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Subject: What's the difference between:
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Author Messages
BrianB
(California)

Posts:2820


05/04/2006 7:43 PM  
What's the difference between what a Board Member or President does and what a Property Management (company) does?

I am the only active board member of a small HOA. I pay another person to manage the accounts, send dues and fee notices, etc.. I take care of getting the mail, sending the mail, handling complaints, writing the complaint letters, dealing with the bank on our accounts, hiring landscapers and firing landscapers, doing audits of the neighborhood for issues, etc..

According to our bylaws (and state law) i am not allowed to be compensated for my duties as a board member. However, can i be compensated for the duties I perform that otherwise we would hire a property management company to do? What's the difference between the three "entities": property management, unpaid board member, and working president doing property management job?

Thoughts?

RogerB
(Colorado)

Posts:5067


05/04/2006 8:30 PM  
Brian, to be the President of the Board and the Managing Agent is a conflict of interest. You as a Board member and can not be compensated for services rendered but can be reimbursed for out of pocker expenses. A good Managing Agent is a knowledgeable professional trained in the numerous aspects of the job.

When Board members get sick and tired of doing many hours work each week for no pay they hire a Managing Agent. And they never consider self management when they realize our Managing Agent can save them more than our cost

LisaS
(Illinois)

Posts:341


05/04/2006 8:39 PM  
Simply, no you cannot be compensated regardless so long as you serve on the board.

Most CCR's have that clause because there would be a conflict of interest in many arenas. For instance, how do you decide what to pay yourself? What if someone thinks you are overpaid? or incompetent? or writing extra checks to yourself? There would be no checks-and-balances.

Don't get me wrong...i am not insinuating that any of that may be true. I don't even know you! But, even if there is no wrong doing and you have the best of intentions it would not work out (even if you overlook that your CCR's state that Board members cannot be compensated.)

My question is...do you desire to get paid because you are doing so much work (I hear you..I manage our HOA too)or so that you don't have to pay a management company and can keep it 'in house'?
Lisa
SwanB
(Washington)

Posts:199


05/05/2006 3:38 PM  
BrianB: You mention your bylaws do not allow you as a Board member receiving compensation, which seems to be a standard. However you don't tell us what your bylaws say as far as what the Board membership should be comprised of? How many directors and officers is your Board supposed to be, according to your bylaws?
BrianB
(California)

Posts:2820


05/05/2006 3:58 PM  
our bylaws state we must have a minimum of three board members. we elected three members about 5 years ago. Since then, one of them failed to pay his assessment on time and was removed from the board (another by law). So that leaves two of us. We have not had an annual (member) meeting in three years, because we cannot get a quorum of members (in the past) or manage to get anyone interested to run for the board (and thus, cannot print an absentee ballot, as required by law). Without being able to have a meeting, we can't elect new board members, so... the two of us are stuck. There are no other volunteers to be on the board (thus, no one can be nominated or appointed).

As for the potential problems, I truly see them: conflict of interest, embezzlement fears, etc.. They are real concerns with a board of one. I could say that with an open bid process and open records and books, I can eliminate some of the issues. I can also guarantee that no one would do this job for less than me, which makes the bid process rather moot from that aspect. I can also say that since no one in our community gives a hoot, I could probably walk away with the bank account and they wouldn't notice.

So if i can't hire myself to do the job, I guess i could set up a friend as a "manager", and pay him to do it. That just seems more underhanded than doing it myself.
RogerB
(Colorado)

Posts:5067


05/05/2006 4:22 PM  
Brian, don't your By-laws allow the Board to appoint directors to fill vacancies on the Board? Also, you should hire a Managing Agent, if for no other reason, to protect yourself. Send an RFP, with the specific duties desired, to 3 or more Management Companies and ask for sealed bids. This is the proper procedure. Never consider "setting up a friend as a manager" as this could get you in trouble.
SwanB
(Washington)

Posts:199


05/05/2006 4:23 PM  
Does anyone know what a board or association can do in this type of situation; where they don't have a board the size their bylaws dictate and can't fill the size? What about not being able to conduct a meeting because of the quorum issue? There must be a fall back for this type of a situation in Robert's Rules of Order; I just can't find it??
TomJ
(Arizona)

Posts:42


05/05/2006 4:43 PM  
Associations is Arizona that hire management companies do no allow the board to receive compensation. However, in some associations where there is no management company, the board does get compensation. Usually in the form of free assessments I believe.

