FEES, MORE FEES AND
MORE MANAGEMENT FEES!
Opinion By Jan Bergemann
Published March 22, 2011
Many board members and owners always talk about the cost of hiring a management company. They all seem to forget that the monthly charge paid by the association is only a small part of the income for the management company.
Like waiters with tips, the basic monthly pay they receive from the associations are in many cases only peanuts, compared to all the extra income they make with charges here and administrative fees there. Most contracts allow management companies to keep all these extra charges and even add extra for writing so-called violation letters, the violation to be determined by the manager without prior approval of the board. Board members should read very carefully the contracts with management companies before signing a new contract. While some management companies make complete bids -- meaning all regular charges included, others charge for everything extra as "described" on one of the many pages -- in small print -- often overlooked.
Since S1196 was enacted last year, the statutes [FS 720.303(5)(c)] allow associations to "charge the actual cost of copying, including any reasonable costs involving personnel fees and charges at an hourly rate for vendor or employee time to cover administrative costs to the vendor or association. This provision has turned into a major money-maker for management firms, who already charge personnel fees and charges at an hourly rate for vendor or employee time for the inspection of records, not just for the photocopying as the wording of the statutes implies. But since everybody seems to do whatever they like -- no matter what the wording of the statutes says -- management companies have quickly realized that there is no limit to their charges and are charging outrageous fees to owners that request records, just for inspecting these records. The demanded charges are often so high that owners forget about record requests when seeing the demand to pay in advance. So much for the concept of TRANSPARENCY and OPEN RECORDS.
In a recent case the management company demanded from an owner a prepayment of $300 to inspect the financial records of the association. Eight (8) hours to retrieve the records and two (2) hours monitor time x $25 per hour. After paying the $300 the owner went to the office at the agreed upon time to inspect the records, but faced only two (2) banana boxes full of unsorted documents. Great bookkeeping -- and an even greater charge -- a charge that was billed for "preparation" of record request. How long may it have taken the manager to carry the two (2) banana boxes from storage to the inspection room?
Or wouldn't you consider $82.50 an outrageous charge, considering that the manager charged $2.50 for the photocopies of five (5) pages of minutes from two board meetings, but $80 for preparing this request?
Not to forget all the extra income for management companies that are charging not only for Estoppel Letters, Homeowner Association Certification Requests and Condominium Certification Requests, but as well for the Transfer Fees from the new owner.
Title companies, Lenders, Realtors and attorneys are paying fees to management companies to obtain status of accounts for closings. See here an example of a WEBSITE set up by MAY MANAGEMENT SERVICES, INC. -- just for the purpose of requesting documents and paying for them -- actually, have your credit card ready. No request will be considered until prepaid. With today's computer technology and an accounting system up to par it may take a halfway capable secretary about 10 minutes (max) to produce this simple document. Nice profit -- wouldn't you agree? -- especially since the association already paid to have all these documents ready to roll.
The latest source of great income for management companies is the charge of collection fees. In recent years we have seen many -- some outrageous -- charges for so-called administrative fees for collections charged by management companies. Senator Fasano's bill S530 now wants to make this method legal: (Line 1463 ff.: The claim of lien also secures any reasonable expenses for collection services relating to the delinquent account which the association incurred before filing a claim.) All these added fees give homeowners in arrears less and less incentive to "save" their home from foreclosure. Instead of trying to keep families in their homes to avoid even more foreclosures, our legislators are even adding more and more fees to make any attempt to save what could be saved more difficult. All these extra fees will make more owners consider the option of walking away from their homes/condos, after living there for free for as long as possible!
Fees, fees and more fees! But make no mistake: These fees are charged by management companies for management companies -- and they are huge money-makers for these community association management companies. Owners are burdened with more and more fees, but the associations don't profit from these extra fees. No more money comes into the coffers of the associations -- actually allowing all these extra fees to be charged creates even more financial problems for associations.
But why should associations and owners get any relief as long as our esteemed legislators can make sure that their newly enacted laws increase the profits of the community association service providers -- like attorneys and community association managers?