Termination of a Management Agreement

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

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, 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.
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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