HOA management is tasked with many day to day operations that help the association function. While close-knit relationships with contractors and vendors is traditionally a good thing, too close of a relationship can cost the HOA money it never should have spent in the first place. In order to spot these potentially risky partnerships, we offer four critical red flags to watch out for. Arguably the most important, however, is making sure your LA HOA Insurance Program is up to date and effective to manage all of the daily exposures you face.
The relationship is loosely defined.
If there are affiliated partnerships, the board should be made aware. “A lot of the megacompanies we deal with have a lot of vendor companies that do that intentionally to pick up the loose change. So boards should ask, ‘Is there any legal, formal affiliation between the manager and the vendor or their parent corporations? And even if there’s not a formal affiliation, do you have a relationship with this vendor?'” A noncommittal or dodgy answer should be a huge red flag, explains Ben Solomon, founder of Association Law Group in Miami Beach, Florida to HOA Leader.
Additional bids aren’t accepted.
If there is hesitation or pushback from HOA managers about getting additional bids for goods and services, this is a good indicator that there is more going on than the board is aware of.
Seeing the same vendors win bids time and time again.
If the vendor didn’t offer the best price, or there is someone much more convenient for hire, yet the same vendor wins the bid each time, this is a huge red flag. Not only does this indicate an affiliate relationship, but it also means that your HOA is missing out on establishing and building professional relationships with other reputable vendors.
Your manager always has the final say.
The entire board should have a say in who the association chooses to hire. If an affiliate relationship is known, it should be announced to the board prior to settling on a vendor. Otherwise, if the manager always gets the final say regardless of the board’s majority opinion, this is a huge sign of overstepping their boundaries with vendors and contractors.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOA’s like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions, and Restrictions (CC&R), exposing the board, HOA and management to lawsuits– which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (855) 999-4505, or fill out our online form.