Looking for advice in Maryland

Started by MikeT14 • 10 replies • 1005 views

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MikeT14 (Maryland)
Posts: 6

Posted:

Hello,

I am looking for someone to give me some guidance, preferably in my region of Howard County Maryland. Just joined the HOA Board about a year ago, and the following items concern me:

1- Lots of turnover at Management company.
2- The Management company controls our banks accounts.
3- I don't have a copy of the contract with the management company (just requested today).
4- They can never clearly explain things.

If you are knowledgeable on HOA's and in Maryland I would be grateful for your guidance/advice. Please post on here, and perhaps we can then message each other briefly.

My main goal is that we do an RFP if we decide that is the direction we want to go.

Thank you,
Mike

MikeT14 (Maryland)
Posts: 6

Posted:

(looks like this forum doesn't have an edit post button)

Some more details are that the neighborhood is about 40 townhouses.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Are your town homes considered fee simple (thus being an HOA) or condominiums (thus being a COA)?

MikeT14 (Maryland)
Posts: 6

Posted:

Quote:

Posted By TimB4 on 04/18/2017 7:51 AM
Are your town homes considered fee simple (thus being an HOA) or condominiums (thus being a COA)?

We are fee simple. Roughly 40 units. The management company fee is $5,520/annually. This is roughly 1/3rd of our annual budget, which is $14,700.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I take it that you couldn't get enough volunteers to do the work, hence the decision for a management company (MC)to assist.

I live in a 130 town home development (also fee simple) in Fairfax County. We have been self managed since turn over.
Therefore, I have some knowledge of MCs, but no real first hand experience. However, I'll try to help as best I can.

When you say that the MC has the accounts, do you mean that the account is in the name of the MC or in the name of the Association but the MC is on the signature card (along with the Board)?

At $5,520/yr, that is only $11.50 per month per unit.
When we looked into an MC we were getting bids of $35 per unit.
You will know more when you obtain a copy of the contract, but what duties does the MC perform for the Association?

Are you still under control of the developer or has the development been built out and the members control the Association?

What are some of the questions or issues you are looking at having explained?

You posted that you are new to the Board (I expect a Director). Do you also have an Officer position (Pres, VP, Treasurer, Secretary, etc.)?

If you prefer, I can be contacted at [email protected].
However, the more you can provide on this site, without mentioning names of the MC or the Association, the better answers you will receive. The varied experience of the members of this forum can likely help. Some responses will be good, some will make you think, some may even tick you off but in general all responses are intended to help you help yourself.

MikeT14 (Maryland)
Posts: 6

Posted:

Quote:

Posted By TimB4 on 04/18/2017 8:22 AM
I take it that you couldn't get enough volunteers to do the work, hence the decision for a management company (MC)to assist.

I live in a 130 town home development (also fee simple) in Fairfax County. We have been self managed since turn over.
Therefore, I have some knowledge of MCs, but no real first hand experience. However, I'll try to help as best I can.

When you say that the MC has the accounts, do you mean that the account is in the name of the MC or in the name of the Association but the MC is on the signature card (along with the Board)?

At $5,520/yr, that is only $11.50 per month per unit.
When we looked into an MC we were getting bids of $35 per unit.
You will know more when you obtain a copy of the contract, but what duties does the MC perform for the Association?

Are you still under control of the developer or has the development been built out and the members control the Association?

What are some of the questions or issues you are looking at having explained?

You posted that you are new to the Board (I expect a Director). Do you also have an Officer position (Pres, VP, Treasurer, Secretary, etc.)?

If you prefer, I can be contacted at [email protected].
However, the more you can provide on this site, without mentioning names of the MC or the Association, the better answers you will receive. The varied experience of the members of this forum can likely help. Some responses will be good, some will make you think, some may even tick you off but in general all responses are intended to help you help yourself.

We have a board with four people. All are good and involved. In the past, I expect this was not the case. I have lived here 5 years, but just recently joined.

