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Subject: Bad prop mgmt & faulty water meters drained our HOA funds. How can we recover damages?
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JesseK


Posts:0


09/30/2020 3:02 PM  
tl;dr Old property management knowingly generated inaccurate water bills causing HOA to loose all our funds. The manufacturer of our new wireless water meters sold us a severely flawed products that cost the HOA thousands of dollars and hundreds of volunteer hours each month to maintain.

BACKGROUND: We are a small community of homes in Texas (US) and have a private water system that requires the HOA to pay the big community water bill to the city, then split the bill to individual units based on the submeters at each house.

ISSUE #1: Property Management
From 2018-2019, our then property management company was contracted to do water billing for the community as well. We agreed to take out a loan and install new wireless water meters to make this possible, as it would cut our billing costs in half. They were supposed bill residents according to water meter reads, handle all account discrepancies and monitor water system alerts and activity.

-They did not maintain/service water meters as needed causing many water meters to be offline. After an audit in 2020, we found that 69% of the meters in the neighborhood were not online to provide monthly water usage readings. -They also did not inform the board that many meters were not providing readings each month. -They knew a large number of water meters were offline and actually told the 3rd party contracted billing company (we didn't even know they hired out the job) to average usages when readings were not available. Some accounts never had accurate readings from the beginning, so they were always billed a completely bogus amount. Estimated loss: $75,000-$130,000.

-They did not properly collect on all accounts, allowing many people (mostly tenants) to move out without paying their water balances Loss: $7,011.18

-They lost several of the meters Estimated loss: $10,000

ISSUE #2: Faulty Water Meters
We took out a loan to replace all the old analog water meters with digital wireless water meters at the end of 2017. The property management company pitched a 3.25 year ROI by investing in these meters.

After we inquired recently, the 3rd party water billing company that the property management company contracted informed us the water meters had issues from the beginning with meters not working.

Issues with the meters:

Replacement Required:

Leaks (2-3/mo) - meters burst internally with water spewing out of the body

Leaks (2-3/mo) - meters crack at the threads due to a combination of poor construction quality (cheap plastic) and poor installation (misaligned pipes were not straightened and instead, meters were forced on at an angle putting all the pressure at the thread joints). They also used paper gaskets, which degrade over time and leak.

General malfunction (3-4/mo) - Meters just stop working and show 0 gallons of usage despite water being used. A few show some usage, but far less than what is actually used. Some just completely stop working altogether

Service Required:

Battery life (10-15/mo)- The meters were advertised to be "self powered and provide years of reliable battery life". We were never told they need to be recharged at all. In reality, most last between 6 months-2 years tops before the battery needs to be charged. Several have weird issues causing them to run out of battery every 2-4 weeks. We were paying over $1,000/mo for a plumber to charge the batteries until we figured out how to do it ourselves.

General unreliability (10-15/mo) - Meters stop reporting. The manufacturer doesn't know why but we've found if we just pop a new battery and a few different antennas on, it eventually starts working again.

LOSSES: The manufacturer has been repairing broken meters under warranty, though terms are not listed anywhere. When meters break, we must pay for a plumber to remove the broken meter and replace it with a straight pipe, pay to ship the meter back to the manufacturer, wait for them to fix it (it has been taking roughly 2 months for them to fix them). Once the meters are finally shipped back to us, we must pay a plumber to come out again to replace the straight pipe with the fixed meter.

Monetary - For every meter that breaks, it is $300 total for the 2 plumbing jobs, plus we are out water billing information for the month. If we don't catch that a meter is not working and manually average usage, we will be out the money for the water they used. When the meters leak, it's often a gushing river costing hundreds of thousands of gallons of water loss each month.

Time - I have had to take on the enormous task of monitoring these meters everyday to see how many fall offline and organize volunteers to help try to fix the meters where we can. I also have to organize volunteers to audit individual water usage data every month to identify possible inaccurate/incomplete date and average usages where needed.

At this point, we are looking into possibly pursing legal action against both parties but are not sure if we have a strong case or even what kind of lawyer we need. With the old property management company, we would love to recover monetary damages for all the water costs the HOA had to absorb. With the water meters, we would love to fight for a full refund and a return of the product due to the high failure rate. Even better if they could reimburse plumbing costs. When we’ve inquired, they laughed it off saying they might offer $50 per meter that originally costed almost $700 installed.

