The HOA management company transition process involves several steps, from the initial review to onboarding. Board members are responsible for ensuring this process goes smoothly, with all files and credentials transferred without delay.
How Long Does an HOA Management Company Transition Take?
The transition from one HOA management company to another generally takes 90 to 120 days, with variations depending on the complexity of the association and the completeness of documents.
Switching HOA management companies is rarely straightforward. In fact, it is often a long and arduous process. Many things can go wrong along the way if the parties fail to coordinate and keep each other in check.
What is the Process for Transitioning HOA Management Companies?
The HOA management company transition process involves understanding the HOA’s obligations, notifying the current firm, handing off all documents, turning over financial records, informing owners and vendors, going live, and onboarding the new manager.
Here’s a breakdown of the steps.
1. Understand Obligations
The initial stage involves the board reviewing the current management contract and voting to terminate. Boards must then identify replacement candidates, review proposals, and negotiate terms.
Keep in mind that Illinois law imposes certain requirements on community association managers and management companies under 225 ILCS 427. During the transition, the board must ensure that the new company complies with these requirements.
Estimated Duration: 30 days
2. Notify Current Management
Contract signing takes place after the first 30 days. After this, current management must be notified. Either the HOA board or the new management company can take over this task.
Estimated Duration: 15 days
3. Prepare Documents for Handoff
The old company must turn over all administrative, operational, and financial documents to the new company. This is also the best time to compile the vendor list and draft the notice of the change.
Transition documents include:
- Association’s governing documents
- Articles of incorporation
- Community plat
- CC&Rs
- Bylaws
- Rules and regulations
- Board resolutions
- Annual and board meeting minutes for the past 7 years
- Financial statements for the past 3 years
- Receipts, expenditures, and invoices
- General ledgers
- Owner account statements
- Bank statements and reconciliations
- Reserve account summary
- Most recent reserve study
- Most recent annual budget
- Capital improvement plans
- Vendor contracts
- Insurance policies
- Membership lists
- Pending service requests, violations, and ARC requests
- Pending attorney contracts and legal issues
- Tax returns and information
- Access credentials to the community website, online portal, and other online accounts
Estimated Duration: 30 days
4. Transition Financial Responsibilities
While the document transfer is in progress, take this time to hand over financial duties and authority as well. Bank accounts must be updated to remove the previous manager as a signer and add the new one.
Additionally, owners must know the cut-off for sending payments to the old management address. They must be informed of the new address and any changes in instructions.
Moreover, vendor payments must continue to prevent service interruption. The incoming HOA manager must receive all vendor information and pick up immediately after the outgoing manager relinquishes their role.
Estimated Duration: 30 days (concurrent with the previous step)
5. Inform Owners and Vendors
Both owners and vendors must be aware of the change in management. They must receive a formal notice, along with new contact information and procedures.
Estimated Duration: 30 days (concurrent with the previous step)
6. Go Live
Once everything is set up, new management systems can go live. This includes the new portal, work order system, and billing system. During this step, the outgoing and incoming managers can perform final checks.
Estimated Duration: 15 days
7. Onboard New Management
Finally, onboarding begins. A walkthrough allows the new manager to get a feel for the community. They must also attend the next board meeting as the official manager. Over the next month, the new manager can establish a routine and adjust as needs arise.
Estimated Duration: 30 days
How to Minimize Delays in the HOA Management Company Transition Process
Transitions can run into several problems, from delayed task completion to missed documents. Here are the best tips for ensuring a smooth process.
1. Terminate the Contract Within the Specified Window
Before anything else, the board must review its current management contract. Check the termination clause for any requirements or special provisions. The association may be liable to pay an early termination fee if it cancels the agreement before the intended date.
Furthermore, board members may need to comply with certain notification requirements. A formal termination notice must typically be in writing and delivered via certified mail, but exact specifications will depend on the contract.
Many contracts also have auto-renewal clauses, with a dedicated timeframe for cancellation. Avoid missing the window and locking the association into another multi-year agreement.
2. Allocate Enough Time for File Transfers
Document handovers take up a quarter of the transition process. Beginning early ensures the completeness and accuracy of documents and records. Plus, compiling and uploading the documents into the new system also takes time.
3. Follow up on Slow Handovers
If the outgoing company is dragging its feet, boards shouldn’t hesitate to follow up. An uncooperative firm delays the entire transition, incurring more costs and extending the adjustment period.
4. Create a Checklist and Calendar
A checklist helps the association track all deliverables, while a calendar sets critical deadlines. With both in hand, the board can ensure it doesn’t miss a single item or task.
5. Monitor Performance
A strong start doesn’t guarantee excellent performance throughout the contract term. New management may put its best foot forward in the first year before its quality wanes. A good company is consistent, takes initiative, and supports the association’s success.
Is it Worth the Time and Effort?
The HOA management company transition process can be lengthy and grueling, but associations shouldn’t endure poor service simply because switching is inconvenient. Waiting too long to replace poor management will only worsen the community’s situation and may lead to long-term operational and financial damage.
Hillcrest offers HOA management services to communities in Chicago. Call us today at 630-627-3303 or contact us online to request a proposal!
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