Your HOA management company should be a proactive partner in running your community. They handle the backend work, like accounting and homeowner requests, for the Board of Directors so they can focus on making important decisions. But what do you do when your current company isn’t performing up to standards? It may be time to think about how to change your HOA management company.
Is it Time to Change Your HOA Management Company?
Though the process may seem daunting, we will show you how to change your HOA management company smoothly and effectively. We’ll explore how you know it’s time to change, how to review your HOA management contract to be prepared, and how to switch to a new company.
Your HOA Management company should make the Board’s job easier and help run the community efficiently, but sometimes, they don’t meet the community’s needs. There are many reasons why a community would want to change their HOA management company. Here are some:
Poor Communication
This can range from a lack of regular reporting to long response times with homeowners. Communication is crucial for effective HOA management, and poor communication is a red flag that can lead to dissatisfied homeowners and an unharmonious community.
Financial Mismanagement
Your HOA management company must provide clear and transparent financial reporting. Regarding the association’s money, pay attention to HOA management companies that don’t adhere to Generally Accepted Accounting Principles (GAAP) or provide monthly financial reporting, as they may not handle your community’s finances as they should.
Maintenance Problems
Work order requests and maintenance concerns should be handled promptly. If they aren’t, you may want to consider changing your HOA management company because deferred maintenance can cause many issues, including insurance non-renewals.
Legal and Compliance Issues
You want an HOA management company that will keep the association safe harbor and far away from legal or compliance issues. If your current HOA management company isn’t following best practices, it may be time to switch.
Board Consensus
The decision to change your HOA Management company must be carefully considered by the Board of Directors and unified. Before starting the process, it may be a good idea to have meetings to discuss the concerns with the current management company and evaluate why a change is necessary.
Review Your HOA Management Contract
When it’s time to change your HOA management company, you’ll want to ensure you understand how to terminate the contract properly. A termination section of the management contract will typically provide a notice period and list any fees or penalties for early termination.
The notice period can range anywhere from 30 days to 90 days, so make sure to read your contract carefully. When in doubt, contact your association’s attorney to understand better the legal implications of canceling the contract.
Switching to a New HOA Management Company
Before you change your HOA management company, you should have a replacement in mind. The Board of Directors will need to solicit proposals from multiple management companies for consideration, and it is best practice to obtain at least three proposals to review.
When scouting a new HOA Management company, the Board should consider the company’s financial services, communication procedures, experience, and reputation. During the interview process, ask questions relevant to your community’s needs. For example, if a hot-button issue from your current management company is a lack of communication, ask your prospective new HOA management companies how they communicate with their homeowners and their standard communication procedures.
After deciding on a new HOA management company, the Board must negotiate a contract, sign an agreement, and start onboarding. Onboarding involves providing the new management company with all documentation and information about the association. Once the new company receives all the information, it will notify all homeowners of the switch so they can change where they send their assessments and onboard the homeowners onto any software used.
The new HOA Management company will also transfer all accounting information, close old bank accounts, and open new ones. This process can take weeks or months, but the right HOA Management company will help every step of the way.
The process of how to change your HOA management company isn’t as intimidating as it seems. It’s a simple process of first identifying your current concerns with your HOA management company, evaluating your current contract, finding a new HOA management company, and onboarding your community. Proactive boards will regularly assess their current HOA Management company’s performance to ensure the community gets its needed service.
Have you had a good or challenging experience changing the HOA management company you want to share? Tell us in the comments!
Ready for a change?
In conclusion, it’s a good idea for HOA boards to take a proactive approach to managing their communities and regularly assess their management companies’ performance. If you’re ready for a change, City Property Management is here to help create a unique fit for your community, and we’d love to show you how.
