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Identifying the best vendors and striking the finest possible agreements for all of the services that community associations need are among the most consequential aspects of board service. For every vendor that is identified, vetted and selected, associations and their board members should avoid relying on informal verbal agreements, or even using the vendor’s proposal as the agreement, as such tactics can and often do lead to disputes or do not provide adequate safeguards for the association. Instead, they should execute well-drafted contracts that outline the scope of work, payment terms, performance standards, and the responsibilities and rights of both parties.
Prior to signing any written agreements, board members or association property managers should carefully review them to ensure they clearly define the services to be provided. General and vague descriptions should be avoided, as they often lead to misunderstandings. For example, instead of signing a contract that simply states a vendor will provide landscaping services, use one that includes such specifics as: “mowing all grass areas every two weeks, trimming all trees and shrubbery once per month, and replacing seasonal plants and flowers on a quarterly basis.”
Vendor contracts should also include start and end dates, with automatic renewals called for as warranted. They should also spell out how and why the association can terminate the contract if performance standards are not met to its satisfaction.
In keeping with board members’ fiduciary duties to the associations they serve, payment matters are of primary importance with every vendor contract. Contracts should specify the total payment amount, when each payment is due, the conditions for the application of late fees, and the circumstances under which the association has the right to suspend or withhold payments.
Vendor licensing and insurance requirements, if they apply, should also be included. Association contracts should require that the vendor must carry all the appropriate levels of liability and workers’ compensation coverage, and that the vendor must maintain its corresponding business licenses. Contracts should also stipulate that that the service provider must submit proof of coverage and licensure, and expired insurance certificates and licenses must be updated and provided to the client.
It is also critical for contracts to expressly protect associations from any and all potential legal liabilities that could possibly ensue. This entails the inclusion of an effective indemnity clause providing that the vendor must defend and hold the association harmless from any claims that may arise.
Also important are stipulations holding the vendor responsible and accountable for ensuring the quality and consistency of their work. For example, a security services contract may stipulate the exact level of monitoring and number of guards that must be maintained, and it should delineate with specificity the penalties for any deficiencies. The process for determining whether any shortcomings have taken place should also be provided, and these may include inspections and/or progress reports.
Just in case a dispute ever arises, the contract should also specify how it would be handled, such as through arbitration, mediation or litigation.
Before finalizing and signing the agreement, associations would be well advised to work with highly experienced legal counsel to root out any potential problem areas. These could be in the form of missing provisions, ambiguous language, and stipulations that may run afoul of existing community rules or bylaws.
Once all the checks are made, vendor contracts should be executed with the signature of an authorized board member, and a copy of every signed contract should be maintained as part of the association’s official records.
Carefully constructed vendor contracts should serve as both a shield to protect the association from any shortfalls or potential issues that may arise, and also as a roadmap for the coming provisions of the corresponding goods or services. By ensuring that contracts include all these necessities, associations and their board members can be assured that all the pertinent obligations will be fulfilled.
Our firm’s South Florida community association attorneys write about important matters for associations in this blog and our Miami Herald column, which appears every two weeks on Sundays, and we encourage association directors, members and property managers to click here and subscribe to our newsletter to receive our future articles.