Monday, April 5, 2010

Scrutinize Those Contracts!

Now is an excellent time to have your contracts reviewed by legal counsel to determine if (a) those contracts are cancellable at will and (b) whether a better deal can be negotiated. You should be earmarking all contracts coming up for renewal to make sure they do not automatically renew without you first negotiating either a better rate, a different, and perhaps scaled-down, set of services, etc.

This is especially true for your cable contract. Many of you have asked whether or not you can simply cut off the cable service to delinquent owners. The answer is that the cable company will not readily do that and you may not be able to do that under the terms of your contract, the statute and/or your governing documents. Instead, you may be able to change from a bulk to a retail contract so only those paying for the services will be able to use them.

Not only should you scrutinize existing contracts but you should be more careful when entering into future contracts. Negotiating the best deal possible will save you money in the long run. If, in the past, you did not feel the need to have your contracts reviewed and you have ever been burned by that practice, please reconsider investing an hour or two of attorney time to ensure you avoid costly mistakes and include language in your contracts that protects your interests. A recent case on point, is a balcony restoration contract that was properly prepared by a member of my Transaction Team to include language that the contractor’s contract price included all work necessary to complete the project. This was later found to include the cost to remove individual sunshades from the balconies; a significant savings to the association.

Even though you are only required to obtain competitive bids on certain contracts, it is a good business practice in this environment to obtain several bids, if possible, on all contracts of any significance.

1 comment:

  1. Guarantees by contractors should also be evaluated--one question is will the contractor be in business five years from now--another, a contractor may give a guarantee but how will he react when asked to live up to his/her guarantee--

    Mike Katz