Every board signs contracts. Landscaping, snow removal, pool service, roofing, paving, painting, the annual audit. Across the 200 communities Eclipse manages in Dayton, Cincinnati, Columbus, and Northern Kentucky, vendor spending is the single largest line most associations control.
Here is what surprises most board members. Ohio and Kentucky give boards enormous authority to spend that money and almost no rules about how.
Under the Ohio Condominium Act, ORC 5311.081(B)(1) lets a board “hire and fire… independent contractors and employees,” and ORC 5311.081(B)(3) lets it “enter into contracts and incur liabilities relating to the operation of the condominium property.” That is the whole of it. Neither the Ohio Condominium Act nor the Ohio Planned Community Act requires competitive bidding. Neither sets a dollar threshold above which a board must solicit multiple proposals. Neither requires a written contract at all.
Kentucky is thinner still. Planned communities there have no governing statute of their own, so an HOA’s authority runs entirely off its recorded declaration.
The absence of a rule is not the absence of a risk. It means procurement discipline is something a board imposes on itself, or does not. What follows is what that discipline actually consists of.
Licensing Verifies Less Than Boards Assume
“Licensed and insured” appears on nearly every contractor’s truck and proposal. In Ohio it is a narrower claim than it sounds.
ORC 4740.01(A) limits state contractor licensing to five trades: heating, ventilating, and air conditioning; refrigeration; electrical; plumbing; and hydronics. That is the complete list. Roofers, pavers, painters, siding contractors, concrete crews, snow removal outfits, and landscapers hold no Ohio state license, because none exists to hold. Kentucky licenses three trades: HVAC under KRS 198B.656, electrical under KRS 227A.020, and plumbing under KRS 318.030. The same gap applies.
There is a further wrinkle. Ohio’s licensure reaches “construction projects” that expressly exclude one, two, and three family residential buildings under ORC 4740.01(F). Electrical or HVAC work on detached homes in a planned community is regulated locally rather than by the state board.
The practical consequence is worth stating plainly. For most of the trades an association hires most often, there is no license to verify. The vetting has to come from somewhere else, which means insurance certificates, references from comparable properties, and contract terms are doing the entire job.
The Lien That Attaches to Every Unit
This is the provision Ohio condominium boards should know and most do not.
ORC 5311.13(C) provides that anyone furnishing labor or materials for work on “any part of the common elements of any condominium property is entitled to a lien to secure payment for the work, labor, machinery, material, or fuel on the estates or interests of all owners in all units and their respective undivided interests in the common elements,” so long as the work “was duly authorized or directed by the board of directors of the unit owners association.”
Read that again with an owner in mind. A roofing subcontractor who never had a contract with the association, and who goes unpaid because the general contractor kept the money, can place a lien that rides on every single unit in the community. An individual owner discovers it at closing. Under ORC 5311.13(D), that owner can release their own unit by paying their proportionate share, which is to say by paying for someone else’s failure.
Ohio gives boards a cheap and underused defense. ORC 1311.04(A)(1) requires an owner who contracts for lien eligible work to record a Notice of Commencement before work begins. Doing so triggers ORC 1311.05(A), which then requires every subcontractor and supplier to serve a notice of furnishing within twenty one days of first work. The association learns, in writing and early, exactly who can lien the property. Skip the recording and ORC 1311.04(I) removes that obligation entirely, meaning subcontractors preserve lien rights without ever telling the board they exist. Lien affidavits are due within sixty days on residential condominium units under ORC 1311.06(B)(1) and seventy five days otherwise, so the window in which a board learns of a problem is short.
Kentucky offers less certainty, not more. KRS 381.9195(1) addresses a money judgment against an association and channels it onto all units, but a mechanic’s lien is not a judgment, and KRS 381.9195(3)’s reference to construction liens is limited to work supplied before the condominium was created. Kentucky has no equivalent to ORC 5311.13(C) for a sitting board’s common element repair work, and KRS 376.010(3)(a) limits any lien to “the right, title, and interest of the person who contracts for the improvements.” Where such a lien lands is a genuinely open question. Northern Kentucky boards should treat lien waivers and payment bonds on significant common element contracts as necessary rather than optional. Our guide to the Northern Kentucky statutory framework explains which of the four layered statutes governs a given community.
Insurance Is the Control Doing the Most Work
Because licensing covers so little, the certificate of insurance carries the weight.
