KP3 (Texas)
Posts: 124
Posts: 124
Posted:
Has anyone gotten out of their contract with the management company for breech of contract? How much do you have to prove and to whom?
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Management Company breech of contract
Started by KP3 • 12 replies • 1204 views
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SheliaH (Indiana)
Posts: 6,964
Posts: 6,964
Posted:
This question is a little too vague. Generally I would think you would have to SHOW the company didn't comply with section(s) such and such of the contract. Depending on what they didn't do, you might need a combination of specific dates and times, who contacted who, what was supposed to be done and real people willing to testify to this (such as current or previous board members).
Since this smells like a legal question, you really need to get an attorney. And check the contract itself to see what it says regarding cancelling the contract. Your attorney may be able to negotiate a parting of the ways - or you may have to fight it out in court.
Finally, if you're going to give the current manager the boot, you'd better have some sort of transition plan set up, along with a new property manager waiting in the wings. This isn't something that can happen on a dime - slow down, think this through carefully and put together a plan.
Since this smells like a legal question, you really need to get an attorney. And check the contract itself to see what it says regarding cancelling the contract. Your attorney may be able to negotiate a parting of the ways - or you may have to fight it out in court.
Finally, if you're going to give the current manager the boot, you'd better have some sort of transition plan set up, along with a new property manager waiting in the wings. This isn't something that can happen on a dime - slow down, think this through carefully and put together a plan.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
JohnC46 (South Carolina)
Posts: 14,265
Posts: 14,265
Posted:
Our yearly PM contract says either party can cancel within the year with a 60 day notice and no penalty.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
We have a 30-day out pause in our mgmt. contract and no cause is needed. what you do need KP is a majority of the board to agree to end the contracts.
Speaking of which, what does your contract with your MC say on this topic???
Speaking of which, what does your contract with your MC say on this topic???
KP3 (Texas)
Posts: 124
Posts: 124
Posted:
Quote:
Posted By KerryL1 on 12/04/2016 4:23 PM
We have a 30-day out pause in our mgmt. contract and no cause is needed. what you do need KP is a majority of the board to agree to end the contracts.
Speaking of which, what does your contract with your MC say on this topic???
We have a 30-day out pause in our mgmt. contract and no cause is needed. what you do need KP is a majority of the board to agree to end the contracts.
Speaking of which, what does your contract with your MC say on this topic???
It has the thirty day clause. Problem is the delinquencies. They will probably want all of that paid before they will allow the contract to end. I do have board majority support and are currently soliciting bids from other companies
JohnC46 (South Carolina)
Posts: 14,265
Posts: 14,265
Posted:
KP
I am confused how delinquencies figure into the MC contract. Yes they figure into our budget but not our MC contract. Please explain.
I am confused how delinquencies figure into the MC contract. Yes they figure into our budget but not our MC contract. Please explain.
KP3 (Texas)
Posts: 124
Posts: 124
Posted:
Quote:
Posted By JohnC46 on 12/04/2016 5:03 PM
KP
I am confused how delinquencies figure into the MC contract. Yes they figure into our budget but not our MC contract. Please explain.
KP
I am confused how delinquencies figure into the MC contract. Yes they figure into our budget but not our MC contract. Please explain.
Another community broke their contract with this company and they wanted all of their collection fees and demand letter fees paid on all the delinquent accounts..
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Sorry, I should have written 30-day clause out.
KP: with others wheat do delinquences have to do with your contract with your MC?? Please explain!!
KP: with others wheat do delinquences have to do with your contract with your MC?? Please explain!!
KP3 (Texas)
Posts: 124
Posts: 124
Posted:
Quote:
Posted By KerryL1 on 12/04/2016 7:55 PM
Sorry, I should have written 30-day clause out.
KP: with others wheat do delinquences have to do with your contract with your MC?? Please explain!!
Sorry, I should have written 30-day clause out.
KP: with others wheat do delinquences have to do with your contract with your MC?? Please explain!!
