Can a newly elected board of directors unilaterally decide to change management companies without consulting the homeowners?
Yes, the Board of Directors are elected by a majority of the membership to make decisions on the day to day operations of an Association. These decisions should be made with the best interests of the Association as a whole, in mind. If the current management is not conducive to the Board realizing their “vision” for the community’s potential, then that must be addressed.
With the economy in its current state, there are many homeowners delinquent in their dues. How can the Association save enough money to fund the reserve while operating on less than 100% of the budgeted income?
There are a number of ways that Associations can save money to ensure the reserves are kept up, without sacrificing services.
In my experience, Associations over spend in 3 key areas; first, is the management company. Many companies will quote a low monthly rate, only for the Board to later find out that they also charge for letters, faxes, emails, meeting attendance, even fuel surcharges. At API, we help Association budget for management expenses effectively by providing fully customizable management at a low flat rate. Without the extras, it is much easier to gauge exactly what the management cost will be.
The second area Associations overspend is in landscaping. Everybody wants their community to look great, but you do not need a large name company to achieve this goal. There must be thousands of landscaping companies in and around Southern California. 98% of those companies do not have a widely known name. That doesn’t mean their services are not on par, or sometimes even better, it simply means they might not have the nicest trucks or uniforms. These are still licensed and insured companies that can charge much less for their services because they do not have an office in Newport Beach and their drivers do not drive brand new trucks, meaning their overhead is much less.
And the third way Associations overspend is with their insurance. Like all other vendors, these contracts should be put out to bid each year to ensure the policy provider is still competitive. Also, policies may include “extras” that increase the premium’s cost for no good reason. Using common sense while evaluating all potential service contracts is paramount for every Board Member; if it does not sound right or make sense, ask questions.