M.B. from outside of Connecticut writes:
Dear Mister Condo,
Can a new Board terminate an existing contract with a management company that was recently hired by the previous Board President? We believe the management company’s actions are incompetent, unresponsive and ineffective and do not serve the best interests of the Association and is a detriment. Our financial accounting is poorly handled and in a terrible mess and they and also a serious financial drain. The legal counsel is also an issue and are going to be replaced as well. We are trying to repair great damage done by poorly managed boards and have many hurdles to deal with. Getting rid of this management company would help move us forward. Please advise. Thanks!
Mister Condo replies:
M.B, the key word here is “contract”. The previous Board was empowered to enter into legally binding contracts with vendors, including the management company. Unless the management company has specifically broken parts of the agreement which would constitute a breach of contract, the current Board would likely be unable to simply terminate the contract. The same is true with your legal counsel. If they have a signed agreement executed by the previous Board, the agreement would hold up in court and the association could find itself losing a great deal of money by wrongfully terminating these agreements. Of course, if either the management company or the attorney has breached their contracts, the association may be able to fire them for cause, thereby releasing the association from further harm.
A well-intentioned Board can do a great deal of good, even with the existing management company and legal team. The Property Manager reports to the Board so the Board can set their objectives and direct their work. The attorney has a fiduciary interest to work in the best interests of the association. Neither are appointed for life. If the current Board finds it does not like working with either of these entities, they need only run out the clock on the current contracts while they look for their replacements. In the meantime, get your money’s worth out of these professionals. It sounds to me like your current Board is up for the challenge. Good luck!
2 thoughts on “Current Condo Board Obligated to Contracts from Previous Board”
Current Condo Board Obligated to Contracts from Previous Board: https://t.co/RidmdfPNMy
This is an issue we see frequently when reviewing governing documents and even with reserve study providers trying to lock in communities to long term contracts. Here is a decent explanation on the issue from a law firm in the issue: http://www.davis-stirling.com/MainIndex/Multi-YearContract/tabid/3627/Default.aspx