HOAs must follow laws when selecting contractors

Q: Seemingly out of nowhere, our homeowners' association board of directors hired a new landscaper. There were no complaints against our previous landscaper, and it did a great job. The new landscaper began by doing a terrible job and complaints poured in.

Then suddenly, on the day of an HOA meeting -- one day before the landscaper was scheduled to clean up -- it blitzed the community and finally did a good job.

Subsequently, I found that our president is a friend of the owner of the new landscaping firm, and he may have run off our previous landscaper.

In addition, at the same meeting, when a homeowner complained about his dues account being turned over to a collection agency, the president gave him the name of a gentleman at the collection agency to call to see how it could be worked out. This left the impression that the president was very familiar with the person at the collection agency.

It is my understanding that our HOA management company should be handling matters dealing directly with our vendors and not the board members directly. If board members take control, it is possible that conflicts of interest, perhaps more, could arise.

Should board members have to divulge to the community in writing their connections with vendors who work for the HOA? For example, are they friends or former neighbors?

Is it appropriate for board members to be so close to such vendors that they direct their work?

A: To hire a new landscaper, your association should have obtained at least tree bids and those bids should have been sealed and opened at a board meeting. The topic of selecting a new landscaper should have been announced to the homeowners on the board's agenda.

It is not unusual for the management company to provide suggested contractors, and to also ask the board members if they have any contractors that they want management to contact.

Once the sealed bids are opened at the board meeting, a spread sheet can be prepared for the board to make a final decision. It is difficult to do a spread sheet at the meeting because of time constraints. The board would need a second meeting to make the final decision. It is against the law to hire a contractor in executive session.

The president could very well know who the homeowner needs to contact at the collection company since the president and the board are constantly involved with each other in approving payment plans and signing documents approving the final foreclosure stages. I would not necessarily think that something sinister was happening.

Your management company serves as an administrator. Many associations have very specific committees or board members or homeowner volunteers who work with the various contractors and communicate their reports to the board as well as obtain bids for projects or repairs not covered under the basic maintenance contracts.

These committees, or individuals, would coordinate with the management company that serves as a conduit to the board and keeps it informed. Many associations authorize these committees to monitor, supervise and in some cases approve certain types of expenditures with certain caps on them. Boards should reflect these decisions in the minutes of the meetings.

You don't have to be a friend or neighbor to slowly develop a working relationship with a contractor, and often through the business relationship -- especially over a period of time -- your committees or volunteers or board members may not be as critical as they should be in performing their jobs and could allow contractors "more chances" in correcting deficiencies.

NRS 116.31084 requires disclosure and abstention from voting if the board member is receiving compensation, profit or some personal gain. Disclosure is also necessary if the vendor is related to the board member.

The law does not state that the board member has to disclose friendship or acquaintance, or has to abstain from voting because he or she knows the contractor.

This is a delicate balance because in selecting companies or contractors, board members and homeowners who attend the board meetings will ask the question: Who knows of this person or company as to the quality or efficiency of their work?

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, email support@hlrealty.com.