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Subject: Issues with Property Management Company
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AcC1
(California)

Posts:9


04/11/2019 11:09 AM  
I am reaching out with questions and concerns regarding our Property Management Company. I am the Treasurer of our HOA Board of Directors. We hired a Property Management company in April 2018. While their contract is up and they are now month to month, our CC&R’s & Governing Docs have not been updated in 47 years. Our old & current CC&R’s include and state that if the BOD wants to change property management companies they have to go out for a membership vote. We have over 288 homes and our members are not responsive to our ballots and voting; despite our efforts in campaigning, town-halls, etc..
The problem is that our property management company is negligent. They are not been paying our bills on time,they do not answer our questions or concerns, has lack of follow through, unresponsive, has constant errors on checks, etc…the list goes on and on. If our revised new Governing Docs (which eliminates a members vote to change companies) don’t pass what do we do? Are we stuck with this company? Is there any loop-hole or special circumstance that we can take advantage of to fire this negligent company and bypass the members vote?

I’m sure you need to see our contract and gov. docs to give a full & accurate response, but are you familiar with this specific issue? Any information or feedback would be greatly appreciated and thank you.
BarbaraT1
(Texas)

Posts:150


04/11/2019 11:18 AM  
Were you self managed prior to hiring this management company?
AcC1
(California)

Posts:9


04/11/2019 1:12 PM  
Hi, no we were not. We had a decent property management company for about 8 years and the new president wanted to switch and change to the current one we have (big mistake). So we went out to the membership to vote and we did get the votes back to make the change. But, this time around no one is interested in sending their votes back (maybe voters fatigue) and we are now concerned we may be stuck with them.
KerryL1
(California)

Posts:6308


04/11/2019 1:32 PM  
Does the contract with the MC give you any way out?

Can you give us the exact wording of your CC&Rs about "changing" MCs?
BarbaraT1
(Texas)

Posts:150


04/11/2019 1:39 PM  
I would talk to a lawyer who specializes in HOAs and find out what the consequences would be for the board if they choose to ignore this covenant.
GeorgeS21
(Florida)

Posts:1179


04/11/2019 1:48 PM  
AcC,

Could you post (redact names) the portion of your CCRs that specify a vote to change MCs?
MarkM19
(Texas)

Posts:256


04/11/2019 2:09 PM  
AcC,
I find it hard to believe that this much power was given to the HOs. Usually the CC&Rs are the opposite and the board has complete discretion. I would be surprised if a case could not be made for breach of contract here. What if this company went out of business? What if they were caught embezzling funds from the HOA? I would not sit on a board that left you with this little authority.

Just for the record most MCs will not live up to boards expectations. They always over promise and under deliver IMO. The PM is usually over worked and under paid and has more properties than they can handle. This forces them to manage by fire. If your issue isn't burning they will put out someone else's fire. All I am saying is instead of throwing the baby out with the bath water just replace the bath water. Demand a new PM on your property. Set expectation levels with this new person and hope for better results.
AcC1
(California)

Posts:9


04/11/2019 2:24 PM  
Thanks for everyone's reply. It does seem odd that our gov doc's/ CC&R's are iron-clad, as you made good points. You never know they could go out of biz and embezzle, etc.. I do agree that many over promise and under deliver and we need to manage our expectations. This company was owned from a nice couple for 10+yrs and they retired and handed it down to their children, who are both irresponsible, not competent and perhaps too small of a shop to handle out HOA. But, nevertheless, they mistakes are endless and too big to ignore. There are only 2 people staffed in the office (total) and there's no other replacement we can have. The Board is spending hours scrutinizing checks that have errors, our Reserve check was sent to the wrong bank ($350,000) we had to track down, clients who are not being paid until 60-90 days and vendors, projects are not being followed up on, plus they are deceitful in their communication to us. I think it's valid for us to look elsewhere. I can't imagine that we would be "sued" or whatever, if we did make the independent decision to hire someone else, outside the membership vote. It shouldn't be that iron clad.
Anyway, keep you posted and we will reach out to our HOA attorney in the next couple weeks for more feedback. AC
GeorgeS21
(Florida)

Posts:1179


04/11/2019 8:52 PM  
AcC,

So, you are not going to show us your CCRs?
RichardP13
(California)

Posts:3424


04/11/2019 9:34 PM  
Until your CCRs are amended and if the clause is as you state, it pretty much is the way is it. They are 47 years old and things should have been updated.

Based on what you stated, a HOA attorney CAN get you out. But, you still have to follow your CCRs and allowing the HO's to make the call.
SteveM9
(Massachusetts)

Posts:3189


04/12/2019 6:01 AM  
Sounds like they are going down in flames. Start interviewing new property mgmt companies immediately. Loosing $350,000 would have been the last straw for me.

The new HOA mgmt company will help you get rid of the old one. Its unlikely they are competent enough to sue you and it sounds like you have plenty of enough evidence to fire them.
AcC1
(California)

Posts:9


04/12/2019 8:01 AM  
Hi, Yes our issues are very concerning and getting worse. As you can imagine our old CC&R's are not a concise document. So I am sifting through them to cut and paste the verbiage of a membership vote and MC change. I will add those shortly. I think we are at a point where we need to take our chances and find a new one and replace them without a vote- I highly doubt we would endure any legal action...it's just convincing the rest of the BOD to do so. I will post parts of our 48 year old CC&RS soon. Thanks again for all the feedback.
GeorgeS21
(Florida)

Posts:1179


04/12/2019 8:44 AM  
AcC,

Your CCRs would have been filed at the clerk's office.

Any new CCRs would have ben filed at the clerk's office.

