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Subject: Management Companies
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Author Messages
TracyeH
(North Carolina)

Posts:53


01/08/2018 12:09 AM  
For 30 years we have had a volunteer board. But it's getting to where no one wants to do the job. I am one the board now and it is a lot of work. We have our annual meeting and March and have elections. I'm not doing it again, neither are the other members. So I'm asking advice about management companies. What to look for? or any information from people who have one.
TimB4
(Virginia)

Posts:15081


01/08/2018 5:23 AM  
Having a MC does not eliminate the need for a board. It does remove some of the day to day tasks.
Alternatives to MC are independent contractors. For example, someone to do bookkeeping.

prior to seeking a MC, the Board needs to outline what they want a MC to do (specifically).

For example:

Under finances: Collect mail, record payments in ledgers, prepare and make deposits to bank, provide duplicate copy of deposit slip to treasurer. At end of year, provide a printed ledger for each lot for Treasurers files.


In my opinion, others disagree, the access to Association funds should be limited. The Bank accounts should stay at banks of the Boards choosing under the Associations name. The MC should not be on the signature card. The MC could prepare the checks, but signatures should still be from the Officers of the Association.






RichardP13
(California)

Posts:2202


01/08/2018 8:32 AM  
Sorry Tim, your suggestion may work as a self managed community, but it wouldn't work if there was a management company involved.
KerryL1
(California)

Posts:4632


01/08/2018 9:00 AM  
What size is your HOA, Tracye? What size should your board be (see your bylaws)? No matter what size, your HOA still must have a Board of directors as probably specified in your covenants (AKA, CC&Rs; declaration). The Board would direct the MC.

We have a complicated high rise with lots of mechanical equipment & amenities, so our Mgmt. Co (MC) handles all the day-to-day business with a full-time onsite Prop. Mgr. (PM) who has a full-time assistant PM.

HOAs with, say, detached homes and few if any amenities probably need what Tim describes, which may involve no onsite PM. Some HOAs might have a PM onsite for several hours a week and do what Tim lists along with, say, looking for violations and supervising your vendors, e.g., the landscapers.

So a lot depends on the size & complexity of your HOA. I guess I'd start by contacting HOAs like yours to see who handles their management needs. The MC might be listed on their website. You could then visit the MC's site to see what they offer. Thn your board probably would a want to interview three MCs.

RichardP13
(California)

Posts:2202


01/08/2018 9:10 AM  
Posted By KerryL1 on 01/08/2018 9:00 AM
What size is your HOA, Tracye? What size should your board be (see your bylaws)? No matter what size, your HOA still must have a Board of directors as probably specified in your covenants (AKA, CC&Rs; declaration). The Board would direct the MC.

We have a complicated high rise with lots of mechanical equipment & amenities, so our Mgmt. Co (MC) handles all the day-to-day business with a full-time onsite Prop. Mgr. (PM) who has a full-time assistant PM.

HOAs with, say, detached homes and few if any amenities probably need what Tim describes, which may involve no onsite PM. Some HOAs might have a PM onsite for several hours a week and do what Tim lists along with, say, looking for violations and supervising your vendors, e.g., the landscapers.

So a lot depends on the size & complexity of your HOA. I guess I'd start by contacting HOAs like yours to see who handles their management needs. The MC might be listed on their website. You could then visit the MC's site to see what they offer. Thn your board probably would a want to interview three MCs.




So Kerry, does your PM provide the services Tim suggests, and if not, why?
SheliaH
(Indiana)

Posts:2037


01/08/2018 9:16 AM  
Tim and Kerry give some great advice. Once you find three companies to interview, don't forget to ask for contact information of some of their client HOAs and talk to them about what they like and don't like - look for communities similar in size and amenities to yours so you're not comparing apples to bananas. You might even Google them to see if the companies have been involved in any major lawsuits and how they were handled. A lawsuit shouldn't necessarily eliminate them from consideration - you want to see if the company was in the wrong, what it did to fix it and what they've done since then to keep the problem from happening again.

But for now, I'm a little worried about your board. I do understand burnout (been there), but who will replace you if everyone leaves? A good HOA board should have a mix of new and experienced members - the newbies often bring the energy and new ideas, while the more experienced people offer valuable advice.

Make your annual meeting a type of "come to Jesus" meeting, where you tell people point blank it's time for some of them to step up because the association can't run itself, even with a management company. If no one shows up and the current board says to hell with this, you run the risk of the association going into receivership and you REALLY don't want that to happen.
RogerB
(Colorado)

Posts:5049


01/08/2018 9:28 AM  
Tim has provided good advice. For your consideration the following are attached.
Select at least 3 management companies to interview for the specific services you need.
I suggest that after determining which management company to hire then develop your own management agreement or by altering their agreement; and have the agreement checked out by your HOA attorney before signing.