Our bylaws allow the required percentage of home owners to be a quorum to drop each month that there is not enough to have the Annual Meeting. Every year it takes us a couple of months to get enough. This year will be interesting since Arizona law now requires absentee ballots.

That doesn't matter though, we never get anyone to run for the board anyway. So there will not be any names on the absentee ballot.

The first Annual Meeting I attended, one person running for the board was not at the meeting and no one knew him.
BrianB
(California)

Posts:2820


05/06/2006 9:39 AM  
Sure, i can appoint someone to the board. However, every single person in our association has already indicated they will not serve or do anything, so what's the point in appointing them?

Several years ago, we used a managing company. They did the exact same things I am doing now for free, and charged our association over $1000 a month to do it. During our time with them, we drained a $15,000 surplus that had been built up, and were on the verge of raising the assessments in order to pay for managing the money. We elected a new board, fired the managing company, and did it all ourselves. We kept the dues at their "original" level, hired a better landscaper, and now have once again built up a $12,000 savings account.

Aside from taking money and overcharging, what is the benefit of our association hiring a managing company?

Our by-laws have nothing about a reduced quorum, so we are stuck: can't send an absentee ballot without names, can't get anyone to even NOMINATE another person, let alone actually have that person run or hold the office. So, without a nomination, we can't do absentee ballots. Without ballots, we cannot hold a legal annual meeting. Without an annual meeting, we cannot change the board. And thus, I get to be president for life!
RogerB
(Colorado)

Posts:5067


05/06/2006 10:46 AM  
Brian, once again I say you need a GOOD Managing Agent. If this requires the assessment to be raised so be it. You can streamline the Agent's services and may be able to get a good Agent for less than $1000/month depending on their duties.

The benefits of a good Managing Agent can be to relieve you of the day to day duties; keep you out of trouble; help develop a stronger participatory community which is badly needed; and if the Agent is really good they may save you more than they are paid.
BrianB
(California)

Posts:2820


05/06/2006 1:05 PM  
Roger, there is no way, as a board member with fiduciary responsibility to the association, i could with good concience advise the association to hire someone and raise the assessments just to have someone hired to collect the newly raised assessments. That's all a managing company does for us, collect our dues, write four checks a month, etc.. They can't enforce our rules, the board does that. And I can go to the post office, write four checks a month, etc. for much less than anyone else would charge.
LuciusD


Posts:0


05/07/2006 7:58 AM  
Posted By BrianB on 05/04/2006 7:43 PM

.... I take care of getting the mail, sending the mail, handling complaints, writing the complaint letters, dealing with the bank on our accounts, hiring landscapers and firing landscapers, doing audits of the neighborhood for issues, etc..

Thoughts?



You are DOING things that are not (or should not be)in your job description as a board member. You are DOING functions you are supposed to be DIRECTING and supervising. You are performing the functions of Vice President, Treasurer, Secretary and several committee chairs (positions that do not normally require membership on the board). Bylaws often specifically prohibit occupancy of multiple offices other than (possibly) secretary/treasurer.

Fiduciary responsibility does not mean "be cheap". It means getting things done responsibly and at a fair cost. If your members refuse to take responsibility for being officers and DOING what needs to be done then you should contract out the DOING. But that does not relieve you of the responsibility for DIRECTING and overseeing. If the members will not participate in DOING the work, they have a responsibility to pay for getting it done. (But not by the president.)


SwanB
(Washington)

Posts:199


05/07/2006 8:20 AM  
I agree. Given you are over-functioning as the sole Board member to save money for the association, and, ultimately, yourself as a dues-paying member, this is honorable. The directive of a Board member is not to 'do' but to make sure the tasks are done. Besides the very legitimate point of breaking your bylaws by functioning as multiple officers of the corporation which could place your HOA in violation of state and federal laws, depending on your Articles of Incorporation. Isn't this true?
RogerB
(Colorado)

Posts:5067


05/07/2006 8:56 AM  
Brian, I hope you realize that your efforts are placing you and your association in a precarious position. Hire a qualified person to do the association's day to day work. You could better serve your association by focusing more effort on getting members to participate both on the Board and with other association activities.

BTW, who signs the check to reimburse your expenses?
BrianB
(California)

Posts:2820


05/07/2006 7:25 PM  
Interesting... we do have a clause preventing multiple offices, except for secretary and treasurer. they can be the same. However, since that person doesn't do anything, it is left to me to do the actions necessary to keep the association solvent.

