Thursday, March 19, 2015

Painful Partings

One of the more stressful aspects of community association management is deciding to terminate a client contract.  Some reasons as to why this might occur include:

  • Loss of management staff or support that result in reduced service levels
  • Client demands services beyond the contract
  • Client is unable/unwilling to pay billings
  • Manager faces constant harassment or physical threats / lack of respect from homeowners and/or board members
  • Client consistently ignores professional advice (from attorney, insurance broker, CPA, manager, engineer)
  • Client exposes management company to liability (improper insurance coverage, Fair Housing decisions)
  • Client exposes community to liability (improper decisions, failing to respond in a timely fashion, selective rule enforcement)
  • Client's actions are degrading to the reputation of the management firm
The manager acts as a guide for community Boards of Directors, and navigating the above situations is no different.  Management always tries to work through challenges first, before resorting to a termination letter.  If circumstances permit, 30 days for a course correction is not unreasonable. 

It is disheartening to see a thriving client falter, but the management company can't hesitate if remedial steps fail.  It is easy to let things drag on, but this may only enable the aberrant behavior to continue.  

The way the termination is handled is just as important as the way service first began.  The failed expectations should be detailed in a formal letter to the Board, showing the same level of respect as expected in return.  A classy exit not only reflects well on you, but on the management industry as a whole.  Your goal should be to empower the next management company so that the Board addresses the critical conditions that lead to the termination.   You want the community to get back on track, regardless of which management firm is engaged.

Approached in the right manner, a proper termination leaves the door open for your engagement with the same client at a future date.  Homeowners moving to other communities may be the deciding factor for whether these, too, become clients.  Conduct yourself accordingly.

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