Removing Major Property Management company

Started by MarkF18 • 32 replies • 1046 views

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MarkF18 (Arizona)
Posts: 6

Posted:

Wondering what it would take to remove a property management company and govern our HOA just from members of the community? My old HOA was that way and it was half the price with much cleaner with more things tp offer.

FloridaC1 (Florida)
Posts: 27

Posted:

Quote:

Posted By MarkF18 on 01/11/2021 7:21 AM
Wondering what it would take to remove a property management company and govern our HOA just from members of the community? My old HOA was that way and it was half the price with much cleaner with more things tp offer.

Depending on the number of units and the amount of your budget, a licensed manager may be necessary. Please provide the number of units and yearly budget, also, what's wrong with your current management?

AugustinD
Posts: 5,144

Posted:

Quote:

I think it is not cool to compare the cost of volunteers doing much of the labor (zero dollars) to the cost of a professional manager. There are other costs to having a volunteer do the work, like burn-out, and what happens when no one wants to donate her or his time to what are usually seriously ungrateful members?

SheliaH (Indiana)
Posts: 6,964

Posted:

I will assume you're on the board, in which case you should know step one is to read the property management contract to see what it says about terminating the contract.

You should also consider why you want to terminate the contract. is money an issue? Are you dissatisfied with their quality of work? If do, can you name specifics (dates, a complete description and the consequences?). Did you try to resolve the problem or problems by having a conversation with the manager and perhaps his or her supervisor and develop a performance improvement plan?

Could the problem be the board itself - You hire the property manager to handle daily operations, but some of most of you won't get out of the way and let the manager manage. Instead a bunch of people call with additional instructions (most If which weren't discussed or voted upon in a board meeting) or an officer tried to Lord over the property manager because he/she is the president, dammit and people are supposed to do as they're told!

If money's the issue, did you read the contract to see what they do for you and consider if any services are unnecessary and could be dropped to save money? Maybe you're mad because you asked for things that weren't in the contract to begin with and are shocked to find out if you want it done, you have to be willing to pay for it.

Once you figure all that out, you'll have to decide if you'd like to hire another one or go the self management route. That's not as easy as it sounds. You have to find people who are willing to do it and have the skill set or at least the willingness to get some trains my and learn if you hire several contractors such as a bookkeeper to put together the financial reports, a bit of supervision will be necessary. Are you willing to do that? What happens if you or someone else steps down - how do you maintain continuity?

After figuring all that out, you will need a transition plan to ensure bank accounts and paperwork is turned over at the appropriate time, and no, this doesn't happen in a day or even a month, depending on the size of your community and scope of what the property manager was doing for you. Oh, yeah, you'll need an attorney to help guide you through the transition to ensure everything was done properly and on ti.e before the game over.

So that's just a taste of what you might need to expect. There are some property managers who participate in this website and I hope they chime in with their experiences so you'll get some idea of what to expect and avoid. This is not a slapdash move, and I'm not saying a change isn't necessary but you must be willing to give this careful thought and make your plans.

My community went through three companies and tried self management before we settled on our current company. All that happened before I bought my home and fortunately we've had a good relationship with the three managers since then. In case you're wondering, the first two weren't fired - both retired (sadly one passed away a few years later.)

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

MarkM19 (Texas)
Posts: 1,459

Posted:

Hi All,
I hate to say it but my guess is that MarkF18 may be a Homeowner that got a violation. I say this because I have seen this over the recent years. Owner gets a note for breaking a rule of the HOA and instead of correcting the error of their ways they want the PMC replaced. I see this all the time in my HOA the get the notice of violation and they run to FB to give their version of the story and everyone else who have ever received a letter jumps on the bandwagon. He he does not have any of the details it will be clear that I am correct. If he has the facts and is on the board he should be able to provide the reasons for his actions here.

Being on boards for 11 years now I can safely say that no PMC will ever be perfect. It is an unrealistic request to expect everyone to be happy with Management. They do a very tuff job and are usually poorly compensated for being the bad guy in the HOA. They get all the nasty calls and do all the legwork for the boards. I always try and give them the benefit of the doubt until patterns of repeat failure come up and even then you never know what the new companies issues might be.

