MC contract.. disability insurance

Upon reviewing our Mgmt company contract I find it has a 60 day termination clause. Our governing docs allow for a 90 day termination clause. However it seems to read we would have to pay them for services through their anniversery date which is next Febuary 2010, even though we gave them notice now.

Also, unles I read it wrong it seems we are paying for the disability insurance connected to our Mgmt Company. Is this normal ?

NancyM2

Mary, I forgot to add ... it states with or without cause.
NancyM2

Nancy the only time we have ever paid Workman's Comp is when we actually had an employee who worked on site under our control. Is this for employees who normally work in your community or for all of the MC's employees? As we advise people here regularly you can voluntarily sign away rights so while it is unusual I doubt it is illegal. Since you have your handy dandy on site attorney I would ask them the question of payment for cancellation of the contract. But since it appears that it may be in violation of your governing document it may not be enforceable (not a legal opinion). Below is what our docs say, however OH law has changed to limit the contract of the MC to 90 days after transition unless renewed by H/O vote in COA's. Our docs also require the MC to provide a surety bond at their own expense to cover any HOA money they have access to with a 10 day notification before it can be cancelled or modified.

Section 5.2. Professional Management Contracts. The Association may delegate all or any portion of its authority to discharge its responsibilities under Section 5.1 above, to a manager or managing agent. However, neither the Association nor the unit owners will be subject to any management contract nor agreement executed prior to the assumption of control by the unit owners, as provided in Article IV, Section 4.2, for more than one years subsequent to that assumption of control unless such contract or agreement is renewed by a vote of the unit owners pursuant to the By-Laws. Any such management agreement shall not exceed three (3) years and shall provide for termination by either party without cause and without payment of a termination fee on ninety (90) days or less written notice.

Mary I'm not an attorney, however if Nancy's documents contain similar language or if the matter is covered under Davis-Stirling (Site was down when I tried to look it up) then that section of the contract could be declared null and void. The BOD could not have entered into it legally if they had specific prohibition against it and since it is almost boilerplate language of most MC's contracts that they will abide by the CC&R's unless they violate the law then they couldn't have it as part of their contract either.

The only insurance coverage that an associaiton should be paying that covers the manager is to have them scripted on to an Association Pofessional Liability policy (D and O or Errors and Omissions depending on who you talk to as to the name of the policy) the same as the board and teh Fidelity bond should automatically cover them since they should ahve access and control to funds. Disability and/or worker's comp should be the management company's policy and payment not the association.

Frankly as a manager we do not recommend that any contract including management be written for over one year although having an automatic renewal for the same term as the original contract works well for management and others like landscape services or trash removal or pool services etc. All should have at least 30-day termination without cause at any time and no liquidated damages clauses