Can HOA Community sue the past HOA Property Management for fraud & not following board direction given on minutes?

MM5

Let me try and address a couple of your concerns.

A pre-lien letter does not have to be approved each time by the Board. The procedures would be in the management contract and also must be part of the association's collection policy. It MUST be sent via registered mail to the address ON FILE with the association.

A lien MUST be approved by a majority vote of the Board at a open general meeting and recorded in the minutes of that meeting. It MUST be sent via registered mail to the address ON FILE with the association. To be effective, it MUST be recorded with the specific county in which the PROPERTY is located, not the county in which owner resides.

If the association wishes to pursue legal remedies against the prior management company, they can, but from experience, difficult, but not impossible.

At the end of the day the Board is ultimately responsible for the overall management of the community. You need to have processes in place in order to followup on what is being done on your behalf. Never assume it has been done. Checks and balances.

Welcome to HOATalk, MM. Are you on the board?

Find a new management company.
Jeanne

Richard gives a good explanation, MM. But, before you search for a new MC, which might be what you should do, review your contract with your existing one. What does it say about liens?

When you write that the"minutes" say this or that, do the minutes state that the Board voted to file a lien on APN xxx? Or do the minutes say something else? The minutes need to record Board action, not one director saying "file a lien." You as a Board need to vote.

You also wrote, "This management co even made up their own violation for things not in our cc&rs because it was a pet peeve of the owner of the property mgt." Did the MC call this owner to a hearing? Did the Board meet with this owner to discuss the s-called violation? Or did the MC fine the owner without a hearing??

The MC contract has been terminated.

On the violations not in the cc&rs the owners were never called to a hearing so we meet meet with them & fines were never imposed.

The minutes state " discussion on intent to lien & liens : the board directed the MC owner to subject intent to lien at 90 days & liens at 180 days with board approval each time.

We found out about all the intents that were placed on accounts the day the contract was terminated.

Reports in our board books are different from the actual accounts receivables report provided to us for status on all accounts.

Based on your comments ... I would contend very smart move your Board made on this issue.

If not complying and doing the job hired ... you fire and replace the employee not performing.

And this is why there are so many terrible mgmt companies out there. The board hands everything over to them, and doesn't check anything they do. Happens all the time. To open a HOA mgmt company, all you need to do is put a sign on your door. No experience or licensee necessary.

Thank you for all the fees back, however based on the info I provided are we able to take the previous MC to court & do we have a case? This is just a few of the problems we had with them. We didn't hand everything over to them. We would question all actions also countless emails followed up with calls asking for info that were never received. We would even try to not approve minutes citing errors & only approve with conditions due to errors. We aren't a fully built out CID & still have a developer on board as the president/declarant of our HOA. This is one of the reasons for not being able to be self managed as we would like.

Thank you for the info... We plan to do so as soon as we finish with the forensic audit. By then we have lots of the above mentioned issues to organize by problem & date. Has anyway heard of HOA's taking MC to court & winning?

As I wrote above, I'm not involved in the legal professions nor is anyone else who posted replies. But, as I also note above, I don't think you have much of a case. If Richard from CA returns to this thread he may know the answer.

Seems the MC was sloppy, unprofessional, etc., but did it do your HOA harm? Was the harm/damage something that could've been avoided if the Board had been more heavily involved?

You really can't say to a judge, "Your honor, we asked the PM to correct the minutes, but they didn't," and expect some recompense IMO. There is no reason why the Board as a whole cannot simply correct the minutes. This is done at the meeting following the meeting when the minutes were taken.

Is your new PM certified? I urge you to go to davis-stirling.com, Main Index, Management to get to a menu that nicely discusses management topics. Yo'll see, by the way, that when hired and every year thereafter, the manager must show evidence of certification (though I don't think any is required in CA).

And, again, please tell us how many are on your Board and how many units or detached homes are in your HOA.

