5% fee for non-operational oversight

[Vlad Selsky]

We have relatively new property management for my HOA. The HOA is 12 units and property management charges $45/unit (in Boston). After a year, they are now saying they will start applying a 5% fee to administer work that falls outside the usual recurring, operational matters. I'd like to understand what is the industry norm regarding what work falls under this fee. I always thought that a big capital improvement project involving hands-on oversight would warrant this fee. But they are saying that simply getting two vendor quotes (as stipulated in our bylaws), aka meeting the vendor on-site to scope out the work, qualifies for this fee. I asked them, do you draw a distinction between a $2500 patching of roof or $50,000 roof replacement? They said No, the 5% would be applied in both cases. Does that make sense, given that the effort on their end is about the same in either case? At the moment, they are visiting the property once every other week. Wouldn't escorting vendors to get quotes fall under the usual norms of property management?

[Michael Smythe]

@Vlad Selsky most likely, they have realized they are not making a profit managing your HOA.

In response, they are trying to come up with other revenues to make a profit.

So, why don't you approach them about what the $45/unit charge needs to be changed to for them to make an acceptable profit.
- Or maybe negotiate a flat fee instead of the 5% charge, since whether they meet a contractor onsite for a $5k or $50k job, their time commitment is about the same.

Otherwise, you'll have to start looking for a new PMC.