Vendor and contractor relationships are essential for any HOA. Here are 5 tips for vetting potential partners to make sure your community gets the quality service it deserves.
If the responsibility for hiring vendors for your managed community or HOA falls on you, there are a lot of things to consider. It is critical for the HOA to vet potential vendors to make sure they get the reliable, safe, high-quality service their communities need. Associations that don’t perform essential vetting could wind up with a mess and unhappy residents on their hands.
Here are five things HOAs must do to successfully vet vendors and navigate the hiring process.
1. Experience matters
One important thing to consider is the experience of the vendor, and that doesn’t just mean years in business. What really matters is whether the vendor has experience with your job.
The needs of a sprawling gated community are different than those of a single condo or complex. The same goes for one-time construction projects or ongoing maintenance. Some jobs require a bigger company with more resources.
Verify that the vendor has experience with clients, projects, and jobs like this one. Also, look at the company’s website to see if they list clients or past jobs, you can always call them and ask how the vendor performed on their projects.
2. Reputation matters
Find out what current or past clients have to say about a vendor, they are probably your best resource for finding out if a vendor is right for you.
Start by doing a Google search of the company name to see if anything comes up. There are many online review sites that you can check out. Also go to the Better Business Bureau and state licensing boards to ensure there are no complaints or legal actions against the vendor.
3. Compliance matters
All vendors who provide services on or around residential properties must carry certain types of commercial insurance. If they are not compliant, and there is an accident that results in injury or property damage, the HOA could face fines and legal action.
Vendors should have the following commercial insurances:
- General liability: Covers the business in the event of a lawsuit as a result of an injury or property damage while on the site. From a delivery driver who gets in an accident to a cable technician who accidentally cuts a line, liability insurance helps protect everyone.
- Workers compensation: This insurance covers medical bills and lost wages for employees injured on the job. Every state sets a minimum amount that businesses are required to carry. Vendors should have a certificate of insurance for all workers who will be on your property, including helpers or assistants who may not be full-time employees.
- Commercial auto and vehicle liability: Like general liability, this type of insurance covers any vehicles owned by the company, including cars, delivery vans, trucks, and passenger vans and buses.
Be sure to have all vendors list your HOA as “Additional Insured” on their general liability and commercial vehicle insurance policies. This will give your organization legal rights to compensation from the vendor’s insurance company.
Check out our previous blog on vendor insurance requirements. Then verify that any vendor you are thinking about hiring is in full compliance with the laws in your state.
4. Contract specifics matter
Failing to understand contracts or specify key terms and conditions has tripped up many an HOA board. If the contract is vague or doesn’t include certain services, be sure to ask about them. This is the best way to ensure there are no surprise expenses afteryou sign the contract.
Vendor contracts should specify:
- The exact services to be rendered.
- How services will be rendered and how often.
- The payment arrangement for the vendor, including how often and when the vendor will be paid. (Example: monthly retainer, hourly fee, as-needed basis, etc.)
- The estimated hours per week or month.
- What happens if there is an emergency? Is there an extra fee, or are emergency services covered? Who do you contact in the event of an emergency? What happens if services are needed on weekends or holidays?
5. Transparency matters
It’s also important to be open and honest with your residents throughout the hiring process. If you keep residents in the dark, they may become suspicious and think you’re trying to hide something. Let residents know about the companies you are considering and allow them to give feedback. Be sure to inform them once a vendor is selected.
Note: Before beginning the hiring process, consult the HOA bylaws and any policies and procedures manual. Your governing documents may include requirements for informing residents about hiring vendors.
Check out our previous blog on the Top 5 Vendor Management Mistakes for more information.
Need help hiring vendors?
Hiring can be a big job, and you may not have the experience to know which company is the best choice. VendorSmart can help you vet vendors and manage bids, and we provide ongoing vendor support, including risk management and compliance management. If you are looking to hire a vendor or manage the certifications of current vendors, contact us to get started.