Any kind of transition is hard. Like a dad handing the keys to the car to his teenaged son for the first time, management transitions require a lot of preparation and trust. There are two kinds of management transitions that a management company has to deal with: transitioning from developer control and transitioning from one management company to another. Both kinds take some skill to navigate through successfully...
Developer to Homeowner Control
In a transition from Developer to Homeowner control, there is real danger of losing the management contract if you are seen as too closely allied with the Developer when there is active building going on in the community. The way to lessen the possibility of losing the management contract is to start a homeowner “Executive Committee” or “Advisory Board” as soon as there are sufficient homes settled to support this fledgling committee structure—usually between 25 to 50 homes settled. If you wait until the homeowners take control—it’s is too late, and the chances of losing the management contract become much greater.
Organize a general homeowner meeting to get some initial volunteers. Meet with this initial homeowner group like you would with an elected Board of Directors. Suggest policies and procedures for their review and approval. Present bids for maintaining the community. Then take their recommendations to the Developer controlled Board for official approval. Most Developers do not really want to get involved with the day to day operation of the community, so they are only too happy to have homeowners and the management company take this responsibility off their hands—as long as it does not inflate their costs of interfere with their continuing build-out of the community.
By starting a homeowner governing structure before the actual transition of power from the Developer to a homeowner controlled Board of Directors, you prevent the perception that you only represent the interests of the Developer. This should help insure the continuation of your management contract once the homeowners take control. By starting the homeowner involvement early, you protect yourself from the old saying going back to our own Revolution – “No taxation without representation”. You are giving the homeowners representation in how their community is run and money spent even before they take control—and that is definitely in your best interest.
Change in Management Companies
The second kind of management transition is when you either pick up a new management contract from another management company, or worse, you lose a management contract. When you pick-up a new management contract, you need to work with the existing management company to ensure a smooth transition. You want to maintain good relations with the existing management company because you need their cooperation. Avoid criticizing the existing management company or their practices. In football, this would be called “piling on” and it would be a foul—avoid this foul to maintain good relations with this other company.
Present the existing management company with a list of the records you need. It helps if the list is in writing with checkboxes and a date column when those records will be available. Your list might also have a “Received” date column. When a change in management occurs, it is good to keep documented records on the turnover of community info. We've created a sample transition checklist for you to adapt and use:
Remember, the hard copy records belong to the community. Electronic data from the management company’s software belongs to the management company—not the community. If you are able to import the electronic data from the existing management company’s software into your software (making the transition significantly easier for you), they are not obligated to cooperate by giving you this data. They would be doing it as a favor to you. So this is another reason for you to try to engender cooperation by showing a friendly and helpful attitude towards the existing management company.
If you meet resistance in getting the electronic data, point out to the existing management company that if the situation was reversed and you were losing a management contract to them (and it may be at some point), you would be glad to cooperate by providing the electronic data to make their transition easier. (And then smile and take whatever they give you, and when the time comes to reciprocate, take the high road and give them exactly what you said you would.)
Management transitions can be a difficult time for a management company. But the right attitude along with taking proper steps in advance can remove many of the obstacles that can interfere with a successful management transition.