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HOA Property Management Contract Review Checklist

A Haveny template

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A practical guide for boards switching management companies. Use this before signing any new management agreement, and pull your current contract alongside it — most boards are surprised by what's actually in there.

This checklist is written for California associations and references California-specific statutes (the Davis-Stirling Common Interest Development Act, Civil Code §§4000–6150). The general structure — what to look for in each clause, why it matters, and how to think about negotiating leverage — applies in most US jurisdictions, but wherever this document cites a specific California Civil Code section, that citation is California-specific. If you're using this template in another jurisdiction, check what your own state's HOA statute (and general privacy and agency law) says on the same point before relying on it.

Get an attorney to review this contract if the association has any budget for it at all. It's one of the most consequential documents an association signs — it governs money, records, liability, and who can act on the association's behalf, often for years. For boards handling this without counsel, the rule is simple: someone on the board should actually read the entire agreement start to finish, not skim it, and if anything feels confusing, vague, or just off, ask the management company to explain or rewrite it in plain terms before signing. A company that won't clarify its own contract in writing is telling you something. You should also ask whether the contract was prepared by an attorney, or on a template an attorney prepared — that attorney represents the management company, not your association, but it's still a signal: a professional manager takes the business seriously enough to have counsel involved, and a contract drafted or assembled by AI with no attorney review at all is a red flag. Also research the manager's reputation: opinions, complaints, and litigation history. A single complaint may not tell you much, but a consistent pattern will. You should be able to make an informed decision.

Not legal advice. General information for board members reviewing a management agreement.

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The Clause-by-Clause Review

You generally have more negotiating leverage than it feels like. Management companies expect boards to ask for changes, and a reasonable request rarely costs you the deal. The table below adds a fourth column on where that leverage typically matters most and where it doesn't.

