Switching Condo Management Companies? Good Idea or Bad Idea?

Switching Condo Management Companies?  Good Idea or Bad Idea?

Are you considering switching management companies for your condo association, townhome association or perhaps your HOA?  When is it a good idea to switch?  When is it a BAD idea?  Then again, why switch if it won’t really make a significant improvement in how the association is managed.

Here are the key areas to consider when contemplating switching management companies:

1. Document the issues.  If it is a very minor issue, you may simply give the manager a call to discuss and resolve it.  However, if it is a bigger issue or an ongoing issue, put it in writing and take action.  For example:
   • Manager took a week to respond to my voicemail.
   • I sent an email to the manager and never got a response.
   • I asked the manager to get 3 bids ahead of the upcoming board meeting and and we only got 1 bid handed to us at the board meeting.
2. Check the management agreement.  See if there is specific language you can cite that verifies that the management company is out of compliance with the operating agreement.  This is why it is much better to have a detailed management agreement versus a very vague agreement.    Perhaps consider consulting your attorney.
3. Communicate the feedback to the manger.  For the first time around, go to your assigned manager via email so that it is documented and ask for specific corrective action.   Don’t simply threaten them with a cancellation letter.  That will only make the situation worse.  Again, this is all assuming the management agreement mentions what you are asking for specifically.  For example, per the management agreement Section 2.a, it mentions that ALL phone calls and emails will be responded to within 3 business days.  On the other hand, if the agreement doesn’t say phone calls will be returned in 3 business day and is silent on turn around time, how can you require it?
4. Ask for a formal written response.  It is important that your concerns are formally addressed and responded to by your manager especially if the board is feeling very frustrated.
5. Wait for improvement.  See how things go.  Allow the manager some time to show more improvement.  The last thing you want to do is get overly critical and make the manager get on the defensive.
6. Escalate the situation.  If things don’t get noticeably better, don’t let the manager and management company off the hook.  Take the next step by notifying upper management.  Depending on the size of the management firm, it could mean the owner of the company or perhaps the VP of Operations or the Property Supervisor.
7. Get a New manager.  If the situation escalates beyond step 6, most companies will respond as follows “We heard you and now here is your new property manager”.  Does this resolve the issue?  It may or it may not.  The problem with this “solution” is that it may never fulfill the obligations of the management agreement or the needs of the board and association.  Within a few weeks or months, you might be back to step 6.  And the other problem with this “solution” is that it now takes a lot more work for the board to get the new manager “up to speed” with current issues.
8. Manage the Manager.  In the end, a management company is hired for a fee to improve the quality of living of the board members and homeowners of the client association.  If it ends up taking more time and work for board members to manage the management company relationship, then what is the point of having a management company?
9. Details are Essential.  If the board finds that a better outcome is unlikely, then the board should initiate a search for a new management company.  Before doing so, make sure to check the cancellation clause in the agreement.  Every agreement has different wording.  Consult your association attorney if uncertain.  Once that is verified, create an RFP that details what the board is looking for in a new management company.
10. Switch for a MUCH better outcome.  Switch firms only when you are 100% certain that the new firm can deliver a better quality service.  If the new firm and the current firm operate with the same business process and same methodology, then its unlikely the association will get a noticeably higher level of service on a consistent basis.

Switching condo management companies out of frustration and without having a clear understanding of the needs of the board and association may not lead to a better outcome.  This is especially true if the new company operates on the same business model and principles as the outgoing firm.  Clarifying the needs and searching with the intent of creating a much better dynamic and outcome WILL result in a MUCH better situation.

About the Author:

Salvatore J. Sciacca aka “Condoboss” is one of the nation’s leading experts in the community property management industry. He is also the President and Founder of Chicago Property Services, Chicago’s #1 community property management company specializing in management and operations of condos/townhomes/HOA’s of 100 units and under. Salvatore is also the founder of managmycommunity.com (MMC), which is a state-of-the-art online support portal for community associations.

With over 20 years of industry experience, Salvatore is recognized for his extensive knowledge of capital planning, preventative maintenance, cost-saving measures and community building techniques. He holds industry stature as a Certified Manager of Community Associations (CMCA), the designation of Association Management Specialist (AMS) and is fully licensed as a manager (License #: 261.001386) through the State of IL.

Salvatore’s contact information is:
312-455-0107 x102
ssciacca@chicagopropertyservices.com
www.chicagopropertyservices.com