This week's tip deals with saving money by digging into your

management company's relationships with the vendors it

recommends for association projects.

"A lot of our competitors own plumbing, electrical, or insurance

companies or landscapers, or painters—all types of ancillary

vendors that provide services and products to associations,"

explains Robert White, managing director of KW Property

Management & Consulting in Miami, which oversees about 125

associations totaling 30,000-35,000 units.

"They'll do the management and see that the building needs new

paint and just get their vendors in there. Or they'll get bids

from other vendors and then tailor their bid around the other

bids. That creates a major conflict of interest. Some companies

even reward managers for getting those vendors into those

associations to begin with."

That doesn't mean your association will always get the short end

of the stick. "In some cases, having an affiliated company do

work for your community is not only perfectly appropriate, but

you have an even higher likelihood of achieving satisfaction

because the manager is working with you in another way and wants

to preserve that relationship," says Lisa A. Magill, a

shareholder and association attorney at Becker & Poliakoff PA in

Fort Lauderdale, Fla.

"However, if the owners of the companies are affiliated, you may

not have the same level of comfort that bids reflect arms-length

transaction pricing."

One way to determine whether you're getting fair and independent

advice from your management company when it comes to outside

vendors is to include a question in your request or bids asking

bidders to identify all the owners of the company and all the

ownership interests those people have in any other companies the

association does business with.

For more examples of how you might be losing money if your

management company has failed to disclose a conflict of interest,

and to learn more about protecting your association, see our new

article, HOA Management Companies: Does Your Management Company Have Conflicts of Interest?

Best regards,

Matt Humphrey

President