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Subject: Management Company & Transfer Fee Compensation
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Author Messages
RobertR1
(South Carolina)

Posts:5164


12/28/2008 10:48 AM  
Joanne,
I caution you don't let the trees obscure the forest. You still have to live there and everything you all do will not negate that factor. So make haste slowly, and take this piece by piece, don't get hung up on principal and shoot for a better tomorrow.
If you keep these things in mind you will be doing a favor to all.
It is a tight rope you will walk and keep yor eye on the prize.
RobertR1
(South Carolina)

Posts:5164


12/28/2008 10:58 AM  
MaryA,
I know you a little bit now and your replys always seem to hint that someone is picking on the Board unfairly. I don't blame you a bit for this because people pick on the Boards, just not all the time. In this case you make reference to how much the poster should be doing but neglect to mention that the Boards actions, given we can believe what is posted, there is no doubt the Board is not acting in a friendly fashion. If they were by this time and all we read that has happened they would have sat down and resolved this. That is what has to happen in the end anyway.

Forgive me if I steped on your toes but I was replying to the poster and what was posted in the thread, not passing critizism on you personally. I may have been too curt and should have explained I respect your abilities, but, I thought you knew that.
JoanneD1
(Arizona)

Posts:447


12/28/2008 12:46 PM  
Thanks so much for all of the responses I have gotten. It takes strength to keep up the fight and fortunately, I awake renewed everyday on this front. I am going to begin the task of researching new management companies and I have come to one conclusion......everything should be billed through our HOA.....not directly to the MC. We have no papertrail on sales where escrows were open and never closed, yet the MC got paid $195 for providing the Disclosures. We do not need to be a cash cow for any MC. I believe our fees are excessive and I will also begin to take the steps to correct that. Whoever is responsible for our losses is going to be made accountable one way or another. Yes, I do have to live here, but I have always conducted my life in such a way as to believe in my pursuits. Our small group(which is growing)is looking out for everyone including the BOD. There are good people here who know how hard one has to work to make a dollar. I would imagine the BOD is getting a legal opinion and they should!! They should have done it before this mess started. The good news is that we caught it when we did. I will keep you posted as to how things proceed.
MaryA1


Posts:0


12/29/2008 8:25 AM  
Posted By RobertR1 on 12/28/2008 10:58 AM
MaryA,
I know you a little bit now and your replys always seem to hint that someone is picking on the Board unfairly. I don't blame you a bit for this because people pick on the Boards, just not all the time. In this case you make reference to how much the poster should be doing but neglect to mention that the Boards actions, given we can believe what is posted, there is no doubt the Board is not acting in a friendly fashion. If they were by this time and all we read that has happened they would have sat down and resolved this. That is what has to happen in the end anyway.

Forgive me if I steped on your toes but I was replying to the poster and what was posted in the thread, not passing critizism on you personally. I may have been too curt and should have explained I respect your abilities, but, I thought you knew that.




Robert,

There was certainly no offense taken in your remarks. I just wasn't clear on what you were saying.

I am a little surprised that you feel my remarks ". . .always seem to hint that someone is picking on the Board unfairly." I didn't realize I come across that way. I am the type of person who likes to have as much info as possible. I don't side with boards, and I don't side with the member -- at least not until I know more about the problem. As a past board member I am aware of what the resp's and duties are and I'm also aware that many members really don't have a clue. Many complain w/o knowing enough of the in's and out's of the situation. Oftentimes in my responses I try to give info that might be helpful in understanding why the board took a particular position. During the past 10-12 yrs that I've been involved in HOA issues, I have concluded that there are more boards doing a good job than there are errant boards. And even many of the so-called errant boards are not operating that way intentionally. HOA education is so lacking and accounts for so many of the problems we see in how HOAs are managed. I know you've heard the old adage, "it's the squeaky wheel that gets the oil". People who are pleased with their HOA board are usually silent; it's the ones who have problems that we hear from and that's why many people think the vast majority of HOAs have problems.
MaryA1


Posts:0


12/29/2008 8:43 AM  
Joanne,

Good luck with finding another mgmt co. But, you should be aware that most, if not all mgmt co contracts require a transfer fee to be paid to the mgmt co. Perhaps this is a negotiable item but I've never heard of that happening. Most often the board just accepts it and if they don't already have that requirement they adopt it right away. It's up to the board to decide whether or not the mgmt co. can receive the fee at closing or if the fee should go to the HOA and they in turn pay the mgmt co. However, if the fee is paid directly to the mgmt co at closing the PM should definitely make a report of it to the board. In many instances there is nothing left over for the HOA treasury -- the fee charged is the amount of the contracted fee payable to the mgmt co.

If I were in your position I would try to get some info from the board. Does the mgmt co contract specify that a transfer fee will be paid to them? If so, how much? What fees does the HOA charge -- disclosure, transfer, buy-in or capital improvement and how much for each? Does the mgmt co receive the transfer fee at closing or should it be paid to them by the HOA?

With the answers to these questions under your belt, you will have a better understanding of exactly what is going on and be able to better determine if something is amiss. Also, without seeing the financial statements you will not be able to determine whether or not the HOA is receiving any of this money. As I stated in an earlier response, there is a statute giving members the right to inspect or receive copies of assn records. If the board denies your request you can file a dispute with the Office of Admin Hearings.
RobertR1
(South Carolina)

Posts:5164


12/29/2008 8:48 AM  
Thank you for your great reply, you said a lot that needs to be read by those that don't know how the HOA wheel turns.
We all develop opinions because of experiences. My opinion of why we only hear from dissatisfied owners is self explanatory. I believe nearly all HOA's have dissatisfied owners. In would be un-human not to be this way. Nearly all don't complain, for lots of reasons. I have formed an opinion that this business just does not blend well with harmony. Squeaky wheels do get the grease, but that presents only part of the problem. We have a band of merry owners here, small but effective and damned if we can agree on everything. We may be satisfied to a degree but we don't seem to lack for causes or changes we want to make. We get along fine, we just don't agree on everything..........we are normal.

I have this thing about the Board being proactive even when there is nothing to be proactive about. You don't need to have a mission to be proactive, but a board that is continuously bouncing off the members seems to be the way to counter this overwhelming apathy we observe. But, that just turns some of our merry folks off and they believe, "these owners are mature adults, they should not expect someone to lead them by the hand. If I can read my covenants, then so can they."
JosephW
(Michigan)

Posts:882


12/29/2008 10:15 AM  
There is some history needed here and some explanation of how management companies and fees have evolved over the years. When management companies first started specializing in community association, back in the '70's, they basically charged a per unit/per month fee and the only additional costs were for items such as copies and postage. The management fee was basically a guess because they had no history to base the fee on. Since most companies were just starting out, they equated volume (total number of units managed) with profits, so the early fees were low. This continued as more people started to get into the business and used low bidding on the management fee to get their foot in the door. As a result, management fees remained low, even as costs increased. I spent a good part of the late '70's and 80's working with managers and mangement companies around the country, regarding the business of management, looking at how they conducted their business, so I know a little bit about what I'm talking about. I'm going to use what happened in my market as an example, but it is consistent with what occurred around the country.

