HOA purchasing policies

Date Published : Jun-21-2022

Written By : Kim Brown

Members of HOAs and condo communities pay fees that are used to maintain the development. A lot of that money goes towards purchasing materials and services.

In order to ensure money is used ethically and responsibly, associations create and follow purchasing policies to guide boards, managers, and other staff who handle community finances. 


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Purchasing policies

Purchasing policies, sometimes referred to as procurement policies, provide a roadmap for purchasing items and services. Policies include information about:

  • Who is authorized to make purchases
  • How much a staff member, such as a manager, can spend before seeking permission from the board
  • When bids must be solicited
  • What happens if the services or items cost more than expected
  • Purchasing ethics
  • And more

Policies are informed by existing state or county laws, as well as the individual association. For example, some states may require associations to request bids if the total cost of the product or service is more than 5% of the total annual budget of the association. In other states, it might be a 3% threshold.

Similarly, some condos or HOAs might require a minimum of 3 bids, even though it is not a state law. Others may only say that multiple bids are necessary. Purchasing policies may and should be revised from time to time. 


Obtaining bids

Purchasing policies inform the purchasing process, but there’s more to it than that. We’ll cover some of the more practical aspects of acquiring goods and services below.

Associations don’t always need to obtain bids for smaller jobs. In fact, small jobs that cost only a few hundred dollars should not be put up for multiple bids. The process can be lengthy and some contractors wouldn’t spend their valuable time creating bids for minor jobs. It also delays the time it will take to complete a repair. But when that time comes, it’s best to ask for multiple bids

Bids are to be requested in writing, but that doesn’t mean they can’t be submitted through email or a vendor management system. The bidding process is ideal for extensive repair work or long-term services, including:

  • Landscaping
  • Pool maintenance
  • Re-roofing
  • Exterior painting

Bids help condos and HOAs plan and budget. They also make it possible for communities to select the contractor who can complete the required work within the timeframe and contract specifications. Perhaps the board thought that repairing the pool would cost much less than what contractors are quoting. The board can use this information to readjust plans and budgets before any work starts.

Associations should evaluate all possible needs and costs before soliciting bids in order to attract the right company or person. The more detailed information a bid can provide to prospects, the better. Boards should establish a limited price range, when they need the work completed, the frequency of the service (if applicable), and the complexity of the repair. It may be helpful to include photos or diagrams, depending on the nature of the project. If creating bids is beyond the expertise of the board or manager, we strongly recommend hiring someone who does have experience. It will save the association time and money in the long run.

Note that, unless explicitly written in the HOA’s governing documents, there is no obligation to select the cheapest vendor. While most associations will do this to save as much money as possible, boards and managers should also consider what they are getting for the money they are paying. Value is also important. Does it make more sense to buy the cheapest product? Or the one that will last the longest? The answer will vary depending on the size of the association, the purpose of the product, and finances. 


Vendor contracts

Vendor contracts are formal agreements made between the association and vendor once the board has selected a company or provider. Contracts protect parties by clearly stating what is expected of each party, and provide a roadmap to follow if something does not go according to plan. When procuring significant services, or expensive materials, associations are exposed to a higher level of risk. Without a clear description of the deliverables, timelines and responsibilities of each party, enforcing the contract becomes increasingly difficult.

Below are some common terms and conditions that regularly appear in formal vendor contracts:

  • Project specifications
  • Early termination
  • Data protection and breach notification
  • Confidentiality
  • Indemnification
  • Force majeure
  • Service level agreements
  • Severability

Contracts spell out the terms and conditions that the parties entering the contract must abide by. They go beyond line-item product descriptions and costs.


Purchase orders

Purchase orders help associations formally document smaller procurements. As a best practice, virtually everything that the association spends money on should trigger a purchase order (though there are a few exceptions). 

Purchase orders (POs) are documents issued from the organization to a vendor. They formalize requirements and pricing, and serve as legally binding documentation. It is a form of proof that shows what goods or services were ordered. If there is some confusion later on about what was supposed to be provided, the PO can provide a clear answer. POs are just as important for vendors as they are for boards and managers.

POs usually capture the following information:

  • The association’s name and address
  • The vendor’s name and address
  • Delivery information such as where goods are being dropped off and who will receive them
  • A detailed description of the quantity and unit price for each product or service being requested
  • A purchase order number
  • Payment terms, delivery terms, acceptance terms
  • Approval by the association
  • Approval by the vendor

Purchase orders are great for commodity-style purchases when the condo or HOA can easily identify exact numbers. Depending on the purchasing policy, they may require approval from the board.

Purchase orders are not to be confused with work orders. A work order is started when a particular task or job must be completed. But a purchase order is created when an association is purchasing materials or services. Work orders are created after a service request is approved, where there’s a scheduled repair that needs to be taken care of, or when something breaks down unexpectedly. Work orders capture all of the key information about the job in one document. Together, work orders and purchase orders give the association more information about the scope and cost of a job. 

Purchase orders are a great option when the association needs more than an invoice, but not something as formal as a multi-page contract.



Owners expect their board and management teams to spend their hard-earned money wisely. There is a middle ground between spending furiously and not investing enough to keep the HOA safe and well-maintained. 

Purchasing policies help keep associations accountable. They inform purchasing processes, and dictate who has the authority to spend money. Policies need to be coupled with accurate and consistent documentation. While all members don’t get a say about which vendors are selected to provide goods and services, they do have a right to see where their money was spent. Good documentation also minimizes misunderstandings between parties, and can act as proof on the rare occasion that an issue must be settled by a judge.  

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