HOAleader.com - Tip of the Week - May 21, 2021
Published: Fri, 05/21/21
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Reader Questions Condo/HOA Management Company Allegiance
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One of our readers says there's a problem in California of management companies refusing to sue, or discouraging HOAs from suing, developers when shoddy workmanship in a new condo or HOA requires repair.
In this week's tip, discuss whether this is yet another thing you should worry about as a board member.
Let's start in California, which is where we've been told this phenomenon is occurring. One of our on-the-ground experts hasn't seen this but doesn't deny it could happen.
"We haven't had an issue with this, but it probably exists," says Joan Lewis-Heard, a senior associate at SwedelsonGottlieb in Los Angeles, who at any given time represents hundreds of condos and HOAs throughout California. "We haven't had the problem because the management companies we work with are on the up and up.
"But even if a management company has a reputation of being builder friendly, that doesn't mean they don't have the association's best interest in mind," she adds. "As long as the management company has the HOA's best interest in mind, it doesn't matter how friendly they are to the developer."
For another one of our experts, the closest she's seen is a situation a colleague at her law firm experienced a few years back. "Our firm's attorneys have for years been doing the attorney marketing thing by going into different management companies and conducing ask-the-attorney sessions," explains Phaedra J. Howard, a partner specializing in community association law at Hellmuth & Johnson PLLC in Edina, Minn. "About five or six years ago, one of my colleagues was doing that for a management company that has since been bought out. At the time, the management company was managing a lot of associations that were still under developer control.
"My colleague learned that one developer basically told the management company, 'Those lawyers sued developers for construction defects,'" states Howard. "Essentially, the developer didn't want us going in there and telling the managers that they should tell their associations to sue the developer. We stopped doing the ask-the-attorney events for that client.
"But I don't know that the developer's comments affected the management company's association clients," she adds. "It was just the one management company, and I can't say that management company carried that beyond anything other than not letting us do our thing there. And we're back giving such sessions at that management company now."
But there's probably more going on here than meets the eye. Read the view from the management side, plus a reason this suspicion might arise, in our new article: https://www.hoaleader.com/members/4325.cfm
Best regards,
Matt Humphrey
President
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