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Dan Tiernan, COOSep 13, 20132 min read

What to look for and include in your vendor contract

A written contract is highly recommended when working with vendors for your HOA or condo association. Make sure that all services discussed actually end up in the written contract; verbal agreements have no binding effect. Having your Florida Condo and HOA vendor contracts with every detail written out can help you avoid any future legal trouble.

FL Condo and HOA ContractsThere are two types of contracts:

1. Ongoing, routine service contracts – these include landscaping, security, pool maintenance, phone, cable and internet contracts.

2. One-time, project-based contracts – these include concrete restoration, resurfacing a pool with diamond brite, and replacing a roof.

An ongoing contract issue to be aware of is the length of the contract. A vendor may offer you a great discount to stay with them for a longer period of time. But, is the market changing fast enough that length does not matter, even though the discount sounds good now? An example of this would be a bulk cable agreement. Technology is constantly advancing and changing, so those upfront "door fees" may not justify a cable contract longer than five years.

Your community association also needs to consider the cancellation terms of ongoing contracts. Some vendors may state in the contract that your association needs to give up to 120 days notice to cancel in advance of the contract expiration. You should also review the annual raise structure outlined by the vendor. There may be a low initial cost, but the raise for the vendor may become very high after the first year. This is called a back-loaded contract. Instead of just looking at the initial cost, calculate the entire value of the contract over the full life.

A One-time contract issue is payment terms. You want to hold back as much money as reasonably possible until the job is completed so you have the power to get them to correct any issues. If you pay your vendor everything up front and there is some type of issue, they will be much more motivated to correct the issue if they have not received payment yet.

Ultimately, always make sure you are being specific in your contract: the more specific, the better. Times and dates, warranties, variable changes (such as weather patterns and even the economy), payment terms, permit qualifications of the service provider and/or contractor and what “language” you and your vendor will be using should all be specified in your contract. Not being specific in your contract can become a major hindrance to you, and potentially result in legal trouble.

Stay tuned for future blog posts about contracts for minor repairs, major repairs, landscaping, bulk cable, and property managers.