Employing HOA Vendors? Here Are Some Legal Matters to Take into Account
The numerous daily chores necessary to run and maintain your community are overseen by your board of directors, but they are not the only ones who must be involved. Painters, plumbers, electricians, landscapers, repairmen for equipment maintenance or emergencies, exterminators, and other vendors will be expected to be hired by your property management company. Additionally, you will require vendors to handle any capital improvements, unplanned emergencies, or urgent maintenance.
What are Property Managers Looking For From Vendors?
Hiring members of the property management team or the board of directors’ immediate families, close friends, or other close associates is never recommended. The improper vendor selection can have an adverse effect on more than just the caliber of the services rendered; it can also subject your community organization to liability due to the vendor’s behavior, the contract’s conditions, or possibly both. In that case, your homeowners’ association and neighborhood could face serious financial losses and legal repercussions.
Record of Success
Asking a specialist who can direct you toward reputable vendors with established track records is one technique to choose a property management vendor. If you deal with a property management company, its experienced personnel can help you pick who to choose—and whom not to choose. An experienced board member may be able to relate past vendor experiences.
In order to ensure that service providers have the necessary qualifications and adhere to strict service standards, management companies have developed long-term relationships with reliable vendors.
Some of them may even have their own vendor certification procedure. Additionally, management companies regularly collaborate with the association’s lawyers.
As a result, once you’ve chosen a vendor, the lawyer might craft the contract’s clauses to shield your association from liability.
Suitable Certification
It’s a legal responsibility, so picking the correct provider for your association is no easy task. Before granting contracts or agreeing to services, you must conduct due diligence and verify potential vendors satisfy all prerequisites and are suitably licensed, bonded, and insured. Your board owes it to homeowners to ensure that only licensed service providers continue to operate in the neighborhood.
For any association, choosing an unlicensed vendor could prove to be an expensive error. Many states require individuals who intend to provide products and/or labor valued at more than a certain amount to have particular licenses in order to provide their services. Let’s say they lack the appropriate insurance and bonds as well. If that happens, it might be disastrous on both a financial and legal level, putting your community in danger of fines or financial ruin as a result of the vendor’s conduct.
As we previously indicated, some property management companies have formed proprietary certification systems. As a result, prospective vendors must demonstrate that they meet certain criteria before being authorized to work in the company’s managed communities. If your management company doesn’t certify vendors or your association is self-managed, you can check a possible vendor’s licensure and history of legal disputes by visiting the website of your state’s licensing board.
Status of Employment
Any company must understand whether its vendors are independent contractors or employees since it might mean the difference between making an informed decision and one that could result in expensive blunders that could have been avoided. Checking IRS Publication 1179 for a detailed analysis of both categories and what is required of you as the client when hiring them is one approach to figuring out which employment classification best meets your association’s needs.
To help you choose the best kind of vendor for your needs, it’s also a good idea to speak with an attorney or a reliable property management business. There is still the issue of the services contract, though, regardless of the type of vendor you select.
Binding Agreement
Remember to solidify your commitment with a written agreement when choosing a supplier. Make sure an experienced attorney is involved in the drafting process so that this document can be legally binding and clearly explain the terms of both parties. The association must be safeguarded, and each party must succeed.
Hiring a friend or someone you find online is considerably simpler than choosing a property management company. After all, your association may face significant financial and legal consequences if things don’t work out.
You’ll be in a better position to select a reputable vendor that can satisfy the demands of your association, your neighborhood, and its inhabitants if you stick to the guidelines we described and speak with your association counsel.