With the increasing number of hurricanes causing damage to condominiums, many associations are falling prey to poorly drafted construction contracts and/or unlicensed contractors regarding remediation, masonry, and other restoration work in common areas.

At the law firm of Kaba & Associates, P. A., we are dedicated to ensuring that your Home Owner Association or Condominium Association does not enter into poorly written construction contracts or become the victim of an unscrupulous contractor.

While it is important that any contract signed by an association is first reviewed and revised by it attorney, there are several key provisions which should be included in any construction contract, and in particular, pitfalls to avoid.

Ideally, an engineer and/or architect will be retained for any substantial construction and/or renovation work. The Condominium Act and the association’s condominium documents should be reviewed regarding voting requirements and other considerations concerning the association’s expenditures.

Typically, proposals used by contractors contain one or two pages and very few essential terms. Some of the essential terms which should be recommended by an association’s attorney to include in an addendum, include, but are not necessarily limited to the following:

- a prevailing party attorney fee and cost provision
- a right to file suit, if necessary in a court of law, and not binding arbitration
- language that states no subcontractors shall perform the work without the prior written consent of the association
- language that states no add-ons or additional work be performed without the prior written consent of the association and/or its representative
- language that states the contractor shall not assign the contract to other parties
- commencement and completion dates
- a liquidated damages provision for delays and possibly a similar “early completion bonus” clause (both of which must be carefully drafted to avoid being deemed an unenforceable “penalty” clause)
- a requirement for a sufficient amount of professional liability, General Comprehensive Liability (naming the association as the “certificate holder”), and Workman’s Compensation insurance
- a requirement that any litigation shall be filed within the county and state of the association
performance bonds and material and payment bonds should be required to ensure performance and payment to sub-contractors and suppliers
- language that states final payment shall be made following the passing of a final inspection for the work

In addition, it is worthwhile to spend a few minutes confirming on-line public information, including, but not necessarily limited to the following:

- corporate status of the contractor with the Division of Corporations
- licensure status for the scope of the work to be performed
- a general Internet search, which will often reveal websites used by the contractor, organizations to which the contractor belongs, trade associations and/or other information regarding the contractor or engineer

In some instances, it may prove worthwhile to conduct a quick search on the Clerk of Court website in the county of the association to confirm whether the contractor has previously been sued.

The bottom line is you need to perform due diligence when it comes to entering into construction contracts and agreements.

Contact Kaba & Associates, P.A., for sound advice and thorough review of any construction-related contracts. We'll make sure the proper details are addressed and you have proper legal protection.