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 the vendors they’re paying for landscaping, roofing, asphalt, pool service, or maintenance were chosen because they’re the best for the job. But in many parts of the HOA management industry, vendors are chosen for a very different reason — because 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.But no matter 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 topMany management companies add:• Project coordination fees• Claim fees• 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.