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Subject: New Home Owner - Corrupt HOA - Help Needed
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SusanC20
(California)

Posts:7


10/12/2021 11:40 AM  
Hello all -I am a first time home owner and was so excited about my purchase but have been learning that our HOA Board is completely corrupt. To give a little background, I closed in February of this year. We a HOA meeting in April which I learned was the first one in over a year. Our bylaws state there needs to be one every six months, minimum. I have emailed the management company multiple times about a meeting that should be held this month with no reply. Also, there has not been an election in over 2 and a 1/2 years. I’ve asked about this as well and get no response. This is a large complex of 168 units and only 67 of those owners live on the property. The rest are all rentals which I now understand is above the 25% allowed per the new 2021 law. We have only $32,000 in reserves even though the HOA takes in over $1 million per year in dues. I also learned we have had a special assessment each year for the past four years and are expecting one in February. I love my place but this is turning into a nightmare. I’m trying to get on the board myself but without an election or a reply from the management company I don’t know how I can do so. After begging for and finally receiving detailed financial reports, I learned we employ a property manager, two full-time maintenance men, one part-time maintenance man, and a part-time cleaner who I’ve never seen. This equates to $114,000 per month. These people are on salary and not paid for the hours they work. There are currently only four board members. Only one board member actually lives here. Three of them own multiple units which they rent, and I realize this is not against the rules but I think something shady is happening. Two of the board members used to work for the same management company we use. My guess is that they’re using funds to fix issues with their units here and possibly using maintenance to repair issues at their other properties. I don't have any proof other than here say, but I don’t see 100 hours of repairs being made every week. The fitness center lock has been broken since I moved in, for instance. Seems like an easy fix for 2.5 repair men. I don’t know what I can do aside from hiring a lawyer which I don’t have money for at the moment. Any suggestions would be great. Thank you.
JaniceM7
(Maryland)

Posts:16


10/12/2021 11:57 AM  
Are you condos or SFH or townhomes? What does your HOA "own" and needs to keep up maintenance on? What law prohibits rentals in your community? We need a lot more information to help you.
SusanC20
(California)

Posts:7


10/12/2021 12:12 PM  
Hi - these are condos as of 5 years ago. They used to be apartments. I'm not sure what you mean but what does the HOA own or where I can find that. I pulled this from Davis-Sterling:

Types of Restrictions. Beginning January 1, 2021, associations are required to amend their governing documents to conform to the following rental caps and lease terms. Failure to amend governing documents to conform to these standards by December 31, 2021 could result in a fine of $1,000. (Civ. Code §4741(f)&(g).)
1. Rental Cap. This limits the total number of units in a development that can be leased. For example, no more than 10% of the units in the development can be rented at any one time. Beginning January 1, 2021, rent caps more restrictive than 25% are unenforceable and all associations with rent caps were required to amend their governing documents to conform to 25%.


I live in California if that helps.

Thanks!

MaxB4


Posts:1395


10/12/2021 12:16 PM  
Susan

Actually the law Gavin Newsome signed essentially got rid of enforceable rent restrictions. What part of California do you reside? Hiring an attorney will be a waste of money. You are close to being in a Mission Impossible situation with so many rentals. Guessing from the expenses you live in a condo. Knowing who the management company is would go a long way, if they are a large national company or large in California.

It is not an impossible task, but you would need a lot of support and a lot of information.

I own a HOA management company and can help you get pointed in the right direction. If you like to email me, the address is [email protected]
KerryL1
(California)

Posts:8620


10/12/2021 12:24 PM  
Agree with janice--need much more info.

Are you a multi-story condo building? Or? How old? What amenities (Pool? gym?, lobbies)

There is a difference between Board meetings and meetings of the members (owners), which usually are for elections. board meeting are not called "HOA meetings' they're called board meetings. So I take it your Bylaws state there must be two board meetings a year?

Maintenance. If you have 167 condo units in a stacked building, a 1/2 time custodian is not enough. It's possible you're confusing maintenance (or "engineering") staff with custodial staff. Maintenace/engineers do a lot more than repair work IF you're a mutt story budding. The detailed financial reports which you now have will show you what money was spent on in your building(s). You'll see a contractor name and the work completed.

