Purchasing Policies & Procedures for Condominium Boards

The Importance of Written Purchasing Policies in Condominium Management

A purchasing policy is a formal set of rules that govern how a condominium corporation selects, approves, and manages purchases of goods and services.

• Ensures consistency and fairness in procurement decisions.

• Prevents fraud and misuse of condominium funds.

• Creates a clear approval process for all expenditures.

• Ensures compliance with legal and ethical obligations under the Condominium Property Act (CPA).

  • It states that the corporation is responsible for the control, management, and administration of condominium property, which includes making purchasing decisions that align with governance policies.

    
    

Preventing Fraud, Favoritism, and Conflicts of Interest in Purchasing

Without a structured purchasing policy, a condominium corporation is vulnerable to:

🚨 Conflict of Interest: A board member or manager personally benefits from a purchasing decision.

🚨 Favoritism: Repeatedly selecting the same vendor without competitive bids.

🚨 Overpayment: The corporation pays above market rates due to lack of oversight.

🚨 Lack of Documentation: Purchases are made without contracts or approvals, creating legal risk.

Best Practices to Prevent Fraud & Favoritism:

• Require multiple bids for large contracts to ensure competition.

• Document all purchasing decisions in board meeting minutes.

• Prohibit self-dealing, where board members or managers award contracts to themselves, family, or friends.

• Use conflict of interest disclosures to ensure decision-makers declare personal relationships with vendors.

Implementing Bidding Procedures for Large Contracts

Competitive bidding helps ensure that the corporation:

• Gets the best price and service quality.

• Maintains fairness in supplier selection.

• Reduces legal risks and financial waste.

Steps in a Competitive Bidding Process

1. Define the Scope: Outline what the contract covers (e.g., maintenance, landscaping, repairs).

2. Issue a Request for Proposal (RFP): Describe the project, expected standards, and selection criteria.

3. Collect and Review Bids: Obtain at least three quotes and compare pricing, experience, and references.

4. Board Approval: The board reviews bids and votes on the selection based on documented criteria.

5. Sign a Contract: Establish clear payment terms, timelines, and performance expectations.

Avoid Sole-Sourcing! 

Hiring a contractor without competitive bids should only be done in emergency situations or when specialized expertise is required.

Ensuring Purchasing Decisions Align with Condominium Regulations

Purchases made on behalf of a condominium corporation must comply with legal requirements and financial governance policies.

• Approval Requirements: Large expenditures may require board approval or a unit owner vote (e.g., special assessments for major repairs).

• Budget Limits: Spending must align with the annual operating budget and reserve fund planning.

• Record-Keeping: All purchases must be documented, including invoices, receipts, and board meeting minutes.