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MikeK22 (California)
Posts: 19
Posted:
Hello everyone,

Our HOA got fed up a few months ago and finally fired our incompetent property manager. However, we reviewed the operating contract between the HOA and the manager and it is pretty clear that they failed to honor many contractual obligations including setting up board meetings and responding to the boards emails.

Do you know if we are able to go after the HOA for fees collected and get them reimbursed for failure to fulfill the contact as stated?

I bounced this idea off the wife and she said it really wasn't going to be worth the trouble as small claims is only up to 5K.

Any thoughts would be greatly appreciated.
SheliaH (Indiana)
Posts: 6,964
Posted:
Why would scheduling board meetings be part of the property manager's duties - that was THEIR responsibility.

As for responding to the emails, was there anything in this contract that specified when responses were to be expected (e.g within 3 hours) What type of response were you expecting - that the email had been received and you'd get a response after the issue had been investigated or that something specific would be done? Depending on the subject of the email, you can't always expect a response right away.

If you're looking for reimbursement of any fees paid, try looking for something far more serious, such as failure to supervise a contractor (you'll have to prove how the failure hurt the association, such as having to pay more for work because the property manager didn't contact the vendor like he/she was supposed to).

Otherwise, I'm inclined to agree with your spouse - the property manager is gone, so move on. Just make sure you've obtained all the association's documents so there will be a smooth transition to whoever you hire. And this time, have a conversation about what the association should and shouldn't expect regarding the manager's duties. His/her job is to manage the property, but things that should be the board's responsibility (like scheduling its own meetings) is on the board. If you don't have board members who can do things the right way, get rid of the current bunch and vote for those who will (you may need to be one of them)>

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
MikeK22 (California)
Posts: 19
Posted:
The board meetings are actually in the contract of the HOA manager to set up and coordinate.

There was quite a bit of small things but given that we are a newer/smaller HOA there hasn't really been anything major for them to mess up on.

I was trying to see if anyone has gone this route to try to get fees back. I think it might be a long shot but who knows.

NigelB (Texas)
Posts: 254
Posted:
Quote:
Posted By MikeK22 on 03/20/2018 1:46 PM
Hello everyone,

Our HOA got fed up a few months ago and finally fired our incompetent property manager. However, we reviewed the operating contract between the HOA and the manager and it is pretty clear that they failed to honor many contractual obligations including setting up board meetings and responding to the boards emails.

Do you know if we are able to go after the HOA for fees collected and get them reimbursed for failure to fulfill the contact as stated?

I bounced this idea off the wife and she said it really wasn't going to be worth the trouble as small claims is only up to 5K.

Any thoughts would be greatly appreciated.

I'd say that it would be a waste of time.

Even if you pursue it in small claims court and represent yourself, how much do you expect to get back?

Out of your annual assessment, how much of that goes toward paying for the manager, then divide that amount by the number of properties in the HOA, and then further figure out the amount that represents the failure to honor contractual obligations.

Here's an example our contract with our management company runs at about $7200 per year, plus extras for services that are billed separately. Lets say the response to emails and convening board meetings is part of the master contract. We have 233 properties so each property's share of the $7200 is about $30. Lets say that the non performed contract was 15% of the master contract - that amounts to a refund of $4.50 to you.

But really the contract is between the HOA and the manager, I doubt that you can claim anything from the HOA for its failure to ensure that the contract provisions were not met - seems like they remedied it by terminating the contract.
JanetB2 (Colorado)
Posts: 4,219
Posted:
You wife is right it would not be worth the time and cost. Just be glad they are now gone and to be replaced with someone more competent. Also, if you sue the HOA then you and your neighbors will end up paying anyway, plus the attorney fees. You will open a can of worms you wished had not been opened.
MikeK22 (California)
Posts: 19
Posted:
Quote:
Posted By NigelB on 03/20/2018 2:18 PM
Posted By MikeK22 on 03/20/2018 1:46 PM
Hello everyone,

Our HOA got fed up a few months ago and finally fired our incompetent property manager. However, we reviewed the operating contract between the HOA and the manager and it is pretty clear that they failed to honor many contractual obligations including setting up board meetings and responding to the boards emails.

Do you know if we are able to go after the HOA for fees collected and get them reimbursed for failure to fulfill the contact as stated?

