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Subject: Do you require your vendors to provide proof of insurance, bonding, license, etc?
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GregM14
(South Carolina)

Posts:54


12/30/2020 4:44 PM  
Our property manager has a new requirement that any vendor we use must provide the following:

- Copy of business license
- Copy of bonding insurance
- Copy of state workers compensation insurance
- Copy of vehicle insurance
- Copy of liability insurance policy, showing our HOA is covered by policy
- W-9

To me, this seems like a long list of requirements. It probably makes sense for big contracts ($65,000 for example) but I am thinking that it will scare off vendors for small contracts ($500 to pressure wash off grafitti, for example). I am concerned that it will hamstring our board into using fewer vendors at a higher cost.

Do you require all of this from your vendors?
MarkM19
(Texas)

Posts:716


12/30/2020 6:22 PM  
Greg,
I think these are pretty standard requirements for PMCs. I have to say I agree with you that these can make it extremely hard for some companies to bid on small jobs. I wonder if anyone has every had the small vendors sign waivers giving up the right to sue the HOA for small jobs under the W9 guidelines of $600 limit.

SheliaH
(Indiana)

Posts:3670


12/30/2020 7:22 PM  
Depends on the job and building code requirements - and the more costly and extensive the work, the more likely we'd require this and perhaps a bit more.

Since the property manager works for YOU, why don't you speak to them about meeting somewhere in the middle? For example, you could require this of any job over, say $3000 or if the work will also require a building permit. Otherwise, having workmanship comp insurance and a lien release from all subcontractors would be a good place to start.

Of course, you are also checking ALL vendors with organizations like the BBB and state Consumer protection agency to see if they've had complaints against them and how they were resolved - aren't you? There's more to think about price, you know.
GregM14
(South Carolina)

Posts:54


12/30/2020 7:41 PM  
Posted By SheliaH on 12/30/2020 7:22 PM
Depends on the job and building code requirements - and the more costly and extensive the work, the more likely we'd require this and perhaps a bit more.

Since the property manager works for YOU, why don't you speak to them about meeting somewhere in the middle? For example, you could require this of any job over, say $3000 or if the work will also require a building permit. Otherwise, having workmanship comp insurance and a lien release from all subcontractors would be a good place to start.

Of course, you are also checking ALL vendors with organizations like the BBB and state Consumer protection agency to see if they've had complaints against them and how they were resolved - aren't you? There's more to think about price, you know.




We're finding reliable vendors, for sure. I haven't checked with BBB or state agencies, but I do check Google / Yelp reviews and find companies that are highly rated. In the 14 months that I have been on the board, we've had excellent performance from all of the vendors that I have signed a contract with. Only one that seemed to cut corners was a graffiti removal company that was found by the property management company.

I am defintely not suggesting that we hire unlicensed or uninsured contractors. I expect that they all carry the appropriate licenses and insurance, just I don't think I need to have copies on file of all of that for every vendor.
MelissaP1
(Alabama)

Posts:9864


12/30/2020 8:28 PM  
You don't feel needed? Well guess who does feel it is necessary? When something goes wrong and your insurance/lawyer has to step in. It may seem like "overkill" but overall this is the right thing to do. What is the worst thing? Got extra paperwork documenting proof of what the vendor is required to provided sitting in a file somewhere?

Former HOA President
CathyA3
(Ohio)

Posts:1490


12/31/2020 5:29 AM  
The alternative to requiring vendors to provide proof of insurance, etc. is for the association to carry workers comp and other insurance to compensate. I've even seen some recommendations that associations carry workers comp in addition to requiring vendors to have insurance - that may or may not be overkill, opinions differ.

As others have said, depending on the job a license should be required.

The bottom line is that an association must protect itself:

* in the event someone is hurt on the common elements

* if the vendor does poor quality work

* if a worker breaks into a home or commits another crime

I would say that these things come first. If this reduces the pool of vendors who can bid on your jobs, or if it raises costs, then so be it.
CathyA3
(Ohio)

Posts:1490


12/31/2020 5:41 AM  
I agree with Melissa: keep copies of the paperwork on file. For one thing it's the board's job to keep good association records. And if there is a dispute in a few years and you have an all-new board, you want them to have proof on hand because the opposite party in the dispute isn't going to help you.

I also say good for the PM who is requiring these things - they're being thorough and earning their fee. It's possible that the board may want to make the occasional exception for a particular job, but making an exception shouldn't mean throwing standards out the window. (There should also be a valid reason for the exception. "This guy is the board president's good buddy" isn't a valid reason.)
GregM14
(South Carolina)

Posts:54


12/31/2020 9:00 AM  
Posted By CathyA3 on 12/31/2020 5:41 AM
I agree with Melissa: keep copies of the paperwork on file. For one thing it's the board's job to keep good association records. And if there is a dispute in a few years and you have an all-new board, you want them to have proof on hand because the opposite party in the dispute isn't going to help you.

I also say good for the PM who is requiring these things - they're being thorough and earning their fee. It's possible that the board may want to make the occasional exception for a particular job, but making an exception shouldn't mean throwing standards out the window. (There should also be a valid reason for the exception. "This guy is the board president's good buddy" isn't a valid reason.)




Cathy,

How did your vendors respond when you asked them to provide all of the above documentation. Did they gladly turn it over or did they grumble? Did you have any that walked away from an offer because of the onerous documentation requirements?
MarkM19
(Texas)

Posts:716


12/31/2020 9:35 AM  
Greg,
The only vendors who will complain are the ones that do not have the coverages required. The ones that do are usually glad to submit the proof.

