guest blog by Jill Schweitzer
As a Realtor in Arizona, I recently went to a class presented by an HOA property management company. The topic was the various ins and outs of HOAs hiring a management company. But as the class progressed, I thought it really would be better taught by an attorney and not somebody within the HOA industry.
Here are my conclusions after going through this class:
1. Absolutely, have an attorney review and make changes to the contract! Have the attorney tell you what items to add in to the contract items that are missing in the laws to protect the both the HOA and the individual homeowners…thereby holding the management accountable and responsible for any misfeasance or malfeasance. Also have the attorney remove the indemnification clause! Why pay to defend a management company for its bad actions?
2. Check court records online and in person to examine lawsuits the company may have been involved in.
3. Recommend that boards either eliminate or lower transfer and disclosure fees!
4. Recommend the board get a website independent of the management company. This would ensure that the HOA’s connection with homeowners survives any future change in management.
5. When hiring a management company, HOA boards should be careful of all the extra junk fees; printing, copies, coupon books, violation letters, etc.
6. Finally, mandate that any management company hired by an HOA certify that it has insurance against all misfeasance and malfeasance by management company owners, executives or employees.
Those items weren’t included in the presentation, yet I thought these are the most important issues to anyone hiring a new HOA management company. The reason I added copies and printing is because we had all inclusive on copies in a management agreement, so they charged us for printing! And…the majority of the board allowed it. They also included coupon books, yet tried to charge for those when it was time to re-order! All board members need to have a copy and read the contract! And owners should also be allowed to read it as well.
In many cases I question why an HOA needs a management company in the first place. They can hire directly even part time instead of hiring an expensive corporation. Our management company is owned by one of the board members. She has five other communities under her management company.
The management company inspects the community at least twice a week and the management company is brutal with fines. I got two fifty dollar fines for excess high grass in one July when it rained all month. I do not think it stopped for an hour during the entire month.
The grass can get very wet and parts of the lawn looked like a lake during this rain period. I have been hit by over a thousand dollars in fines for different lawn offenses in a six year period. I like to garden and I keep a property in as good shape as I can considering we are located on a former swamp with sand and not soil. The grass just does not like 100 or more degrees which is not uncommon.
My point is when you have a corporation to complain to you are pissing in the wind. I see no reason for management corporations other than an extra way to screw the homeowner. The HOA can hire people to do the work and many professional people would love a good part time job when the work needs a professional, but most required functions of the HOA have little reason for an expensive corporation.
The best advice is to avoid renting or buying in a community controlled by an HOA. HOA is a good idea which has become a nightmare. I like to think of an HOA like traffic court. No matter how professional the judge looks he is looking at how fat is your wallet.
Many times the management company makes $5-7 per violation letter they send out…what an incentive to send out as many letters as they can. I know of one HOA with 442 houses that had 300 violations in one month. That manager made an extra $4490 in 6 months on violations! And the beauty is no owner can audit those violations to see if they were actually reasonable or went out in the first place. I agree with you too, it’s not necessary to hire a management company – and since they are not licensed or regulated here, I don’t call them professional companies.
Do you know if an HOA board sees or approves of the violation notices before they are sent out or if property management companies simply act on their own? I’ve gotten violation notices for things I’m pretty sure I’m allowed to do, and when I email back in protest I get no response nor am I bothered with a violations notice on that issue again even though I’m still doing it.
From my own experience, the management company just sent them out without board approval…however I do think the board did approve ‘selective enforcement’ of violating only certain people for using their garage for storage…
Something smells here. The board member owns the property management company that is being paid to manage the HOA? C O N F L I C T OF I N T E R E S T
What are the homeowners in this HOA saying about this?
Our property management company like most is horrible. The person who is our contact cannot send out a grammatically correct or proofread email or letter. Sometimes I have to read her correspondence several times to figure out what is being said. To me if you can’t send “official” correspondence without looking like you dropped out of high school you have no business calling yourself a professional. Also, this person also manages 4 other condo complexes in the area so you know we don’t get full attention. Further, the company itself seems more interested in “managing” individual condo rentals than in managing our complex. Most condos that are rented in my complex are rented through our very own property management company, which makes it even worse when those renters get away with all kinds of violations. I understand that a 200 unit condo complex may be too much for a volunteer board of 5 people to manage, yet I wonder what we are paying this inept rude management company for. One thing I really want to see is licensing and regulation for property managers. It wouldn’t solve everything, but it would ensure some minimum qualifications and training. In my state anyone can call themselves a property manager, and it shows.
It’s ridiculous that everyone else is licensed! And it’s crazy that buyers buy using licensed agents, lenders, appraisers, inspectors…and then after they close, their HOA money is managed by an unlicensed and unregulated person, and most people do not realize this – or why it’s a problem. They need substantial regulations and doing so, should not be a money maker for their lobby group (have someone independent handle the licensing, classes, enforcement). To me it’s one of the most corrupt industries. Homeowners that ask questions are then put to the attacks of cease and desist letters to shut them up and try to scare them. The reality is, all these cease and desist letters that are sent out, are actually the HOA industry harassing the homeowners.
My state tried to get property managers licensed and regulated, but the resolution failed. I hope it is brought up again because I’m tired of being “managed” by these real estate flunkies.