management co. thinks they own our hoa

we just had our turn over meeting from the developer dec. 8 I am one of a 3 member board we gave the management co. a 30 day notice that we were letting them go that is what our docs. require docs. also state without penalty we placed a board but the developer and the management co. have not turned over anything we have 196 units,pool,tennis courts and a gym the developer only has 9 unlts left the management co. and developer are crooks man. co. takes kick backs on everything and developer just plays stupid at this point home owners just want them both out of here so we can start over!they started depleating our reserves months ago to the tune of 57,000 this management co. thinks 561.00 a month is enough to go into reserve when they have left it with a 13,000 balance if it doesnt go into reserves then more for them to steel out of the expense account PLEASE! ANY SUGGESTIONS

I forgot one; do you have an attorney versed in real estate law representing the HOA's interests?

You can use the search feature to find posts on transitions and on the Community Associations Network website (link on the left) but here are a few things to keep in mind:

Make sure any contract spells out exactly what the Management Companies duties and responsibilities are; if it's not in writing it doesn't exist. After you notify your current Management Company of the Association's intent to terminate or not renew their contract within the notification period set in the current contract, you need to sign the contract with new Management Company specifying the date they are to assume control of the Association.

While any management company you change to should have a transition checklist to make the changeover easy; here are just a few things to keep in mind. The new Management Company should handle all of this but it is the BOD's duty to make sure that it's done.

Notify all owners of change in Management Company and the date the change is effective and any change in where they mail their assessments to and whether they will need to file a new ACH (auto debit) Authorization Form if they use that option.

Notify Secretary of State of change of Management Company and new address and any change of Registered Agent.

File Form 8822 - Change of Address with the Internal Revenue Service and notify your local County Tax Office.

Notify all vendors including Utility Companies of change of Management Company and new billing address.

Notify the Associations attorney.

Review all homeowner's in the collection process (Past due, lien, foreclosure) to make sure none fall through the cracks.

Setup new banking accounts and transfer funds if necessary; order checks and deposit slip's. Or
remove former Management Company's employees from the bank signature cards and make sure you have the original ACH (auto debit) Authorization Form for homeowners that utilize that service.

Arrange to transfer all files from the former MC to the new one including but not limited to:
Association Documents including but not limited to:
1. Articles of Incorporation, CC&R's, By-laws and any Rules, Regulations, Resolutions.
2. Any Board Policies and Procedures.
3. Site plans and maps.
4. Architectural Control Rules (ARC), guidelines - if separate from CC&R's.
5. Originals of all warranties, permits or other documents received from the developer.
6. Reserve study (if done).
7. Association Federal Tax ID.
8. Copies of all minutes and meeting files
9. All association correspondence and replies, including e-mail.
10. All current contracts.
11. All legal files and correspondence.
12. All management reports.
13. A current list of vendors and maintenance contractors, including contact names, addresses & phone numbers including a listing of all utility companies and account numbers, meter numbers.

Accounting/Bookkeeping including but not limited to:
1. Current budget.
2. Current financial statement.
3. Delinquency list and status
4. A/P history for current year (needed for 1099's)
5. Check registers/stubs/cancelled checks
6. Paid invoices
7. Open invoices
8. Bank statements - operating and reserve
9. Bank reconciliations - operating and reserve
10. Investments, CD's, passbooks , Money Market Accounts
11. Any payroll reports
12. General Ledger with journal entries
13. Tax files/coupon book
14. All audits and tax returns.

Homeowner files including but not limited to:
1. Current property owner and resident list.
2. Property files.
3. Copies of all work orders completed and in process.
4. All past and pending ARC submissions.
5. All past and pending violation letters.
6. Pending and completed work orders

I wouldn't file anything with the state until you actually make the change. I know this won't help you but since we have people lurking from all the states I'll throw it in. In Ohio for condos, the MC contract is automatically canceled 90 days after transition unless renewed by a majority of the members. All other contracts expire one year after transition unless renewed except necessary utilities:

5311.25 Required provisions for condominium instruments.

(D) Unless a contract or other agreement is renewed by a vote of the unit owners exercising a majority of the voting power of the unit owners association, neither the unit owners association nor the unit owners shall be subject to either of the following:

(1) For more than ninety days subsequent to the date that the unit owners other than the developer assume control of the unit owners association, any management contract executed prior to that assumption of control;

(2) For more than one year subsequent to an assumption of control, any other contract executed prior to that assumption of control, except for contracts for necessary utility services.

