Law Offices C. Jaye Berger, Principal
C. Jaye Berger
The client’s tale. The managing agent for a co-op had obtained a contract for the building’s outdoor swimming pool. The agent was going to sign it on behalf of the building when the board said, “Let’s have our lawyer review it.”
I was that lawyer. A few things struck me immediately when I reviewed it. The insurance coverage amount was very small and the company only had its post office box address listed. I knew I did not want the building to possibly be chasing after a company with no street address that also had very little insurance if something catastrophic happened. My recommendations led to discussions regarding how much coverage the co-op should have and it was changed. I also saw that there was no pre-season survey of the condition of the pool. I drafted in a provision for that to ensure the building knew everything was working and in good condition before opening day.
My comments led the board to reevaluate whether this was the right company for them, and they got quotes from other companies. This was a positive development as it caused the pool company to pay more attention to its contract and its business practices.
It made other changes that gave the building a lot more confidence in working with it. We added provisions about advance notice for extra lifeguards and overtime. There was now an indemnification provision. There was a provision for contact in case of emergency. The same kinds of concerns apply to other types of contracts, such as contracts with architects and engineers, which many buildings sign without having them reviewed by an attorney knowledgeable in this area. Later they wonder what a waiver of mechanic’s lien is and why they did not obtain one during construction.
The lawyer’s take. I expressed my concerns to the board. What if someone were injured and there was not adequate insurance? What if the pool had a mechanical problem and a child was hurt? It raised everyone’s consciousness about these issues. The same things occur when I review construction contracts. I have found important points that attorney shareholders on the board missed, such as limitation of liability clauses, where damages are limited to the architect’s fee. In another situation, I discovered that an architectural firm was not really an architectural firm, but rather a construction company owned by an architect, which meant it did not carry errors and omissions insurance. The company corrected that. Many vendors think their contracts say things that they do not, so when a problem arises and everyone pulls out their contracts, the issue is unclear. That leads to litigation problems that review by a knowledgeable attorney can help avoid.
Case closed. This case illustrates the adage “penny wise and pound foolish.” Spend more time having an attorney review contracts and your building will have fewer problems down the road.