Las Vegas HOA: Can an HOA Cancel its Management Contract Early?

Las Vegas Homeowners Associations (HOA) boards in Nevada that employ outside management normally sign a one year contract with their management company. Beyond that one year, the HOA board will either approve a new one year contract with a month-to-month contract only occurring until a new contract is signed.  I have run across longer term contracts, three years for one company here in Las Vegas, however it is hard to see that as a benefit for an HOA board to sign a long term contract.  It is easy to see the benefit to the management company though! Too much can happen in three years; board members change, the management company can reassign new personnel to handle the HOA’s account.

HOA Management companies function best in my opinion when they have to keep earning their client’s business.  Having a one year contract allows the management company to become familiar with a community and get it set on the right path, yet still allows an HOA board to change management companies within a reasonable amount of time if a solid relationship cannot be established.

Nevada law also allows HOA boards to terminate their contracts early, provided that they give their management company 30 days’ notice (in some cases). The State of Nevada wants to allow HOA boards’ pretty wide discretion in managing their communities. Getting trapped inside of a bad service contract can have a negative effect on not only the board but all the member homeowners as well, so the state has given the power to boards to terminate service contracts fairly easily.

In most cases, management companies require anywhere from 30 to 90 days’ notice of termination.  If a board plans to terminate their contract before the term expires, the termination should always be in writing.  You should also plan to have to repay any promotions that may have been received at the signing of the contract.  For example, if the association 3 months free management with a signed contract, then you may be required to pay current management back for that promotion if you did not complete the term of the initial contract.  There are some exceptions that allow a board to terminate without “penalty”.  For example, in accordance with NRS 116A.620, if your community manager commits a violation of NRS or NAC 116, the board has the right to terminate the contract with 30 days’ notice without penalty.

If all goes well and your current management company accepts your termination without penalty you can expect the following over the next 30 days after termination:

The Transition Process in a Nutshell:

  • New management should provide a list of items with a timeline in which they will need each item belonging to the association.  This transition request should have exact date deadlines so that there is no question as to when the previous company should be turning things over to the new company.
  • New management should send a welcome letter which provides the homeowners with vital information about the management company, where to send payments, their new account numbers, website access information if that is available as well as a statement showing their current balance (balances are provided by the previous management company).
  • Vendors should also be notified of new management and should be asked to change billing addresses so that their invoices are paid in a timely manner.
  • Full transition can take anywhere from 30 to 90 days depending on how well the previous management company kept their records and how cooperative previous management is during the transition.  The longer it takes the previous management company to get the necessary information to new management, the longer the transition will take.

Paul Rowe is co-owner of Shelter Management Group (SMG) and is also a licensed property manager. You may reach Paul at Shelter Management Group at 702 818 478 zero and by emailing info @ sheltermanagementgroup. com. You may also complete a contact form via the SMG website.