Sandra,
You sound very capable and from what I can make of this, you are on the right track. Our condo is in SC and as you are finding out SC state offices are reluctant to get involved. I do have one suggestion that may help. Call the Consumer Affairs office in Columbia Sate House (main office) and ask to speak to the attorney that is assigned to oversee the Condo and HOA legislation of the state. No names but I found this office to want to be helpful and may be able to point you in the right direction. I talked to them months ago and I do know there is current legislation in the works.
I have also posted about some of this on this site a while ago, you may use the search feature on this site (top right on page) and search South Carolina.

You must convince your owners they have the responsibility to chip in for this attorney you are retaining. Stay out of anything long term with attorney at this time, just pay to get her advise.

Good luck, I am sure you are finding Glens advice helpful.

Aw Mary, you caught me.............maybe,
The way I read the posts nothing has been turned over to the Board from the developer or M/C. Until they take control of M/C and get the books and a letter assigning the association to the BOD, they got nothing. I think they will work this out and are really just making a worst case plan. I doubt the M/C would be so foolish not to turn records over to the new Power, when the transition is made. Of course they could have signed something with the developer they can stay on for life, in which case, a good lawyer is necessary, no matter who pays, and we all know who is going to pay in the long run. I also am concerned that this new Board is not receiving the strong support of the owners and that may be problematic.

we have alot of support almost all the homeowners are behind us they desperatly want control of their hoa but we are not a wealthy community units sold from 90,0000 to 115,000 assesments are 95.00 mth and that includes pool , ins. on the units inside and out and lawn service alot of our home owners are in arrears liens have been placed some units are in danger of foreclose thru their morgage co. we all know what the hoa gets if that happens, 0! so going to them personal( agin) for the att. fees could be a problem but we will if we have to

dont know how much straighter I can be? why would you assume we have done something wrong? yes the board is behind me 100% and most of the homeowners too no we have not been to court that takes money this community does not have we held our turnover meeting elected a board by ballot and a lot of proxies homeowners were ajorned the att. unfortunatly had to leave at that time new board,m/c vp and developer vp bod met we selected our officers nothing was signed no docs. were brought for us to see m/c said she would call us to set a meeting to sign the sign.cards and she would bring bank statements, financials etc.and would call within the week it was mon. we started holding our own home owners meetings over a year ago see developer was supposed to turnover when 75% was sold it was way overdue we had a representative from CAI come speak to homeowners we formed a transition com. requested doc. got fin. for 5 mths out of the past year met with m/c several times to dicuss issues with the fin. lg. prepay balance developer has been prepaying 1yr assessments on units starting over a year ago it would go into the opperating account and was being spent before it was due pretty slick uh? nice big hole they were digging for us there fortunaltly prepay balance has not increased much a little over 8,000 but aged owner bal. has went from over 17,000 to over 37,000 not a pretty picture they started depleating the reserve nov.2007 by writing checks for the ins. premium and reconciling them as uncleared checks in the opperating and uncleared deposites in the reserve and when we questioned them as to why checks were even written when they could not be cleared they said they would be voiding those checks 57,000 was gone from our 70,000 reserve att. said as long as it was spent on the hoa they could spend it but why go to so much trouble to hide it? there is sooo much more m/c had to know we would want to let them go transition com. was successful in getting developer to do a long list of repairs to units and common areas units were built in 1980s for rentals rehab. for sale late 2006 developer neglected repairs until just before turnover

Others will hopefully add to this list but one of the first things you need to put together is a policy & procedure book, a how to guide if you will. This will help not only your BOD but the ones that come after you in running your Association and the MC should be able to give you some generic ones that you can adapt to meet your Association's specific needs.