We were the first company in the state to manage only community associations. We spent a lot of time and money hiring good people (heavy intelligience and personality testing prior to hiring) and training, both in-house and through national trade associations. During the 5 years I was with the company, we never lost a client, including those where we were hired by the developer and took through transition to owner control. During that time, a number of new companies entered the market, including one we dubbed "year and gone", who basically bid contracts at 50% of the market rate, did nothing for a year and got canned. But they stayed in the market, because newly elected boards often thought that their responsibility was mainly to reduce assessments and went with the low bid on all contracts. As a result, the level of management fees remained low. Annual contract increases did not keep pace with costs. Remember, as a manager, gaining experience and expertise, I expected to be compensated with an annual increase, as did all of the other employees, In order to give me that raise, the company found itself forced to increase my workload, to the point where I was regularly averaging 60-80 hour work weeks and rapidly burning out. In my last year, the company brought in an outside consultant to look at how we were doing business and at the market. Basically, they came to the conclusion that they could not continue to survive as a business using the management fees as the only revenue stream. Constant board turnover meant that our expertise and experience would only allow us to charge a minimum more than the lower-charging, much less professional, companies. As a result, they were projecting net incomes of 3-5% in the coming years unless we changed our business model. Those of you in business know that this is an unacceptable return. Owners or investers are normally looking for 15-20% return as a minimum. So we (and other companies around the oountry who took the time to study it) changed our business model.

The logical area to change was in the areas where we could not accurately project the time or the costs, or did not directly benefit the entire association. Some of the areas we took out of the basic contract and changed them to a per hour or per occurrence cost were:

Number of meetings - the basic contract included 'x' number of board meetings (all scheduled ones) and one annual meeting. If a general meting was normal we would include that also, however, unscheduled meetings were extra

Insurance loss management - Since an insurance loss, is by definition something that can't be forecast, the time management spends overseeing repairs is usually in addition to their normal management duties and should be compensated separately

Special or additional assessments - these are usually unique occurrences similar to an insurance loss and should be handled similarly

Number of general mailings per year - mailings are not just copies and postage - there is a time element.

Collections - since the number of late notices, lien or foreclosure work would, at best be an estimate, and, since the cost was created by the actions of an individual, management began tacking on additional charges to cover their time. This has evolved into:

Violation notices and fine charges - same reason, unknown number, cost created by the actions of an individual.

Unit transfer fees - this was one of the items that was identified as a possible revenue stream. First, the cost was created by the actions of an individual owner that was leaving the association, not by any association activity. Second, their was a time element in creating it and a certain degree of liability in providing it. Included in this would be re-finance paperwork, or any item dealing with lenders, title companies etc.

There are about 50-100 other items that have been identified in this category of "additional charges" and different management companies use whatever mix they choose or works in their market.

All of these were designed to receive some compensation when a certain amount of time was exceeded. Management sells time. Control of time is how they keep managers from burning out. A study done a number of years ago showed that about 3 years was the length of the average management career and that burn-out was the single most stated reason for leaving. You can't run a successful professional business with that kind of turnover. It's a little better now than it was when the study was done, but burn-out is still a major factor in why associations keep getting different managers every few years.

Now, over the years, and especially during the recent market run-up, transfer fees became a significant portion of revenue to management companies, in some cases making up the majority of their net profit. The rationale being, the cost was being borne by an owner who was leaving the association, not by the rest of the owners who had nothing to do with that owner's decision. Overall management fees could remain competitive.

Recently, there have been legal challenges (management win in California) and state legislation (Virginia in particular)that have tried to address the issue of transfer fees. Whatever the outcome, please remember that the ultimate issue is whether the individual pays for an action they initiated, or will all of the owners pay? So, the rate may not reflect the actual cost to provide the documents, but there is a cost and it will have to be paid, one way or the other. The choice is always yours when it comes to negotiating your contract.

So for those of you who say, "This should be included in the contract", - can you control the numbers or time? If you can't, then management will probably have to adjust elsewhere to compensate when the time exceeds their estimate. They may make fewer inspections, spend less time on the management reports or supervising contractors. They aren't managing your association as a charitable exercise.

Joe


Joseph West
Official HOATalk.com Sponsor
Community Associations Network, LLC
www.CommunityAssociations.net

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GlenL
(Ohio)

Posts:5491


12/29/2008 12:13 PM  
Very well said Joseph.

Studies show that 5 out of 4 people have problems with fractions
RobertR1
(South Carolina)

Posts:5164


12/29/2008 2:32 PM  
Very well said, Joe is an articulate guy and speaks with passion about his life's work. I have no doubt he speaks with authority regarding Management Companies.

But, I'm 78 years old;d and I am old enough to know I am listening to one side of a story, and from what I understand this is a lesson in how to form a corporation that will manage other people problems for profit.

Sorry Joe, I am not in my field but I would like to hear counterpoint. I don't think you mentioned once that Management companies have gotten out of line and are responsible for all kinds of problems, if we can believe 10% of the troubles we hear on this site. Would I be wrong to believe that once a Management Company becomes so big (successful) they assign managers to any number of Associations. Not saying this is wrong per sec,just asking the question. When this happens the Management company or Microsoft or what ever, loses the personal touch with their customers. The managements job then becomes managing the managers. So can I ask the question, does these associations (all) need this kind of infrastructure to provide them with the service they need? If true them it becomes a race between the management companies to see who comes out on top and the owners pay the bill.

We are 65 units and like all associations have to be considered as to budget, location, physical plant, age, all kind of things that make each unique. Certainly, I can not throw the management companies blanket on all associations and suggest this is a fit.

Most of this started from a post, if I remember right, if it was legal or reasonable for a management company to charge an owner $15.00 for two pages on minutes. I say that is "Highway robbery, no matter who does it."
JosephW
(Michigan)

Posts:882


12/29/2008 4:09 PM  
For the record Robert, I haven't been a manager since 1979. I have worked with associations, both self- and professionally managed, as well as management companies, law firms, accounting firms, developers et al, since then. I've also served on the board of my homeowner's association.

But since you use the example of the minutes, let's look at it. Take the cost of the employee who retrieves and copies the documents, then the cost of providing the office, equipment and storage, etc. and $15 for the 10 minutes it takes to find and copy the docs is probably not too far out of line as the actual cost these days. If you think it is, imagine what it would cost to retrieve those same documents from your attorney's office. If you think they should only charge the copy cost of 15 cents per page, then all of the other owners are going to pick up the cost for time to fulfill that one owner's request. Fine with me, but someone is going to have to cover that cost.

And of course, it's a lesson in how to manage for a profit. There wouldn't be any management companies without the ability to genereate a profit. Self-management is not an option for many associations.

Part of the problem with association management has been their inability to generate enough revenue and profit to attract long-term, quality employees. Good community association managers are hard to find and harder to keep. Here's a short list of the skills most companies look for when they go out in the market to hire someone ( or what they are expected to know at their end of their training period):

A working (general) knowledge of:

Finance - bookkeeping, taxes, collections and collection law, banking - as to the association's needs

Maintenance - buildings (hi- and mid-rise), elevators, roofing, siding, paint, plumbing, electrical, heating/cooling, roads, landscaping, pools, drainage

Insurance - as it pertains to associations

Law - association, contract, personnel, discrimination, housing, etc., as it pertains to associations

They must be able to interact positively with thousands of owners, each of whom thinks they pay the manager's salary in its entirety.

They keep or lose contracts on the whims of ever-changing board members, each of whom usually comes to the office with a personal agenda, new personality, and ego to deal with.

