Issues with Property Management Company

I am reaching out with questions and concerns regarding our Property Management Company. I am the Treasurer of our HOA Board of Directors. We hired a Property Management company in April 2018. While their contract is up and they are now month to month, our CC&R’s & Governing Docs have not been updated in 47 years. Our old & current CC&R’s include and state that if the BOD wants to change property management companies they have to go out for a membership vote. We have over 288 homes and our members are not responsive to our ballots and voting; despite our efforts in campaigning, town-halls, etc..
The problem is that our property management company is negligent. They are not been paying our bills on time,they do not answer our questions or concerns, has lack of follow through, unresponsive, has constant errors on checks, etc…the list goes on and on. If our revised new Governing Docs (which eliminates a members vote to change companies) don’t pass what do we do? Are we stuck with this company? Is there any loop-hole or special circumstance that we can take advantage of to fire this negligent company and bypass the members vote?

I’m sure you need to see our contract and gov. docs to give a full & accurate response, but are you familiar with this specific issue? Any information or feedback would be greatly appreciated and thank you.

Hi, no we were not. We had a decent property management company for about 8 years and the new president wanted to switch and change to the current one we have (big mistake). So we went out to the membership to vote and we did get the votes back to make the change. But, this time around no one is interested in sending their votes back (maybe voters fatigue) and we are now concerned we may be stuck with them.

I would talk to a lawyer who specializes in HOAs and find out what the consequences would be for the board if they choose to ignore this covenant.

AcC,
I find it hard to believe that this much power was given to the HOs. Usually the CC&Rs are the opposite and the board has complete discretion. I would be surprised if a case could not be made for breach of contract here. What if this company went out of business? What if they were caught embezzling funds from the HOA? I would not sit on a board that left you with this little authority.

Just for the record most MCs will not live up to boards expectations. They always over promise and under deliver IMO. The PM is usually over worked and under paid and has more properties than they can handle. This forces them to manage by fire. If your issue isn't burning they will put out someone else's fire. All I am saying is instead of throwing the baby out with the bath water just replace the bath water. Demand a new PM on your property. Set expectation levels with this new person and hope for better results.

AcC,

So, you are not going to show us your CCRs?

Sounds like they are going down in flames. Start interviewing new property mgmt companies immediately. Loosing $350,000 would have been the last straw for me.

The new HOA mgmt company will help you get rid of the old one. Its unlikely they are competent enough to sue you and it sounds like you have plenty of enough evidence to fire them.

AcC,

Your CCRs would have been filed at the clerk's office.

Any new CCRs would have ben filed at the clerk's office.

Cutting and pasting will not provide the language in the current CCRs - their age is a secondary consideration.

CCRs are legal documents - cut and pasted material is just material and is likely irrelevant.

Can you post the legal CCRs?

AcC - forum rules prohibit naming HOAs ... and, the link requires a password.

Thank you, AcC. It appears you don't need to get membership approval to terminate your contract with the MC., but you do to hire aa new firm.

Read, as advised above, your contract with the MC to see under what circumstances you may end the contract. Submit that language to the Board and vote to get rid of them.

Let your membership know that the Board has voted to terminate the MC as of mm/dd/xxxx. Don't say anything in the written notice to the members that might be defamatory. Include a ballot saying it's crucial to vote for new mgmt. company and the board needs 51% of the membership to hire such. Other can help with wording.

Send to all Owners per CA election requirements and your election rules. It helps to assure the return of ballots if you include a stmaped-self-addressed envelope. Sometimes it helps to offer an incentive to vote. Say to dinner at nice nearby restaurant.

AcC

I know CA has funky association regulations but is is possible to have a vote to hire a new MC via petition? First, interview and select a new MC. Second, draw a Voting Petition up and gather 145 (51%) signatures.

That is what we have to do. We already found a new company we like. We have no choice but to have our membership vote and hope we get the 51% needed to change. If not we are stuck with this company. Our question and goal was to see how we could AVOID all this and make the decision and change within the Board of Directors, thus eliminating a membership vote all together. But looks like our rules in our CCR's have no wiggle room.

Your rules say management can be by the board OR a professional management company.

1. Fire the incompetent MC.
2. Run by board management by hiring an accountant, landscaper, handyman and answering service. In other words, do it yourself for a while.
3. Use mail-in ballots to amend those outdated ccrs.

Richard, as a PM yourself, do you have nothing useful for AcC given s/he's in CA? And must you be unkind to others who're actually trying to help?

AcC--just wanna make sure. You do have election rules and your HOA has elected directors via absentee mail-in ballots, right?

Btw, our CC&Rs aren't quite as tight as yours, but we may not hit a manager as a direct employee, i.e., we can't have in-house management.