Category	What to Look For	Why It Matters	Your Leverage / What to Ask For
Term	Initial term length (1–3 years is typical). Does it auto-renew? On what notice?	Unless you have a separate right to terminate, long auto-renewing terms trap you with a bad manager for another full cycle if you miss the notice window. If the renewal date overlaps with your board election cycle, that can make changing managers even harder to coordinate.	Auto-renewal is fine on its own — don't fight it for its own sake. What actually matters is the termination right (next row). If you have an unconditional right to terminate for convenience at any time after the initial term, on reasonable notice, the renewal structure stops mattering — you're never trapped. It only becomes a real problem when that termination right doesn't exist. You'll also want to make sure the current management contract gets handed to every new board, so this knowledge doesn't disappear with board turnover.
Termination — No Cause	Can either party terminate for convenience? Notice period (30–90 days is common)?	Without a no-cause exit, you're stuck proving "material breach" to get out early.	Negotiate this one hard. Some contracts are drafted so that after the initial term, you only have a right not to renew on a specific date, not a standing right to terminate at any time. That's materially worse — you can miss a narrow window and be stuck another full term. Insist on: "either party may terminate at any time after the Initial Term upon [30–60] days' written notice," not "either party may elect not to renew."
Termination — For Cause	What counts as material breach? Is there a cure period?	Vague breach language makes it hard to terminate even when service is clearly failing, and it's easier to define this upfront than to fall back on default legal standards for breach after a dispute has already started.	Less critical once you have a solid no-cause right, since you don't need to prove breach to exit. Still worth a defined cure period (15–30 days) so you're not stuck arguing what "material" means.
Transition on Termination	Deadline to return books, records, and funds (30 days before the contract's end date is standard — a new manager needs the records before their own contract starts). Format of records — does the board get admin access to the portal, or just PDFs? And separately: is the Association's data portable, or does it live inside the manager's proprietary software in a form that's hard to export regardless of what the contract says about "records"?	Managers can slow-walk a handoff for weeks if the contract doesn't set a hard deadline and format, and software lock-in can make a technically-compliant handoff still functionally useless.	Ask for a specific deadline (not "commercially reasonable time") and export in a usable, non-proprietary format, not read-only PDFs, regardless of which software the manager uses internally: the Association's data is the Association's, independent of whichever platform happens to store it. State that if the manager's non-compliance with this clause causes the Association additional cost (e.g., the new manager charging more for a messier onboarding), the outgoing manager compensates for that cost. It's also worth clarifying that in a termination dispute, the manager may not withhold records or attempt to negotiate daily liquidated damages for each day records go unreturned past the deadline. (Liquidated damages are a pre-agreed compensation amount for breach, and under California law they're only enforceable if they're a reasonable forecast of anticipated harm, not a disguised penalty — Civil Code §1671.)
Compensation — Base Fee	Monthly management fee, and what it actually covers.	Compare against at least 2–3 competing bids for your unit count and complexity, and compare scope, not just price: different companies may price a materially different bundle of services under the same-sounding "base fee."	Get 2–3 competing quotes before you negotiate this one — it's your strongest data point. Line up what each company actually includes in the fee, not just the total.
Compensation — Add-On Fees	Full fee schedule: meeting attendance beyond X minutes, special project hourly rate, court/deposition appearance, collections/lien processing, NSF fees, record storage, 1099 prep, insurance claim coordination (often 4%+ of the claim), capital project coordination (often 2–5% of project cost).	This is where costs balloon. A low base fee with an aggressive add-on schedule can cost more than a higher flat fee.	Ask for the reduced coordination fee (often 50%) to also apply when the board takes the lead on a project, not just when a licensed architect/engineer/PM is engaged — if the board is doing comparable work, the discount logic should apply the same way.
Owner Chargebacks	Which fees get passed to individual owners (move-in/out, entry system programming, document requests, NSF)?	Your governing documents are the actual source of authority for fees the Association imposes on members, but some transfer/escrow-related administrative costs may legitimately come from the manager as their own charge for preparing documents.	Verify against your CC&Rs before the manager starts charging them, and confirm the sales/escrow document fees are reasonable relative to market.
Scope of Duties	What's actually named in the scope section, not left as an unwritten assumption. Standard items to look for by name: assessment invoicing, collection, and delinquency follow-up; accounts payable / vendor bill pay; monthly financial statements and annual budget and reserve-disclosure preparation; board meeting agenda preparation and minutes; architectural (ARC) application processing; violation notices and rule enforcement; vendor bid solicitation; records custodianship and homeowner records requests; insurance renewal coordination; and an emergency/after-hours contact procedure.	Make sure nothing you're relying on (site visits, a specific reporting cadence, reserve funding recommendations) is silently excluded or bumped into "additional service, additional fee." A scope section that just says "general management services" is exactly the kind of vagueness worth pushing back on.	If your board wants site visits, a specific reporting cadence, or anything else beyond the boilerplate, ask to have it written into the scope section by name. Managers change, boards change — it should all be in the contract rather than living in someone's memory.
Spending Authority / Approval Thresholds	Dollar limit the manager can spend without Board approval (e.g., $2,500/occurrence). Number of bids required above a threshold. Emergency spending carve-out. Rules the manager must follow when spending within the pre-approved limit, e.g., arm's-length dealing and market terms for vendors, so the discretion isn't misused even below the dollar threshold.	Too high a threshold means real money moves without the Board ever seeing it coming, and an unconstrained "within-limit" discretion can enable self-dealing (favoring an affiliated vendor) even when no single purchase crosses the approval line.	Negotiable, but most boards land near industry standard ($2,000–$3,000/occurrence). Push harder if your budget is small relative to that number. Either way, the board should be notified of spending at the time it happens or within a reasonable time after, not just at the next scheduled report.
Financial Controls	Are Association funds held in a separate account (not commingled)? Who are the signers? Does the manager have unilateral withdrawal authority, and up to what limit?	Commingled funds or unlimited manager signing authority is a red flag on its own.	Ask for a short advance-notice requirement (even a few business days) on ancillary/ad hoc withdrawals. Expect the recurring base management fee itself to stay auto-deducted without notice — that part is close to non-negotiable industry-wide — but ancillary charges should route through board review first.
