Moving Management Companies Can Result In Lost Files: How To Prevent

“The new management company cannot seem to find all our files – what can we do?”

A recent complaint received by CCOC is but one of many echoing the same cry for help.
This is a major problem for Associations, but where does the onus lie: the management company or the Association. The answer, unfortunately, is both.

Most home owners are cautious on moving day. You want to ensure your possessions are packed properly, you receive an inventory of what is boxed, loaded on the moving van, and upon arrival you check again to ensure all your possessions have arrived and have been delivered undamaged.

The same rule applies when a new management company takes possession of your Association’s records and files.

A management company that is competent usually provides to the Association they have recently contracted with a “Transition List” or a “New Client Start-Up” to be completed by the Association. Some of the information requested would be:

• A list of all unit owners, addresses, relevant contact information and should include a request to determine the percentage of investor owned units and if the community is a tax district.
• A list of all vendors/contractors used by the Association.
• The number of bank accounts [loan information [to ensure due date for payment], business checking, savings including verification of authorized signatures.
• All governing documents of the association
• Insurance information to include the agent, carrier, policy period end date.
• Request information on any pending lawsuits
• Emergency town information
• A copy of the association’s operating budget and common fee schedule in effect when the new management company takes over and what the late fee policy is.
• A competent management company will check the Secretary of State to determine if the Association is current in its file. In addition, they will prepare and submit the new change forms.
• Most important is receipt of all accounting records in order to bring their accounting system current.
• Some management companies will flash drive written documents and accounting files. Although the prior management software may be entirely different; the new management company will have full records and could, in some instances, retrieve these files if necessary.
• Security Codes for buildings, if applicable, the Alarm Company and the first and second responders.
• Change of Agent Form and a Change of Business Address Form with the Office of the Secretary of State..

In one instance, a new management company filed a Change Of Agent form with the Secretary of State six [6] months after contracting with the Association, but never changed the mailing address or new board member names, hence information was still being sent to the former management company and a board president who was no longer on the Board of Directors.
Management companies retain the current year files and in some cases the prior year files nearby. Remaining files are archived. Critical files that should be turned over and signed for by the new management company are:

1. Unit Owner files
2. Contract file containing all completed contracts
3. Insurance files containing past claim history
4. Governing documents for Association
5. Pending quotes
6. Pending work orders
7. Pending payables
8. Audit file [containing past approved audits of association’s financial status.

Every Association is different, therefore the above outline would differ depending on the scope of your common interest community.

So what steps should your Association follow to ensure that your records and files, the history of your Association, is not misplaced, mislabels, or simply just placed in a storage area, or worse a back room, and the complaint from the new management company is “I have yet to find a current contract file in 40+ boxes of records that I was given. The files are all askew.“

If your new management company cannot or does not provide the Association with a document to account for the files they will be taking, then develop one.

This will ensure that the neither the former or new management company does not play the “blame game” with missing files.

The only entity that faces problems with the ‘blame game’ is the Association. A reputable management company should willingly comply when turning over their records thereby ensuring they have met their obligation to the Association and this leaves them fault free when records cannot be found by the new management company.

In addition, a member or members of the Board of Directors may also want to be on site when records are moved or could before hand go through their Check List to verify what records will be turned over.

Advise your new management company to follow your transition list and state that you want each line items to be initialed, indicating they have taken possession of your records, and request that a signed copy by the property manager is to be returned to the Association.


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