Ironically, I sign the checks to the landscaper and city, etc.. Oddly enough, according to our bank, i am not a signator on the account. However, that hasn't seemed to bother a single check in 5 years, all of which have been cashed by the bank. THe bank will not tell me who the signator is, of course, that's confidential. I suspect it is some previous president or treasurer, years ago, who opened the account. However, i have no way of knowing, or finding out. The bank will only talk to the signator, and without knowing who that is, we can't go down and add a new signator to the account. So, we keep depositing money and signing checks, and the whole thing runs merrily along.

So tell me, if this house of cards comes tumbling down, what will happen? Can the state shut us down?

JulieS
(Georgia)

Posts:412


05/08/2006 8:19 AM  
As the president of our HOA, again after being removed, there is no way in the world that I would be in your position. I am the board member who is most active even with four other people and a management company.

I would schedule a meeting for the home owners and let them know that if there are not volunteers to help then you will be forced to hire a management company causing annual assessments to increase. This should get their attention and hopefully additional volunteers.
BrianB
(California)

Posts:2820


05/08/2006 2:55 PM  
a meeting with the homeowners? lol... they won't show up. Since 2000, we have had a total of 11 people at ALL our annual member meetings, combined! I cannot even get 4 people to show up anymore.

I tried the "money" threat as well, with a meeting held to discuss spending $15000 on our landscaping, and raising assessments in order to do so. That meeting had two board members, and three homeowners: and one of the homeowners had just sold their house, and was moving out of state. They just were curious and wanted one last say about things.

I think I will just appoint myself treasurer, resign as president, and keep going. that way, i can sign the checks.
RogerB
(Colorado)

Posts:5067


05/08/2006 5:12 PM  
Brian, you really need help. As the President and only Board member:
1. you can continue to call meetings until a quorum is present.
2. you can find members willing to serve on the Board and appoint them.
3. any Board member can sign checks but make sure to add them as signees on the accounts.
4. make sure to carefully document all actions as you are placing yourself in a terrible position.

Personally, I would resign from the Board if other owners would not step forward to help. There would too much financial risk to justify the ego trip!
BrianB
(California)

Posts:2820


05/08/2006 7:40 PM  
thanks for the advice, but most of it is undoable at this moment. Apathy by the homeowners beats almost any strategy.

If i resign, then no one will run the association, and it will simply stop paying bills, and get into financial trouble. we will default, the city will likely sue us, etc..

I cannot appoint anyone, as they have all stated they have no interest in joining the board. If elected, they will not serve. They will either resign, or if i won't accept a resignation, they will pay their monthly assessment late, and that automatically takes them off.

I cannot add anyone as a signator agent on the bank account, because I am not a signator agent on the bank account. Only someone already on the account can add someone else, and we have no way to find out who is on the account.

I guess i could continue to call meetings every week or month, and someday hope I get a quorum. That's about all i can do, i guess.
JulieS
(Georgia)

Posts:412


05/09/2006 6:44 AM  
One question...why is everyone so set on not helping with the board and their neighborhood?
BrianB
(California)

Posts:2820


05/09/2006 7:53 AM  
laziness, apathy, and ten years of "if my rates don't raise, who cares". Previous boards have been inneffective, and future boards are likely to be ineffective. There is no reason to volunteer onto the board, since there is nothing the board can do except deal with complaints. And who in their right mind would volunteer to deal with complaints just for fun?

RogerB
(Colorado)

Posts:5067


05/09/2006 10:23 AM  
Brian, you have provided excellent arguments for hiring a managing Agent! I'll bet you that owners will volunteer to serve when the Board does not have to deal with complaints, the day to day management activities, and assessments are increased.
JulieS
(Georgia)

Posts:412


05/09/2006 12:07 PM  
I second that motion!
KevinH
(Texas)

Posts:53


05/09/2006 8:55 PM  
You mentioned that you can not add yoruself as a signer at your bank, correct?

Do you have the minutes of the meeting where you were elected as a board member?

Did you have a meeting afterwards to assign officer positions? If so, were the minutes recorded?

In many cases, a bank will recognize the President as the final say on anything. So if you tell them you have signing privileges, you do and can sign the necessary paperwork.

In the worse case scenario, open a new account and transfer the funds over. But at LEAST, get the account setup with you as signer.

Then hire a management company and do NOT give them signing rights. What state are you in?

We found a full management company that cost a fraction of our previous one (from $9600/yr to $3000/yr).

And we found a lawn care company for a fraction ($15000 to $6000 - when most were going the other direction - $20-$30K).

You just need to shop around.

If you cannot see the forest for the trees, back up and get a better view. Don't start to clear a path while still blind.
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