The accounts are in the HOA name, and the MC controls them for us. We have three accounts. Noone from the board ever signs checks...

The MC basically collects dues and pays invoices. Anything other than that we get charged pretty much. They charge us additional for postage, mailing, etc. There are separate line items for tax prep and the like.

We are not under developer control. Neighborhood was completed in early 90's.

I am the secretary. I went to a board meeting, and it turned out it was election time. There were four of us there, hence we all ended up on the board.

My main issue is we pay them roughly $475/month to pay invoices which some months we don't even have an invoice. We basically have three vendors (snow/grass, CPA for tax, and insurance). It seems collecting money is probably the most difficult, but all homes pay on time pretty much. Some a couple weeks late, but nothing longer than 60.

If we wanted to do it ourselves what would be the process? In others opinions is it worth it? It seems that $5k would add up quickly allowing us to repave sidewalks, or even lower the dues.

SheliaH (Indiana)
Posts: 6,964

Posted:

If the property manager "doesn't explain things clearly" to your satisfaction, it could be due to your being new on the board. Then again, the property manager may have some issues regarding communication and/or isn't used to board members who actually ASK for details on what's going on (sometimes it's easier to BS your way through things and the board members go along with it because it makes sense or they don't know or care about the details either).

Your colleagues should have ensured you had a copy of the contract when you joined, but now that you're getting one, begin by going through it so you'll have an understanding of what they're supposed to do - especially on the bank accounts (instructions as to who gets paid for what should be the Board's domain).

By the way, have you spoken to your colleagues about any of this? If so, what did they say? The Board is responsible for overseeing the property manager, so if things aren't getting done, it will need to address that with the manager. If that doesn't work, then you should consider an RFP.

You may or may not get to that point, but for now, concentrate on finding out what they're supposed to do and consider which issues are most concerning to you and discuss them with the board. I believe property managers should be evaluated every year by the board (including a survey of homeowners to see what they're concerned about, if anything). As you notice trends, sit down with the property manager and his/her supervisor, if necessary and discuss a plan to address them. Give them a deadline to address those issues and in the meantime, you may want to review the contract to see if there are services you're paying for that you no longer need or never use. Eliminating them would be a start in getting costs down.

I would also suggest you take a look at the Community Association Institute (CAI) website, which has a ton of education materials for new and experienced Board members, such as best practices on selecting and working with property managers. Consider buying some of those books to help you determine your next steps. Better yet, check if there's a CAI chapter in your area - if so, you could attend some of their meetings and network with people who can give you references to other property managers if you find you want to go in another direction. Good luck!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MikeT14 (Maryland)
Posts: 6

Posted:

Quote:

Posted By SheliaH on 04/18/2017 8:34 AM
If the property manager "doesn't explain things clearly" to your satisfaction, it could be due to your being new on the board. Then again, the property manager may have some issues regarding communication and/or isn't used to board members who actually ASK for details on what's going on (sometimes it's easier to BS your way through things and the board members go along with it because it makes sense or they don't know or care about the details either).

Your colleagues should have ensured you had a copy of the contract when you joined, but now that you're getting one, begin by going through it so you'll have an understanding of what they're supposed to do - especially on the bank accounts (instructions as to who gets paid for what should be the Board's domain).

By the way, have you spoken to your colleagues about any of this? If so, what did they say? The Board is responsible for overseeing the property manager, so if things aren't getting done, it will need to address that with the manager. If that doesn't work, then you should consider an RFP.

You may or may not get to that point, but for now, concentrate on finding out what they're supposed to do and consider which issues are most concerning to you and discuss them with the board. I believe property managers should be evaluated every year by the board (including a survey of homeowners to see what they're concerned about, if anything). As you notice trends, sit down with the property manager and his/her supervisor, if necessary and discuss a plan to address them. Give them a deadline to address those issues and in the meantime, you may want to review the contract to see if there are services you're paying for that you no longer need or never use. Eliminating them would be a start in getting costs down.

