Tuesday, July 19, 2016

How to Prevent an "Act of God" from Derailing Your Community.


Ask a contractor or vendor about what will happen to their services and your community in the event of a disaster or emergency and they will likely point you towards a clause in their contract entitled, Force Majeure.

A typical force majeure clause reads as follows:

"X shall not be liable for any failure or delay in performance of this Agreement, in whole or in part, where such failure or delay is caused by circumstances beyond X's reasonable control, including but not limited to acts of God, severe weather, fire, terrorism, vandalism or civil riots, war, civil disturbance, labor activity or strike, court order or any other cause outside X's exclusive and direct control."

While your contractor certainly cannot control the weather or any of the other items listed above, he or she can control what they are willing to do to help your community recover and how much it will cost you.  Unless you have properly negotiated your contract, most vendors' proposals contain language which is designed to protect them from liability, from having to perform services and/or from incurring penalties in the aftermath of a disaster. However, if you have properly negotiated your contracts, language can be added which provides that your association is not responsible to continue making payments for a project or services which have temporarily ceased due to an emergency situation. In the absence of such protective language you may find yourself having to pay for services which are not being delivered.

For services like security, landscaping, pool and grounds maintenance, your association needs vendor contracts which clearly specify the services to be performed prior to a disaster and in the aftermath of same and at what rates. Moreover, for an essential service like security and/or an important repair project, your association should address how quickly your community can expect to be protected post disaster. Naturally, you also want to pay a fair price for such services and not a price which has been inflated as a result of the emergency so pricing needs to spelled out in the contract.

The following are some questions you need to start asking when negotiating your contracts:
  • How many guards will return to the community post disaster, when and at what rates?
  • Will our manager be working onsite post disaster or remotely?
  • When will the landscaping company arrive to remove dangerous storm debris?
  • Who will help document the community properly in anticipation of a possible insurance claim?

Florida's six-month hurricane season started on June 1st. In addition to powerful windstorms, residential communities are also vulnerable to fires, floods, tornadoes and hailstorms all of which can fall under the category of an "act of God". Moreover, we now have the very real threats of civil disturbances/riots and terrorism for which volunteer boards should start preparing.

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