California's AB 2273 Bill Has Passed. What Does It Mean?

In general, the lobbyists gets a bad reputation as being the purveyors of everything that is wrong with politics. The reality is that the vast majority of lobby groups provide strong advocacy for a wide range of personal interest groups.

That is certainly the case with the CAI California Legislative Action Committee (or CAI-CLAC), which is working diligently on behalf of all the California condominiums, cooperatives and homeowners associations and is the major driving force behind passage of the recent California Assembly Bill AB 2273.

AB 2273 is a community association law that every HOA should be supporting, and it could have ripple effects all across the country as other legislatures look into the same types of measures to protect homeowners.

What is AB 2273?

Whenever a piece of legislation is proposed it has to be written by lawyers in such a way as to make it nearly unreadable to the average person. AB 2273 is no different.

The big take away from the eight pages of legalese is that the bill “requires recordation of foreclosure sales within thirty (30) days after sale.”

Translation: When a bank or lending company forecloses on a property governed by an HOA they need to inform that HOA that they are the new owner.

 

Why does this matter?

Consider some facts put forth by CAI-CLAC as they mustered support for the bill:

• In 2011, half of the HOAs surveyed had delinquencies of more than 10%; some had a 50% delinquency rate.
• 97% of delinquent assessments are more than 30 days late; 73% are more than 91 days late; 44% are more than 4 months late.
• 49% of the HOA sales in 2011 were foreclosure and short sales.
• 75% of the lenders delayed foreclosure sales even when the owner had vacated the unit and no one was paying assessments or making mortgage payments.
• 60% of the time foreclosure sales are not timely recorded by the foreclosing party, or the purchasing party; 73% were delayed more than 60 days; 23% were delayed more than 6 months.
• 76% of the time, assessments are not paid until more than 60 days after the sale; 28% of the time assessments are not paid until more than 6 months after the sale; and 14% of the time the assessments are not paid until more than 6 months after the sale.
• 79% of the time, foreclosing parties fail to pay any assessments; of the foreclosing parties that do pay, the consistency of the payments ranges from as low as 10% to as high as 50% of the time.

Clearly, like everywhere else in the country, California is still in the throes of a foreclosure crisis. However, unlike the average property that is foreclosed or abandoned, the properties that are foreclosed upon and are governed by a HOA still have to be properly maintained. This means that, without AB 2273, the cost of those fees would unfairly be put upon the shoulders of the other residents in that community.

With the passage of this law, the banks and/or lending companies will now have to step up and pay the HOA fees like every other owner. Thanks to the bill, banks will no longer be able to evade the homeowners association as those institutions will now be compelled to provide information and begin paying their fair share quickly.

Is your HOA protected in your state with a similar measure?

How has foreclosure touched your community?

Let us know.

HOAs And The Adoption of Solar Energy

As you are aware, the “big picture” goal of an HOA is to insure that the property value of their complex remains at maximum high pricing levels.

This is accomplished by maintaining the structure from a maintenance perspective and the grounds from an aesthetic perspective. It is the latter that can often cause friction among residents. Some HOA’s restrict hanging beach towels over balcony railings, while others limit the amount of holiday lights that can be strung up. All of these measures were written  into the CC&Rs or created by the vote of your board via the authority that is afforded to them.

If you move into one of these communities with these laws already established, your only course of action is to change the law itself, if you cannot live with them.

What makes solar energy an issue within HOA communities?

Solar energy has long been considered the pinnacle of eco-friendly technologies. Today, more businesses and homes are going green by installing solar panels to convert the sun’s always beaming power into useable energy. In some cases, a solar system can allow a home to go completely off the grid and even sell back power to the electric company.

It stands to reason that homeowners living in a HOA governed community would want those types of benefits, but aesthetics play a major role in the (perceived) value to a community.

Frankly, solar panels aren’t that pretty looking. For a viable solar energy system, you’ll need to install several large panels on a roof.

Real estate agents often cite these “add-ons” as a detriment to holding property values.

Recently a couple in Georgia took their homeowner association to court to fight for the right to install solar panels on their home. This dust-up is making its way to the state legislature as lawmakers consider whether HOAs have the right to exclude owners from installing these systems. There are many of these laws already on the books regarding the use of solar panels within an association, with the first one being instituted in California back in the 1970s.

