Condo Smarts: Strata service contracts can get complicated

It's never too late to organize your strata corporation's records. Photo by Chalirmpoj Pimpisarn Getty Ima /Getty Images/iStockphoto

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Dear Tony:

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We have a service agreement that we are attempting to terminate and have discovered an exclusive clause that requires 90 days notice before anniversary of the contract. Clearly no one on our strata council or manager read the contract in detail and now we are faced with another four years of a contract that renews automatically every five years unless we terminate within the terms.

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Strata corporations are extremely vulnerable to these practices because we are volunteers, our managers generally do not have the experience to review these contracts and in our situation, no one wanted to approve the funds for our lawyer to review the contract prior to signing. Now we’re stuck with a company that is providing lousy service and insists on the balance of the contract running out. That is still four years and by then a new council will be in place, maybe new management and likely the next renewal will occur.

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How do we get out of this?

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— Gabe M., Vancouver

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Dear Gabe:

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Strata corporations enter a variety of complicated service agreements with many conditions that favour the service providers and not the clients. Automatic renewals/evergreen contracts, guaranteed price adjustments, restrictive termination clauses and detailed service conditions that may include or exclude many costs.

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Elevators, fire safety inspections, heating ventilation mechanical, waste management, insurance, management agreements, warranties, communications and security systems, are all common examples. The success of a healthy business relationship is a clear understanding of the services, costs, liabilities and terms and conditions of renewals and cancellations before you engage.

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At this time your strata corporation needs legal advice on the contract. By the way, this will likely cost more than a sound contract review before you signed.

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You may have an argument for breach of contract which could be a negotiating factor to terminate. However, this requires supervision and documentation of failure to meet the contract conditions.

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Has there been a breach of the contract? If there is a breach, is there a breach provision where you must notify the service provider and entitle them to remedy the breach?

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Contract administration is time consuming but it is made easier with organization and advance review by an experienced professional. As the consumer you are entitled to full disclosure and clarity.

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As part of the contract proposal request a summary page that lists all costs, escalating or inflation costs, conditions for renewal or termination, any exemptions or exclusions, and dispute conditions. It provides a quick reference for council making decisions and giving directions to their managers. It is also essential that council members have access to all the service agreements and contracts. Organize your documents.

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If someone has an opportunity to look at renewal/cancellation dates, terms and conditions and add this to your council meetings and minutes, everyone is well informed. It’s never too late to organize your strata corporation’s records.

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