There are times when homeowners associations need to find new HOA management. After all, not all management companies are good. Some perform poorly or simply don’t meet an HOA’s needs. When is it time to change, and how should you go about it? Let’s find out.
When Should You Change HOA Management Companies?
Communities that experience a problem with HOA management companies they hire shouldn’t always jump to termination. After all, terminating an agreement can lead to serious consequences. It may also sour the working relationship, leading to other complications.
However, there are also times when the problems are too big and cannot be dealt with. What are the signs you need new HOA management? Here are some red flags that should alert your community.
1. Low-Quality Performance
One of the biggest reasons for switching management companies is low-quality performance. The HOA is pouring thousands of dollars into their management contract. It’s a waste of money if the HOA management company doesn’t properly care for common areas, enforce rules, or handle member communications.
This is especially problematic when the HOA management company needs to provide better services when it comes to financial and legal matters. These two aspects of community management are crucial to community success. A change is worth considering if the management company cannot answer basic questions, makes sloppy mistakes, or creates problems.
2. Lack of Communication
Communication is critical to proper community management. The HOA manager should regularly communicate with both the homeowners and board members. They should also coordinate with the vendors, staff, and other personnel so the HOA runs smoothly.
However, a lack of communication signals it might be time for a change. Keep an eye out for management companies that never or rarely answer calls or reply to emails. The community can’t be left hanging, especially during emergencies.
3. Incomplete Projects
The management company should complete all their small and large community projects. This includes everything from changing light bulbs to replacing common area roofs. They should produce high-quality, concrete results to ensure the community is well-maintained.
If the management company fails to finish projects, it’s best to ask them if there’s a problem first. There may simply be an issue or company change that’s hindering progress. However, this becomes a problem and may be grounds for termination if it’s frequent.
4. Hidden Fees
Homeowners associations should watch out for management companies that habitually charge hidden fees. The best HOA management companies are transparent about what’s included in the contract and what incurs extra charges. They should all be listed in the contract and not come as a surprise to the board.
5. Resident Complaints
It may be a red flag if the residents complain about the management company. That’s because the HOA manager may act agreeably in front of the board. However, they may show a different face to the homeowners.
The HOA manager may make excuses or hide their tracks so the board doesn’t notice. Hence, the board must consider the residents’ complaints and give them weight, especially when they pile up.
6. Inconsistent Enforcement
One of the perks of having an HOA management company is that they’re unbiased and consistent. However, it can be a big problem if the company is inconsistent with enforcing the rules. This can lead to a lot of conflict within the community and may result in liability.
7. Financial Instability
A good HOA management company is supposed to help the community stay financially stable. This means they should help the board make financial plans and decisions that lead to financial success.
However, if the community is financially unstable, it could be a sign that the company needs to be more competent or neglectful. Look out for reduced income or financial losses due to poor management.
8. The Board Is More Burdened Than Relieved
An HOA management company is supposed to take care of the board’s operational duties. This relieves the HOA board of the burden of collecting dues, enforcing rules, or handling member communications.
However, it’s not a good sign if the management company’s presence gives more work to the board members. It may be time to change to new HOA management if the work isn’t easier for the board.
How to Find New HOA Management
If the signs are clear, it’s time to switch to a new HOA management company. But how does a homeowners association do this in the first place? Isn’t it a breach of contract? If you’re unsure how the process works, here are some steps you can take to find new HOA management.
1. Check the Agreement
The first step is to review the management contract. Check the date of expiration and auto-renewal clause. If the expiry date is near, waiting until the contract expires may be better. This gives the board time to look for a replacement. It also helps them avoid the consequences of early termination.
If the HOA can’t afford to wait, it’s best to review the contract’s cancellation policy. The HOA may need to pay a penalty for early termination. Keep this in mind and ensure enough funds to cancel the agreement. Otherwise, the board may be forced to wait until the expiry date.
2. Inform the Management Company
If the board wishes to terminate the contract, they should give advanced notice to the management company. The service agreement often requires this. However, if there are no requirements, a good rule of thumb is to provide notice 30-90 days beforehand.
3. Consult With an HOA Attorney
It’s best to proceed with legal advice if the board considers contract termination. The attorney can review all the clauses and terms, specifying which ones to watch out for. They can also help the HOA find ways to terminate the contract without problems.
4. Inform the HOA Members
The board should inform the community of their decision to terminate the contract. Keep them in the loop so they don’t mistakenly coordinate with the existing management company on community matters. It also helps them understand why the board is making this decision and what they can expect in the near future.
5. Look for a Replacement
Once finalized, the HOA board should begin to look for a replacement. Doing this early is best so the community can transition things smoothly. Moreover, remember to keep homeowners informed and ask for their input.
The Best Choice for Your Community
Terminating a contract and looking for new HOA management is a big decision. It can disrupt community operations and even cost the association money. However, it’s also a good choice if the current management company provides insufficient or poor service.
If you need a qualified HOA management company in San Mateo, look no further than First Equity Property Management. We can run your community like a well-oiled machine, ensuring a smooth transition process. Call us today at 650.349.7233 or contact us online for more details!