Management discussing with homeowners board decisions?

AnitaM6 (Georgia)
Posts: 14

Posted:

Does a management company have the right to discuss with individual homeowner a board decision to move services which has not yet been announced to members? Isn’t this a breach of contract? Is there any recourse?

MaxB4
Posts: 3,513

Posted:

Who would be making the announcement, the management company or the Board. If it the management company, and its been board approved, what is the issue?

AnitaM6 (Georgia)
Posts: 14

Posted:

Board made the decision of non-renewal of management contract. Sent certified notice to management company within the 60-day notice required by contract. Homeowner calls PM about ongoing fine situation. PM tells homeowner she has been fired! Which is very disturbing to board. As we were still 40+ days away from our contract end and feel this is a breach of contract as she has zero rights to be sharing board decisions with our homeowners. This is the only homeowner with which we have any issues in our community. They are notorious for never filing an ACC and multiple violations existing at present. Would this be a breach of contract? Our contract ends with her at end of year and she gets to charge us several ridiculous charges for close-out per the contract…while doing absolutely nothing for last 2 months of contract. Just wondering if we could avoid those charges due to her breach of contract.

AnitaM6 (Georgia)
Posts: 14

Posted:

The board intends to make the announcement at end of year. No permission was given to PM for this type conversation with any homeowner. PM knows this is an unruly homeowner which she has given information which forces the board to address the issue asap. She also told this homeowner we were planning to self-manage. Board is very upset.

AnitaM6 (Georgia)
Posts: 14

Posted:

The board intends to make the announcement at end of year. No permission was given to PM for this type conversation with any homeowner. PM knows this is an unruly homeowner which she has given information which forces the board to address the issue asap. She also told this homeowner we were planning to self-manage. Board is very upset.

AnitaM6 (Georgia)
Posts: 14

Posted:

The board intends to make the announcement at end of year. No permission was given to PM for this type conversation with any homeowner. PM knows this is an unruly homeowner which she has given information which forces the board to address the issue asap. She also told this homeowner we were planning to self-manage. Board is very upset.

AnitaM6 (Georgia)
Posts: 14

Posted:

The board intends to make the announcement at end of year. No permission was given to PM for this type conversation with any homeowner. PM knows this is an unruly homeowner which she has given information which forces the board to address the issue asap. She also told this homeowner we were planning to self-manage. Board is very upset.

AnitaM6 (Georgia)
Posts: 14

Posted:

The board intends to make the announcement at end of year. No permission was given to PM for this type conversation with any homeowner. PM knows this is an unruly homeowner which she has given information which forces the board to address the issue asap. She also told this homeowner we were planning to self-manage. Board is very upset.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By AnitaM6 on 11/25/2021 8:01 PM
Board made the decision of non-renewal of management contract. Sent certified notice to management company within the 60-day notice required by contract. Homeowner calls PM about ongoing fine situation. PM tells homeowner she has been fired! Which is very disturbing to board. As we were still 40+ days away from our contract end and feel this is a breach of contract as she has zero rights to be sharing board decisions with our homeowners. This is the only homeowner with which we have any issues in our community. They are notorious for never filing an ACC and multiple violations existing at present. Would this be a breach of contract? Our contract ends with her at end of year and she gets to charge us several ridiculous charges for close-out per the contract…while doing absolutely nothing for last 2 months of contract. Just wondering if we could avoid those charges due to her breach of contract.

What breach of contract?

AnitaM6 (Georgia)
Posts: 14

Posted:

Asking if it is a breach of contract for PM to announce to homeowner a board decision to not renew her contract? It is at the very least unprofessional! But asking if this is the norm for industry or if it is a breach of contract?

MaxB4
Posts: 3,513

Posted:

If you are a board member, then you should have access to the management contract. None of us know the circumstances behind the parting of the ways, but nothing of the sort is in my contract. I've been fired twice, both times for not placing fines on a homeowners without due process, the board didn't want to have a face to face with the "offending" homeowners.

Is it the norm? Probably not.

HenryS7 (Pennsylvania)
Posts: 336

Posted:

Once the board makes a decision, it would be fine for the PM to release this information to a homeowner in my opinion.

The board should have immediately sent out an e-mail blast to homeowners about what was going on rather than wait until later.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I think the PM should have zipped lip unless she was given permission to announce the decision. When we've changed PM's, we announced the name of the new company when we sent out the new budget and coupon books. No drama.

The issue is: what are you going to do about it? This isn't really breach of contract unless your contract states specifically that announcements are made by the board. It's mostly lack of professionalism - I'd just consider it confirmation that you've made a good decision to find another PM.

