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HOA Management Mistakes to Avoid in Vendor Bidding

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Business partner relations can be tricky for association managers. Watching out for these four mistakes can prevent legal troubles and financial losses.

Managing business partner contracts is an important part of community management, but many Community Association Managers do not do their homework when receiving and approving bids. It's very important to take this responsibility seriously.  Homeowners Associations have a fiduciary responsibility to ensure that the HOA is using its funds correctly and keeping the property running smoothly.  

Making mistakes when accepting bids can cost a lot of money and create many problems.  Many of these problems are entirely avoidable.  Read on to learn what not to do during the bidding process.

1) Not Doing Research on Business Partners

Imagine a leak in the clubhouse roof happens.  The HOA wants to fix it quickly.  The CAM or a board member does a quick online search and contacts the first result on a search engine.  By the time the work is finished, and the problem is taken care of, other issues come up.  Maybe the work was not done correctly.  Or maybe the bill was four times the market rate.

If you fail to do the research, it can be a costly mistake.  What may save you time can end up costing the HOA big time in the long run.

To avoid this, we recommend having great relationships with qualified business partners lined up well before you need them.  Especially ones that you will need in an emergency.  You can ask a seasoned CAM in your office who they use.  You can meet them at a trade show.  We advise you only seek out companies that have established themselves as a market leader for a minimum of ten years.  And choose a company representative who has been with the company for at least that long.  Since "sales" has a reputation for being very transient, you owe yourself, the board, and the homeowners the best, most established company you can find.  

2) Skipping the Bidding Process

Going through the RFP process is time consuming, opaque, and dull.  But it's also vital to ensuring that the community has a good understanding of current pricing and terms in the market.  Depending on the project and the needs, it's always good to interview three business partners.

3) Forgetting to Check Governing Documents

A CAM or association can sometimes get stuck.  It's not uncommon for governing documents to place guidelines around contracts, such as prohibiting any that may last longer than a year. 
Become familiar with the bylaws, and double check the rules before signing on with any business partner.  This can ensure you will avoid any future headaches caused by running afoul of community restrictions. 

4) Not Informing Homeowners of Changes

Always be open and transparent with residents when there is a new business partner around.  Residents have a right to know how the community is being managed.  It brings a sense of integrity to the CAM, and tightens the trust between them and the homeowners.  Plus, it gives them a sense of pride to see that their community is being professionally managed.

Avoiding these common issues can ensure that your community management will go much smoother, with a minimum of complaints, costly errors, and legal troubles.