For some homeowners associations, a new HOA management company may just be what they need to start fresh. While having professional help is ideal, not all companies are made equal. Some offer exceptional services, whereas others only do the bare minimum. This is why it is imperative that association boards reassess their HOA management and determine whether or not it is time for a change.
Reasons to Switch to a New HOA Management Company
With the new year already here, HOAs are gearing up to prepare annual budgets, evaluate insurance policies, and examine their roster of vendors. One of the vendors an HOA should thoroughly assess is their HOA management company.
Performing yearly evaluations of HOA management ensures the association stays on track. It also allows HOA boards to check whether their values still align, their quality is still up to par, and their price is still reasonably within budget. Of course, some things should trigger a board to consider changing HOA management.
If you start to see these problems with HOA management companies, it may be time to consider a switch.
1. Poor Quality of Service
Perhaps the most important consideration is the quality of service an HOA management company provides. If a company fails to maintain a satisfactory level or quality of service, the board should seriously consider making a change.
Poor quality of service could manifest in several different ways. The company may begin cutting corners, providing poor advice, or phoning it in. Whatever it may be, a competent board should easily spot the gaps in service. One or two mistakes may be overlooked, depending on their severity. However, if these mistakes start piling up or become more serious, the board should not turn a blind eye.
2. No Longer Helpful
While an HOA board is primarily responsible for all the decision-making, a management company or its manager should act as the board’s counsel. The manager or company should provide insightful input and advice, guiding the board to make smart decisions. If a company or manager stops offering sound advice, it may be time to look for new HOA management.
3. Terrible Communication
By now, a competent board should know that communication is the key to a successful community. A good management company should constantly communicate with the HOA board, informing them of everything. Communication with homeowners is also part of a management company’s job. The company or manager should send notices according to proper procedure, field homeowner calls, and respond to requests.
Without consistent and open communication, everything would fall apart. When a company starts communicating poorly or stops altogether, the board should take it as a sign to clean the house.
4. Too Costly
No matter how excellent an HOA management company is, if their prices are out of the HOA’s budget, keeping them around wouldn’t make any sense. Likewise, if a management company has too many hidden costs within its contract, the board can’t fully trust them to be transparent.
Thus, an HOA board should also consider the HOA management companies’ costs during evaluations. Determine whether management fees will significantly impact the annual budget, especially if the contract is up for renewal and will likely get a price hike. The board may not want to lose a good management company and have to start all over again, but plenty of equally competent companies charge lower fees.
5. Inconsistent Enforcement
More often than not, HOA boards delegate enforcement tasks to their management company. This includes sending out violation notices, scheduling disciplinary hearings, interpreting the governing documents, and conducting inspections for violations. All of these things should be done consistently and fairly. If an HOA management company starts to get sloppy, the association could be in legal trouble. There is no room for selective enforcement in a well-functioning community.
6. Complaints from Residents
Although the HOA board is responsible for overseeing management and conducting evaluations, board members are not omnipresent. They don’t have eyes and ears on everything. Thus, HOA boards should also rely on homeowner input.
If the residents complain about management, board members should listen to them. While some complaints may be unfounded or born out of contempt, others may have merit. The board should learn to filter these complaints and investigate further. If the accusations are true, the board should consider switching to a new company.
7. Not a Priority
Management companies, especially larger ones, tend to have a lot of clients. Sometimes, juggling all of these clients can prove challenging. However, every HOA deserves to have its needs addressed promptly. If an association finds that its requests and concerns are consistently put on the back burner, it may not be the company’s priority.
8. Lack of Transparency
Most of the time, HOA management companies handle accounting and financial management. They must provide associations with timely and accurate financial statements and reports. If a company fails or refuses to do this, the HOA board should immediately take it as a red flag. Boards should never tolerate a lack of transparency, especially regarding financial matters.
9. Unprofessional Behavior
The relationship between an HOA and its management company is that of a business one. As such, both parties should expect professionalism from either end. If the management company starts acting unprofessionally, such as ignoring boundaries or misusing funds, it is time for the board to switch to a new one.
10. Unwilling to Change
Everyone makes mistakes — it’s human nature. The important thing is to acknowledge, correct, and learn from those mistakes. But, if a management company’s faults are pointed out to them and they react negatively or refuse to remedy them, they do not value the association. Thus, the HOA board should start looking for a replacement.
How to Change HOA Management Company
Changing management companies is often easier said than done. Boards who don’t know where to begin should learn from the steps below.
1. Enlist the Help of a Lawyer
First, hiring a lawyer to help with the process is best. Firing a management company and hiring a new one involves a lot of legal processes. Navigating them with a lawyer advising the board and reviewing contracts will be much easier.
2. Review the Current Management Contract
With a lawyer in tow, the HOA board should look through the current management contract. There could be renewal or termination clauses that the association must follow. For example, a common provision boards may find is an early termination clause, which states that the HOA must pay a monetary penalty for ending the contract before its expiry.
3. Notify the Company of Termination
After evaluating the contract, the HOA board should notify the management company of the association’s intent to terminate its services. Again, it is best to enlist the help of a lawyer to draft the termination notice.
4. Let Homeowners Know
Homeowners have a right to know what’s happening in the community, including management changes. The board should inform homeowners that the old management company has been let go, and a new one will replace them. This is also a good time to gather input from residents, though the decision ultimately rests on the board’s shoulders.
5. Begin Searching for a New HOA Management Company
Now comes the lengthy part. To look for a new management company, follow these steps.
Put Together a Committee. If the HOA board needs help, it can form a search committee to assist with the process.- Assess Needs. The HOA board and search committee should work together to evaluate the association’s needs. This will allow the HOA to outline what it’s looking for in a new company and its budget.
- Send Out RFPs. The HOA should then send out a request for proposal (RFP). This RFP contains all the project’s pertinent details and standardizes the search criteria.
- Review the Bids. Once the HOA receives the proposals, the board and committee should review the bids. Assess each company’s services and compare them against their price matrix.
- Screen the Prospects. This crucial step will filter out the good from the bad companies. Look into company backgrounds, client size, references, and reviews.
- Interview Candidates. After narrowing down the pool of candidates, the HOA board should schedule interviews. Creating a list of questions to ask the new HOA management company is also a good idea.
- Negotiate the Contract. Don’t forget to review and negotiate the contract. Again, a lawyer greatly comes in handy.
- Onboard the New Company. After dotting the i’s and crossing the t’s, it’s time to onboard the new company. This means introducing owners to the company via a letter or notice and facilitating a smooth transition from the old to the new.
The Bottom Line
When something isn’t working, it’s important to make a change. This could mean switching to a new HOA management company for homeowners associations. Learning to identify the signs and the process of switching to new management is critical. With this guide, though, it should come easier.
If you need a new management company, look no further than Cedar Management Group. Call us today at (877) 252-3327 or contact us online to learn more!
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