Although most managers are college graduates, there is no degree in community association management, so they are starting over when they first hire in, unless they move from another company.

Managers have been generalists in the growing age of specialists. Don't use this board as an example of good or bad managers - people come here when they have a problem, not when they're happy, and all of the posts on this or all of the other boards wouldn't make up 1% of the association's managed. Right now I'm working with 6 different management companies around the country. They each manage more than 100 associations and turn over less than 2 per year. All have associations that have been with them for 20+ years. The majority of associations that leave them return within 3 years. Do they have a bad manager or employee now and then, of course, the same as any company that hires people. To state that management companies "have gotten out of line and are responsible for all kinds of problems" is like saying that because of Abu Ghazib, all US soldiers are out of line and irresponsible. Anecdotal information does accurately reflect anything except one side of a specific situation.

Do they lose touch with their customers (the owners), of course. This is part of the overall change in the American service industry, which is forcing them to automate more and reduce personal time spent with the client. This isn't their choice, it's a survival choice. When cost becomes the overriding factor you get the Wal-Mart-inization(?) of the industry. A few years ago, I did a little calculation about where management fees should be in my market, if COLA was the only factor used. Turned out a 150 unit condo would be paying about $26/unit/month, when in fact they were paying less than 1/2 that. So management had to become much more "productive", less personal, more automated, in response to market demands during that time, and clients got what they willing to pay for.

Personally, I think the age of the manager as a "generalist" is coming to an end. I think the person you will see at board meetings will be someone skilled in managing people, attached by their computer to all of the other information needed to report to the board. Specialists behind the scenes will handle all of the specific finance, maintenance, insurance, or owner issues. The manager will instead, be knowledgable in conflict resolution, dealing with different personality types, communication, etc.

Joe

Joseph West
Official HOATalk.com Sponsor
Community Associations Network, LLC
www.CommunityAssociations.net

*See legal notice below (end of page) or go to www.hoatalk.com/legal
JoanneD1
(Arizona)

Posts:447


12/29/2008 4:23 PM  
Unfortunately, the only MC I can relate to is the one that I am dealing with. They are making anywhere from 380-395 for each sales transaction and we had 27 of them in the last three years. On top of that, they use a company called condo certs and all that the MC has to do is report any fines, delinquencies, pro-rate any HOA fees and special assessments, report pending litigation and that's about it. Is that worth this kind of money???? We have only 79 units here with a 24/7 manned gate and it is getting expensive. Then there may exist the "unspsoken" fees such as kickbacks or referral fees that can be passed from vendor to MC. Interior designers know all about this kind of stuff. I once received a $400 check from a faux painter whose name I mentioned to someone. I was shocked. I called the painter and asked her what it was for. I don't mind paying a fair wage for a fair day's work, but this MC is not operating with a vested interest in our community. He had sent the same handyman here twice and both times we had to REDO the job. That handyman is finally barred from the property. I am looking for a good management company. This MC wanted $25 to send a letter of insurance to my bank blaming the insurance company that the fee was charged by them. I called the insurance company and they said there is no fee. Who am I to believe? It was my bank that called me and said your MC wants $25 for a letter of insurance and they won't take a personal check and this has never happened before. I call it nickel and diming and since reading Joe's informative letter, I guess there is a professional name for the task. I would rather pay more upfront than to be slammed at every turn. I think this is the tip of the iceberg with this MC. I know there have to be some good companies out there. I just don't know nhow to find one and reading Joe's posts has been very helpful. We want a good manager more than anything else right now. Sincerely, Joanne
JosephW
(Michigan)

Posts:882


12/29/2008 4:56 PM  
Joanne,

Most management companies don't and NONE should take kickbacks and referral fees. This should be stipulated in any management contract any association signs.

Most additional fees are negotiable, but it seems that most boards prefer to have those costs that are created by an individual owner passed along to them, rather than raising the overall management fees for everyone. If you think about it, the process is probably more fair, it's the amounts that people disagree with. Again, they're negotiable.

Finding a good management company and then finding a good manager within their employees is a process that a board or selection committee have to commit some time and resources to. I think too many use a combination of the Yellow Pages, friends that live in a different association, and an 8-ball ( or just give the contract to the lowest bidder).

Dealing with a management company is like dealing with any other contractor - if you have problems, document, take pictures, notify them, give them one chance to fix and then take it to another level. If the board isn't willing to deal with it, elect a board that is.

Joe

Joseph West
Official HOATalk.com Sponsor
Community Associations Network, LLC
www.CommunityAssociations.net

*See legal notice below (end of page) or go to www.hoatalk.com/legal
JoanneD1
(Arizona)

Posts:447


12/29/2008 5:30 PM  
Thanks for the reply Joe. We are willing to put in the time to find the BEST fit. Most here feel we are not getting much for the money and would rather pay a little more and get better service. We will check out the BBB and a group Mary referred to, but I don't think they have a "rating" type system. The small size and the age of our community presents many difficulties. It may be time to consider going to a keypad entry system as we would put alot of money back into the coffers, but there will be great resistance to that. I personally feel that a man on third shift can present a false sense of security as we note he is sleeping much of the time. We old folks are awake at wierd hours! Once we know the parameters and the job description, which you have lent great insight to, we can begin to make more sound decisions. Right now, or community is not happy because of a rather non-responsive board and issues dealing directly with the MC. The BOD unwillingness to answer some simple questions makes us all very unhappy and suspicious. It is almost as though they are pitting us against the manager and we are only asking for clarification and policy, procedure and awful bookeeping. I think you would agree that isn't too much too ask. I look forward to more paarticipation from you in these discussions. I am on a learning curve for sure and want to keep an open mind to both sides of the issues. Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


12/29/2008 6:22 PM  
Joe,
Why does your last paragraph lite up and start blinking at me. Maybe I don't understand.

Don't management companies manage the contracts, and contractors? Don't they pick and choose for the most part, those service companies that are interested in providing a service? It seems as if the control here is with the management companies. Maybe I got lost somewhere along the road. Not to worry.

With regard to the $15.00 for two pages of minutes. Does the management company charge the association to put the minutes on the report? Wouldn't the Management company be smart to put these minutes within reach of each owner? Wouldn't that be good business.
Would the management company charge the association to maintain a web site? Wouldn't it be good business to provide a place on the web site to allow owners to copy minutes. As you say if an individual employee is required to search for these minutes, retrieve them and copy them and the time required is 15 minutes and I am sure the cost of the two pages are calculated also, $15.00 is a fair charge. But, wouldn't it be good business not to have to charge, because of the cost of personnel time, and wouldn't the availability of these reports be a benefit to the Management company, costwise.
To put up a no frills website that allows access to association documents is not cost free, granted, but it's good for the association and I would think good for the Management company.