Reporting	What reports, how often, in what format, and does the Board get direct online access to ledgers/statements (not just what the manager chooses to send)?	"We'll provide monthly statements" means nothing if there's no enforcement mechanism when they don't.	Ask for direct, real-time portal access rather than relying on the manager to proactively send things.
Liability Cap	Is management company liability capped (e.g., at 6 months' fees)? What's carved out (gross negligence, willful misconduct, criminal conduct)?	A tight cap plus a broad Association-side indemnity (see below) is a very one-sided risk allocation, worth negotiating.	Worth pushing on, but expect resistance — this is often the least negotiable clause for larger management companies. The more realistic lever is requiring the manager's own insurance (see below) to sit behind the cap.
Indemnification — By Association	Does the Association indemnify the manager for nearly everything except the manager's own gross negligence/willful misconduct?	Standard in the industry, but confirm the carve-outs are real and not illusory given the liability cap above.	Standard language; usually not worth a fight on its own.
Indemnification — By Manager	Does the manager indemnify the Association for anything, or only gross negligence/willful misconduct?	Ordinary negligence often isn't covered — know what risk actually sits with the Board.	Ask whether ordinary negligence (not just gross negligence) can be carved in for specific high-risk items like AI data handling (see below) and fund handling, even if the general cap stays as-is.
Insurance Requirements	Two distinct questions, don't let them blur together: (1) Is the Association's own fidelity bond / crime / employee-dishonesty coverage, which California law already requires the Association to carry, endorsed to also cover dishonest acts by the manager and its employees, or does the manager instead carry its own equivalent fidelity coverage? (2) Separately, as a matter of market practice rather than statute: does the manager carry general liability and D&O coverage, and is the manager named as an additional insured on the Association's policy (or vice versa)?	Question (1) isn't optional or a negotiating point — it's a statutory requirement. Under Civil Code §5806, every California association must maintain fidelity bond/crime coverage for its own directors, officers, and employees (at least equal to reserves plus three months' assessments), and if the association uses a management company, that same bond must be endorsed to also cover dishonest acts by the manager and its employees. That's the actual source of the obligation, not the manager volunteering coverage out of goodwill. Question (2) is genuine risk allocation the parties negotiate, and confirms the manager isn't quietly shifting coverage gaps onto the Association.	For (1): confirm in writing whether the Association's existing bond is endorsed to cover the manager, or get proof the manager carries equivalent coverage — this is a compliance question, not a negotiation. For (2): fairly standard; confirm it matches what your insurance advisor already recommends.
AI / Third-Party Software Use	Does the contract address the manager's use of AI tools? Is there a restriction on inputting Association or owner data into public/general-purpose AI platforms? Is there a disclosure duty when AI output is relied on for a decision affecting the Association?	Almost never addressed in standard templates, and it should be. There's nothing wrong with using AI as long as the risk allocation is right: if all the efficiency gains go to the manager and all the risk goes to the Association, something is wrong. See the AI section below, which includes a California-specific statutory basis for this.	Ask for it directly — most templates say nothing here, so raising it isn't fighting an entrenched position, you're filling a gap. See the clause language below.
Manager's Own Insurance	Does the manager carry E&O (professional liability) and cyber liability insurance, at what limits, and is the Association entitled to see the certificate?	The liability cap only protects the manager. If the cap is low and the manager carries no E&O/cyber coverage, a real loss — AI-caused or otherwise — has nowhere to land except the Association. And increasingly, even a manager who does carry E&O coverage may find AI-related claims specifically excluded, see "silent AI" in the AI section below.	Ask for a certificate of insurance as a condition of signing, not just a representation in the contract text. A manager unwilling to provide one is a signal on its own.
Dispute Resolution	Mediation/arbitration required before litigation? Attorneys' fees provision (prevailing party or one-sided)?	Alternative dispute resolution itself is standard. Watch for clauses giving the manager veto power over the Board's choice of legal counsel — this is a real clause that has appeared in signed agreements.	If you see anything limiting the board's choice of its own counsel, push back on that specifically — it's not standard even where arbitration itself is.
Assignment (and Change of Control)	Can the manager assign the contract to another company without Board approval? Separately, and easy to miss: what happens if the management company itself is acquired or merges into a larger company? A stock sale or merger often isn't technically an "assignment" of the contract at all, so a standard assignment clause may not give you any say when your manager is bought out from under you — roll-ups and acquisitions are common in this industry right now.	Without a Board-approval requirement on assignment, you could end up managed by a company you never vetted. And without a separate change-of-control provision, the same thing can happen through an acquisition that technically isn't an "assignment," leaving you with no contractual trigger at all.	Ask for mutual prior written consent (not just notice) before either party can assign — this is reasonable and commonly granted. Ask for a separate clause requiring written notice within a set number of days of any change of control of the management company, with a right to terminate on shortened notice if the Board isn't satisfied with the new ownership or management team.
Licensing & Credentials	Does the contract require the manager (or the individual community manager) to hold specific credentials (CMCA/AMS) or a real estate license where applicable?	Verify independently, don't rely on the contract's self-representation. California doesn't require a broker's license for HOA management, but licensing history still tells you a lot about who you're hiring.	Verification, not negotiation — check the CA DRE lookup and complaint history yourself regardless of what the contract says.
Representations & Warranties	Does the manager represent it's duly licensed and able to perform, and will comply with applicable law?	Standard boilerplate, but useful leverage if licensing issues surface later.	Standard language; not usually worth negotiating further.
Amendment	Can the manager unilaterally update fee schedules/exhibits with mere "notice," or does it require mutual agreement?	Unilateral fee-schedule updates on notice-only terms let costs creep without a vote.	Ask that any fee increase require the board's written approval, not just advance notice — notice alone isn't consent.
Communication Channels	Does the contract disclaim responsibility for monitoring social media/community forums? Is there a single point of contact requirement?	Reasonable on its own, but make sure it doesn't become an excuse to ignore owner complaints raised anywhere except one narrow channel.	Reasonable as drafted in most templates; low priority.
Unusual Clauses (catch-all)	Anything that feels unusual, one-sided, or unfair — don't skip past it just because it's dense or unfamiliar.	You should understand every right and obligation you're agreeing to on the Association's behalf. Unfamiliar doesn't mean unimportant.	Research it: independent research (search engines, AI tools, trade publications, message boards) and ask the manager to explain it in plain language, then negotiate from there.

