The Ins and Outs of Contract Success for Condo Boards and Management Companies
Condo boards and management companies often seek out contractors to help them maintain and service their complexes.
Some of the most common services condo associations hire require on a contract basis include:
- Residential cleaning
- Parking enforcement
- Waste collection
- HVAC system maintenance
- Carpet cleaning
- On-site security
- Building repairs and maintenance
Depending on the circumstances, either the condo board or a hired condo management company will be responsible for finding vendors who can provide these services.
The problem? Sometimes condo association contracts are signed that are not necessarily in the best interests of the residents or their condo board.
This is why knowing what to look for in condo management contracts is so important.
In today’s blog, we’ll be discussing some of the most common mistakes condo associations make entering into contractor agreements and highlighting some precautions that can be taken.
A Guide to Finding Suitable Contractor Agreements for Condominiums
1. Termination Notice Requirements
This is one of the most critical aspects of any contract related to property management for condos. Some vendors will require that condo management companies or associations provide termination notice within a small window of time. For example, a company may require a minimum of 90 days notice, but no more than 180 days.
These types of clauses can be restricting and problematic down the line when the condo board is interested in switching providers or ending the service agreement.
Before signing a condo maintenance agreement, always be sure to double-check termination notice requirements and do not be shy about negotiating terms that are mutually satisfactory.
2. Scope of Work
Condo association contracts often go awry when there is a misunderstanding about who is responsible for specific tasks.
For example, not all residential cleaning companies hired to maintain the common areas of a condominium property will offer carpet cleaning services. You may have to hire an additional contractor to oversee the cleaning of your carpets.
It is always a good idea to request a checklist of all services that will be provided and clarify any discrepancies in expectations ahead of time.
The more detailed you are in defining the scope of work in advance, the less likely it will be that you’ll encounter conflicts in the future.
3. Duration of Agreement
Contractor agreements for condominiums can last anywhere from three months to 5+ years, depending on the type of service being provided and the standard practices of the chosen vendor.
It is absolutely crucial that condo boards and management companies closely review the time commitment of any contract being signed.
A contract that suits your needs today may not be ideal one year from now.
Separate immediate needs from long-term needs and weigh out the benefits of signing to a long-term contract (some providers allow you to lock-in pricing, which may be beneficial).
And, of course, don’t be afraid to negotiate terms that better fit your requirements.
4. CCDC Contracts
For larger-scale projects, like building renovations or landscaping, you may want to consider a standard 2MA Master Agreement from the Canadian Construction Documents Committee.
These documents are available to the public for free and are a great way to protect the interests of both the client and the contractor.
The 2Ma Master Agreement was specifically designed to make entering into specific work arrangements faster and easier, as well as to eliminate the need to review and re-negotiate general terms and conditions for each work order.
The 2MA Master Agreement covers:
- Change order requirements
- Dispute resolutions
- Payment terms
- Review and inspection processes
- Construction timelines
And much more. You can access CCDC online here.
5. Labor Rates
Condo association contracts typically fall into one of two categories in terms of labor rates:
In a fixed-price agreement, the client pays a predetermined sum for a specific project. Snow clearing is a great example of a fixed-price contract. Typically, a condo complex will pay a fixed rate per month to have snow removed from their lot.
Time + Materials
This type of rate usually applied to larger-scale construction projects. A time + materials rate will require the client to pay a fee per hour, based on how long it takes the contractor to complete a specific job. The client is also expected to cover the costs of any necessary materials to complete the project.
Paying a time + materials labor rate can be quite expensive in the long run if not closely managed.
Thus, it’s important to analyze labor costs and terms before entering into a contractual agreement.
Remember, it is your responsibility to protect your best interests when signing a contract. You may want to have a lawyer or someone you trust review the document as a reassurance.
Additionally, be sure to date the document when you sign it and ensure that both parties sign and receive a copy of the agreement.
If any changes are required at the last minute, be sure all changes are initialed and confirmed in writing.
As the saying goes, “An ounce of prevention is worth a pound of cure!”.
Do you have a question related to contractor agreements for condominiums? Are you a resident at one of our Catalyst Condo Management properties? Contact us directly. We’re always happy to help!