Conflict of Interest with PM

Five years ago, when we brought our townhouse in Oregon the developer turned the property over to a PM. The PM that was selected was also owned by the developer. I questioned this conflict of interest but I was told nothing could be done about the PM selected. After the turnover the board was selected and now it has become obvious that there is something unethical about the running of our HOA.

The Board President will not allow any competitive bids for services, such as the PM services, landscaping, or maintenance. I have requested a discussion on competitive bids many times as a board agenda item which has been rejected. We had a fencing company after the first year come to the board meeting and talk to us about the builder using defective products, and I suggested that we go back to the builder to make it right, of course the PM and BOD rejected that motion.

I have requested an outside group counting our board election votes. Only the PM counts the votes today and that suggestions has also been rejected. I have asked about auditing the books, and no one answers that request. The President of the Board signs contracts without even reading the contracts from the PM. We had an outstanding young attorney servicing on the board, and he just decided to step down due to the lack of fiduciary focus that he has experienced with the board meetings. As a homeowner I’m also very concern about fudiruary duties of the BOD. My belief is that the PM is driving the agenda for our community. The President is an out of control bully who has chased many board members off the board. The annual meeting notification is roughly 30 days before a meeting and usually in December where weather is unpredictable so the attendance is extremely low. This Board President has been in office for 5 years now and its getting difficult to solicit new homeowners to serve on the board.

Not sure what to do next with this situation. Please let me know your thoughts on how to go out for competitive bids on the PM services and address this conflict of interest.

Welcome to HOATalk, Mary.

Is your developer still in control? Review your governing documents to learn when control passes from the developer to the homeowners--it's usually when XX lots or units have sold or closed escrow.

If I were you my first concern would be about potential construction defects. Many believe that the developer is responsible for 10 years but that's not true, or only may be true for certain elements of your HOA. If, for example, the possibly faulty fence was pointed out to your board four years ago, you may be in danger of having the statute of limitations clock run out of time and your membership may not be able to get the developer to fix that particular problem.

I feel that I need to know more about your situation and it helps to know: how many units are in your HOA? How many directors are on the board? How often must the Board hold open board meetings? Are there other homeowners who share your concerns? You all need to coalesce and attend meetings to put pressure on the board.

If your developer still has control, it may be very difficult to get the Board to take action on these possible defects.

What do your governing documents, probably your bylaws, state re: elections and counting ballots? If they are silent, you may need to look at your state's laws about such matters. In many states, there are strict laws about elections, counting ballots, etc. In CA, for instance, homeowners may watch the ballots be opened and observe the ballot tabulations.

Also check your own documents or state laws concerning how to access your HOA's records. In CA an many other states, a written request to the management is all it takes for h'owners to review financial information, e.g., balance sheets, monthly financial reports etc. Plus the contract with the Mgmt. Co. Reviewing it is important because it'll state the limits of the MC company's authority.

That's all for now, I think we all need more info from you.