Getting multiple bids is one of the most common practices HOA boards follow when hiring contractors. Whether the association needs a new roof, landscaping services, parking lot repairs, or a major renovation, comparing proposals can help board members make informed decisions about how association funds are spent.
But how many bids does an HOA actually need? Is three always the magic number? And what happens when a board can’t find enough qualified contractors willing to submit proposals?
The answer depends on several factors, including state law, the association’s governing documents, the project’s cost, and the type of work being performed.
How Many Bids Are Required for an HOA Project?
Three bids is a common recommendation for HOA projects, but there is no universal law requiring every homeowners association to obtain three bids before hiring a contractor.
Some states establish competitive bidding requirements for certain association contracts. Others leave the decision largely to the association’s governing documents and board of directors.
An HOA’s bylaws, purchasing policies, or other governing documents may also establish bidding thresholds. For example, an association might require three competitive bids for projects exceeding $10,000, even if state law does not impose that specific requirement.
Before requesting proposals, board members should determine:
- Whether state law requires competitive bidding for the proposed contract
- Whether the governing documents specify a minimum number of bids
- Whether the association has an adopted purchasing or procurement policy
- Whether the project qualifies for an exception, such as emergency repairs
- Whether the board must obtain membership approval before proceeding
It’s also important to distinguish between obtaining bids and accepting them. A requirement to solicit competitive bids does not necessarily mean the association must hire the contractor offering the lowest price.
Why Do HOA Boards Typically Get Three Bids?
Requesting three bids gives the board an opportunity to compare pricing, evaluate different contractors, and identify potential differences in the proposed work.
One bid provides a starting point, but it offers little context for determining whether the price is competitive. Two bids allow for comparison, although a substantial difference between the proposals can make it difficult to determine which estimate is more reasonable.
Three bids generally provide a broader perspective without making the selection process unnecessarily complicated.
Competitive bidding can also benefit an association in several ways.
Better cost comparisons. Multiple proposals help board members understand the likely cost of a project and identify estimates that are significantly higher or lower than others.
Greater accountability. A documented bidding process demonstrates that the board considered alternatives before committing association funds.
More information about contractors. Reviewing several proposals gives the board an opportunity to compare qualifications, experience, warranties, and project timelines.
Fewer questions from homeowners. When residents question a project’s cost or contractor selection, the board can explain the process used to evaluate the available options.
However, obtaining three bids does not automatically mean an association has conducted an effective bidding process. The quality of the proposals and how they are evaluated matter just as much as the number received.
What Do State Laws Say About HOA Bidding Requirements?
HOA bidding requirements vary by state. Some jurisdictions establish specific financial thresholds, while others give associations more discretion over their purchasing decisions.
Florida HOA bidding requirements
Under Florida Statute 720.3055, homeowners associations must obtain competitive bids for covered contracts exceeding 10% of the association’s total annual budget, including reserves.
For example, an HOA with a $500,000 annual budget, including reserves, would generally need to competitively bid a covered contract exceeding $50,000.
Florida law also establishes exceptions for certain professional services, qualifying contract renewals, and other circumstances. The statute does not require the association to accept the lowest bid.
Florida condominium associations operate under a different statute. Under Florida Statute 718.3026, the competitive bidding threshold for covered condominium contracts is generally 5% of the total annual budget, including reserves.
These laws require competitive bidding under specified circumstances, but they do not establish a universal three-bid requirement.
California HOA bidding requirements
California does not have a general statewide law requiring HOAs to obtain three bids for every project.
However, an association’s governing documents or adopted purchasing policies may establish bidding requirements.
The Davis-Stirling resource on HOA bidding policies explains that competitive bidding is a sound business practice for significant projects, even when a particular number of bids is not legally mandated.
California boards should also review applicable approval requirements and financial controls before entering into major contracts.
What about HOAs in other states?
Associations in other states should review their applicable statutes and governing documents before establishing a bidding procedure.
A board should not assume that another state’s requirements apply to its community. When the rules are unclear, consulting the association’s attorney can prevent costly mistakes.
Does an HOA Have to Accept the Lowest Bid?
No. Unless an applicable law or governing document establishes a specific selection requirement, an HOA board generally does not have to accept the lowest contractor bid.
The least expensive proposal is not necessarily the best value for the association.