Our documents require that the minutes of each board meeting be made available to the members, for 26 years they have been sent out by snail mail on request and a file kept to copy in a community room. Now we want a copy of any of our CCR's or minutes of committees, or ongoing construction projects, we go to a web site to copy them.
Granted again, there is cost involved but it seems plain good business to realize if you have to charge $15 for two pages of minutes, there is probably a better way. You also spoke of putting the cost on those individuals making the request for services. Is it significant that if you don't have to provide but one service to all, instead of one service per owner, that would also be good business. But to be my own critic, I have not been walking in your shoes all these years and I certainly am not implying you don't know your business. I may be dull but I know you are among the best and the fault here is probably more my lack of knowledge than anything else.
JosephW
(Michigan)

Posts:882


12/29/2008 6:48 PM  
Robert,

A lot of it just perspective. I agree that all of the things you state would be good for the association, so all they have to do is negotiate it into any management contract. Management is for-profit, so they are going to stay with things that provide them revenue. However, the reality is that the less revenue they generate, the less likely they will want to continue managing your association. Simply a fact-of-life. However, I believe the trend is in your direction, with documents going on-line and freely available for download. You just have to understand that management firms, as a group, are traditionally 2-3 years behind the technology curve. Comes from having been burned badly in the late '80's when a lot of software that promised to make their life easier did just the opposite.

As for the last paragraph, every company has issues with sub-contractors. The management company calls a plumbing firm that they've successfully used for years, but unknown to them, the only plumber the company has to respond at that time is new and doesn't do a good job. The manager may not be scheduled to visit the site for a couple of days, so the work won't be checked on immediately (you really don't want to pay the cost of the manager being on site for every job), so the HO should let them know.

Joe

Joseph West
Official HOATalk.com Sponsor
Community Associations Network, LLC
www.CommunityAssociations.net

*See legal notice below (end of page) or go to www.hoatalk.com/legal
JoanneD1
(Arizona)

Posts:447


01/02/2009 3:21 AM  
HAPPY NEW YEAR to all ! Just an update on the dilema I have been discussing. I sent a final demand letter to the BOD regarding questions about policy and procedure and contract agreement with the MC. After quoting the AZ State Statute (Thanks Mary1)dealing with "Requests for Records" I finally received an answer from the board president who said I was asking "rhetorical" questions and that if I "must have an answer" it is that "No such policy exists" and enclosed a copy of the MC dated 1994 which automatically renews itself unless stated otherwise. The MC has been giving itself pay increases WITHOUT anyone's knowledge. The MC sent a letter of explanation, appolgy and a "self imposed" audit that reported all the sales transactions for the last 4 years. This information was emailed to all owners. The information was so contradictory to our audit that I began to hyperventilate! The MC admitted that hit was in error when it reported that they had not been taking money directly out of our transfer fee at the time of closing. HELLO! The MC is the one who sends the demand letter to the title company with instructions on how to disperse the funds! The management company then goes on to report that they have deposited over $2000 into our reserve fund because of this error. How many red flags does anyone see now? Our small group is meeting today in order to decide how to proceed. There may be some actionable activity and we don't want to do anything to cloud further investigation. This MC has other clients who may have common complaints, but just are not aware of it. I contacted an HOA who had been an account of this same company and the only response I received was that the owners thought it was time for a change. Well, I guess so if anything like this was going on there too. I will keep updating you and again.....Thanks so much for all the input. It was tremendous help! Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


01/02/2009 4:59 AM  
JoanneD,
Happy New Year to you.
May all this be a harbinger of things to come.
Let me comment the most important thing to happen here is the perserverence of a few able people to not want and let the world go by. You all must be very elated and again if associations could talk yours would be crying with relief. Keep the cool head and keep chewing bite by bite. My admination for a job well done.
EllenS1
(Florida)

Posts:1148


01/02/2009 8:08 AM  
If the MC gave themselves more compensation than their contract with you calls for they are in breach of the contract and I believe that would nulify your having to give them X amount of time to cancel their contract. Sounds like a good time for an audit (an unannounced one).
JoanneD1
(Arizona)

Posts:447


01/03/2009 7:33 AM  
I fear that this is the tip of the iceberg in our community. Our little "gang" audit shows that we are over $16K short. We report 33 verifiable sales transactions either recorded on the tax records or on settlement statements that we were able to obtain from owners. The MC reported 24 sales in that same time period.....WHOOPS! I can share this information because it has become public knowledge in our community. The question is how to proceed? We still have not had a response from our BOD other than to turn over our information and if they feel it necessary, they will put us on the agenda, call a special meeting or give it to the attorney. This is not brain surgery. We have the most beautiful spread sheets and there is no way we are giving it to them so that they can give it to the PM. They have TOTALLY given him the benefit of the doubt and paid us little attention, if any. We have requested a meeting with the board and have asked that the PM not be invited. There are some serious issues here. What they should have done is called an UNANNOUNCED AUDIT of our books, but now the BOD has let the cat out of the bag, it is too late. I fear that he will have a myriad of excuses for his incompetant audit and the fact that he has paid our reserves some $2000 will be viewed as satisfactory compensation. WRONG!!!! I guess we are going to call a special meeting if we do not hear from the BOD by the end of this day. This is a real can of worms. Until next time, Joanne
RobertR1
(South Carolina)

Posts:5164


01/03/2009 8:34 AM  
JoanneD,
First let me say I am most grateful for your feedback. We don't get enough of it around here and it is an integral part of the issues.
Your group seems a formidable force to be reckoned with, and I certainly can understand the Boards reluctance (at this point in time) to be trying to hunker down and weather the storm. As much as I understand it, I can not dismiss that the answer to all this is still going to be all fractions sitting down and mediating the differences. Got to happen. You all have set an example (from your posts) of how owners really do have a considerable amount of power, they just need to manage that power.

I also know your group must realize that life goes on after this issue is resolved. My advice is to bargain well, bargain smart, your prize is going to be the improvement to your association, not nailing someone to the barn door. I do foresee a drastic change in your BOD and certainly your M/C. Do you have any sense of the solidarity of your current board? I would look to-wards working with any members of your board willing to extend the peace pipe. Corporate memory and continuity are nice to have around.

If the Board is stonewalling, have you thought of telling them politely by letter, they either sit down with you all and talk, or you will call a special meeting to either recall the board or present your finding to the membership at large. You are not, at this point, suggesting anything you can't back away from. What you have (if correct) would make a great power point demonstration. If you go this route, you must stay away from pointing fingers and calling names and present your compilation as a considered generalization.
JoanneD1
(Arizona)

Posts:447


01/03/2009 9:45 AM  
Robert, Thanks for all the support and guidance you and others have given. I am bossie, but I know a piece of good advise when I hear it. You must have been reading my mind when you suggested a power point presentation. We talked about it yesterday. Our spreadsheets are so colorful and graphic that it would be amazing to show everyone how things look on paper....not only amazing, but alarming. We have composed two spreadsheet:
1. The LEFT side lists all home sales and monies due our HOA
The right side shows how and to who the money was dispersed at closing
2. The Left side lists all home sales and monies due our HOA
The right sides shows how the monies were dispersed via the MC OWN Audit!

Have you heard the old saying, figures don't lie, but liars figure? The numbers speak volumes. I would imagine that the BOD might be getting some kind of legal opinion as I write this, and it might just be in their best interest to do so. You are right about having to live here and we do all attempt to keep that in mind. That works both ways and I know you realize that too.

Hey Mary, if you are out there...is there any kind of statute that would demand yearly audits of the HOA books? I think that would be money well spent. I am not good at legal ease. I mostly conduct my life and business by maintaining a clean conscious.