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AI Use — Why It Needs Its Own Provision

This section is written from a California legal perspective, including specific Civil Code citations. If you're using this template outside California, the reasoning still applies, but check your own jurisdiction's data-privacy law and general agency law before relying on the statutory citations below; they won't transfer directly.

Start with the basic agency-law point, because it's why any of this matters. The manager acts as the Association's agent. As principal, the Association generally bears responsibility for what its agent does on its behalf, subject to the usual carve-outs (fraud, gross negligence, contractual caps). That means when a manager's AI use goes wrong, the legal and financial exposure lands on the Association, not the manager, even though the manager made the choice and the Association may have had no idea it was happening.

Most standard management agreements say nothing about AI. That silence isn't neutral: it leaves the manager free to use it however they like, with no disclosure duty and no allocation of risk if it goes wrong, or worse, it invites a one-sided clause where the manager keeps all the efficiency gains and the Association absorbs all the risk. Management companies increasingly use AI tools for correspondence, vendor screening, and drafting, so a modern contract needs to address it directly rather than leave it to a general confidentiality clause to cover by implication.

The goal isn't to ban AI use — most agents use it now, and a manager using AI thoughtfully may genuinely serve the Association better than one who doesn't. The goal is proportional, accountable use: understanding the risk that comes with it, not pretending it isn't there.