For example, suppose an HOA receives three bids to replace its clubhouse roof:
| Contractor | Proposed cost | Key differences |
|---|---|---|
| Contractor A | $42,000 | Shorter workmanship warranty |
| Contractor B | $47,500 | Longer warranty and more comprehensive scope |
| Contractor C | $53,000 | Premium materials and extended project timeline |
Contractor A offers the lowest price, but Contractor B may provide better overall value if the additional warranty coverage and proposed materials justify the difference.
Before making that determination, the board should confirm that the proposals cover comparable work.
A lower bid might exclude debris removal, permits, or repairs that other contractors included. These omissions can result in additional expenses after the project begins.
The board’s responsibility is to make an informed decision that serves the association’s interests, not simply to choose the smallest number.
What Should HOA Boards Compare When Reviewing Contractor Bids?
Price is an important consideration, but it should never be the only factor used to select a contractor.
A thorough evaluation should consider the following:
| Evaluation factor | What the board should review |
|---|---|
| Scope of work | Are all contractors proposing the same services, materials, and deliverables? |
| Experience | Has the contractor completed similar projects for HOAs or other properties? |
| Licensing and insurance | Does the contractor hold required licenses and appropriate insurance coverage? |
| Project timeline | When can work begin, and how long will completion take? |
| Warranty coverage | What labor and material warranties are included? |
| Payment terms | Does the proposed payment schedule align with completed work and project milestones? |
| References | Can the contractor provide references from comparable projects? |
| Exclusions | What work or potential expenses are not included in the quoted price? |
Boards should also review how contractors handle change orders, project delays, and unexpected conditions.
For larger construction projects, involving an independent engineer, architect, or construction consultant can help the board assess technical differences between proposals.
How Should an HOA Request Contractor Bids?
An effective bidding process begins before contractors submit their proposals.
One of the biggest mistakes boards make is asking several contractors to estimate a project without providing a consistent scope of work.
If one roofing contractor proposes replacing the entire roof while another recommends repairing damaged sections, their estimates cannot be compared on price alone.
To avoid this problem, the association should prepare a written request for proposal (RFP) or request for bid (RFB).
The document should identify the work being requested and establish consistent expectations for prospective contractors.
A typical HOA bid request should include:
- A description of the project and its objectives
- Detailed specifications and required materials
- Any applicable licensing and insurance requirements
- The anticipated project schedule
- Instructions for conducting site visits
- The deadline and method for submitting bids
- Warranty and payment expectations
- Any required permits, inspections, or compliance obligations
For projects with established technical specifications, a request for bid can be particularly useful because contractors are pricing the same defined work.
As explained in the Davis-Stirling bidding guidance, standardized specifications help associations obtain proposals that can be meaningfully compared.
Once proposals are received, the board or management team should review them for completeness before presenting the options for consideration.
What Happens If an HOA Cannot Get Three Bids?
An HOA may have difficulty obtaining three bids, particularly for specialized projects, smaller communities, or work requiring contractors with specific qualifications.
Some contractors may be unavailable, while others may decline because the project is too small, too complex, or outside their service area.
If an HOA cannot obtain three bids, the board should first determine whether three bids are legally required or simply recommended under its purchasing policy.
If no applicable requirement establishes a minimum number, the board may be able to proceed with fewer proposals, provided it follows the association’s governing documents and applicable approval procedures.
However, when a law or governing document requires competitive bidding, the board should not assume that receiving only one proposal satisfies that obligation.
Before proceeding, the board should consider expanding its contractor search, extending the submission deadline, or consulting legal counsel about the available options.
It is also important to document the association’s efforts.
Meeting minutes and procurement records should reflect how many contractors were contacted, which proposals were received, and why the board determined that proceeding was appropriate.
When Can an HOA Skip the Competitive Bidding Process?
Certain circumstances may justify using a different procurement process, although exceptions depend on applicable law and governing documents.
Emergency repairs
Emergencies may require immediate action to protect residents, prevent property damage, or restore essential services.
For example, a major water main break may require the association to hire an available contractor without waiting several weeks for competing proposals.
Florida’s HOA bidding statute includes an emergency exception, but boards should still document the circumstances and comply with applicable authorization requirements.
Specialized professional services
Some states exempt particular professional services from competitive bidding requirements.
Florida, for example, provides exceptions for certain contracts involving attorneys, accountants, architects, community association managers, engineers, and landscape architects.
These exemptions do not necessarily eliminate other requirements for approving or documenting the contract.
Existing vendor relationships
An association may already have a qualified contractor providing reliable service under an existing agreement.
Depending on the governing documents, contract terms, and state law, the board may be able to renew that agreement without conducting a new competitive bidding process.
