hoa-management-faq

What should be included in an HOA management contract?

Discover essential elements to include in an HOA management contract for effective community governance and successful property management

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Reviewed by:

D. Goren

Head of Content

Updated Dec, 6

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What should be included in an HOA management contract?

 

Parties, authority, and scope

 

  • Who is hiring who: Name the HOA legal entity, manager/company, license numbers (if required), and the properties covered.
  • What the manager may do: Define “agent authority” (what the manager can sign/approve) and hard limits (no rule changes, no lawsuits, no loans, no contracts over $X without board vote).
  • Services list: Spell out every duty: meetings, minutes, records, owner communications, budgeting, vendor bids, inspections, collections, enforcement support, insurance admin, reserve planning.

 

Money handling (most disputes happen here)

 

  • Banking and controls: Accounts titled to the HOA, not the manager; board-only control over adding signers; separate operating/reserve accounts.
  • Spending rules: Written approval thresholds; emergency definition and cap; purchase order process.
  • Accounting standards: Monthly financial package contents (balance sheet, income/expense vs budget, delinquency report, bank reconciliations).
  • Audits and access: Board’s right to view source documents anytime; annual CPA review/audit if desired; no commingling (mixing HOA funds with others).

 

Fees, pass-through costs, and term

 

  • All-in price clarity: Base fee plus every extra fee (copies, postage, resale docs, after-hours, violations, collections).
  • Vendor markups: Ban or cap “kickbacks”; require disclosure of referral fees.
  • Contract length: Prefer 1-year with renewal options; termination for cause (clear breach + cure period) and termination without cause (e.g., 30–60 days) with fair transition help.

 

Enforcement, collections, and legal coordination

 

  • Rules enforcement: Manager can send notices, but board controls fines and hearings; define timelines and templates.
  • Collections ladder: Late fees, payment plans, attorney referral point; require compliance with state/federal debt laws.
  • Lawyers and lawsuits: Only board authorizes legal action; manager cannot select counsel without approval.

 

Operations, vendors, and risk

 

  • Vendor management: Bid rules, contract review, proof of insurance, and who supervises work.
  • Maintenance plan: Routine vs capital projects; reserve study coordination.
  • Insurance and claims: Renewal calendar, certificate tracking, claim reporting duties.

 

Records, privacy, and handover

 

  • Records ownership: All records belong to the HOA; define retention and where stored.
  • Data security: Limits on sharing owner info; breach notice duties; password access for board.
  • Transition clause: Deliver all files, logins, keys, contracts, and balances within a set time; no “hostage fees.”

 

Performance standards and disputes

 

  • Service levels: Response times, onsite visit frequency, meeting attendance, and reporting dates.
  • Indemnity and liability: Define who pays for what; require manager’s E&O insurance (professional errors) and fidelity bond (theft).
  • Dispute process: Escalation steps before court (e.g., meeting, mediation), and governing state law/venue.

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