What to look for in an HOA management contract
By OurHOA · General information · Revised
Key contract terms to check before your board signs a management agreement, from scope and fees to termination and record handover.
Scope of services and what counts as extra
The single most important section of any management agreement is the scope of services. This is where the company spells out exactly what it will do for the base fee: collecting assessments, preparing financial reports, coordinating maintenance, sending violation notices, and so on. Read it line by line, because anything not listed there is usually billed as an additional service at an hourly rate or flat add-on. If your community expects the manager to attend every board meeting, handle architectural review applications, or manage a major construction project, confirm those duties appear in writing rather than assuming they are included.
Fee structure and the costs that surprise you
Most contracts list a monthly management fee per unit, but that number rarely tells the whole story. Look for line items covering setup or onboarding fees, after-hours emergency calls, mailing and copying charges for owner notices, and extra fees tied to litigation or insurance claims. Some firms bundle these into the base rate while others charge each one separately, so the only way to compare two proposals is to list every possible charge side by side. Ask the company to show you a sample invoice from a community similar in size to yours, and if they hesitate, that tells you something.
Contract term, auto-renewal, and the evergreen trap
Many management agreements run for one to three years and include an automatic renewal clause. That means the contract quietly extends for another full term unless the board sends a cancellation notice by a specific deadline, sometimes 60 or 90 days before the renewal date. Boards that miss the window are locked in for another cycle, often with a fee increase already baked in. Mark the opt-out deadline on the board calendar the day you sign, and set a reminder at least 30 days ahead so you have time to evaluate performance and solicit competing bids if needed.
Termination rights and early exit costs
Even outside the renewal window, the contract should explain how either party can end the relationship. A well-drafted agreement includes a termination-for-cause clause that lets the board walk away without penalty when the company fails to perform, along with a termination-without-cause clause that allows either side to exit with 30 to 90 days of written notice. Watch for early termination fees that equal the remaining months on the contract. If the penalty for leaving is larger than the cost of staying, the board has very little leverage to demand better service.
Record handover and transition obligations
The part of the contract most boards overlook is what happens after it ends. A strong agreement requires the outgoing manager to return all association records, financial files, bank account access, vendor contracts, and owner correspondence within a set number of days, typically 30. It should also state that the company will cooperate with the incoming manager or the board during the transition at no additional charge. Without that language, some companies have held records or delayed bank transfers until a final invoice was paid, leaving the board scrambling to reconstruct its own files.
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These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.