Billing dispute?

I’m the new treasurer of my HOA. I believe our mgmt company has been overbilling us for thousands of dollars over the course of the last year. It’s likely an error in their system somewhere (and not outright deception) but I have pretty solid evidence that yes, they’ve been overbilling us.

I sent a query to the mgmt company (with documentation) and our PM responded “this could take awhile and I may have to charge additional for my time”. Is this normal procedure for what is essentially a billing dispute?

Are there any ‘magic words’ I need to use here? In my query I tried to Play Nice and said stuff like “I don’t understand” and “can you please explain?” Perhaps I should be more direct and say “we expect a refund”?

Bill

Before I went this route I would simply say, "I believe you have a billing problem and I'll be damned if we are going to pay you to fix your own problem." Lawyers can always be hired later if actually needed.

Since you don't know for certain if there's an overcharge, there's nothing wrong with what you said. Why start demanding things when you don't even know if there is a problem and to what extent?You don't say who's in charge of this system or how much access the manager has to it, so slow your roll a bit.

Have a chat with the company president and discuss (calmly) what they will do and how it will be do ne. There should be regular updates, so determine when these will come about - and hold them to it.

If you and your board haven't already done so, give your association attorney a heads up on tbis. You don't need him or her yet,but you want to ensure he or she is also getting the updates and once you have them, you can determine what's next (e.g. An audit).

A PM is a paid contractor of the HOA. So I am a bit confused on how they can actually be "over charging"?. There should be a set amount on the contract of what the HOA pays for. Some PM's do it by charging let's say $5 per household. If you have 100 members that is 100 x $5.

Now they may charge for some additional type of work. That should be defined though what it is. Like do you want your PM to be responsible for writing and issuing out violations? Be prepared to pay for that. It costs money and time to issue and deal with violations.

I would look at getting an independent audit. Should be done anyways. Plus review the contract. See what is DEFINED they are to be doing. Don't get confused between paying bills and paying the PM's contracted bill of services. They can't necessarily control some expenses the HOA incurs. Higher utility bills or other expenses happen. It isn't the one that writes the check's fault.

The reason why I suggest an attorney is being a Board member is a big task and takes a lot of personal hours. The only way it is feasible to be a board member, in my opinion, is to hire out everything that can be hired out.

A dispute with the PM is an easy task to hire out. Get an HOA attorney involved and let the attorney direct what needs to happen to resolve the dispute. It might cost something, but when you divide the cost among all of the homeowners in an association, the cost is pretty small.

We as board members can wear ourselves out by trying to handle everything ourselves, but that is not in the best interest of the board members.

I am all in favor of sending that to an attorney for a paid professional to handle.

You might also want to get in touch with the old treasurer to see what they may know about the charges.

Sounds like you think they are involved in "kick-backs" from vendors. That may happen if you hire a PM that insists on using their vendors. Not that something is "wrong" with that. It is how they do business. However, in our HOA we hired the contractor and told the accountant to pay their bill. Had a 3 bid process before hiring including the accountant's job.

So need to figure out if this involves kick backs of some sort. Either way, may be time to go out shopping for a new PM.

After some thought, I don’t see the need to be mysterious about this: our PMC does violation patrols. The items in question are violation letters. The cost per letter varies from the cost specified in the contract. And the number of letters we’re billed for varies inexplicably from the number of violations we see reported.

Bill

I get what you’re saying, Henry. But I retired early and while arguably it might be better if I devoted my time and energy to art or music or solving climate change, this HOA gig has become something of a hobby. My attitude may change as time goes by, but for now: I don’t mind putting some effort into it. In some ways, the HOA feels like a house that’s become a ‘fixer upper’; my hope is to spend a year or two helping to get it back into shape.

Bill

Have you discussed this with your fellow HOA Officers and Board Members? That would/should be the first step. Being new, you may not have all necessary info/insights.

Depending on what your query to the MC asked for and was intended to accomplish, answering your query may involve additional workload that is not part of their contract to perform as part of their regular duties.