Unless the MC was the registered agent for the Association, the owner had a lousy lawyer. Legal notices are to be sent to the registered agent of the Corporation/Association or, if the Association is not incorporated, to each Director. Again, it would not go through the MC unless they were the registered agent.

If the MC is licensed by the State, have you filed a complaint with the licensing bureau?
Failing to pass along legal notice would be enough for a complaint.

We are incorporated & mc is the registered agent. The previous mc owner has a ccam.

Assuming the Treasurer signed the checks the audit may put the blame back with the BOD.

If the Treasurer did not sign the checks, again the blame would be with the BOD (according to most bylaws).

Why on earth would you turn over your funds to a third party ?

Would you do that with your personal funds ?

DOH

John B26: we never turned over our funds to a 3rd party! We sign all checks, the previous mc stated funds were items approved by board. Then 9-11 months later placed same items approved by board on minutes for example liens & intent to liens. Both HOA & homeowners were charged for these items. We were also charged for late fees that are in our contract to pay $3.00 of the late fee to mc. Then with out boar approval precious mc removed MANY late fees & not just (1) courtesy for the year but all & in some cases a whole years worth. With that alone they made money off the late fees & by removing them the HOA lost out. Then with out board approval they put intent to liens on properties. Also properties that had intent to liens already in place they removed all late fees for properties who hadn't paid dues for over a year, removed the lien on property due to sale & never collected past dues from the sale of property!

Yes we have an HOA attorney & waiting on her to return from vacation to discuss this matter! The main reason for us wanting email exchanges from owners & previous mc is because MANY times owner email previous mc with no response & at board meetings the board is under the impression the owner never replied about the hearing & is a no call,email or even show & at that point we place a fine on the account. It has happened more than a handful of times that the owner did in fact email proof of rental agreement, or let the mc know via email they weren't able to attend the hearing. They would also ask for board members to please contact them. By the time we the board find this out the owner I very upset & has every right to be. When we ask previous mc about this they are clueless & we then provide the emails from the owners to the previous mc. We ask for it to be placed on agenda to have fines removed due to mc error again. After we approve the removal of fines the previous mc still doesn't do so.

Trust me the board has NO confusion at all as every email that any board member sends out will have cc to all board members as an FYI. As a board member hearing nothing but complaints from homeowners about previous mc not getting back to them. I wanted to make sure it wasn't just the complainers who complain about everything. I also wanted back up proof to show the owner of the previous mc. I also feel it's my duty to make sure homeowners in our community are treated fairly. With all that being said it's not micromanagement rather making sure things are getting done! We are paying a mc to do a job & clearly they were doing a half fast job!

MM5 ... Same as other who responded above that is a question to ask an attorney.

However, my question would be if you take the previous MC to court what are you hoping to achieve or monetarily gain?

Then the next question would be how much is the HOA willing to absorb in a possible loss with regards to a Court battle? After all you do understand that most major court battles can cost anywhere from around $20,000 to more than $100,000 for many major issues. The only amount you have previously mentioned was $2,200 which is potentially peanuts compared to the cost of a full blown legal battle. And the cost would be greatly dependent upon the issue of whether the HOA wins or loses the battle.

Is your Board willing to spend $20,000 or more to gain little retribution?

You need to use great wisdom when choosing your legal battles ...

Dragging your HOA into a lawsuit to prove a point or prove this mgmt company shouldn't be in business is not what "grown ups" do. Your angry, I get it, but as a board member your running a business and need to make decisions accordingly.

If the mgmt company gets a bad rep, they can simply open up under a new name. Doesnt matter how bad they are.

MM5

You should seek the opinion of your present MC instead of this forum as they would have all the documents or the lack thereof of whether there was always wrong doing. They in turn could refer the matter to your legal counsel for advice.

If you choose to follow through with legal proceedings, you will be to have all the documents, especially properly approved and signed minutes showing the previous MC was negligent. Embezzlement is a serious charge, you better have all your ducks properly lined up. Making a point with the association money may not be the most prudent thing to do as it could come back and bite you in the wallet.