Changing Management Company

Started by RW3 • 21 replies • 1708 views

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RW3 (Tennessee)
Posts: 3

Posted:

Hello,

first, it is great that such website is available.

Thank you to the initiators.

I am the vice president of a HOA. We have a terrible management agent and I would like to change this company.
The problem is, that the other board members are sympathizing with this agent, because she is a woman and the boards members are older gentlemen. They do not see any issue with her because they do not want to. They felt into total complacency.
I have a very good contact to our homeowners, of course, because they come to me when they have issues and not to the other blind board members.
I am not able to find anything in our rules and regulations, but I think I remember that when the majority of homeowners agree, in form of e.g. a list of signatures, to a new management, the other board members cannot refuse this.

Can someone confirm this with a source maybe?

Thank you

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It may be time to change how you do business over all. We instituted a 3 bid and only 1 year contracts. This way every year we could opt out of a contract we were not happy with or add/remove items we wanted. No one says we can't continue with the status quo but the world is built on competition. Every contract a HOA I say is competitive... Even if done by a woman...

Former HOA President

RichardP13 (California)
Posts: 163

Posted:

RW,

Nationally, there is no such rule. I am not aware if Tennessee state regulations allow for such, but the other place to look is in either in your CCRs or Bylaws.

Boards are the ones who generally set policy, such as Rules and Regulations, and this is when a majority can possibly override a decision a Board made.

TimB4 (Tennessee)
Posts: 21,059

Posted:

RW,

When others don't want to change contractors (regardless of the contract), this doesn't mean it can't happen. It does mean that you will likely have to do all the work.

My suggestion is to:

1) reveiew the contract to see when it is up for renewal.
2) Draft a "request for proposal" (RFP). An RFP is simply a document specifying what you expect the company to provide to the Association and ask that they submit a bid based on those expectations by a certain date.
3) Make a motion that, as a fiscal responsibility, the Board should submit bids to see if the services being provided are at a fair cost. Explain that soliciting bids doesn't mean that the Board has to change contractors, it just ensures that the Board is paying a reasonable and fair price for the services.
4) Send out the RFPs (including one to the current contractor)
5) Work with the sales reps, correlate bids and present the findings to the Board.
6) Discuss the issue.

We don't use a management company, therefore, I don't have an example of an RFP for management services or I would post it. Perhaps someone else has an example that they can sanitize (remove references to existing HOA) and post.

BTW - you may find that you are getting the best deal for the cost or you may find that you can save thousands. The point being that you won't know for sure until bids are solicited.

Hope this helps.

Tim

RW3 (Tennessee)
Posts: 3

Posted:

Thank you for your responses.

To Tim: I have already everything.
The question is, if I together with the homeowners, can overrule the rest of the board members to switch to the new company.

RichardP13 (California)
Posts: 163

Posted:

RW

The short answer is, without the majority vote of the Board, you couldn't proceed.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By RW3 on 01/27/2015 3:35 PM
Thank you for your responses.

To Tim: I have already everything.
The question is, if I together with the homeowners, can overrule the rest of the board members to switch to the new company.

Assuming there is a legal way to do that, do you think the board would still be functional afterwards? Maybe it's time for a board shakeup rather than trying to do an end run around the existing members. Do a lot of other homeowners feel this way too?

Have you read both your bylaws and CCRs to see if they say anything about overriding the board? Many of them only specify board overrides for budgets and special assessments. If not, you'd need to find your state laws on associations and see if they have any provisions for an override.

Escaped former treasurer and director of a self managed association.

RW3 (Tennessee)
Posts: 3

Posted:

Thank you all. I contacted an attorney for clarification.

TimB4 (Tennessee)
Posts: 21,059

Posted:

RW,

I took a look and could not find anything that allowed the membership to overturn a contract award decision by the Board.

If you think about it, that makes sense. Once a contract is entered into in good faith, the contractor has an expectation that the contract will be fulfilled and the terms complied with. Even if the membership could break a contract entered into by their Board, there would likely be termination fees or the requirement to pay the full contract anyway.

Now, I have heard where memberships can overturn rules and regulations made by the Board (although I couldn't find that in TN statutes either) and allowing members to have that authority makes sense, because rules and regs are internal and affect the members (not outside contractors).

When you get your opinion, please let us know what it was.

Tim

TimB4 (Tennessee)
Posts: 21,059

Posted:

RW,

Based on your response, I get the impression that the Board did solicit bids and still awarded the contract to this individual, which is why you are looking at overturning that decision vs. convincing the Board that bids should be solicited. Is that impression correct?

CharlesB20 (Colorado)
Posts: 15

Posted:

If homeowners are not pleased with the performance of the HOA manager or the management company, and they would prefer that the association engage a different management firm, AND if the executive board is not inclined to take such action on its own, then the homeowners may organize a movement to replace the existing board with one more to their liking. This requires the removal of incumbent directors. Removing directors may be accomplished at a special meeting of the association called specifically for that purpose. Also, directors may be removed at an annual meeting of the members--- in which case the removal of a director (or directors) must be an item of business stated on the annual-meeting agenda.

Unless the directors are thus replaced, the executive board is the legal, governing body of the association, and the board has full authority to award and/or maintain contracts as it deems necessary.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

RW

You may find that the contract with the present MC has an early cancelation fee. Ours does.

JerryD5 (Colorado)
Posts: 218

Posted:

We went through changing out MC out last year. Luckily for us, the board was unanimous in our decision. The MC was a huge company that has several offices in our metro region (I believe they are national). We were tired of being ignored, instructions not being acted on and overall poor performance. While we did the transition at the end of their current contract, we did have a 60-day out if we exercised it (with no penalty). We lined up a new company before we got rid of the old one. It is nearly like night and day, service-wise. Plus it was about $300 a month cheaper. In foresight, I wish we had done it a lot sooner.