I bounced this idea off the wife and she said it really wasn't going to be worth the trouble as small claims is only up to 5K.

Any thoughts would be greatly appreciated.


I'd say that it would be a waste of time.

Even if you pursue it in small claims court and represent yourself, how much do you expect to get back?

Out of your annual assessment, how much of that goes toward paying for the manager, then divide that amount by the number of properties in the HOA, and then further figure out the amount that represents the failure to honor contractual obligations.

Here's an example our contract with our management company runs at about $7200 per year, plus extras for services that are billed separately. Lets say the response to emails and convening board meetings is part of the master contract. We have 233 properties so each property's share of the $7200 is about $30. Lets say that the non performed contract was 15% of the master contract - that amounts to a refund of $4.50 to you.

But really the contract is between the HOA and the manager, I doubt that you can claim anything from the HOA for its failure to ensure that the contract provisions were not met - seems like they remedied it by terminating the contract.

I probably should have clarified that I am the president of our 3 person HOA board. Our dues are 14K per year but didn't account for the percentage of failure. I figured that at this point is would be 30-50% failure. In any event, I sent an email to the management company's management as more of a heads up that we are looking into the breach of contact and see what they say. They might come up with a quick settlement offer to make it go away.
DouglasK1 (Florida)
Posts: 2,046
Posted:
Note that in a contract lawsuit damages are generally awarded based on your actual financial damage, not on other factors such as what percentage of their contract they didn't meet.

Escaped former treasurer and director of a self managed association.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Property managers are PAID contractors of the HOA. Which means the ONLY monies they are to get is what was written in the contract. It has NOTHING to do with whatever dues your HOA did or did not collect during that time. The dues are the HOA's business NOT the Property Managers. They just worked for the peanuts you paid them.

Your really just asking if you can prorate the contract for the work the contractor did. Which I would say would be nearly impossible to prove. Instead, it was more of violation of the contract that allowed you to fire them.

Dues do not equate to the Property Management salary. The dues are used to pay the Property Manager's salary per whatever contact that exists.

Former HOA President
KerryL1 (California)
Posts: 14,550
Posted:
With others, don't waste your time, Mike. Your Board really should have been on top of the PM to make sure they adhered to the contract. Our OM, too, by the way, schedules all meetings of the board and of committees too. So, it's not unusual.

You do mean the Board fired the manager, right, Mike? Not "the HOA."

Just make sure you get back all of your files and that your next contract contains what's important to your board and itms that your board is willing to enforce.

What size is your HOA, Mike?
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By MelissaP1 on 03/20/2018 3:58 PM
Property managers are PAID contractors of the HOA. Which means the ONLY monies they are to get is what was written in the contract. It has NOTHING to do with whatever dues your HOA did or did not collect during that time. The dues are the HOA's business NOT the Property Managers. They just worked for the peanuts you paid them.

Your really just asking if you can prorate the contract for the work the contractor did. Which I would say would be nearly impossible to prove. Instead, it was more of violation of the contract that allowed you to fire them.

Dues do not equate to the Property Management salary. The dues are used to pay the Property Manager's salary per whatever contact that exists.

As a Management company, I am not a PAID contractor, but the managing agent.
I don't work for peanuts, I demand cold, hard cash.
It does matter what dues are collected, as my monthly fee is from what is collected.
The dues are MY business, that is what I bill for and collected and lien for.
RichardP13 (California)
Posts: 3,868
Posted:
I am curious, exactly what didn't they do?

You always have the avenue of small claims, but you have to prove monetary harm from their non-actions.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Richard most HOA's pay a management company to do what they want them to manage. Hence they are paid contractors to the HOA. Dues are the INCOME of the HOA. The HOA then pays their Contractors from that income. Now the Management Company may be paid to collect/manage/pay debtors dues money. Make no mistake, that once the management company is gone, those dues are going to the HOA NOT the Management company once that contract has ended.

Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By MelissaP1 on 03/20/2018 4:59 PM
Richard most HOA's pay a management company to do what they want them to manage. Hence they are paid contractors to the HOA. Dues are the INCOME of the HOA. The HOA then pays their Contractors from that income. Now the Management Company may be paid to collect/manage/pay debtors dues money. Make no mistake, that once the management company is gone, those dues are going to the HOA NOT the Management company once that contract has ended.

