Get 2 months of free community web site hosting from Community123.com!
Sunday, December 15, 2019
Get 2 months of free community web site hosting from Community123.com!
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Requiring contracts for large projects - tell me I’m not crazy
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
ChrisP5
(Missouri)

Posts:145


08/08/2019 7:34 PM  
I’m beginning to feel like I’m going a bit crazy dealing with our PM. Tell me if I’m way off base here.

Background - We had some significant property damage to a condo building resulting in damage estimates over 500,000. We finally have the bids to rebuild and are working through final approval with the insurance now.

The proposal from the construction company is a half page and that’s it. There is no contract to be signed.

I can’t imagine doing any major type of work without a contract in place, particularly a six figure construction project. We know this company and trust them but I feel we need to be protected. I started asking about things like work comp, liability, liability for subs, warranties, payment terms, termination for non-performance, etc and most of the answers are “oh we would require that” “oh they are great at that”.

I work for a very large entity that requires contract for nearly everything we do so that may be skewing my view. Am I completely out of line for thinking a fairly detailed construction contract needs to be in place here? I don’t want to hold up rebuilding but also don’t want to expose the association to unreasonable risk.
SamE2
(New Jersey)

Posts:201


08/08/2019 8:51 PM  
You are not crazy your $500,000 job will turn into a $1,000.000 job without a detailed contract.
MelissaP1
(Alabama)

Posts:8768


08/08/2019 9:47 PM  
Need more details. What is the involvement of the PM with this company? Who is going to be signing the contract? The PM or the HOA?

Why would the company doing the work not put a contract together after the proposal? They need protected too. A proposal is different than a contract. So maybe it hasn't been drafted yet?

Former HOA President
KerryL1
(California)

Posts:6732


08/09/2019 8:09 AM  
Sounds like you're on the Board, right, Chris? Your PM got more than one bid for your board to consider, right?

With proposals & contracts of that size, our board interviews the potential vendors.
PatJ1
(North Carolina)

Posts:94


08/09/2019 8:22 AM  
You said you're working with the insurance company. The work to be done should be included in the insurance adjuster's report. When we had a smaller insurance repair job, the vendor's report was very short and referred to the adjuster's report. I do recall signing off on it. It wasn't as large as this, but our insurance company held the funds until the owner and HOA signed off that the work was completed.

Many years ago, I was on the Board during the very end, we had a building burn with 4 condos. Insurance made draw payments against the work done once they were approved by the Board. It did take almost a year for the work to be completed.

Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
SheliaH
(Indiana)

Posts:2776


08/09/2019 10:38 AM  
No, you're not off base. In fact, I've seen blogs from HOA attorneys who suggest projects over a significant amount of money should be reviewed by an attorney before they're signed, so the fine print won't trip up the association somewhere. How much is significant will depend on the association and its finances.

Ultimately, the BOARD, not the property manager is responsible for responsible use of the association resources, so if you're on the board, insist that your attorney have a look at the contract (not a proposal). Have the contractor provide answers to your questions and ask about anything you don't understand. If there's something that bothers you and you can't negotiate that part of the contract, you may need to rethink hiring that contractor. And do your due diligence - you can ask for written proof of insurance and liability coverage and double-check the status with the carrier, or have the property manager do it.

KerryL1
(California)

Posts:6732


08/09/2019 12:47 PM  
Though a CA HOA attorneys' website, visit Davis-stirling.com and scroll to Contracts and then click on Contracts Checklist. It's very useful.
PestY


Posts:0


08/09/2019 3:04 PM  
Posted By ChrisP5 on 08/08/2019 7:34 PM
I’m beginning to feel like I’m going a bit crazy dealing with our PM. Tell me if I’m way off base here.

Background - We had some significant property damage to a condo building resulting in damage estimates over 500,000. We finally have the bids to rebuild and are working through final approval with the insurance now.

The proposal from the construction company is a half page and that’s it. There is no contract to be signed.

I can’t imagine doing any major type of work without a contract in place, particularly a six figure construction project. We know this company and trust them but I feel we need to be protected. I started asking about things like work comp, liability, liability for subs, warranties, payment terms, termination for non-performance, etc and most of the answers are “oh we would require that” “oh they are great at that”.

