By Rebecca Newman Casamayor / Published November 2018
In a monthly or sometimes even weekly basis, a community association will solicit and receive a proposal from a vendor offering services, or from a contractor to be retained on a building repair or modification project. A board member, or even at times the association’s manager, if the manager has the proper delegated authority, will then be asked to sign this proposal on behalf of the association. It will not be unusual for the board, management, or even the association’s residents to push for the contract to be signed on an expedited basis so that the services or the work can commence right away.
However, this frequent inclination to immediately sign the proposal and move forward with the project must be resisted. The majority of these proposals tendered to the association for signature will not be written in a mutual/bi-lateral manner—let alone one that adequately protects the association’s, and therefore the owners’, interests. The proposals will often be extremely vague and leave numerous terms and scenarios open ended, thus setting the parties up for disputes and potentially even litigation in the future. Or, if the vendor or contractor has an attorney who prepared the draft agreement, the document may be detailed and clear-cut, but very one-sided in favor of the vendor or contractor and against the association. Another risky situation can occur when the contract appears simple and straightforward on its face, but attaches a “terms and conditions” page pulled from the internet, with tiny font, which is impossible to read and, which can contain provisions that do not even pertain to the transaction being negotiated by the parties.
Consequently, in considering whether to sign a proposal from a vendor or contractor on behalf of the association, it is extremely important that the board and management consult with the association’s attorney, no matter how insignificant the project seems or how basic the draft contract appears. However, many times the board will want to proceed without legal advice due to the time it would take to have the attorney review and revise the document, or due to the legal fees the association could incur. This is particularly risky and not advisable since the price of the project or services being negotiated is not necessarily proportionate to the level of legal risk posed to the association if something goes amiss during the term of the agreement.
For instance, here are some examples of the key provisions and terms, which should be considered when reviewing proposals and negotiating contracts between community associations and contractors/service providers:
The above is obviously not a complete list of all of the terms and provisions which should be vetted before an association signs a contract with a third party. In addition, the kinds of provisions included in the agreement will vary based on the type of transaction in question—whether it is a construction or repair project (structural, waterproofing, painting, electrical, landscaping, etc.), an agreement for ongoing services to maintain the building (waste retrieval, cable or internet, janitorial services, elevator maintenance, etc.), or a contract for services provided by a professional (property managers, accountants, engineers, etc.).
Again, in light of the many variables and situations which should be covered and properly drafted in a contract to be executed by the association, it is imperative to seek advice from the association’s attorney prior to signing the contract document. While there will be some time and cost associated with that review process, it will be well worth it to protect the association and its owners from much larger consequences in the event of a later breach or if a dispute arises with the other party.
Rebecca Newman Casamayor
Associate Attorney with Haber Slade