Terminating Your Current HOA Management Contract
As the end of the year approaches, many HOA management contracts expire and/or come up for renewal. Don’t miss your opportunity to make a needed change in management! Request a copy of your management contract and carefully review it with members of your Board of Directors, in order to explore what your options are when it comes to terminating your management agreement.
It’s important to take the length of the contract into consideration. Determine how long the contract lasts. Is it one year, two years, or three years? If the contract automatically renews (also called “keystone”), what are the time periods that it automatically renews for?
If your HOA wishes to terminate the contract with their current company, you’ll need to find out what stipulations exist for being released from the contract. Will you have to give 30 days’ notice, 60 days’ notice, or 90 days’ notice? Do you need to give notice 30 days’ before the effective date? If so, it’s important for all board members to be aware of the effective date of the contract. Furthermore, does your notice have to be given by regular mail or certified mail?
You’ll also want to establish whether there are any termination penalties involved with being released from the contract early. Will remaining management fees need to be paid out in the case of early termination?
Knowing the exact language in your HOA management contract will help your board members make better decisions regarding their association. Consult with your HOA management company or your HOA attorney for more helpful tips on reviewing your HOA management contract.