| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7588 | Closed | public | Multifamily | Les Sparks |
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Quick question for you regarding management fees and what the fees include. We have a client who is being reviewed monthly by HUD and they questioned a cost charged to the property. The charge was $10/unit for the 96 units on the property to have the dryer vents inspected to ensure they were not backed up to create a fire hazard. The owner owns a company that does maintenance-type of work…they performed the work and billed the property for this expense. HUD is saying this should be included in the management fee. We’ve always followed the guidance in HUD Handbook 4566.2 Section 4-7 as to what is included in the management fee and that doesn’t…is there any other place that outlines specific guidance as to what is included in the management fee outside of that handbook? I cannot find anything but maintenance services were not included per our understanding. I appreciate any feedback you can provide. |
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From Les Sparks: That entire answer form HUD is BS. Unless HUD Can prove that the cost is either not 1) reasonable; or 2) not a front-line maintenance cost. Since the cost is related to the maintenance of the project, it is hard to argue that it is not a front-line cost. So, that leaves us with the cost not being reasonable. Now I do not have any position or data to support the $10 charge. However, I am including guidelines for this entire conversation from Handbook 4381.5 – The Management Agent Handbook. This is the main Handbook where HUD discusses the requirements for the assignment of costs. I have never heard the Handbook you mention quoted as guidance for these types of costs. The attached in the main guidance. You will find nothing herein requiring the charge to be paid from the management fee. My only concern is whether they can justify the amount being charged per unit. |