I apologize for the super long post, but this has devastated our neighborhood and completely taken over my life. I literally spend 20-30 hours a week trying to figure out water billing, fix water meters or tend to emergency leaks. If I and other volunteers had not stepped in (and continue to step in) with drastic measure, we definitely would have gone bankrupt and lost water service to the community.
TimB4
(Virginia)

Posts:17008


09/30/2020 3:07 PM  
Sounds like the Board or Officers dropped the ball in not overseeing the manager or the project.
TimB4
(Virginia)

Posts:17008


09/30/2020 3:09 PM  
You can try and negotiate with the MC/PM a settlement.
If that doesn't work, you can seek legal options - for which you will need to contact an attorney.

The question the Board needs to ask itself is:

Is it worth more money to go after the lost money or should this simply be an expensive lesson learned?
TimB4
(Virginia)

Posts:17008


09/30/2020 3:10 PM  
I would strongly suggest a keyed bypass valve around the meter.
This would allow you to repair/replace the meters without the need for additional work.
TimB4
(Virginia)

Posts:17008


09/30/2020 3:12 PM  
Appears that the OP has left the forum (post count at zero).

Wish I saw that earlier.
HappyE
(Texas)

Posts:7


09/30/2020 3:19 PM  
I am still here, I somehow removed my account.

What do you mean by a key'd bypass valve?
HappyE
(Texas)

Posts:7


09/30/2020 3:25 PM  
We've been able to recover by fixing meters we can and switching to a new model for meters we need to replace. We are mostly looking to see if we can recover money lost from either the management company, the water meter company, or both. I've been advised that the legal road is not easy, and could very well end up costing us money and making things worse, but some members are adamant about pursing that path.
TimB4
(Virginia)

Posts:17008


09/30/2020 5:02 PM  
Posted By HappyE on 09/30/2020 3:19 PM
I am still here, I somehow removed my account.

What do you mean by a key'd bypass valve?




This would be a pipe that bypasses the meter via valves.
The valves would have to be lockable to minimize others bypassing the meters.


bypass valve

Water Utility Products

Pad Locking Lever Ball Valves



TimB4
(Virginia)

Posts:17008


09/30/2020 5:07 PM  
Posted By HappyE on 09/30/2020 3:25 PM
We've been able to recover by fixing meters we can and switching to a new model for meters we need to replace. We are mostly looking to see if we can recover money lost from either the management company, the water meter company, or both. I've been advised that the legal road is not easy, and could very well end up costing us money and making things worse, but some members are adamant about pursing that path.




As I said, you can negotiate with the PM/MC.
If the PM/MC is no longer employed by the Association, you will likely have to look at legal options.

Per your posting, the valve company already made their offer.
Take it, reject it, counter and/or look at legal options.

Considering the legal options, do a cost analysis to show what it might cost.
A few letters on behalf of the association, perhaps a few hundred per letter.
Legal case fought in court - thousands.



I'd be putting effort into a water meter policy that prevents this from happening again in the future.
Inspections required
what should be in a report to the board
maintenance
etc.
GenoS
(Florida)

Posts:4130


09/30/2020 9:28 PM  
Another reminder that new technology is not the answer to every problem. It sounds like a nightmare.
ChrisE8
(New York)

Posts:128


10/01/2020 2:49 AM  
A general litigator (or a litigator who has experience in the construction industry) would probably be best for this. You may have claims against the management company for breach of contract (particularly if your contract had any performance requirements for the property manager) and various torts, and you may have claims against the seller and the manufacturer of the equipment. I'd say that your best bet would be going against the property manager.

If you try to negotiate a settlement with the property manager, the property manager will surely call in its lawyer and be resistant to settling, so I would just go ahead and get a lawyer but expect to pay at least $5,000 to $10,000 in legal fees just for a settlement and up to $50,000 to $100,000 for actual litigation.
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Forums > Homeowner Association > HOA Discussions > Bad prop mgmt & faulty water meters drained our HOA funds. How can we recover damages?



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