Why an HOA Board Should Use Caution When Hiring a Contractor

Jun 22, 2020 4:30:22 PM / by HOA Manager

construction cones and hard hatFinding a contractor who will perform quality work at a reasonable price can be a daunting task for any HOA board. It’s always a good idea to use contractor caution and ask for references, contact the Better Business Bureau and your state licensing bureau to see if there are complaints against a prospective contractor.

In addition, the following warning signs can alert you to unscrupulous, disorganized, inexperienced or financially troubled contractors who may deliver broken promises, bad work and blown budgets rather than professional results.

First Impressions

In any business, first impressions are important. HOA board members should note how a contractor presents himself and maintains his truck, tools and equipment. These are good indicators of how well he’ll take care of the jobs in your homeowners association. He should look neat and professional, and his vehicles and equipment should be clean and in good repair.

Beware of Low Bids

Price is always an important consideration when selecting a contractor, but don’t let a low price or a special deal blind you to a potential problem – both can be signs that you should be wary. A bid far lower than others may indicate the contractor isn’t experienced enough to know the actual cost of the job or he never intends to finish the work. Disreputable contractors may bid low to secure a contract and then tack on extra charges as the job progresses.

Take Your Time

If you are pressured during the bidding process by tactics such as “limited-time offers,” look for a different contractor. Hiring a contractor is not a split-second decision the HOA board should make. A prospective contractor should take his time as well, carefully reviewing the specifications of your job before submitting his bid. If he doesn’t take notes and measurements and make material and labor calculations, or if he simply names a price based on a similar job, he may not be detail-oriented or thorough enough to do a good job in your homeowners association.

Beware of a Materials Discount

A prospective contractor may offer you a discount, hoping to earn your future business following a job well done, but be wary if a contractor offers materials at a discounted rate. Small contractors rarely buy materials in the high volumes necessary to yield big discounts, and unless they severely overestimated quantities for a previous job, they rarely stock large inventories of material. Discounted materials are usually seconds, ungraded or below-grade minimums for code, any of which would compromise the quality of your project.

Only 20% Up-Front

While the price may be right, what about the terms of payment? In general, don’t choose a contractor who asks for more than 20 percent of the total cost of a job up front. While some projects require a large initial payment to cover a deposit for products like cabinets or special-order ceramic tile, it doesn’t apply to commodity materials like roofing and lumber, which a legitimate contractor will usually purchase on account with at least 30 days to pay.

Beware of Cash-Only Jobs

Finally, a contractor who works on a cash-only basis should raise a big red flag for HOA board members. Not only does paying in cash limit your financial recourse if problems arise, the contractor is likely not operating a legitimate business, which includes paying taxes and insurance. Look elsewhere for a professional to perform the work.

In closing, remember to always use caution when choosing your homeowners association contractors as they can impact not only the value of your community but the life cycles of maintenance and the impact of assessments

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Topics: HOA Management, HOA Contractors, HOA Maintenance