I Really Need Help - we are close to Bankruptcy

Hello all – I am in desperate need of advice guidance, suggestions. I’ve chatted on here before – quick recap – I’m the new HOA President, no help from the other 2 members, 168 units with 57% renters. I’ve been able to control our management company a bit better. They charged us $14,700 in EXTRA fees in addition to their monthly flat fee over 4 and a half months. Robbed us blind. Would not give us our account access (which I just got after 5 and a half months). They paid themselves without any board member reviewing the invoices. Is that legal? We have $73K due in delinquencies, but our attorney has ceased working on them due to nonpayment. We owe him $15K.

Our current outstanding bills are just shy of $240K. We have approximately $80K in our account and zero reserves. We still need to treat for termites, do gutter maintenance, and update the railings to code to the total tune of $75K. We need to have the plans for the CA retrofit submitted and file an extension for the permit in April, which may or may not be granted. Both of those items costs money. We approved a special assessment for $2,900 to have 4 roofs replaced. This was put off by the previous board for 3 years and they are now falling apart. We had 36 leaks after the huge amount of recent rain. The project has started, but homeowners are screaming every day and most are refusing to pay and we may have to halt the construction. I see no way to get our account back in the black without their help, but they refuse. This property is very close to bankruptcy. One more unplanned major repair and we are done.

I have inherited quite a mess and really want to quit. I have NO idea how to fix any of this.

Thanks for any input.

We def. need a new management company, but are locked in a contract until August 31st. We have no money to fight them in court. Getting rid of them will help, but what about our finances? Have you ever seen one so bad?

Well that's somewhat of a relief!

I have a few emails from people here - what does yours start with?

thanks!!!

While you're working with Max to see if you can get rid of the MC, I would be thinking about these options:

1.
Have the board hire an attorney who over several months, will shake the money out of owners refusing to pay and foreclose as needed and also look into a loan. There is precedent for this. Sometimes it is the only way to turn things around. If the HOA cannot hire an attorney due to lack of funds or the HOA's poor reputation, proceed to 2.

2.
What needs to be done here is likely way above an unskilled volunteer's pay grade. Due to insolvency, your board can ask a receiver to take over per California Code of Civil Procedure 564 (b) (6). See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?secti564.&lawCode=CCP2.

3.
If you do neither of the above, then at ​some point I would think the creditors will take the HOA to court to collect. The judge will find the board incompetent. The creditor will ask for a receiver to be appointed pursuant to https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?secti564.&lawCode=CCP.

4.
Bankruptcy may indeed be an option, per https://www.davis-stirling.com/HOME/H/HOA-Without-Directors . But this again is above your pay grade. You all need an attorney. But you may not be able to hire one. Hence you are back to the receivership option.

5.
If you do not want to do all the work, then I suggest resigning and considering selling immediately.

Property values may (will?) plummet. HOA dues will skyrocket, to pay the bills and the receiver. A competent receiver might arrange for loans and then aggressively pursue collection. Things might sort themselves out over many many months. Or they'll just keep getting worse until the lack of maintenance leads to condemnation.

Thanks, I got the two documents. As W.C. Field once said, a sucker is born every day. You are getting hosed, and that's not the french version. For that monthly extras fee, I would throw management in for free. WOW!

Being that you just signed in September of last year, the initial contract would go through August 31, 2023. I compared yours to mine and I am 60% less.

You need to send this to Wendy in North Carolina and show him/her what real greed is.

A real-life example of a condo association whose building was literally breaking in half; became uninhabitable; owners were refusing to pay the special assessment; the board said 'tough,' foreclosed and sold the units; and after five years, had turned things completely around:

https://www.sarasotamagazine.com/home-and-real-estate/an-unlikely-heroine-steps-in-to-save-crumbling-dolphin-tower

This is the result of volunteers who do not care about doing their job over a long period of time. So sad that it the finances are in such disarray. This is going to be a long process to bring a resolution that it could possibly impact the sale of any of the units.