It sounds like this could be resolved somewhat simply with a relatively straightforward discovery of fact, discussion among HOA leadership, and then presentation to MC for explanation. If your fact-finding reveals discrepancies (on the MC's side of the process), then the MC will need to explain and the Board should insist on not paying extra for that.

Sic'ing the HOA layer on them at this point without actually confirming the complete accuracy of your findings and discussing with Officers/Board is total overkill. But if you want to add significantly to your cost and sour whatever relationship you have with your MC, then engaging the lawyer will certainly help to accomplish that.

But if your fact-finding comes up with info that the MC cannot explain and refuses to correct, then yes you should consult your lawyer.

Something to keep in mind is that a single violation could result in numerous letters having to be written/sent to the suspected violator . . . so numerous letters per individual violation is not unusual.

Finally, the whole idea of MCs getting paid per letter written or other similar situation is totally absurd in my opinion. If the contract is written this way, then the MC is incentivized to write as many letters as they can. This is a ridiculous concept that will result in an undesirable situation for while the MC will profit and teh HOA and its members will suffer. So if this is your contract, then you should seek to change this aspect as well.

I know I’m going to come off as a jerk asking this here, but: is there any other forum where y’all hang out, that is perhaps a bit better suited to these kinds of discussions? Ie, someplace that allows

- editing and correction?
- previews?
- anonymization?
- private messaging?
- member-only access?

I feel like there’s an immense wealth of wisdom and experience here - but there’s stuff I’m simply not free to say in this kind of forum. I’d love to chat (for instance) with MaxB4 about his system, for instance, but the conversation couldn’t go far before I’d have to withdraw for fear of exposing myself. I don’t think my PMC can identify me *now* - but I feel the need to be cautious and paranoid.

Bill

Bill

If your only concern/displeasure is violation billing, as in otherwise you are happy with the MC, then it is time to address/correct that situation. Do not throw the baby out with the bath water.

This would be ideal, and I suspect I will soon ask for just such a report. Essentially I’d like to know, for each violation: the violation stage, how many letters were sent, of what type (email, 1st class USPS, Certified), and the address(es) to which these letters were sent. We have not been receiving this information. I’d be happy to be wrong, but: I’m not confident that our PMC can easily provide such a list.


For what it’s worth, this is pretty much the path I’ve been following. The HOA Board has been involved in this ever since I came on-board earlier this year. It’s been busy, and I’ve only recently managed to pull everything together into a succinct but clear document that describes the issues (and has been reviewed by other Board members, too).

I’m aware that a single violation can result in more than a single letter. Still, we are not provided with a sensible breakdown of letters and charges (and, in fact, the closest thing we have to such a report disagrees substantially from the numbers provided in our invoices). AND the cost of each type of letter varies from the costs laid out in our contract.


I agree with you 100% on this. In fact, a large part of why I ran for the Board was to get a straight answer on whether or not the PMC was collecting a ‘bounty’ on each violation. Nobody would give me a straight answer. When I finally had access to all of the reports etc - I won’t say they are ‘incentivized’, but - the PMC has a surprising amount of freedom in handing out violations and billing my HOA for ‘costs’. Part 2 of this adventure is going to be getting these costs under control.

Bill

I hope my HTML isn’t all screwed up..

I had a situation in the HOA I manage where the association was billed for a bunch of certified letters I knew I didn’t send. In our company each property is assigned a code that is input into the postage meter or copier so properties can be billed - some other manager mistakenly used my property’s code.

Of course they shouldn’t be billing a client for investigating a billing dispute or answering questions.

Given what you’ve described I wonder… does your management company have the initials R.M. by chance?

Hi,

The first thing you should do is get this on your attorney's radar. You don't have to involve them yet, but make sure they are up to speed.

You can also review the PM contract and see what they are allowed to charge extra for. While it doesn't sound fair that the company charge you for an error that was caused by their system, it may be legal.