Even if it were breach of contract, the PM would simply run out the term of the contract while you spend money fighting it out legally.

Anecdote: One of our former PM's was more obviously in breach of contact - they had decided that the contract was poorly written in the association's favor, so they simply charged us what they believed the contract should have said. We didn't terminate the contract for cause for the reason I just stated, simply gave the required 60-day notice. (FWIW, I agreed with the former PM that the contract was badly written, but it was their contract! Mainly, though, we objected to their method of dealing with the problem: contracts don't get re-negotiated on the fly by one party. However, the former board members should have caught this a couple years earlier - I found the discrepancy after I was elected and was reviewing contracts and finances - the board had been asleep at the switch. So fault all around, I think.)

BenA2 (Texas)
Posts: 1,273

Posted:

Quote:

Posted By AnitaM6 on 11/25/2021 8:01 PM
Board made the decision of non-renewal of management contract. Sent certified notice to management company within the 60-day notice required by contract. Homeowner calls PM about ongoing fine situation. PM tells homeowner she has been fired! Which is very disturbing to board. As we were still 40+ days away from our contract end and feel this is a breach of contract as she has zero rights to be sharing board decisions with our homeowners. This is the only homeowner with which we have any issues in our community. They are notorious for never filing an ACC and multiple violations existing at present. Would this be a breach of contract? Our contract ends with her at end of year and she gets to charge us several ridiculous charges for close-out per the contract…while doing absolutely nothing for last 2 months of contract. Just wondering if we could avoid those charges due to her breach of contract.

Unless the contract has a clause prohibiting the manager from releasing such information, then I do not see a problem. I think, generally, the homeowners have a right to know the details of any contract since they are a party to the it. The contract is with the association, not the board.

AnitaM6 (Georgia)
Posts: 14

Posted:

Thank you. My opinion as well. We planned to address after holidays with assessment notice. There should have been no immediate need to address at this time. But to tell them she was fired! We had a 1 year contract, put in place by previous board, which we never got good service on, so we decided not to renew the contract for next year. We are abiding by all the terms. The contract is for accounting only with an original add on of inspections once a month. We cut out the inspections because it was designed where if she write more than 5 per month, there was an extra $50 for all over. She wrote 11 in one month. We only have 29 homes. They were ridiculous in nature, a house with a small dirt mark on the sash was told to paint their home exterior. We felt most were for extra charges. We are still paying her for the agreed upon amount but not wanting her to perform the services. No where in our contract does it discuss she is to announce anything to homeowners. That should be simple courtesy. This makes us even more certain we made the correct decision to move away!

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By AnitaM6 on 11/25/2021 8:01 PM
Would this be a breach of contract? Our contract ends with her at end of year and she gets to charge us several ridiculous charges for close-out per the contract…while doing absolutely nothing for last 2 months of contract. Just wondering if we could avoid those charges due to her breach of contract.

I think it could be grounds for terminating either her, her company or both "for cause."

-- The manager put out arguably information that is defamatory to the HOA, saying the HOA "fired" her. In fact, the HOA chose not to renew the contract.

-- Has the board voted to self-manage? If not, the manager crossed the line on this point.

-- I would check in with the HOA attorney about terminating this manager immediately. I feel this manager's conduct gives signs of wanting revenge. She could be said to be harmful to the HOA.

PatJ1 (North Carolina)
Posts: 568

Posted:

Assuming that the MC is set up to draft HOA charges directly from the HOA accounts, many are, it may be best to just work on getting the accounts transferred to the new MC and determine any action after the changeover is complete.

Expect everything to come to an almost complete halt until the contract expires. 12/31/2021? You still need them to do their part for the transition. Emphasis should be on how the HOA can assist in a smooth change.

Announce the change to the members and welcome the new MC. Then review what charges they take. Then determine if it is in the financial interest to attempt to recoup the charges or just to move on.

We left a very bad MC once. They didn’t transfer our funds over to the new MC accounts as requested for weeks and we scrabbled to pay a very important binder for our Master Policy coverage.

CathyA3 (Ohio)
Posts: 6,299

Posted:

It can't hurt to talk to the HOA lawyer about this, but keep in mind:

* As Pat said, you'll need the current PM's cooperation to get accounts and records transferred over to a new PM.

* Suing the current PM for breach of contract means you'll have to prove the accusation. Depending on the wording of your contract, these charges may have been assessed at the PM's discretion. (There can be an early-termination charge, for example, although it doesn't sound like that's what happened.)

* You'll have to pay the HOA attorney to pursue this, and the legal fees could well exceed the charges you object to. The HOA would be on the losing end financially even if you prevail in court, and that is by no means guaranteed.

