Management Company Contract

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We were presented with a two year contract from our Management Company at our April 2015 board meeting. He presented to the Board as a two year (no increase) in fees and no changes but we had to sign that night and for two years. The Board reviewed and I signed. I am the Board President. I always side on having our attorney look at contracts but was outvoted because our Treasurer is always looking for the cheap way out and he convinced the board not to have an attorney review.

Anyway, last year we wanted to give notice and move on with obtaining another management company due to mismanagement. The MC we have had since 2012 is worse than our previous MC (but they went out of business).

I asked our attorney to review the contract on how we can terminate and send notice to the MC, however, we are finding out that our MC took out the "out clause" which binds us until December 31, 2017!!

The MC and his father (family owned company) are sending the Board emails asking "what can we do for you, etc." and mentioning that we are in the contract "for some time".

Our attorney said we need to "play nice" to see how we can get out of this. He basically gave us three options: Suck it up, pay MC off or give them 30 days to correct issues and if they don't get better we MAY be able to get out of the contract and negotiate.

I believe it is a bad faith contract and am ready to contact the Attorney Generals office. Does anyone have any experience with this or any advice?

Never again will I sign a contract without attorney review even if I am outvoted. We will end up paying more in attorney fees and possible paying off MC then if we just had our attorney review the contract. Lesson learned!!

alas... I see this far too often as a practicing community association attorney in Florida, i.e., Board members who wish to avoid the relatively modest costs of having their attorney review an important contract, the contract becomes an albatross for them, and then the attorney is brought in AFTER THE FACT to fix the mess. Such a horribly myopic approach typically ends up costing the community far more in legal fees to negotiate/litigate its way out of a bad contract than it ever would have incurred had it simply had its counsel review it prior to execution.

It sounds to me like your attorney is giving you solid counsel here; I would also recommend that you document each and every deficiency in the MC's performance, and then send a letter laying out the facts and giving the MC a reasonable opportunity to correct each deficiency.

If -- after a few rounds of this -- the MC has NOT corrected the deficiencies in performance AND THOSE DEFICIENCIES ARE MATERIAL (i.e., are not just picayune) -- I would have your attorney research the law in your state to determine whether it permits cancellation of a contract non-cancellable on its face for repeated material breaches. Alternatively -- or in tandem with that -- you can enter into negotiations to terminate the contract upon payment of a mutually palatable amount to the MC.

Good luck!

We bought our way out of a bad contract with an MC once. We shelled out 2 months of fees and got nothing in return. Worth it though.

MaureenM1 Penn :
1- If you or any Director has concern about such a risky of piece of cheapskate stupid lazy diligence, respectfully MAKE SURE the Minutes reflect your contrary vote and refusal to execute.

2 - AN ETHICAL TWILIGHT ZONE ?
A company employing me to manage condos instructed me to present to two highrise Boards, a harmless looking telecom renewal contract. Unbeknownst I reviewed & warned both Boards strongly against execution, having extracted a commitment that their Minutes would be totally silent as to such input from me that helped kill the contracts.

Later when I gladly resigned into re-retirement, the Boards issued lengthy thanks to my former management company and recommendations for me.

Service provider bribes ?

More years later I learned that the same telecom company had targetted individual stooge directors at other corporations. A judicial decision overthrew a secret lazy-diligence execution unsupported by Board resolution there.

I never sought nor got the details why my former employer had been pushing the client-unfriendly contracts - ? bribes ? But that same highprofile management company established some legal history years later for being counter-sued for grossly negligent performance . . .

It's not bad faith.

It's the Board who failed to read the contract prior to signing.
It's the Board who failed to obtain bids to see if the price paid was a fair price for the market.
It's the Board who chose to sign and have no increase in cost even though the "The MC we have had since 2012 is worse than our previous MC"
It's the Board who allowed the contractor to manage them vs. them managing the contractor.

Take it as a lesson learned.

Also, take steps now to ensure records and funds are in control of the Association and not the management company.
This will make transition to a new management company easier.