Can you change HOA Management Companies?
As an HOA board member, you may reach a point where you feel it’s necessary to change HOA management companies. Perhaps you’re dissatisfied with the responsiveness, quality of service, or value you’re getting from your current company. The good news is that yes, HOAs can change management companies, typically by not renewing the contract or terminating it early if the company has breached the agreement.
However, before making a decision to change, there are several important things for the board to consider and steps to follow to ensure a smooth transition. Changing management companies is a significant undertaking, so it should not be done hastily without proper planning.
Things to Consider Before Changing HOA Management Companies
Prior to soliciting bids from new HOA management companies, the board should:
- Review your current management contract. Note the expiration date, termination requirements, and any penalties for early termination. You’ll need to follow the proper notification process.
- Clarify your reasons for wanting to change. Document specific issues and unmet needs so you can seek out a company better suited to your community. Get input from homeowners too.
- Determine your budget and desired fee structure. Changing companies may affect your management fees.
- Decide on the scope of services you require. Do you need full-service management or accounting only? Are there any additional duties you want the new company to handle?
- Allow sufficient lead time. Transitioning to a new management company typically takes 60-90 days. Build this into your planning.
HOA Management Services
There are three main types of HOA management services:
Accounting Only HOA Management
With this model, the management company only handles the financial management, including collecting assessments, paying bills, financial reporting, budgeting and overseeing reserve funds. The board handles other aspects like meetings, communications, maintenance, and rules enforcement. Accounting only management works best for self-managed communities that just need financial expertise.
Full Service HOA Management
Full service management includes comprehensive financial and administrative services. In addition to accounting, the management company helps with board meetings, minutes, homeowner communications, vendor oversight, rules enforcement, and legal compliance guidance. This is ideal for most communities who want professional management to handle day-to-day operations.
Onsite HOA Management
With onsite management, the company provides a dedicated manager who works onsite at your community during regular business hours. Onsite managers handle administrative tasks and serve as the point person for homeowners and vendors. This hands-on approach works well for large communities with many amenities, staff, and maintenance needs.
HOA Management Duties
When evaluating management companies, consider which of the following duties you require:
Financial Management
- Billing and collecting homeowner dues
- Payment of invoices and vendor bills
- Bank reconciliations and financial reports
- Annual budget preparation
- Delinquent account monitoring
- Tax returns and audit assistance
Administrative Services
- Prepare board meeting agendas and attend meetings
- Maintain association records
- Oversee vendor contracts and projects
- Obtain bids and supervise maintenance
- Field homeowner requests
- Inspect common areas
- Coordinate amenity reservations
- Communicate with members via newsletters, website etc.
- Coordinate board elections
- Advise board on governing documents and legal compliance
Some companies offer expanded services like online homeowner portals, mobile apps, annual reserve studies, project management, and onsite staffing. Clarify which services are included in the base price and which cost extra.
HOA Management Fees
Management fees vary based on your location, community size and complexity, and scope of services. Most companies charge a flat monthly rate, typically starting around $10 per door per month for accounting only services and $20-$35+ per door per month for full service management. Some charge hourly rates for certain duties. Be sure to clarify what is included to compare pricing and value between companies.
Also ask about start-up fees, early termination fees, and charges for extra services such as filing liens, supervising major projects, or holding special meetings. Find out if management fees will be guaranteed for a period or subject to increases.
HOA Management Change Timeline
Once you’ve chosen a new management company, notify your current company according to the termination terms in your contract, typically 30-60 days notice. The transition process usually takes 60-90 days and involves:
- Signing a new management agreement
- Transferring bank accounts and funds
- Changing signatories on accounts
- Providing new company with governing docs, tax ID#, etc.
- Forwarding mail to the new company
- Updating contact info (website, directories, etc)
- Notifying homeowners of the change
- Turning over association records to new company
- Arranging training on software/systems
- Introducing new manager to the community
Work closely with both your outgoing and incoming management companies to coordinate a smooth changeover. To avoid disruption in services, don’t terminate your current agreement until the new company is ready to take over.
What’s the first step to Change HOA Management Companies? Create an RFP for HOA Management Services
Looking to solicit bids from HOA management companies? Use the powerful RFP tool at HOAProposal.com. This easy-to-use tool generates a professional, comprehensive Request for Proposal that includes all the relevant information management companies need about your HOA’s services, fees, and requirements. It does the heavy lifting for you and helps you obtain comparable bids so you can make the best choice for your community.
Can You Change HOA Management Company
In conclusion, changing HOA management companies is a big decision but sometimes necessary to get the service, value and expertise your community needs. With proper planning and a robust RFP through HOAProposal.com, you can find the right fit and enjoy a successful partnership with your new management company.