Sorry, I'm not a contractor, I am the agent of the association, according to documents filed with the Secretary of State. Nope sure what they do down your way.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By RichardP13 on 03/20/2018 5:07 PM
Posted By MelissaP1 on 03/20/2018 4:59 PM
Richard most HOA's pay a management company to do what they want them to manage. Hence they are paid contractors to the HOA. Dues are the INCOME of the HOA. The HOA then pays their Contractors from that income. Now the Management Company may be paid to collect/manage/pay debtors dues money. Make no mistake, that once the management company is gone, those dues are going to the HOA NOT the Management company once that contract has ended.


Sorry, I'm not a contractor, I am the agent of the association, according to documents filed with the Secretary of State. Nope sure what they do down your way.


While you may be noted via the Secretary of State as the agent to receive the HOA correspondence and who they contact ... you are still contracted by the HOA to perform that duty. Generally here in CO the Management Company will be noted as the contact agent via the Secretary of State if the HOA has a Management Company. Otherwise it will be an officer of the HOA.
RichardP13 (California)
Posts: 3,868
Posted:
There are a number of MC's that are employees of the HOA.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By RichardP13 on 03/20/2018 7:36 PM
There are a number of MC's that are employees of the HOA.


I think that was the point Melissa was making ... you are an employee of the HOA even if you are noted as the “agent”.
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By JanetB2 on 03/20/2018 7:42 PM
Posted By RichardP13 on 03/20/2018 7:36 PM
There are a number of MC's that are employees of the HOA.


I think that was the point Melissa was making ... you are an employee of the HOA even if you are noted as the “agent”.

No, I am not an employee of the HOA
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By RichardP13 on 03/20/2018 8:29 PM
Posted By JanetB2 on 03/20/2018 7:42 PM
Posted By RichardP13 on 03/20/2018 7:36 PM
There are a number of MC's that are employees of the HOA.


I think that was the point Melissa was making ... you are an employee of the HOA even if you are noted as the “agent”.


No, I am not an employee of the HOA


Really??? Who signs the checks you receive?
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By JanetB2 on 03/20/2018 8:33 PM
Posted By RichardP13 on 03/20/2018 8:29 PM
Posted By JanetB2 on 03/20/2018 7:42 PM
Posted By RichardP13 on 03/20/2018 7:36 PM
There are a number of MC's that are employees of the HOA.


I think that was the point Melissa was making ... you are an employee of the HOA even if you are noted as the “agent”.


No, I am not an employee of the HOA


Really??? Who signs the checks you receive?

I do
KerryL1 (California)
Posts: 14,550
Posted:
Look, Melissa & Janet. Many CC&Rs do not permit the manager to be the "employee" of the HOA, including ours.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
It is probably a "Paid Agent" situation. Paid by the HOA to be their "agent". Which if our HOA was ever to stop being homeowner controlled, we are required to hire a Management company to manage us. Which basically is selling out our HOA and losing our votes. We may still be able to have a "Board" but the MC is in charge. The MC would set the dues and then paid from them as like a business. The dues would be set to cover their "fee" and what money is needed to collect to pay the bills.

That isn't a normal relationship with many HOA's. May be more popular with Condos. It's almost like going into conservership without the court rule IMO. If it's the best to compare it to something.

However, it's been most of my experience one hires an MC as a contractor than their agent. We don't know the details of the MC and HOA relationship here. It just did not sound like a Paid Agent situation. It sounded more like they had a contract relationship that they terminated. Which still does not mean dues are involved. Think the OP has some confusion here.

Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By MelissaP1 on 03/21/2018 5:09 AM
It is probably a "Paid Agent" situation. Paid by the HOA to be their "agent". Which if our HOA was ever to stop being homeowner controlled, we are required to hire a Management company to manage us. Which basically is selling out our HOA and losing our votes. We may still be able to have a "Board" but the MC is in charge. The MC would set the dues and then paid from them as like a business. The dues would be set to cover their "fee" and what money is needed to collect to pay the bills.

That isn't a normal relationship with many HOA's. May be more popular with Condos. It's almost like going into conservership without the court rule IMO. If it's the best to compare it to something.

