Is This A Conflict of Interest?

Barron's Real Estate Dictionary defines COI as:

"Situation in which a person is faced with a possible decision in an official or fiduciary capacity from which he or she stands to benefit personally because of another relationship. To avoid this, the decision maker may step down from one role or the other."

So... Only if he makes the decision on who to hire and, I would add, that he does NOT have access to the other bids prior to submitting his.

If he can do the same job cheaper, well then, all the better for YOU!

Anna,

As Peter says, if he does not have access to see what the others bids are, he is not in conflict at all. He may even do a better job than an outside company because he knows that he could get the boom lowerd, both in the tree and the management divisions. I see no problem at all except, does he know what he is doing?

Insurance & LICENSING is a prerequisite for ANY contractor who bids to step on your property.

All businesses must be licensed. This also carries liability insurance requirements and, if large enough, workman's compensation insurance.

For the sake of this discussion, suppose the Property Manager (PM) owns a maintenance company. It could be a construction company, landscaping company, sign-making company, plumbing company, or anything else.

1.) If the PM supervises the work & owns the company doing the work, it definitely can lead to problems. Does the Association want to supervise the PM & the company doing the work? If the answer is "No", then the HOA better be ready to fire the company and the PM because the PM is likely to be upset if the HOA decides to fire the PM's maintenance (construction or other) company. The PM likely feels she is not being paid much in the first place and figures by getting $$ from hiring her own company to do the maintenance or other work it justifies the low pay as PM.

2.) If the maintenance work is not being done in a timely manner when the HOA BOD knows (or thinks it knows) there are other capable contractors out there who are available for reasonable fee, how does the HOA accuse the PM of setting aside work on your HOA property (because she knows her maintenance company has the job) while her maintenance company does other tasks for other places?

3.) Definitely the PM should not see the bids from the other companies! Does the HOA want to personally solicit, track down and evaluate the bids on jobs (essentially do the PM's job) just so the PM's company can be included in the bidding process?

Unless the PM's maintenance, construction or other company has a stellar reputation of doing excellent (or far better than anyone else in the area) work at a comparable (or better) rate to other area contractors and this quality of work or cost would not at all be negatively influenced by the obvious conflict of interest, I most definitely would not advise allowing the PM to hire her own company to do the work. After all, the PM likely is already hiring the people she knows and trusts to do the work, some of whom likely are being hired out of habit rather than getting fresh bids, particularly on routine work.

It is far easier for the PM not to be offended if the HOA says "Let's not use XYZ contractor anymore, clearly the quality of their work has slipped." It would be bad enough that the PM would be stuck telling an old friend the HOA does not want to work with that contractor anymore. Think about trying to tell the PM that her company's work is inferior. It would be tough to separate the PM from her maintenance company.

Incidentally, if I were a PM and I wanted to use my own company to service my HOA contracts, I would insist upon double signatures on the checks (or at least approval from someone at the HOA that our work was well done) and definitely send very detailed itemized invoices to the HOA of what our company did for them and how much we billed for each service. And I would be on-site supervising my crews with more scrutiny there than anywhere else, if for no other reason than my reputation was doubly on the line. This makes great business sense because it will increase the quality of the results and will likely result in more work for both my property management company and my maintenance company. Such a quality of oversight by the PM would be a big plus for the HOA.

Unfortunately, this is not how things always work out.