If they are vendors that do work for PMCs or other HOAs they know the drill and it is almost like providing a Business card.
MelissaP1
(Alabama)

Posts:9864


12/31/2020 10:44 AM  
Greg those sound more like your opinion of the situation than the vendors. Some vendors actually do like to provide the documents. Why? They want to cover their own butts. I don't know of any good vendor whom would not turn over the documents that are requested. If you have one that grumbles, that is a red flag.

BTW: Do NOT ever believe a "BBB" stamp/picture on their documents are real. Validate it with the BBB. Simply go to their website and make sure what their status is with the BBB. I've had contractors hand me paperwork that easily was proven to be wrong. Once something goes wrong you want to settle this with insurance not lawyers or police.

Former HOA President
SheliaH
(Indiana)

Posts:3670


12/31/2020 11:48 AM  
In with Melissa and cathy, but you probably knew that already. We live in a society where people sue at the drop of a hat for crazy reasons, so it makes sense to err on the side of caution and have more than what you need instead of not enough. In HOA land you find out pretty quickly the devil and the angels are all over the details, and it helps to know where and what they are.

If a vendor wants to work with my association, they will gladly provide this information, and if they can't or refuse to, it's onto the next. It's like the Godfather - it's not personal, it's business. So who cares if someone leaves in a huff because their paperwork isn't straight? You will find out who the reputable businesses are as you work through this and eventually they'll be inclined to provide their credentials without being asked that can save time and yes, money, for everyone.

And once again,I remind you you're one board member and are entitled to your opinion. If you think this is overkill, ask your colleagues if they feel the same. Maybe someone else will be willing to give the paperwork the once over if you don't want to.
JohnC46
(South Carolina)

Posts:10370


12/31/2020 12:16 PM  
Greg

You say the PM has new requirements. It sounds like they run the show. Is your development still under Developer/Declarant control?
CathyA3
(Ohio)

Posts:1490


12/31/2020 12:23 PM  
Posted By GregM14 on 12/31/2020 9:00 AM
Posted By CathyA3 on 12/31/2020 5:41 AM
I agree with Melissa: keep copies of the paperwork on file. For one thing it's the board's job to keep good association records. And if there is a dispute in a few years and you have an all-new board, you want them to have proof on hand because the opposite party in the dispute isn't going to help you.

I also say good for the PM who is requiring these things - they're being thorough and earning their fee. It's possible that the board may want to make the occasional exception for a particular job, but making an exception shouldn't mean throwing standards out the window. (There should also be a valid reason for the exception. "This guy is the board president's good buddy" isn't a valid reason.)




Cathy,

How did your vendors respond when you asked them to provide all of the above documentation. Did they gladly turn it over or did they grumble? Did you have any that walked away from an offer because of the onerous documentation requirements?




They often provided them without being asked. Our regular landscaping/snow removal company would provide new copies each year along with his annual bid.

I also don't agree that this is onerous. So many HOAs do ask for such things that any vendor who bids regularly on jobs will have copies of the paperwork available. It's the actual preparation of the bid that takes time and brain work.

If a vendor is going to walk away, it's usually because the job is too small to be worth their while, or a similar reason. If they would walk away because they didn't want to provide proof of something that is reasonable to ask for, we didn't want to hire them anyway - it shows a lack of professionalism.

I know some board members believe in getting as many bids as possible for everything, but I think at times it can be counterproductive to do that. It all depends on the job, among other things. We don't want to waste vendors' time just for the sake of getting as many bids as possible.

When I was on the board, our property manager requested bids from vendors who had proven themselves in other communities managed by the same PM company, so we usually had plenty of bids to evaluate without looking further. That said, if we happened to hear good things about a company outside of this group, we'd have the PM ask them to bid as well if we thought there was a decent chance we may want to use them at some point.
KellyM3
(North Carolina)

Posts:1603


01/01/2021 4:59 PM  
Posted By GregM14 on 12/30/2020 4:44 PM
Our property manager has a new requirement that any vendor we use must provide the following:

- Copy of business license
- Copy of bonding insurance
- Copy of state workers compensation insurance
- Copy of vehicle insurance
- Copy of liability insurance policy, showing our HOA is covered by policy
- W-9

To me, this seems like a long list of requirements. It probably makes sense for big contracts ($65,000 for example) but I am thinking that it will scare off vendors for small contracts ($500 to pressure wash off grafitti, for example). I am concerned that it will hamstring our board into using fewer vendors at a higher cost.

Do you require all of this from your vendors?




Remember, your property manager (if you've hired a company as opposed to an internal employee) should have a rolodex of "approved" vendors who have already supplied their office with the information needed OR have the management company's trust to conduct services in their communities.

This shouldn't be as stressful as it initially feels. In terms of scaring off small vendors, these terms will do that. They're designed to screen out anything but the most professional vendors, though nothing is perfect.

Also, you will likely be correct that your board will be prevented from making handshake deals, at very good prices, for property services. However, HOA property is NOT our private property where hiring small handymen is within our risk tolerance level.

I would seek greater clarity for those smaller jobs that you mention. Worker's Comp & Liability insurance are a must but I'm not sure every job requires a bond to cover incomplete projects. I side with you on that.
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