* Assume the current PM would fight hard if terminated "for cause". That would damage her reputation and make it harder to get new clients, and if breach of contract is not proven in court then this could lay the groundwork for a counter-suit. At best it would mean more legal expense, and that's if the former PM doesn't win the counter-suit.

My feeling is that everybody is all butt-hurt right now, and that's when people make financially unwise decisions. Unless these extra charges are really excessive and have no basis in the contract, I'd channel Elsa and "let it go".

AugustinD
Posts: 3,698

Posted:

-- I do not support suing to, say, recover x amount of dollars for breach of contract. I support consideration of terminating "for cause."

-- Termination "for cause" should remain entirely confidential, discussed in executive session and calling in the manager as needed.

-- Regarding personnel matters, much should remain confidential, to avoid further litigation.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Anita

you are not renewing with the PM and you know the owner in question is a PIA. What do you want from them?

AnitaM6 (Georgia)
Posts: 14

Posted:

Thank you all for your reply’s. It is so close to end of year, most likely in our best interest to let it go and be rid of this type underhanded management! Have a wonderful Holiday season!

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Quote:

Posted By AnitaM6 on 11/25/2021 7:45 PM
Does a management company have the right to discuss with individual homeowner a board decision to move services which has not yet been announced to members? Isn’t this a breach of contract? Is there any recourse?

You've given the property management company a notice of non-renewal so the property management is, technically, passing information. I would not worry over it and you've already fired the company so the ultimate recourse has occurred. The PM doesn't owe your board timing discretion nor should you expect it.

BenA2 (Texas)
Posts: 1,273

Posted:

Quote:

Posted By AugustinD on 11/26/2021 8:16 AM
-- I do not support suing to, say, recover x amount of dollars for breach of contract. I support consideration of terminating "for cause."

-- Termination "for cause" should remain entirely confidential, discussed in executive session and calling in the manager as needed.

-- Regarding personnel matters, much should remain confidential, to avoid further litigation.

Is terminating a contract a personnel matter? I doubt contractors have the same protections as employees in most states. In Texas anything involving an HOA contract would be open to the members except the actual negotiations.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BenA2 on 11/27/2021 6:34 AM

Posted By AugustinD on 11/26/2021 8:16 AM
-- I do not support suing to, say, recover x amount of dollars for breach of contract. I support consideration of terminating "for cause."

-- Termination "for cause" should remain entirely confidential, discussed in executive session and calling in the manager as needed.

-- Regarding personnel matters, much should remain confidential, to avoid further litigation.

Is terminating a contract a personnel matter? I doubt contractors have the same protections as employees in most states. In Texas anything involving an HOA contract would be open to the members except the actual negotiations.

I agree that contractors have less (so-called) protections than employees.

I call them "(so called) protections" because too often these days we are seeing poorly performing employees being passed from one organization/company to another, where the prior employer would stay silent on bad behavior out of fear of litigation from the former employee. It's misguided as we witness too often, for one, school districts being silent about pedophiles, and then said pedophile lands in another school and repeats his abuses.

Yada. I only have opinions on the issue. The OP appears to have come to a wise decision.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By AnitaM6 on 11/26/2021 12:03 PM
Thank you all for your reply’s. It is so close to end of year, most likely in our best interest to let it go and be rid of this type underhanded management! Have a wonderful Holiday season!

Good decision.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I would not have kept this so secretive. Reason #1 when you fire a contractor it should be from numerous member complaints not just a board. When I had to fire our lawncare service it was based on multiple people complaining about the work. It was very awkward as the guy lived in the HOA. Plus he was the drug dealer to the Ex-President. Whom let the guy pretty much have carte-blanche. One of my first decisions was to instill a 3 bid process and force him to bid. Of course my intent was to always to have him let go. However, this allowed it to be an open and with competition decision. People were welcome to provide bids or speak up why they did not want him to win the bid. (Which they did).

Think having a more open relationship like this helps when you may be dealing with an "emotional" attachment relationship with a contractor. Things like this happen if you all let it get on a personal attached level. It should always be established who is the boss and refer to contractual terms with each other. Can still be "friendly" but don't get sucked into an emotional entrapment.

The OP made a good decision to letting this management go. It shows by their actions some of the issues the HOA may have been going through. Plus this allows a clean slate to start a better interaction with the new management company. It's hard to deal with someone whom will let all the dirty laundry out. However, if you put the clothesline in the front yard then you never have to worry about your drawers flying out the back door.

Former HOA President

MaxB4
Posts: 3,513

Posted:

What nobody has questioned was the management company was hired to do bookkeeping, with a add on to do violations, by a previous board. Maybe they were following the signed agreement, but a new board had different ideas.