I work for a very large entity that requires contract for nearly everything we do so that may be skewing my view. Am I completely out of line for thinking a fairly detailed construction contract needs to be in place here? I don’t want to hold up rebuilding but also don’t want to expose the association to unreasonable risk.





There is no contract requiring signature.

Y'all have received a PROPOSAL.

Now you take other proposals into consideration and develop a SPECIFICATION to obtain bids so that all prospective bidders are bidding on THE SAME SCOPE OF WORK and the SAME MATERIALS to be used.

THEN y'all select the lowest ACCEPTABLE bidder (not necessarily the lowest bid).


or


perhaps the insurance company is 'handling' the repair with THEIR lowest cost vendor
ChrisP5
(Missouri)

Posts:145


08/09/2019 8:24 PM  
Thanks for confirming what I was feeling. I’ll try to answer a few questions...

1) This is the only company that we have considered for the work.. they are the original builder and the nature of this reconstruction will effectively have them tearing down half a building and rebuilding while residents continue to occupy the other half. Given their knowledge of the existing structure they are probably the best suited to the job.

2) Our insurance is full replacement cost so as long as the insurance company signs agrees it should be covered.

3) The PM has primarily been the interface with our insurance as well as the multiple insurance providers for resident units. The PM has also interfaced pretty closely with the contractor in the initial steps of recovery.

4) As crazy as it sounds this company actually claims they don’t have a standard contract form they use. They primarily build new neighborhoods and commercial buildings that are turned over to the owner after the structure is completed.

5) I am the president of our board and have convinced even the non business savvy members that this isn’t a handshake agreement kind of deal.

6) thanks for pointing out the DS Checklist. That will come in handy for discussions.
PestY


Posts:0


08/10/2019 7:27 AM  
The 'contract' need merely state:

Insurance company will pay in full.

Repairs will meet original construction specification OR present code, whichever is more stringent.

(anything else risks 'alienation' of an apparently good builder - think round object busting)


or


let your insurer handle the issue




MelissaP1
(Alabama)

Posts:8768


08/10/2019 7:51 AM  
I wouldn't ASSUME they are the best for the job based on "familiarity". Built in mistakes are built in mistakes to keep covering up. You don't know what they built isn't subject to scrutiny. I would get atleast 2 other bids to see where they go. I've worked in construction field before. No builder is perfect and do things alike. Even the best builders build in bad ideas...

Former HOA President
NpS
(Pennsylvania)

Posts:3921


08/10/2019 9:42 AM  
Posted By MelissaP1 on 08/10/2019 7:51 AM
I wouldn't ASSUME they are the best for the job based on "familiarity".


If a major priority it to get people back in their homes as quickly as possible, then going with the original builder could make a lot of sense. Also, less likely to to have disputes over undisclosed problems that often occur when you bring someone new in.

Sikubali jukumu. Read all posts at your own risk.
MelissaP1
(Alabama)

Posts:8768


08/10/2019 10:27 AM  
The fact being "Undisclosed issues". Do you really want the same group who didn't tell you about they built something wrong keep working? I've learned the hard way about ASSUMPTIONS when it comes to construction... Just saying don't have assumptions but reasons...

Former HOA President
NpS
(Pennsylvania)

Posts:3921


08/10/2019 12:47 PM  
Posted By MelissaP1 on 08/10/2019 10:27 AM
The fact being "Undisclosed issues". Do you really want the same group who didn't tell you about they built something wrong keep working? I've learned the hard way about ASSUMPTIONS when it comes to construction... Just saying don't have assumptions but reasons...

You missed the point I was making.

Let's call it "unobservable" instead of "undisclosed".

A new contractor will often have a clause in their contract to cover them against things that come up that weren't readily visible. The original contractor wouldn't be successful with such an argument.



Sikubali jukumu. Read all posts at your own risk.
PestY


Posts:0


08/10/2019 1:51 PM  
nps,

you nailed it with one hit
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Requiring contracts for large projects - tell me I’m not crazy



Get 2 months of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement