Keeping Up with Your Condo Contracts

Contracts of all sorts can have a bit of an intimidating sense about them – but they’re ultimately there to benefit both parties on either side of whatever agreement is being made. 

Condo contracts are no different. However, rather than being scary, intimidating documents filled with near-indecipherable legal language, the savvy condo board should instead view condo contracts as multi-faceted business tools that work to lay out any agreements or arrangements made between the corporation and a vendor.

That said, there can be some red flags to watch out for – and that’s where we’re bringing in the expertise of Dustin Gutsche and the entire Catalyst ops team to help shine a light on what to pay attention to. 

Five Condo Contract Red Flags to Watch Out For


1. Be Sure You’re Comparing Apples to Apples 

The first thing to remember regarding contractual offerings is to compare the costs of signing on the dotted line and the level of service (and industry experience!) you’d receive from each vendor. 

“Different scopes of work are going to involve different prices,” Gutsche pointed out when discussing the subject. “When comparing contracts, you want to ensure that the work and service align between offerings and that you’re not paying less for one contract only because you’re getting less in return.”

Suppose you can save your condo corporation a few bucks by going with a smaller scope of service that is the right fit for your community of condo owners! Just be sure you’re not getting short-changed on services you need simply because one contract came in with a lower number attached to it than the others.


2. Price Increases Are a Thing – But So Are Price Increase Limitations

This might come as a surprise, but when you sign a contract with a vendor or contractor, you might be agreeing to pay more with each passing year.

Crazy, right?

“If you don’t set a certain price increase cap within your contract,” Gutsche explained, “you can sign on with a company for five years, and they can have a clause in there that allows them to adjust the contract price for, as an example, inflation. This would give them free rein to bump up the contract price by 12% or 15% or pretty much whatever they feel like – and you’ll be stuck paying those extra costs.

“So, by ensuring there’s a clause in that contract that says, ‘Yes, you can increase the price – but we’re setting a cap on those increases at 5% per year,’ you can protect yourself, your condo community, and your budget.”


3. Auto-Renewals: Sometimes Helpful, Sometimes Not

Things that happen automatically are typically meant to make our lives easier, simpler, and more convenient. The same can be said of auto-renewing contracts – but this only works out to be the case if you’re happy with your current terms. If you find yourself on the other end of things and want to alter or cancel an auto-renewing contract, the process may be challenging to navigate.

“Auto-renewing contracts are great when you’re looking to carry things forward another term,” Gutsche agreed. “Sometimes, though, they can be tough to work within. This is because many auto-renewing contracts feature a minimal amount of time during which you can make changes or cancel for the next year – typically just a small window between 120 days and 90 days before your current contract ends. If you miss your opportunity to make changes during that time, your contract will renew for another term – a situation you may or may not be happy with!”

That said, if your contractor isn’t amenable to striking that auto-renewal clause from the contract, you should be in the clear so long as you stay on top of that timing and be sure to follow up with any changes you’re looking to see during that window of opportunity. So make a note, set a reminder in your phone, and do what you must – just don’t miss that chance to review your contract, and you’ll be set.


4. Just Termination and Remediation Clauses

A just termination clause details precisely what type of breach of agreement may result in the contract being terminated.

Remediation clauses, though, are where things get interesting. 

“Some contracts feature a remediation clause before any just-cause termination details,” Gutsche detailed. “This clause requires a condo board to give a contracted vendor a period of time (often thirty days) to correct an issue that did not comply with the agreed-upon contract. Essentially, it protects a contractor from being let go for doing a bad job, which isn’t fair because it’s not the burden of the condo corporation to ensure a contractor does their job – that duty is the contractor’s obligation to uphold.”

Watch for these clauses and do what you can to negotiate them out of the agreement.


5. Look for Detail

There’s nothing quite so intimidating as a weighty document dropping with a resounding thud on the bargaining table – but in reality, the more information and detail a contract contains, the better. 

“Generally speaking, if a contract doesn’t have much written in it, that’s probably because it’s vague – and that leaves both you and the contractor open to trouble,” Gutsche cautioned us. “A good contract is both clear and detailed. The more details in the contract, the more communication going, the better for everyone involved: the board, the property manager, contractors – everyone.”

Sound advice, as always, Dustin; thank you very much!

A big thank-you goes out to Dustin Gutsche and the whole Catalyst ops team for chatting contracts with us today – we couldn’t appreciate it more! Looking for more info on what to look out for when it comes to your next condo contract? Contact us at Catalyst Condo Management today, and we’ll be happy to do what we can to steer you straight!