Why Not Hire Our Neighbor?

A very common temptation in the HOA is to hire one of the members or a tenant to work for the association. The arguments often are that the resident or member is known to all, offering a discount, and knows the property well. Some HOAs even hire a resident to manage the association.

Only the very smallest associations can operate without a professional manager, and they tend to operate more as partnerships than HOAs. Experienced managers are expected to be current on the governance and financial procedures required by law and the frequent changes in those procedures. A professional manager has knowledge of many vendors and good contracting practices, and usually has others in their company to whom they can turn for advice or information regarding challenges. Credentialled managers have continuing education requirements requiring them to keep current.

When the HOA hires one of its own to do paid work for the association, a number of complications arise. Normally the primary argument for hiring the neighbor is that they will do it cheaper than the HOA’s current vendor. Sometimes the reason they can do it at lower cost is that they are not trained, do not have the necessary insurance or credentials, and frankly are happy to have the extra income. Is the board ready to question the neighbor about their qualifications, or will the board hesitate to be “rude”?

Another problem with hiring a neighbor arises when things go poorly.  Who wants to tell the neighbor that their work is bad, or that they need to be terminated? What if the work is so bad that the person should be pursued with a court action? Is the board ready to sue a neighbor? When hiring a truly third party vendor, there is no hesitation to hold the vendor accountable for poor service or poor work.

When a neighbor is working for the HOA, conflicts of interest are unavoidable. Is the resident speaking as vendor or as a concerned homeowner? Are their decisions in how they perform their work affected by their relations with certain neighbors? Will some neighbors get better service than others because they are friendly with the vendor-neighbor?

One last problem can arise when a resident actually is a qualified service or product provider. Sometimes such a person is willing to give the HOA a special discount to help their community. However, too many times I have seen that boomerang against both the HOA and the resident – there will always be someone who resents the fact that a neighbor is making money from the HOA (even discounted money). Sadder still are the people who will infer a more sinister arrangement “ah, so what other backroom deals is our HOA making?”

The noted philosopher and sausage salesmen Jimmy Dean used to say, “you get what you pay for.” It almost always is worth paying extra to have a truly independent third party service or product provider for your HOA. The appearance of business-like dealings for the HOA, the ability to hold the vendor accountable without hesitation, and the greater likelihood that the vendor is qualified, are all sufficient reasons for HOAs to resist hiring a resident.

It’s great to appreciate and support your neighbors, but just don’t hire them.

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.