Transitioning from One Management Company to Another.

It’s Simpler than You Think.

Many prospective clients inevitably ask us during an interview how the transition process works from one management company to another. Some boards are reluctant to change companies because they mistakenly believe it’s a long, complicated process that requires their direct oversight. Others are worried that community information will get lost between the two. Still others aren’t sure what their rights are when it comes to terminating an agreement with an existing firm.

While changing companies can produce some anxiety, it’s important to know the facts about transition and what your rights are as an Association.

  1. Transition is Not a Complicated or Long Process. Transitions generally take 30 days or less. Beacon Management will handle the entire transition process, interact with the prior management company or developer and provide a status report to the Board along the way. Depending on the size of the property and state of the records, transition typically takes 30 days. We recommend overlapping services with the previous company to ensure a seamless transition. Beacon Management Services uses a comprehensive checklist to ensure the accuracy of all association records and financials.
  2. Transition is Protected under Georgia Law. Georgia law protects Associations from a prior management company or developer by stating that the transfer of information is done in a timely and orderly manner. This protection is provided by the Georgia Real Estate Commission and by the Secretary of State Department of Corporations laws and guidelines. Georgia law also states that an association’s records must be kept for seven years
  3. Transition Should Include Evaluation of These Critical Documents.Association Documents
  • Architectural Guidelines, Board Policies/Resolutions, Rules and Regulations
  • Deeds and plats to common areas
  • Governing Documents – Bylaws (current and past)
  • Governing Documents – Corporate Charter/Articles of Incorporation
  • Governing Documents – Covenants, Conditions & Restrictions (CCR’s)
  • Minutes book
  • Names, addresses, and telephone numbers of owners
  • Names, addresses, and telephone numbers of mortgagees

Financial

  • Audits (recommend forensic audit if necessary)
  • Accounts payable ledgers and schedules
  • Accounts receivable ledgers and schedules
  • Bank reconciliation
  • Budgets
  • Certificates of Deposit
  • Charts of accounts
  • Checks
  • Expense analyses and expense distribution schedules
  • Financial statements
  • General ledger
  • Inventories of products, materials & supplies
  • Invoices from vendors
  • Invoices to customers
  • Notes receivable ledgers & schedules
  • Payroll records & summaries, including payments to pensioners
  • Replacement reserve records, including costs, depreciation reserves, depreciation schedules, blueprints & plans, estimated life of asset
  • Tax returns

Maintenance

  • Certificates of occupancy for common elements
  • Contracts
  • Correspondence
  • Employee personnel records
  • Insurance policies
  • Insurance records, accident reports, claims
  • Keys and combinations
  • Warranties

Assurances

  • Statement of compliance with ordinances and governing documents
  • Confirmation from local authorities re: fire hydrants, etc.
  • Confirmation that emergency communications centers have mapped association
  • Statement of determination of public agency or utility responsible for lights/sewer
  • Transition Should Include a Thorough Building/Property Audit. To learn everything there is to know about an association, a complete property audit should be conducted. This is especially prudent when the developer is the Declarant or there is a long-term management company in place. Again, this should be handled by the incoming firm and not the board of directors.
    • Organizational “audit”
      • Corporate audit
      • Governing document audit
      • Covenant enforcement audit
    • Physical and common elements “audit”
    • Engineer/contractor for inspection of common elements
    • Engineer/contractor for reserve analysis on common elements
    • Confirm that association owns common elements
    • Review/new reserve study
    • Review assessments and budgets
    • Evaluate contractors—insurance, management, landscape
    • Orientation—all aspects of Association’s operations
    • List of manufacturers of products and specifications used in the maintenance, repair or replacements in or on common areas or common elements
    • Copies of any bonds or letters of credit posted with any state or local agency
    • Schedule of quantities of the following:
      • Square footage of roof
      • Square footage of all paved area on the association property
      • Square footage of lawn surface
      • Square footage of exterior surface of each building
    • Confirmation of compliance with the local authorities
      • Completion bonds, either in place or already released
      • Traffic and safety regulatory signage
      • Fire code compliance
      • Designation of roadways and site lighting, both public and private
    • CAI ABC’s—“A Basic Course for Association Leaders”
    • Job description for Directors
    • Handbook for Directors, including governing documents
  • Transition Should Include Evaluation of Employees. A critical component to the success of a community is the staff (if applicable). Part of our start up plan is to evaluate human resource use.With the Board’s consent, the new company should interview current staff members to ascertain their core competencies for the position or function involved. Hiring an experienced person is just the first step. They should also be screened for attitude, experience, integrity, education, credentials and industry longevity. We recommend providing every employee with a job description, written procedures, daily work routines and timed schedules for each position or function involved. In addition, we encourage managers to pursue ongoing professional development in order to become “thought leaders” on industry issues relevant to their community.
  • Transition Should Produce a Good Outcome.
    Throughout the transition process described above, professional management can and should serve as advisor to the Board, custodian of the association’s books and records, and the entity to which the Board turns to assist in the development of long-term plans and goals to make sure that a community’s early due diligence translates into future continued success and financial stability for the owners.We recommend that you hire a management company that has your best interests in mind. It starts there. Carefully choose your manager. Align your core values to everything any member of the team does – from scripting a greeting spoken by the front desk person to cultivating a culture of accountability. A community’s culture and image of itself has to be reinforced every day, by every interaction, by every courtesy, by extending your best effort every day.

Finally, transition is temporary. A moment in time that is intended to bridge the gap between the old and the new. And with it, a fresh start that leads to greater opportunities for success.