Residents having contracts with the HOA

ZachR,

First, is this resident a contractor? Does he have a business license, insurance, and bonding? Also, is the license specific to your work needed? Is the business license current, no complaints from BBB and references for this type of work recently? Your HOA insurance may not cover you if an accident occurs with this homeowner without proper due diligence on the boards part. Demand the paperwork to back up the resident's interest. It's business not relationships.

- M

No one mentioned price. I think you ought to look for a couple of bids from other contractors.

If I were a resident, I might suspect that the Board picked the resident contractor as a favor. If you have competitive bids, no one can questions the price aspect.

Zach,

We have hired independent contractors from within our Association. That is if they win the bidding process, are licensed, etc.

They should also not be a relative of anyone on the Board as this creates a perception of impropriety.

Tim

I agree with Maureen. Also, be sure to ask if this guy has ever worked with a HOA - get references and check them. This, in addition to his providing the paperwork, can be compared against the other bids to see how he stacks up. Beware of him lowballing the project - in my experience, I've seen many people who underbid to get the job and then realize there's a lot of work and resources than the bid will cover. Then, they claim "I can't do the work unless I get more money" and when you try to make them stick to the contract, they disappear.

If you really want to try out this resident, give him a small project first and see how he does.

Oh, and I forgot the most important thing of all. Doesn't it sound to you like whoever is going to pass on these contracts in this conversation is a Homeowner. So lets throw in the Board and the committees that spend countless hours, no exaggeration, giving their services to the ownership year after year. What if one disagrees.

Except that the one time we did this (with the lawncare maintenance, handiman, and concrete work) we discovered that there was, in fact, a very close personal relationship between the resident (who was NOT bonded or insured, by the way), the VP and the treasurer.

After about 3 years we discovered that we were not filing 1099s on the contractor, were paying higher than average fees for all of his services, he was not providing very good service, which the VP and treasurer were covering up for (on grading projects he was supposed to have done, the VP said he inspected it and it was done well -- we find out later it was NEVER even TOUCHED; on a concrete project (installing a sidewalk access on a common area) the VP told us he inspected it and it was done well -- discover after we get cited from our zoning enforcement department that the sidewalk was not only poured from inferior concrete, but it violated certain minimum requirements for sidewalks, did not have a proper incline at the curb and ended in an incline straight into a culvert); on mowing projects it would take him literally a WEEK to complete one rotation of our 16 acres of common area, because he is only one man and has, um, you know, "other duties."

In another contract, we hired a CPA for an audit who was the daughter-in-law of one of our residents.

The audit was the first we had ever done and was spurred in no small part as a result of actions of the Treasurer involved in the hiring of the resident lawncare contractor above.

She did the audit fine, and we discovered some issues that were fixed, but when it came time for her to file the taxes, including the back taxes for the previous 3 years that the former treasurer did not file but claimed he did, it took her almost 6 months to prepare and file them. That was 5 months longer than she agreed to take.

When we tried to contact her after about 3 months of hearing nothing, instead of calling US back, she called her father-in-law/resident and tried to get him to have us stop contacting her.

Because the potential for abuse, or conflict, or interpersonal issues is higher, the board has since made a resolution that we will not accept bids from residents or relatives of residents.

If you have a business conflict with someone not tied to the association, it remains that, just business.

If you have a business conflict with someone who is a member, it can get really ugly really fast. It somehow then becomes "personal" and other members in the neighborhood inevitably get pulled into it.

I can't tell you how many people called us upset that we "fired" the lawncare guy. Even though he actually quit once he realized that he wasn't going to get unreported income anymore (to the tune of close to $20,000/year).

Well, that is just wishful thinking, as far as I'm concerned. There is no earthly reason to think a resident would be more "protective" of the HOA funds or reputation than anyone else in business.

And, as mentioned, the issues becomes a huge problem if there does become a conflict.

Just like with hiring family, not really a good idea. It SOUNDS like it should be a good idea, but in reality, it can be ones worst nightmare.

It took us almost two years to finally get over all the fallout from the lawncare issue. Even today there are still people in the association who think WE were UNFAIR to the resident who was cutting our grass. They still think he was giving us a cheaper deal and that he "cared" more about his work than someone else might have. Even though we had constant complaints about areas that were not cut, we would have to call him about them, he would say, "I'm getting around to it, I'm only one man, yada yada yada" and then the area STILL not get cut for over a week.

Our VP and Treasurer both assured us that they had gotten competitive bids and his were the cheapest. They tried to lock us into a 5-year contract.

At that time the VP was the chair of the ARC and the ARC generally was the one who bid projects like that out.

After the fact we find out that did not happen. When we (the board) took over the role of obtaining competitive bids, we discovered, 3 years later, that the resident's contract was almost $1K a month higher than the highest bid from a more professional and legitimate organization (one that was bonded, insured, and had enough employees to mow our 16+ acres in a single day).

Hiring a resident sounds like a good idea on the surface, and probably will be as long as there are no issues or conflicts.

Once you have to "nag" the resident/vendor to live up to his/her contract, well, that's where all the fun begins.

And you end up with residents taking sides, which is even MORE fun and entertaining!

