Property Management transfers its position

[$uspect]

What is the name of your state? California

A year or so ago, Property Management Company-A, (PM-A) sent out a letter to say they were retiring from the business. Further, they stated that Property Management-B, (PM-B), would be taking over as the new PM.

PMB contacted my wife and another former board member, assuming they would continue to serve the board, and scheduled a walk-through and the first board meeting in over two years.

We were optimistic as the last PM-A was mostly absent and didn't hold elections or board meetings.

The first meeting went pretty well on the surface, but we had questions concerning the transfer of one PM to another PM without a vote of the members or a meeting of the board of directors. Our questions of this nature were directed to PMB's owner.

A year later, these questions remain unanswered.

So I've done some educating and from what I can tell, a PM is a vendor, just as landscaper, roofer, or trash company, and the board decides who is hired and what they are hired to manage, not another PM company. It would be like a landscaper picking out his replacement or perhaps "offering up" their position in exchange for something nice.

Can a Property Management Company select its replacement?

If not, what does this mean for the HOA?, I know the answer could be varied, but I'm trying to get an idea of the options. Would it need to be handled formally, as in a civil matter, or can they simply be ignored?

Finally, if the PM overstepped their bounds, overspent on repairs, and towed a very select number of member vehicles and their guest vehicles for expired registration, Not everyone who had expired tags got towed, just two units, and one of those units intends to sue to get reimbursed and awarded four times the fees in penalties. He mentioned pursuing selective enforcement. It was a really ugly situation that evening and almost erupted in violence between the towers and the owners.

The former PM did not enforce the rules concerning registration being kept current to park in the spots that are barely off the street. Its a 14-unit HOA, and some tenants haven't registered since 2020. It just wasn't an issue, then suddenly the new PM made it an issue. Our concern is who is responsible for our neighbor's suit? Will it be the board of directors? Will the HOA bear the burden of the fines when he succeeds? Or can the PM be held accountable for not following the law (no signs, not present, no notification prior to or following)?

Money is tight around here, and it's even tighter for the HOA, as I believe someone drained the reserve. So there could be a lot riding on this neighbor going after the PM, and instead of getting his pound of flesh from the PM, it comes out of our pockets, including his own.

 

[LdiJ]

This is a potentially complicated situation. Under normal circumstances, it is the HOA that calls the meetings and runs things and the HOA that hires the property management company to handle the day to day management of the overall property. Therefore no, under normal circumstances a property manager would not hire it's own replacement. Nor would the property manager hold elections or schedule HOA meetings. That is the responsibility of the HOA board.

However, that can vary a bit depending on how the property is actually owned. It is possible for a third party to own all of the common areas therefore it is possible for that third party to hire the property management company. That still would not give the property management company the authority to schedule HOA meetings to hold elections.

It would be best for the HOA board members to consult with a local attorney to see where things are supposed to be standing at this point. It may be that your HOA board allowed the property management to usurp power that they do not have. It may be something else.

 

[Zigner]

This is a potentially complicated situation. Under normal circumstances, it is the HOA that calls the meetings and runs things and the HOA that hires the property management company to handle the day to day management of the overall property. Therefore no, under normal circumstances a property manager would not hire it's own replacement.

I agree with this, but it's also conceivable that the new PM company bought the old PM company which would allow a "transfer" of the contractual responsibilities.

 

[LdiJ]

I agree with this, but it's also conceivable that the new PM company bought the old PM company which would allow a "transfer" of the contractual responsibilities.

Yes, something along those lines could be possible.

 

[festival]

It depends on the contract with the old and new management company. Some contracts have auto-renewal every year, or for longer periods, and some may have transfer provisions as LdiJ and Zigner indicated. You need to see the contract.

Contracts typically, but not always, delegate authority to the management company for things like fines and perhaps towing. The management company often gets to keep the fines, which is why they start enforcing everything. My understanding is that the HOA usually is ultimately responsible for lawsuits. However, if the management company does not have a valid authority in a contract, or acted negligently, then the management company is probably responsible.

Try asking the management company or the board to see the contract. You have right to see it.