Know what to look for when dealing with contractors

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Community associations hire dozens of contractors to perform myriad maintenance and administrative tasks.

Some are major undertakings, like replacing roofs and decks. Others are smaller, like auditing the books or shampooing carpets.

Whatever the project, you want it completed competently, on time and within budget.

Increase your chances for positive results by heeding this advice from association pros:

Define the job. Put your expectations and specifications in writing, and ask prospective contractors to bid accordingly, said Angela Falzone, property consultant and community association manager of Association Advocates Inc. in Chicago and Park Ridge.

"Just calling in three roofers might give you an apple, orange and banana in suggested needs and cost estimates," Falzone said. "Starting from the same scope of work, those bids will be easily compared and invaluable in making the right vendor choice."

If the project is a big one, the best approach is to hire an engineer to design the specifics and get proposals, she added.

Insist on insurance. Even the most airtight contract in the world can't protect an association from a contractor who doesn't have money, said Ben Rooney, an association attorney from Keay & Costello PC in Wheaton.

"For example, your contractor causes all sorts of damages and doesn't even finish the job," he said. "The association files suit and successfully obtains a judgment. Unless the contractor has funds the association can reach, this judgment is no more than a piece of paper."

The association should take precautions such as requiring written contracts, getting a certificate of insurance that includes the association on the contractor's policy and a provision prohibiting the contractor from canceling the policy without notifying the association first, Rooney said.

"Vendors who don't have insurance typically offer lower prices," said Salvatore Sciacca, community association manager and president of Chicago Property Services Inc. in Chicago. "Boards may find that attractive, but the risks outweigh the cost savings, in my opinion."

Watch for red flags. Don't agree to large down payments or demands to be paid in cash. Extremely low and high bids can signal that something is amiss, Sciacca said.

"If the lowest bidder is slightly below the other bids, it's usually OK and should be considered," he said. "If someone bids way higher than anyone else, they might be misunderstanding the scope of work, or perhaps they offer union labor when the other bidders are nonunion.

"The more money the association pays upfront, the more risk it has that the contractor will not perform as expected," Rooney said.

But making installment payments as the contractor achieves certain benchmarks is reasonable, he said.

Nepotism might be OK. Associations may hire board members or their families as long as certain conditions are met.

They must notify owners of the decision to enter into the contract within 20 days and give them an opportunity to petition for an election to approve or disapprove the contract.

When in doubt over whether a conflict of interest exists, it's better to over-disclose than to under-disclose, Rooney said.

Don't rush the process. Meet the contractors in the final running. Call their references. Check online review sites like Yelp and the Better Business Bureau for complaints.

"The bottom line is reputation, reputation, reputation," Sciacca said. "It takes time to vet out good-quality vendors."

Keep good contractors for repeat jobs. You eliminate learning curves, and you might get better pricing.

"Using the same plumbing company, for example, saves the problem of identifying where pipes are located, and how they are joined with other units," Falzone said. "Loyalty from those vendors helps get projects scheduled more quickly."

Boards that insist on three bids for everything, she said, might lose out on such cost efficiencies.

ctc-realestate@tribune.com

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