Reasons Why Management Companies Terminate Management Agreements
There are times when an HOA board is fully justified in terminating its contract with its management company. Of course, there are also times when an HOA board terminates its contract with its management company for a bad reason.
There are also reasons why management companies sometimes find it necessary to terminate the management contract with their HOA clients. Some of these reasons are listed below:
- The board engages in selective enforcement of its CC&Rs and Operating Rules creating the risk of a lawsuit.
- The board engages in overt discrimination creating the risk of a lawsuit.
- The board refuses to comply with its CC&Rs and the Davis-Stirring Act creating the risk of a lawsuit.
- The board is mean-spirited, rude, and/or disrespectful when dealing with owners, tenants, contractors, or vendors, creating unprofessional, embarrassing, and unpleasant situations.
- The board refuses to listen and follow sound advice creating the risk of a lawsuit.
- One or more board members have a material conflict of interest which they either fail to disclose to the membership, or they refuse to recuse themselves when voting on such matters.
- The board has unrealistic expectations of the management company and manager given the written terms of the management agreement and the amount of money the association is paying for management and accounting services.
American HOA Management