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Violation Reporting - A Modest Proposal

Started by BillD16 • 16 replies • 622 views

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BillD16 (Texas)
Posts: 971
Posted:

It’s me again: Texas HOA, 600 detached single-family homes. I’ve been on the Board for about 6 months and I’ve been the Treasurer for the past 3+ months.

Our PMC charges us a lot of money for violations. Both the reporting and the collecting of them. The HOA will pay $50-$200 just for letters to collect on a $25 fine.

So we lose hundreds of dollars each month.

In the meantime, property values in my neighborhood are shooting skyward like rockets. This has nothing to do with violation reporting; it’s just Austin in 2021.

I’m thinking: we should eliminate most violation reporting. I mean, isn’t violation reporting supposed to keep property costs high? Small stuff, like “trim bushes”, is fine. But anything that goes out as Certified mail is costing us too much money. But the property values keep rising.

Thoughts,

Bill
HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”
LetA (Nevada)
Posts: 2,679
Posted:
Certified mail is used to get peoples attention because they likely ignored prior mailings. It is never a wise idea to stop the certified mailings, that is how things get out of control and neighborhoods look like caca.
BenA2 (Texas)
Posts: 1,273
Posted:
It sounds like the MC profits from looking for and reporting violations. That is a bad idea. I suggest having the MC only report major violations, such as putting up a building or other incurable violations. Leave the minor violations to the members. If it bothers the members, they will report it. If it's so minor that no one bothers reporting it, it isn't worth spending money on.
BenA2 (Texas)
Posts: 1,273
Posted:
Also, the certified letter is only required before taking action, such as a fine. There is nothing in the state law saying you cannot give someone a courtesy reminder for minor violations, in which case certified mail is not required. If they ignore the courtesy reminder you can move to formal action with certified mail.
MaxB4
Posts: 3,513
Posted:
You have two posts dealing with almost the same thing.

Based on experience, I'm going to make some observations. Being you're 600 detached homes, you're probably paying about $6000.00 management fees monthly. The $1500.00 admin is not out of line. If you send out monthly statements, that's going to run $600.00. Board packets maybe $100.00 a month. $200.00 for your violations, maybe $200.00 for collection letters. So it will add up.

As a treasurer, you have a responsibility to have the discussion with MC. As a management company owner, I welcome that opportunity to discuss an association finances with a board member.

You mention your spend upwards of $200.00 to collect a $25.00 fine. No, actually you will probably have 30 or those $25.00 fines, so the MC collects $200.00, the association $750.00.

The board should be setting the policy for how violations are observed and letters sent out. A management company should do no more or no less than what the Board has directed. It's possible how your MC is handling violation is majority board policy. In order to change, YOU need a majority. That how things are supposed to work. If the board thinks the MC is being overly excessive with the violations, it is THEIR responsibility to reign in that behavior.
BillD16 (Texas)
Posts: 971
Posted:
Quote:
Posted By MaxB4 on 12/17/2021 8:13 PM
You have two posts dealing with almost the same thing.

Based on experience, I'm going to make some observations. Being you're 600 detached homes, you're probably paying about $6000.00 management fees monthly. The $1500.00 admin is not out of line. If you send out monthly statements, that's going to run $600.00. Board packets maybe $100.00 a month. $200.00 for your violations, maybe $200.00 for collection letters. So it will add up.

As a treasurer, you have a responsibility to have the discussion with MC. As a management company owner, I welcome that opportunity to discuss an association finances with a board member.

You mention your spend upwards of $200.00 to collect a $25.00 fine. No, actually you will probably have 30 or those $25.00 fines, so the MC collects $200.00, the association $750.00.

The board should be setting the policy for how violations are observed and letters sent out. A management company should do no more or no less than what the Board has directed. It's possible how your MC is handling violation is majority board policy. In order to change, YOU need a majority. That how things are supposed to work. If the board thinks the MC is being overly excessive with the violations, it is THEIR responsibility to reign in that behavior.

I get monthly financial statements, including Accounts Payable. They indicate that we’ve been paying $500 to $1500 per month for just the violation letters.

Our PMC does not like to discuss matters with anyone but the Board President. And, over time, our Board has adopted the notion that we need to do what our PMC tells us to do. The PM / PMC has been uncooperative about providing visibility into how violation letters expenses are calculated.

Oh well. I’m beginning to think that the situation with my HOA is so uniquely dysfunctional and complicated that I shouldn’t ask questions here anymore.

