HOA Management Firms

Started by JohnC46 • 18 replies • 1344 views

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JohnC46 (South Carolina)
Posts: 14,265

Posted:

I am new to this chat board and while reading to catch up and get its flavor, it seems to me that many HOA's are attempting to operate/manage themselves. Am I just mis-reading?

We are a 4 year old HOA of 120 patio (standalone) homes (105 built and owner occupied). We have no amenities (no party house, no pool, no tennis courts, no parks, etc), very little common area, public streets, public water/sewage, so we are not in a complex situation.

Our yearly dues include all landscaping and home exterior maintenance. Yes if a brick falls of the outside of my home, the HOA pays for it to be replaced. All homes have an unconditional 1 year warranty from the builder so the builder would be replacing the brick in the first year.

Our HOA is still controlled by the developer who is very open and candid. We get a yearly budget at our HOA meeting. It has a healthy yearly surplus designated as future maintenance. We do not have a hostile relationship with the developer. Within a year we will be transitioning control to the homeowners.

Personally, I am an advocate of using a Property Management Company. I understand their typical fere will be about $8 to $10 per door.

Asking for ideas and suggestions.

Thank you

John Curry

JohnC46 (South Carolina)
Posts: 14,265

Posted:

PS

How does one edit a post after posted....thanks

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It's whatever the homeowner's are comfortable with is what most HOA's go with. Some do well ran by owners exclusively, some with accounting only, and some with property management companies. (This is AFTER the contractor has turned over the HOA to the owners).

There's 2 ways property management companies work. 1 is they are in full control of the HOA and given the power to run/operate the property. The 2nd is they are hired by the HOA and work for the BOD/Members. Their job is to assist the HOA in daily operations. So don't assume a property management company makes the decisions of the HOA. They are contractors of the HOA who do act at the will of the owners if that is the arrangement.We used an accounting firm for the bill managing portion but made the decisions amongst ourselves the owners. This system worked well for us.

Former HOA President

TimB4 (Tennessee)
Posts: 21,047

Posted:

John,

Welcome to the forum. As you have found out, there is no way to edit a post once it is posted (something we have all learned to live with).

I'm going to modify what Melissa posted about Management companies. The Company always works for the board. How much (full control) or how little they do is based on what the Board allows.

We have 130 lots and, like you, have little amenities (two small playgrounds, entrance signs and a bus shelter) but we also maintain the roads and sidewalks. Every time we look into having a MC, we discover that it isn't financially supported by the membership.

When your developer turns the Association, I would recommend that the Association perform a Reserve Study. This will tell you if your assessments are enough to fund the Reserves for maintenance,repair and replacement of common elements and if you truly have a "healthy" reserve. Additionally, if the Association is responsible for home exterior maintenance you are probably going to need more than you think (it also makes me think that you might be considered a condominium vs. HOA).

When are Association completed our Reserve study we actually had to increase our Assessments 20% to $848 per year. Since our Association doesn't cover maintenance of the individual homes/lots, I expect yours may be higher.

Using a mangement company or not is, as Melissa posted, a choice everyone must make for themselves. I would only offer the following cautions:

1) Don't allow the management company to have full access to the assessments. If you disagree, sign over your income and give me your checkbook (of course you have to hope I'll pay all your bills and not take more than I should for looking over your finances). Let them collect the assessments and make the deposits. However, your Treasurer should be the one writing any and all checks.

2) Some management companies receive a portion of the fines collected for infractions. This "may" cause some companies to be overzealous in enforcement of covenants as they see it as a revenue stream. I believe that this is how some Associations get bad reputations.

3) Most MC's have established relationships with various contractors. This may be good or bad. Insist on three bids for any work accomplished and that the Board awards the contracts. This way, you ensure that the Association is getting the best deal.

Hope this helps,

Tim

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The way our HOA is set up is that if we ever disbanded, the property had to be managed by a property management company. That meant that there would be no feedback or HOA board of owners. It would function similarly to how an apartment complex works with their property management. It's a rare situation but Property Management companies can take the place of the homeowners. A situation that many wouldn't choose but is an option in certain situations.

Former HOA President

JeffR7 (California)
Posts: 251

Posted:

If your HOA was disbanded who would hire a management company, who would sign a contract, and who would make payments. Not to say where would the money come from?

Either you have some really weird language in your CC&Rs or you are misreading it.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It is in our CC&R's that the owners would have to agree to disband and turnover to a Property Management company. It would be a vote of the owners that would turn the property over to the management company. It was an option that I was looking into at one point due to the lack of participation/apathy. I wanted to possibly open up my own property management company and have the members turn the HOA over to me to run. That way I could be paid and have control on setting up the dues/contracts. This was during the "dark period" of our HOA where no one really seemed to care and I had to pick up the reigns. Surprisingly, there were many who actually wanted me to do this!

In the end, this option didn't come into play and I got eaten by "bigger fish"...Which I created...It's just a little known option that takes a bit of digging to know it exists. It is better than court conservationship...

Former HOA President

JeffR7 (California)
Posts: 251

Posted:

I still don't see how it's an option. I understand that anything can be put on paper but enforcing it is a different issue.

