HOA and Management Companies

Started by RobR1 • 5 replies • 1060 views

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RobR1 (New York)
Posts: 3

Posted:

Hello all.

New to the forum here. I came across it when searching for some answers pertaining to the HOA for which I am a VP.

Just a quick orientation on my HOA. We are not your typical type of HOA that enforces certain types of rules. This HOA was established by our builder who built our development in a natural preserve and was for the most part meant to collect dues ($120 annual) which are primarily used for paying the insurance on our common areas (approx 12-15) as well as paying a maintenence crew to cut the grass. We also pay some other small bills as well pertaining to our development.

Anyway, my question / situation is as follows:

We have 270 homes. Over the past 3 years of my involvement on the board, we were able to roughly bring the deliquient homeowners down from about 30% non paying down to approx 10% non paying.
I would venture to say that most of the time that our board spends is reviewing who and who has not paid, and then in compliance with our bylaws impose liens on the deliquient properties. The board consists of 5 volunteers, and in the interest of saving time, we were going to look into the possiblilty of letting a management company manage this aspect for us.

I was wondering if anyone has a similar situation to mine, and also what is your experience with management companies. Im wondering if Im asking for something way out in left field, or if this is a resonable request.

Any and all feedback is appreciated!!
Thanks,
Rob

HaroldS (Arizona)
Posts: 906

Posted:

You will probably have to increase your yearly assessment fee to cover the cost of a management company if your present $120 is just covering your existing listed expenses. Your documents or state law probably spells out what percent you can increase your yearly assessment without consent of the members. Anything you would need over that allowable percent would have to be voted on by the members. For instance if your documents or your state allow a 20% increase that would be $24 X 270 = $6,480. I doubt you can find a management company who will work for $540 a month. So you are probably looking at a larger assessment that will require approval of the members. Harold

JosephW (Michigan)
Posts: 882

Posted:

Management companies probably shouldn't file liens for associations, an attorney should, and the cost should be passed along to the delinquent owner. I know the procedure is not particulary hard, and that many management companies do this, but as far as I am concerned, this is a legal action and an attorney should be involved. Besides, you wouldn't have to pay a monthly fee, just the cost of filing the liens, which should be collectible. Also, you want someone familiar with collection and bankruptcy laws or you could have some serious problems.

Joe

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MikeS1
Posts: 668

Posted:

Do your HOA docs allow for the suspension of privileges in the event of arrearages over 60 days. Do you have a set collections policy? Late fees? I submit that most hoa docs will address this. Are there common amenities where you can restrick their use, or suspend privileges these amenieties? Is so this might be another way that you can bring people into compliance. We also use a collections agency and their fees are in addition to what the homeowner owes the HOA. We don't lose any percentage when this is referred to a collections agency. Also the homeowner is notified that this is being turned over to collections agency. Good luck.

HaroldS (Arizona)
Posts: 906

Posted:

The problem with collection agencies (including attornies) is that under the Federal Fair Debt Collection Act a savvy debtor only needs to write a letter to them telling them to stop contacting them. That doesn't eliminate the debt of course, but it does end that avenue of collection. Harold

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Sounds as if you also have some organizational problems also.
What kind of documents are you working from, some detail please. Do you have State Documents, Declaration, Master Deed, etc. Are you a registered business with the state.?

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