Management Company Due Diligence

JonathanH, following is one way to approach your selection:

1) Decide on what specific services you want from a management company. If you cannot decide whether to have only accounting services (IMHO a bad idea) or full services, you can arrange the RFP to have bids for each.
2) Create an RFP with:
a) name, location, number of units, description of common areas/amenities and type of units;
b) provide an itemized list of services desired (this helps when it comes time to compare bids);
c) request examples of their financial reports, basic Agreement, and references;
d) if you want answers to specific questions a questionnaire can be attached.
3) Canvass other HOAs to determine which management companies to contact and which not to contact.
4) Mail RFPs offering them to bid with a deadline for receipt of sealed bids. Advise on who to call to discuss any questions they may have.
5) After the deadline compare bids received and decide on which companies to bring in for an interview. Request the Agent who would be assigned to your association be available for the interview.
6) After the Board votes and selects a company, award the bid and advise and thank the other bidders.
7) Create an Agreement which is acceptable to both parties; don’t just use the Management Company’s Agreement.

If you need a list of potential services we can provide our portfolio of services.

Good Luck,
Roger

Adrian,

I would be really interested in receiving that questionnaire. We are considering making a change to our management company as well. The builder selected a property management company, and they've remained for 10 years. Last year, the property manager we had for 5 years 'left' the company. When we were elected to the board (2 weeks ago), we discovered that the manager was regularly going WELL above her discretionary spending authority. The President, who was her best friend, was the only board member signing checks, so the rest of the board was unaware of what was going on. We're going to be doing an audit, but through the financial game playing, one of the results is that our reserves are no longer fully funded. We do have a new manager, but the company is basically tainted in our eyes.

JonathanH, Don't go there, read some of these other discussions and see what happens when you get a MC involved. first comes favoritism to certain Board members that the MC feels will be in favor of their activites, and then when it comes time for elections the MC's back those that will keep their intrerests in mind. Minutes and reports are slanted to make the friends on the Board look good and the minority of the Board look bad.

If you just want some one to take care of the books and money, hire an accounting firm and you should be much happier. Keep home control of your Board and Association. Once you get them in your community it is very hard to remove them.

We went through 2 of them and the only difference between them was one was twice as expensive. As far as doing anything advantages for the Assocition, Zip.............Problems caused, unbeivable.

PS: The president of our assoc. board also made it where only she (and one other--the treasurer who is also in bed with her and the MC) sign the checks. Before this MC took over, our board had had all four officers signatures at the bank and the duty had to be alternated so that we all knew what was being paid, and believe me we each caught little errors. On several occasions, there would be payment to a contractor that had been already made before. We ended up paying an attorney three times for the same "opinion" and do you think they reimbursed the assoc.? NOW, only the president and her buddy, the treasurer, sign checks, ever. Our bylaws state that checks require two signatures. Bottomline, if you get enough dishonest people working together, they can work quickly to spend monies that you cannot recover. It is no different than Enron--just smaller amounts of money.

I know my posts sound negative, but I've been a resident/member for 10 years and on the board for 5 years with two MCs. One was honest and resigned because of the president; the present one is dishonest, unscrupulous, ineffective, inefficient, incompetent, illegal, much more and GIVES advice for same, and is only there because of the president. I am no longer on the board because I was onto them--you see the problem!
EdR

Thanks for the comments. At this point, I'm in charge of heading up the committee with the charge to review what the possible management company candidates do, compare them, etc. I'm not actually a board member which is probably a good thing that the board is staying away from making this decision on its own.

At this point we're really only considering hiring a management company to do the financials, dues processing, etc. The board hasn't explicitly decided to go that route which is also why the committee was established - to figure out if one is necessary and if so what company should do it.

RogerB,

Technically you're right, but there are bad apples out there when it comes to management companies. I'm sure that yours is NOT one of them - but they do exist. Our previous board was aided by a manager who would review proxies received for the annual meeting and election, and let the board members know how many votes they'd need to acquire to be elected. This same manager also regularly lied to members and to the board. She gave (bad)legal advice, when the contract specifically prohibits that. It turns out that she also regularly spent association funds in excess of her contractually allowed discretionary amount. In short, she was a nightmare. When her misdeeds were brought to the attention of her supervisors, they seemed to be ignored. Homeowner apathy wasn't a problem in our neighborhood, and we were eventually able to get this board out of office and we are now considering replacing the management company, though the manager in question is no longer with them. The fact that they were silent and refused to act

We're discussing rule changes on another thread, and while you expressed appreciation for the procedures that HOA boards have to go through in CA to create and change rules, my property manager actively derides this law. In our case, it's unfortunate that the law will cause our efforts to take longer to come to fruition, however I firmly believe that this law has served to keep a number of more ridiculous rules from being enacted, or even proposed.

The board I serve with is in the process of evaluating ALL of our vendors - for the simple reasons that homeowners have never had a say over the vendor selection, and the contracts have never been reviewed. We're paying bottom dollar for our property manager, and the service we get shows. However, in order to get better service, we'll have to raise rates. And we all know how popular that decision will be.

I'm not contesting that a property manager is a valuable tool. Every director I serve with works full time, except me. I have my own business, which allows me to determine how much work I take in, BUT I am also a full time student. None of us has the time required to manage our small (160 home) community. Our CC&Rs and Bylaws do not require that we have a professional manager. We do have the option of self management. To me, this is too big a risk for the general well being of the community to be worth the annual savings. We are, however, discussing this option simply because we've had a terrible property manager in the past. And because those stories, at least here in CA, are all too common. I believe that if we find a good manager, we'll be in great shape. The problem is finding that good manager, and (in our case, at least) then convincing the membership to pay for it through a fee increase.

EdR, thank you for the compliment. Have you ever thought of offering your services as managing agent for your HOA? One reason I do this somewhat thankless job is because I have experienced many lousy management companys when serving on HOA Boards.

I have walked in your mocasins for many miles!!!

RogerB

Just to let you all know there is another way to handle management. In one of the associations where I own, we do not mix our physical management with our financial management. We have two separate entities and it has made for a very good and very safe balance.
The board is able to retain full control of pretty much everything that is going on. Granted, this may not work for those of you who do not have at least a quorum of board members who are on site almost full time.
There is good information about chosing a management company and responsibility lists at the site www.communityassociations.net. You will also find many other topics relavent to this thread.
Good luck