Good luck with your HOA. I agree with the advice to change MC if your current board is willing. If not, start action to replace the board using the guidelines set forth in your documents.

KerryL1 (California)
Posts: 14,550

Posted:

When is the contract with your current MC up for renewal? Perhaps you can rally homeowner to attend an open meeting to demand (politely, of course) a change in management companies (MC).

Or, perhaps your MC would be willing to place a new agent at your HOA and remove the existing one.

How many homes are in your HOA? Is your manager full-time on your premises?

BonnieG1 (Nebraska)
Posts: 1,186

Posted:

Our situation was a little different last year. Our President was not happy with the PM but I (The Secretary at the time) and the homeowners were happy with our PM.

We almost lost our PM due to the way our President was treating him. Such as insisting he come on site on a Sunday to help her prepare documents for the annual meeting. (Which was actually my job, but she wouldn't let me do it) But the thing she insisted he do (that in my opinion) was way off base was have him come back to pick up a beer can from under a sign in our yard.

He gave 60 day notice and she accepted. I am so glad that after the annual meeting last year her and husband gave the new Board their resignation letters which were word for word identical. Before the annual meeting I was the only other Board member.

A very smart Board member advised we get a position paper from our current PM and review that with the other bids for Property Management. We voted unanimously to keep our PM.

I am not saying the PM was perfect but he certainly is good and listens and responds to our concerns.

AprilS
Posts: 18

Posted:

We compelled the Board to change by presenting it with a recall and giving it 60 days to terminate the management company or we were going forward. They finally found a new company with two weeks to spare.

Background: large community of 75-80 rentals, with the majority on the board landlords of several units. Two members, onsite owners, who provided the majority with irrefutable proof of the management company's total lack of ethics or frightening ineptness, were generally dismissed by the other three. I'm talking tens of thousands of dollars for goods and services never received, awarding 200k contracts without bid or board knowledge. Yet still the majority said to keep them.

Now we're in the uncomfortable period where this disreputable company is still collecting dues and writing checks for goods and services. An independent property manager we know suggested we rescind the management company's access to accounts, funds etcetera.

The problem is the fact they pay the regular bills on checks they print in their office.

Ideas how to " shut them down"

NpS (Pennsylvania)
Posts: 4,216

Posted:

Suggestion:

Figure out how much MC will need to go through end of termination period. Add a small buffer amount. Move all other funds to a new bank controlled by the BOD.

Sikubali jukumu. Read all posts at your own risk.

AprilS
Posts: 18

Posted:

Thanks!

CLARIFICATION: that's 75-80% rentals of a 200 unit complex.

BTW, the management company lied to everyone who called them about the owner-renter ratio. Generally they were told 49-50%, just under the FHA requirement for favored loans.

AprilS
Posts: 18

Posted:

NpS (Pennsylvania)
Posts: 4,216

Posted:

Are those long term rentals, seasonal rentals, weekly rentals?

Sikubali jukumu. Read all posts at your own risk.

AprilS
Posts: 18

Posted:

Our CCR's will not allow rentals for fewer than 30 days, although it's happened and the owners have been fined.

I bought for cash after being told about the 50% ratio. Then I learned the awful truth. My belief was once the housing market bounced back, the neglected elements of the property would be addressed, as no home owner would tolerate continued degradation.

The landlords seem content to allow low income housing tenants who are just happy to be close to the ocean and have few rules enforced. The landlords cram 6 people in one bedroom units and eight or nine in two bedroom units. That means the owners are subsidizing water and trash for tiny units never indented for six adults and two kids. The two onsite members have succeeded in getting a management company hired who will provide part time onsite personnel to deal with rules and complaints, but this was not what owners hoped for. We wanted an independent manager, a financial company, and a project manager to oversee repairs and maintenance.

BonnieG1 (Nebraska)
Posts: 1,186

Posted:

Quote:

Posted By AprilS on 01/29/2015 10:58 AM
We compelled the Board to change by presenting it with a recall and giving it 60 days to terminate the management company or we were going forward. They finally found a new company with two weeks to spare.

Background: large community of 75-80 rentals, with the majority on the board landlords of several units. Two members, onsite owners, who provided the majority with irrefutable proof of the management company's total lack of ethics or frightening ineptness, were generally dismissed by the other three. I'm talking tens of thousands of dollars for goods and services never received, awarding 200k contracts without bid or board knowledge. Yet still the majority said to keep them.

Now we're in the uncomfortable period where this disreputable company is still collecting dues and writing checks for goods and services. An independent property manager we know suggested we rescind the management company's access to accounts, funds etcetera.

The problem is the fact they pay the regular bills on checks they print in their office.

Ideas how to " shut them down"

Although we have a good management company we still oversee our finances. We had problems in the past and have no desire to turn everything over to a management company.
All bills and association dues go through at least one Board member. As President, I approve all bills. (there have been a few times when the management company charged for an item or two that was in the contract) But I just brought this to our PM's attention and these small charges were deleted.
After I approve the bills, I give them to the treasurer for recording. He records when each bill is due and then gives them to the PM who cuts and mails the checks. I usually just get the fees out of our locked on site box and give them to the treasurer to record who then gives them to the PM. If we have a problem owner who is being fined, I usually look at the check from the owner.

You could get a person to just keep your books. In 2013 before we hired the PM, we had a separate bookkeeper who cut our checks for us. The checks came back to us to be signed and mailed.

Most PM companies we interviewed wanted to have complete control of our finances. The company we have is the only company that I can remember that would let keep the control we have.

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