Bill
HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”
MichaelS56 (Minnesota)
Posts: 858
Posted:
Our management company rep may bring to the Boards attention a violation. Board members may also bring violations to the Board for review. Our Declaration has the steps we are to follow and the amount.
MaxB4
Posts: 3,513
Posted:
No two associations are going to handle their compliance issues the same.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Bill

Letting the PM report violation and end up making money on such is wrong. A fair cost is one thing, but it seems your PM is making quite a bit of money. I say agree on a modest cost with the PM. If they will not, it might be time to look for another PM.
MaxB4
Posts: 3,513
Posted:
Quote:
Posted By JohnC46 on 12/18/2021 2:09 PM
Bill

Letting the PM report violation and end up making money on such is wrong. A fair cost is one thing, but it seems your PM is making quite a bit of money. I say agree on a modest cost with the PM. If they will not, it might be time to look for another PM.

What's a modest cost? If the letter were sent out certified mail, the PM is not making money on that. What's the cost for certified mail? $3.35. Say a hundred letters a month. Who authorized the certified mail, the board or PM?
BillH10 (Texas)
Posts: 1,217
Posted:
Max,

Certified Mail with a Return Receipt is closer to $7.00 in post office charges alone. That does not include standing in line if necessary (although I understand from an owner of a PM company much larger than ours that can be avoided), letter preparation expenses (time and materials), time to prepare the Certified Mail post office documents, travel to the post office, etc. To avoid the necessity of tracking every jot and tittle of expense, we stipulate a Certified Letter will be charged at $25.00 in our contracts.

The volume of Certified Mail being sent puzzles me. In our experience, we only use Certified Mail if we reach the step in the compliance process in which a hearing is to take place. There are two or three letters which are sent via First Class mail before that point is reached; more than 95% of the compliance issues are resolved before the hearing step. If this association is using Certified Mail from step 1, the Board must put a stop to the PMC doing so.
SheliaH (Indiana)
Posts: 6,964
Posted:
You don't have to eliminate violation reporting, but you can review your processes to see what's most effective. By now the board should be able to identify patterns - maybe some issues are more problematic than others and the focus should be on that.

Certified mail isn't cheap, so you may want to instruct the property manager to only send them when the homeowner hasn't or refuses to fix the problem. That should be the point where fines should be considered, assuming you have a policy, or the violation is causing so many problems it may be time to call in the association attorney for further action. If it goes to court, you could always request the association be reimbursed for mailing costs. That said it would be helpful to put that in your rules enforcement policy with an effective date and then send it to the homeowners so they know what to expect.

As for your property manager's preference to only speak to the board president, that might have happened because too many board members were going to him or her with conflicting instructions. If you don't know why this is the procedure, why haven't you bought it up during a board meeting with the property manager being there?

In fact, you can't make decisions about association expenditures by yourself, so I hope you're discussing all of this with your colleagues. Then all of you can vote on how best to address this.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
ThadC2 (Florida)
Posts: 820
Posted:
https://www.hoalife.com/ is one package I looked at. but $95 a month and 25 cents per home is expensive, I wonder if there is a cheaper package?
MaxB4
Posts: 3,513
Posted:
Quote:
Posted By BillH10 on 12/19/2021 5:42 AM
Max,

Certified Mail with a Return Receipt is closer to $7.00 in post office charges alone. That does not include standing in line if necessary (although I understand from an owner of a PM company much larger than ours that can be avoided), letter preparation expenses (time and materials), time to prepare the Certified Mail post office documents, travel to the post office, etc. To avoid the necessity of tracking every jot and tittle of expense, we stipulate a Certified Letter will be charged at $25.00 in our contracts.

The volume of Certified Mail being sent puzzles me. In our experience, we only use Certified Mail if we reach the step in the compliance process in which a hearing is to take place. There are two or three letters which are sent via First Class mail before that point is reached; more than 95% of the compliance issues are resolved before the hearing step. If this association is using Certified Mail from step 1, the Board must put a stop to the PMC doing so.

I have never sent a violation letter out certified mail, no matter what stage it was in. We will only send certified mail, as required by statue, for pre-lien and lien notices.

I suggest that the board approved, through the signing of a contract, that violation letters be sent out by certified mail. Shame on them. I suspect the association in question is managed by one of the national companies.
BillyC3 (Kansas)
Posts: 40
Posted:
Am I the only person who saw "A Modest Proposal" and thought of https://en.wikipedia.org/wiki/A_Modest_Proposal ?
BillD16 (Texas)
Posts: 971
Posted:
Quote:
Posted By BillyC3 on 01/03/2022 4:54 PM
Am I the only person who saw "A Modest Proposal" and thought of https://en.wikipedia.org/wiki/A_Modest_Proposal ?

Heh heh. The reference to Swift was intentional.

BillD
HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”
CathyB7 (Colorado)
Posts: 25
Posted:
What is spelled out in your MC contract. Perhaps you can look into a revision if they are charging fees for sending violation information to the board and to your homeowners. This effort should be included in the contract and it should state the cost. Does your MC have a community website that the board has access to and be able to see the violations thus being able to create their own reporting? I think the best place to start is with your MC contract and review your covenants which should have some information on when violations should be sent. Good luck.

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