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I am a board member of a homeowner's association (HOA). The board is potentially interested in severing a contract with a company that has been managing our association since 2007. In 2007, the President of our HOA (who no longer owns a condo in our building and is therefore no longer a member of our HOA) signed a contract with Jane Doe*, who was DBA of Acme Management Co.*

The relevant portions of the contractor appear to be the following:

Term of Agreement. This agreement shall be effective as of the 9th day of September, 2007, and shall expire on the 30th day of September, 2008. Upon expiration of the above initial term, this Agreement shall automatically be renewed and extended for a like period of time unless terminated in writing by either party by providing written notice 30 days prior to the date for such renewal. This Agreement may also be terminated by mutual agreement of the parties at any time. Upon termination HOA shall pay to Manager any fees, commissions, and expenses due Manager under terms of this Agreement, which are owing to Manager.

Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of Manager and the heirs, administrators, successors, and assigns of the HOA. Notwithstanding the preceding sentence, Manager shall not assign its interest under this Agreement except in connection with the sale of all or substantially all of the assets of its business. In the event of such a sale, Manager shall be released from all liability under this Agreement upon the express assumption of such liability by its assignee.

On September 10, our HOA was notified by Jane Doe* that she was selling her company (which had already changed names to Leading Management Co.* since the contract was signed) to a different owner, resulting in a new company called Superior Management Co.* Given that such a change of ownership could cause a change in the quality of service, the HOA board began looking into alternative companies. However, we were since provided with a copy of the original contract that apparently prevents us from switching companies for a full year, given that we are past the 30-day notice period.

With the above context, we would like to know whether we have sufficient legal grounds to sever/terminate/exit this contract with Superior Management Co.*, if the company does not mutually agree to do so.

*Real names replaced with fictitious names to protect the innocent

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we would like to know whether we have sufficient legal grounds to sever/terminate/exit this contract with Superior Management Co.*, if the company does not mutually agree to do so.

No. In that event the HOA is stuck with the contract at least for the remaining part of the current period. The HOA's concern that the provider could breach the contract by significantly underperforming seems speculative and does not entitle the HOA to breach it first.

Changes in the name and/or ownership of a party does not alter the parties' rights and obligations pursuant to the contract. This implies that neither party is entitled to disavow his obligations by terminating the contract altogether. For early & unilateral termination to be an option, it would have to be provided in the terms of the contract itself.

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    Very helpful even though not what I wanted to hear. Much appreciated!
    – devuxer
    Oct 5 at 4:58

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