It's likely that your HOA has had to deal with this issue and had to make a call on whether they should be permitted or prohibited in your community.

Do you know the solar rules in your HOA and your state?

Would you object to panels being put up on your roof?

Is there a working solar energy system in your community now?

We’d love to hear your comments and stories. Better yet, if you’ve got a picture of a solar energy system from your community feel free to share with the forum. 

High Rise Community Managers Must Be Versatile To Be Effective

Believe it or not, the Empire State Building in New York City took exactly one year to build from groundbreaking to ribbon cutting. This was back during the Great Depression when it was vitally important to complete a towering project like this to provide hope and inspiration to the entire nation. Today, every city’s skyline is populated with high rise buildings. Many of these buildings are used for businesses, but there is an equal and growing amount of high rises all across the nation that have been built exclusively for residential living.

As with condominium complexes and gated housing, these high rises are active communities managed by a board of volunteers or a community association management company charged with servicing the common needs of the residents.

Understanding the High Rise Owner

To understand the management needs of a high rise community, you first have to appreciate the type of owners who have chosen this distinct lifestyle.

A general population high rise can house working professionals, students, families, singles, and couples. It is the kind of vibrant community that might feel extremely divergent in terms of its population, but in reality the residents are just like every other community of like-minded individuals: They want to make sure their homes are safe, comfortable, and that they are able to maintain a quality of life.

The high rise HOA plays a key role in helping resident achieve all of those goals.

Most high rise residents move into these environments to “downsize” their lives. They could be coming from a bigger home in the suburbs and have strived to minimize their surroundings. One thing is for sure, they will not be missing the upkeep of lawns, roofs, or driveways. Depending on the neighborhood, they might also be forgoing driving in favor of strolling to shops and dining.

On some level, this makes them a much more active type of community.

There are other high rises which are targeted to specific clientele such as the more affluent or retirees. Both types of residents will be expecting certain accommodations to be met in order to promote their version of a standard of living.

Affluent residents will be looking for amenities such as valet and concierge service.

Retirees might prefer access to daily activities that help promote healthy social interactions.

Young professionals may not be heard from at all!

These wide range of characteristics must be acknowledged by the acting HOA and association manager.

Special High Rise HOA Responsibilities

Unlike a condo complex, a high rise is going to have many more residents as part of the community. This means all the typical common areas such as parking, places to hold parties (which should be used only through reservation and managed by a committee or management company representative) and storage will be exponentially increased.

There are other areas that need special attention in a high rise such as:

• Window washing
• Heating and air conditioning
• Floor by floor sprinklers/fire alarms
• Elevator maintenance
• Emergency response planning

The benefit of having so many more residents is that it will be easier to recruit HOA volunteers. These board members can be split up into various committees charged with the task of supervising a specific area of the high rise complex. Because of the volume of potential residents, many high rise HOAs have turned to community association management companies to provide structured assistance with regard to collecting fees and maintaining other services.

Need assistance and more information on properly managing a diverse community like a high rise building? The Management Trust can help.

Is your community association a true community?

The primary mission of any community association is to manage the upkeep of all the common living areas. That in and of itself is a huge responsibility, but an HOA should not stop at paying the gardeners or fixing the roof. They should also foster a positive living experience for all residents. This could mean establishing a calendar of events that will bring those residents together during engaging activities.

While not every activity is going to appeal to all the residents, the mere fact that an HOA goes the “extra mile” to sponsor these events says a lot about the type of people living there.

How can a community association turn neighbors into friends?

As with any other business, when an HOA develops an events calendar they have to take the needs of the many into consideration. A peek in at an HOA in Florida’s calendar of events gives a good indication of a proactive board that prides itself on providing plenty of activities for its residents. There is obviously no problem with pets at this community because they have scheduled a Paw Prints session where the family pooch can get their paws immortalized in cement. They also offer classes in scrapbooking, astronomy, and woodwork. On the long list of group meetings there are events for singles, Italian Americans, and Republicans -not to mention an Easter Egg hunt, a Passover celebration, and a Soup ‘n Salad luncheon.

