How to Switch your HOA Management Company
Each fall, homeowners associations across the nation vote on issues regarding the upcoming year. Fall is also the time of year when many HOA management contracts expire and are up for renewal. If your HOA management contract is up for renewal, this is an excellent time to stop and assess your management situation.
Every day we get phone calls and emails from HOA board members who are frustrated with their current management companies for various reasons. They’ve been with one HOA management company for years, and have watched their service deteriorate over time until it’s finally gotten to a point where they are ready to make a change.
Are you getting the level of service you need from your HOA management company? The vast majority of America’s community associations do not have a professional HOA management company. If your association is self-managed, this is a great opportunity to look at what you stand to gain by retaining the services of a trusted community association management company.
Qualities to Look For When Switching HOA Management Companies
Perhaps one of the greatest and most obvious advantages of hiring a professional property manager is access to the wealth of knowledge and experience they have to offer. Experienced property managers can guide a board of directors through their decision-making process and help to make sound business decisions. What’s the level of experience within your community leadership? Perhaps you already have experienced homeowners on your board. If not, you may want to consider the benefits that an experienced property manager can bring to the table.
HOA management companies are also a big help when it comes to association financials. Budgeting, collecting dues, and working with collections agencies are all part of the management process. An HOA management company collects funds when a homeowner is delinquent on dues, and should work with the board to create a policy on collecting late assessments. Liens and foreclosures often require working with banks and attorneys—another job for the management. Is your HOA management company adept at association financials? Are their reports accurate and easy to read? If not, take this into consideration.
If your association is self-managed, then you will want to assess its financial ability in the same way. Are dues and late fees assessed correctly? Most importantly, is your association allocating adequate funds into reserves? A quality HOA manager will work with reserve specialists and committee members to determine an adequate amount of reserve funding.
Without this preparation, what will your association do when it’s time for a major repair or replacement, such as re-paving the roads or replacing roofs? Staying on top of maintenance issues is a must when managing a planned community. This can prove difficult for larger communities or those with substantial common property. The quality of maintenance is often a benchmark for not only the vendors, but the management as well. Anyone with eyes can determine the physical condition of the community; it can be painfully obvious when maintenance work isn’t done right, or in some cases, isn’t done at all.
How are maintenance issues handled at your community? Are work orders issued in a timely manner, or does it take weeks to complete even the most basic of repairs? Nearly all professional HOA management companies have a list of vendors that they use on a regular basis. These include landscapers, insurance companies, general contractors, and maintenance companies. This means that you don’t have to take a chance on hiring a vendor that may not be able to deliver; your HOA management company has already done the screening process for you.
Signs It Might Be Time to Change Your HOA Management
There are several significant issues that HOA board members usually encounter when dealing with a sub-par HOA management company.
Poor communication is one factor that weakens the relationship between an HOA and their management company. We hear from HOAs all the time who say their community manager fails to return their phone calls or reply to their emails quickly. They leave a message for the community manager, but it takes several days for them to respond, if they respond at all. Homeowners and vendors have the same experience. When it comes to the management of a homeowner’s association, communication is key. A quality management company will always strive to keep an open line of communication with its clients.
In some cases, the HOA’s community manager fails to complete projects. Whether the board has asked for a street light to be replaced, a water leak to be investigated, or bids from a new landscaper, it seems the community manager is continually putting off projects. The board ends up feeling stuck as they repeatedly bring up these concerns without making any progress.
Another common complaint we hear from board members about their HOA management company is that compliance drives or walks aren’t being done consistently, violation letters are being sent to the wrong homes, or the management company isn’t handling compliance in the way that the board has asked.
Additionally, we often hear from board members that they can’t access the HOA’s financial reports online and on demand. We hear from boards that are getting incomplete financial documents; some boards request these reports and never receive them.
Consistent Community Managers
Besides the general difficulties outlined above, one of the most frequent complaints we get from HOA management clients who call our office looking for a bid is that they had a great community manager, but then their management company gave them a new person, and then another person, and the current community manager isn’t measuring up.
Community managers can make or break an HOA management company. They are what separate the good companies from the less-than-stellar ones. They can make a board member’s experience positive or negative. They are the reason you love the company you’re with, are barely tolerating them, or can’t wait to switch. Ultimately, there are several important differences between a great community manager and one that’s mediocre at best.
Responsiveness is a key characteristic to look for in your community manager. First-rate community managers know that customer service largely comes down to responsiveness. They return emails immediately; they answer their phone and/or return phone calls; they want to get people the answers they need.
A great community manager also cares about their communities. They want their communities to look good, be safe, and for homeowners, board members, and vendors to all have good relationships with each other. They get upset by the same things that upset board members or homeowners.
Your community manager should also defuse situations instead of escalating them. Ideally, they go into every situation trying to defuse any tension, anger, or frustration that might exist. They know how to put people at ease, and help them realize that their HOA or HOA management company isn’t out to get them. They strive to help the board lead their community in a way that creates trust, confidence, and goodwill with homeowners rather than an adversarial relationship.
Training also factors into the effectiveness of your community manager. Excellent community managers can answer common questions from homeowners and board members. They aren’t novices; they’ve studied local laws and have some experience under their belts. No one knows all the answers, but a good community manager knows where to go and who to ask if they don’t have the answer.
Your community manager should be working full-time. Some HOA management companies use part-time employees as community managers, but a part-time schedule doesn’t provide enough time for the community manager and HOA board to accomplish necessary tasks efficiently.
Finally, your community manager should enjoy their job. Great community managers work for great companies; they quit from companies that overload them and have an unhealthy work environment. If you know of several community managers who have left your management company, it’s likely that the employees aren’t to blame.
Terminating Your Current HOA Management Contract
Are you on the Board of Directors for your homeowners association? Is your HOA overseen by a professional HOA management company? If you answered yes to both of these questions, then you should have a copy of your current management agreement between the association and your HOA management company. This contract holds vital information necessary for properly managing your homeowners association, including how to terminate the contract.
As the end of the year approaches, many HOA management contracts expire and/or come up for renewal. Don’t miss your opportunity to make a needed change in management! Request a copy of your management contract and carefully review it with members of your Board of Directors, in order to explore what your options are when it comes to terminating your management agreement.
It’s important to take the length of the contract into consideration. Determine how long the contract lasts. Is it one year, two years, or three years? If the contract automatically renews (also called “keystone”), what are the time periods that it automatically renews for?
If your HOA wishes to terminate the contract with their current company, you’ll need to find out what stipulations exist for being released from the contract. Will you have to give 30 days’ notice, 60 days’ notice, or 90 days’ notice? Do you need to give notice 30 days’ before the effective date? If so, it’s important for all board members to be aware of the effective date of the contract. Furthermore, does your notice have to be given by regular mail or certified mail?
You’ll also want to establish whether there are any termination penalties involved with being released from the contract early. Will remaining management fees need to be paid out in the case of early termination?
Knowing the exact language in your HOA management contract will help your board members make better decisions regarding their association. Consult with your HOA management company or your HOA attorney for more helpful tips on reviewing your HOA management contract.
No homeowners association should be paying their management company for incompetence and unresponsiveness. Being able to spot key differences between high-quality and low-quality community managers and HOA management companies will help you and your HOA make the right choice for your community’s needs, whether that decision involves keeping your current HOA management company or not.