That breaks into three separate questions a contract should answer:

1. Can the manager use AI at all? Yes, but there's a real difference between low-stakes, general use (proofreading a letter, drafting a generic template, answering a non-specific question) and inputting Association or member-specific data — only the second category triggers the restrictions below. Either way, a human stays responsible for the output. Most AI systems now surface some version of a use-with-caution disclaimer, a line reminding you to double-check its answers — that's the industry itself acknowledging its error rate, and a policy that ignores this is choosing not to know something the tool is already telling you. The real danger isn't the AI being wrong sometimes, it's a manager relying on an answer they have no independent way to verify, or being unaware that AI systems tend toward sycophancy (agreeing with and validating whoever's asking, rather than prioritizing what's actually correct).
2. What can go into it? This is where California law stops being a matter of contract negotiation and becomes a statutory floor the contract can't waive. Under Civil Code §5230(c)(1)(B), an association or its managing agent may not transmit a member's personal information to a third party without that specific member's own consent, unless the disclosure is otherwise required by law (there's a specific carve-out for records disclosures required under Civil Code §5200 et seq.). This consent has to come from the individual member — board approval does not satisfy it, the board cannot consent on a member's behalf, and a property management contract cannot override this statute. Feeding a member's correspondence, complaint, or personal details into a general-purpose AI tool is transmitting it to a third party under this section. Separately from that statutory floor, the contract should also restrict inputting confidential Association information (financial records, privileged communications) into public, general-purpose tools that retain or train on submitted data.
3. Who's on the hook if it goes wrong? Under Civil Code §5230(c)(2), a member who's harmed by a violation can sue the Association, not the manager, for injunctive relief and actual damages, and can recover their own attorney's fees if they win. So the Association carries the statutory exposure even though the manager caused the problem — which is exactly why the manager needs to carry that risk back contractually: a duty to promptly fix the problem, and actual indemnification standing behind that duty, not just a promise with nothing backing it. Note that the manager's own professional liability insurance may not cover this, see "a note on insurance" below.

A note on insurance: "silent AI" is ending

Until recently, most professional liability (E&O) and cyber policies were silent on AI: they neither explicitly covered nor excluded AI-related losses, so coverage existed by default rather than by design. Insurers call this "silent AI" coverage. That's changing fast. Starting with 2025 renewals and accelerating through 2026, major insurers have begun filing explicit AI exclusions — Verisk's ISO introduced generative-AI exclusion endorsements for commercial general liability effective January 2026, and W.R. Berkley has filed an "absolute" AI exclusion for its D&O, E&O, and fiduciary liability lines, excluding any claim "based upon, arising out of, or attributable to" AI use. In plain terms: don't assume a manager's existing insurance responds to an AI-caused loss. It increasingly won't. That's exactly why Clause 4 below makes the manager's indemnity obligation independent of whether their insurance actually pays out.

Suggested Clause Language

1. Permission, with a disclosure floor

Management Company may use artificial intelligence tools ("AI Tools") to assist in performing its duties under this Agreement, provided that any output materially relied upon in a decision, communication, or recommendation affecting the Association shall be reviewed, exercising reasonable judgment, by a qualified human employee of Management Company prior to reliance. Management Company represents that it uses [insert AI tools and tiers, e.g., "Claude Enterprise"] as its designated AI Tool(s), and that the following services involve AI Tool use: [name]. If Management Company changes or adds AI Tools, it will notify the Board in writing within five (5) business days identifying which AI Tools are used for which services.

2. Data-handling restriction

Consistent with Civil Code §5230(c)(1)(B), Management Company shall not transmit any owner or member's personal information to any AI Tool without that individual owner or member's own consent, obtained directly from them — Board approval alone does not satisfy this requirement — unless the transmission is otherwise required by law (including disclosures required under Civil Code §5200 et seq.). Management Company shall not input any confidential Association information, financial records, or privileged communications into any publicly available or general-purpose AI Tool that retains, trains on, or otherwise processes such data outside Management Company's controlled environment. Use of enterprise-grade AI Tools with contractual data-protection and non-training commitments equivalent to Management Company's obligations under this Section is permitted without separate consent.