MarkF18 (Arizona)
Posts: 6

Posted:

I will have to get the number of residence for sure. We are a large community The builder is now gone and we are able to make the necessary changes more for the residence them the builder However the major property management company is operating or trying to operate the same. They have now raised the dues about 30 percent with no improvements at all. Their annual costs are extremely high. The common areas and parks look terrible, garbage everywhere but leave your garbage can out a little to long and you get a fine. dead grass no tree trimming, No pools. no activities, ect. We did elect a new set of board members that are now k with the management company. Al meetings so far have been private and not open to the members of the community. I know we would need a licensed manager but do we need a big cooperate company to do it with a extremely high price tag? I do believe that we would be much better off with a smaller management team with interest mostly concerned with the interest of our community. Unlike the big cooperate management company with interest of all their communities. My old HOA ran so smooth with many more amenities with out the big management company for close to half the price

MarkF18 (Arizona)
Posts: 6

Posted:

No violation here just many people in the community are feed up with paying more for nothing.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By MarkF18 on 01/11/2021 9:11 AM
I will have to get the number of residence for sure. We are a large community The builder is now gone and we are able to make the necessary changes more for the residence them the builder However the major property management company is operating or trying to operate the same. They have now raised the dues about 30 percent with no improvements at all.

Only the Board, which you and your fellow members elect, can impose an increase in the dues. The Board does so by a vote.

Quote:

Posted By MarkF18 on 01/11/2021 9:11 AM

Their annual costs are extremely high. The common areas and parks look terrible, garbage everywhere but leave your garbage can out a little to long and you get a fine. dead grass no tree trimming, No pools. no activities, ect. We did elect a new set of board members that are now k with the management company.

Have you looked at the most recent reserve study?

-- It is common for people who are new to the management of HOAs to not understand that one's monthly dues pay not only for day-to-day operating costs but also go into a savings account for big ticket common element items that will have to be replaced for many years.

-- What kind of common elements does your HOA have? Roads, parks, signs? Front yards?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

MarkF

The MC is hired by the BOD. The BOD is elected by the owners. You have to get a BOD that is willing to look for alternatives. Either convince the present BOD to do so, or replace them with those that think like you. Are you willing to run for the BOD?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By MarkM19 on 01/11/2021 9:07 AM
I hate to say it but my guess is that MarkF18 may be a Homeowner that got a violation.

The OP expressly indicated dues had been going up, and he thought there was money to be saved. This concern of the OP's -- saving money -- is one that all boards and many members have. Leaping to the conclusion above seems strange to me.

MarkF18 (Arizona)
Posts: 6

Posted:

I wish I could run for the board but I could not be a fair effective member due to my job and availability. I am not new to the HOA deal as I have been labeled. I am new to the big corporate management company with a major interest in themselves and then the community they are hired by. This big management company manages many big commented in the area therefore decisions are influenced by all of them not individually for each community. I think once the builder is gone no need for this type of management.

MarkM19 (Texas)
Posts: 1,459

Posted:

MarkF,
Thanks for giving us this added information. I apologize for making my earlier assumptions.

I agree with you that if your HOA has recently been turned over from Developer controlled Manage to HO Board control. I always suggest that this is usually a good time to make a change. I could probably guess the name of the PMC that you currently have is it is as you describe. That being said the board has to make the call if they are up for the extra work it takes to interview, hire and lastly get the new company up to speed. They also have to realize that every HO will be effected by this change. This includes new contact info, ne place to mail payments and online banking changes. I always like to say that a new PMC is a blank slate because they only know what they are able to get from the company that is losing your business. The board has to bring this new Manager up to speed and inform them on all the ongoing task that may be in the process. If this step is not done it can take them months of ineffectiveness before they get things figured out.

