Members performing work

MikeJ8 (Illinois)
Posts: 45

Posted:

I've been on our BOD for many years and all work has been done by reputable contractors. We have some painting work which was bid out & approved several weeks ago and went to a different than the original contractor due to his workload/schedule. Our president has not said to cancel the work and her husband will do it for less than the three bids.

He's not a contractor just unemployed. I do feel bad for him but are there any potential issues with paying a homeowner to do work on HOA owned property?

GlenL (Ohio)
Posts: 5,491

Posted:

I doubt the president has the power to cancel a Board resolution (I'm assuming the Board voted to hire contractor X) without a formal vote. Then the husband would either have to provide proof of insurance, workman's comp and depending on local regulations a business license or the HOA would have to hire him so he would be covered by the HOA insurance and pay the workman's comp for him. If you do this you will also need to 1099 him if the work is over $600.

Studies show that 5 out of 4 people have problems with fractions

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By GlenL on 10/23/2012 8:44 PM
I doubt the president has the power to cancel a Board resolution (I'm assuming the Board voted to hire contractor X) without a formal vote. Then the husband would either have to provide proof of insurance, workman's comp and depending on local regulations a business license or the HOA would have to hire him so he would be covered by the HOA insurance and pay the workman's comp for him. If you do this you will also need to 1099 him if the work is over $600.

Not exactly.

If you hire the individual as an employee, you provide the worker's comp, pay wages, withhold income taxes, pay FICA taxes and unemployment insurance, and issue a W-2.

If you hire the individual as an independent contractor, he is responsible for his own insurance, income and self-employment taxes, and you issue a 1099-MISC if the pay is over $600.

BradP (Kansas)
Posts: 2,640

Posted:

Mike

I see two issues here...first does the president have the authority to cancel the work already scheduled unilaterally? No, and along those same lines the bid process isn't fair. The president was allowed to see the bids and then undercut them which is shady at best. You will iritate those businesses and good luck in the future with them.

Second issue comes down to his status? Is he a painter by trade and there fore qualified for the work? Second, does he have his own liability/workman's comp insurance? I think it is perfectly acceptable for members to do small tasks that carry very, very,very low liability. However, I am assuming with painting that he will be on ladder at some point, your HOA is asking for trouble.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Only hire people who are licensed and insured even for the handyman duties. She may want to hire her husband to give him something productive to do. However, they both should think of the consequences if they don't protect themselves. It's important to only hire contractors who can provide a business license and their own insurance. You don't want to find out the hard way.

Now I used to have "Volunteer days" in my HOA to fix things. The HOA would provide the materials and the owners the labor. These would be on small projects like painting the clubhouse fence, cleaning the pool furniture, small maintenance items, or just cleaning up areas. Things that would not require much effort that the community would enjoy the results. Plus had things for the kids to do to keep them happy. Your HOA may be able to do something along those lines. Make sure it's volunteer only and the HOA provides the supplies. Not the happiest of scenerios for the unemployed husband but will give him something to do.

Unless he's willing to get insured and licensed, I would ask your members to voice your concerns or request volunteer labor only.

Former HOA President

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Glen's correct. I respect the need for work but respect the need to protect the property from liability as a higher consideration.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By BradP on 10/24/2012 6:56 AM
The bid process isn't fair. The president was allowed to see the bids and then undercut them which is shady at best. You will iritate those businesses and good luck in the future with them.

An HOA is a privately funded organization and is not required to be "fair." It is not a government agency spending taxpayer dollars. Having worked in a number of competitive businesses, it is quite common to let one bidder know what the other is offering in the hopes of getting an even lower price.

Contractors are used to having their bids turned down so the only one likely to be irritated will be the guy who got the job and then was told he does not have it. If a contract was signed, then he may do more than be irritated; otherwise it is just another day in the life of a contractor.

BrianB (California)
Posts: 2,820

Posted:

Quote:

Posted By LarryB13 on 10/24/2012 8:46 PM

Posted By BradP on 10/24/2012 6:56 AM
The bid process isn't fair. The president was allowed to see the bids and then undercut them which is shady at best. You will iritate those businesses and good luck in the future with them.

An HOA is a privately funded organization and is not required to be "fair." It is not a government agency spending taxpayer dollars. Having worked in a number of competitive businesses, it is quite common to let one bidder know what the other is offering in the hopes of getting an even lower price.

Contractors are used to having their bids turned down so the only one likely to be irritated will be the guy who got the job and then was told he does not have it. If a contract was signed, then he may do more than be irritated; otherwise it is just another day in the life of a contractor.

tacking onto Larry's advice... the losing bidder could also decide to contact the IRS and report "potentially unreported wages" and 'collusion to defraud'. The losing bidder could also contact OSHA, for example, and file a complaint about some (made up) health or safety issue, and get an inspector to come out (depending on jurisdiction, they may or may not have authority to investigate) to check training, etc. If not OSHA, perhaps the local DEHS, EPA, etc., with regard to hazardous materials (paint) in use, or haz waste (ie, where is he disposing of the remnants, the wash, etc.) The losing bidder could also contact the HOA insurance company, and make some claim that might launch an investigation, or removal of coverage. be careful of entering the minefield.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By BrianB on 10/25/2012 11:34 AM

tacking onto Larry's advice... the losing bidder could also decide to contact the IRS and report "potentially unreported wages" and 'collusion to defraud'. The losing bidder could also contact OSHA, for example, and file a complaint about some (made up) health or safety issue, and get an inspector to come out (depending on jurisdiction, they may or may not have authority to investigate) to check training, etc. If not OSHA, perhaps the local DEHS, EPA, etc., with regard to hazardous materials (paint) in use, or haz waste (ie, where is he disposing of the remnants, the wash, etc.) The losing bidder could also contact the HOA insurance company, and make some claim that might launch an investigation, or removal of coverage. be careful of entering the minefield.

