HOA Vendors – The Biggest Mistakes with Bidding
Reviewing vendor bids and approving a contractor for an HOA service provider is a big deal—one of the most significant responsibilities that the HOA is tasked with. It touches on both your fiduciary commitments—that is, your responsibility to ensure HOA funds are spent prudently—as well as your duties to ensure that everything in the community runs as smoothly as possible. As such, reviewing and accepting vendor bids is not something to rush or to approach haphazardly.
Nevertheless, many HOA Boards make mistakes in their vendor bidding process that end up costing the Association a lot of money. Most of these mistakes are fairly easily avoidable—and some of the most common ones include:
- Not making use of the free information available to you. Licensure boards, the BBB, online reviews—all of these can prove helpful as you weigh the merits and reliability of a potential vendor. Make sure you check them out!
- Accepting vague proposals. The contracts you accept should offer thorough, written accounts of what the vendor will do, when/how often, and for how much. A contract that is fuzzy on the details or lacking in these key facts should not be taken seriously.
- Ignoring HOA governing documents. Does your HOA prohibit contracts that last longer than a year? You won’t know unless you check! (And this is a fairly common prohibition in HOA governance.)
- Not having an exit strategy. If a contract is vague about the termination procedures, ask for some clear language to be added.
- Failing to inform owners of new vendors. It’s always a good idea to be transparent and to keep homeowners in the know.
Approving contracts for new hoa vendors is never anything to take lightly, so make sure you are mindful of these common errors!