When it comes to managing a condominium, establishing and maintaining effective vendor relationships is crucial. But to protect the corporation’s best interests, property managers and boards must ensure that vendor contracts include specific legal provisions.
In a recent interview with Patrick Nelson, a condo lawyer and Associate from Shibley Righton LLP, we explored the key points to look for in every vendor contract, with an emphasis on three essential elements: insurance, indemnity, and termination provisions.
Here’s a summary of our interview and why these points are critical for your condo corporation’s success.
Vendor Contracts: The Key Points that Every Property Manager and Director Must Look For
1. Insurance Provisions: Safeguarding the Corporation
Every vendor contract should have clear insurance provisions to protect the condo corporation from potential financial liabilities. Insurance clauses ensure that the vendor has adequate coverage if something goes wrong during the service period. This protection minimizes risks to the corporation, providing peace of mind to board members and owners alike.
2. Indemnity Provisions: Shielding Against Liability
In addition to insurance, contracts should contain indemnity provisions. These clauses legally require the vendor to take responsibility if their actions cause harm or loss to the condo corporation. Indemnity is an essential part of risk management, making sure that the vendor is accountable for any incidents related to their work.
3. Termination Provisions: Flexibility to Exit the Contract
Termination provisions are often overlooked but can be critical for managing relationships. They outline how both parties can exit the arrangement if it’s not working out. As Patrick explains, some termination clauses may be restrictive, allowing limited scenarios for ending the contract. This approach might benefit the corporation by fostering long-term vendor relationships. However, for most situations, especially in competitive service industries, it’s better to have broad termination provisions that allow either party to exit without cause. Commonly, these clauses set a notice period—often 30, 60, or 90 days—depending on the nature of the service provided.
Further Resources: Contracts in Condos
Want even more helpful tips on condo management? Check out the article Condo Conflicts, Contracts, and Kickbacks (written by another Shibley Righton condo lawyer, Patrick Greco!).
Our blog also offers a wealth of information on relevant condo law topics, making it a valuable resource for property managers and boards alike. Or, explore Stak’d, our library with over 10,000 hand-curated condo-related resources for additional summaries and tools, or dive deeper into our blog for more detailed discussions on topics that matter to you and your community.
Careful Contract Consideration: In Conclusion
Incorporating these three provisions into vendor contracts helps ensure that the condo corporation’s interests are protected. As Patrick advises, always review these clauses carefully to avoid unnecessary risks and to enable smoother management if the need to exit arises.
By understanding and incorporating these elements, condo corporations can safeguard their assets and foster stronger vendor partnerships.
-Stratastic Inc.
P.S. Need help checking out a contract before you commit your condo? Reach out to the team at Shibley Righton, or find more condo lawyers on our vendor directory, My Condo Vendor.
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