When an Association enters into a contract with a management company, the contract needs to be analyzed for a few key issues. Since such a contract locks an Association into being managed by a management company, and sometimes there can be a falling out of the parties, the contract can come into play as to what the Association can and cannot do. While there are many issues that need to be addressed in the contract, I want to point out 2 specific issues, the termination of the contract, and venue.
Many management companies have clauses in their standard contract that allow for either party to provide 30 or 60 day notice to terminate the contract. I have seen some contracts that do not allow for such a way to terminate the contract, and the Association winds up being stuck in the contract for the entire duration of the contract term (unless there are breaches of the contract or possibly other issues). There should always be a termination clause that allows the Association to tender notice to the management company, that they desire to terminate their agreement. It is not in the best interest of the Association if there is not such a clause, and while many times it may be a boilerplate contract that the management company is presenting, I would recommend reassessing them if such a clause is not provided in the contract they present to the Association.
The venue of any conflicts of the contract should also be addressed. For example if an Association in Volusia County is contracting with a firm out of Miami, the venue should favor the Association and be in Volusia County, so that if something does have to be challenged, the Association does not have to go to Miami to fight the issue, but instead can handle the issue in their own backyard.
As I mentioned, there are many aspects that are covered in most property management contracts, but I just wanted to point out 2 specific ones that can cause very big headaches for an Association down the road. A management company’s job is to help the Association properly manage it’s business, and issues like these 2 do not do that.