MarkF18 (Arizona)
Posts: 6

Posted:

Thank You just the answer I was looing for so I can share it. My HOA experience has always been great and I even thought I got a lot for my money. Here not at all pay much more for very much less.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

Posted By MarkF18 on 01/11/2021 9:39 AM
I wish I could run for the board but I could not be a fair effective member due to my job and availability. I am not new to the HOA deal as I have been labeled. I am new to the big corporate management company with a major interest in themselves and then the community they are hired by. This big management company manages many big commented in the area therefore decisions are influenced by all of them not individually for each community. I think once the builder is gone no need for this type of management.

The Board of Directors hires the management company.

If you want the management company fired, you will need to persuade the Board of Directors to replace them.

If you want the community to be self-managed you will need to convince the Board of Directors to volunteer their time to do that.

If the Board of Directors won't do what you want, you can try to recall and replace them (the process will be in your governing documents) or wait for the next election and replace them. Then you would need to find candidates who do want to do what you want.

To replace the Board with either method, you will need a significant number of your neighbors to agree with you, and be willing to attend meetings and vote, or submit proxies.

To persuade your neighbors, you will need to devote a lot of time to outreach.

Your inability to serve on the board yourself will not improve your chances of persuading your neighbors to make a radical change and create a whole bunch of work for themselves, at your behest.

Good luck.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

The problem with self management is getting people to do the work required. Even the OP (MarkF) said he would not be on the BOD so nothing personal, but of what use would he be to the association?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By JohnC46 on 01/11/2021 10:47 AM
The problem with self management is getting people to do the work required. Even the OP (MarkF) said he would not be on the BOD so nothing personal, but of what use would he be to the association?

For me to feel other than what JohnC46 posted above is difficult. Much of the time I think HOA members who are not willing to serve on the HOA board, yet criticize the Board in harsh terms, lack both credibility and honor.

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By BarbaraT1 on 01/11/2021 10:39 AM

Being that Mark stated that he is in a rather large community, you will need to check your governing documents to see what is required. I have seen documents that state that the membership must approve going from professionally managed to self manage. In addition, they may have a clause where a majority or more of mortgage lender must also approve as it is they are funding the homes in the community.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The HOA pays the PM to do the work as a paid service. You and your neighbors could do the job yourselves and "save money" but at what cost? The HOA isn't in the business of "saving money". It's in the business of paying for it's bills and maintenance. Hiring a PM helps with that daily business that volunteers are not capable or want to do.

It's like I can change my own oil. However, I choose to take it to an express oil change place. Why? They do this for a living I don't. They can do it quicker. Plus have the tools/means to do it. I pay for that expertise and ability. Yes, I can save myself a few bucks but would I be happy about it? No. I am not wanting to waste an hour of my time getting grimy, getting under a car, and what if something goes wrong? Plus an oil change looks like you have done "nothing" to add any value or appreciation to your vehicle.

So it's best to go shopping for other options with a PM. Why not change what you want for them to do? That is a much better option than having some poor neighbors take on the responsibility in their personal life.

Former HOA President

MarkF18 (Arizona)
Posts: 6

Posted:

I would most defiantly run for the board if I could be an effective board!! My job restricts me from being home and available to do what is required. That would just not be fair to the community. As a resident I shold be able to attend meetings and voice my opinion!! Once I retire you will see my name on the ballot!!

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By MarkF18 on 01/11/2021 11:22 AM
As a resident I shold be able to attend meetings and voice my opinion!!

I have no objection to this and even encourage it, as long as participation is done without the exclamation points, all caps, yelling, profanity, and preferably with a basis in facts.

Have you looked at the HOA's reserve study?

AugustinD
Posts: 5,144

Posted:

MarkF18, are you so sure that the current directors are not sacrificing time to the HOA that they could instead be using to enrich themselves through paid work? This is about money, isn't it? Some are willing to do with less money in order to improve their communities. You are not.

You seem to want the forum to accept your excuse as valid. But doing so seems to ignore the many hours that the directors are likely giving. You do not want to donate your time. These folks on the board do. If you want me to see you as fair, this ought to be at least acknowledged. (Not that my opinion of you should count for squat.)

