HOAleader.com - Tip of the Week - May 13, 2011
Published: Fri, 05/13/11
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Save HOA Money: Create Bidding Guidelines
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Who needs guidelines for bidding out work? Your HOA does.
This week's tip gives you a head start on creating bidding
guidelines so your board of directors has a roadmap for bidding
out jobs big and small--and saves your homeowners association
money in the long run.
As with so many other tasks you must perform, start creating
bidding guidelines by checking your state laws and governing
documents. They may have provisions covering when your HOA must
request bids on projects, so be sure to review them and include
their requirements in your bidding guidelines. "In Florida, the
laws generally require condominium associations to obtain bids if
the project will cost more than 5 percent of the annual budget,"
says Lisa A. Magill, a shareholder and association attorney at
Becker & Poliakoff PA in Fort Lauderdale, Fla. "That threshold
is 10 percent for homeowners associations." Of course, she adds,
those provisions shouldn't discourage your board from obtaining
bids for services excluded from the statute or below the
threshold.
In Michigan, the state's nonprofit act governs. "The guiding
light for HOAs in Michigan is the Nonprofit Corporation Act and
Michigan's best business judgment rule," explains Nathaniel
Abbate Jr., a partner at Makower Abbate & Associates PLLC in
Farmington Hills, Mich., who represents associations. "The act
requires board members to discharge their fiduciary duties in
the manner of the reasonably prudent director, and wherever
prudence dictates that work not be performed without first
soliciting bids, the board should get bids."
Start by including in your guidelines a timeline for how often
you'll bid out work. "I ask my association clients: 'Does your
association rebid the work of existing vendors?'" explains
James R. McCormick Jr., a partner at Peters & Freedman LLP in
Encinitas, Calif., who represents associations. "We have some
associations that do that every three or four years. That helps
to ensure you're getting the best value and price. And if you
have a vender with whom you're very happy, keep that vendor,
but also keep it on its toes by asking it to submit a bid as
part of a review process every few years."
Perhaps the most important topic to cover in your guidelines is
how you'll deal with potential conflicts. To learn more about
that issue, along with how to craft your request for proposal
and when to call in the legal eagles, see our new article:
http://www.hoaleader.com/members/576.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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How and When Should You Bid Out Homeowners Association Work?
At most HOAs, bidding out work is an on-the-fly type process. It'
s not uniform, and sometimes the process works better than at
other times. Why does that matter? Because when your bidding
process doesn't work well, your HOA is probably losing money.
Instead of an unplanned process, your board should have
guidelines covering when it will request bids for work and how
the bids will be solicited and reviewed. Here, we show you how.
Click here to read full article:
< http://www.hoaleader.com/members/576.cfm >
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"Force-Placed" Insurance: What Your HOA Board Must Know
In this week's tip, we warn you of the possibility of surprise
insurance costs if your HOA has taken out a loan. It's called "
forced-placed" insurance, and it can be costly to your HOA.
Click here to read full article:
< http://www.hoaleader.com/public/571.cfm >
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Can Your Lender Buy HOA Insurance and Charge Your HOA for It?
HOA boards beware: If a lender holds a mortgage on your HOA
property or on an owners' property, it can enforce its
requirement that your HOA carry adequate insurance coverage for
its assets--regardless of whether you want that coverage or can
afford it. Here's what you should know about this practice so
that you can protect your HOA and avoid spending unnecessary
money.
Click here to read full article:
< http://www.hoaleader.com/members/570.cfm >
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What's Your HOA's Right to Inspect a Unit for Violations?
Do you suspect owners are violating your HOA's no-pet policy? Or
your nonsmoking policy? Or your limit on how many people can live
in a unit? What if you think a resident is a hoarder and his unit
is a safety hazard? All those issues trigger your HOA's right--if
such a thing exists--to inspect an owner's unit. Here, our
experts weigh in on that touchy subject.
Click here to read full article:
< http://www.hoaleader.com/members/569.cfm >
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Four Insurance Policies Your Homeowners Association Must--or
Should--Have
In this week's tip, we explain four insurance coverages your
association must have or should seriously consider.
Click here to read full article:
< http://www.hoaleader.com/public/564.cfm >
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