3. Accountability when it goes wrong

Management Company shall promptly correct any error, omission, or adverse consequence to the Association or its owners arising from Management Company's use of an AI Tool, at Management Company's own expense, and shall notify the Board within 48 hours of discovering any unauthorized disclosure of Association or owner data caused or contributed to by an AI Tool, in addition to and without limiting any notification obligation arising under Civil Code §5230(c)(2) or other applicable law.

4. The liability/insurance balance

The limitation of liability set forth in Section [Indemnity and Liability] shall not apply to losses arising from Management Company's breach of Sections [2] or [3] above. Management Company shall carry, at its own expense, professional liability (errors and omissions) insurance and cyber liability insurance, each in an amount of not less than $[1,000,000] per occurrence, and shall furnish certificates evidencing such coverage upon request. Regardless of whether such insurance responds to the claim, Management Company shall indemnify, defend, and hold harmless the Association for any damages, injunctive relief compliance costs, and attorney's fees awarded against the Association under Civil Code §5230(c)(2) or other applicable law arising from Management Company's use of an AI Tool.

5. Individual acknowledgment

This acknowledgment applies independently of the enterprise tools designated under Clause 1. Clauses 1 and 2 govern what Management Company as a company is permitted to use; they don't stop an individual employee from independently pasting Association data into a personal account on an entirely different, unauthorized tool. Clause 5 closes that gap by making the acknowledgment personal, not just corporate. Before gaining access to Association files, every manager working on the Association's data will sign a statement, a copy of which is delivered to the Association, confirming they are: (i) aware that AI can make mistakes and that outputs should be double-checked, and if they lack the knowledge to verify an AI output themselves, they will check with a knowledgeable colleague or disclose that the output is unverified; (ii) aware of AI sycophancy, the tendency of AI systems to agree with and validate the person asking rather than prioritize what's actually correct; (iii) aware that information entered into many AI systems, depending on the specific tool and tier, may be retained indefinitely, used to train future models, or later produced in response to a subpoena, unless that tool is one of the enterprise-tier tools designated under Clause 1 with a non-training commitment; and (iv) familiar with this AI clause of the Property Management Agreement and undertake to comply with it.

That's the balance: the manager can use AI as a tool, they just can't decide unilaterally what member data goes into it, and they can't rely on a low, generic liability cap, or on insurance that may not even respond, to absorb a loss their own tool choice caused. Clause 4 is what actually does the work; without it, Clauses 1–3 are aspirational language sitting behind the same cap as everything else. Clause 5 exists to make sure the individuals actually handling the Association's data, not just the company on paper, understand what they've agreed to.

If you can't renegotiate the whole contract: the indemnity letter

Not every board reading this is negotiating a new agreement — some of you are dealing with an existing signed contract that already has AI exposure baked in, and a full renegotiation isn't realistic right now. A lighter-weight option: ask the manager to sign a standalone indemnity letter — a written confirmation that they're aware of their obligations under Civil Code §5230(c)(1)(B), and that if those obligations are breached through the manager's AI use, they will indemnify and defend the Association and make it whole for losses under §5230(c)(2). This doesn't require reopening the whole contract, and a manager unwilling to sign a simple letter confirming they'll follow the law they're already bound by is telling you something.

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Before You Sign

1. Get 2–3 competing proposals on the same scope of work so you're comparing apples to apples on fee schedules, not just the headline monthly rate.
2. Check licensing and complaint history independently — CA DRE public lookup, Yelp/BBB, and litigation search on the company and the individual manager assigned to your account. Don't rely solely on the manager's own representations.
3. Negotiate the liability cap and indemnity balance if it's heavily one-sided — this is usually negotiable even with larger management companies.
4. Confirm the transition mechanics for your current manager before you sign the new contract: notice period, records handoff deadline, format, and data portability.
5. Put the new contract in front of an attorney if the board has any budget for it. If not, at minimum use this checklist against the draft line by line before the Board votes, and consider a standalone indemnity letter for anything you can't get rewritten into the contract itself.