However, boards should periodically review vendor performance and pricing to determine whether the arrangement continues to serve the community.
An exception to competitive bidding should never be treated as an exception to responsible financial oversight.
Should HOAs Require Three Bids for Every Project?
Requiring three bids for every purchase can create unnecessary administrative work and delay routine maintenance.
A $500 repair generally does not warrant the same procurement process as a $250,000 clubhouse renovation.
Instead, associations may benefit from establishing purchasing policies based on project cost, risk, and complexity.
For example, a board might adopt an internal policy similar to the following:
| Project cost | Example purchasing policy |
|---|---|
| Under $2,500 | One written estimate |
| $2,500–$10,000 | Two written estimates |
| Over $10,000 | Three competitive bids |
| Emergency repairs | Follow documented emergency purchasing procedures |
These amounts are illustrative, not legal thresholds. An association should establish its own policy based on its budget, governing documents, and applicable law.
The policy should also address who can authorize expenditures, when board approval is necessary, and how exceptions are handled.
Having these procedures in writing creates consistency and reduces uncertainty when new projects arise.
Common Mistakes HOA Boards Make During the Bidding Process
Even when boards obtain the recommended number of bids, mistakes in the procurement process can lead to unnecessary costs or disputes.
Comparing proposals with different scopes
If contractors are pricing different materials, quantities, or services, their estimates may not provide a meaningful comparison.
The board should request clarification or revised proposals before making a selection.
Choosing based on price alone
An unusually low bid may reflect missing work, lower-quality materials, or unrealistic assumptions about labor costs.
Boards should investigate significant pricing differences rather than automatically treating the lowest proposal as the best option.
Failing to verify contractor qualifications
A competitive price does not compensate for inadequate insurance, missing licenses, or a history of poor workmanship.
Contractor qualifications should be verified before a contract is awarded.
Not documenting the decision
Boards should maintain copies of proposals, relevant evaluations, and meeting minutes documenting the approval.
These records can be particularly valuable if homeowners later question why a specific contractor was selected.
Overlooking potential conflicts of interest
A board member may have a personal or financial relationship with a contractor submitting a proposal.
Any potential conflict should be disclosed and handled according to applicable law and the association’s governing documents.
Maintaining a fair, documented selection process protects the integrity of the board’s decision.
Frequently Asked Questions About HOA Bidding Requirements
Is the three-bid rule a law for HOAs?
No. There is no nationwide law requiring all HOAs to obtain three bids for every project. Some states require competitive bidding for certain contracts, while individual associations may establish their own three-bid policies.
Can an HOA approve a project with only one bid?
Possibly. An HOA may be able to approve a project with one bid if applicable laws and governing documents permit it. Boards should verify the requirements before proceeding, particularly for large contracts.
Can an HOA hire a contractor who is not the lowest bidder?
Yes, in many circumstances. Boards can generally consider qualifications, warranties, experience, and other factors when selecting a contractor. Florida’s HOA bidding statute expressly states that associations are not required to accept the lowest bid.
Do HOAs have to get new bids every year?
Not necessarily. There is no universal requirement to rebid every vendor contract annually. Whether a contract must be competitively bid again depends on applicable law, the agreement’s renewal provisions, and the association’s purchasing policies.
Who is responsible for obtaining bids for an HOA?
The board of directors is ultimately responsible for overseeing association expenditures. However, the community association manager, a designated committee, or a project consultant may coordinate the bidding process on the board’s behalf.
Should HOA boards share contractor bids with homeowners?
Boards should follow applicable records-access and disclosure requirements. In some states, contractor bids become part of the association’s official records, although access may depend on the status of the bidding process. For example, Florida HOA law addresses the retention of bids received after bidding has closed.
Making Better Contractor Decisions Starts With a Consistent Process
For most significant HOA projects, requesting three competitive bids is a reasonable starting point. It gives board members an opportunity to compare costs, assess contractor qualifications, and make decisions based on more than a single estimate.
However, the number of bids is only one part of responsible procurement.
Boards should understand their legal obligations, establish clear project specifications, evaluate proposals consistently, and maintain records explaining their decisions.
A well-documented bidding process helps protect association funds and gives homeowners greater confidence in how their community is managed.
For more guidance on managing association responsibilities, explore the resources available at The Honest HOA.
Editorial note: This article provides general educational information, not legal advice. State laws and governing documents may impose additional or different requirements. Boards should consult their association’s legal counsel when interpreting bidding obligations.