So owners vote to dismantle the HOA and to turn it over to a management company. Great. Now owners stop paying for that management company and what do you do. There is no HOA to collect money or to enforce any rules. Sure you can make each individual owner to sign an individual contract, but what about time when it needs to be renewed. You really have no way to force anyone to sign it.

Who would physically write checks to the management company and from what account (HOA doesn't exist anymore).

Sure it might have sounded nice when you put it in, but I don't think you really thought it through.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It's pretty simple. The Management company has the SAME powers of the HOA. That means if you don't pay they can take you to collections. They can still place liens if necessary. They are a company which we would be responsible for paying. It works similarly to how it works in apartment complexes versus condo. We basically would turn into "renters" of our common property instead of actual owners/controllee's of it. There are already many condo's that work this way. They don't have an HOA but a management company to which they pay for maintaining the property. It's just a different setup. All possible...

Former HOA President

JeffR7 (California)
Posts: 251

Posted:

Melissa, you are not making any sense.

In an apartment building there is an owner who hired a management company that works on their behalf. Renters sign contracts (leases or rental agreements) and a management company can enforce those leases.

Quote:

Posted By MelissaP1 on 01/19/2012 4:31 AM
It's pretty simple. The Management company has the SAME powers of the HOA. That means if you don't pay they can take you to collections.

How can they have the same powers if I never entered in any agreements with them? What gives them a right to record a lien if I don't have obligations to them.

Quote:

They are a company which we would be responsible for paying. It works similarly to how it works in apartment complexes versus condo.

Who is 'we'? There is no HOA so they don't work for HOA and they sure dont' work for an individual owner because they didn't hire them.

Quote:

There are already many condo's that work this way. They don't have an HOA but a management company to which they pay for maintaining the property. It's just a different setup. All possible...

Do you actually have a first hand knowledge of any? A management company will always work for a board. A board may not be as active and delegate a lot of responsibilities to a management company, but at the end of the day there is still a board.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Common elements can't take care of themselves. Common elements can range from pools, recreational facilities, clubhouses, or property. This is why a HOA is formed. It's for the owner's to agree to manage these elements amongst themselves for themselves. However, if the owners are so apathetic and have no interest in managing their shared common elements they can give up their rights to it and have a property management do it. That means the owners give up their rights to manage the common elements and give that responsiblity to management company.

That means the property management company is now responsible for the shared common elements. If the owners want to use these elements they must pay to do so. Instead of being able to vote and having a board of owners, they now have a company who makes their own rules/regulations.

It's not unlike being under contractor control except the owners selected the contractor. That's the best I can break it down. Sorry you can't see this as an option. The owners don't need a board as they wouldn't be associated with eachother anymore. It would be with the property management instead.

Former HOA President

JeffR7 (California)
Posts: 251

Posted:

Melissa, your latest post shows you lack basic understanding of what common elements are, how they are owned, and what a management company does.

I don't think there is any point of me trying to explain it for the 5th time. I know I tried.

The basic principal here is ownership. In order to disband an HOA you need to find an owner for those 'common elements'. If your HOA stops its existence who owns the property? Management company? Fine if you agreed to transfer ownership, but don't expect owner to keep paying to that management company after it's done. There is simply no authority to make an owner of a single family residence (which it would become after HOA is gone) to pay for any services not specifically contracted by the owner.

Good luck with your understanding and I sure hope you don't attempt to do this in any association you might bee affiliated with.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

A property owner within a 100-plus property HOA who supports self-managing is not a member of the board and is certainly counting on someone else to volunteer to collect the dues, keep the books and manage the property.

TimB4 (Tennessee)
Posts: 21,047

Posted:

Quote:

Posted By KellyM3 on 01/19/2012 6:43 PM
A property owner within a 100-plus property HOA who supports self-managing is not a member of the board and is certainly counting on someone else to volunteer to collect the dues, keep the books and manage the property.

We have 130 properties. I have served on the Architectural Committee and BOD in the past. I am currently still serving on the Board (reelected in Oct). I am a strong supporter of self management.

That said, we do hire an independent bookkeeper to assist the treasurer.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

If the Treasurer wants the job.........I guess I can say nothing. But, whew.

TimB4 (Tennessee)
Posts: 21,047

Posted:

Kelly,

I've just gone from President to Treasurer. Ask me again in a year. I may have changed my mind.

Tim

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Bluster and forum fun aside, I cannot imagine handling that role w/ a neighborhood that large.

MikeS1
Posts: 521

Posted:

Seriously - Before it transitions from developer control, hire a good certified PM. (CAI AMS or PCAM)) It's well worth it. They can help with the transition from developer control and make sure that everything gets done and down right during this process. Things change too fast for a non-professional to keep up with all the laws (both statuatory and case law). We own two properties right now. One is professionally managed by a large company and things are just fine. The other property/community has an on-site PM with is an employee of the community and there are some serious voids in training issues. I really recommend a fairly good size professional management company. (Not just a one or two person company). That way you have other staff to back up your assigned PM>. It's well worth the money.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Mike

What you say makes good sense especially during the transition. Once the transition is made, we have an elected BOD, and we see how smooth things run then I might suggest we revisit being self managed

I would generally be against self managed HOA's but I would consider it for us as we have little to no amenities and common ground thus a rather straight forward, small, and easily understood facility/budget.

Thanks

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