Rules/best practices renewing HOA management company contract

Hi,

I am on the board of my HOA. The contract of the management company seems to renew without the board voting on it.

I am looking for guidance on how this is typically handled.

should the HOA mgmt company submit an updated contract annually?

my question is not about whether or not to use and how to use a mgmt company.
Yes, I have question about the performance of ours and yes as the treasurer I am not informed about annual contract increase.
My question is more about the board responsibilities to mange the contract and best practices doing so.

Most contracts, whether they be a MC or even a landscaper, will have an auto-renew clause. The initial term is one year and thereafter will auto renew on the anniversary date. There is a termination clause, usually between 30-90 days and generally with or without cause.

Trust me, you don't want to be changing out management companies on an annual basis. Don't take my word, ask around.

As the best example Mark is one of those former MC people... Anyways, I see no harm at all to ask for a copy every year on the MC's contract. Why not? Your paying for it?

We had a rule in our HOA that we never signed multi-year contracts. 1 year only. 3 bids per contract. Does NOT mean we did not renew contracts. We just made it a bidding process every year. That way we could get rid of those who failed or reward those who did well. It's not bad to be able to modify a contract every year as things just change.

So get a copy and go over it. If the MC doesn't like it, that would raise a red flag to me. Why would they hide it?

Good Mark because I am NOT giving YOU FREE ADVICE! So thanks for making another post about you again and knocking others... We all appreciate such attitudes... Done with you Mark like many others I am sure here.

First

Our MC and Landscape contracts call for automatic renewal and either party can cancel the contract at anytime by giving the other party 30 days notice. If no mention of an automatic rate increase, then such a rate increase must be negotiated.

Our management company does not and may not automatically increase its rates. When it does, it alerts the Board before the anniversary date and the boar approves it ---or not.

That you Georgie for those kind words!

In the HOA where I used to live, a person JUST like you did try and remove me from a board. I did resign and moved out of the community. The issue was over a lawsuit that I called them on. Some didn't like it, including the attorney and the MC. That association has since gotten themselves in a world of trouble since. The dues in 4 years have doubled for NO reason.

When someone who is ignorant about MC's and gives false or misleading information, I WILL stand up for my profession (former).

Our management company contract also renews automatically every year unless the board uses the cancellation clause written therein. That's why you and your colleagues need to READ your contract to see what's in there. If you're happy with the company's performance, go ahead and let it renew. However, that doesn't mean you shouldn't do a performance evaluation every year to see if there are problems that need to be addressed.

One way to start is by polling the homeowners to see what they think - when they send an email or make a phone call, how quickly does the manager acknowledge receipt of the email or phone call if you had to leave a message? If the contact concerned a maintenance request, how soon was that done? Keep in mind some requests may require board review and approval before you receive a response - if so, the homeowner should be told that from the start. Is the property manager polite and professional in his/her behavior? what about the rest of the company (e.g. accounting department that oversees deposits of assessments)?

Hopefully, you get enough responses so you can identify patterns. From there, you can talk to the property manager about the findings.

As far as the money piece goes, you'll know (or should know) from reading your governing documents what the association is responsible for. Remember, it matters not what HOA A pays compared to you - the cost should depend on what services your community provides (besides you don't live in HOA A, so it's not your problem). How well does the property manager assist the board in meeting those obligations? Are there services you're paying for that you don't use very often or at all? If so, consider deleting them from the contract so the price can be adjusted. If certain services have increased over time, you can also talk to the manager as to what can be done to control those costs. For example, it might be more cost-effective to hire an independent expert to update your website as opposed to having the property manager do it.

Finally, if you'd like to amend the contract, have your attorney take a look and guide you through the process, so everyone on the board will understand what they're voting for. Note what changes will affect homeowners immediately so they'll know how to proceed (e.g. change in phone number or address).

The community association institute website also has a number of books on selecting and working with property manager - you might consider getting one or two to help develop policies and procedures. Good luck!

My apologies to the OP - like most open fora, we have our share of disagreements. Sometimes over substances, sometimes over personality.

As I noted earlier - about MarkW - he likes to change people's names to make fun of them - like in 5th grade - except, unlike most those folks - he never grew out of it. Nasty, childish habit that afflicts even bullying prone politicians.

He tends to use the word "lawsuit" in many of his posts - draw your own conclusions.

I agree.

Yes, auto renewals are common.

If you want to bid out the contract, start looking at least 6 months before it renews. It will take 30-60 days to get bids from other companies, and you’ll probably need to give 30-60 days notice to the current company if you want to change.

Any contract should be put out to bid every 3 years or so. I don’t recommend doing it every year because this is a small industry, bids take a lot of work to prepare, and companies will decline to bid if they know you are just doing an annual price check.

Changing management companies is a giant pain in the butt, so boards should try to address whatever issues they have with the current company or negotiate whatever contract changes they want first.

Don’t be afraid to ask for changes. The cost of acquiring a new customer will likely be higher than whatever concessions you want.

What responsibility does the association have in ensuring that the people that are elected or appointed to serve on their boards actually know what they're doing?

MarkW,

There are thousands, perhaps millions of disagreeable people, with very negative, nasty attitudes that retire well.

Glad to know it is a "new" and has the size, "45 foot coach" (I know it is a subtlety, but still glad you pointed it out). :-)

That actually isn't going to happen anything soon. Never going to get me in a helicopter or small plane.

Actually had to drive in to LA to see my daughter today.