When searching for a new vendor to service your homeowners association (HOA), there is often more to the decision-making process than meets the eye. There are typically several people assisting in the process, with many factors to consider when bringing a new company into the community. Whether it is for a new landscape contract or a small community project, knowing what to look for in a vendor for your HOA is vital and with the help of a great property management company, the community and decision-making board of directors will know what qualities to seek out.
Ample Insurance
The first and most important qualification for a vendor should be ample insurance. Though this is sometimes overlooked to lock in a company with the cheapest price, hiring a vendor without proper coverage can cost the association more in the long run. General liability insurance is the most common and typically held by many companies. For this policy, you want to look for a minimum of a million dollars in coverage. This may seem like a lot, but when it comes to insurance settlements, possible lawsuits, or damages, high coverage is key.
However, general liability is not the only type of insurance you should look for when hiring a new vendor. Auto insurance and worker’s compensation insurance can be just as important. If the vendor will be driving a vehicle to complete their work onsite at the community, auto insurance is necessary for the same reasons all drivers have auto insurance – protection if there is an accident or damage. Worker’s compensation insurance, commonly referred to simply as workers comp, is insuring the employer should an employee of the company get injured while on the job. This is a common type of insurance but unfortunately, many times critically overlooked. Many associations do not know to check for this kind of insurance and if the hired vendor doesn’t carry proper coverage and an employee is injured on your job site, the community may be liable to a lawsuit and a hefty settlement. Ensuring that the vendor hired for your community has comprehensive and up to date insurance can protect the HOA and reduce risk for all parties involved.
Comprehensive Contracts
Regardless of the size of the project the vendor is being hired for, there should aways be a written agreement as the days of a handshake deal are long gone. Depending on the project, this contract should contain items such as payment terms, termination parameters, and a clearly spelled out scope of work. The payment terms should clarify if there is a deposit necessary, what the clear cost for the services will be, and how payment will be made if it is a monthly, quarterly or annual contract. The termination parameters are also crucial for contract services, as a 30 days notice clause can ensure that an HOA does not get stuck in a contract they no longer want to be in. With a 30-day notice clause, an association or vendor can simply terminate the contract with 30 days’ notice. Often times, this is not included in a contract or is a longer period of time and should be something to look for or negotiate the addition of. Also, note that many contracts should contain a severability clause. This is beneficial for both parties because this clause prevents the entire contract from becoming void if one or more parts of the contract are deemed unenforceable or invalid. A quality vendor should be able to provide all of this information in the contract they present or should be agreeable to signing the community’s contract should the HOA have its own drafted.
Great References
When searching for a vendor, reviewing references can seem like a tedious task. However, this is often how great vendors are chosen, even if prices are similar and insurance coverage is identical to competitors. There are often numerous vendors that perform the same services but finding out what other communities have thought of their performance can be key to picking a perfect partner for the HOA. Often times, an HOA’s community manager will be able to obtain references from colleagues and other professionals in the industry to find out how easy the vendor is to work with and how their quality of work is.
Choosing a new vendor for an HOA can be a tricky process with multiple bids and proposals to sort through and review. However, keeping an eye out for these valuable qualifications will lead any community on the right path to finding a vendor for the HOA that is not simply there to collect a paycheck, but to become a professional partner with the association and provide quality services.
