THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, February 10, 1996 TAG: 9602080268
SECTION: REAL ESTATE WEEKLY PAGE: 20 EDITION: FINAL
COLUMN: Common Ground
SOURCE: G. Robert Kirkland and Michael A. Inman
LENGTH: Medium: 66 lines
I am the president of an association that recently decided to change management companies. We did not feel our manager had the expertise that we needed on some of the more important issues, such as insurance, budgeting and covenant enforcement.
We checked our management contract to make sure we were within our rights, and we felt comfortable because we were past the expiration date of the original contract, although there is a clause that says that the contract automatically renews for successive one year terms. It requires 90 days advance written notice to terminate the contract. The contract was renewed on Oct. 1.
We gave notice at the end of December for the contract to terminate on the first of April. The management company told us that we hadn't given them proper notice and that they had until Sept. 30 under the contract and that we would have to give them notice prior to June 30 in order to end the contract on Sept. 30.
But they said if we really wanted out the contract we could pay them 90 days management fee and then they would give us copies of all of our records except correspondence files and outdated accounting records. We feel like we are being jerked around and that they are not entitled to any money and that they should turn over all of our records, regardless of what type of record they are.
What do you think about this situation?
We think you are wrong on one count and right on the other. With respect to the termination, most contracts do read that once the contract renews, both parties are bound to each other for another year and then the notice provision for the renewal term is the same as it would have been during the initial term: that is, you have to give 90 days notice prior to the end of the term, not 90 days notice at any time you choose.
You need to look closely at the contract to make sure that you don't have the right to cancel on 90 days notice at any time, but that would be an unusual provision for the management company to put into the agreement they probably prepared and provided to you. Consequently, if they are entitled to go to the end of September, then they are not being unreasonable to ask for some compensation for early termination.
If you believe you have ``cause'' to terminate, that is, the management company has breached your contract, you should also look for a clause which allows you to terminate immediately ``for cause.'' It would require some material failure to comply with the terms of the contract to constitute ``cause'' to terminate the contract summarily.
With regard to the records turn-over, you are entitled to all the association's records and you are entitled to the originals. The management company is merely a custodian of your records. If the management company wishes to keep copies, that is their prerogative, however, you should insist on receiving all of the original records. MEMO: G. Robert Kirkland, president of a Virginia Beach property management
consulting firm, and attorney Michael A. Inman specialize in Virginia
community association issues and are affiliated with the Southeastern
Virginia chapter of the Community Associations Institute. Send comments
and questions to them at P.O. Box 446, Virginia Beach, Va. 23458. To
submit questions by phone, call 486-7265; by fax: 431-0410.
by CNB