Rob4,
Not being flippant here my friend, but your"
it does not always work out but I like the idea of keeping our money in our community."
is a two edged sword at times. Sometimes keeping the money in your community means exactly that, and the money never goes for the required services. A tiny smidgen is revealed here. But for the sake of discussion, I wonder if hiring members under contract to provide services would past the mandate test of your documents. It could be that there is a legal question. How would the Board explain their position if they provided keys to a member to enter individual units and this individual did a dastardly deed. The victim could end up suing the fellow owner, suing the association and suing the Board and if the person had a company suing the company. Which means also the victim would be liable
as a member of the association. E gads!

Another comment for those that happen to read these posts. None of this is written in stone and the decisions have to be that of the individual associations. This issue can bring rain and sometimes it can bring sunshine and all the time it brings rain and sunshine at the same time.

David,
Playing a little devil's advocate here:

How can you possibly treat an outside contractor and a fellow owner with the same degree of consideration. You readily admit you ELECT to give residents preferential consideration. You state you would prefer to hire residents, then go on to say you hold them to the same standards as other outside the association. Then as posted here, the board makes a decision that they like to keep the money in the association. Does this explain mitigation to do the job or mitigation to select residents to do the job.

But don't take this serious, you are charged with the decision by your documents, certainly those that post, like me, are above the fray and we just give opinions or experiences.

Maybe we are more low key in NC ... our HOA is a community ... like a small town and we try to look out for each other ... we went through a phase where we would take anyone who was not in the neighborhood ... I use to tease ... who is the best person for the job ...neighbor A ... but you want stranger B ... so, if I get neighbor A to move across the street to the next HOA you would hire them? ... yes, in a minute .... which was foolishness ... as long as the neighbor's bid is in the ball park of the market and they do the same job, I defer to the neighbor ... in our HOA, we contract with residents to do deck repair and sealing, grounds, plant flowers and trees, deliver newsletter, manage the clubhouse, etc. They all work more hours doing a better job than any random contractor we have ever hired ... overall, it is quite simple ... get bids, references, write up the job description, and let everyone know and apply for the work ... don't discount neighbors because they have the "unfortunately" problem to live your community.

David and Rob,
First we thank you for the input, we have a LOT of folks read these message and we try to seek out information that can guide those on the fence. It is a pleasure to hear from you both and to acknowledge that all HOA and condo's are not a mess and none of them are run well and not all are in financial trouble. Both of you can offer a lot by posting here. If you do and as you go along the thought might occur to you at times that no one knows what they are doing and the Community associations are a dismal failure, it is refreshing to hear about some that give great consideration to what they do. Those associations that are run well also spend time on planning for how the association will run when all the good guys get tired and say to hell with it, when a rogue comes in and upsets the whole well thought out plans. Using this site as a measure there is plenty of this happening every day and of course the always present apathy of a large number of homeowners, add in 100 other individual variations of the theme and it all comes across this site.

In spite of all that my opinion for the masses remains, all things averaged, think long and hard abut hiring owners. This can open up a lot of doors that maybe not all boards can control and manage.

I understand your meaning. I spent the last 12 hours or so reading through this site and it is sad to read about the poor state of associations due to mismanagement and apathy even though there a lot of good people trying to make it right. Our neighborhood is not perfect by any means but on my watch we do due diligence, communicate with the owners often, read HOA and associated laws to stay on top the game, be reasonable as often as possible and take adverse action when all other avenues were explored.

I appreciate your compliment.

PS: Yes I do have time on my hand, I'm working in Alaska for 2 weeks and have the weekend off (woohoo). So what do I do, read HOA stuff for 12 hours or more for my community 4,000 miles away and post some comments that I hope enlighten someone who may be struggling with HOA conundrums. :-)

Well, it's time to eat breakfast. Be back soon.

Here are some other thoughts ... not we only hire neighbors for the simple tasks like cleaning and sealing decks, bookkeeping, creating and delivering the newsletter, managing the clubhouse and pool, lifeguard, planing annuals, doing inspections, etc. I would never hire a neighbor to replace the roof since that is serious job ...unless they were very qualified and a professional roofer ....

We use to have a management company ... in fact two ... they did everything for 20 years and people got lazy ...when I bought my unit (a townhome) they were seriously in debt with little board involvement ... we were paying the management company $40k/year and getting little for it ... so when I was elected president, I dumped the managemetn company and hired people, many neighbors to do all the task the management company use to do ... I probably have 20 people doing the work now for $30k at a much high quality and everyone is involved .... we employ the kids and neighbor wanting part time work to lifeguard, plant flower, run our website, create and deliver the newsletter ... I have one retiree (former property manager) who manages all the maintenance and one stay at home mom who is our bookkeeper .... using the local mom bookkeeper we are able to pay contractors within an hour compared to 30 days with the management compay which is worth 3% lower price from contractors... it is really interesting the difference in view when you paying someone who is very aware they are spending their money ... it drives a lot of inovation ... as people try to do more with less ... vs our management company that tried to get more for less and constantly answered every problems with a dues hike ... so four years later, we are rolling in money ... paying all our bills ... and slowly working through 20 years of deferred maintenance.

With all due respect, David, you've been lucky.

We will all come from different perspectives, and that's okay, but I would still strongly recommend against hiring residents for any contract work.

Others operate differently.

By the way, I didn't use the word "hatred" but it can very easily become a nightmare. And you are right about the transparency, open comms, honesty, etc etc etc, but when you're the only side playing with those cards in your deck, well, just sayin' . . . .