CONFLICT OF INTEREST?
Published May 22, 2019
I believe more needs to be done to protect condo
and homeowner associations when it comes to management companies
providing additional services like painting, landscaping,
irrigation, insurance, water restoration, lending money for capital
projects or the purchase of the HOA clubhouse and the list goes on.
It has become so lucrative that even smaller to medium size
management firms have gotten into the game.
In my opinion, I believe a double standard exists
because some, not all, of these organizations have lobbyist
protecting their interest and not the associations. Let me put it
this way, how can legislation pass not allowing board members to
hire companies in which the board member owns one (1) percent
interest but yet a management company, with a simple disclosure in
an agreement, can push all its companies onto the association. Do
you find that to be fair or ethical? I donít!
Some may say, well if they can provide a similar
service for a better price, what's the problem? The problem is, how
do you know thatís the best service or price? How do you know the
proposal or RFP process was not rigged to the benefit of the
management company? As the manager of the association, you have
direct access to all the proposals, the discussions had with each
vendor and inside knowledge not privy to the other vendors.
Furthermore, if the management company was in charge of sending the
RFP to two different companies, how do you know they didnít send it
to the most expensive companies in town, so their proposal shines?
If you weigh the pros and cons of this kind of situation, you will
see that you have more to lose than you think.
Better yet, this kind of practice has made it
harder for board members to get apples to apples comparison when
considering a change in management because the management companies
that have an interest in all these other organizations will come in
with a rock bottom management price knowing they can make it up with
the other services. As a board member, you should always rememberÖ
ďThereís no free lunch.Ē
Iím curious to hear from our readers, are you ok
with having your management company bring in companies in which they
have an ownership stake? Do you believe itís a conflict of interest
or a benefit?