Clearly not every HOA needs to be as comprehensive when it comes to setting up an events calendar. For example, a Large Scale community may not have nearly as many planned events as say, an Active Adult community, or vice versa! It's very contingent on the members of the community and what their needs are.

An HOA in Texas takes a more low-key approach to their activity planning. Mixed in with the scheduled HOA board meetings is a community garage sale which gives residents a chance to sell some of their “stuff” and clear out the garage. The more homes that participate in a garage sale, the better the chances of a good traffic flow.

Over at another Texas HOA, there is a very extensive list of classes and recreational programs available for the residents - a prime example of providing specific events to fit the needs of the community. On the list of upcoming scheduled activities is a men’s poker night, a ladies knitting group, bible study, and Zumba fitness. In other words, there is a little something for everyone and a strong sense of true community is being built by the board members. 

Keep in mind that an HOA is not obligated to insure that residents have something to do but that does not mean there cannot be the occasional HOA sponsored perk. Even something as simple as renting a dumpster for a weekend gives residents the opportunity to clear out the clutter from their homes and promotes a positive attitude about the HOA. That is of course if they do not want to bother trying to sell the stuff at a garage sale!

All of this begs the question, what has your HOA done for you lately? Is there an events calendar for your community?

Let us know if you will be spending the summer with your neighbors, or if you’re just building a fence for privacy!

How a Community Association Should Review Vendor Proposals

As a community association board member, you’re taking on an active role in your community. This covers all the general upkeep issues with gardening, cleaning and laundry room service and any ongoing “handyman” type projects.

A board is bound by many legal mandates set forth in many places (such as state and and your own  CC&Rs) with regard to how to accept vendor proposals and should adhere to these rules when working with your community association manager to correctly see this process through.

The following is a general breakdown of how a community association board should review vendor proposals.

Step 1: Confirm Complete Proposal

• Thoroughly review and anticipate questions: The top two questions from other board members (and possibly residents) will be “how much is it going to cost?” and “how long is it going to take?” If you are presented with a new question from another board member or a homeowner, take note and make a commitment to provide a quick answer.

• Use Appropriate Scope: Not every job will require an exhaustive vendor selection process. You might find that a vendor recommendation from your community association management company or fellow resident will be enough. Yes, you should still perform due diligence but hiring someone to change light bulbs is not the same as hiring a roofing contractor. Keep the scope of the job in perspective. Basics for soliciting bids of any number includes a general description of the job and a general quantification of number and volume or size.  For instance, a bid to “install speed bumps at entries” is not enough information even if you discussed the project in detail with the vendor.  A better description would be, “to install two speed bumps at each of the three entries, each being 8 feet wide and between 4 and 5 inches in height.”Make sure that each vendor has bid the same project.  If one vendor asks for a clarification (i.e. do you want us to include the mailbox kiosks along with all the buildings in the painting bid?), make the same clarification with all of the vendors.

• Licenses and other Basic Assurances: This includes any certifications, licenses, bonds or insurance required by your state or specified by the CC&Rs. Ask for copies of this documentation from each vendor.  Many management companies retain a list of “scrubbed” vendors, so you may be able to have all of the prequalification done in advance.

• Association & Management Insurance: When an outside contractor comes onto the property to do work, you may have to provide them with your HOA’s insurance certification. 

• Injury & Illness Prevention Plan: For California associations an IIPP needs to be in effect for the property, and other states may have similar requirements.

• Tax ID Number: Simple but important. Every vendor needs to provide their tax ID number to get paid.

Step 2: References and Job Checklist

• Check the References: When a vendor provides references you should utilize them. This goes back to another common board question: “Did you check their references?” If it is a major project for your community, the answer should always be “Yes.”

• Job Checklist: As a board member, you might take on a supervisory role for the CAM project if you do not work with an association management company. A new vendor should be asked about any previous experience working with HOAs. When the job begins consider making a job checklist: are they cleaning up after their work sessions? Are they are starting/finishing on time? Are they correcting any mistakes? Would you recommend this vendor for future work?

