The Ins and Outs of a Service Contract
Most Community Associations have contracts in place for all sorts of goods, services and repairs. Due to the large amount of contracts involved with every Association, contract disputes are a very common occurrence for Boards and Managers.
Usually the root cause of the contract disputes seen by Community Associations is due to the fact that most contracts entered into do not spell out enough of the details that are essential in a fair agreement. Whenever your Board is considering any agreement, the association's attorney should be asked to review all of the details of the contract prior to the association approving it.
By taking your time to make sure that the following elements are integrated into any contract that the association enters into, you can help eliminate many of the common problems associated with service contracts.
- How will changes be handled? In the contract, spell out exactly how changes will be handled, how they will be executed and approved, and how/when the vendor will be paid for any changes.
- Who is the point of contact for the parties involved? The point of contact should always be clearly identified to eliminate interference and distractions.
- What items or functions are included in the contract? Clearly define, in detail, exactly what should be maintained or repaired under the agreement. This can be included as an exhibit to the contract and as pictures, maps, photos and drawings to help clarify the written word.
- How will disputes be handled? Pre-determine if disputes will be addressed through litigation or arbitration? Who will pay for the expense of this procedure?
- Proof of insurance should be provided prior to any work being performed. Also, as a precaution, the association should be named as an additional insured and certificate holder in order to be notified immediately of any change of status in the contractors/vendors insurance status.
- Who is responsible for what? Both the contractors and association's responsibilities should be spelled out in detail. This may include a minimum amount of workers or equipment that is required to be on the job, it may also includes certain times and days that the work must take place or certain preparation that the association needs to perform prior to the contractor starting their work.
- What’s the timeline? There should always be a start date and a completion date stated in the contract and what the penalties would be to either party if there was a problem or delays with commencement or completion of the work. The termination of the contract should always be defined by both parties and made a part of the contract.
- What are the terms? The terms of the contract should always be spelled out and defined. This would include any billing procedures and when any payments are to be made.
- Is there a warranty? All warranties should be detailed and spelled out and agreed to. Also, details on how quickly the warranty work will be performed and how any warranty claims need to be communicated. Any manufacturer warranty information should also be included.
By addressing the above issues and agreeing to the various items with your contractor, an association can eliminate most of the potential problems in your next service contract.
Association Services of Florida