What to Check Before Signing a Contract
With a Property Management Company
During the process of hiring a property management company, the Homeowners Association (HOA) will have to face the challenge of reviewing the property management contract. Most companies will have a standard contract, but don’t sign right away. You’ll want to pay special attention to the fine print and details, such as terms, cancellation rights, and fees. If things aren’t crystal clear, ask as many questions as you need. Not doing so can lead to misunderstandings down the line. And don’t worry – you’ll be able to make any changes if needed.
A property management contract can be broken down into these categories:
1. Responsibilities and Fees
This is the section of the contract that should list out the services that are being agreed upon
and how those services will be performed. This section will also break down the fees. Take some extra time to see how the fees are broken down and if there are extra fees for certain services. You’ll also find details about what your responsibilities as the HOA are in this section. Pay special attention here because you’ll want to know what you’re agreeing to.
2. Termination Clause
Make sure the contract has a clear termination or cancellation clause. This section will detail under what circumstances you or the property manager can end the relationship and what fees will be incurred. Some specific things to look out for are:
- Notice to Terminate: Make sure there’s a specified number of days.
- Fee for Early Termination: Fees often will vary from a few hundred dollars to having to pay all fees the management company would have been paid for the remaining length of their contract.
- Reason to Terminate: You’ll want a contract that does not require cause to terminate the contract.
- Obligations Upon Termination: There will be a list of responsibilities that must happen upon termination and the time window it must be completed within.
3. Liability and Other Common Items
All property management contracts will list out what the company can and cannot be held liable for. This section is sometimes referred to as the “hold harmless” clause and protects management companies, except where they have been negligent. The property manager is not responsible for the negligence of vendors they hire. To protect yourself, include a “reasonable care” clause in the contract. This means that the property manager is not liable if, and only if, “reasonable care” has been taken when hiring the vendor – they did their research and did not hire a vendor with a history of complaints.
Other common clauses you may run into are:
- Entire Agreement: The contract is the final version of the agreement and supersedes all prior written and oral proposals.
- Modification: The contract can only be modified by a written agreement executed by both parties.
- Assignments: The property management company can transfer their contract to another management company without your consent.
- Governing Law; Venue: What states’ laws will govern the contract’s interpretation.
Most importantly, once you have reviewed the contract, have your HOA’s attorney (if you don’t have one, find an experienced attorney in the area) to review the contract. The attorney can alert you if there are any issues and changes needed. Once you get the green light, it’s time to sign and build that lasting relationship with your property management company!
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We retained West Property Management to take over managing our brand new HOA. As a brand new builder community, West Property Management had to help manage numerous complicated developer-builder-homeowner transition matters. Despite the often unpredictable and/or complicated tasks that our HOA faced, West Property Management handled these matters in a very “can do” and no-nonsense manner. Their timely approach, expertise and patience with a new, novice Board of Directors also made working with West Property Management productive and positive. The Board continues to enjoy working with them and highly recommend them for property management needs.
When selecting West Property Management, you can expect professionalism, follow-through, and success in managing your property(ies). It all started with listening to our expectations and consistently delivering superior service and expertise without prompting for our 350 properties; telephone calls and e-mails were tactfully responded whether there was a complaint or a compliment.
When evaluating a property management company, we felt the primary factor was collaboration to learn what we should or should not do to effectively manage processes. The second important factor was the skillful management of suppliers to reduce outstanding receivables and ensure the successful delivery of work products through excellent customer service. West Property Management always displayed a “can-do” attitude and resolved any issues with persistent alacrity.
West Property Management’s impressive knowledge and practical approach we highly recommend irrespective of what level of management you seek. Both Lynn Weymer (our Property Manager) and Chris Westerlund (the owner) were always available to consult on Board matters and always resolved any presented issues. We will continue to work with West Property Management and look forward to our continued partnership.
It was a pleasure working with Chris. He was very professional and went above and beyond to make sure I was comfortable and informed every step of the way. I give Chris and West Property Management my highest recommendations and look forward to working with them for all my future property management needs.
West has been such a joy to work with – they’ve brought a new level of professionalism and experience to our HOA and we’re grateful to be working with them!
West Property Management has been so wonderful to work with. Excellent communication and customer service. A professional organization who provides a wonderful personal touch. I’d highly recommend them!
Chris Westerlund and West Property Management were great. Being a realtor, I deal with a lot of property management companies. I reached out to Chris about obtaining HOA resale documents. He was instrumental in getting the documents delivered to me that same day when we needed them in a rush. In addition, he used his resources to find the contact information for the company we had been trying to find for a couple of weeks. I’d highly recommend anyone/business looking for property management services to reach out to Chris and West Property Management!