A board needs time, smarts and a strategy to wisely choose a new management company
Los Angles Times
By: Donie Vanitzian
12 August 2017
QUESTION: Our association has hired and fired so many management
companies that we’ve lost count and, as a board director, I am
exasperated with the situation.
Most companies made it very difficult to reach them by phone and it was
worse actually trying to talk to a live person. The company owners
would never talk to homeowners and rarely spoke with directors. Once
they were hired, managers immediately changed our banks and accounts,
brought in their own vendors, and forced their attorneys on us even
though we already had representation! Soon, managers were trying to run
our board meetings and give us legal advice.
Without fail, after we hired the companies for a set fee, we realized
we were getting billed a lot more than what we agreed to. The entire
board is exhausted, why can’t we find an honest management company that
just does what we want them to?
ANSWER: Like anything, hiring a management company requires due
diligence and persistence on behalf of the board. Part of that includes
investigating these companies more thoroughly, asking for references
and demanding clarity and transparency in written agreements.
Ben Bar, owner of Allstate HOA Management in Los Angeles, has been
servicing Southern California associations for over 16 years. He
explains that it should not be difficult for boards or owners to
contact a live person at the management company and also receive a call
back. “Non-responsiveness is the primary reason associations replace
managers and management firms,” he said.
Customer service is the backbone of any management company’s business.
Managers need those skills to be able to provide professional and
knowledgeable assistance to the board and homeowners. If a manager is
disrespectful, the communication between directors, owners and
management is compromised. A manager that is difficult to deal with may
discourage owners from relaying potential problems early on.
Bar said that the management should defer to the board regarding banks
and other third-party services, especially when the HOA has a good
working relationship with existing vendors who know a complex.
“Managers should not change the association’s vendors without a written
request from the board nor should they be permitted to force attorneys
on them as they are vendors too,” he said.
When your board reviews a prospective management company’s service
agreement it should be on the lookout for any use of mandatory vendors,
obligations of the association and a company’s disclosure of its
ownership interest in vendor companies it owns. Remember, your
association is the client and should be dictating the terms of your
contract — there are plenty of management companies to choose from.
In regard to board meetings, managers should not run them, plain and
simple. While they can provide assistance when requested to do so, it
is the president of the board that conducts these meetings. And unless
the manager is a licensed attorney representing your board, no legal
advice should be imparted. Board directors that act on so-called “legal
advice” from unlicensed managers are breaching their duty of care to
the owners by subjecting the association to liability.
Management companies should not increase their fee schedule right after
getting hired, but boards share responsibility in this arena as well.
“Because boards have a duty to read the management contract very
carefully before signing, they should discuss fees and potential
problems before committing to any company's services,” Bar said.
In the search for new management, he recommends going well beyond
online reviews since they are typically not verifiable. “Look for
referrals from other association boards, professionals and even
homeowners that experienced success with their management,” he said.
Some additional pointers he provides on the search process:
> Boards should review a management company’s internal systems and
procedures and look for examples of how it has dealt with problems that
typically arise in running a homeowner association. The management
company should be well-organized and welcome a visit from board
directors at any time to discuss these matters.
> Interview a minimum of three companies. Boards should allow
sufficient time for interviews, at least 30 to 60 minutes. Have a well
thought-out list of questions ready beforehand. Ask to meet the firm's
owner for the interview along with a manager, and be wary of any
resistance to that request.
> Choose a management firm that shows an understanding of the
complexities of interpersonal relationships and has a working
understanding of governing documents and applicable statutes.
> Look for someone who listens, understands and emanates strength
and maturity. And be leery of companies impatient to get on with it and
“close the deal.”
You know what your association needs and what works best for your
board. The right management company is likely the one that is most
willing to tailor its services to your needs.
“This is not a one-size-fits-all business. Take your time and choose wisely,” Bar said.
Zachary Levine, a partner at Wolk
& Levine, a business and intellectual property law firm, co-wrote
this column. Vanitzian is an arbitrator and mediator.
top contents
appendix
previous
next