Author: Dana, owner and resident
Posted: 02-03-2012
In response to the HOA board president’s recent survey letter and request to vote, I don’t feel a simple vote of members is a sufficient answer to the subject of vendor contracting for “a non-profit corporation for the benefit of all”.
First of all, as to contracts, you must be totally transparent to all owners. Even if your board is happy with and wishes to retain the present vendors, it is important to exercise your collective fiduciary responsibility. Do it right! First, set up a post office box accessible by the board of directors only and not the management company. The board chooses the vendors to be invited to bid and mails out the appropriately documented proposals. The sealed bids are returned to the board’s post office box and opened in a properly posted executive session excluding the property manager since this is a corporation decision. As of January 1st, posting of executive sessions is now 48 hours instead of 72 hours.
The president then puts the contract proposal on the agenda for the next business meeting. At the meeting, the chosen bid is presented with the cost and voted on by the board. The other two bidders are named but cost of their proposals is not included in the minutes.
In your executive session, cost is not the only factor. If you are happy with your present vendor and their quote is a little higher than the others, it is not a problem. What you have accomplished is putting together a legitimate paper trail that shows you have fulfilled your fiduciary duty.
As to your subcontracting with the vendor who is contracted with the corporation, there are some concerns. Because you are a subcontractor to the vendor you should recuse yourself as a board member from any and all decision making and voting pertaining to contracting, managing and payment of this vendor.
What contracting role are you providing? Is it such that a license is required or are you operating under the vendor’s license? What about insurance? In Section 1365.7 of the Davis Sterling Common Interest Development Act referring to limited officer and director liability, it does not apply to subcontractors working with a vendor on your premises. Also refer to Section 5047.5 of the California code entitled, “liability of directors who volunteer”. What is your insurance situation in your role as a subcontractor?
And in closing, please do not leave the selection of vendors up to vote by owners. They do not work with budget details as the board does. This is your responsibility.
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