Is a Property Management needed by law?

My homeowners association has about 140 units located in California. I wonder if we need an accounting office to hold records instead of a property management company. Your feedback and input are valuable.

HanhN1 - Regarding California law (Davis Stirling) that pertains to associations, go to http://davis-stirling.com/index.html in the upper left side click on Index of Laws, and then click on Davis Stirling. My read is there is nothing that requires a property manager.

One thing to keep in mind if you decide to self-manage, your treasurer most likely will need to be bonded (to help protect the HOA in the case he/she runs off with all the money).

Personally, small HOAs could probably handle self-management. It's something I have looked at in the past, because the cost of management companies can seem so extreme, in comparison to the money coming into the HOA.

However, once you have had a management company in place, there may be a requirement in your bylaws, etc that states that in order to switch to self management would require a >50% vote of members (2/3 or 75% in many cases).

This mainly helps to ensure such a big decision is OK with the majority of the stakeholders, before they discover otherwise. Especially if the board turns out not to be very good at self-management.

But if you feel you are stuck with a bad management company, you can fire them and get another. Never feel that you are stuck with them (unless somehow they actually have a seat on the board - yuck).

It seems an MC borders on one side or another: They are unscruplous, and suck the HOA dry with hidden fees and costs not clearly mentioned in the contract. Or they are taking on too many HOAs and other properties to try to make ends meet for themselves financially, to truly give your HOA the service quality you seek. That has been my experience so far. The fault probably lies in the system that encourages developers to create HOAs, which saves the city lots of money and headaches, but is poorly regulated, which generally means the homeowners are the real losers here. In some ways it is getting better, but it has a long way to go yet I think.

A property management company is not needed by law, as that is a decision by your Association's Board of Directors (BoD). A BoD is needed to manage the affairs of the Association. While management companies can simplify things for a condo Board, they do not replace the condo Board. The Board still must meet to set priorities, review the budget, vote on major expenditures, evaluate management companies, etc.

Management companies can greatly help a BoD and should strongly be considered for larger associations, such as yours. They are absolutely essential if your BoD members do not have if the required skills, desire, or time needed to properly conduct Board functions. The level of service provided by a management company varies and you can do as much or as little as you want. However, you should recognize that there are many things that your BoD must do to properly manage the "business" of your association.

Shown at www.*********.com under the Contents section is a summary list of all the tasks that your BoD should consider doing -- either themselves or with the aid of a management company.

Good luck
JoeK

BTW our association is relatively small, but the management company is 25% of our budget. Quite a bit of $
Jane