Firing your HOA's Management Company

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little_bird
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Firing your HOA's Management Company

Post by little_bird »

I live in a condo building downtown(I'd prefer not to say which), and I need some advice. Our building's management company is the same company as the one that developed the building and sold all the units inside. They make sure the floors get vacuumed and the flowers get watered, along with a host of other things. We pay monthly membership dues for our homeowners' association, and a portion of that money, of course, goes toward paying our management company for their services. I have run the current situation by a couple people, and have been met with responses ranging from, "that's fishy," to "that's unacceptable."

Without getting into particulars, the situation is that the mgmt company has been terrible about communication. We just met for the first time in almost a year, and it seemed that the only reason we met was so they could convince us with sketchy numbers that we need to increase our dues by 19%. Nobody in the room was particularly opposed to the increase. Things get more expensive as time goes by, and that's fine. That's how the world works. But whenever anyone asked about any of the particular points, or asked the representatives from the management company about the lack of communication, they would get pretty defensive.

My question is: what is the process of firing your management company and hiring a new one? I would like very much to know if we're being raked over the coals, but these numbers, though fishy, are beyond me as I'm not much of an accountant. How can we find a new management company? Is there an index or comparison for it?

Any advice anyone can offer would be greatly appreciated.

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staubio
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Re: Firing your HOA's Management Company

Post by staubio »

First of all, I'd encourage you to join DNA for the HOA Congress gathering we're hosting on March 3 at 6:30 at Riverbend Lofts. We're bringing together HOA leaders from around downtown to discuss issues like these and build a community of practice.

Second, it really depends on your agreement. Since this is the developer's management company, I'm guessing you haven't entered in to any contractual duration. Typically, an HOA has a clause in the bylaws outlining the management company relationship and the related costs. You'd likely have to amend that section to outline the new relationship and, depending on your bylaws, you'd need a significant vote of your owners.

Most importantly, you are entitled to and should demand absolute visibility to all of the transactional information about the HOA's expenditures and a budget that outlines the need for changes in dues, even if it is to bolster a reserve account. Typically you'll perform a "major component study" that outlines the areas of the building that will require maintenance or replacement in the future and budget your cash flows accordingly. In my building, for instance, we have some reserve money but know that we need that money for future expenses like elevator repairs and inevitable HVAC work, for instance.

Anything short of this level of disclosure is absolutely unacceptable, not to mention shortsighted.

hethj7
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Re: Firing your HOA's Management Company

Post by hethj7 »

For what's its worth, I'm on the homeowner's board for my condo.  We meet once a month with our management company and are involved in all major decisions, such as raising dues, what major projects to take on at the building, and we help in setting and approving the yearly budget.  I'd get a copy of your condos bylaws and read through those as a start. 

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