AGAIN, A MILLION THANKS TO EVERYONE and I will keep you in the loop as this continues to unfold.
Sincerely, JoanneD
MagdaS
(Florida)

Posts:32


01/03/2009 10:30 AM  
Don't local area multiple listing services have those forms. Ours in SW Florida does and gives evreyone a uniform guide to information.
RobertR1
(South Carolina)

Posts:5164


01/03/2009 11:45 AM  
Hi MagdaS,

I'm kind of dense at times. What specific forms are you referring to. You are probably addressing a specific post on this thread. As you can see from this post, your post is listed above or in my post. You can do this by clicking on the "reply" just above the specific post you want to answer. Clicking on the "reply" at end of thread will not reference any specific post.
RobertR1
(South Carolina)

Posts:5164


01/03/2009 11:51 AM  
Ha,
I am wrong................what am I screwing up?
Fine way to start a New Year.
MaryA1


Posts:0


01/03/2009 12:50 PM  
Joanne,

Yes, there is a statute addressing audits. I've copied it below. This is the one for planned communities, the condo statute is 33-1243 and reads the same. (Couldn't remember if you're in a condo or planned community.) As you can see, the statute leaves a lot to be desired. If your docs don't call for an anuual audit conducted by a CPA, then the board can just decide to have a review (which is the cheapest and absolutely meaningless!)done each year. Hopefully you can convince your board to have an independent audit performed by a CPA. And, make certain the CPA is aware of the specific problems you have uncovered.

33-1810. Board of directors; annual audit

Unless any provision in the planned community documents requires an annual audit by a certified public accountant, the board of directors shall provide for an annual financial audit, review or compilation of the association. The audit, review or compilation shall be completed no later than one hundred eighty days after the end of the association's fiscal year and shall be made available upon request to the members within thirty days after its completion.
RobertR1
(South Carolina)

Posts:5164


01/03/2009 1:30 PM  
MaryA,
What do you have about the distribution of an Audit results by a CPA for South Carolina? A aduit was proposed last annual meeting in April. They got around to it in Oct, I think, after talking about it at board meetings all summer, and I understand now have the completed Audit. As usual, some of these kinds of questions, such as, when it the report going to be issued , seems to be answered, the Board has to study that or words to that effect.
Is there state law that controls this in SC. If there is I can't find it, but I am not near as clever and knowledgeable as you, and that's the truth.
JoanneD1
(Arizona)

Posts:447


01/03/2009 2:15 PM  
Back at ya guys. We presently all sit waiting for a response from the arrogants on the BOD and no reply as yet to what I consider an urgent matter. I have had one call from an irrate owner who now wants the BOD to resign and I happen to agree. We are definitely going to call another specical meeting, but that cannot occur for 10 days which gives the PM 10 more days to cook. I know an audit can be very expensive, but I guess at this point we have no other alternative as the books must be a nightmare as evidenced by the PM self audit. I would almost want one of us to sit in on the audit. I wonder if that is possible? We have some pretty powerful retired execs that have joined our gang. These guys are good CEO's of successful companies....not the likes of what we are hearing on the news. There are so many areas that now fall suspect. The PM is charging $1500 a year for "duplication" under the title of administration. HOW??? All HOA documents are sent via the company called Condo Certs. The annual budget propsal which is no more than 4 pages is emailed to almost everyone. Any other correspondence is only a couple of pages once or twice a year. So even if each owner was annually receiving 50 pages (50x79), at .20 per page it only adds up to $790. There is no way we get 20 pages a year, but I am being more than generous to prove a point here. It all adds up to big bucks in the end. Call this micro-managing or whatever you wish, but in these economic times, one better have very deep pockets. Now we must start the search for new management regardless of what officially happens. You would have to be dumber than a rock to continue on with this MC. I guess I will start making phone calls and inquiries on Monday. There is a group here that the managers belong to but I don't know what their real purpose is. I don't believe they rate their members, but I will start investigating as soon as possible. One community that relieved our pressent MC would only say that the "owners thought it was time for a change." I don't know about you, but if something is not broken, I do not fix it. Under normal circumstances,I think an audit comes under the title of "preventative maintainence! Sincerely, Joanne
JosephW
(Michigan)

Posts:882


01/03/2009 4:51 PM  
Robert - I doubt SC addresses it specifically, so try the corporate laws. Annual audited financial reports are generally distributed at the Annual Meeting (usually as part of the overall financial report to the members) and your state's corporate law may mention this.

Joe

Joseph West
Official HOATalk.com Sponsor
Community Associations Network, LLC
www.CommunityAssociations.net

*See legal notice below (end of page) or go to www.hoatalk.com/legal
MaryA1


Posts:0


01/03/2009 5:09 PM  
Robert,

I'm afraid you give me much, too much credit. :-)

I did take a look at the not-for-profit corp act and couldn't see anything about audits. I wasn't able to find any other statutes for condos or planned communities.
JosephW
(Michigan)

Posts:882


01/03/2009 5:37 PM  
SC corporate law doesn't require audits, here's what it says:

SECTION 33-31-1620. Financial statements for members.

(a) Except as provided in the articles or bylaws of a religious corporation, a corporation upon written demand from a member or the Attorney General shall furnish the demanding party its latest annual financial statements, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries or affiliates, as appropriate, that include a balance sheet as of the end of the fiscal year and statement of operations for that year. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements also must be prepared on that basis.

(b) If annual financial statements are reported upon by a public accountant, the accountant's report must accompany them. If not, the statements must be accompanied by the statement of the president or the person responsible for the corporation's financial accounting records:

(1) stating the president's or other person's reasonable belief as to whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and

(2) describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.


and

ARTICLE 7.

MEMBERS MEETINGS AND VOTING

SUBARTICLE A.

. MEETINGS AND ACTION WITHOUT MEETINGS
SECTION 33-31-701. Annual and regular meetings.

(a) A corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.

(b) A corporation with members may hold regular membership meetings at the times stated in or fixed in accordance with the bylaws.

(c) Annual and regular membership meetings may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual and regular meetings must be held at the corporation's principal office.

(d) At the annual meeting:

(1) The president and chief financial officer shall report on the activities and financial condition of the corporation; and
-------------------------------------------------------------------------------------------------------------------------

If you don't get an audited financial report at the annual meeting, I guess I would ask the Treasurer if he/she would be willing to certify the financial report that was distributed as accurate. If they do, then they are assuming some liability for inaccuracies, if they won't, then the follow-up question would be "Why not??"

Joe


Joseph West
Official HOATalk.com Sponsor
Community Associations Network, LLC
www.CommunityAssociations.net

*See legal notice below (end of page) or go to www.hoatalk.com/legal
RobertR1
(South Carolina)

Posts:5164


01/03/2009 6:23 PM  
Thank you Mary,
I think SC fooled you on condos. They are in the process of writing HOA's legislation, been in state house at least over 1 year.

As to condo Law, that is chapter 27 of the Horizontal Property Act of SC.

I don't see much specific about audits there but our documents require a yearly audit (by CPA) and after 27 years we just had our first. I was concerned about when a report would be out but Joe has said a report should be made at annual meeting. We will see in April. I did think about whether there were any requirements for Non-profit corps in SC as far as time Audits have to be distributed after completion, but got lost in the maze of Government documents.
You do seem to cut through them, to me, I keep getting lost. Thanks again,
RobertR1
(South Carolina)

Posts:5164


01/03/2009 6:27 PM  
Joe, Thanks a lot, I will take your reply to heart and wait till annual meeting for audit report.

