competent) and she signed the contract. She did not check with every director because one director reported it to the membership (they threatened this director for telling the membership what was going on), but the rest of the board and membership apparently think their hands are tied. It is serious when you have a corrupt president working with a desperate MC, or vice versa. I consider, that even though it's time being stolen from the members and fraud by dealing a contract without a vote, it's still embezzlement.

BTW, does anyone know the rules about management companies and how to get them to let go of an association when they are no longer (nor ever have been) effective? They will not resign--they are desperate for the job--but they have illegally handled our election (opened and counted ballots and the bylaws state they are to be "written and sealed"), not deposited member's dues until after election and then will not provide them with documentation to show whether or not their vote was counted, nor provide ANY of the members with requested documents of any kind, illegally involved with insurance claims, opening director's mail (and publishing it without the director's consent), will ONLY TALK TO THE PRESIDENT (duh!), even though the board asked them to deal with the whole board, continue to donate to select interest groups for apparent favoritism and nepotism, do not follow the contract that was originally signed anyway, do not help the association enforce covenants that the president doesn't want enforced fairly or legally, retaliate against select residents they do not like, and/or will not handle their complaints (reasonable or not) if they don't like them (more so because the president doesn't like them), state illegal, untrue and unethical things in closed meetings, cannot keep up with paperwork, records, for instance, can't tell even the board the names of new move-ins within a reasonable time (months), constantly lose the approved architectural control forms and then cite the homeowners for violating when they've gotten approval (charging the association for sending out these letters repeatedly), AND WORST OF ALL--THEY HAVE DONE A TERRIBLE JOB OF KEEPING UP WITH FINANCES and the treasurer is incompetent and relies on them, so neither can get the finances straight, YET, when a homeowner complains about any of this, the MC threatens a lawsuit against them and use that leverage to stay contracted. I spoke with an attorney once who used to have her own management company and she informed me that a good board interviews and changes management companies every two to three years just to keep everyone honest. If necessary you can go back to a good MC again, but even in her opinion, there is no such thing as a good management company, just some are better than others. Does anyone know how to pierce these corporate veils or who to report these problems to? Has anyone successfully sued the boards or management companies? It is my understanding that the MCs are indemnified by the assn's insurance and can't be held responsible--is this always the case? If so, this could go on and on with little hope for help.
EdR

EdR (Texas)
Posts: 170

Posted:

Jim:
Have you ever known of anyone (a member) to write to the management company (MC) and spell out the problems and ask them to resign? I am no longer on the board, and the MC is part of the reason. In depositions a serious matter in the association, a former employee of the MC testified that the owner/agent of the MC was complicit regarding a verbal assault on a director while that director was with her on a monthly inspection. Since the current president was part of the plan and they are "joined together at the hip" it is an impossibility to get rid of them. My spouse even presented a list of reasons they should be replaced, at a board meeting, and they are still there. This is a very good reason why MCs shouldn't sponsor or donate to organizations and special interest groups and/or that the president of the board shouldn't have a personal agenda. These things really should be kept separate. It is no longer a matter of competency or honesty to help with running our board, it is a matter of scratching each other's back. The aesthetics of the community are suffering also. My question is: how can the MC threaten people with suits for complaining or if they complain. Another director (currently) was threatened with sanctions (I don't know how they can accomplish that--but they seem able to do just about anything they choose) for complaining to them and the board that they were not communicating with ALL board members (the MC or the board) and were leaving him out. The rule/bylaws of the board was that a vote could be taken outside of the meetings if ALL directors were contacted. They either do not contact ALL or they make sure to wait to handle a vote if they know certain directors (mostly that one I mentioned) are not going to be present at the meeting. In fact, he has stopped going to as meetings as he can get by with because he knows the association is building steam to file a suit against the board and the MC and he doesn't want to be a part of it.

Are you familiar with the legal part of MCs? The MC has three attorneys, and although the board has to have total board approval to get legal assistance, the MC, on their own, will get legal advice from their three attorneys and charge the association for it. The president has even consulted with the MC's attorneys (also without total board approval--outside of a meeting--and the assn. was charged for it). In fact, the president contacted the defendant's attorney in the assault lawsuit and also contacted the noticed deponents and told them she had consulted with the MC's attorneys and they didn't have to attend the depositions and THEY DIDN'T attend! I'd appreciate knowing what you understand to be the reason for an MC to have their own attorneys if the assn. has the authority to hire attorneys if they need to. Is this just part of the "favors" syndrome? Thanks for your input.
EdR

EdR (Texas)
Posts: 170

Posted:

Jim:
Our association can be self-managed and a couple of directors are working on that project. The problem is that no one really wants to commit to the work and I can understand, I've done worked every committee on the board and volunteers are difficult to find.

To: RogerB:
I'd like some input from you about management companies--I know that since you appear to be a management company that you might feel that your toes are being stepped on here, but we do have a serious problem in our association with the MC and I know that not all MCs are like this--in fact, the previous MC resigned from our assn. because the president was expecting them to choose sides--so I know some are ethical. There are several neighboring associations with similar problems and the legislators are starting to get involved. Could you answer some of the questions I've asked of Jim on this subject, please? Thank you.
EdR

RogerB (Colorado)
Posts: 5,067

Posted:

EdR, I would NOT write directly to the manangement company (MC). I would write to the Board, with a copy to the MC, itemizing all the problems you listed. Request these be investigated, corrected, and that the the results be documented in the minutes of a Board meeting.

