Management Co. vs. Self-Management

Howdy All, it's been awhile. It is time for my annual HOA meeting and I've placed on the Agenda an overview of common-interest living. One of the things I want to address is governance by a management company and governance by community only. I understand the association is still mandated to have a Board when hiring a management company. My questions are: Why? How does that work? I'd like to explain this to the association to help them understand the reality of no one stepping up to volunteer to serve on the Board. I am heading into my eighth year as President. Thank so much for your help.

Dave,
I think so. So, a management company does not deal with Bylaws, CC&R's, Rules and Regulations or Resolutions. They just basically do what the Board asks them to do to facilitate the requirements of these statutes? For example, send out invoices for annual assessments, collect and deposit into the bank. Or, get three bids for any common-area maintenance and repair and make the decision on which one to hire. Or pay bills. Do they deal with problematic homeowners? Enforcement of covenant violations? If the relationship of MO's and HOA's is basically one of employee/employer, why the horror stories of MO's taking over and running the show, often to the detriment of the HOA. What I read here is that the Board is the ultimate authority, and they can approve or disapprove any action of the MO. Thanks.
Dorothy

The board can delegate whichever duties it chooses to the management company. Of course, the more duties delegated and the more complex those delegated duties are, the more the management company will charge. One thing you mentioned as a possible duty of a management company was "... make the decision on which one to hire." There is nothing wrong with the management company making a recommendation to the board as to which bid to accept. But the board must make the decision.

The horror stories you hear are often the result of weak or lazy boards. If the board shows that it is unwilling or unable to make decisions, the management company may step in to fill the vacuum. Any contract with a management company should give the association the right to terminate the contract with appropriate notice.

Thank you all. You have clarified for me what I can talk about if this ever comes up. My HOA, while not super small, 42 houses, has no major common areas or maintenance issues. We pay just two bills a month. In the twenty one years of our existence we have had to seek legal remedy only once to collect assessments in arrears for six months, and twice for covenant enforcement. Over these years the HOA has been managed admirably by our volunteers. Ironically, this very competency fosters complacency. If it ain't broke, why change anything? So, no one, year after year, will step up to volunteer to serve their term as an officer. One year I had to serve as Vice President, and when that temporary period was up, I had to literally beg a former President to please step in, so we would not be in violation of our own Bylaws, thereby making us vulnerable to possible action by the one problematic homeowner we have -- who sees conspiracy, police state, preference etc., in every action the Board takes. It's queer how people don't connect the dots between their property value and the management of their property by the association. This past summer we had four houses for sale. All four sold within 2 months, two weeks, two days and four hours respectively. The similar house in another area of town would not sell as fast or for as much. This is a very sweet neighborhood because we have covenants that are honored and enforced. So why won't people volunteer to help? It's a puzzle. Thanks for the information fellow volunteers!

Dorothy..we are not in Kansas anymore...oops...I digress.

What you might want to consider is a part time bookkeeper to do all the tedious tasks and free up the BOD to manage. This might also aid you in enlisting others to run for the BOD.

Dorothy

Typically a management company will have a list of services they offer and you buy the services you want. The services can range from you simply keep the books only up to you all do everything for us. The issue becomes how much are you willing to pay and will the company want a specific amount of billing otherwise they do not want your business.

Need to know more about your association size, budgets, etc.

We are 113 standalone patio homes with no amenities and very little common ground. Our yearly budget is about $70K. Overall I feel we could easily be owner managed and at most, hire a part time bookkeeper.

Oh, you guys, sorry if I mislead, but there is not way in heck we are going to a management company. There's not a bone in my body that shirks from talking to homeowner about anything. (Eye, it's the Irish in me). Thankfully, I so rarely have to be the bad guy. Like I said, in the twenty years we've been alive, we've had only one lawsuit, two situations that need minor legal counsel, and just one lien for back assessments, and they were only six-months behind. We have, I think, judging from so many of the posts I read here, an extraordinary HOA, with one exception that is ordinary: apathy to serve. I like that amendment to serve for a reduction of fees. I'll have to bandy that about a bit. Our budget is just under $10,000 a year. We write only two checks per month, are tax-exempt, and it takes a whopping three minutes to balance our checkbook. But I wanted the information on the various MO's of MC's just for more information in my quiver, should I one day have to shoot an arrow into the derriers of my neighbors to step up!