Step 3: Presentation to the Board and Follow Up

• Summarize Comparison: Before a final decision is made, prepare a comparison chart or list to present the board. This will incorporate the bids, qualifications and references. If you work with a community association management company, they should present this to your board and provide a recommendation of the right vendor for the job.

• Courtesy Letter: Because you don’t want to burn any bridges, it is advisable to send a courtesy letter/email to any vendor who didn’t get the job.

Managing a Master Planned Community Requires Many Hands

By all accounts the country’s first Master-Planned Community was built in Scottsdale, Arizona. What is the difference between a Master Planned Community and a bunch of homes in the suburbs? The key word is “planned.”

With a MPC, there is an effort by developers to create a community that will satisfy all the needs of that community. Depending on the size of this community, there could be parks, shopping centers, schools, and even churches all built at the same time as the homes.

On a smaller scale, Master-Planned Communities is a type of community that can also be built to meet the needs of a certain segment of the population, namely retirees. This might mean building homes around a golf course or a community center which provides social services and meals.

Because of the size and scope of required work, a Master-Planned Community is almost always governed by a community association or homeowner’s association management company along with volunteer board members. When it comes to managing a MPC there are a lot of the same type of responsibilities as you would find with a typical HOA. The difference is the broad reach of that community and what exactly it encompasses.

Master Planned Community Board Responsibilities

Managing a MPC will require a duly elected board of representatives who need to insure that the resident’s needs are met in terms of their shared property or common areas. Because a MPC will often include additional recreational areas there is the need for a much larger grounds keeping crew. Consider some of the typical outdoor features found in a Master-Planned Community and it will give you a sense of the importance of staffing.

• Tennis courts
• Swimming pools
• Golf courses
• Hiking/Biking trails
• Man-made ponds, lakes
• Gardens
• Walkways
• Parking structures

All of this maintenance can be contracted to an outside company or managed from within the MPC board. Because of the size of this type of community, an association management firm should be considered a requirement to ensure the board is properly supplemented with a full-time staff member to handle the day-to-day upkeep and ensure there is a consistency with standards.

This does not mean that the residents are surrendering any of their rights but instead are letting professionals take care of the all the collections, payments, bookkeeping, and legal matters. After all, the reason for moving into a MPC is to enjoy your time away from work and not spend it inundated in the concerns of all of your neighbors.

Among the other responsibilities for managing a MPC is compliance with the CC&Rs that govern the community. All kinds of issues like parking, pets, improvements, and even flying flags are covered with these regulations that have been written and voted on by board members. If there is a need to a variance or levying a fine for an infraction then it becomes the board’s responsibility to handle that matter as efficiently as possible.

This does not mean that an MPC board is some monolithic authority. Instead, they should be receptive to the changing needs of the community at large. This holds true for an outside independent management company or a board made up exclusively of residents. For a MPC board to run smoothly all sides of an issue should be weighed and voted on accordingly.

In short, a Master Planned Community can almost be looked at as a global microcosm, one which requires diverse people driven management.

Are you living in a MPC community? What are you experiences with your board? 

Community Association Board Stereotypes: Who is On Your Board?

We do not get to choose who will be in our families. In other situations like work or school, we are thrust into communities where the concept of “getting along” is required of us. This is especially true in a neighborhood where a community association is the governing body responsible for the management and upkeep of that environment. In many ways, an HOA or condo board is like a microcosm of every other type of “forced community”. You are going to get all kinds of personality types meshed together to work towards the common good. Unfortunately, some of these personalities do not always get along.

Does your community association board work well together?

Can you recognize these “stereotypes”? 

The Take Charge Member

You could call this person the “natural born leader.” This is the board member who keeps things moving at a meeting and is the great facilitator. Typically, this type of person already has some executive experience on their resume and is happy to assume the rule of CEO. If your board is working with a community association management firm, your manager should be this person!

The Eternal Pessimist

When considering improvement projects it is important to think about the worst case scenario. Usually this will be brought up by the Eternal Pessimist on your HOA board. This is the member who thinks doom is just around every corner whether that means a leaky faucet that could turn into a mold attack or a crack in the pavement that will result in lawsuits. There is nothing wrong with being overly cautious but that has to be tempered with a bit of realism.

