The Board of Directors voted unanimously to end the management contract with Goodwin & Associates [G&A] and return to self-management. The Board determined that after three years, the management company provided no real benefit to the Association or the Board while the engagement created unnecessary costs and significant burdens to the board and homeowners.
Until March of 2018, the Association was governed and managed by fellow homeowners, board members who are elected at the annual meeting. However, as those who have served on the board understand, the work is not limited to the regular monthly meeting as there are ongoing responsibilities, especially for positions that carry the greatest burden of management, which include the Treasurer, Secretary, and the Architectural Review Committee [ARC].
When interviewing management companies, G&A’s sales team made service claims and promises that the board has determined were either inflated or completely false. G&A’s sales pitch was punctuated by their claim that the burdens of management would lessen to such an extent that the board might consider a change from monthly to quarterly meetings (though Bylaws require that the board meet monthly).
However, during open deliberation to terminate the contract, board discussion centered on the realities of services received:
- Over the entire term of the contract, G&C exhibited little to no understanding of Quail Creek’s Covenants, Conditions, and Restrictions [CC&Rs], which has resulted in the majority of G&A’s violation reports to be for items that are not in violation at all, which included the May report.
- After homeowners were consistently mailed notices for offenses that were actually not violations, the board stopped G&A from sending notices automatically and from that point forward, required G&A to get direction from the board before taking action. Despite this, several homeowners received unauthorized violation notices for matters that were in compliance with the CC&Rs.
- The board ended up creating its own spreadsheet to manage violation notices, which was not something that G&A provided, to keep track of timelines and action steps. There are instances where G&A was unable to provide the Board with either accurate timelines or proper evidence that proper procedure was followed, which resulted in added costs to the Association and time-consuming added effort of the Board.
- Regardless of the severity of a violation, any violation notice sent by G&A included an administrative cost to the homeowner, regardless of how minor the offense, where all notices sent by G&A were delivered via US Mail. So, to mitigate the cost to homeowners for violation notices, the board instituted a new process of first sending a “courtesy notice of violation” by email from the board, before authorizing G&A to begin the costly process of mailing violation notices.
- The Board also had to begin requiring that any notice sent to a homeowner via certified US mail also be copied and sent via regular mail, since homeowners have sometimes refused certified mail from the HOA in the past.
- G&A claimed to provide legal services to the HOA when selling the contract to the Board. In fact, during the 2019 annual meeting where the G&A representative “ran” the meeting, homeowners were again reminded about the added value that G&A brings because their in-house legal counsel provides legal services to the Association, should the need arise.
- However, G&A does not provide legal services and their in-house legal counsel, if G&A has it, is limited to credit reporting and collections.
- The Board also discovered that the G&A contract actually indemnified them from any legal action, which leaves the HOA completely exposed to actions taken on behalf of the Association with or without the Board’s knowledge, authorization, or understanding. This means that if G&A is sued by a homeowner of QC, the Association must pay for G&A’s attorney fees for their defense, and if they lose, the Association pays the judgment.
- The insurance policy which protects Board members from personal liability, a policy that G&A directed the Association to purchase, does not cover G&A.
- G&A exhibited a lack of understanding of the Association’s policies as well as state and federal law governing HOA’s when taking action on behalf of the Association.
- Before taking legal action against an uncooperative homeowner who was in violation of the CC&Rs, the board decided to re-do the state-required & board-policy instituted process of official notices to the homeowner, as G&A could not provide the board with sufficient proof that the process was precisely followed.
- At last year’s annual meeting, members had approved a special assessment for street repairs, however, that vote was challenged by a homeowner for improper notice, and the Board withdrew it because G&A failed to include state-required wording in the meeting notice that a special assessment was up for consideration, which meant that most homeowners were completely unaware of the proposal.
- Last year’s annual assessment notice was incorrect and had to be re-mailed to homeowners because the increase to the Assessment was not included. There were several homeowners who had already mailed in their assessment payment before they received the second notice, which required further follow-up by the board & G&A to recoup the difference. That led the board to require G&A to receive board approval of any draft for mailings intended for the entire membership.
- Despite this, G&A mailed out this year’s annual assessment without the board’s review and approval, and in spite of the board president’s notice to G&A of the contract termination, which included the following wording: “…we request that G&C cease all services that require additional service fees, immediately. This includes the upcoming annual assessment mailing that is scheduled.” Not only was the mailing unauthorized, but again, homeowners were billed for an incorrect amount.
Discussion to terminate also centered on the charges incurred by homeowners for G&A’s administrative costs, which the Board agreed was out of proportion to what is reasonable for a neighborhood with just 69 homes, especially since the Board is actually doing most of the work.
- Meeting minutes have continued to be the job of the Board Secretary, not G&A.
- The Association pays just three regular bills per month, along with a few others that are infrequent, and also provides title companies with resale certificates (at a cost of $250 to the homeowner, where before it cost just $50). While having G&A pay these bills creates the impression that the Treasurer’s work is lessened, our current and past Treasurer have highlighted the added burden of playing watchdog over G&A accounting, as overcharges and mischarges to the Association has been an all-to-frequent occurrence, which has created more work for them, not less.
- The ARC has continued to do its work without the assistance or guidance of G&A.
In summary, while the work of the volunteer Board to self-manage the Association can sometimes be time-consuming, G&A’s actions actually added to the Board’s monthly burden, which resulted in the Board managing the management company.
In the future, for those rare instances that a homeowner refuses to come into compliance with CC&R’s following state-mandated notification efforts by the Board, the Board, in compliance with the established state-mandated policy, will turn over further compliance efforts to an attorney to remedy the matter in a court of law, the cost of which will be incurred by the homeowner, not the Association.
The deliberation to terminate the G&C contract was included on the last three Board Agendas (March, April, & May), however, when G&A contacted the board’s president in response to the termination notice, they claimed that the termination was a complete surprise.