Why is the assistance of an attorney important in the review of service contracts?

Benjamin Franklin famously said back in 1736 that “an ounce of prevention is worth a pound of cure.” Mr. Franklin’s saying was most certainly not meant to apply to Florida property owners associations as Florida was not even a state at the time but his advice can be seen as applicable to community associations insofar as service contracts are concerned because it is easier to prevent large costs and legal exposure to an association by sound contract language crafted or approved by an attorney at the start of a relationship with a vendor than to repair the damage that a poorly worded agreement that was simply signed on an association’s behalf without legal review has created.

What do I mean by service contract? An important function of an association is to oversee essential services that vendors provide for the community such as landscaping, pest control, asphalt paving, and security. These services require written contracts which should include important terms that protect the association, particularly in the event that the vendor does not perform its side of the bargain or causes damage to a person or property.

Why is the assistance of an attorney important in the review of service contracts? Perhaps most significantly, contract disputes can be expensive and time-consuming. And, such disputes are not always incorporated into the association’s annual budget which could put a lot of financial strain on the association and lead to unpopular special assessments. Also, the association can be stuck with a vendor that is doing a poor job.

Some examples of where an attorney’s advice is important include making sure the vendor is contractually obligated to provide sufficient insurance and that there are well worded indemnification provisions. There are some nuances in Florida law regarding indemnity and all too often it seems that contracts created by vendors are one-sided and do not protect the association in the event for example that a third party is injured as a result of the vendor’s services. Also, contracts created by the vendor may be unclear or unfavorable to the association regarding the vendor’s responsibilities, the timeframe by which the work must be commenced and completed, payment terms, recourse for the vendor’s failure to perform, warranties, under what conditions the agreement can be terminated, and where litigation must be commenced if there is a dispute, to name just some possible provisions where an attorneys’ involvement in contract review can be very important. I recall an instance where a national vendor puts in its standard contract that any lawsuit involving the contract had to take place in Pennsylvania. Nothing against Pennsylvania--as I even quoted one of its most well-known residents, Benjamin Franklin, earlier in this video--but it seems that being required to bring a lawsuit up in Pennsylvania is probably not advantageous to most Florida Associations. And if an attorney were not involved in the review of that contract, the association likely would have been subject to that onerous requirement.

A wise man once said that “successful people have systems.” By incorporating into its system of contracting with vendors the involvement of experienced legal counsel to assist with contract review, the association’s board and property management can better protect the association particularly by avoiding potential disputes with vendors or limiting the association’s exposure in the event disputes occur.

Victor Berwin counsels and represents clients in a broad range of matters with an emphasis on community association/ country club issues, employment agreements and commercial, real estate, and creditors' rights litigation. Learn more about Victor here.