Cutting and pasting will not provide the language in the current CCRs - their age is a secondary consideration.

CCRs are legal documents - cut and pasted material is just material and is likely irrelevant.

Can you post the legal CCRs?
AcC1
(California)

Posts:9


04/12/2019 9:28 AM  
Hi- here's the link to are our current CC&R's from the 70's (done prior to Davis Sterling). We have amended them, but they have NOT passed so we still have to follow these. The amended Governing Docs voting ballots went out yesterday. We are hoping we get enough votes back to pass.
Hope this helps in clarifying our predicament. I was not able to download the PDF as the file was too large and exceeds max size.

http://bahianovato.org/bahiahoa/document_view.asp?id=54

GeorgeS21
(Florida)

Posts:1179


04/12/2019 10:07 AM  
AcC - forum rules prohibit naming HOAs ... and, the link requires a password.
AcC1
(California)

Posts:9


04/12/2019 12:14 PM  
I'll have to find a different way to send it as my password to give access to homeowners financial dues accounts/ status, etc.. Probably not prudent for me to share my password. But I did find the verbiage as states in Article 9, "Power to Convey":
Manager:
"The Association may delegate the daily management duties to a manager who is subject to the direction and control of the Board of Directors or to a professional manager or management company, provided that any contract with such professional manager or company, and the compensation to be paid is approved by at least fifty on percent (51%) of the members of each class of the association entitled to vote."
KerryL1
(California)

Posts:6308


04/13/2019 5:03 PM  
Thank you, AcC. It appears you don't need to get membership approval to terminate your contract with the MC., but you do to hire aa new firm.

Read, as advised above, your contract with the MC to see under what circumstances you may end the contract. Submit that language to the Board and vote to get rid of them.

Let your membership know that the Board has voted to terminate the MC as of mm/dd/xxxx. Don't say anything in the written notice to the members that might be defamatory. Include a ballot saying it's crucial to vote for new mgmt. company and the board needs 51% of the membership to hire such. Other can help with wording.

Send to all Owners per CA election requirements and your election rules. It helps to assure the return of ballots if you include a stmaped-self-addressed envelope. Sometimes it helps to offer an incentive to vote. Say to dinner at nice nearby restaurant.
AcC1
(California)

Posts:9


04/14/2019 8:40 AM  
Thanks Kerry. The problem is we are wanting to bypass the membership vote completely...even if we fire this one and narrow down a one or two candidates. If we send that out to vote we still likely wont get enough votes back to pass. Our community is not responsive. So we were looking for a loop-hole to bypass the whole thing, in general. Looks like that may not be possible. I just find it crazy how the CC&Rs are so 'iron-clad". Oy vey.

JohnC46
(South Carolina)

Posts:8195


04/14/2019 9:09 AM  
AcC

I know CA has funky association regulations but is is possible to have a vote to hire a new MC via petition? First, interview and select a new MC. Second, draw a Voting Petition up and gather 145 (51%) signatures.
AcC1
(California)

Posts:9


04/14/2019 9:33 AM  
That is what we have to do. We already found a new company we like. We have no choice but to have our membership vote and hope we get the 51% needed to change. If not we are stuck with this company. Our question and goal was to see how we could AVOID all this and make the decision and change within the Board of Directors, thus eliminating a membership vote all together. But looks like our rules in our CCR's have no wiggle room.
AcC1
(California)

Posts:9


04/14/2019 9:33 AM  
That is what we have to do. We already found a new company we like. We have no choice but to have our membership vote and hope we get the 51% needed to change. If not we are stuck with this company. Our question and goal was to see how we could AVOID all this and make the decision and change within the Board of Directors, thus eliminating a membership vote all together. But looks like our rules in our CCR's have no wiggle room.
GeorgeS21
(Florida)

Posts:1179


04/14/2019 11:44 AM  
AcC,

Not expert at CA law, but would bet you can fire your old MC for cause, then propose another, and if it doesn’t pass, then contend a MC is necessary, then hire them anyway to avoid HOA damages. If someone takes you to court, you can obviously contend there was no choice.
SueW6
(Michigan)

Posts:470


04/14/2019 11:49 AM  
Your rules say management can be by the board OR a professional management company.

1. Fire the incompetent MC.
2. Run by board management by hiring an accountant, landscaper, handyman and answering service. In other words, do it yourself for a while.
3. Use mail-in ballots to amend those outdated ccrs.
RichardP13
(California)

Posts:3424


04/14/2019 1:58 PM  
I have kinda been watching this for a while and waiting to see if anyone would give you the right answer. They haven't. I had this happen a few years ago. Have a attorney schooled in contract law give you an opinion, you'll be happen you did.
KerryL1
(California)

Posts:6308


04/14/2019 3:05 PM  
Richard, as a PM yourself, do you have nothing useful for AcC given s/he's in CA? And must you be unkind to others who're actually trying to help?
RichardP13
(California)

Posts:3424


04/14/2019 3:12 PM  
Posted By KerryL1 on 04/14/2019 3:05 PM
Richard, as a PM yourself, do you have nothing useful for AcC given s/he's in CA? And must you be unkind to others who're actually trying to help?



I did give them useful information. See a lawyer. I can't give them the answer, as I am not one. I had a case with very similar language, VERY SIMILAR!
KerryL1
(California)

Posts:6308


04/14/2019 4:21 PM  
AcC--just wanna make sure. You do have election rules and your HOA has elected directors via absentee mail-in ballots, right?

Btw, our CC&Rs aren't quite as tight as yours, but we may not hit a manager as a direct employee, i.e., we can't have in-house management.
KerryL1
(California)

Posts:6308


04/14/2019 4:22 PM  
of course, I meant "hire!"
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