Professional HOA management comes with many benefits, but there are just times when the HOA management company and the community aren’t a good fit. When is it time to change HOA management companies? How can communities go about this? Let’s examine both questions below.
When Is It Time to Change HOA Management Company?
HOA management companies are not always perfect and can make mistakes here and there. Small errors or missteps don’t necessarily mean it’s time to switch. Sometimes, all it takes to make the relationship work is better communication or a tweak in the contract terms.
However, there are also times when the professional relationship isn’t working out right. How do you know it’s time to change HOA management company? Here are some tell-tale signs that it’s time to look for a new management company.
1. Poor Communication
HOA management companies need excellent communication skills. After all, the HOA board needs to know everything that goes on in the community. They should know what problems are happening and what solutions the HOA management company is taking to resolve them. Otherwise, the board could conflict with the homeowners or lose control over community matters.
If the HOA management company has poor communication habits, it might be time to switch. This is especially true if the management team’s communication habits do not improve after providing feedback. Watch for any of the following signs of poor communication:
- Hard to reach through communication channels
- Failing to return calls or emails
- Slow or late response to board or community concerns
- Not taking homeowner problems seriously
2. Falling Behind on Major Projects
HOA management companies typically take charge of community projects such as renovations, major repairs, or capital improvements. However, if they fall behind on important projects, it might be a cause for concern. For instance, let’s say the community’s streetlights need repairing. If the HOA management company has neglected to address this issue or is falling behind, then it can be a red flag. It’s also concerning if the management company hasn’t given updates on vendor bids for an extended period.
3. Too Many Mistakes
HOA management companies make mistakes occasionally, but they should never make a habit of them. For example, the HOA management company might neglect the board’s input when handling rule enforcement. The HOA board might want to issue two violation notices before penalizing homeowners. If the HOA management consistently sends out only one notice and immediately penalizes homeowners, it’s not a good sign.
Even seemingly minor mistakes can cause issues when they’re made consistently. For instance, the HOA management might mistakenly send violation notices to the wrong house. A one-time offense could be excusable, but making the same mistake several times could delay enforcement. Moreover, it could even aggravate some homeowners who think they are wrongly accused. It could lead to arguments and potential lawsuits if the HOA isn’t careful.
4. No Access to Records
The HOA board must have complete access to all of the community’s documents, including financial records. They should be able to locate them and have them on demand when necessary. However, if the board cannot access the community’s records quickly, this could be a reason to change the HOA management company.
5. Hidden Fees
HOA management companies should be transparent about their fees and additional charges. The contract should thoroughly dictate all the included services and the rates for even the most minor add-ons. If the HOA management company charges you surprise fees that are not included in the contract, it’s a red flag. These fees can quickly add up and destroy the trust between the team and the HOA board.
6. Inconsistent Rule Enforcement
HOAs must enforce the rules consistently. They cannot pick and choose which rules to enforce and which homeowners to enforce them on. Otherwise, the homeowners could file a lawsuit against the HOA for selective enforcement, which can also render certain rules unenforceable.
7. Resident Complaints
If the residents complain a lot about the HOA management company, it might be time to change companies. Review the HOA management team’s performance and identify why the homeowners are unhappy. If the management team is sloppy or has unreasonable processes, try to talk to the management team to see if you could work something out. However, if this does not go well, you can find new management.
8. No Alleviation for Board Members
HOA management companies are supposed to make life easier for the board members. They’re supposed to take over the community’s daily operations and much of the work. However, if the board’s lives aren’t getting any easier, the HOA management team isn’t doing its job.
9. Poor Financial Standing
HOA management companies should be able to keep your community’s finances in check. They are in charge of collections and should advise the board on how to earn more money or cut costs where they can. If the HOA is in financial trouble, it could indicate inefficient management.
How to Change HOA Management Company
Transitioning to a new HOA management company can be tricky. After all, HOAs cannot just sever their professional relationships willy-nilly. They need to plan their steps carefully and try to avoid paying penalties for ending contracts early. Here’s what you need to know about how to replace the HOA management company.
1. Review the Contract
Transitioning from one HOA management company to another can be easy or difficult, depending on the contract’s terms. If the contract expires soon, it might be best to wait it out and switch management companies after expiration.
However, there are times when cutting the contract early is the best option. In this case, check the contract’s cancellation policy and review the requirements before cancellation. HOAs will often need to provide advanced notice before they cancel the contract. Moreover, they usually must pay a cancellation fee to the current management company.
2. Send Notice to the Management Company
After reviewing the contract, send word to the current management company about the decision to end the contract. The industry norm is 60 to 90 days ahead, so send notice two to three months before the contract expiration or cancellation date.
3. Consult Your HOA Attorney
It’s always important to consult an attorney before switching management companies. Your HOA attorney should be able to provide advice and tell you all the repercussions of cancellation or termination. They should also be able to review the new contract you will sign and ensure all legal bases are covered.
4. Notify the Residents
Homeowners associations should keep residents updated, especially on essential matters like switching management companies. Send notice of the change and reiterate why the HOA board is making this decision. Let the residents know what they can expect from the transition, and be open to answering any questions.
5. Look for a New Management Company
The HOA should have options after cancellation or termination. Before canceling the current contract, look for a new management company or HOA manager. The board can also ask the HOA attorney for advice and recommendations on new management companies.
Remember, receiving multiple bids and considering several candidates is always a good idea. Conduct interviews, ask for proposals, and negotiate contracts as necessary. A good management company is properly licensed, has a reliable network of vendors, communicates well, and has many references. Consider your community’s needs carefully before signing an agreement.
The Bottom Line
Working relationships won’t always be perfect, but there comes a time when communities need to sever their ties with an HOA management company. Terminating a contract can be difficult, and the transition may require some changes. Nonetheless, it can be the best choice when the working relationship isn’t working out.
Do you need a new HOA management company with years of experience? Elite Management Services offers a wide array of services to community associations. Contact us online or call us now at (855) 238-8488 for more information!
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