The Importance of Requests for Proposals & Fiduciary Responsibilities


Requests for Proposals (RFPs) are necessary in fulfilling a Board’s fiduciary responsibilities. Additionally, it is essential to consult with legal counsel when preparing RFPs. On a recent TBMA webinar, panelists Joel McTague, Attorney, Frank, Weinberg & Black, P.L.; Leslee Wills, Board Vice President, Magic Tree Resort, FL; and Austin Jordan, Board Vice President, Barrier Island Station, NC, shared their insights.

Having your resorts best interest in preparing RFPs

When it comes to preparing RFPS, making sure you do everything in the best interest of the association is key, according to McTague. And although you have to make sure the proposal is comprehensive, McTague said not to be completely boxed in and eliminate the ability of people responding to RFPs. “Sometimes it’s what the board never considered or thought of,” he said. “Don’t overlook alternative items.” He also feels it’s a good idea to get an accountant and other relevant professionals in the process.

Wills agrees that the extensiveness of an RFP is vital, but it should be “muted a little bit.” In spending much time as a Board and trying to anticipate every possible angle, she feels that “incorporating a degree of flexibility into the equation is equally as imperative.”

Jordan agreed that you don’t want to paint yourself into a corner. “How you structure an RFP depends on what you’re looking for in terms of services,” he said. “Never overlook expertise.”

What projects need RFPs

As to when a Board should get an RFP, McTague says that specific state laws on this issue may differ or may in some cases be silent, a good general rule of thumb is anytime a Board is going to invest 5% or more of the association’s annual budget in a project or on a particular service, a Board should consider getting RFPs.

The process the Boards should follow

Involving the entire Board in the process of preparing RFPs is a must in order to make the right decision, according to Jordan. He said, “We’re fortunate we have folks on the board who have been on both sides of the table preparing RFPs and responding to them.”

It’s also required to have an early preparation time window, stressed Wills. “When you think you have a long window, add to it,” she said. “There will be things that come up. You will need more time. When setting the time frame, also include a buffer time. Board members can get sick, there can be deaths, there can be a pandemic…Any number of reasons can throw a timeline off.”

McTague suggests a case-by-case because it’s a complicated procedure. “You have to look at the overall Board personality and what they’re looking for to determine if it’s a good fit. As for awarding contracts, you have to follow your state laws. Sometimes you need just one signature, sometimes you need the whole Board to sign off.”

He also reminds us that “As humans we don’t like to think of the eventuality that things go wrong.” That’s why McTague recommends getting an attorney involved and address issues upfront when you’re in the RFP process and negotiating the contract.

Another issue to be addressed up front, or in some point during the process of a property management change, according to Jordan, is involving the compatibility of record keeping software from one property manager to another. And to be very specific in the RFP proposal.

Wills agreed with paying attention to detail and knowing if the new service provider is going to be a fit with your resort.

The importance of timelines & transition

When developing an RFP, Jordan stresses the importance of developing a detailed realistic timeline.  “For example, if your Board will be seeking proposals from property management companies for your resort, determine the date you wish the new property management company to commence operations and then work back from that point.  Begin at least 18 months prior to contract commencement with a thorough review of the existing property management contract. Determine if it contains any automatic renewal provisions and note any stipulated dates for notifying of intent not to renew.”

“Moving on from that point,” Jordan continues, “be certain to build in enough of a cushion between milestones to allow for unanticipated developments and include key events/dates in your RFP so that prospective bidders know what is expected and when.”

Once a decision has been made and the contract awarded, Wills emphasizes the value of a smooth transition between service providers.  “As part of the RFP process, hopefully you’ve requested and seen at least a sample transition plan or, better yet, an actual transition plan.  Hold the service provider to the commitments set out in that plan.”  Wills goes on to highlight the importance of clearly outlining roles and responsibilities of all stakeholders in the transition process.  “In the case of a property management company change, if your Board is remote-based, give serious consideration to an onsite transition manager or someone charged with the responsibility of ensuring things get done.  Accountability is key.”

Do owners have a right to review contracts?

“Almost every state has a requirement—owners in many states have to show a proper purpose,” said McTague. “It’s proper to see how much the Board is spending of my money. It’s not proper to say, ‘I am the president of a property management company and want to see what my competitors are charging.’”

McTague also brings up the matter of emails. “Are emails considered writing?” he said. “You may not want to take a chance of emails going into a spam folder.”

Wills addressed conflict of interest, which she felt is a “thorny topic” and recommends reaching out to your attorney for guidance. “That’s what they’re there for,” she said. “You can navigate with honesty and openness.”

Jordan added to ensure your Board has an articulated, detailed conflict of interest policy that’s been vetted by an attorney. “We require every member of the Board to sign our conflict of interest policy. It makes it clear what is and isn’t a conflict.”

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