It’s common for homeowners associations to begin long-term contracts with contracts for services such as trash removal, landscaping, or other maintenance. What associations will not realize, however, is that many of these contracts are set to auto-renew.
Without knowing this, your community could find itself facing financial liabilities if you notice the auto-renew clause too late and try to cancel the renewed HOA vendor contract. Being prepared for this can help your association be able to cancel a contract properly and avoid any surprises.
Being Prepared for Renewal
With some maintenance or service companies, after the term of the contract ends, which can range from one to three years, it will expire and the association will be able to begin a new contract or move on. However, some companies will have a clause in their contract saying that it is set to extend for a certain amount of time after the end of the contract unless the association notifies the company in a certain amount of time.
Noting Contract Terms
The most responsible thing a community can do in regards to contracts is evaluate the terms closely to check for two things:
- Any auto-renewing terms in the contract.
- If there is an auto-renew clause, the amount of prior notice needed to not auto-renew.
You’ll also want to make copies of the contract terms for reviewing later on.
Checking Renewal Information
If you have a contract that is being renewed, it’s also smart to make sure you look over any changes that will come with the renewal. It’s common for there to be changes in laws or requirements to the new contract as needs, services, and even technology can change. Taking another look will ensure that you agree with the scope of work and have the right expectations.
The best way to remind yourself of this is by adding the contract’s termination date to your calendar. Even if you know the contract renews and you’re okay with it, knowing the end date will keep you in the know and make sure you still agree with the terms.
If your association needs assistance regarding contracts with maintenance or vendors, a management company like Cedar Management Group can help.