General liability is the part boards look at. Workers’ compensation is the part that creates the exposure. Ohio requires coverage of every employer with employees under ORC 4123.35(A), and ORC 4123.01(A)(1)(c) applies a twenty factor control test to anyone performing labor under a construction contract. A worker for an uninsured contractor can be deemed the association’s employee. If that happens, ORC 4123.77 strips a noncomplying employer of the fellow servant rule, assumption of risk, and contributory negligence defenses, and ORC 4123.75 lets the administrator pursue the employer to recover what the fund paid out.
Kentucky reaches the same place by a different route. KRS 342.610(2) makes anyone who contracts for work “of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person” a statutory employer, liable for compensation to an uninsured subcontractor’s employees. An association’s business is maintaining common elements, so recurring services such as landscaping, mowing, snow removal, and pool maintenance sit squarely in that category. KRS 342.690(1) confirms the exposure attaches “whether or not the subcontractor has in fact, secured the payment of compensation.”
A vendor file with a general liability certificate and no workers’ compensation certificate is an incomplete file. The same discipline applies to the association’s own coverage, which our insurance review process evaluates against the applicable statute.
The Conflict Nobody Discloses
A board member’s brother in law bids the paving job. A treasurer’s spouse owns the landscaping company. These situations are common, and they are not automatically improper. They become a problem when nobody says anything.
Ohio associations are nonprofit corporations, so ORC 1702.301(A)(1) governs. A contract in which a director has an interest survives challenge if the material facts are disclosed and a majority of disinterested directors approves it, or if the members approve it, or if the contract is fair to the corporation. Kentucky’s KRS 273.219 is closely parallel, with one detail worth emphasizing. Under KRS 273.219(4), an interested director “shall bear the burden of proving that the transaction was fair to the corporation.” Under KRS 273.219(3), a transaction “may not be authorized, approved, or ratified by a single director.”
Disclosure is not an admission of wrongdoing. It is the mechanism that makes an otherwise defensible contract defensible. The minutes are where that happens, and a board that records the disclosure and the disinterested vote has converted its largest governance risk into a paragraph.
Ask How Your Management Company Gets Paid
Boards evaluate vendors closely and rarely apply the same scrutiny to the company running the process.
Three questions are worth asking directly, and the answers should be in writing.
Does the management company accept anything of value from vendors it recommends? Rebates, referral fees, volume incentives, and preferred vendor payments are real practices in this industry. A board is entitled to know whether the recommendation it is receiving is the best option for the community or the most profitable one for the manager.
Does the management company mark up vendor invoices or administrative pass throughs? A transparent fee structure states what the association pays for management and charges that. Nickel and dime pass throughs for copies, postage, and processing obscure the real cost of the relationship.
Eclipse holds the AAMC accreditation from Community Associations Institute, and our managers carry CMCA, AMS, and PCAM credentials. Those designations carry ethical obligations around vendor relationships that are worth asking any management company about, whether or not that company is us. Our management agreements also specifically prohibit the “kickback” arrangements that are common in the property management industry.
What Boards Should Do Next
Here are some practical steps to make sure your association does not end up surprised:
- Adopt a written procurement policy with a bid threshold. Set a dollar figure above which three proposals are required. The number matters less than having one, because a threshold removes the case by case argument.
- Require a current certificate of insurance naming the association as additional insured. No certificate, no work on the property. Verify the effective dates rather than filing the certificate unread.
- Record a Notice of Commencement before any significant common element project in Ohio. ORC 1311.04 makes it the board’s job, and ORC 1311.05 makes it valuable.
- Require conditional and final lien waivers tied to each payment. On larger projects, ask about a payment bond. In Kentucky this is the substitute for a statute that does not exist.
- Put conflicts on the record before the vote, not after the invoice. Name the relationship in the minutes, then record the disinterested majority.
- Confirm your 1099 practice for the 2026 tax year. The reporting threshold for nonemployee compensation rose from $600 to $2,000 for tax years beginning after 2025, though gross proceeds paid to an attorney remain reportable at $600. Your management company should be tracking this already.
Vendor selection is where a board’s fiduciary duty stops being abstract. Reserve planning decides who pays for the wear on a community’s assets. Procurement decides whether the money buys what it should.
If your board is drafting a procurement policy, preparing to bid a major project, or trying to understand what your current management agreement actually permits, reach out to us here. We are glad to share the standards we use across our own portfolio, whether or not you end up working with us.
