Residential Property Management/Property Manager Issue

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QUESTION: Our Pennsylvania Home Owner Association hired a new property manager after interviewing him and also getting proposals from other property managers at the beginning of 2013. Prior to hiring him we had the BOD lawyer check his references which our lawyer said checked out.

However, as time went on the new property manager had trouble of keeping track of the owners checks deposited in the bank account and has not provided any monthly financial reports - like delinquent owners payments, income statement budget vs actuals, balance sheet, etc. After a number of promises to provide the financial reports and misses the issue was raised with the BOD but only a few of them were interested. The BOD president refused to get involved and said the BOD Treasure was asking for too much and supported the property manager in not providing the reports. However, the property manager contract call out the reports.

To determine what property manager could do I had a conversation with him where he told me he has no experience in managing the financial of a HOA but thought he could use a property manager software package to do the finances which has proved to be false. He also hired an accountant but it appears he has no property management experience either.

BOD is not interested in hiring some other property management group to take over the finances or recently even hiring and accountant to find out what the issues are. The property manager continues to receive his full fee.

What would suggest to get the BOD to move on fixing this issue?

ANSWER: Nick,

Thank you for your question. Sounds like your HOA has had an interesting time and hopefully learned a great deal from the experience. It is clear the management company your BOD engaged was not qualified to manage an HOA. To "fix" the issue I recommend terminating the contract for cause and finding a new management company capable of meeting your HOA's needs.

In the future, I suggest your BOD ensure its RFP specifies a few key capabilities such as financial reporting (ask for sample copies), membership in local trade associations and most important make sure the management company and property managers are accredited though a national association such as the Institute of real Estate Management (www.irem.org) or Community Associations Institute (www.caionline.org).

Lastly, I was troubled to hear members of your BOD were "uninterested" in the reporting problems. Members of an HOA's BOD have a fiduciary responsibility to the HOA that they need to take seriously. I suggest you have your HOA's attorney conduct a training program explaining your HOA's by laws and officer and director responsibilities. CAI is a great place to start:

http://www.caionline.org/events/boardmembers/Pages/default.aspx

Best wishes for the future.

K. David Meit, CPM



---------- FOLLOW-UP ----------

QUESTION: Thanks for your input.
You suggested to have our attorney conduct a training program for BOD so they will their fiduciary responsible seriously.

However, it appears our attorney is part of the problem because he continues to make excuses why the property manager is not living up to his contract. As a matter of fact, he has critized me along with some board members when I looked into what options we might do to get the financial reports. I have asked our attorney for a copy of the contract a couple of times but, no answer from our attorney. Believe attorney and property manager have a relationship and lawyer did not reveal that when the lawyer vetted the property manager during our selection process. Also, starting to believe our lawyer did not execute a contract with the property manager since the lawyer cannot send me a copy of the contract.

I am the on the BOD/Treasurer.

Any additional suggestions to deal with these issues?

Answer
Nick,

So the plot thickens! Please know I am not an attorney and offer no legal advise.

I suggest you formerly request a copy of the management contract (by letter, certified mail, etc.) and ask if there is an existing relationship among the parties. At this point you may also wish to engage outside counsel to provide advise to the BOD or you personally as a concerned member of the HOA. I suggest contacting your local CAI chapter for referral to reputable HOA law firms.

David

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K. David Meit, CPM

Expertise

Real estate investment, operations, renovation, marketing, and administration. Specializing in urban multifamily, DC rent control, property repositioning, change management and building high performance operating teams. For more information, please visit www.oculusrealty.com

Experience

I have over twenty-five years experience managing all classes of multifamily property in New York City, Washington, DC and the Maryland and Virginia suburbs. I am President & CEO of Oculus Realty, LLC, a licensed real estate broker in Virginia, Maryland and the District of Columbia. Oculus is an Accredited Management Organization (AMO) through the Institute of Real Estate Management (IREM). I have earned the CPM and ARM accreditation through IREM and GRI designation though National Association of Realtors (NAR). My career includes successful management and executive positions at Bozzuto Management, Forest City Residential, DARO Realty and Vornado Realty Trust.

Organizations
Institute of Real Estate Management Ethics and Discipline hearing Committee, Chair Region 3 Education Committee, Chair West Central Maryland Chapter 92, President (2012) Apartment and Office Building Association Advisory Board Member National Apartment Association Property Management Associations President, 2004 National Association of REALTORS

Publications
http://www.bizjournals.com/washington/stories/2010/09/13/story24.html

Education/Credentials
Boston University, BA New York University, Schack Institute of Real Estate, Property Operations Institute of Real Estate Management, CPM designation

Awards and Honors
Institute of Real Estate Management AMO of the Year Award 2015 CPM of the Year Award 2012 Past President's Award 2012 Property Management Association PMA Presidentís Award, 2003, 2005 PMA Vision Award, 2004 Property Manager of the Year, 1998 Apartment & Office Building Association Outstanding Leadership Award, 2006, 2008, 2011 AACE Award Washington, DC Service Team, Sedgwick Gardens, 2004 AACE Award, Virginia Garden New Upscale, Regentís Park, 1998

Past/Present Clients
My clients include high net worth individuals and family offices looking for long term income and appreciation from investment real estate.

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