Homeowner’s associations have a bad reputation because they often cause a lot of problems for the people living in the community.
What would you do if you were on the board of a HoA and found out that the property management company was charging excessive fines in the name of the HoA?
That is what the HoA board member in this story discovered, so she not only canceled the contract with the management company but got several other HOAs to do the same.
Check it out.
Background
For anyone who has ever served on an HOA board, you know that most of the violations, accounting, and general management of an HOA (especially with a neighborhood of the size I run) is handled by a property management company.
Sounds reasonable.
This is mainly because it would be too expensive and biased to have someone who lives in the community handle all of these duties alone.
A dirty little secret of these companies however, that many of these companies will make their prices cheaper by secretly passing fining policies on to homeowners that the board has no control over.
Hence today’s story.
Main Story
About a month ago, we were conducting a regular HOA meeting.
We have been having them fairly often to keep our board, management company rep, and homeowners in sync since I have been hearing complaints of bad behavior from the management company.
This particular meeting however, things almost got out of control.
As soon as we finished all of our checklist items, we asked homeowners about any questions.
A couple stood up and I saw the man holding a paper with a shaking hand, which I quickly learned was due to his anger.
This guy is not being treated fairly.
Over the next 10 minutes, he explained how he was here to plead his case for the board not to foreclose on his house, especially since he had been making payments on a large debt for a very long time.
Without going into too many details, the discussion got extremely heated because our management company had told us not to get involved since this homeowner had already been involved with our lawyers.
After lots of arguing, the meeting was finally over.
I left totally confused because I knew that the homeowner was in good standing, and if he was willing to pay (which the records showed he had called to do so), why couldn’t he?
I had been told by my property manager to NOT take any action, and I decided to call BS.
I called the legal firm representing the board (which I was told to not do… even though they represent us?).
After talking with the firm for an hour, I found out that the management company had not allowed this homeowner to pay his fines and dues because of a petty procedural technicality, and that instead they were slapping fines on him like there was no tomorrow.
I quickly told the lawyer to offer to settle his balance with no fines, and the issue was resolved the next day.
Revenge
I spent more time looking into our management company and found out that they would underbid management contract costs and supplement them by adding in their own fines on to homeowner collections without the board’s approval.
This is a technicality in the fining process, and while it’s not illegal, it’s highly unethical and disputable because it encourages the management company to fine and escalate non-issues since to make more money.
I honestly felt horrendous because I had no idea, because it’s a one-line clause in the contract.
I also received a call from our community manager urging us to stop waiving fines since it “sets a bad example”.
I would be so upset.
That really sent me over the edge.
Livid with this phone call and new knowledge about fines, I found a new management company and terminated our contract immediately.
In addition, I believe I found a loophole where all of the charges unfairly pressed against homeowners will NOT be recouped by the company and the HOA cannot be liable for them since they are pass through.
During the issue with the property investment company, I met about a dozen other HOA board members in my area and discovered about 6 of them are using the same company and even community manager.
I urged them to look into the same issues, and they soon discovered the horrors for themselves.
It sounds like all of them will be terminating their contracts too.
One of the other association presidents actually knows state counsel for HOA rules, and they are now working with them to make this practice illegal.
It sounds like they deserve to go under.
If it passes, this entire company would go under.
While I am not holding my breath, I am certainly following the legal proceedings closely, and have even offered to testify before a committee why this rule is needed.
It sounds like deliberations begin in January.
As for the community manager (the person helping our community), they have lost over half of their contracts, and their manager came begging for me to stay.
Oh, I bet they wanted to keep the contract.
They even offered to stop the fining policy in the most “corporate” talk way possible where they basically gave themselves plausible deniability if they do it again.
I told him that his property manager deserved what she had coming to her and that their policies were stone cold terrible.
He tried to reply but I just hung up, I was too angry.
Watch these management companies closely, they are almost all seriously snakes in the grass waiting to screw over board members and community members.
It is nice to see a HOA board member actually sticking up for the community.
Take a look below to see some of the comments.
I hate the HOAs as well.
Exactly right.
I would never want to live in an HOA.
While rare, there are good HOA members.
I would not be at all surprised.
This property manager was downright unethical!
They deserve whatever they get.
If you liked that post, check this one about a guy who got revenge on his condo by making his own Christmas light rules.
