Management Co. Costs

Our management company wants to charge us an additional $5.00 for every bill they send out to the homeowners, monthly, because they insist paper costs have gone up. They are already charging us an amount for the bills, office supplies and clerical time. This $5.00 will get them over $1000.00 a month in extra income. Has anyone ever heard of a management company charging per bill costs plus $5.00?

Also, does anyone have in their budget, a line item that states, late charges to management company? They are trying to convince us they are charging us the late fees on all homeowners (regardless if paid on time or not) but if the homeowner does pay on time, it all comes out in the wash. Has anyone ever heard of this?

Kathy, we charge for each late charge statement. The cost is not related to the cost of paper which is nothing; nor cost of ink which is minor. It is for the accounting time involved. You are very lucky it is only $5.00 per statement; that is very low. Compare it to what attornys are charging for the same service.

I don't see anything wrong with the $5 charge. Your forgetting sending out a letter isn't cheap. You have to have office supplies, envelopes, postage, and it takes someone's time to work on it. Notices don't happen for "free". People are always demanding that the MC or HOA send out notices. However, those notices do cost money. That money has to come out of the HOA's budget. It's NOT the MC's. They just control the money. It sounds like this charge is actually helping the HOA's budget. IF the MC is already getting paid a flat rate then nothing will be made by them at all. IF the MC is allowed to "skim" a piece of this charge off, it may just be a $1 a letter. Not that much.

As far as late fees are concerned. I LOVE them! That's because the HOA can only collect money 3 ways. Those are: 1. Dues/assessments 2. Special Assessments 3. Late fees if charged. We charge a $20 late fee. The money goes to our HOA account. So I liked to have late fees if they were paid. You can't bank on them so they are like icing on the cake as far as a HOA is concerned. If your HOA is as strapped as ours, then every penny counts.

I did NOT mention Liens, fines, or foreclosures as a money making resource. They are NOT. You must remember in regards of liens/foreclosures, you doing that legal action because the HOA is OWED money. Liens/Foreclosures are only to collect the money already OWED the HOA plus it cost money for doing the entire process. Believe me, Foreclosures your EXTREMELY lucky to break even and NOT get stuck with a house. If you get stuck with the house, you get stuck with house payments, repairs, and real estate agents to sell it off. NOT as money making as people belive. As far as "Fines", it's illegal in MOST states to levy liens or foreclose on houses based on Fines. Fines are considered additional income if collected. Unless there was a financial loss due to the fine (damages) the HOA had to pay out, then fines can't be collected officially. YOu can issue them according to your documents, but if push comes to shove, the court may not allow them. So be careful.
I don't see a problem with your MC. Sounds like they are trying to do their best in this situation. People don't understand the HOA setup and often cause chaos in the system. I suggest reading a few more post on here to get an idea of what a HOA and MC relationship is. It should be helpful.

Hi Kathy:

If you bill monthly and this is on top of everything else you are paying, then it would seem excessive. If you bill less than monthly and it's for billing those who are late/delinquent, then it would not seem too excessive.

J. Patrick Moore, CMCA