Community Association Service Contracts Do’s and Don’ts

One of the most important tasks for community association board members is the oversight of maintenance, cleaning, security, valet parking, construction/painting, landscaping and other vendor services. These essential services require the use of written contracts that should include vital protections for associations, which would be well advised to turn to highly experienced community association attorneys to help ensure such contracts include all of the appropriate stipulations.

One of the primary considerations for most of these contracts is insurance. Vendors must maintain proper and adequate insurance to protect associations, their staff and their residents from any potential legal and financial liabilities that may arise from the execution of the services being performed under the contract. At a minimum, vendors’ insurance should include worker’s compensation coverage for employees who may by injured while on association property as well as general liability coverage.

The association should also insist that it be named as an additional insured and certificate holder, which would require that it be notified of any changes in the contractor’s insurance.

Vendor contracts should also clearly delineate all the service provider’s and association’s responsibilities under the agreement. This includes the specific services that need to be completed, the timeframe within which the work must be performed, payment terms, penalties for nonperformance, and termination terms for both parties. Having these parameters in writing will help to reduce the potential for any conflicts between the parties.

The most effective vendor contracts also stipulate the exact methods to be used by both parties to resolve any disputes that may arise. Alternative dispute resolution proceedings can provide significant benefits over the courts for many types of disputes, so parties to these contracts should consider calling for their use in the written service agreement.

If a vendor is offering a warranty for their work, the details of the warranty should be included in the contract. This should include exactly what is covered under the warranty, its timeframe, and the process for requesting repairs.

By working with highly experience community association legal counsel for the review and execution of important vendor contracts, association board members and property managers can be sure to include all of the necessary provisions to protect the association and avoid potential disputes.