The Meter is Running
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Problems arise when a contractor does not complete his duties because of a weak contract.
AUTHORRonald L. Perl, Hill Wallack
Boards should not enter into contracts without review by their attorneys.
Ronald L. Perl, Partner in Charge, Community Association Group
In what seemed to be a routine matter for the condominium board, it hired a mason to perform pointing and repairs on a brick façade. The president signed a contract prepared by the managing agent, who in turn secured the contractor’s signature. A deposit was paid to the contractor, and he began work. Problems began shortly after the start of the project when owners complained that the contractor was not cleaning up at the end of the work day and that the sidewalks and walkways were filled with trip hazards. In addition, work progressed at a far slower pace than anticipated; some days the work crew was a single person. We were consulted by the condominium board, which wanted to terminate the contract. Upon review of the contract, we found that it lacked a performance standard, a completion date, a requirement for work site maintenance, and a statement concerning grounds for termination. Each of those provisions is something we always include in this type of contract. Such terms would have provided the association with a stronger position to force the contractor to improve performance. Although the job was eventually completed, the effort was greater and the legal costs higher than if the contract had been appropriately modified by counsel initially.
Associations should not enter into contracts without review by their attorneys. Some managers utilize forms provided by attorneys for other associations. They believe that if an attorney approved the contract for a similar purpose for someone else, reusing the same form can avoid legal review and save money. In some cases, there may be no problem. However, a project at one community may not be exactly like a similar project at another, so the same contract terms may not be appropriate. When they aren’t, the results can be quite costly – both in money and aggravation. Attorneys are trained to anticipate problems and provide protection for various situations and are more likely to spot potential pitfalls. Boards, therefore, should never approve a contractor’s contract without attorney review, and managers should not simply use form contracts for vendor work.