It’s common for boards to wait too long to switch HOA management companies. They’ll stay years at a firm they dislike, convinced that leaving costs more than staying. 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.
What are the Steps to Switch HOA Management Companies?
The new HOA management transition process can feel overwhelming for many board members, especially if they want to avoid several issues and disruptions. However, with the right preparation and timing, your HOA can make the switch smoothly and avoid many of the problems boards often fear.
Read Your Contract First
The first thing you can do to change HOA management companies is review 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. Often, contracts quietly roll over for another year if nobody cancels within 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, take votes, or even have any preliminary conversations, make sure you know your termination clause.
Choose a Replacement Before You Drop 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.
However, when considering a switch, 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? Each of these questions needs an answer before you make any decision.
A company that does a good job of onboarding will have answers ready immediately. 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 is recorded in the minutes; and written notice is sent to the outgoing firm exactly as the contract specifies.
After this, pick one board member to be the transition coordinator. The role is crucial. 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 usually takes 30 to 60 days. A long list of your records, including meeting minutes and financial statements, will be transferred from the outgoing to the incoming management company.
Ensure your coordinator holds weekly check-ins with both firms to confirm they are 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 they’re not yet familiar with.
The 90-Day Proving Ground
Even after the records arrive, the job isn’t quite over. For the first three months with the new firm, it’s 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.
The final thing is that 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 sticking with a management company that isn’t working and waiting around, 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.
Finding the Perfect Fit
When you switch HOA management companies, coordination and a good plan can help the board avoid any issues or disruptions. By preparing early and keeping things organized, your association can ensure this change results in better service that perfectly aligns with the community.
Looking for the right property management company for your neighborhood? HOA Explore offers a convenient way for community associations to find the right support and solutions. Use our online directory today!
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