Terminating your contract with your association management company should not be done for light or transient reasons. But when an association management firm, for whatever reason, engages in a sustained series of breeches, abuses or usurpations, it’s the right and duty of the association, via the board of directors, to terminate that contract and to appoint a new manager for the community.
It’s almost always better to resolve differences with frank communication between people of good faith. But that doesn’t always work. Here are five signs that your association is justified in abruptly ending its contract with its association manager – even if your association has to pay an early termination fee to do it.
1. They Have Forgotten Who Is in Charge
Good association managers bring a lot of expertise to the table. They can help guide boards of directors in matters related to compliance, real estate law, best practices and other vital matters. They’ve participated in or personally organized all kinds of maintenance and capital improvement issues and can often see around corners that boards of directors - typically made up of people that aren’t experienced with association management – can’t see.
But, at the end of the day, it’s the homeowners – and their representatives who sit on the board of directors – who are the people in charge. Association managers can’t forget this. Don’t let any association management staffer start behaving like the community, condo or development under management is their own private fiefdom. Rude, imperious or condescending behavior toward residents by any association management company employee should not be tolerated. If the association management firm staff have an issue with a resident, they should refer it to the board. Where there is an issue with an association management firm employee, the board should take it up with the firm and allow them to discipline and correct the employee.
If they can’t or won’t do this, the association management firm has taken their eye off the ball. If the management firm’s leaders are so weak they can’t counsel or correct a wayward staffer, then they obviously think being nice to their employees is more important than their obligation to you, the client, and therefore should no longer have your business.
2. There Is a Skill or Expertise Mismatch
Association management companies occasionally take on contracts they don’t have the capacity to handle. For example, a small association management company that can do a perfectly acceptable job of handling basic day-to-day maintenance and customer service functions under normal circumstances can wind up completely over its head if they agree to take on major renovations or improvements.
In these situations, the association management company no longer has the requisite staff or expertise. This happens occasionally when an association expands rapidly or one or more key employees leave the association management company and equally-skilled replacements cannot be found.
While having a skill or expertise mismatch doesn’t necessarily reflect poorly on the association management company, as your community may have simply outgrown them, your association still deserves to have a manager who can do the required work.
3. They Are Sloppy With Financial Accountability
Stewardship of the association’s money is one of the core functions association management firms provide. They owe you a regular and accurate statement containing a full accounting of every dollar of the association’s funds that they spend. Don’t be afraid to verify these figures with third parties. Association management firms – or their employees – sometimes commit fraud by creating fake financial statements to cover theft or embezzlement.
One condominium association in Hollywood, FL wasn’t vigilant enough, and an association manager created a company with a name similar to the condo association’s insurance company. Using that entity, the association manager started writing large checks to herself; she embezzled $228,000 before the scheme was discovered.
It’s the association management company’s job to monitor their employees and provide internal accountability controls to detect and prevent fraud. It’s your job as a board member to ensure that these controls are in place and followed, as failure to do so could cost your associations thousands.
4. They Take Kickbacks From Contractors
Association management companies and their staffers have been known to take kickbacks under the table from contractors in exchange for work. The conflict of interest here is obvious. Contracts for maintenance, landscaping, repair, extermination, janitorial and other services should be reviewed and opened for bidding on a competitive basis.
Sometimes the amount of money at stake is negligible, and there’s a limited time to get bids in. When there’s a maintenance emergency, you don’t always have time to follow the proper procedures. But for the most part, boards of directors should review and approve contracts that involve significant amounts of money and are open-ended or have long durations.
It is wise to adopt a zero tolerance policy for any acceptance of kickbacks from contractors absent full and open disclosure to, and acceptance from, the association’s board. If the association management company has accepted kickbacks, they should be let go immediately. If they are willing to make such an unethical decision, what else will they do – or won’t do – that might harm your association?
5. They Become Nonresponsive, Lazy or Take You for Granted
When their contract is settled in and things are humming along, the association managers may begin to take the ongoing contractual relationship for granted. Acquiring new contracts with other associations may become more interesting than properly servicing the existing contract they have with yours.
People from all walks of life tend to become neglectful of established relationships. It takes capable, alert and proactive leadership on the part of association management companies to counter this natural human tendency, and not every executive is up to the task.
Is your association management company slow to return phone calls or answer emails? Do on-site staffers show up late to work, take inordinately long lunches or leave early with work left to be done? These are challenges that the association management company should deal with.
If they seem to simply be going through the motions and don’t correct the issue energetically and decisively even when it’s pointed out to them, then it’s time to find a new company to take its place.
Unprofessional and unethical association managers are more trouble than they’re worth and can cost their customers thousands. Get free quotes from local association managers on AllPropertyManagement.com, the largest online directory of property management companies in the U.S., and find the association manager your association deserves!