Old Man Potter

Every neighborhood has one of these characters. This is the person who is bothered by everything. Even if you were to give in to all of their demands they would still find something wrong. Unlike the Eternal Pessimist who fears bad things happening, Old Man Potter sees wrongs in the actions of others. This is the type who will quote chapter and verse of the CC&Rs for the slightest of infractions. They will be the first one to complain about the neighbors breaking the rules.

Switzerland

This is the person on the board who has a hard time taking sides. They see both sides of the proverbial coin. While it is great to be objective, at some point you need to take a vote. Too often the Switzerland character wants to be neutral on every issue so as not to offend anyone. The result is that they end up offending everyone because they cannot take a stand.

The Historian

There will always be someone who has lived in your community the longest. They have seen it all come and go. Hopefully, the Historian is amenable to perspective and context. If not, they will begin every story with, “I remember when it was better…” If they are constantly living in the past they will never adapt to changes.

The Scrooge

This is the HOA member who does not want to spend a dime on anything. And forget about assessments! They will vote them down as a matter of principle. Actually, there is a benefit to having a Scrooge on the board. They are sure to keep things honest and cost effective.

The Gossip

This might just be the most dangerous person on an HOA board. Being a gossip goes hand in hand with stirring up trouble. Neighbors cannot help but be nosy; it is in everyone’s self-interest to pay attention to what is happening. However, when the Gossip takes those “reports” and begins spreading them to create contempt then there is the potential to stir up a hornet’s nest of trouble. Best to eliminate this before it gets too pervasive.

So, who is on your HOA board? If you have to ascribe a personality to yourself which would you pick? Who did we leave out? Feel free to share your stories and comments. 

HOA Maintenance Projects: Phase Three - Executing the Project

Previous HOA Maintenance Articles Phase 1: Determining the Need  Phase 2: Planning and Accepting Bids

Once an HOA board has approved a Reserve  Project, or any type of major maintenance job, the hard work shifts from management and the board to the contractor.

That does not mean that you can now sit back and just wait for the job to be finished. There is still some work needed to be accomplished in terms of alerting the residents and supervising the contractors, a task that should be managed by your community association manager.

As with most other items in a community living environment, certain guidelines for implementing a maintenance project should be outlined in your CC&Rs, but there are a great deal of details related to managing the project that needs to be added to those guidelines.

Resident Notification

While it is true that every resident might be aware of an upcoming project (especially if they were assessed fees to fund it!) they still need to be properly informed of the nature of the work and how it may potentially impact their living environment.  Whatever the circumstances, residents should be made aware of any disruptions through a written letter or email to each owner.

Additional bulletins should be posted in common areas as well. One of the most common complaints that boards and management receive from their homeowners during a big project is that the communication was lacking.

Contractor Supervision

A contractor coming into your complex will need to have a designated member serve as the supervisor of the project. This is a role that should be handled by your CAM, or a contracted professional and not an existing board member.

The role of this designated supervisor is to:

• Regulate access for the contractor and his crew into the complex.
• Ensure that all working codes are adhered to, such as the hours in the day that maintenance work can be done in the community.
• Confirm that the work is being done to the specifications of the project, oversee safety procedures.
• Approve progress payments to the contractor. 

In an HOA some of these processes may be less vital, but in tighter quarters like a condo association, maintenance work can significantly disrupt residents.  In a condo, with everyone living in close proximity to the common structures, you may even need to communicate properly for privacy concerns.  You don’t want your contractor to be on a ladder cleaning a bathroom window and surprise a homeowner in the tub.

Unless there are highly unusual circumstances (such as an emergency situation), the contractor should conform to those working hours prescribed by law, or by agreement in the contract for services, and sometimes there may even be restrictions set forth  in the CC&Rs. If there is a full time course of construction supervisor, that party should take note of when the work crew arrives and when they leave.

At the end of each work day, the supervisor should also walk the work area with the contractor or crew boss to make sure there are no potential hazards left behind such as construction waste. An active job site does not have to be spotless but it can be “contained”.

Managing the Unforeseen

The goal of every maintenance project is to have it completed on time and on budget. However, there are instances when a project could enter into unforeseen territory. For instance, replacing a roof might reveal more extensive water damage than what was initially assumed. Although something like this should have been identified earlier in the project, additional work that was not covered in the original bid may be required.

