Can management companies charge by number of units?

Q: Can a management company charge the same fees for managing a smaller number of units compared to a community with more units? Since you have experience, what is your opinion?

A: Management fees should be based upon the operating cost of the association and profit level.

Many of the national management organizations have created spread sheets by which fee structures can be developed. The spread sheets consist of the various management functions, how long the work will take and who is providing that work (labor cost would be different from a clerical staff member versus a community manager) and the goals of the association.

For example, if a management company was asked to become a receiver for an association for a short period of time, that management fee on a per-door basis could be more than the fee for the traditional management of an association. For developers, the management fee may be a minimum monthly fee until “x” amount of units are sold. Some fees are set by the common interest communities and condominium hotels commission per state law. In fact the Legislature has given the commission more authority by instructing the commission to establish fee structures for the collection of delinquent assessments.

Some management fees may offer a lower per door fee based upon a larger number of units within that association. Generally, smaller associations do pay a larger per door fee for their monthly assessments, as smaller associations are economically challenged. You have to spread the cost over a smaller number of homes. Your directors and officers liability insurance could cost the same $800 a year for communities under, for example, 80 units, regardless of whether you have an association that is 40 or 80 homes.

Management fees may include extra charges for a variety of functions, for example, the monitoring of an insurance claim, the processing of disclosure packages. Other expenses would be that of office supplies. When comparing management companies, you need to look at their services and then compare the prices, as some companies may include more services for their base fee than other companies.

It would violate anti-trust laws for me to state a fee structure in the newspaper or any where else for that matter. Fees need to relate to cost and to the profit level of the management company.

Q: Our rules and regulations call for a seven-day written notice before towing a car that is being stored on common area property such as in the owners’ covered parking space. Our management company states that since Clark County allows vehicles to be towed after 48 hours after a red tag has been put on the car, it applies to us also. Since the common area parking is private property, wouldn’t the rules and regulations prevail until changed by the board?

A: The rule of thumb is that the association’s rules can not be more stringent than the county’s ordinances. For example, if your regulation stated that vehicles could be towed with a five-hour notice, that would be illegal as the county allows for at least a 48-hour notice. Your current regulation is more lenient in that the homeowner has a seven-day written notice prior the towing of the vehicle. If the board wants to tow vehicles within 48 hours, then they need to change their regulations.

Q: I am seeking information and your opinion regarding a lease restriction passed in 2004. My original opinion was that only those who purchased after the effective date of the amendment were restricted from leasing based on the new NRS. I have since been advised that 116.335 2.does not prohibit enforcing the provisions for renting and leasing conditions contained in our covenants, conditions and restrictions.

A: Your association had rental restrictions in the covenants prior to this past legislative session. The board can continue to enforce the rental restrictions based upon your covenants which impacts all current and future owners. The new law allows the association to grant variances based upon hardship cases for homeowners who apply for a variance. The association does not have to grant any variances.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com.

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