Management Companies or Bounty Hunters ?
By Jan Bergemann 06 - 01- 2002

Since quite some time homeowners living in mandated properties all over the nation wondered, why the amount of violation letters suddenly increased when new management companies took over their communities. Complaints often were answered by the management companies with responses like "accusations being false" or they are just "taking their jobs more serious!". 
"That's what we are hired for!" 

Quite some homeowners already suspected for quite a while that there is more to it than just these new companies being more efficient. But suspicions like kickbacks etc. were just answered with statements like: "These violation letters just create more work for management companies!"

It seems like it is even worse than suspected. There are obviously management companies working like bounty hunters. The copy of a management contract, which came recently in my possession, proves clearly what the whole issue is all about: MONEY! 

If you read the Contract under Special Sources you'll find that the managers are "reimbursed for their efforts"  by fines collected from the homeowners. 
I would say that this is incentive enough to create violation letters by the bunches. And could it be that some of these managers are getting a little creative to find some more violations to increase their income?

After seeing a contract like that, the follow-up question is obvious:
Are the management companies working as the right hand of the association board for the welfare of the homeowners and members of the managed association, or are they just bounty hunters interested in filling their wallets?
Another profession which is considering homeowners associations as a cash cow?



7.1 Manager shall be compensated for the services provided under this agreement as follows :
> Management services                  ...........       $3,935.00 per month
7.2 Manager shall invoice Association for the monthly management fees on or after the first day of the month of service, Payment shall be due within thirty (30) days.  Manager reserves the right to apply, and Association agrees to pay, a one time ten (10) percent or S50.00 penalty, whichever is greater, to any undisputed fees unpaid for more than sixty (60) days after the invoice date.

7.3 For any projects or work not provided for in this agreement, but requested or initiated by Association, Manager will quote a rate to Association and will await the approval of Association before proceeding.

7.4 From time to time additional homes may be built or additional properties may be annexed into the Association.  Upon the occupancy of new homes or the platting or annexation of the lots, whichever occurs last, the monthly compensation to Manager shall increase as described here.

For each new home that is constructed and occupied over and above the number of homes listed in section 1.1, the monthly fee paid to Manager shall increase by S2.50 per month.  Manager shall be responsible for calculating changes in fees associated with new occupied homes.

For each new lot that is platted or annexed without a home over and above the number of lots listed in section 1.1, the monthly fee paid to Manager shall increase by $0.90 per month.  Manager shall be responsible for calculating  changes in fees associated with new platted or annexed lots.

8.1 One special source of revenue for Manager is covered in this agreement , which is not paid directly by Association. When legal action is required in order to recover delinquent amounts owed to Association or to enforce compliance with the Deed Restrictions, Manager shall be entitled to a fee for its part in the successful resolution. The fees listed below shall be assessed against the property owner and will only be paid to Manager when Association receives payment from the property owner. Unless a different  policy is adopted by the Association, Manager shall invoice the owner account for twice the amount shown and half will be payable to Manager and half retained by Association as offset to its administrative costs.

 >   DR forced maintenance administration fee ($ per work order)          10.00
 >   DR violations turned over to attorney ($ per violation)                      10.00
 >   Late fees in February and March       ($ per account)                         10.00
 >   Lien/release preparation fee      ($ per lien/release)                           10.00
 >   NSF check processing    ($ per check)                                                 10.00

Management Agreement between              Page 5            Association initials:_____
C.-.A. Services, Inc. and                                                         Manager  initials:_____
H--rthstone Homeowners Association, Inc.                        Effective date: 01/01/2001

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