If something like this were to occur, it might not be necessary to go through the entire bidding process all over again, especially when you have already got the approved contractor working on the job.

It is best if a procedure to address these types of potential add-ons are specified as an option in the initial contract, even if it is in general terms, i.e. “any unforeseen additional work will be approved by the construction supervision company, at the hourly rates set forth on exhibit B, and materials shall be charged at cost plus 12%”.  Sometimes a contingency clause can be done with more specificity, i.e. “for each 4x8 piece of underlayment found to be rotted, the contractor shall replace at $200 per, upon the approval of the construction supervision company”.

However, if there is a large or impossible to have foreseen extra cost, then an emergency board meeting may have to be convened to approve the expenditures. This is another responsibility of the project supervisor to orchestrate this procedure

By staying in communication with the contractor and having daily progress reports, then most unforeseen situations can be dealt with properly and in the end a successful project can usually be completed on time and on budget. 

When strange pets cause HOA nightmares

In the world of living communities, an HOA almost always has the power to restrict pet ownership. On some level there is a practical reason for taking a “no pets” approach to the CC&Rs. It is less chance of any “biting” incidents to cause trouble between residents. There are some who say that a “no pets” policy is better for property values.

All of the practical issues aside, it is hard to deny the abundant amount of joy that can be had from owning a pet.

Unfortunately, HOA laws are HOA laws but that does not stop some residents from trying to bend those rules or have them rewritten all together.

Depending on your sense of humor, the following may serve as some funny examples of unique animals causing headaches within a community association.

If you live within a community assocition and/or serve as a board member, we'd love to hear your stories too! Share them in comments section.

The Pig vs. the HOA

Dogs are not the only pets that get into hot water with HOAs. Take the case of Wilbur. Wilbur is a pot-bellied pig (he looks so cute in the photo above doesn't he?) who has become the main litigant in a lawsuit against the Cypresswood HOA in Houston. Wilbur was brought home by the Sardo family. He is now 60 pounds and according to the HOA is in violation of the neighborhood’s deed restrictions that ban livestock. Hoping to change the rules, Miss Sardo was told that if she could get a majority of signatures from her fellow owners their might be an exception.

No doubt armed with pictures of cute Wilbur, Miss Sardo got her signatures. Wilbur also got his own Facebook Page with 4,000 friends. Then the HOA changed the rules and said the signatures would not be enough. They began to levy a $200 a day fine against the Sardos for every day that Wilbur stays. The Sardos went to court arguing that according to the USDA pot-bellied pigs are pets not livestock.

If that is the case and the HOA does allow pets then the Sardos might win. If the judge rules against them, the Sardos are willing to sell to keep Wilbur.

The Kangaroo vs. the HOA

Most community's CC&Rs might be specific about dog restrictions.

They might have to go to court to figure out if a pig is a pet.

But what about a kangaroo? It is hard to imagine any American HOA writing in a rule to cover kangaroos but that might all change.

Once again, it is the Lone Star state having animal issues. In this case, Nick and Jeni Dreis brought home a six month old kangaroo as a vocational training animal for their 16 year old daughter who has Down Syndrome. As you might expect, the community association came at them with the full force of their CC&Rs issuing a stern letter stating that they "immediately remove the kangaroo from the property as it is not a household pet nor can it be maintained for any business purposes." They were also ominously told to "correct the violation immediately."

Just because an community association says something does not mean that is the end of the discussion, especially when it comes to a kangaroo. The press picked up on this story and public support swelled. The board retracted their order once they realized this was indeed a therapeutic pet. The kangaroo got to stay. This is a perfect example of an board jumping the gun before taking in all the facts.

The Chickens vs. the HOA

Just outside of Colorado Springs is the Heights in Templeton community where four clucking chickens have taken up residence much to the dismay of that community’s HOA. This neighborhood consists of 133 homes. The chickens in question have been kept in a coop for the past two years as pets for the daughter of the house who is allergic to cats and dogs. A neighbor finally noticed the coop and complained to the HOA. The board denied a variance and the homeowner plans on making a personal appeal at the next homeowners meeting. Even with a majority of signatures in support of the chickens, they might not be saved.

