Community association boards execute contracts on the association’s behalf with various types of contractors to maintain, repair, and replace their associations’ common elements. Project specific contracts involve a contractor completing a particular project, for example, replacing the roof of a building. Project specific contracts should always include a start date and completion date requirement.
Service contracts involve a contractor performing a service for the association over a particular period of time, for example, snow removal services, landscaping, and laundry equipment. When contractors provide association boards with proposals for service contracts, the contract often includes an automatic-renewal clause. If an automatic-renewal clause exists, the association is often required to notify the contractor within a specific time period before the contract term ends that the association will not renew. Once the contract renews, the board typically cannot cancel the contract without paying a large penalty, and the contract often renews for anywhere between a month, to five years, depending on the contract language.
A board should always attempt to negotiate the automatic renewal provision out of the contract, or, at a minimum negotiate a longer period of time to give notice of non-renewal. If your Association already has contracts with automatic renewal clauses, now is an ideal time to mark your calendars with the dates of the auto-renewal deadline. Do not miss the opportunity to part ways with contractors who are not performing to the board’s satisfaction.
