HOA Vendor Contracts: What Every Board Must Include Before Signing

Vendor contracts are the most overlooked area of HOA legal exposure. A landscaper damages a homeowner's vehicle. A pool contractor causes a chemical injury. A roofing contractor leaves a property open to water damage. If the vendor contract doesn't have the right provisions, the HOA — not just the vendor — may be liable. Here are the 8 provisions every board must include.

8 Required Provisions in Every HOA Vendor Contract

1. 1Scope of work: specific, detailed description of exactly what the vendor will do
2. 2Contract price and payment schedule: fixed price or time-and-materials with a cap
3. 3Insurance requirements: vendor must carry general liability ($1M per occurrence minimum) and workers' comp
4. 4Additional insured: HOA must be named as an additional insured on vendor's general liability policy
5. 5Indemnification: vendor indemnifies HOA for damages arising from vendor's work or negligence
6. 6Term and termination: how long the contract runs and board's right to terminate for cause or convenience
7. 7Performance standards: objective, measurable description of acceptable performance
8. 8Dispute resolution: mediation or arbitration before litigation (keeps costs down)

Insurance: The Most Important Provision

Before any vendor starts work, obtain and verify a Certificate of Insurance (COI) showing: (1) general liability coverage of at least $1 million per occurrence; (2) the HOA named as an additional insured; (3) workers' compensation coverage (required in every state); and (4) coverage dates that include the project period. A COI that expired 3 days before the accident provides zero protection.

Multi-Year Contracts: When to Avoid Them

Multi-year vendor contracts (landscaping, management, pool service) lock in pricing and service — which can be a benefit or a trap. Before signing a multi-year contract: verify the termination rights and penalties; include an annual price escalation cap tied to CPI; and ensure the contract includes a quality/performance standard that, if not met, allows termination without penalty.

Board Approval Thresholds

Most CC&Rs or bylaws specify that contracts above a certain dollar threshold (commonly $5,000–$25,000) require full board approval — not just the property manager. Boards should establish and document their approval threshold in a resolution, and require at least 3 competitive bids for any contract above the threshold. This prevents unauthorized contracting and protects board members individually.