I would also suggest you take a look at the Community Association Institute (CAI) website, which has a ton of education materials for new and experienced Board members, such as best practices on selecting and working with property managers. Consider buying some of those books to help you determine your next steps. Better yet, check if there's a CAI chapter in your area - if so, you could attend some of their meetings and network with people who can give you references to other property managers if you find you want to go in another direction. Good luck!

I am working with the other board members. I said I would volunteer to do some research. None of us have the contract... shame on us I know. We are all new, and figured things were ok. My main concern was our financial stability. We are fine in that regard with plenty of reserves. Now we are just getting to understand our contractual relationships.

SheliaH (Indiana)
Posts: 6,964

Posted:

Well, the rest of my suggestions still stand - and since all of you are new, ALL OF YOU need to sit down and read the contract. To save some time, everyone can take a section and report to the group.

And has anyone spoken to the former board members (if they're still around) to get some background? Did anyone have concerns about the property manager before now? If so, how was that addressed - perhaps promises were made, but never kept and now here you are.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

NigelB (Texas)
Posts: 254

Posted:

Quote:

Posted By MikeT14 on 04/18/2017 7:19 AM
Hello,

I am looking for someone to give me some guidance, preferably in my region of Howard County Maryland. Just joined the HOA Board about a year ago, and the following items concern me:

1- Lots of turnover at Management company.
2- The Management company controls our banks accounts.
3- I don't have a copy of the contract with the management company (just requested today).
4- They can never clearly explain things.

If you are knowledgeable on HOA's and in Maryland I would be grateful for your guidance/advice. Please post on here, and perhaps we can then message each other briefly.

My main goal is that we do an RFP if we decide that is the direction we want to go.

Thank you,
Mike

I'm in Texas, but had pretty much the same type of experience when I joined the board a couple of years ago.

The management company ran everything to include control of the association bank accounts with little to no oversight over expenditures. No-one on the BOD had approval authority over invoices submitted for payment - even though the management company payment system had that capability.

We made changes - and now a member of the BOD has to approve an invoice for payment in the online system that the management company operates.

We too experience turn overs with the individuals assigned by the management company to act as property managers - but that is very easily overcome if a board member is willing to devote time and effort.

Really all we need our management company to do is to collect our assessments and pay our bills, they do a once monthly drive by for deed restrictions, but rather than allow them to issue violation notices, they first provide the notice of infractions to our appointed ACC committee which reviews and then decides on whether or not to cite.

You have to remember that many of these management companies manage numerous properties and that the individual assigned to your property might have 10 other communities they are responsible for. I think that the general business model for most management companies does not really contemplate strict oversight by a BOD, but a BOD does have a fiduciary responsibility to its members and allowing a management company to go on autopilot can result in many of the problems that you hear about "those HOA's"

Association documents - they were held by the management company. When I got on the board I got copies of every document related to the formation of the association, CC&R's, ByLaws, ACC Guidelines, all current contracts to include the contract with the management company, and compiled a "Directors Guide and Standard Operating Procedure" which explains exactly how the association operates, what property is owned etc. You might want to start with doing something like that - it will help the board to understand and will also provide something for future board members to refer to.

MikeT14 (Maryland)
Posts: 6

Posted:

I now have the contract and related addendums. Things are actually not as bad as I thought. The contract is about 10 years old, with a clause that it will continue annually at an agreed rate between the MC and the Board. It has only gone up about $500 over 10 years, which seems good to me. They have been fulfilling all of their obligations.

I think we are in a good place, but just need to ensure oversight is better. I was first considering the option of not having the MC, but that's not a direction we want to go. Noone wants to have to be responsible for all these tasks (we all have full time jobs and kids for the most part).

Thanks for everyone's input. It is genuinely appreciated.

I will be sure to check the resources you have all provided.

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