Contracts

Great contracts are the foundation of healthy relationships.

Your declaration / CC&Rs is special kind of contract called a covenant (a dedicatory instrument) between homeowners and the association that "runs with that land." Covenants do not bind third party vendors! This page is dedicated to relationships between your association and third party vendors.

Your association can, and in many cases should work closely with your vendors, but that does not make vendors your "colleagues" or "partners." Whether formally incorporated or not, you should think of your community as a business. Homeowners who share a vested interest via their mandatory assessments are like partners and/or shareholders of your corporation. Alignment with a shared interest is the primary reason many associations require that Board members (volunteer directors) own real property within the community. The vendors your association engages cannot and will not share the same interest in the overall nuances and success of governing and operating your community as your homeowners.

While you should not need to consistently reference contractual provisions, contracts are intended to include specific deliverables and protections.

Contracts require 3 basic elements to be binding:

something of value exchanged between two or more parties (a legal concept known as consideration; read Hamer v. Sidway)
mutual assent consisting of a valid offer and acceptance of that offer
basic legality; courts can determine that certain contracts are unconscionable
- Further reading: Contractual Unconscionability: Identifying and Understanding Its Potential Elements
- Further reading: Is Your Contract Enforceable?
- Further reading: Proper Vendor Management – A Strategic Necessity

Great contracts make all the difference, especially when things get tough...

Community associations that retain a management company (or intend to make a management transition) should read Great Expectations!: What to Expect from your Management Company. Your association has a huge decision: include those expectations in your contract, or not. View our Management Toolkit.

Property vet your contracts!

Indemnification, Liability, and More

YOUR ASSOCIATION can safeguard against wayward indemnity clauses by adopting a standard contract addendum (see below) that establishes fair and balanced terms that are relevant for almost all agreements with third party vendors and especially for vendors who will perform on-site services.

Certain state statutes, such as RCW 4.24.115, invalidate specific lopsided contractual provisions as a matter of public policy.

contracts or agreements related to construction, alteration, repair, addition to, subtraction from, improvement to, or maintenance of, any building, including moving and demolition in connection therewith, and including architectural, landscape architectural, engineering services… purporting to indemnify, including the duty and cost to defend, against liability for damages arising out of such services or out of bodily injury to persons or damage to property… are void and unenforceable when the indemnitee and its agents are solely negligent and in other circumstances.