Managment Yealry Fee

John

From experience, that is typical language from a management contract, BUT the increase MUST first be approved by the BOD. Like in sales, you don't ever get until you ask and then approved.

It was reported as 1.6% for all items less food and energy. Including food and energy it was -0.1 percent. Food was up for the year but energy was down substantially mainly due to lower oil prices.

How much of a management company's fees are for food? I'd try and negotiate it even lower than 1.6%

4% a year is an increase of over 50% in year 12.

John

This was for a management increase, not assessments.

Hahahaha! In that case I'd stick to the 1.6% figure

One of the ways many HOA's get in financial trouble is they ignore or refuse to accept Economics 101 and that is that costs will increase. Any HOA not building a revenue increase in every year is simply putting their head in the sand.

My HOA has not raised dues in 7 years. After pouring over the budget, I believe we need a 16% increase for 2016. Had this been done in painless steps of 3% per year we would not need such a drastic increase.

Nps, The UPI-U is an extremely poor measure of the actual inflation rate. For example with a UPI-U of 1.5% when adjusted for the printing and infusion of massive amounts of new money the BLS adjusts this to 4.9%. I would estimate the real inflation rate in the past 10 years to be near 5% per year.

Try this link - it has an inflation calculator - http://www.usinflationcalculator.com/

This may also be a good time for your board to review the contract to see what services are being provided, how well the management company is providing those services, and if there's a service you may not need anymore, or can subcontract out to save money. If renegotiating the contract becomes necessary, you can dicker over how that should be done.

Personally, I'm not crazy about basing fee increases off the CPI because so many things go into that and it varies by region, city, etc. Fee increases WILL happen, but I think it should be based on the type and quantity of services being provided.

We put contracts out for bid every year to keep vendor prices down. If you stick with the same company year after year, your costs will likely soar. Why? They know your not leaving and can charge whatever they want.

We stay away from 1-year contracts if we can.

We put out 3-year RFPs that require pricing for each year. We use the sum of all 3 years to compare prices.

Vendors know that they need to be competitive on their annual increases. We see many proposals where the first increase is 0% and the second increase is 2% or less.

The following year, it's out to bid again.

HI All,
Thank you for all your answers:MANAGMENT COMPANY YEARLY INCREMENT (NOT HOA)

The Managment company increased to 4% and suggest for 2016 will be 4% as well. Thney never notyfied us about the increase ,I asume because it was already at the contrct.

CAN WE RENEGOZITE THAT INCREASE?,
cAN DO THEY EEVRY YEAR INCREMENT 4% BECAUSE THE CONTRACT?
DO THEY MUST NOTYFIES BEFORE THE INCREASE OR AS TEH CONTRACT UNDELRINE IT ,IS IT OK?

HOW MUCH A MANAGMNET COMPANY SHLOUD RISE/INCREASE(%) YEAR TO YEAR CONTRACT RENOVATION?

We have this is pour contract:
Beginning on the first annual anniversary of this Agreement and each successive anniversary thereafter, the Management Fee shall be increased by an amount, which is the greater of four percent (4%) or the increase in the Consumer Price Index for all urban consumers ("CPI -U") as identified and published by the Bureau of Labor and Statistics, over the CPI- U of the preceding calendar year

HI All,
Thank you for all your answers:MANAGMENT COMPANY YEARLY INCREMENT (NOT HOA)

The Managment company increased to 4% and suggest for 2016 will be 4% as well. Thney never notyfied us about the increase ,I asume because it was already at the contrct.

CAN WE RENEGOZITE THAT INCREASE?,
cAN DO THEY EEVRY YEAR INCREMENT 4% BECAUSE THE CONTRACT?
DO THEY MUST NOTYFIES BEFORE THE INCREASE OR AS TEH CONTRACT UNDELRINE IT ,IS IT OK?

HOW MUCH A MANAGMNET COMPANY SHLOUD RISE/INCREASE(%) YEAR TO YEAR CONTRACT RENOVATION?

Hi John

The contract says what the contract says. If the MC can raise it 4%, they will.

You have a couple of ways that you might be able to get out of it:

1. Look at the termination clauses of the contract. Maybe you can terminate on the anniversary of the signing if you give 60 or 90 days notice. Maybe you can terminate at anytime with 90 days notice. Maybe you can terminate for cause with 30 days notice. All of these are things that you might find in the contract itself.

2. Look at your cc&rs and bylaws. Maybe there is a clause that says you can't have a multi-year contract with an MC. If your docs have such a clause, the contract will become void after one year - your docs override the contract with the MC.

Whichever way you go, you will probably need to terminate the contract or threaten to terminate the contract if you want MC to renegotiate.

Best of luck.