Pick­ing a man­age­ment com­pany.

When de­cid­ing on a firm, board needs to do thor­ough check and scru­ti­nize pact.

Los Angeles Times - - BUSINESS - By Donie Van­itzian Zachary Levine, a part­ner at Wolk & Levine, a busi­ness and in­tel­lec­tual prop­erty law firm, co-wrote this col­umn. Van­itzian is an ar­bi­tra­tor and me­di­a­tor. Send ques­tions to Donie Van­itzian, JD, P.O. Box 10490, Ma­rina del Rey, CA 90295 or

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 the part 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. “Non­re­spon­sive­ness 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 the man­age­ment com­pany should de­fer to the board re­gard­ing banks and other third-party ser­vices, es­pe­cially when the HOA has a good 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 ven­dors 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 so­called “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. 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-siz­e­fits-all busi­ness. Take your time and choose wisely,” Bar said.

PR Newswire

CUS­TOMER SER­VICE is the back­bone of any man­age­ment com­pany’s busi­ness. Ask­ing for ref­er­ences should be part of an HOA board’s process in pick­ing a firm.

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