RealManage Insight

9 Important Questions to Ask Before Signing a Service Contract

by Annette Byrd, CMCA®, PCAM® on Jan 18, 2022 1:30:00 PM

A homeowners' association protects every homeowner's interests by maintaining the community's standards. However, for an HOA to operate effectively, board members, active homeowners, advisors, and even vendors must work collectively. For your HOA to serve the community effectively, you should choose a competent service provider. Service providers minimize your association's expenditures while delivering outstanding services, increasing efficiency, and financial stability.

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Other than selecting the right service provider, you should verify the credentials, call references, and pay attention to the service contract. A service contract is an agreement or pact between your HOA and a particular service provider outlining the relevant information on their services. You should not quickly sign the service contract before analyzing it comprehensively. 

With the help of your association's lawyer, take time to scrutinize, get clarification on the negotiated services before signing it. That will help prevent misunderstandings or inconveniences and protect your HOA's interests. Let's look at nine critical questions you should ask before appending your signature on the service contract.

What are the Contract Terms? 

You should ensure that the service contract clearly states how and what precisely the HOA will pay the vendor for their services. These are the payment terms and billing procedures. Contact your HOA attorney to clarify. All parties involved should understand and agree to these terms.

How Will the Vendor Deal With changes to the Agreed-Upon Services?

Since change is inevitable, vendors can change the service agreement when needed. Therefore, you should ensure that the contract explains the process of embracing changes, who approves them, and how they will get implemented. It should also clarify when the HOA will pay the vendor for the new developments.

What are the Response Times and Timelines for Services?

When a specific service gets provided, the contract should state when it starts and ends to prevent incompetence. Vendors and homeowners associations are subject to penalties for causing delays. The contract should also explain how and when either of the parties can terminate the agreement.

Who is the Point of Contact?

Check to ensure that the contract has the contact details that either the HOA or the vendor can reach. That can be their phone number, email address, or other reasonable contact modes. If more information is required, it should indicate whom the vendor may contact and whom the HOA may contact for more clarification.

What Responsibilities Do the Vendor and the HOA Have?

Each of the two parties involved should understand their responsibilities for the given project's success. The service agreement should state what the HOA should do to ensure the vendor delivers their services effectively, like prior preparations. It should also spell out the vendor's obligations, like the minimum number of employees or tools required or when the provider should perform their duties. 

Does the Vendor Have Insurance?

Insurance helps protect the plan and the participants. You should ensure that the contract has the vendor's insurance details. Carefully review the insurance coverage to check if the vendor included the HOA as an additional insured party and certificate holder. That will ensure that the HOA also receives updates if there is a change in the insurance status. 

How Does the Vendor Handle Disputes?

Disputes between your HOA and the vendor might arise along the way. The pact should clearly state how and where to solve such conflicts. It should also specify the party that will cover the legal fees and costs in case of any.

What is the Vendor's Warranty Policy?

Check the contract and read the vendor's warranty details, what it covers and when to activate it. The agreement should also explain the warranty claims process or additional manufacturer warranty information to activate the warranty.

What Got Included in the Price?

It is essential to understand what exactly you're paying for, from the required services to other add-ons. The contract should list everything your HOA will pay for and how much. This should also include extra charges like overtime work expenses and supply changes. 

Need Help Picking the Right Vendor for Your HOA?

Different vendors have different capabilities and working terms. Therefore, choosing the right vendor is more challenging than you can imagine. That is especially when you want a service provider that delivers quality services but stays within the association's budget.

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