Reader Questions - Management Charges, Proxies

Dear Kelly,

We are a community of several hundred single family homes, no amenities other than many acres of green belt. Our board felt it necessary to change management and go with a company that was a friend of our “in house” attorney. There was no other request for bid let out before we hired the new company. And no reason was given to the owners for changing.

The current company charges more than double over the old one. Since we are upside down on our budget, I was wondering if there is any rule of thumb, or guideline as to what management firms can charge.

Sincerely,

N.M., San Clemente

Dear N.M.,

There is no limit on what a management company can charge, and the charges for management services can vary widely. It is subject to negotiation. Be careful about putting too much or even sole emphasis on the management fee. The least expensive management firm may overload its managers too much, or have lesser qualified managers (who don’t need to be paid as much).

It is quite difficult to compare “apples to apples” with management contracts, but careful preparation of the scope of responsibilities may help. However, other questions should be asked. Is the manager credentialed by CAI or another credentialing organization? How many other associations will the manager be handling? What triggers extra charges?

The selection of management is a board responsibility. Boards should go beyond a bare “dollars per door” analysis, because yes, sometimes you do get just what you pay for – and nothing more.

p.s.: Your lawyer is another service provider, and usually should only be reviewing the contract, not picking the management. However, veteran HOA attorneys have many manager friends – don’t let that disqualify a good manager!

Best,
Kelly

Dear Kelly,

Could you please tell me if proxies are legal? And if they are, where I can find a legal copy? What form it should take? There will be about 8 people running for 5 positions on the board. We want to be clear and honorable for the Inspector of Elections.

Thank you,

M.A.

Dear M.A.,

If not banned by the Association’s governing documents, proxies are allowed in California. A proxy can only be held by another member (as opposed to, for example, a tenant). Proxies may take many forms, as the main requirement is that it be written and signed by the owner – there is no standard form required. There is very little guidance in the law as to how to confirm a proxy is authentic, and this is often a source of disputes during elections. Proxies can easily be expressly revoked, or revoked by a later proxy or by the member voting their own ballot.

Proxies are unnecessary for most votes, since membership votes on directors, governing document amendments, and assessments must all be by written ballots distributed to members at least 30 days in advance. So, today there is rarely a need for proxies. One can vote weeks before the election, or mail one’s ballot in from elsewhere in the country (or world) so long as it arrives in time. Instead of using proxies, it is simpler for owners to vote their own ballots. When amending bylaws, we often recommend the prohibition of proxies, since they are largely unnecessary and often the source of disputes and tactical gamesmanship in even the best associations.

Thanks,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.