It’s relatively common for boards to wait too long to make changes to their HOA management company. They’ll try to weather years of a firm they don’t actually like, simply because they believe the transition will be more effort than it’s worth. Obviously, this should never be the case. A switch (when handled properly) takes about 60 days, and thousands of communities run it every year. Here is a basic overview of how it works.
Read Your Contract Before You Do Anything
One of the easiest and most effective things you can do is to look at the termination clause in your management agreement. You’ll find several pieces of information, most importantly your required notice (usually somewhere between 30 and 90 days), fees for early exits, and the auto-renewal date. The auto-renewal date is incredibly important. Oftentimes contracts will just quietly roll over for the next year if nobody cancels it during the given window. Boards that decide to leave too late can find themselves locked in for the entire next cycle, so before you do any interviews, votes, or even have any preliminary conversations, make sure you know your termination clause.
Choose the Replacement While You Still Have the Old One
Turning in a notice with nowhere else to go is a bad idea—plain and simple. Your community will end up unmanaged for an entire quarter.
Instead, you should be running your search while the current contract is active. We’ve already covered how to vet a management company in our State of HOA Management report (can be hyperlinked), so there’s no use repeating it again here. However, when specifically considering a switch, make sure you also ask each candidate to walk you through their onboarding process before you commit. How do they take over the books mid-year? Who covers the migration of records? How soon will the homeowners get payment instructions? Every single one of these questions is important to know the answer to before you make any choices.
A firm that does a good job on onboarding will immediately have answers ready. A firm that improvises will also improvise on the job.
Make It Official, Then Put Someone in Charge
The process will go as follows: the board votes to terminate, the vote goes in the minutes, and written notice goes to the outgoing firm exactly the way the contract specifies.
After this, pick one board member to be the transition coordinator. The role is important—a handoff with no single person in charge turns into a group project, and group projects are typically far more disorganized and inefficient.
The Records Handoff
The transfer will usually take anywhere from 30 to 60 days. A long list of your different records will be shifted between the outgoing and incoming management companies, and you should ensure that your coordinator is holding weekly check-ins with both firms to ensure that they are both doing their jobs. This is also when good bookkeeping will come in handy; missing records are always invisible until the worst possible moment.
A note on timing: if you can, schedule the switch for a slower part of the year. It is usually quite tough for a new firm to arrive in the middle of budget season, especially when they have to plan finances that they are not yet familiar with.
The 90-Day Proving Ground
Even after the records arrive, the job is not over quite yet. For the first three months with the new firm, it is highly recommended to track them against the same things that pushed you away from your old management company. Good firms expect this, and treat those first 90 days as an audition. They understand that nothing is set in stone.
Final thing—boards sometimes see switching management companies as an admission that they chose badly in the first place. It doesn’t need to be. Communities change, firms change, and it is common for a decision that may have fit five years ago to be the wrong one today. The real mistake is continuing with a management company that is not working, and waiting around and hoping it will change. When you’re ready to see what else is out there, reach out. That’s exactly what we’re here to help with.
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