You’ve been working with your HOA management company for a few years, and they’ve been a great asset to your HOA board of directors and community as a whole. There are new issues; however, that need to be resolved, and your HOA management company isn’t up to par. Perhaps it's because of frequent turnover, or maybe poor communication and an inability to guide your HOA. Whatever the case, it's time to start looking for a new management company. How do you do that? Where should you look, and how do you find a new management company that can tackle the issues you're facing?
Don’t panic! It can be a painful process, but if you follow these recommendations, it can be much easier than you think.
Switching management companies can be difficult and headache-inducing. Not only will you have to go through a lengthy ordeal of interviewing prospects, reviewing proposals, and transitioning management, but also understand what you're looking for and find a management company that can best serve your community's needs.
Before you begin, have a conversation with your current management company to see if it’s possible to work out the issues that are causing you to seek other potential management companies. It may be easier to renegotiate your contract with your present management company and address the changes the HOA board wants to see rather than go to the expense and hassle of transitioning management. If that’s out of the question, however, then it’s time to begin looking for a new HOA management company.
When beginning the hunt for a new HOA management company, it's important to have a comprehensive list of issues to address in your HOA. Meet with your board and discuss what needs and expectations are required for a potential management company.
Examples of needs could be needing professional bookkeeping, document management, and regular communication with homeowners.
Talk to your board and see what your community needs.
Next, it's time to start asking what you want from your new HOA management company. Create another list mapping out what you would like from them. Sometimes it’s easiest to start with aspects you find lacking in your current management company, such as:
These can be the foundation of the document and help steer you in the right direction of what you would want in the future.
In addition, think about specific items you want them to handle as well. Do you want a management company that is primarily administrative or more in-person? Maybe all you need is a management company to handle your financials, or perhaps you need everything they can offer: bookkeeping, violation regulation, hiring and overseeing contractors, etc. Communicate with your board members about the most important aspects that you want in a management company
While going through this process, it's also important to keep money in mind. Don’t bite off more than you can chew budget-wise; refer to your budget and get a good understanding of what you can afford. Create a price range you’re willing to pay for services as an additional vetting tool when you start looking for new management companies.
Once this information is mapped out, create an RFP (Request for Proposal) document with this information included to present to potential management companies.
The next step is to create a search committee. Your committee can be made up of volunteers who are involved in certain areas of expertise such as finance or law, as well as members of the community and board members on your HOA.
The search committee’s job will be to gather information on potential HOA management companies, request proposals, and interview prospects that seem promising.
While searching, keep in mind that you fully understand the pricing related to your potential prospects. Make sure you not only know the monthly cost they propose but also what other fees they charge and who pays them. A company might have a low monthly cost but charge a fee for every violation & “late dues” notice they send—or they might charge absurd fees for HOA documents and transfer fees. If you have questions about how a management company organizes its pricing, ask them for clarification.
Ask for interviews with each potential management company, and make sure you are connected with the actual person that would be managing your homeowner’s association. Since it is not likely that the owners of the HOA management company will handle the day-to-day functions of managing your HOA, you’ll have a better understanding of what each company can offer if you interview the actual manager.
One of the largest complaints from HOAs is the rapid turnover of managers within the contracted HOA management company. Learn the average length of experience for the property managers employed at each company you consider. This can provide insight into turnover and better avoid the inconvenience of your manager being replaced.
Make sure you have a solid contract with your chosen professional. Ensure the contract states all prices they may charge with a clear description of each, which disallows price changes without approval and requires that the manager be transparent with their actions and their fees. The manager should willfully provide a list of their fees and charges to any homeowner at request without charging them for it.
The contract should also require the annual disclosure of all conflicts of interest and their value. These conflicts of interest disclosures include items such as if the manager uses one of their subsidiaries or other departments to perform repairs, file liens, or collect on unpaid accounts and charges the HOA as a vendor rather than as the management company.
Finding a new management company for your HOA is a big and very important task. Make sure you take your time with your decision and be picky about what your HOA’s needs are. Settling for less than what you want will put you in this exact same spot the next time your contract expires—looking for a new management company. Communicate well with your board and with each company you consider. Better to over-communicate your concerns and expectations than to be unpleasantly surprised after you have signed a new contract.