Property Manager hires contractors without board approval

P.R. writes:

At our last board meeting, we were considering hiring a contractor to paint the lobby and the hallways of our first two floors. The board had never hired a painter before. The PM said he knew a couple of painters and would hire one to get the work done in the next week. Does a property manager have the authority to hire any contractor they want?

Paul replies:

Dear P.R.:

In one word, it depends. The board is the boss and makes all the decisions unless the decision-making authority has been delegated to the property manager (PM). If you are  new to the board the first task you should  undertake is to review the service agreement between the PM and the condo corporation. What is the PM contracted to do? If the PM needs to complete certain tasks that need board approval, it should be stated in the agreement. Sometimes you may find that it is not stated as completely or as clearly as you would like. If anything needs clarification, it should be clarified in writing and attached to the service agreement or noted in the board minutes.

The board may have been doing business with a contractor that is familiar with your property, provides good service on a timely basis, at a reasonable price. Unless there is a compelling reason to change, the board may instruct the PM to call this particular contractor to mow the grass for example. In another situation, the board may not have used anyone to do any painting and may delegate the task of hiring a painter to the PM.

Your corporation may have a policy that requires the board to solicit three quotes for any contract above a certain dollar amount. The board could delegate the task of soliciting quotes and preparing a comparison to the PM. The board would then make the final selection, and then leave the ongoing supervision/management of the contractor to the PM.

The bottom line is that the board is responsible to administer all the affairs of the condo corporation. The PM only has the authority given to it by the board.

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