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

The big corporate management company takes it's direction from the board and works for them. Could it be that your board doesn't know how to manage them? If so, then how can they possibly manage themselves?

BillH10 (Texas)
Posts: 1,217

Posted:

MarkF18

I read again your initial post and a later post in which you provided additional information. I am bothered about the fact you seem to be blaming the management company for the fact the common areas are not properly cleaned up or maintained. You commented about the lack of amenities, and the fact the management company charges are "extremely high". You also state the big management company may not be paying attention to the community in lieu of paying attention to their internal priorities.

Have you investigated why, or questioned why, the common areas are not being properly maintained? Have you communicated your concerns to the management company or the Board? If so, what was the response?

The fact the amenities are not what you would like them to be is not the responsibility of the management company, and probably not that of the Board if the community was recently turned over to the Association. Did you inquire as to what amenities would be included by the builder when you purchased your property? Are you expecting a swimming pool when none was planned from the beginning? Or, has the builder departed and amenities which were promised (or hinted at) are non-existent?

What is the basis for your assertion the management company annual charges are "extremely high"? Have you conducted an analysis of competitive management company annual charges on an apples to apples basis in your state and local area? Have you read the management contract to determine what the management company is responsible for?

As another person observed, the amount of the assessment is the responsibility of the Board, not the management company. I will take that further to say it is very common for builders/developers to keep the annual assessments low while under declarant control to ensure potential buyers are not turned off by the amount of the assessment. While the budget the builder/developer publishes may include a reasonably accurate depiction of month over month expenses for utilities and landscaping for example, such budgets are often woefully understated in terms of funding for reserves. The management company may have convinced the Board the builder's budget will not fly and the increase was necessary to ensure funding is adequate. Did you ask for an explanation of the increase?

It is my opinion many of the questions and concerns you have should be investigated before the question of changing the management company is pursued; changing the management company will not address the lack of amenities and probably will not result in a decrease in the annual assessment.

I also suspect I know which company presently manages the Association, I am not defending or denigrating them in any way. Changing the management company may be warranted.

You mentioned this is not your first 'living in an association' rodeo. However, I'm not confident you fully understand how an association operates or is governed based on statements you have posted. I respectfully suggest you have some homework to do.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By BillH10 on 01/11/2021 2:06 PM
MarkF18

I read again your initial post and a later post in which you provided additional information. I am bothered about the fact you seem to be blaming the management company for the fact the common areas are not properly cleaned up or maintained. You commented about the lack of amenities, and the fact the management company charges are "extremely high". You also state the big management company may not be paying attention to the community in lieu of paying attention to their internal priorities.

Have you investigated why, or questioned why, the common areas are not being properly maintained? Have you communicated your concerns to the management company or the Board? If so, what was the response?

The fact the amenities are not what you would like them to be is not the responsibility of the management company, and probably not that of the Board if the community was recently turned over to the Association. Did you inquire as to what amenities would be included by the builder when you purchased your property? Are you expecting a swimming pool when none was planned from the beginning? Or, has the builder departed and amenities which were promised (or hinted at) are non-existent?

What is the basis for your assertion the management company annual charges are "extremely high"? Have you conducted an analysis of competitive management company annual charges on an apples to apples basis in your state and local area? Have you read the management contract to determine what the management company is responsible for?

As another person observed, the amount of the assessment is the responsibility of the Board, not the management company. I will take that further to say it is very common for builders/developers to keep the annual assessments low while under declarant control to ensure potential buyers are not turned off by the amount of the assessment. While the budget the builder/developer publishes may include a reasonably accurate depiction of month over month expenses for utilities and landscaping for example, such budgets are often woefully understated in terms of funding for reserves. The management company may have convinced the Board the builder's budget will not fly and the increase was necessary to ensure funding is adequate. Did you ask for an explanation of the increase?

It is my opinion many of the questions and concerns you have should be investigated before the question of changing the management company is pursued; changing the management company will not address the lack of amenities and probably will not result in a decrease in the annual assessment.

