Boards and Management Relationships-Who is to Blame When Things Go South?

I have not put up any blogs for too long. My only excuse is that I am very busy and time gets away from me. I blink once and a week goes by, blink twice and a month is gone. I have many interests and keep very busy. I keep saying I will slow down but it’s not looking like that is going to happen. So, this is catch up morning. I am putting up several blogs from questions that have come over the past month. Hope they are helpful. This first blog is about questions regarding management and vendors.

“My HOA has had different management companies take advantage. I’m wondering just how common of a problem this is. Our board believes that they should not micro-manage so they refrain from a lot of oversight and do not listen to neighbors raising issues about what they’ve seen. Not sure if this could be promoting the problem. I recently had unauthorized work done by the manager that negated my contractor warranty and is now costing the HOA. Should manager contracts include any clauses that protect the HOA from being taken advantage of?”

My answer to this is fairly simple. Boards should pay attention to what is going on. So fault for letting management get carried away, if there is any to be had, falls squarely on the board. That said, there are cases where management acts because the board fails to do so. And management often knows more about what needs to be done (professional management familiar with California laws and willing to wade through the governing documents that is). And many boards are loathe to call management out on anything for fear of losing the person who does all the work. Boards that bounce around from manager to manager should take stock and look at itself as well as management. Sometimes relationships break down because the board does not set any boundaries or pay attention to the contract. Sometimes it does not even know where the original contract is. And of course there are managers who barge ahead without paying attention to the Board, or overpower or threaten the Board, or who take sides and ally with certain Board members to the detriment of balance. I could go on and on about the many problems I have seen over the years develop between management and boards, or management and owners. The best advice I can give is to seek legal review when considering management contracts to get a good one, become familiar with the contract, raise and discuss concerns and evaluate performance each year with the manager, and be up front and honest when there are issues that need to be addressed. Pay attention to owner complaints and determine whether there is a wrinkle or two that needs to be ironed out before someone gets burned. And PAY ATTENTION to the termination provisions when considering firing the manager. If an HOA board does not do this, it can easily end up in a situation where it is legally bound to pay two management companies at the same time.

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