However, it's been most of my experience one hires an MC as a contractor than their agent. We don't know the details of the MC and HOA relationship here. It just did not sound like a Paid Agent situation. It sounded more like they had a contract relationship that they terminated. Which still does not mean dues are involved. Think the OP has some confusion here.

YOU HAVE NO IDEA WHAT YOU ARE TALKING ABOUT!
MikeK22 (California)
Posts: 19
Posted:
Sorry about the confusion but let me clarify...

I am the president of a small condo HOA which consists of a 3 member board. We are 60 units each paying 200 a month in dues of which we were paying a management company (MC) 1200 a month or about 14K per year.

The contract between the HOA and the MC was 10 years old but outlined many duties of the MC which they failed to complete. Some examples would be failure to facilitate board meetings, failure to complete annual budgets on time, failure to respond to send notices for infractions, etc. While this was why we moved away from them. As far as I am concerned, I believe the MC is no different than the landscaper, pool guy, etc. They are an entity that we hired to do a job.

Given that we are small/newer complex, we haven't had any major construction or projects that can directly be tied to a fiscal impact but rather want to see about going after the contract failure to at least get something back for the HOA not me personally.

RichardP13 (California)
Posts: 3,868
Posted:
Mike

Let me comment as someone who does own a MC. I think based on the number of units, you fee is a little high, but I don't know how many meetings per year you have or the amount of amenities.

Was the proposed budget submitted to the Board on time or delivered to the homeowners late. I will generally submit proposed budgets to a Board in late September. I will have the budget package prepared long before that, so all is ready by December 1st, if the end of the year is your fiscal year.

Is the MC and the Board on the same page in regards to compliance? Once the letters are sent, does the Board meet to enforce, due process?

It is the responsibility of the Board, primarily the President to set the agenda and the dates of the meetings. The MC will prepare the agenda, get a meeting place, post if convenient.

We are different than the landscaper and the pool guys. If properly done, we are what can make a HOA run smoothly.
DouglasK1 (Florida)
Posts: 2,046
Posted:
Unless you can quantify your financial damage from their actions/inactions, suing is not likely to get you anything.

Escaped former treasurer and director of a self managed association.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By RichardP13 on 03/20/2018 9:09 PM
Posted By JanetB2 on 03/20/2018 8:33 PM
Posted By RichardP13 on 03/20/2018 8:29 PM
Posted By JanetB2 on 03/20/2018 7:42 PM
Posted By RichardP13 on 03/20/2018 7:36 PM
There are a number of MC's that are employees of the HOA.


I think that was the point Melissa was making ... you are an employee of the HOA even if you are noted as the “agent”.


No, I am not an employee of the HOA


Really??? Who signs the checks you receive?


I do


Using HOA funds ... and the BOD can choose to replace you as an independent contractor in the future, if they so desired.
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By JanetB2 on 03/21/2018 11:49 AM
Posted By RichardP13 on 03/20/2018 9:09 PM
Posted By JanetB2 on 03/20/2018 8:33 PM
Posted By RichardP13 on 03/20/2018 8:29 PM
Posted By JanetB2 on 03/20/2018 7:42 PM
Posted By RichardP13 on 03/20/2018 7:36 PM
There are a number of MC's that are employees of the HOA.


I think that was the point Melissa was making ... you are an employee of the HOA even if you are noted as the “agent”.


No, I am not an employee of the HOA


Really??? Who signs the checks you receive?


I do


Using HOA funds ... and the BOD can choose to replace you as an independent contractor in the future, if they so desired.

Your point?
MikeK22 (California)
Posts: 19
Posted:
When we went out for bid I got 4 which were all around the same price except the new MC companies offered significantly more in services like a web portal and other technology to help with the administration and visibility of the complex/HOA. Meetings were every other month. I'm sure there are some others that might offer services for less but given that 4 bids came in all close in price I think 1200 is reasonable.

The proposed budget was late by about 4 months. We got it in January and yes we are on a Jan-Dec fiscal year.

Again, our management company was responsible for coordinating the board meetings (as stated in the contract). This generally wasn't the problem but the MC company had some turnover and it got all messed up.

You are 100% correct that a good MC is valuable and vital to helping an HOA run smoothly. However, they still are a contractor to the HOA and can be replaced as we have done.

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