It's as I said.. The management company wanted all the fees they were entitled to while on contract as a demand to be released..
LarryB13 (Arizona)
Posts: 4,099
Posts: 4,099
Posted:
Quote:
Posted By KP3 on 12/04/2016 5:29 PM
Another community broke their contract with this company and they wanted all of their collection fees and demand letter fees paid on all the delinquent accounts..
Another community broke their contract with this company and they wanted all of their collection fees and demand letter fees paid on all the delinquent accounts..
It sounds like they are demanding to be paid for their efforts and not the results. What does their contract have to say about paying for partial, incomplete, or unsuccessful attempts at collecting delinquent assessments? Why are they not already billing for these services if they are due and payable? A 30-day notice should give them an opportunity to close out any collections in progress.
BTW, how much would your association owe for all these fees?
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
KP,
Breech of contract is something you would prove in court.
Wanting to terminate the contract for unproven (not taken to court) breach of contract will require you to comply with the terms of the contract.
Typically, it is easier (sometimes cheaper if one does the math) to simply let the contract run it's course until it ends.
However, without termination, you can pull responsibilities back from the MC (you still have to pay them the same but you will remove their control).
Breech of contract is something you would prove in court.
Wanting to terminate the contract for unproven (not taken to court) breach of contract will require you to comply with the terms of the contract.
Typically, it is easier (sometimes cheaper if one does the math) to simply let the contract run it's course until it ends.
However, without termination, you can pull responsibilities back from the MC (you still have to pay them the same but you will remove their control).
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
If your HOA is within 12 months or so of the contract naturally reaching completion, save yourself the headache of breaking the deal mid-stream. Things can get really ugly and stressful....and your ordinary dues payer isn't served well at all by breaking contract and forcing them to adapt.
If you think delinquencies are bad now, wait until good-paying property owners get confused about where to pay.
I've been and done that as board president - but rode out the management contract per the lawyer's request. Want my T-shirt?
If you think delinquencies are bad now, wait until good-paying property owners get confused about where to pay.
I've been and done that as board president - but rode out the management contract per the lawyer's request. Want my T-shirt?
NigelB (Texas)
Posts: 254
Posts: 254
Posted:
You need to review the contract.
Our contract with the management company provides for either party to terminate the contact with 30 days notice. The contract also specifies what fees the management company can charge the association. Those fees include charges for attempting to collect delinquent accounts, a $20 per month admin charge on a delinquent account, fees for mailing letters to the delinquent owner, basically anything associated with the collection efforts.
It is immaterial whether or not the delinquency is settled because generally speaking the association pays some of those charges up front (filing a lien, credit check) and then they are charged to the delinquent account. If the account goes to the attorney for collection, more charges mount up and are paid up front by the association.
Ultimately, the association might take a bath on the charges that are run up in attempting to collect - simply because it may not be worth it to pursue.
In Texas, the law requires that delinquent homeowners be given the opportunity to enter into a payment plan.
In summary, I'd say that the management company has a valid claim for their costs of attempting to collect - those charges should be added to the delinquent account(s), and then your new management company would assume the collection efforts.
Our contract with the management company provides for either party to terminate the contact with 30 days notice. The contract also specifies what fees the management company can charge the association. Those fees include charges for attempting to collect delinquent accounts, a $20 per month admin charge on a delinquent account, fees for mailing letters to the delinquent owner, basically anything associated with the collection efforts.
It is immaterial whether or not the delinquency is settled because generally speaking the association pays some of those charges up front (filing a lien, credit check) and then they are charged to the delinquent account. If the account goes to the attorney for collection, more charges mount up and are paid up front by the association.
Ultimately, the association might take a bath on the charges that are run up in attempting to collect - simply because it may not be worth it to pursue.
In Texas, the law requires that delinquent homeowners be given the opportunity to enter into a payment plan.
In summary, I'd say that the management company has a valid claim for their costs of attempting to collect - those charges should be added to the delinquent account(s), and then your new management company would assume the collection efforts.
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