Why do I have to pay Association fees?

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You just moved into a new condo or HOA community, the homes look perfect and the landscaping is pristine. The security guards are nice and the pool is always sparkling. You like the area that you live but you always wonder why you have to pay the high association fees and what they cover. I will go over some of the average things that your fees cover.  A lot of home owners living in HOA and Condo associations always have two main questions. Why is it so high? And what am I getting for what I’m paying? This is a normal question for anyone that is living or has ever lived in an association community. The question becomes more intense when they see the community deteriorating and nothing being done to fix or update it. I will go over a few of the normal things that get covered with the fees being charged by the Condo/HOA community to its homeowners.

First things first!

The first thing to understand when living in a Condo/HOA community is that your fees are a portion of the expenses the association uses to run its day to day operations. These expenses are in place to provide the lifestyle that the community owners are accustomed to or expect.  The expenses for a community are usually broken down by unit type (by bedroom count or sq feet of the unit) or simply divided by the amount of units in the community (10,000 per month  in expenses / 100 units = $100 per month in association fees) .

Do you want to know what your association fees cover?

Its simple to do actually! You can contact your association office or property management company and request whats called the association budget.  Normally every year homeowners receive this budget. This budget outlines the yearly expenses for the community. Using this budget you can understand what your share of the association fees will be and how that pertains to the overall expense of the community.

What if I don’t pay my portion of the fees?

While you may think that not paying association fees has no major impact on the association, you would be wrong. As said before its a portion of the associations total expenses that are shared with you. So you not paying puts a strain on the association to run smoothly and offer the amenities that you have come to expect. The smaller the community, bigger the strain. Condo/HOA fees help maintain the quality of life for the communities residents and protect the property values for the communities owners.

What do I get out of it?

So what are some of the things that are used with the money that you send in every month? Some Condo/HOA communities have big landscaping budgets. I know you may not notice it since your either cutting your own lawn or paying someone $100 or less per month to handle the task before you moved into the community. But most lawn jobs for associations can cost anywhere from $1,500 to $15,000 per month! This pricing doesn’t include the extra costs not covered in the regular lawn contract. Next would be electricity and water bills. Some associations pay the water bill for there owners. This is mostly due to the original construction of the community.  All the electricity in the communities common areas also have to be paid by someone. The big lights in the clubhouse or at the entrance have an nice size bill right behind it. What happens when you don’t pay your water or electric bill? Yes, the services do get shut off. The same thing happens in associations, the only difference is the bills and the people affected are on a larger scale. The other bills that your community may be in charge of are insurance coverage for the community, pool maintenance, elevators, clubhouse and clubhouse staff, parking garages, fitness rooms, sidewalks, roads, security gates, roofing, building exteriors, and the overall cleanliness and fixing up of the community.

So should I pay?

While I know everyone’s situation is different paying your fees will help you and the community in the long run. It is also something that is required by your governing documents. So the answer is yes you have to pay them!  If you feel that your fees are being used incorrectly and not for the betterment of the community, you have routes you can take to get your self heard and to verify what is actually being spent. If you cannot pay for other reasons speaking to the association about your situation would be one of the first steps to take to prevent any major issues down the road. They may be able to work with you depending on your situation.

Changing Your Association Management Company

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Posted by Shaun Patterson on Aug 19, 2018 12:02:58 PM

I know everyone usually thinks its easy to change management companies that work with your community. Its not as simple as  sending an email and everyone will live happily ever after. Here we have compiled some things to actually look out for when you finally decide that your community wants to make a change. The first thing people have to understand that in Florida in order for a property management company to manage a  HOA or Condo community they need to have the specific licenses and hopefully the proper insurance or bonds. These licenses tell the community that the company or person they have hired understands the changing FL statutes and can professionally manage their association. So before you ever let go or your current manager or management company please make sure that you verify this information with the new company.

Notice:

The first thing you want to do is give notice to your current manager or management company that you will not longer be using their services in the future. Before you do this take a look at the contract that was signed to get a better understanding as to how the notice needs to be sent out and what the time frame would be to relinquishment. Check if you have to give a 60 day notice or a 90 day notice. You may have to give no notice at all depending on how the contract is set up.    Please don’t go through a process of looking for a new management company unless you are sure this is the right choice. Wasting other companies time may hurt your community in the future when you really need the help.

Tip:  If the current management company has no way of receiving feedback for the work that they are doing, alerting them that you are looking to cancel your contract with them may help them see the light and provide the service that you expect from them. If not it may at least open up a channel of communication that can be used to explain your grievances in more detail.