I also will make sure or attempt to make sure that in the future barring a Audit there will be words added to the financial report as you suggest.

Great help.
JoanneD1
(Arizona)

Posts:447


01/04/2009 5:26 AM  
Here's the latest! A member in our "gang" received the most outrageous email letter and I think Robert said this was going to happen. In a thumbnail of what he reported to all owners, he was inflammed that we would question the integrity of the property manager and be so unappreciative of the volunteer board of directors. He said he had been witnessing this from the sidelines and found it embarassing. Not only were we stunned, but SHOCKED that this owner doesn't seem to care about some kind of $16000 shortage to his own HOA! My first response "reply to all" was that by the self audit performed by the MC, 9 transactions were not listed and I encouraged all readers to look at the MC schedule of sales transactions and find their own transaction listed. I also referenced that a home I personally sold was absent on the audit. My second response to all was to reference the first listing on the audit by the MC that shows a sale BUT NO TRANSFER FEE COLLECTED when if fact there was one in place. I didn't bother to point out to this letter writter that the unit void of the fee belongs to the sitting board president. I also shared with the writter and all, the MC contract that took me 15 days to receive along with a rude response from the board president. I had to quote the Arizona State Statute before they would send it! My third and final response to all was that I had my Settlement Statement from a home I purchased and the proceeds reported by the title company had been paid directly to the MC and those were in the amount of $4505. I also cited that transfer from the sale of a home that was not reported in the MC audit generated an addition $ 3440. I told all that I want a CPA acounting of how my transaction funds in the total amount of $7945 have been deposited to my HOA! I have not heard a word back and I can't imagine what kind of spin anyone can put on this. I am dealing with factual information and have the documents for backup. Now I am finally beginning to understand why our country is in this mess! As you can see, our HOA is a mess and we a board that is in total apparent denial of the entire situation. If the board had any sense at all, they need to go on the offense and call a special meeting ASAP and start asking the right questions to the right people. I have been shaking my head in disbelief since I have began this whole process. HELP!!!! Sincerely, Joanne
MaryA1


Posts:0


01/04/2009 5:45 AM  
Robert,

I did find the Horizontal Prop Act and thought it applied to condos but wasn't quite sure. In the Definitions, condos was mentioned but thrughout the whole statute there was only specific mention of apartments, then apt conversions. A bit confusing, I thought. Each state has their own style in writing statutes.
MaryA1


Posts:0


01/04/2009 5:56 AM  
Joanne,

There will always be some people who will side with the BOD, no matter what. These are the types who "don't like to rock the boat" -- they like to "get along with everyone" -- no matter what. They'll sit around with their heads in the sand until the shoe falls at their door, then look out.

Just out of curiosity, did the numbers the PM gave you match up with the financial statement reporting? Also, could there have been some "for-sale by owner" closings where no fees were collected? Do you think the board will be receptive to a full-scale audit? You don't want to settle for a compilation or a review.
RobertR1
(South Carolina)

Posts:5164


01/04/2009 6:06 AM  
Joanne,
IMHO you and your gang don't need help, you need patience and persistance. You all are doing a good job from where I sit. I would advise that being so reactive to criticism from a singloe homeowner, or two or three, is not going to get you much. Better that you would invite this owner to sit down with you and your gang and see if you can't make a convert. Raining responsive e-mails through-out the neighborhood is not going to change much at this point. As before, if you all feel it is necessary to recall the Board or call a special meeting for a specific purpose, by all means, have at it. Just do it right. Don't fight your battle with your neighbors, your problem is the board and the M/C. You need to hunker down now, keep the pressure on, set some dead lines for BOD and M/C responses. If they choose to ignore you all, and recall and special meeting are not your choice, hire a lawyer and take them to court. On the Board side, I am sure the thought has occurred to them that it may be better to have you sue them than they sue you for whatever they may be thinking. It is usually better for the association to be sued than sue. That last little statement says a lot because as you know, you all are part of the association also and throughout any legal battle will remain that way.
JoanneD1
(Arizona)

Posts:447


01/04/2009 6:08 AM  
Mary, Thanks so much for getting back to me. NO, the ACTUAL TRANSFER FEE SALES REPORTED ON THE MC FINANCIAL STATEMENTS FOR THE LAST 3 YEARS DO NOT MATCH WHAT HE REPORTS ON THE AUDIT for those respective years!!! I have a spread sheet that the board shows NO INTEREST in viewing and it absolutley clear as a bell that something VERY strange is going on. The sales process starts when an offer is accepted and money is put into an escrow account at a title company. The title company than notifies the MC that escrow is open and that is when the governing documents are ordered through Condo Certs and I believe both the buyer and the seller are sent an application. Apparently when the application is complete, it is return for "approval" and the board president signs it. What now is transpiring is getting ugly and I have no doublt that it will prove more than embarassing to the sitting BOD and the MC. I think there is some actionable activity here, at least that is what the numbers are reporting. I don't know what our group can do other than to call another special meeting, do a power point presentation that should shock everyone. The other thing we could do is get a petition and ask all the BOD to resign but that is so severe, not that it isn't warranted at this point. Whatever, it is going to be expensive....we need a FULL BLOWN AUDIT, legal ipinions and God only knows what else, but we have no choice. Sincerely, Joanne
JoanneD1
(Arizona)

Posts:447


01/04/2009 6:16 AM  
Robert, Forgive me! I don't text. What are those initials at the beginning of your kind response. You are right about the emailing to all neighbors, but I felt so attacked I had to just email the bare facts of this mess and hope that other owners would see that we are not just trouble makers. We want to CORRECT this for EVERYONE! The BOD has been dismissive to our group since day one and when we realized that they valued and diseminated the information of the MC before even looking at our work product, it was more than I could bare. This kind of thing grates against every fiber of my being and when I am personally attacked, they have got a pitbull WITHOUT lipstick on their ankle! Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


01/04/2009 6:18 AM  
Mary,
As usual, you are right on the money. The SC documents are very confusing and get worse when you try to rundown responsibility for enforcement. IMHO it is a matter of getting before a judge; and as far as I know, the only way to do that is to sue, and he/she decides how to rule, and that means you don't know what you are going to get. I have had the AG office of SC reply to me verbally that the expectations of the Governor is to have the individual associations work it out. Like all States, this HOA situation, even though it is not a new concept, has come down hard and fast on state enforcement because of the sheer numbers of people involved and the thousands of associations and it is rapidly claiming more residents. IMHO
MaryA1


Posts:0


01/04/2009 6:25 AM  
Robert,

The AZ AG won't get involved either and I would expect it might be that way in many states. We did have a gov't agency charged with adjudicating HOA complaints but the courts just recently ruled the process as unconstitutional (AZ constitution). The AG even offered an opinion in favor of the defendant in the case, but the court apparently saw no merit in it. So, I don't know what's happening now. All the statutes on the books are pretty much meaningless unless there is some accountability in the way of a state agency to oversee HOAs.
RobertR1
(South Carolina)

Posts:5164


01/04/2009 6:31 AM  
In my humble opinion.

It seems important that those of us that comment here are not stepping into the legal arena. We will quote Law documents that pertain to specific items but offer NO legal advice to anyone. There is also a disclaimer on this web site about entries in the Discussion pages.