Attachment: 118285659771.doc
Attachment: 118285689454.doc

TracyeH
(North Carolina)

Posts:53


01/08/2018 9:44 AM  
Thanks everyone for the information. It's a lot to think about. Our concern is that no one will step up to fill the board positions in March. We want to have a plan B if that happens. We know that we still will have to have a board to supervise the MC but that should be easier than what we are having to do now. We have 65 individual homes, a small pool (which is a nightmare), about 20% rentals in the community, and the development is 30 years old. Our dues are at $115 a mo. and we have tried to keep them there by working frugally and sweat equity. Previous board about wiped us out financially. So we have worked hard to try to get reserves built back up.
RogerB
(Colorado)

Posts:5049


01/08/2018 10:00 AM  
TracyeH, I served on HOA Boards in three different states and have been co-owner of an HOA management company for many years. In today's legal environment I would not serve on an HOA which did not have a knowledgeable good professional manager. Attached is information I wrote a few years ago on Professional vs Self management which may be useful.

Attachment: 1180190871.doc

TimM11


Posts:118


01/08/2018 10:00 AM  
Building your reserves back up should take precedence over keeping your dues low. Obviously you shouldn't do something drastic like doubling the dues, but inadequate reserves can end up costing homeowners a lot more money than periodic modest dues increases.
KerryL1
(California)

Posts:4632


01/08/2018 11:44 AM  
Sheila's right about the dangers of receivership if no one steps up. BTW, her HOA got rid of their pool!

Richard, of course, our MC handles the tasks Tim mentions! Why would you think otherwise? And why do you care? And how does your question help Tracye?
RichardP13
(California)

Posts:2202


01/08/2018 11:56 AM  
Tracye

You could count the number of regular posters on this forum on two hands. Reality is there are 350,000 HOA's, with at least 1,050,000 volunteers serving on its boards. As someone who has managed HOA's for over 9 years, I have seen more than what's been discussed on this forum.

There is a old saying, "you can lead a horse to water, but you can't make it drink". I have seen many great people on boards, most of the problems arise, because they are the only ones that want to lift a finger.

Today's technology is different from yesterday's pen and ink ledgers. All homeowner assessment payments are handled through the bank's lockbox system. I no longer manually enter a payment. Payment records are sent electronically and recorded electronically, with software specifically written for HOA's and customized for management companies. That same software will handle compliance issues, maintenance, either common area or residential, collections and homeowner communications. There is no such thing as a complex communities, it is just numbers and organization. Those 1000 home country club resorts are far more complex in my opinion.

As far as bank accounts being with the bank of the HOA's choosing, then they need to remain self-managed. MC's use one bank (for operating accounts) that they have a relationship with. The larger companies will use ones that integrate seamlessly into their software system. Reserves accounts are ALWAYS with the banks of the HOA's choosing (for legal reasons). Can you imagine trying to deal with 100 HOA's, all with different banks in different cities.

I have a different perceptive than most here. I have been a volunteer in a former HOA. I was a board member and then board president. I was threaten with a recall because I stopped a neighbor to neighbor lawsuit that cost my association $250K. I have managed over 120 HOA's of various types and sizes. I now own my own company. If I were ever to live in a HOA ( which I wouldn't) I know how to self manage it very easily, but the politics isn't worth my health.

One thing I would added, and from personal experience, look for a company that manages ONLY HOA's and not rental properties.
SheliaH
(Indiana)

Posts:2037


01/08/2018 12:02 PM  
Posted By TracyeH on 01/08/2018 9:44 AM
Thanks everyone for the information. It's a lot to think about. Our concern is that no one will step up to fill the board positions in March. We want to have a plan B if that happens. We know that we still will have to have a board to supervise the MC but that should be easier than what we are having to do now. We have 65 individual homes, a small pool (which is a nightmare), about 20% rentals in the community, and the development is 30 years old. Our dues are at $115 a mo. and we have tried to keep them there by working frugally and sweat equity. Previous board about wiped us out financially. So we have worked hard to try to get reserves built back up.




I understand wanting to keep the fees low, but as others have said, that often does more harm than good in the end because homeowners end up having to pay a lot more for maintenance and replacement of common element items (those special assessments which cause uproars all over the place) and you end up have to increase fees at a rate higher than what you'd like because the fees never kept up with inflation.

In fact, if you think about it, that could be a huge reason for you and your colleagues become exhausted because it's getting too difficult to stretch those dollars without more money coming in. If you have 20% rentals, I suspect the constant moving in and out is causing wear and tear on some parts of the common areas and the association has to pay for that too.

Thus, here's something else that needs to be added to your annual meeting - not only will other people need to step up, but if you do get a management company to handle the day to day, there WILL be regular fee increases because their fees also increase from time to time. You don't say how long you've had $115 assessments, but I would think if it's over 5 years and you have an older community, it's way past time for a fee increase. Tell the homeowners either they pony up to have a professional do the work or someone with some training and experience in bookkeeping, landscaping or whatever you need will have to do the maintenance work themselves if they're too cheap to pay for it. (In most cases, that would be a disaster).

Elsewhere on this site, I've told the story of how our association got rid of our pool, so do some searches to hear the tale. It took nearly 2 years, which is the third lesson for you - turning things around in your association will take time and money, and it won't be easy, so buckle up. Good luck!
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