Management company contract question

Started by GenoS • 10 replies • 997 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

GenoS (Florida)
Posts: 4,276

Posted:

What kind of "outs" do these contracts normally contain? I thought I saw somwhere, possibly here, that 30 or 60 days notice to cancel on the part of either party was common. I've been looking at ours and it seems to only provide for a 60-day notice before the expiration of the 2-year contract. Is that abnormal in any way?

BillH10 (Texas)
Posts: 1,217

Posted:

Geno, I've seen both and no, a 60 day notice of termination is not uncommon. It is actually to the benefit of the Association as finding another management company in 30 days would be a stretch.

Of course 30 days works to the benefit of the Association if it is terminating the contract as management company shopping could have been taking place for weeks or months.

AllisonD (Florida)
Posts: 449

Posted:

Its not abnormal although 30 is what I have seen more often. I have changed mgt co twice and both times the transition was a nightmare (somewhat indicative of why we were getting rid of the old co). Maybe they want 60 days to get the files in order. In my opinion the files should always be in order. What if our residents want to view our files? They should be ready and available. The last time I got rid of the old co, I told them I would pay them their entire 30 day fee but I wanted my files immediately and their access to accounts disabled, but that did not happen. I told them they could complete whatever pending things they had and we would take it from there, but we did not get our files. The next time I switch co I am going to get a clause that says something like "HOA will receive the entirety of their files within 3 days of written request". The statute says a homeowner can view the files within 10 days, it baffles me why we have to wait so long to get our own files!

RichardP13 (California)
Posts: 3,868

Posted:

You can have a number of clauses in a termination, for instance:

1) 30-60 or 90 days with or without clause
2) 60 days prior to the expiration of the contract, if cancelled 59 days before, it will automatically renew for another year or you can buy out the remaining months. This is a Evergreen agreement.
3) You can have a clause stipulating that the agreement can only be terminated by a majority vote of the Board, in an open session and that you must send notice by regular mail and certified mail.

I am going through that with a dozen HOA's we picked up and the management company is suing on grounds of a non-compete clause in their agreement, which BTW is unenforceable in California.

AllisonD (Florida)
Posts: 449

Posted:

Quote:

Posted By RichardP13 on 09/15/2017 3:24 PM
You can have a number of clauses in a termination, for instance:

1) 30-60 or 90 days with or without clause
2) 60 days prior to the expiration of the contract, if cancelled 59 days before, it will automatically renew for another year or you can buy out the remaining months. This is a Evergreen agreement.
3) You can have a clause stipulating that the agreement can only be terminated by a majority vote of the Board, in an open session and that you must send notice by regular mail and certified mail.

I am going through that with a dozen HOA's we picked up and the management company is suing on grounds of a non-compete clause in their agreement, which BTW is unenforceable in California.

Who is the management company suing?

RichardP13 (California)
Posts: 3,868

Posted:

The HOA. I also worked for that company, owned by an attorney. He is why management companies are given a bad name.

GenoS (Florida)
Posts: 4,276

Posted:

I found a typo in the contract. Along with the 60-day notice I mentioned in the OP it says, "or unless this Agreement is terminated pursuant to paragraph 20)." Paragraph 20 lists the addresses for both parties where notice is to be served. There is a 60-day termination AT ANY TIME clause in paragraph 18. The mention of "paragraph 20" at the beginning is a typo.

GenoS (Florida)
Posts: 4,276

Posted:

Richard: non-compete clause LOL

Thanks for the replies. Over 50% of our members have been owners here for less than 5 years. The old guard here has been set in their ways of "that's the way we've always done it" for too long. If the new people can sustain a certain level of committment and effort then maybe we'll be able to work for positive changes. The management company contract - we only contract for their accounting and bookkeeping service - is only one of the concerns. After 2.5 years they wanted and got a 12.5% increase. More and more I hear neighbors asking, "why?"

AllisonD (Florida)
Posts: 449

Posted:

Quote:

Posted By GenoS on 09/15/2017 4:26 PM
Richard: non-compete clause LOL

Thanks for the replies. Over 50% of our members have been owners here for less than 5 years. The old guard here has been set in their ways of "that's the way we've always done it" for too long. If the new people can sustain a certain level of committment and effort then maybe we'll be able to work for positive changes. The management company contract - we only contract for their accounting and bookkeeping service - is only one of the concerns. After 2.5 years they wanted and got a 12.5% increase. More and more I hear neighbors asking, "why?"

That is a big increase. There are significantly more options now than there were a few years ago. I hope you get some competitive bids and get a better deal for yourselves.

GenoS (Florida)
Posts: 4,276

Posted:

I hope so too, Allison. One of the old guard's standard excuses here is, "we're so small most contractors don't want to bother with us." Some of the new people have taken it on themselves to call around and ask about certain services. They're finding out that that old excuse is garbage and there are plenty of places that would be happy to compete for our business.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By GenoS on 09/15/2017 4:26 PM
Richard: non-compete clause LOL

Thanks for the replies. Over 50% of our members have been owners here for less than 5 years. The old guard here has been set in their ways of "that's the way we've always done it" for too long. Even in past JOB positions I really hate that type comment. Just because that is the way it has been done in the past does not make it correct or beneficial for the membership! If the new people can sustain a certain level of committment and effort then maybe we'll be able to work for positive changes. The management company contract - we only contract for their accounting and bookkeeping service - is only one of the concerns. After 2.5 years they wanted and got a 12.5% increase. More and more I hear neighbors asking, "why?" That is a pretty good "raise" ... my question would be ... "Is it worth it???

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here