Conflict of Interest?

Started by ThomasC2 • 7 replies • 1107 views

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ThomasC2 (Pennsylvania)
Posts: 26

Posted:

At its inseption, our HOA controlled by the developer, hired (at his sole discretion), a property manager to oversee the interests of the owners.
We have just been informed that this same property manager has been appointed to tha BOD by the developer to interact with the owners on his behalf to avoid dealing with the owners through the soon upcoming Transition period.
Does this seem appropriate?
Needless to say, the relationship between the developer and the HOA has been distanced at best.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Like I have said before: it's his sandbox.

He can appoint or hire anyone to represent him at any time.

When the transition is complete, you (your fully documented HOA, run by the residents) can give this MC the boot.

Patience . . .

DonnaS (Tennessee)
Posts: 5,671

Posted:

Thomas,
Welcome to the world of your HOA before turnover. Susan said it like it is. The Developer can hire, fire, change the Docs and basically ignore his HOA until he feels like doing otherwise. If he was really a smart good guy, he would not do it entirely his way but get the owners input on some things but he doesn't have to. Lets just hope that he doesn't do you too wrong as many have done. Keep your eye on him.

ThomasC2 (Pennsylvania)
Posts: 26

Posted:

Thanks Susan, Donna,
Now that you mention it, I do recall being told it was his sandbox.
Do either of you, at some point closer to the transition period, recommend we seek council to protect our interests?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Thomas,
If you can afford it, then it is a wise thing to do but you need to do your homework first. Get a group of owners together, read and reread your Docs, find things that you don't like or have questions on. Make sure that you have an engineering study done before you accept the developement and association done. The more that you know about your assocaition, the better off that you will be when he does the turnover. Then you will save many dollars in legal fees right off the bat.

KirkW1 (Texas)
Posts: 1,665

Posted:

Part of how complicated your turnover will be will also be decided by what amenities you have. In our HOA, we only have a single wall/entrance. So there is not nearly as much to be concerned with. The developer had hired independent auditor every year of existence so the books were in great shape. While our developer didn't spend much time dealing with the people they did take care of business leaving us in good financial condition.

ThomasC2 (Pennsylvania)
Posts: 26

Posted:

Thanks Everyone,
We have formed a transition committee and hopefully they will proceed with caution.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Thomas,

Here's a "transition checklist" I came across. It may be helpful to your Transition Committee:

1) investigate the condition of the common areas, this would include any and all amenities
2) copy of reserve study
3) determine adequacy of assessments
4) copies of all pertinent association documents
5) copies of all previous budgets and financial records
6) copies of all contracts for services (incl. mgmt. co.)
7) title to common areaa
8) landscape and construction drawings
9) inventory of personal property
10) list of builders/subcontractors
11) list of owners (showing lot# and parcel #) and mortgage co's
12) copies of insurance policies
13) review status of deed restriction enforcement

Regarding the contract with the management co: your documents, or state law, may allow the board to opt out of the contract w/o penalties. It would be worth checking this out since you are not pleased with the manager.

One other note, the manager's job is NOT to oversee the interests of the owners", as you stated. The manager doesn't work for the owners, he/she has a contract with the HOA (the assn)to preform certain duties that the board members would otherwise do if the assn was self-managed. His allegiance is to the BOD. When the new board takes over at transition, they need to be aware of this. Too many boards allow the manager to make all the decisions when, in fact, it's the other way around.

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