Cancellation Fees:

Does the Contract that was signed have cancellation fees included? If so, what would it cost you to cancel the contract? These are some of the choices that you have to think about when looking to change management companies. How bad do you want to get rid of your current manager? Is the service so bad that you are willing to pay the fee and get someone else? In some situations it might be better for the community to wait till the right time to cancel the contract. Other instances may be dire and the community may want to bite the bullet and get ride of the management company.

Committee or single person search:

Some communities set up a committee to search for prospective management companies to get quotes from. This way frees up the board to handle the day to day operations without having to deal with pushy sales men. This can also weed out the best from the list of prospects. If you don’t have enough people to create a committee then having one person in charge of finding the management companies to get quotes from will help.

Three of a Kind: 

After you find the management companies to get the quotes from you then pick the best 3-4 out of the lot. This is normally done by requesting a RFP (Request For Proposal) from the top 3 or 4 companies that you would like to give you a formal quote. The Request should entail what services you are looking to have and what information your would need from the company. Using a RFP helps streamline the quoting process while also making sure that the quotes are comparable. After that is done then you will hold a meeting with the board that may include the management companies to go over the services and vote on who the board would like to choose.  The time the board spends together going over the different services and the pros and cons of each offer.

Transfer Process:

This usually happens within 30 to 60 days before the termination of the previous company. This is a usually a scary time for most communities because they want to make sure that all of their documents are transferred properly and nothing is missing. By law the management company should transfer all documents that they have over to the new manager. But you have some questions to ask your self. Do they have any documents? For boards who leave everything to the management company they don’t know what the company has kept records of. In some major cases the management company hasn’t kept record of anything at all! For the good management companies that do their job properly they should have everything in a online files or paper format. Also update all bank accounts that the previous management company would have access or control over. This can be as simple closing the account or removing the rights granted to the current manager. Some banks have a simple form that property managers and board members fill out that will transfer and update the account information. This is also a good time to update the signature cards on the bank account if it hasn’t been done in a while.

TIP: Save the major documents that you receive from the management company (monthly reports, budgets, bids from contractors).  If you have an issues come up and you receive nothing from the management company at least you will have the documents that you previously received.

Notices to homeowners: 

One of the last things to make sure of is that all homeowners know of the change in managers or management companies. This helps keep everyone on the same page. You don’t want homeowners still making payments to the wrong company. You also don’t want them calling the management company for issues going on in the community only to be told that they called the wrong place. This is usually done by the new company taking over or the company that is leaving. Notices can be simple and straight to the point. You don’t really need a newspaper sized explanation as to why you are switching. You just need to alert the homeowners of the changes.

Tip: Homeowners that have not updated the association with new addresses can cause them not to know there was a change in management. This is especially true for residents that live out of the country. Make sure to keep and updated email contact list to help with the transition.

Associations and Approvals

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West Palm Beach Property Association Approval
Now a days we often dread the interview and application process when buying a home in a new association community. It often leaves a nasty taste in your mouth. This is mostly due to the extremely slow application process and the lack of understanding that you have a life outside of the association. You end up having to leave work or worse call off work to bend over backwards to get the documentation needed. Then after getting everything needed you have to wait for the property manager to get off their but and finally set up a date for you to have an interview. Now the last part could be due to the board members also having a say in the interview process. Most people that go through this process think “there has to be a better way”. But why is it after all of the advances in technology are we still having to print out hundreds of documents every year? Why do we have to waste so much of our time scheduling meetings just to sit down for 15mins to 1hr so we can get into the home of our dreams? Why can’t we do this any better than we did in 1995? There are a few reasons for this. The main one is money. Some associations are afraid to incur any cost to change without first seeing the value. It is the same as winning the lotto before actually buying the ticket. It’s the instant gratification that most people yearn for. If you don’t see it working now then it will never work. The second one is greed from management companies. Most management companies charge for printing paper. Which makes sense since you have to print a lot of documents being in the association management business. But simple things that can be emailed should not be printed. Such as a one page application that you can email to prospective owner or maybe have a link online that they can go and fill out them self. Why then would most management companies not let this happen? It’s the mindset of some association management companies to charge as much as they can to the association through ancillary fees. They may have under bid the contract just to get in the property. Because of this they have to find different ways to increase the profits to the company. To find out what your management company is actually charging you request random itemized reports showing what you are being charged for. The good ones will have everything organized and ready to hand out. The bad ones will take time to get something together that they feel looks good. Ask them what things they can put in place that will help streamline the application process and help your new home owners join the association on a good foot. There are new ways to do things and you don’t want to be the ones playing catch up.