Business Real Estate

Board directors can't let a property manager do their job

Question: We have an out-of-control property manager who has systematically taken over the power of the board. Except for another director and myself, the board members think the manager is great. This manager has expanded her management "staff" — that the association pays for — and the staff answers to her alone.

Rather than do the job management is hired to do, they concentrate on harassing and intimidating residents into submission. Violations are initiated against owners who disagree with management. Anyone making management angry is subject to a bogus violation, fines or having their car towed.

Management doles out violations and then presides over violation hearings. As the sole arbiter, she is mean, unrelenting and bad-tempered, and she always decides against the alleged violator. The few owners who have taken the manager and the association to court have won because judges see through this nonsense. What can we do about this manager?

Answer: The management company is a third-party vendor, and vendors do not have any legal basis for issuing fines or presiding over hearings. This conduct need not be tolerated, and the vendor should be terminated.

If the board hasn't already terminated her services, take this manager and the association to court again for her unlawful acts until she gets the message or until the other titleholders vote for a board that can control her actions. According to Civil Code section 1363(h), it is the board that notifies an owner of the possible imposition of monetary penalties and fines. It is the board that makes the decision and gives the titleholder an opportunity to be heard. Directors cannot delegate their duties to any third-party vendor, including a manager.

Some directors think it is acceptable to pass the "self-governing" obligations of a common-interest development to managers or management companies. Often this is accomplished without adequate investigation or vetting, including thorough background checks.

By law, directors — not vendors and property managers — run the association's operations. Directors have a duty to supervise all employees and vendors including managers, and investigate all actions pertaining to the operations of the association. Supervision includes but is not limited to instructing and giving direction to vendors as to what they are and are not permitted to do.

Any acts resulting in damage subject directors and the association to possible liability.

The late Stephen Glassman, an attorney specializing in corporate and business law, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to P.O. Box 10490, Marina del Rey, CA 90295, or noexit@mindspring.com.

Copyright © 2014, Los Angeles Times
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