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How to Manage Contracts for Community Associations

Updated: Jun 26

Spring marks the beginning of the "busy season" for community associations, and as such, many projects and tasks will be happening within the community. Maintaining and improving current conditions in each community is as essential as planning for large capital projects such as roof and road replacement. In this article, we will discuss how community associations can manage contracts for their services.

The Importance of Contracts

In the most basic sense, a contract is an agreement between the association and a contractor/vendor that is performing a service for the community. Contracts are necessary for all the different types of work happening within communities, including service contracts, repair contracts, and preventative maintenance contracts. Having a strong contract is crucial to every community to protect co-owners, board members, and the community as a whole.

The Bidding Process

Once the need for a service has been identified, the bidding process should begin. This process should be put in place for each of the types of contracts. It is important to remember that not every task in the community needs to be bid. A minor or emergency repair does not typically need to be bid as contractors will not want to utilize their time to put a proposal together. The first step in the bidding process is to develop specifications for what and how the work should be completed. The Board of Directors should work with their managing agent, vendors, or other industry professionals to determine precisely what work needs to be completed and identify any unique specifications needed for the job. Once those are identified, they can be put together into a Request for Proposal (RFP) to formally ask contractors/vendors to bid on the project.

Key Components of an RFP

Having a thorough RFP is key to getting accurate proposals back that have the same specifications and scope of work so the Board of Directors can make an educated decision on which proposal to approve. The RFP should include a timeline for the service or work to be complete, payment terms, specifications and scope of work, license, permit, and insurance requirements, and warranty/inspection requirements.

Reviewing Proposals

Once proposals have been returned, they should be vetted for completeness and adherence to the RFP specifications. After all proposals are received and are completed to the same specifications, they can be analyzed. Using a mechanism to compare and contrast the proposals is extremely helpful. Something as simple as a spreadsheet listing important components of each proposal can help make the review process easier for the Board of Directors.

Contract Signing

Once a proposal is approved by a Board of Directors vote, the contractor should not be told that they got the job and the work should commence immediately. Proposals should not be signed and used as a contract, as they often don’t include every item that a robust contract would have to protect the association and its interests.

Managing contracts for community associations is a necessary task that requires careful planning and execution. By following the steps outlined in this article, community associations can ensure that they have strong contracts in place that protect their interests and promote harmonious living.

Read full article by Lee Powers in CAI News 2023 Spring edition.


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