Competitive bidding

Whether you must bid at all depends on your state

There is no federal law and no single industry standard requiring an association to competitively bid a capital project. Some states impose a requirement above a set budget threshold, and some states impose none at all. A board that assumes its state works like a neighboring state's, without checking, is guessing with owners' money.

Florida is one of the more prescriptive states. A homeowners' association must competitively bid a contract once its cost exceeds 10 percent of the association's total annual budget, including reserves, and a condominium association faces a lower trigger, 5 percent of its annual budget. California, by contrast, has no statewide statute requiring HOAs to bid contracts at all; where a California association's governing documents are silent on the subject, no state-law default fills the gap.

Whether your state has a bidding statute, and what threshold triggers it, varies. Check your state's association statute and your own CC&Rs before assuming either way.

Bidding does not mean taking the lowest price

A board that solicits three bids and then hires the contractor with the strongest track record, not the cheapest number, has not broken the rule most bidding statutes actually contain. Florida's own HOA bidding statute says so directly.

"Nothing contained in this section shall be construed to require the association to accept the lowest bid."

Source: Florida Statutes, section 720.3055, The Florida Senate

Competitive bidding is a process requirement: get comparable numbers in front of the board before committing. It is not a mandate to award on price alone. Whether your own state's statute or your bylaws say anything different is worth confirming before the board finalizes its reasoning for a bid decision.

Some contracts are exempt, and bidding isn't the only screening tool

Where a bidding statute exists, it typically carves out professional services. Florida exempts contracts with the association's own employees, and with attorneys, accountants, architects, engineers, community association managers, and landscape architects, from its bidding requirement, for both homeowners' associations and condominiums.

Before any bid goes out, the board also needs a clear defined scope of work so every bidder is pricing the same job. A board may also choose to prequalify firms with a request for qualifications before inviting priced proposals through a request for proposal, regardless of whether a statute requires bidding at all.