Why HOA's shoot themselves and their clients in the foot
Henry Staggs, RRO
May 23, 2021
I realize this might be a touchy topic for some folks. And while I don't intend to offend anyone, I can't imagine writing something like this and not offending someone. Just know from the start, that is not my intention. Rather, I hope to shed a light on a clear problem in the HOA management world. One that I suspect is missed because it's hard to see something you are fully immersed in. That is why it's good to get an outside opinion from time to time. That is why companies do surveys and so on. You know, trying to figure out that they are doing right and what they are doing wrong. Makes sense right?.
Here we go
The title implies clearly that HOAs are doing something that is self-harming. Worse it is harming their client's interests. At the end of the day, the client is the person who actually pays the bill. The last thing any of us (business owners) wants is an unhappy client. Or for a client to learn that we (business owners) screwed their stuff up. But sadly, when it comes to construction in the HOA world, it's set up for one screw-up on another. One particular group here anyways has set itself up for a ton of construction misery. So badly, that I recently decided to no longer offer roof consulting services to HOA's unless they out of the norm. That is to say, HOAs how do not follow the methods I am about to describe in this blog.
Pay to Play
This group, like most, does have an association. This one however is a FOR profit association and believe me, with them it is all about the money. Contractors that pay more, play more. It's that easy. If you want to do well, toss money at them and they (the association) will promote you. So will their most loyal members, who believe and have been told, that they can ONLY hire contractors who are a member of their association. Ok, but that sounds like it running up on the blacklist line. Which I do believe is criminal? Since I am not a lawyer, I will stop here with that line of thought. But my point is that they promote contractors who pay them more, without any real vetting process in place. And most of these contractors walk all over the HOA. More on that later.
Imagine you own a townhouse or a condo and your HOA management company hires a "good" roofer. You learn later that they defined how GOOD the contractor is by the amount of money they spend with the FOR profit association? You see my point, I don't need to belabor this point any longer.
What law suite?
HOA's over the past few years have established rules that make it nearly impossible to hire any contractor. For some time not I keep hearing about some amazingly devastating law suite? I mean to say, I heard there was one but I have not been able to actually see it. But whatever it was, it was not. I suspect that it's not nearly as massive or bad as people have told me. It made the HOA scared and their reactive response is a bunch of qualifying rules that our contractors cant meet.
For example one of the rules is NO SUBS. Sorry, HOA world but every contractor uses subs. And the ones that HOA's hire definitely use subs. They just lie about it. Oh yeah, they will lie through their teeth to get the work. Too often the manager even knows about it and looks the other way.
Using a sub can certainly add some administrative complexity to a project. But you can't just rule it out, and expect an entire industry to comply. As I said, they'll just lie about it to get the job.
The Lowest Bidder
I don't really mean the lowest bidder, but the competitive bidding process that most HOA's prefer is quite bluntly, ridiculous. And we end up with a contractor who has lied from the start of the process about their manpower and capabilities. And they all do. Wait you say ... not all contractors are like that. Right, they aren't. But the way the HOA has set up its qualifications for contractors and the reputation the HOA world has for being a client (not good). Pretty much pushes out the best contractors. Leaving behind a pool of contractors who bribe and lie their way to a paycheck.
Remember the contractor who pays more plays more. That same contractor will lie to qualify and then do a sub-standard job. But will anyone know? Not until it rains and the roofs leak and the HOA is a 'warranty" battle with teh contractor. Again, who is willing to bribe and lie to get the job/ Sorry HOA world, but you set yourself up for that exact kind of contractor.
Summing it up
- The HOA world is scared of getting sued and such a thing harming their client's interest. Which is respectable.
- They set up standards that turn good contractors away, and attract ones who have no problem with a pay to play and say what they want to hear way of doing things
- The contractor does substandard work because they were already a substandard contractor
- The HOA assumes the roof is good
- It rains and the roof leaks
- The roof says its "warranty" work and wants to be paid
- You said no, it's not ... this is your installation error
What's the answer?
Simple. First, choose a contractor that can do the job. Do not limit your options by adding rules like "no subs" which turn off very qualified contractors. Make sure the contractor is qualified, licensed, has the manpower, and so on. Spend your time vetting contractors not asking for bids. Then after you have selected a contractor, DO NOT round back to "let's get three bids", sorry but that is the most damaging thing to HOA's I have seen. There are other ways to get a roofing project done.
And by the way, a contractor's membership in the HOA trade association should not come into consideration at any point. I am sorry to say that most of the great contractors do not join those kinds of associations. When an association is for-profit they know who that game is played, And they don't like to play that game.
Build your construction team You need your manager to do the paperwork and all that fun administrative stuff. You need the HOA board president to represent the community. And someone to be the owner liaison, a member of the community who can act as the diplomate between the contractor and the occupants. Then you need your consultant or architect to help with the project's quality assurance work.
Hold a team meeting, tell the contractor what you want to do and what you are working with. That's right, just lay it all out on the table, this is not supposed to be a shell game. Tell the contractor exactly what you want and then he and the consultant or architect will get a plan together to meet your need.
Make it about getting the very best work possible not the cheapest bid.
That's my two cents worth.