"Management company representatives are agents of the management company; their loyalty is to their employer, not the board and certainly not the homeowners." Stephen Glassman, Villa Appalling
Do we need a management company? Management companies will often tell homeowners that they lack the training, education, experience, and legal expertise to properly operate a homeowners association. While it is true that homeowner board members generally lack experience in HOA management, it is also true that, due to the lobbying efforts of the CAI to defeat legislative attempts at industry oversight, the representatives from the management company are quite likely to be just as lacking in education and experience. Under current Texas law, anyone can call themselves a "property management professional."
There is really no reason why a
HOA needs a management company. What homeowners must remember is that management
companies have no fiduciary duties to anyone but themselves. By applying common sense before making
decisions, and taking the advice of legal and accounting professionals, many
self managed associations have found that association management is much
easier than their former management company had led them to believe.
With the aid of a good
bookkeeper and/or accountant, homeowners are quite capable of managing an
With the aid of a good bookkeeper and/or accountant, homeowners are quite capable of managing an association.
Get your own bids and save$$$ The association, not the management company, should get bids from contractors. Management companies have been known to pad bids from favored contractors to include kickbacks to the management company. This seems to occur more frequently with large companies who exert a powerful influence over contractors seeking their favor. Management companies will also recommend attorneys with whom they have an ongoing relationship. These management companies and attorneys usually belong to the same trade group: the CAI.
Note: Our management company, our past association attorney, and out present association attorney are all top tier members of the CAI.
Read the fine print: Management companies are agents of the association, acting on its
behalf. However, their contract will likely spell out that in the event of a
lawsuit, it is the homeowners association that is either responsible for the management
companies actions, or guarantees to defend and indemnify them for their actions. Since
the management company cannot be faulted, even if they act fraudulently, hiring
the management company may place the homeowners in a more precarious situation
than it would have been had they not hired them. There
are other "red flags" to be aware of. Some management companies will
write into their contract yearly automatic pay increases. Management companies
have also been known to arrange to have their contract renewal to take place
just before the annual meeting to eliminate the homeowners input.
Extra fees: Management companies will often bill for "specialized work," outside the contract. This often includes fees charged by the management company for calls made to the associations attorney who will also charge fees to the association. Attorneys try to convince boards that it is in their best interest to have the management company in constant contact with the attorney. Management companies may also charge for reading emails from board members and homeowners. A primary source of extra fees charged by management companies comes from covenant violation procedures. This involves sending violation notices to homeowners and having management company representatives periodically patrol the neighborhood looking for covenant violations. In order to increase their fees even further, some management companies will try to convince board members that additional rules, regulations, penalties, and fees be imposed on the homeowners.
If you are having trouble with your homeowner's association and you believe an attorney can help, you are probably mistaken. If you can find an honest attorney willing to defend you (which is very unlikely) you'll find that there is little an attorney can do to when dealing with a common interest development regime when their clients civil and constitutional rights have been limited by the CC&Rs. What is most likely is that you will find an attorney willing to take your money who is a CAI member and aligned with the association's attorney.
hiring an attorney to represent the owners
best interests and you'll find he's probably a CAI member who is really
representing the homeowners association industry. If the attorney is a CAI member, it's a waste of time dealing with him." Arizona homeowner
These attorneys are quite willing to take your money, but what they won't tell you is this:
"Residents in Common Interest Developments (CIDs) commonly fail to understand the difference between a regime based formally on rights, such as American civil governments, and the CID regime, which is based on restrictions. This often leads to people becoming angry at board meetings and claiming that their "rights" have been violated - rights that they wrongly believe they have in the CID." Evan McKenzie, University of Illinois
Most of the attorneys in San Antonio that work in this area of law are CAI members and are aligned with each other as well as the homeowner's associations and management companies. If you follow the money trail you will find that it's the associations attorney that profits when there is trouble between a homeowner and a homeowner's association? Attorneys charge by the letter, and management companies find justification for the fees they charge. The more trouble, the more profit. The only real recourse an individual homeowner has is the support of the other homeowners.
"It is very
difficult to find a competent HOA attorney willing to go against the HOA. The
reasons are that the HOA has "deep pockets" and pays more often and the
attorney doesn’t want to be "black-balled" by the HOAs. Your HOA attorney
will not help you, but will defend the acts of the HOA, and many times, provide
"roadblocks" to prevent having to admit that the board is violating either
the governing documents or state laws."
Jim Tome, Houston homeowner
"Covenant enforcement litigation has become a profitable legal specialization for attorneys in states with many CIDs. In many cases, the attorney who advises the board on whether to file suit will handle the litigation and receive substantial hourly fees, raising the question of whether legal advice in these matters is always as disinterested as it should be." Evan McKenzie, University of Illinois
"...there is now a cottage industry of lawyers and property managers who feed off
fees, offering their services to the generally inexperienced HOAs."
Evan McKenzie, University of Illinois
"Although HOA attorneys and management companies operate within the law, some of the things they do are unethical and only generate thousands of dollars for themselves. It is my opinion that our Association is being manipulated in this way to generate thousands of dollars for our attorney and management company." Barbara Gatlin, homeowner
"Most, if not all, homeowners associations sue people and threaten to sue people. It's their stock and trade -- their job. Many have scouts who drive through the community looking for deed restriction infringements. All of these are potential lawsuits. Some invite people to alert them to these potential lawsuits and even have special anonymous phone lines to collect such leads. Naturally, with the aid of lawyers they can, and do, find plenty of people and reasons to sue or threaten to sue." Jim Tome, Houston homeowner