HOAs and Bidding: Don't Let the Process Backfire
In this week's tip, we expand on an interesting discussion that took place during a recent HOAleader.com webinar about condominium and homeowner associations and their use of requests for proposal (RFPs) when bidding out the HOA manager's contract.
During the webinar on how to choose and work with your HOA's manager, the expert panelists offered cautions when using RFPs, particularly when seeking bids from management companies.
First, check whether your state's law or governing documents require you to use RFPs for all or any business relationships. "In Florida, an RFP process is legally required for a lot of different vendor type relationships, including construction," said panelist Ben Solomon, an attorney and founder of the Association Law Group in Miami Beach, Fla., who for more than a decade has advised more than 500 associations and also represents developers through his second law firm, Solomon & Furshman LLP.
"You're required to actually bid under the law make sure you have those bids to look at," says Solomon. "Although some associations may choose to go down a similar path in selecting management or legal services, I'd tell you at least here in Florida, they're exempt by law. The statute says the community association manager is exempt from that procedure. And it's not really the customary practice. It's such a personalized service, and you really need to make sure you find the right fit for you. That requires the ability to interview and dig deep with due diligence, where an RFP is much more along the lines of a paper interview and qualifications."
Using a burdensome RFP may even be detrimental to your overall goal. "You may end up deterring very qualified mangers who don't find the process to be productive for them or don't find it to be customary," adds Solomon. "It could actually deter qualified managers from participating, and you need to be cautious about that as well."
Brad van Rooyen, a partner at Home Encounter, a Tampa, Fla., company that manages community associations, agrees. "We've had RFPs come across our desk," he said. "When I look at the 10- to 15-, sometimes even 20-page long RFP and then I look at the community and see it's only 40 units, it's just too much information that's being asked. Management is a very personalized service, and no two communities are alike. And even management companies are so different in where their focus lies and what makes them different from other firms. The RFP can become too detailed."
Find out more about using RFPs, and get sample RFPs, in our new article, HOAs and RFPs: How to Pair Them Wisely.
Best regards,
Matt Humphrey
President