How to Switch HOA Management Companies Without the Chaos

Many boards stay with a management company longer than they should because changing feels like more trouble than it’s worth. With a clear plan, though, a transition can be smooth for the board and nearly invisible to homeowners. Here’s how to do it.

How does an HOA switch management companies?

Start by reviewing your current contract’s termination terms. Then select a new company, give written notice as the contract requires, and plan a handoff of records, bank accounts, vendor contracts and homeowner payment information. In Texas, the association should also update its management certificate in the county records. Most transitions take 30 to 90 days.

Step 1: Read your current contract

Before anything else, find your management agreement and look for:

• The term. When does it end, and does it renew automatically?
• Termination clause. Can either side end it early? How much written notice is required?
• Termination fees. Are there any charges for ending early?
• Turnover obligations. What must the company hand over, and how quickly?

If the language is unclear, ask your association’s attorney to review it.

Step 2: Choose your new company first

Line up your new management company before you give notice. That way there’s no gap in service. Your new company should give you a written transition plan as part of its proposal.

Step 3: Give written notice

Send notice exactly as the contract requires: the right method, to the right address, with the right amount of notice. Keep a copy. The board should approve the decision in a properly noticed meeting and record it in the minutes.

Step 4: Collect the association’s records and funds

The association’s records and money belong to the association. Make a turnover list and confirm each item is received. It should include:

• Governing documents, policies and resolutions
• Board meeting minutes
• Financial records, including general ledgers, bank statements, tax returns and audits
• Homeowner account records and balances
• Delinquency and collection files, including any accounts with an attorney
• Violation and architectural review files
• Vendor contracts, insurance policies and warranties
• Keys, gate codes, access cards and passwords to association accounts
• Operating and reserve bank accounts, which should be in the association’s name

Your new company should help reconcile the opening balances so the books start clean.

Step 5: Update the management certificate

Texas Property Code Section 209.004 requires an HOA to record a management certificate in the county where the property is located. The certificate includes contact information for the association or its management company. When you change companies, the certificate must be updated within the time the law requires. Your new management company or attorney can prepare and file it.

Step 6: Tell homeowners

Homeowners mostly want to know two things: who to call and how to pay. Send a clear letter or email that covers:

• The name and contact information of the new management company
• The date the change takes effect
• How and where to pay dues from now on, and what to do about automatic payments
• Who to contact with questions during the transition

Send it more than once, and post it on the community website.

Step 7: The first 90 days

A good new manager will use the first few months to:

• Walk the property and document its condition
• Review vendor contracts and insurance coverage
• Review the budget and reserve position
• Check delinquent accounts and confirm where each one stands
• Meet the board to set priorities and a reporting schedule

Frequently asked questions

Can we switch management companies in the middle of the year?

Yes. Transitions happen year-round. Aligning with your contract’s notice period is more important than the calendar.

What if our old company won’t hand over the records?

Records belong to the association. If there’s a delay, the board should put its request in writing and, if needed, involve the association’s attorney.

Will homeowners’ dues change because we switched?

Not automatically. Dues are set by the board through the budget. A change in management fees may affect future budgets, but that’s a separate board decision.

Do we need homeowner approval to switch?

Usually not. Hiring a management company is typically a board decision, but check your governing documents to be sure.

Thinking about a change? Complete Management, Inc. handles transitions for HOA communities across the Houston metro area. Request a Proposal to meet with Donna, or call (281) 469-1057.

This article is general information, not legal advice. Talk with your association’s attorney about your community’s situation.