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Subject: Termination of a Management Agreement
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RogerB
(Colorado)

Posts:5067


03/04/2006 8:26 AM  
Colorado Statute 38-33.3-302(4)(a) states "The associaton's contract with a managing agent shall be terminable for cause without penalty to the association. Any such contract shall be subject to renegotiation."

I would prefer the above statute state "The term of the Association's Agreement with a Managing Agent shall be no more than one year, may be terminated by either party without cause upon 30 days written notice, and with penalty to either party for termination." I believe this would make management companies more accountable. What do you think?

It seems there are many developers locking in multiple year contracts with a management company. Unsuspecting homeowners can be locked into high priced contracts and/or unacceptable services and have no recourse to terminate the contract. Some Declarations state "no contract shall not be entered into which have a term of more than one year"; but the developer prepares the contract and does not include this if they want a longer term contract.

I wonder,
1) Do you know the term of your association's management agreement?Do you have a contract which allows you to terminate upon 30 or 60 days written notice? Without cause? Without penalty?
2) Have you ever been involved in terminating a management company?
If so, did you find it difficult get rid of them? Did it require legal action?
3) Do you think the above statute will make it easier to terminate?

RogerB
EdR
(Texas)

Posts:170


03/04/2006 10:01 AM  
Roger:
I agree with how you would like it to read. I think that makes it fair to both/all sides, IMHO.
Now, do you or does anyone know if we have such a statute in Texas and if not, any advice on pursuing such?
EdR
HaroldS
(Arizona)

Posts:906


03/04/2006 10:15 AM  
Roger - terminating a management contract requires an astute board who knows what is going on. I'm not saying all management companies will do it, but some might just ignore anything related to your association after being fired. That happened to us when we fired the builder's management company. All your HOA legal mail, taxes, etc is probably going directly to the management company. Unless the board is sharp and monitors all the infinite things they pay the management company to do for them, they will probably have no idea what is being handled or not handled upon a change of management company. For instance, our common area property taxes were not being paid because the fired management company didn't forward any mail, and no one on the board thought about it until my wife joined the board, and just barely caught and paid the back taxes before the county auction was going to kick in. The county still showed the old management company as the mailing address for our HOA. By the same token the new management company didn't catch it either that the taxes were not being paid, so you can't expect everything will magically get covered in a management change.
Bottom line: An HOA board needs to keep on top of everything and should not rely on their management company to be sure things get done, especially so when making management changes. Harold
EdR
(Texas)

Posts:170


03/04/2006 11:04 AM  
Same thing happened in our HOA regarding the insurance premium. It was actually cancelled--for liability, D&O, etc. AND, we have a mailbox at our clubhouse. These items should be mailed to both the MC and the assn. The old MC actually did not send it to the board or new MC and didn't tell anyone until it was seriously past due--they could have sent it to begin with if they knew how to later. Sometimes they retaliate when fired, but this one resigned, so I'm not sure what their excuse was. IMHO, most MCs we've dealt with don't have the best interest of your assn. in mind, particularly since they are not accountable or responsible in the end for anything anyway. It's sad but true--and if ever the HOAs can take back their assns., even the good MCs will have a bad rap because of it.
EdR
RogerB
(Colorado)

Posts:5067


03/04/2006 11:31 AM  
EdR, you could check on what legislator initiated recent statutes passed in Texas and contact them. Colorado is one of the leaders in protecting homeowners, so they could refer to the Colorado Common Interest Ownership Act (CCIOA) for ideas.
---------------------------------

Thanks HaroldS, your comments are very pertinent. A GOOD MC would easily handle these matters when taking over from any MC. The key is to get a good MC; board members may not consider all of the "loose ends". Apparently your association went from a poor MC to another poor MC.

We chose to accept to work with an association which was in the process of firing another MC. The terminated MC would not provide the association with any of the records owned by the association which were in the custody of the MC. We had to reconstruct everything - including all accounting records. And the extremely pleasant MC turned into tyrants; they totally ignored their contract. To get rid of them immediately, the association chose to pay off the remainder of the contract year. But fortunately it didn't take long before they realized what a wise decision they had made

RogerB
AdrianC
(California)

Posts:35


05/11/2006 6:30 PM  
Roger,

We changed managment co 18 months ago. To our great relief.

One of the things we did was ask the Managment Co we interviewed was "What records do you need for a smooth takeover?"

Make a list and add anthing you can possibly think of to that list.

We still did not get all we needed and wanted, but it did help a great deal. Our new contract states that the records are the property of the HOA and are returnable on demand.
Agreed to and signed by the managment co.
Of course we won't know till we change if it works. However we also have requested "Back up" copies of financial and other records on CD. This way we will at least have the data and will be able to recover it. It may be a commercial program but other companies use it as well.

I am experimenting with "Filemaker" as a database and managment tool. It costs about $ 189.00 but they will send you a free demo disc, good for 30 days. (Will import/export data to excell, word etc)

Back Up in filemaker on an extra stand alone hard drive and you have a good solution. The hard drive can work on any other computer.

Good luck
Adrian
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