Brian,

All of those things you mentioned are things that anyone could do at any time. My experience has been that most complaints never even get assigned for investigation. This is especially true where the complainant alleges things that might have happened but the complainant has no first-hand knowledge about.

For example, "Joe is taking money under the table for painting" may be true but is not as likely to be investigated as a complaint that says, "When I was the bookkeeper John ordered me to pay Joe $10,000 to paint our facility and John also ordered me to not report it to the IRS." Ditto for "I am sure Joe is dumping paint into the city sewer system" as opposed to "On September 15, 2012, I witnessed Joe dispose of five gallons of latex paint by pouring it into the city sewer at 1234 Main Street."

I recall testimony from a police detective who said that the first step in any investigation is to evaluate the credibility of the complaining party. A person with a grudge is not going to have much credibility.

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By LarryB13 on 10/24/2012 8:46 PM

Posted By BradP on 10/24/2012 6:56 AM
The bid process isn't fair. The president was allowed to see the bids and then undercut them which is shady at best. You will iritate those businesses and good luck in the future with them.

An HOA is a privately funded organization and is not required to be "fair." It is not a government agency spending taxpayer dollars. Having worked in a number of competitive businesses, it is quite common to let one bidder know what the other is offering in the hopes of getting an even lower price.

Contractors are used to having their bids turned down so the only one likely to be irritated will be the guy who got the job and then was told he does not have it. If a contract was signed, then he may do more than be irritated; otherwise it is just another day in the life of a contractor.

True you aren't required to be fair...but that begs the question when dealing with other people's money why wouldn't you want to be as transparent as possible?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I am a big believer in bartering, tipping, tit for tat, scratch my back and I will scratch yours, etc. but when elected to a position of fiscal responsibility I have to look out/protect others so "no funny" business even when I personally like "funny business".

I would not hire anyone to do work in our HOA unless licensed, bonded, and we got bids.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By BradP on 10/25/2012 2:18 PM

True you aren't required to be fair...but that begs the question when dealing with other people's money why wouldn't you want to be as transparent as possible?

What is more transparent than putting all bids on the table so that each bidder will know what the other guy offered? Secret bidding is the opposite of transparency.

BTW, in my own businesses and personal life I never seek competitive "bids." My first concern always is getting the job done well and on time. I've been burned in the past by low bidders who seem to turn into no-shows when it is time to do the work.

The board should not be searching out the lowest bidder. They should be searching for contractors who will do the work well.

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By LarryB13 on 10/25/2012 4:59 PM

Posted By BradP on 10/25/2012 2:18 PM

True you aren't required to be fair...but that begs the question when dealing with other people's money why wouldn't you want to be as transparent as possible?

What is more transparent than putting all bids on the table so that each bidder will know what the other guy offered? Secret bidding is the opposite of transparency.

BTW, in my own businesses and personal life I never seek competitive "bids." My first concern always is getting the job done well and on time. I've been burned in the past by low bidders who seem to turn into no-shows when it is time to do the work.

The board should not be searching out the lowest bidder. They should be searching for contractors who will do the work well.

It is different when you are dealing with your own money as opposed to others...when i use others money i seek out the lowest qualified bidder. There are no guarantees with any contractors and their price...had some really good ones with low prices and really bad ones with high prices

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Brad

The lowest biddder is often far, far away from the best for us bidder.

One of the biggest scams is driveway seal coating. Many such scammers use "stuff" thst looks good but never dries and washes away with the first rain.

I knew a druggie that claimed to be a roofer. His roofing jobs fell apart soon after.

I assure you, they were both the low bidders.

"The bitter taste of poor quality remains much longer than the sweet taste of a low price"

MikeJ8 (Illinois)
Posts: 45

Posted:

I voiced a few concerns which closely match many of yours but one of the other board members thinks its a great idea too so the homeowner is doing it. It's a smaller job but I still don't like the direction our HOA is going. I am 100% sure this will be heavily questioned at out next annual meeting.

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By JohnC46 on 10/25/2012 5:10 PM
Brad

The lowest biddder is often far, far away from the best for us bidder.

One of the biggest scams is driveway seal coating. Many such scammers use "stuff" thst looks good but never dries and washes away with the first rain.

I knew a druggie that claimed to be a roofer. His roofing jobs fell apart soon after.

I assure you, they were both the low bidders.

"The bitter taste of poor quality remains much longer than the sweet taste of a low price"

I agree, that is why you take the lowest qualified bidder, make it a requirement that they have insurance and are licensed. Make it a requirement that they have done x number of similar jobs and ask for and check references. This is where the HOA has to do their homework. Same thing goes in a state business setting, they are often required to take the lowest "qualified" bid and there are things you can do to exclude some folks from qualifying legally to protect your interests.

LarryB13 (Arizona)
Posts: 4,099

Posted:

The News Feed feature on this site has an excellent article written by an attorney addressing construction projects and associations. See http://www.meeb.com/?post_type=meeb-legal-alerts&p=1500&preview=true