Why CoastManagement.net Does Not
Provide Property Maintenance Services Directly
CoastManagement.net does not provide property maintenance services directly (including landscape maintenance) because we believe that providing these services directly creates a conflict of interest with management clients which cannot be addressed satisfactorily.
Management companies have the responsibility (a fiduciary duty) for making certain that their clients receive the greatest value possible for every dollar spent on property maintenance services. This means the management company must make certain that their clients do not pay an excessive billing rate, do not pay for an excessive number of hours billed, do not pay for inferior work, do not pay for unnecessary work, and that maintenance is scheduled so as to minimize the number of service calls in order to minimize your overall cost.
Companies that provide property maintenance services directly are in business to maximize their profit. This legitimate goal is in direct conflict with the property owner’s goal of minimizing maintenance costs. We believe a management company cannot reconcile this conflict of interest if it provides maintenance services to its client. For example, it is possible that the need to meet payroll costs could influence the management company’s judgment as to how much maintenance is “necessary” at your building.
A management company that hires only independent, third party property maintenance companies, such as CoastManagement.net has the incentive and ability to fully protect property owners without regard to the profitability of the maintenance operation. A management company that directly provides maintenance services may not have the same incentive or ability.
By law, a management company, as agent for the owner, has the duty to put your interest above its own. CoastManagement.net is in a position to do exactly that. We take our responsibility seriously.
Why CoastManagement.net Does Not
Solicit or Accept HOA Management Accounts
from Home Builders – Developers
We believe that accepting homeowner association property management accounts from home builders creates a conflict of interest for the management company that cannot be reconciled.
When a developer hires a management company to manage an association, the management company becomes the agent of the association the minute the first escrow is closed because the association is created at that time. This means the management company owes its duty of loyalty to the association when the first unit is sold, notwithstanding the fact that it was selected and hired by the developer. While the management company should know that its duty of loyalty runs in favor of the association, it also knows that it will not receive additional accounts from the developer if it takes sides against it, or points out any failures on the part of the developer.
Management companies are well aware of the fact that developer controlled boards are likely to terminate their services and cease future referrals if the management company takes the side of the association against the developer. Management companies that seek management accounts from developers learn quickly that they are in a difficult position.
While not all management companies that accept developer referred management accounts breach their duty to the association, homeowners must be alert to the possibility.
Some of the abuses that we have observed over the last twenty five years includes the following:
- Management company covering up construction defects so that the statue of limitations eliminates the right of the association to make a legal claim against the developer for the cost of repairing construction defects.
- Management company conveniently ignoring the fact that the developer has not paid its HOA assessments on unsold units.
- Failing to charge the developer late fees and interest on delinquent assessments.
- Ignoring the fact that the developer controlled board of directors is using HOA funds to pay for repairs that should have been paid by the developer.
- Advising the buyers that the developer is responsible for making repairs for only one year when the developer’s legal obligation can run from one to as many as ten years after completion depending on the facts.
Not every developer is liable for construction defects and breaches its duty to the association, and not every management company hired by a home builder breaches its duty to the association and its members. However, as a board member, you should be aware of the risks and understand the dangers.
Please visit HomeownerAssociationTransitionServices.com for a list of developer responsibilities.