I text a lot, but most think I just can't spell, but now that I have iospell check on my Browser, I can't even claim that.
JoanneD1
(Arizona)

Posts:447


01/04/2009 6:38 AM  
Litigation is not an option! We are miles away from that and the subject hasn't even been raised. One of the men in our group has written back to the man who was so defensive to the MC and BOD and he has offered to have coffee or wine and share our information. I don't know what the response will be. Our gang is NOT going to dimiss the financial discrpency and that I know for certain. The fact that the MC has admitted somekind of procedural error and dumped 2K into the reserves in NOT ACCEPTABLE. I don't have a clue what the BOD has agreed to. Do you think they should be sharing some of that information??? Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


01/04/2009 7:22 AM  
JaanneD,
Really, what I think the Board should be doing matters not a wit. As I have said all along this whole matter should be brought to the table to resolve. From what you post the Board don't think so, I think they are wrong and my support is plain because of the mess you are all in. I totally agree with your group, it must be resolved. If the courts is the onloy way, that does not mean you have to accuse anyone of anything. A good lawyer can get this all brought before a judge and let him/her decide blame and compensation. You can also bet the Board is taking your money and paying a lawyer to advise them. You could request that this information, if any, be made part of your records. The Board and Lawyer will claim client/lawyer relation and give you nothing. But you will know they have legal consul, with your money I may add, and you won't be privy to this information unless, and that is still an question, you petition the courts.

The board is protecting their butts, you can believe that, if it were you, would you do otherwise.
JoanneD1
(Arizona)

Posts:447


01/04/2009 7:41 AM  
Robert, I am sharing all the wonderful responses with my gang. We are now comtemplating requesting that any and all legal opinions be shared. I don't know if I even want to put the idea of the lawyer in their heads, but they have probably already done it. We have been sensitive about pointing fingers at the BOD, but have raised the questions regarding the MC. I guess now they are super paranoid and have got their backs up. We have one home here in foreclosure. The owner had been delinquent on his dues for well over 12 months and had moved out of the property for over a year before the BOD and MC decided to start foreclosure proceedings. They could have done that much sooner, but NO they again have their heads in the sand. This foreclosure will cost the HOA about $10000 and the most recent sheriff's sale has been forward another month. For each month, our HOA looses $415. When the BOD was questioned about this at the recent budget meeting, they admitted they were a little slow to react. It is this and more that has led up to the current state of frustration among those of us paying attention and watching how are funds are sqandered. Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


01/04/2009 8:57 AM  
Joanne,
You keep saying things I feel compelled to question, does your husband tell you that?

Your comment about the Board waiting for over a year to start forclosure procedures. Lot of questions here?

Did the Board file a lien? Do your covenants discribe a step by step time line to be followed in the event of non-payment of assessments? Did the Board follow this. Was there any negoiations with the HO and the Board regarding these arrears? Did the Board send out past due notices to the HO discribing penalties?

Was and how was the M/C involved in any of this. Ask the same questions of them.

Are you sure the Board or M/c actually are serving foreclosure papers on this HO and are a party to the foreclosure? If you all do foreclose, what are you going to do with the property? It will mean the association will have to pay whatever the Judge decides the property is worth at this time which might be a deal, but do you all want to be in the real estate business? Now if you have a lien against the property, all you have is an interest in the property, which means in any settlement of the property you all will have a priority position to be able to collect some money for debts. Maybe you can and maybe you can't, depends on how the property is settled.
A simple mechanics lien is straight forward and the judge will probably decide what money you can get. Anything other than that you need a lawyer IMHO.

In the end you are going to lose money and in fairness to the Board it may not be their fault as much as it is the process. To throw crap in the game, you might check carefully and see if the Board is required to garnish the remaining Home Owners for this sum lost. I have heard of that, but my friends here all say you can write it off as bad debts.
GlenL
(Ohio)

Posts:5491


01/04/2009 9:22 AM  
Posted By RobertR1 on 01/04/2009 8:57 AM
Joanne,

Are you sure the Board or M/c actually are serving foreclosure papers on this HO and are a party to the foreclosure? If you all do foreclose, what are you going to do with the property? It will mean the association will have to pay whatever the Judge decides the property is worth at this time which might be a deal, but do you all want to be in the real estate business? Now if you have a lien against the property, all you have is an interest in the property, which means in any settlement of the property you all will have a priority position to be able to collect some money for debts. Maybe you can and maybe you can't, depends on how the property is settled.



Robert, I think you have a misconception about what happens when an association forecloses on a property. We do not (check local listings) acquire the property nor are we forced to buy it; the foreclosure simply forces a sale of the property at sheriff's sale. Usually the lender in an effort to protect their interest will bid the minimum set by the court.

Studies show that 5 out of 4 people have problems with fractions
JoanneD1
(Arizona)

Posts:447


01/04/2009 10:06 AM  
Joanne her and I had a very complete response all typed and for some reason I got bumped off the site. Anyway, it is too much to repeat again, but one of my gang members and I were the oowners who notified the board that something strange was going on at the property that is now in foreclosure. It is located right across the street from me. There was a roof cave in a rainstorm. The second floor was in a demo state and the owner saw black stuff on the walls. He assumed it was mold, but he also learned that there had been a serious fire in the home some years before and that was never disclosed to him. Anyway, he decided to walk away from the property not only because of declining values, but because the assumed mold issue was putting him too far upside down in the deal. The owner told me he was attempting to get a reduced mortgage balance, but Countrywide was not returning calls and they were impolding on themselves at this time. In Jan. the neighbor called a board member to say there was an awaful trash heap in the backyard. It was not unitl JULY, that the PM hired someone to haul out the trash. There were rat feces and some kind of nest in the airducts. It was rather awful. Sounds like a soap opera doesn't it. Anyway, The BOD finally started some action in october.....about a year after the man had already moved out and was way delinquent in his HOA fees. I don't know the exact mechanics of what took place. Sending photos of the mess I am talking about. By now you must all this me crazy! This is making me crazy. So it not only the money shortages that we are addressing, but the history is not good with this MC and BOD. Thanks for listening. It is good to talk to a group that "Gets it!" Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


01/04/2009 10:07 AM  
Glen,
I don't doubt you word, and agree the person with the most interest will want to purchase the property. What if he don't and the association forces the sale? Would the Judge let the property go for the interest the HO has in the property? I have been at foreclosures that the propety did't sell because there was not two bidders, we were one and we couldn't scare up another bidder. The property them went back to the court and was finally settled at a private sale. So to lien the property does nothing to gain any more money than what interest the association has in the property through a mechanics lien. One other little item may be important, our association has in our master deed a "Right of First Refusal", meaning, I am sure you know, they can buy the propety at the lowest price offered. N\ot sure how this works if you lien the property.

Don't you agree the Lender with the largest interest in the property (mortgagor) is just as anxious to close on property as association is?

But, you sound like you know the facts so maybe you are right. I just have never seen it happen here. I read all foreclosure notices and have never seen an Association actually listed as the party that is foreclosing, the association, when appropriate is always listed as a party along with the Home Owner that is being foreclosed. Not sure why this is either.
JoanneD1
(Arizona)

Posts:447


01/04/2009 10:09 AM  
Attaching photos now Joanne I have scaled these photos down and still can't attach them. Sorry you would have gotten a good laugh.
GeorgerwilliamsW
(Indiana)

Posts:975


01/04/2009 10:14 AM  
Picky, picky, picky. . .