I also suspect I know which company presently manages the Association, I am not defending or denigrating them in any way. Changing the management company may be warranted.

You mentioned this is not your first 'living in an association' rodeo. However, I'm not confident you fully understand how an association operates or is governed based on statements you have posted. I respectfully suggest you have some homework to do.

Well said. All good points.

PatriciaR9 (California)
Posts: 3

Posted:

Self Managing is very risky for Homeowners. It can be done, but I would insure that you have a good accounting firm, CPA and legal counsel. With self managing, it may put homeowners in difficult positions in regards to enforcement. You want to keep neighbors your neighbors and not put them against each other. I would recommend using an all inclusive fee, which is a flat fee for all of the services required.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Let your contract naturally expire and simply do not renew it. Don't fire the company or you'll pay a penalty in all likelihood.

FloridaC1 (Florida)
Posts: 27

Posted:

I manage a large POA as part of my portfolio (over 1,000 homes) along with seven other Associations(another 1,000 units) comprised of Condominiums and HOAs. Your 2021 budget would list the number of homes in your Association. OP did not also mention if a CDD was present. Association assessments are based on the cost of running the Association and are not raised by the management company. Insurance is going up 35-50% in 2021 so get prepared for that increase.

OP brought up fines for this and that - you and everyone who lives there received a copy of the documents prior to purchase and if you didn't like the Use Restrictions, you shouldn't live in an Association. Many Associations use the money from fines to keep the cost of assessments low. It's not supposed to be like that but sometimes it is.

You will need a licensed community Association Manager due to size of the community and if this isn't an on-site position (more cost to the Association) your Association will become part of a manager's portfolio. Owners really have no idea what a manager actually does for the Boards and homeowners. For example, bi-weekly property inspections, non-compliance mailings, monthly meetings, preparation for monthly meetings, phone calls from owners who are told to respond by writing, owners who don't know how to navigate the websites to procure the documents they can get on their own, phone calls from owners throwing their neighbors under the bus due to political signs, animals, parking you name it - perhaps you can find non-paid volunteers to handle these kinds of issues within your large community.

I wish they'd give a class on owner certification for living in associations like they do for Board certification; owners need to be educated properly.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Our MC is basically a Bookkeeper and plays the heavy when it comes to writing fining letters.

Any association that depends on fines for income is in deep $hit. Fines are a method to stop violations, not make money. I would be very hesitant hiring an MC that says we can make you money via fines.

MC's should charge on a services/effort needed basis. As an example. Charge more if they are patrolling the neighborhood for Covenant violations. In our case, our BOD looks for and investigates Covenant violations. We then have our MC play the "heavy" and write the warnings/fine letters.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By FloridaC1 on 01/12/2021 3:28 PM

You will need a licensed community Association Manager due to size of the community and if this isn't an on-site position (more cost to the Association) your Association will become part of a manager's portfolio.

Since you are a HOA manager, I trust you can quote the statute that requires the OP's Arizona HOA to have a licensed manager. Please do.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

The little I have seen on MC Licensing requirements could be passed by anybody with a basic education. Similar to Real Estate Agent testing. Read and add 2 and 4, you pass.

FloridaC1 (Florida)
Posts: 27

Posted:

Upon further review, AZ's association managers may take training courses from the Arizona Association of Community Managers but do not need to be licensed. It was my understanding that the CMCA designation is for Community Association Managers in states other than Florida who do not require state licensing. Appears OP's Association could self manage with untrained volunteers however, as an LCAM licensed by the DBPR in Florida, I see that as a comedy of errors ~ the best managers started out as assistants to managers which is the proper training arena IMO.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By JohnC46 on 01/12/2021 4:54 PM
The little I have seen on MC Licensing requirements could be passed by anybody with a basic education.

I agree. I advise against volunteers managing a HOA, but I support consideration of an experienced HOA manager, who may have no credentials other than a lot of experience, in states where there is no certification requirement. I think the states with no certification requirement by far outnumber the states with a certification requirement.

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