You are fed up. The Management Company isn’t returning your phone calls timely. Residents are complaining. Vendors aren’t getting paid. The manager is either a bulldog trying to control the Board, or completely complacent like a wet noodle. And now, you are ready to make the change.
But, where is your management contract?
If you were not on the original Board who hired the Management Company, there is a chance you may have never seen, nor read, your management contract. In fact, you may not even know where it is stored.
If your Management Company does not have transparent technology, with a Resident Portal and Board Only section….now you have to ask your manager, for a copy.
You read the contract and become more frustrated. Many items that were promised, and contractually bound to be completed, are not being addressed.
You keep reading and see the cancellation or termination clause:
Notice, with or without cause, 90 days prior to the end of the contract term.
You keep looking.
What’s the term of the contract? You flip back again and start from the beginning. It’s April 30th. Today’s June 23rd. Your contract just auto-renewed for another year.
Let’s pause for a moment and review what should have occurred and what options you may have.
What Should Have Occurred:
1. Board of Directors Orientation. When a new member joins the Board, the manager should meet with them and provide key documents for the Association. This should include 2 years of Minutes, 1-2 years of Management Reports, 2 years of Audits, a map of the community, an Annual Calendar, a list of contracts with their expiration, the Governing Documents, and any Rules and Regulations (including administrative resolutions and architectural guidelines). Depending on the complexity of the community, additional information may be provided.
This packet of information should also include a copy of the management contract.
2. Board Training. At least once a year, after election, the Management Company should provide Board Training for the new Board Members, and invite existing Board Members, too. This orientation should include the roles of the Board, Committees, the Manager, the Management Company, and the Homeowners. During this period, the management contract should be reviewed so that the Board truly understands the contractual obligation of the Management Company. Additional and ongoing Board training should occur throughout the year about key topics (i.e. budget preparation, how to take minutes, etc.) by the Management Company, and the Board should join the Community Association Institute (CAI).
3. Annual Calendar. Your manager should produce what is called an Annual Calendar for the Association. The Annual Calendar should always list the current and upcoming 12 months of important items occurring in the community. Once one month is completed, that month should be added for the following calendar year (i.e. May 2021 is completed, so May 2022 is added to the end of the calendar).
The Annual Calendar should include:
- Contract cancellation/termination dates (when you need to provide notice by)
- When contracts expire
- When you should go out to bid for a contract
- When certificates of insurance expire
- When you should request a certificate of insurance
- Major maintenance issues (examples below)
*Annual, Bi-Annual, or Quarterly Gutter and Downspout cleaning
*Bi-Annual or Quarterly Filter changes
*Annual Roof inspections
*Landscaping walk throughs
*Snow Removal walk throughs
4. List of Contracts and Expiration Dates. In addition to being listed on the Annual Calendar, it is good to have a list of contracts and their expiration dates in each of the Board Packets or Management Reports. This helps keep the manager on task as well as the Board of Directors informed on when contracts should be bid, or are renewing.
What Are Your Options?
1. Review your management contract with the Association’s Attorney. Your attorney may find a viable reason that cancellation before the 90-day cancellation window, is legal and acceptable.
2. Have a conversation with the Principals of the Management Company. This conversation is important for many reasons, including that no one (you or them) want you to be unhappy for another year.
· They may not know that there is a problem. Many Board members would rather
terminate a management company versus having a potential conflict with the manager
or management company. This means that the manager, and/or principals may not
even know that you are unhappy. Having this conversation sheds light on the situation
and provides the manager and/or management company a chance to resolve the
issue. If they cannot resolve it, they may agree to an early termination.
· A management company doesn’t want a negative reputation. If you are unhappy and
stuck for another year, the negative reviews of the management company, may have a
greater impact on the company than losing your contract. Many firms will agree to part
ways, to avoid this negative publicity.
3. Send cancellation, regardless. This option should be reviewed with legal counsel of the Association first, but on occasion, the management company is not surprised to receive a cancellation and they are willing to accept an early termination.
4. Take the time to get your ducks in a row. Okay, you missed this year’s termination. What can you do to start preparing over the next 8 months?
· Solicit RFPs from Management Companies now. Interview with them, get to know
them, and take the time to negotiate prices and services.
· Determine why you are really unhappy and what changes you want to see occur
moving forward. This will allow you to help negotiate your future contracts.
· Ask any Management Company to add a cancel with or without cause, with 90 days
notice, at any time. No one really wants to be in a relationship if the other party is not
happy. Knowing that the contract can be cancelled at any time keeps the manager
and management company on their toes.
At Bricck Property Management, we understand the importance of educating of our Boards, Committees, and Homeowners. We are proud of our work product and enjoy property management. We want to keep our Board Members informed, educated, and able to make decisions that are best for the community. At any time, please feel free to reach out to us for a proposal for hourly consultation, staffing, or management contracts. We look forward to hearing from you.