With regards to legal functions of your HOA, your can request a copy (or viewing) of the Agreement between the Association and the MC. The "sunshine" law requires that this agreement be made available to you. Perhaps your HOA let the MC draft the Agreement, in which case the MC would draft it to their benefit. If the Board did not carefully review it before signing it might have approved a MC Agreement which did not comply with the Bylaws and/or Declartion. This may explain how the MC can be allowed to use attorneys without Board approval.

I would write the letter from the view point of keeping it as brief and suscint as possible while trying not to be judgemental - just state the facts. Keep in mind this letter could be provided to all members at a later date if you need to remove the President, other Board members, and the MC.

Good Luck,
Roger

JimR (Colorado)
Posts: 21

Posted:

In the first place, a non-board member is not going to be able to write the MC and express their views of the improper conduct of the MC, and ask for a resignation or for a cancelling of their conract with out a potential law suit.

I was able to write a letter to one of the owners of the very large and well established MC because I was the President of the Board. You will only bring rath upon your head and any friends of yours.

Your problem is very difficult being only a member of the assoc. and not of the board. You will need to start at the grass roots, your fellow assoc. members. Form a Concerned Citizens Commitee, develope it the same as a board with officers, hold your own meetings and develope your plan of attack. The Board can not stop you from doing that. Watch for spies in the group that will feed info. back to the Board and the MC.

I formed such a commimttee in 2002 and had very good responce from the members. We listened to eveyones complaints, compiled the lists and had the members vote at one of the meetings that had sufficient numbers to form a quorum, as to which 3 items would of the utmost importance. Once those were decided the committee planned their attack.

We put together enough signatures to force the Board to call a special meeting of the members. At that meeting we laid out the 3 items, and suggested that if the board did not place these items on the annual meeting ballot for all members to vote on, that the board members that voted against this action would be considered insubordinate to the desires of the members and they would be removed from the Board by the members at their next meeting.

We got our items on the ballot and we all went on from there.

As for your attorney problem, if your MC has a clause that states that the MC is the lieson between Board and the law firm, you have problems. The fact that it takes full approval of the board for an attorney to be contacted is a another problem. Your Board needs to contract their own attorney and pay the bill by board approval. Problems should not be submitted to the MC for legal advice. If that is what you have been doing, yes they can charge the association what ever. Our 2004 Board had passed a rule that no one could contact an attorney without a majority of the boards approval. So the first time that I called the law firm I recieved an email stating that the law firm notified the MC and the MC then notified the board, and they rejected my contact. So I went to my own attorney, he stated that the Board could not deny the president access to the attorney as long as the board had contracted seperatley and was approving the bill payment, which we were.

I would suggest the following: Get your concerned citizen committee put together, take up a collection for an attorney counsultation and get some good legal advice. As laymen we are not going to be able to compete against MC's with high priced lawyers backing their every move. Have you concedered petioning the members for the elimination of an association? Turn your community over to your city, which you can do after an association is 5 years old. Read your legal docs, and know them forward and backwards and put up an informed battle. It will take a lot of hard work, are you the savior of your community, or just a disgruntled member? What your next move is, will classify your intentions.

EdR (Texas)
Posts: 170

Posted:

Roger:
This question is for you, but if anyone else, familiar with this subject, knows an answer, I'd appreciate it. As I mentioned in earlier posts, I used to be on the board in my assn. This is too long of a story to go into and may not matter, but the management company (MC)were (and still are) in bed with the president. The reason I am somewhat still informed is that the MC used the excuse of my having told a former employee of theirs (who was witness to a very serious incident and they would not let her testity, plus they told the board in closed session, that she was fired when she was not (I was still there then) that the board was going to go out for bids for another MC, as an excuse to force the current board (president did so willingly and used this as an excuse, in fact most of the board wanted a change except the president) into signing an 18-month contract for them. The MC also told the board after I left that I had interfered with their job, when in fact, it was the other way around. The MC NEVER did anything I asked as a board director. Two employees have left the MC over this matter. Two questions: Since a closed session in this board can only be to discuss for instance, if someone has not or cannot pay their dues (i.e., mentioning names or street addresses), wasn't it way out of line for the MC agent even to say anything like that at all?; and since when can a MC or any contractor make you sign a contract for any specified (by them) amount of months and even then, don't both sides still have the right to give a 30-day notice to terminate the contract (at least that has been written in the contract for the last 20 years) but I have not obtained a copy of the latest yet. The president sent an email around to the board saying that because this former employee had contacted the MC that she had to sign the 18-month contract. The former employee contacted the MC agent to tell him that she had been informed by a prospective employer that she was fired, and that she was not fired (she had given notice and they let her go early). I was only in touch with her because she had information regarding the incident and information she had obtained even after she left the MC (that really had nothing to do with them in the conversation). As you can see, this assn. is in trouble and over half the members are planning a suit, but the president is about to be off the board, has actually moved from the assn. because she knows what's coming, but she created this monster and won't have to deal with it.
Thank you,
EdR

RogerB (Colorado)
Posts: 5,067

Posted:

Ed,
First, get rid of the President. Since she has moved she should no longer be a member of the association so should not be on the board nor be President.

Second, get rid of that management company. You will have to see the Agreement to determine if and under what conditions you can terminate. Just because you pay monthly does not necessarily allow you to terminate with 30 days written notice. While you are researching how to terminate this Agreement the Board (without the knowledge of the ex-President and current MC) can develop a detailed RFP and get bids from several management companies. This will provide data to determine if and when to terminate the MC and who will replace them.

The attacks on you are unfortunate but that is history. You know the truth, try to forget it and move on.
RogerB

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