The Gator vs. the HOA

Then there is the case where an HOA might be found negligent for not containing a gator. This is not a case of a pet gone wild but of a wild animal taking up residence. At a Georgia community with man-made lagoon, a gator moved in. That gator attacked one of the residents. A lawsuit quickly followed holding the HOA responsible for not removing the gator. This brings up an interesting facet of the law. Do you have to warn a visitor of any potential harmful wildlife?

As it turns out, when you create a man-made structure, such as the lagoon, you do have an obligation to post warnings of potential hazards including wildlife.

HOA Maintenance Projects: Proper Planning and Accepting Bids

In our first post on HOA maintenance projects, we discussed the right way to budget for and determine the need to move forward with proper execution.

The next step your association has to go through is a formal process to plan the project based on the good business practices, while bearing in mind and rules set forth in the CC&Rs.

If you're working with a community association management company, a member of their team should be responsible for accepting vendor bids for the project and reporting back to the board to be voted on accordingly - assuming the cost and scope of the project would warrant this sort of effort.

A thorough set of HOA governing documents should detail all the pertinent state laws and regulations with regard to requesting bids on certain projects. These regulations vary from state to state.

For instance, in Florida the state laws specify that any project that will cost more than 10 percent of the annual budget of a complex requires  multiple bids for that project.

In Michigan, and Washington the guiding principle is referred to as the "best business judgment rule", while Nevada requires that the board review proposals from vendors and open them only at a meeting for discussion. Interpreting all of the above, The Management Trust, believes that good judgment and good faith must be employed in determining the bidding process. Think about it: if it's a quick window replacement of the pool clubhouse, the work that goes into soliciting multiple bids and seeking consensus from the entire board is far too much for something that simply does not cost a lot of money.  However, any such work must still be let using good judgment and particularly avoiding any actual or perceived conflict of interest (that’s right, even if it is a $200 project, don’t give it to your out of work son-in-law).

But a larger project, such as replacing every window in every common area building at a master-planed community, would certainly require substantial work for the vendor selection process.

Entrust your community association manager to correctly handle any size HOA maintenance project.

Finding a Contractor

As you begin the process of accepting bids you'll need to find the right vendor. Apologies for the self-promotion, but a great resource for HOAs located in Arizona; California; Denver, Colorado; Las Vegas, Nevada; Oregon or Washington, a good place to start would be the Trusted Partners Vendor Directory. Here you can find approved vendors who have been used by professional management organizations and understand all the issues of compliance.

Another resource for potential vendors could come from fellow residents or board members. However, as alluded to earlier, the caution is to avoid any possible conflict of interest between a board member and a potential vendor. In those cases a board member might have to recuse themselves from voting on the final accepted bid.

Thirdly, disseminating a request for proposal (RFP) is the most traditional way of going about finding the right vendor for your project.

Get It In Writing

It goes without saying that all of your contractors who are bidding on projects should be licensed, insured and bonded to do this kind of work in your state. Don't take their word for it but obtain copies of their information.

As with all important matters in life, the bids for your HOA maintenance project should be accepted as a formal document. These bids should spell out in great detail all of the specifications of the project, including materials and quantities.  

Instead of stating that they will “replace the windows in the complex”, it should say, “replace the twelve windows in the complex with new Jeld Wen, double pane #J11001P122 vinyl windows”.  Instead of stating that they will “replace the rotted fence boards in the fence”, it should state that they will “replace the 92 rotted fence boards totaling about 736 lineal feet with similar product, on the south side cedar perimeter fence”.  And of course the bid should include the prices associated with the project including labor and materials.

The bid should also include other course of construction promises, such as how they will keep the job site when they leave it at the end of each day and any other constraints (for instance perhaps rules about morning start times for a noisy project).  When possible there should also be a time frame included as to when the work is expected to begin and  be completed.  Sometimes a penalty clause for delinquent completion may be appropriate. 

That timeframe is especially important because once the bid has been accepted you'll need to inform the residents of the project going forward. This  also may need to be put into writing not only as individual letters to each resident but also as a memo posted in common areas.