So early on, I think it's a mistake to conclude that the Board is taking $ and using it for their own purposes. that's a huge accusation and you're only speculating.

SusanC20
(California)

Posts:7


10/12/2021 12:54 PM  
Thanks - I was not aware of the Gavin Newsom change so I will table the rental restrictions from now. I live in Los Angeles County. The complex is two story buildings of 168 units total built in 1982. As I said we spend $114K per month for a full-time office manager who is rarely there, two full-time maintenance staff, one part-time maintenance staff, and one part-time cleaner. We have a pool which is maintained by a separate company, a landscaper (even though we have no grass only dirt), and a gardening company that comes once a week to blow leaves and dirt all over. We do not have a custodial staff. Repairs to the property have been paid for by a yearly special assessment as I stated. Is it normal to have a special assessment of $1,500 - $2,000 per year? Is it normal to not have an annual election for almost 3 years? Is it normal to not have HOA member meetings regularly? I know I’m new to home owning this all seems very suspect. I do know that one of the board members who rents had our maintenance staff repair two pillars inside of the rental apartment. This is a homeowner cost and should not have been fixed by our maintenance staff. That is just one example that I know about. The office manager also used to work for the management company and uses the office to rent units and help sell units as she is a licensed realtor.
MaxB4


Posts:1395


10/12/2021 1:21 PM  
Susan,

So now, based on what you have presented, here is my take.

1. You purchased a condo conversion, which will not have the same building standards as a condo from the beginning. Based on history, you will have much more in repairs.
2. Not having an election in almost 3 years is unacceptable.
3. With the setup you described, it is more than likely that board members could be having the maintenance staff fix up their units. It's also possible, if the office is
renting or selling a unit, they may be involved in this scheme also.
4. Bylaws will require an annual meeting, in which elections are held. There may be a very good reason why they don't want elections or change.
5. The minimum number of board meetings was generally quarterly to meet the requirement of reviewing association finances. Now the requirement to review the association is to
be done on a monthly basis. I will guess the vast majority don't adhere to that requirement.
6. Are your total monthly expenses $114K or just those few you mentioned.
7. Based on experience, with a community of 168 units, there should not be annual special assessments. That is just plain financial mismanagement.
8. Lastly, there is a serious conflict of interest with your office manager!

KerryL1
(California)

Posts:8620


10/12/2021 2:15 PM  
Trying to understand: you have both an "office manager," and a Property manager? Anyway, one of these is paid $114,00/ann., correct? Our is the 114K all the maintenance men, the handyman AND the Office/prop mgr.?

When Janice asks what does the HOA own, she's asking what common. areas does your HOA have? You mentioned a swimming pool and a fitness center. We can assume roofs, Are there hallways with carpeting, etc.? We can assume there are stairwells.
SusanC20
(California)

Posts:7


10/12/2021 3:28 PM  
Sorry for the late reply, I had to jump on a work call. Apologies for the dumb questions but again I’m a first time home owner. We have a property management company that is completely useless. They send out monthly HOA invoices for dues and that’s about it. We also have a property manager in addition to the maintenance men and cleaner. Those positions combined total $114K per MONTH. I asked for a breakdown of each salary and was told they couldn’t send it to me as it’s confidential. I pointed out that because my dues are paying their salaries that it’s not illegal and I want to see the breakdown. But of course it was ignored. Common areas are a pool, small laundry room, and a small gym. Each building is freestanding outdoors. There are no hallways or carpets or stairwells. There are about 15 cement steps that go to the unit above me. We all have wood plank patios and those are owned by the HOA. Every other issue I seem to find is to be covered by the owner, including in wall plumbing. They use ONE plumber who is super expensive and use the excuse that he is the only one in Los Angeles that is certified to turn of the boiler on the roof. I investigated myself and this is not true. He is a friend of one of the HOA board members. I asked for comp bids for the last repair they had done on one of the roofs and was told they don’t provide that. I have no idea where my money is going. The finance statements shows us in the red from 20149 and they have not provided a statement for 2020 even after repeated requests. I don't know when they’re having board meetings which I must’ve mixed up with association meetings. We hadn’t had an association meeting in over a year until April and they are supposedly planning one in December. I’ve asked repeatedly for the election process to get underway and I’m told they’re working on it. I also felt there is a conflict of interest with the office manager but apparently I’m the only one that questions anything. Everyone else seems to go with the flow. The problem is we have so many renters no one cares. Small rolls are broken all the time like trash left outside the dumpster large pieces of trash and furniture. We’ve had a loveseat in the outside parking garage for six weeks. Etc. But I’m just looking to get our finances in better shape. If I get on the board my first order of business will be to fire the management company and get a new one. I don't know what to do and cannot afford $2K every year for special assessments. I also don't want to sell as I just bought the home and fixed it up to where I love it.
SusanC20
(California)

