Bids not needed to renew management company’s contract
Q: Thanks for all you do in sharing your thoughts and insights on homeowners association issues.
I have a question about management company contract renewals and whether you are required to get new bids every year.
Our management company contract is for one year and the board will need to decide whether renew it or seek bids. The monthly total for the contract is under 3 percent of our annual budget, but the yearly total would be over 3 percent.
Is the board required to seek bids every year for a management company, or can we simply renew the contract, assuming that the new monthly cost will remain under the 3 percent of our annual budget?
A follow-up question, if the board elects to seek bids for a management company, and it wants to conduct interviews of prospective HOA management companies, when can we do the interviews?
Do we have to interview every company we seek bids from? Can we get the bids, open and review the bids, and determine that a group of the bids are within the budget frame we want to try and maintain for having a HOA management company and only interview those companies? Or do we have to do interviews prior to seeking the bids?
Thanks for any guidance you can provide.
A: As to the first question, there is nothing in Nevada Revised Statutes 116 that requires an association to rebid all of its vendor accounts, including the management contract. NRS 116.31086 (1) states that if an association solicits bids, the 3 percent would be required.
The board would need to place the topic of obtaining bids for management on their agenda to be voted by the directors. If approved, the board could hold interviews.
As to your final question, yes, after opening up the bids, your association can decide who to interview. You would have a problem interviewing a management company prior to obtaining their bid. Since bids are to be opened at a board meeting, there are just too many questions in an interview that involves money.
Barbara Holland, CPM, CMCA, AMS, is an author, educator and expert witness on real estate issues pertaining to management and brokerage. Questions may be sent to holland744o@gmail.com.