    "Don't you agree the Lender with the largest interest in the property (mortgagor) is just as anxious to close on property as association is? "


The homeowner is the mortgagor; the lender is the mortgagee.
JoanneD1
(Arizona)

Posts:447


01/04/2009 10:17 AM  
From what I understand, since the interest to purchase these properties is so low right now, the lenders are recheduling the sales in the hopes that there might be more interest with the passing of sometime. The owner walked away from a downpayment of 200K. The owner told me this himself. Joanne
RobertR1
(South Carolina)

Posts:5164


01/04/2009 10:57 AM  
George,
I made that mistake on purpose, just to see if you were watching!

Believe that and I'll tell you another, is what we used to say as kids.
JoanneD1
(Arizona)

Posts:447


01/09/2009 11:05 AM  
Joanne here and the beat goes on or should I say the beating? Picking up where we left off,,,,a final email was sent to the BOD pleading for a simple meeting before the end of the week solely for the purpose of presenting our findings. We have a 3 page color coded spread sheet that is quite complex, but once explained, it easy quite easy to interpret. We asked that the response come no later than midday or we would feel that there was no other choice than to go forward with felt a "Special Meeting". We even said that should the BOD decide to meet with us after the meeting was scheduled, we would cancel the meeting. I ran around the neighborhood, got a surplus of signatures. Late on deadline day, the president sent an email stating that it was difficult to get the members together, so in the meantime, would be forward our information and data for their review and they would decide how to proceed. We had decided that the complex sheet would go with our accompaniment or not at all. Our spokesman telelphoned the BOD president, said he was in receipt of her email and would she please return the call. The next day, he received an email for the president asking what he wanted to discuss on the phone. I guess it was then that we decided to just go ahead with the meeting. The notices were distributed and the email peace and quiet was delightful except of some ridiculous stuff that is not worth mentioning. After 10 pm yesterday, a lengthy message from the BOD signed by the president gave the most outrageous accounting of the events that you can imagine. Phrases such as "hostile accusation and allegations of intentional wrong doing." It was after the membership received the MC self audit that we began to realize the gravity of the situation and with that in mind, we "suggested" that the PM not be present to lessen the presence of a confrontation environment. So now what....we have a BOD that has publically discredited 3 concerned owners. The BOD remains MUTE on the entire subject of how they are proceeding. We have a nominating committee about to put names on a piece of paper and if we don't get some good people on the board, we are looking at more of the same and the wedge in the community is now OUR full responsibility. What we know for certain is that we have over 6-8 emails graciously and begging for a meeting ASAP. We have factual data showing monitary discrepancies ranging from 11000-18000. We have PM who did a flawed audit and admitting making a mistake and put $2105 into out reserve account? Is there something I am missing? I can't check this for spelling as I can hardly stand to keep rehashing it. I just need to know the BEST way to respond or not respond at all. We have reduced our comprehesive data to a small table that most morons could figure out. We could send it out to everyone before the meeting with a full log of the email meeting requests. Anyone up to the task of making a suggestion? Thanks Joanne
MaryA1


Posts:0


01/09/2009 11:14 AM  
Joanne,

It really appears like the board is not receptive to talking to your group. Perhaps the next step is to recall the board members, or least the ones who are uncooperative. Check out the state statutes on this: condos - 33-33-1243; planned communities - 1813
JoanneD1
(Arizona)

Posts:447


01/09/2009 11:32 AM  
Mary, I continue to be most grateful for every bit of information that you espouse(I don't know how to spell it but it sounds so good!). THANK YOU and I am going to the statutes right now. Stay tuned!!

Joanne
RobertR1
(South Carolina)

Posts:5164


01/09/2009 1:37 PM  
Joanne, I can give you my opinion and tell you why I feel the way I do.

If we accept all we read from your end to be true, and it rings true to me, you all have done a Yoeman's job. You have presented the choice to the board many times to arbitrate this situation. I have no doubt that the President of the Board may have heard all kinds of stories about you all, nature of the beast.

His reaction is to bluster in his response to you and offer no concilitory efforts. I read he is just posturing and if you all keep a steady hand and just progress down the line, be it special meetings or re-call meetings, you will get your time to speak your piece. It must be obvious to you, if he and the Board have read what you all put out (I believe you mentioned that)and he can't see the forest for the trees, he probably should step down. And this act is such a shame as none of this is necessary and when it gets settled it is going to be around the table, or in front of the Bench. You all seemed dedicated to your cause and from here your cause looks just, all things equal, you all should be proud, not apprehensive. Suck it up a little, this will work out.
RobertR1
(South Carolina)

Posts:5164


01/09/2009 2:16 PM  
Mary,
I agree the idea of a re-call should be considered. It the time line they are headed right now, I think a special meeting is what should be forced.
At a special meeting, one of their members could even chair the meeting. I think that is accomplished by a motion from the floor that the Board step down and the meeting be turned over to------in order to properly conduct the purpose of the meeting. You get that and the chair can remove the M/C from the Special Owners Meeting. I think this is workable. If the Board shows no sign of cooperating and threatens to walk out, continue the meeting and include in the business a recall of all the Board and get a majority to agree to start the process.

How does this sound and what are the objections. I just think to deal with the Board AND the M/C is not necessary at this point.

Someone on the management side has to at some point realize what is happening and the damage that is being done is worse than them sitting down and hashing this out. If this does end in court the anti's will want their record to reflect good strong reasoning.
JosephW
(Michigan)

Posts:882


01/09/2009 2:38 PM  
Generally, at a special meeting, you can only conduct the business for which the meeting was called. If the stated (written in notice) purpose of the meeting was to discuss the MC expenditures and "audit", my guess would be a recall couldn't also be done. The recall would have to be done under a separate notice and meeting. Probably covered in the docs or AZ statutes.

Joe

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RobertR1
(South Carolina)

Posts:5164


01/09/2009 2:55 PM  
Thanks Joe, I agree.
My approach would be to call the special meeting to discuss the doubtful actions of the Board (Words to that effect) and the possibillity of a petition to recall the Board.
What is your read on the procedures as I proposed them? Seems possible if everyone behaves themselve.
JoanneD1
(Arizona)

Posts:447


01/09/2009 3:07 PM  
I am so very grateful to each and everyone of you , I could cry because it reminds me that there are still people in this crazy world with values and morality in knowing right from wrong. I am not being mushy about this but I am PASSIONATE about freedom and the freedom of expression. We tried to be as sensitive to the potential embarrassment that this might cause to the PM and/or the BOD, but to be demonized is something that I will not tolerate. I don't get made because it is better to get even. I will attach the letter that the board president broadcasted after 10 p.m. last night and she has also stuffed the mailboxes with today. What a shame and all we wanted was a truthful accounting of where the money is. I will also attach the schedule of the years. This small table represents hours of research and soul searching. I can tell you the numbers in my sleep. Thank you all. We will allow our owners to express themselves at the Special Meeting and if the MAJORITY are in favor of removal, that works just fine for me. We are taking the statutes with us in the event anyone asks. I will forward you responses to my gang as it helps remind them that we have every reason to question our BOD. I will also attach in a seperate response the first and the last of many requests to meet with the BOD.

Most heartfelt thanks, Joanne

Attachment: 11972788371.pdf
Attachment: 11972797754.pdf

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