Posts:7


10/12/2021 3:44 PM  
Sorry - I've been typing too fast during meetings - we pay $14K per month for those staff members and I was able to pull the financial breakdown for 2020:

Income: $989,145
Expenses: -$848,375
Other expenses: -$97,872
Net income: $42,898

Here are the approximate monthly charges:
Total Advertising 13
Common Area Maintenance 504
Fire Safety and Service 60
Gardening & Landscaping 4,166
Insurance 8,000
Office Expense
Postage, Printing, and Delivery Expense 750
Office Supplies 125
Payroll Expense 14,000 – this is for the staff of 5 people I mentioned)
Pest Control Expenses 208
Property Management Fees 1,750
Accounting & Tax Prep 125
Legal Fees 42
Other Professional Fees 150
Electric Gate 1,083
Lighting and Electrical / HVAC 192
Other Lighting and Electrical 417
Locks, Keys, Mailboxes 292
Drywall & Painting (Int) 20
Plumbing 2,500
Roofing 567
Materials & Supplies 833
Other Repairs & Maintenance 3,667
Total Repairs & Maintenance 9,570
Swimming Pool 500
Trash 8,400
Utilities
Electric 900 (office only)
Gas 4,417
Internet 183 (office only)
Telephone 138 (office only)
Water & Sewer 17,333
MaxB4


Posts:1395


10/12/2021 5:44 PM  
You're paying almost $500.00 a month for a pool and laundry room. I think that's pretty steep to say the least.
MelissaP1
(Alabama)

Posts:10534


10/12/2021 9:07 PM  
Moving newer posts as two can play this game with enough time...

Former HOA President
SusanC20
(California)

Posts:7


10/13/2021 10:05 AM  
Is my only option to get on the board? Even so, if I am outnumbered in any vote it won't do much good. I want to get the current manage company fired and bring in a new one. There office building has boarded up windows with their sign out front and the phone number is a voicemail only and no one ever calls back. They occasionally response to the email address. Any other suggestions?

Thanks so much for the help!
MaxB4


Posts:1395


10/13/2021 11:15 AM  
Susan

You need to have a professional look at your situation. Getting on the board and being in a minority will only frustrate you more. Your expenses are out of whack.

The other thing to consider and it's not brought up here, management companies come in a couple of different flavors.

----One that only manages homeowner associations and know the laws, corporate and civil, that govern HOA's in California.


----One that primarily handles rental properties and possibly owns a real estate office and dabbles in HOA's. They may know the laws for tenant rights, but are clueless in
the laws for HOA's. In California, our laws that govern homeowner associations don't differ between HOA's and Condos.

What I find when reviewing management companies, the ones that specializes in rentals don't send out the required Annual Disclosures, Budgets and/ Reviews. When homes are sold within the community the proper HOA documents are rarely sent or are mostly incomplete.

Good luck to you!
AnnaJ1
(Maryland)

Posts:79


10/20/2021 8:10 AM  
Susan, this is a terrible predicament to be in, during what should be a very exciting time. (The purchase of your home.) Does your county/state have an HOA dispute resolution entity?
SusanC20
(California)

Posts:7


10/20/2021 12:01 PM  
Hi Anna - thanks for that, I appreciate it!

As far I have investigated, there is not. I really am stuck with what I can do. I've tried to rally some of the homeowners, but we are outnumbered by the renters and no one seems to want to be involved. Still no word from the management company on an election.
LaskaS
(Texas)

Posts:535


10/24/2021 2:12 AM  
Hi susan,

you may be outnumbered by renters with regards to occupancy.

but renters don't vote.

If you have owner support you can easily affect change.
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