The management contract, in an ideal situation, homeowners association board members and HOA managers would be on the same page about everything and have no worry about disputes. However, the reality is that even rational and reasonable people can have differences and disagreements. That’s where the HOA management contract comes in—to clearly spell out all agreements about fees, services, and actions taken in the event something does go not quite as planned.
So if you’re seeking a property management company, make sure their contract addresses at least the following areas:
1.) Management Contract Fees Structure and Estimates of Man-Hours
Any quality property management contract should include an outline of all management fees and man-hour expenditures involved when working with your HOA. They must consider areas like the cost of training new staff on the property, on-site management equipment costs (if applicable), and the cost of drafting the new contract, just to name a few.
Many of the investment costs that go into property management are otherwise invisible to the company’s clients, so an included fee structure helps in understanding where all costs come from. This is why management companies will have cancellation provisions included in their contracts—to recoup the initial costs of investment.
2.) Scope of Work Outline
Any contract with an HOA management company should include the specifics on the scope of work to be done. Make sure the contract includes:
- What exactly the HOA management company will be responsible for handling, and what the homeowners association board members will continue to do themselves
- Basic services to be performed
- How residents will be screened and approved
- Responsibilities for rent collection
- Responsibilities regarding maintenance monitoring and approval
- Funding of maintenance and repairs
These details will also help in making sense of management costs. A broader scope of work means the fees will be higher, and vise versa.
3.) Amendments and Cancellations
Any good HOA management company contract will allow for either side to make amendments if the reasoning is genuine. Plus, allowing for changes to services, fees, or terms can make the contract more flexible for everyone over the long term.
You’ll also want to look for cancellation guidelines in the contract, as well as the exact dates the contract begins and ends.
It’s important for any homeowners association to have a well-defined and detailed yet easy to understand HOA management contract. When working with a new management company, make sure there is an agreement spelled out beforehand. Understanding this breakdown of what a contract should contain will help in realizing its significance.
Cedar Management Group provides top-notch HOA management services to the Charlotte area. For more information, contact us today.