Property Manager Bonuses?

I'm on the board for an condo HOA which has been my first and only experience with one, so I'm pretty limited in my experience. We switched our property manager about two years ago because of their poor management skills. The new manager has done a great job with helping us turn things around to where our HOA is in pretty good financial shape.

We have a board member that is suggesting giving our property manager a performance bonus; he's saying that he has been on previous boards that gave between $3,000-$7,000 on occasion. I've looked around online and I can't find anything helpful on this topic.

Has anyone had any experience with this? Is this something that HOAs do, and in what amounts?

Also, in case it's helpful, our property manager is an off-site one.

Thanks in advance for the help!

I am kind of in agreement with Tim. Do you really want to be the guy that tells an owner, "I gave away $5,000 of your money because I think the property manager really deserves it?"

Colin - I agree with the others. Dues are to be used to take care of common areas and expenses of the association. Your manager is already being paid for their services from the dues. If you have this amount of money to pay this large amount as a bonus, someone should check out your reserves, and if there is this large of a surplus, the money should be returned to the homeowners. I agree a letter is sufficient.

I'm with the others, Colin. A majority of our Board, however, voted (I opposed) on a $8000 bonus for '15 for all of our onsite staffers including our full-time PM to whom we just gave a BIG raise for her good work. None of the 17 who work here full-time are our employees.

In the past, we've put notices in the newsletter & on our elevators encouraging donations to staff, most of whom are low-paid custodians & security officers. This was a donation that our PM divvyed up among staff based on seniority, or many of us gave donations to individual staff work we particularly liked. Or, some did a combo of both.

Last year, the PM collected $12,000 and I don't know how much individual staffers received.

I have to question when you changed PM's, did you put it out for bid? Was your decision to choose your current PM based on the contract costs?

If so, why are you attempting to pay more than what was mutually agreed to in the contract?

As a homeowner, I would question if you are upholding your fiduciary duties by giving bonuses.

I agree. Fiduciary duty comes into play if more money is paid than what is contracted.

Thank you both for your responses. I like the idea of tying a bonus to something like expense savings, but it seems like that would be a difficult thing to acculturate measure. The only way I can think of tying a bonus to a metric is having a reserve study done and if at the end of the year you have $XX more in your reserve than what was budgeted you could do XX% of the difference as a bonus.

Do either of you have any experience with tying a bonus to a metric?

A HOA is ONLY funded by its members FOR its members. It is to collect as money in dues to pay the bills and have a reserve account for capital repairs. (That is simplified). A bonus is NOT an expense. I am sure the members like their PM but not wanting to kick in extra money for a bonus for doing a good job. Plus the IRS has their hand or nose onto this as it would not really be an expense. It is more like a reverse fine.

My suggestion is write your next years contract to include performance bonuses but you can not randomly decide this. You would be giving the PM an additional accounting issue and prospective ethics questions for the extra money.

People tend to forget a HOA is a NON PROFIT corporation and does NOT run like your home budget. Spend money on what you need and not a want. Sounds awful to some but your in business now. The business of spending ALL your members money on their behalf. How do you feel your money going for this and having a group of people decide that for you? Then you can understand why things like this are good thoughts and intions but not good practice.

"The new manager has done a great job with helping us turn things around to where our HOA is in pretty good financial shape."

If this is a direct employee and perhaps is being paid LESS THAN his/her/its market value, I would be more concerned to retain this underpaid individual than being smeared for tipping the staff.

In restaurants do you tip the (albeit performance-based) minimum wagers; does it encourage performance above and beyond ? Maybe not always. But if the community is underpaying a good performer, maybe it should accept the possibility that other communities would gladly have that performer and will pay that value instead. Commensurate wage is a lesser problem for me than temptation to defraud or skim by Directors/Officers/managers.

The Big Cheap is a notorious 2 edged sword. No wonder that the patron god of condos is believed by some to be an obscure 11th century Icelandic goddess called Thrifa or "grasping" - hence the evolved word "thrifty". Some believe this goddess laid a mojo on shared ownership communities, encouraging underfunded reserves and whacky schemes to save a nickel but spend hundreds of bucks down the road . . .

Bob D ( not in new york but nearby)

That's interesting to hear, 15% is a pretty substantial amount too. Do you have people that work on property and/or are considered employees of the association or is that 15% for an offsite PM?

I am with Kelly. It is not the owners financial responsibility to hand out bonuses. It is the CAM's employer who should be giving the CAM a bonus. Using Association funds to give away "gifts" is a very bad idea (not even sure about the legality of that in my own state).

These days there are super snoops, wouldn't take long for a angry HOA member to track down a board friends and family member's and any kind of improper relationship to those getting a Bonus in the HOA property management business.

Our CC&Rs, perhaps like most, say that dues should be used to maintain, etc., our common areas and pay for necessary services. So, I don't think an $8,000 bonus is appropriate, but our Board approved it. Even for our managers. Noe are our direct employees.

Our PM makes the argument that bonuses encourage our security officers, custodians, engineers and managers to work harder thus maintenance of our common area improves. i say hogwash! So far as I know there's no evidence that bonuses lead to improved performance.

How do your fellow owners feel about their fees being spent on bonuses for contracted services? What do your state's statutes say about how Association fees are collected and spent?