Collections policy

Procedure for handling receipt of assessments, payment of bills, signing of checks

Policy/procedure for adopting policies, procedures and rules

Policy/procedure for handling conflicts of interest involving board members

Policy/procedure for petty cash

Policy/procedure for audits (when and how often to have them)

Policy regarding investment of reserve funds

Policy/procedure regarding having a reserve study and how often to update it

Insurance guideline (how much to carry including D&O and when a claim may be filed)

Policy/procedure for handling Architectural Requests

Policy/procedure for handling Covenant/rules violations (enforcement)

Policy/procedure for a homeowner to appeal a violation

Policy/procedure for dispute resolution

Policy/procedure for elections

Policy/procedure for meetings (Board and Member)

Policy/procedure for holding executive sessions of the Board

Policy/procedure for flags

Policy/procedure for examining/copying documents

Policy/procedure for use of clubhouse or other amenities

we have instructed the att. to fax a bill over to the m/c for her retainer will try to secure payment when we go there next week she feels she can get us out of this contract if not then there are many more issues to deal with contract gives m/c far to much power and controll its time to stop the bleeding! or I fear the community will suffer extreme results in the near future yes!this is a mountain and if blasting it doesnt work than we will just have to chip away at it THANKS so much for the input will keep you posted

Glen, yes M/C was working to please developer but this contract was cooked up between the both of them the M/C has our docs on the website so what does that say about their lack of ethics lg development nearby of over 3,000 homes let them go about 1yr ago suit pending missing funds from what I hear I feel they deceived us intentionaly because it benefits them and they will do it again so Im not sure I can deal with a m/c I cant place any trust in

Robert and Mary thank you for your great advice! I wish I had found this site mths ago we have told m/c we intend on doing a full third party audit they say (do you know how expensive that is) see if we let them go they have to turn over the records or lack of I suspect Im sure things have been shreaded but thats my gut talking will see what att. thinks we should do but att. isnt willing to give any advice until she gets paid cant say I blame her I wouldnt work for free shes been real nice about it and has reduced her fee down to 75.00hr to help us out m/c emailed sign. cards but they have thier name on them and this contract they want to bind us to only requires 1 sign. I forwarded them to att. dont want to sign til att. talks to us about it talked to developer about lg. piece of land we have been paying to cut for over 2yrs they have always told us it was common area only to find out at turnover it is owned by the developer told him we would not be maintaining it any longer and he owed the hoa for it he said 23,000 would be transfered by the end of dec. talked to him again and he said they also would be transfering over 17,000 for tranfer fees that were collected giving us most of our reserve back he also said that if it helps us any the contract was rubber stamped and he did not receive a copy took a look and it does look like a stamp not sure what that will mean will ask att.can any one tell me? does the contract need our corperate seal to be valid? Left a message with m/c told her reg. letter would be there today and we will be at her office wed. 3:00 please have dec. fin. and esp. bank statements want to see if developer deposited that 40,000 m/c wont return our phone calls now last time we spoke she said that our att. will need to talk to her att. received letter today from att. from their att. m/c feels contract is binding requires 60 day notice with penalty but would rather stay on and wants to work with us (sur she does there maybe over 50,000 in the bank)

yes they are bonded but Ill have to look at the docs for all the details glen, you must know your docs by heart how long did that take? this is my 4th home but 1st hoa Are there classes offered anywhere for BOD if? we self manage then maybe the hoa could pay for BOD classes since we would be saving a ton of management fees we are all firsttime BODs THANKS

took a good look at nov. finacials there are 3 different bank accounts at 2 banks management co. only emailed signature cards for 1 bank where 1 account is we will not be going to m/c office this week their att. contacted our att. and said we would be wasting our time and they would not have anything ready for us any suggestions

Thanks Carey! Ill email you soon . M/C HAND DELIVERED a check to our Att. tues. Well thats a good thing and we will be meeting with her next week still waiting on Dec. financials just got an email with all the sign. cards I have been emailing the m/c and I am getting some response now Does anyone have an idea how much we can expect a CPA to charge for a full audit going back to late 2006?

opps. hit enter too soon.

We also have no amenities and only a handful of vendors.

Sandra,

The cost of an independent audit performed by a CPA would be determined by the size of the assn and the nr of years you want audited. This is certainly a question that should be asked b/4 making the arrangements.

Joanne,

Was it Clint Goodman of the HOA Institute?

Setting up our HOA for the first time.. Can you give me the short list of legally what we need to have in place?

Sandra and Glen,
I guess I missed this check list by Glen and I am thinking it is for SC. I can't find it on this thread, could you all print it again? Thanks.