What Your HOA Management Contract Isn’t Telling You About Vendor Kickbacks

And why Neighborhood Cornerstone Partners refuses to participate in those hidden revenue schemes

Most HOA boards assume that the vendors they hire for landscaping, roofing, asphalt, pool service, or maintenance were chosen because they are the best for the job. Unfortunately, in many parts of the HOA management industry, vendors are selected for a very different reason: they pay the management company, not because they provide the best value to the community.

These behind-the-scenes financial incentives go by many names: preferred vendor fees, network participation fees, support fees, project admin fees, and percentage-based claim fees. Regardless of what they’re called, they all function the same way: they are kickbacks — and they cost your community money.

Neighborhood Cornerstone Partners (NCP) rejects this model entirely. This blog breaks down how these systems work, how to spot them, and why eliminating kickbacks is central to NCP’s transparency standards.

How Vendor Kickbacks Really Work

Vendor kickbacks don’t always show up as obvious payments. In HOAs, they usually look like:

• Vendors paying to be on a “preferred vendor list”

• Managers receiving 10–15% of a vendor contract

• “Admin” or “coordination” fees added to vendor invoices

• Project percentage fees

• Insurance claim percentage fees

• Sponsored events, meals, tickets, trips, or gifts disguised as “relationships”

  
  

These incentives are quietly baked into vendor pricing. The board sees only the final invoice — not the original price before the kickback-driven inflation.

Kickbacks stay hidden because:

• Contracts use vague language instead of plain words like commission

• Boards receive processed invoices instead of originals

• Managers discourage competitive bidding with “We already have vendors for that”

• Vendors remain loyal to the manager, not the HOA

  
  

Red Flags in Your Management Contract

Your management agreement may be exposing your HOA to kickbacks if you see any of these:

• “Preferred vendor program,” “network,” or “trusted provider” language

• Any type of “vendor support fee” or “network participation fee”

• “Cost plus admin” or “project admin fee” language

• No requirement for three competitive bids

• Vendor invoices routed only through management

• One vendor being used for everything, regardless of results or pricing

  
  

These red flags indicate that vendor costs may be inflated — and not in your community’s favor.

How Kickbacks Quietly Increase Your HOA’s Costs

Kickbacks raise HOA expenses in three major ways:

1. Vendor pricing increases 10–15%

   If a vendor has to pay a percentage back to the manager, they raise their pricing. A $100,000 project can easily become $110,000–$115,000.

   
   

2. Lack of competition locks in high pricing

   When only certain “preferred” vendors are used, HOAs lose negotiating power, and pricing increases year after year.

   
   

3. Admin fees and project fees stack on top

   Many management companies add:

4. Project coordination fees

5. Claim fees

7. Administrative surcharges

None of this money goes to the vendor — it goes directly to the management company. Over time, this drains reserves, pressures the board to raise dues, and increases the likelihood of special assessments.

Kickbacks Damage More Than Your Finances

Kickback cultures also harm communities in non-financial ways:

• Vendors become loyal to the management company — not the board

• Poor performance is tolerated if the vendor “pays to be preferred”

• Boards struggle to hold vendors accountable

• Homeowners sense something is off and lose trust in the HOA

• Transparency becomes a constant battle

  
  

In short, kickbacks create a conflict between the manager’s profit and the board’s fiduciary duty.

NCP’s Zero-Kickback Transparency Standard™

Neighborhood Cornerstone Partners operates the opposite way. NCP does NOT:

• Take money from vendors

• Mark up vendor invoices

• Add project fees or claim fees

• Participate in vendor networks

• Hide invoices

• Recommend vendors who pay for referrals

  
  

NCP DOES:

• Require competitive bidding

• Provide original vendor invoices

• Allow boards to approve or reject vendors

• Maintain performance-based vendor lists

• Operate with full transparency in banking, financials, and operations

• Align every recommendation with the board’s fiduciary responsibility

  
  

NCP’s Preferred Vendor Culture: Performance, Not Payment

Many management companies use “preferred vendor” to mean “vendors who pay us.” NCP’s definition is very different. A vendor becomes “preferred” with NCP only when:

• They consistently deliver high-quality work

• Boards and residents provide positive feedback

• Prices are competitive and transparent

• They demonstrate reliability over time

• Their work benefits the community, not the manager

  
  

And most importantly: NCP does not accept payment of any kind from vendors to be on a preferred list. Vendor status is earned — and kept — by performance alone. The board always retains total control.

The Bottom Line

Vendor kickbacks are one of the most damaging — and least understood — issues in HOA management. They inflate costs, reduce transparency, weaken reserves, and erode trust. NCP eliminates the kickback culture through a strict, contract-backed transparency model that prioritizes:

• Honest pricing

• Competitive vendor selection

• Board empowerment

• Ethical management practices

• Long-term financial health

  
  

This is the NCP Transparency Standard™ — the foundation of a cleaner, smarter, more ethical approach to HOA management.

Understanding the Importance of Transparency in HOA Management

Transparency in HOA management is not just a buzzword; it’s a commitment to integrity and trust. When boards and residents understand where their money is going, they can make informed decisions that benefit everyone.

The Role of Communication

Effective communication is crucial in maintaining transparency. Regular updates about vendor performance, financial reports, and community projects keep everyone informed. This openness fosters a sense of community and encourages resident participation.

Building Trust Through Accountability

Accountability is another pillar of transparency. When boards hold vendors accountable for their performance, it ensures that the community receives the best services possible. By establishing clear expectations and regularly reviewing vendor contracts, boards can maintain high standards.

The Benefits of a Transparent Approach

A transparent approach to HOA management leads to numerous benefits:

• Increased Resident Satisfaction: When residents feel informed and involved, they are more likely to be satisfied with their community.

• Stronger Community Bonds: Transparency fosters trust and collaboration among residents and board members.

• Better Financial Health: By eliminating kickbacks and ensuring fair pricing, communities can better manage their budgets and reserves.

  
  

In conclusion, embracing transparency in HOA management is essential for building a thriving community. Neighborhood Cornerstone Partners is committed to setting a new standard in the industry, prioritizing ethical practices and community-focused services.

By choosing a management company that values transparency, boards can empower themselves and enhance resident satisfaction. This commitment to integrity is not just beneficial; it’s essential for the long-term success of any HOA.

Why Choose NCP?

Choosing Neighborhood Cornerstone Partners means choosing a partner dedicated to your community's success. We believe in a transparent, ethical approach that puts your needs first. Our commitment to eliminating kickbacks and fostering open communication sets us apart in the HOA management industry.

If you're ready to experience the difference, contact us today to learn more about how we can support your community's goals. Together, we can build a brighter future for your neighborhood.