Q: We want to cancel a contract with an HOA management company. There is no termination clause. Can they hold us in?
We have a 5 year contract with a property management company. The HOA board feels that the management company has failed to meet its duties and it is not likely to change. We want to cancel the contract. They have refused to let us out and say that they will only let us out if we pay the remaining part of the contract. There is no early termination clause in the contract. It only states that the contract runs for 5 years and cancellation notice must be given 30 days before the renewal date or it will automatically renew. Do we have a leg to stand on?
A:
You might have a leg to stand on. It all depends on what is stated in your contract. If the HOA Management Company has failed to meet important portions of the contract, you have options. You could terminate and then defend yourself if they sue, or you can sue them for failure to fulfill the contract and include termination as something a judge can order.
I highly recommend that you have an attorney review the contract.
A:
I agree you should consult an attorney with your contract. Just because there is not an "early termination clause" doesn't mean that they won't suffer damages if you end the contract early. The amount of damages will likely be the lost profits on the contract, but if you have suffered damages because of their failure to perform, then those damages will offset what they are claiming.
It will be a matter of you being able to prove their breach and subsequently their unwillingness to cure the breach or them being able to prove that they didn't breach.
I am not sure how much is left on the contract. Usually it will need to be substantial to induce someone to sue. Litigation is expensive on both sides. I advise avoiding it when possible.
Hope this helps.
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