When condos and HOAs must get competitive bids
When condominium and homeowners associations want to enter into new contracts with vendors or professionals for various projects or duties, there is a misconception that the association must get at least three (3) competitive bids before hiring the vendor or professional. This is definitely not the case.
For condominiums, Section 718.302, Florida Statutes, provides that: “If a contract for the purchase, lease or renting of materials or equipment, or for the provisions of services, requires payment by the association on behalf of any condominium operated by the association in the aggregate that exceeds 5 percent of the total annual budget of the association, including reserves, the association shall obtain competitive bids for the materials, equipment or services. Nothing contained herein shall be construed to require the association to accept the lowest bid.”
However, the statute goes on to say that: “Notwithstanding the foregoing, contracts with employees of the association, and contracts for attorney, accountant, architect, community association manager, timeshare management firm, engineering and landscape architect services are not subject to the provisions of this section.”
The reason you do not need to get competitive bids with these professionals is because you cannot compare their services apples to apples. How these professionals provide their services is unique to each, so getting competitive bids is not a good way to compare their services.
However, for other types of services that exceed 5 percent of the total annual budget of the association, including reserves, such as landscaping, bulk cable or hiring a building contractor or providing the materials for an expensive building project, it makes sense to require competitive bids as many contractors can provide the same service or materials at different prices.
There are exceptions in Section 718.3026, Florida Statutes, to having to obtain competitive bids when usually required including obtaining needed products or services in an emergency (after a hurricane for example) or if there is only one business entity that serves the association within the county as the source of supply. Also, there is nothing in the statute requiring an association to get at least three (3) bids; getting only two (2) competitive bids is all that is required.
For homeowners associations (HOAs), Section 720.3055 puts the magic percentage, which requires competitive bids at 10 percent of the total annual association budget, including reserves. If a contract was awarded under competitive bids, any renewal of the contract is not subject to competitive bids “if the contract contains a provision that allows the board to cancel the contract on 30 days’ notice.”
An additional twist for HOAs is, that although competitive bids are not required for the same professionals as in condos, including community association managers if an HOA does use competitive bids for contracting with a manager, the contract can be made for up to three years. The same emergency and sole source of supply within the county exceptions available to condos also apply to HOAs.
Last, it should be pointed out that for both condos and HOAs, all contracts for the provision of services and all contracts that are for the purchase, lease or renting of materials or equipment that are not to be fully performed within one (1) year, must be in writing.
