Most standard contracts for services in the condo industry include termination clauses – while the majority of these are fairly reasonable, from time to time, a contract comes across our desk that just leaves us shaking our heads.
Some contracts contain termination clauses which heavily favour service providers/contractors, making it virtually impossible for a condo corporation to terminate – surprisingly, we have even seen some management contracts like this.
These termination clauses can leave a condo corporation without any viable options – resulting in high costs and even higher frustration, even in cases of inadequate performance.
Generally speaking, contracts should have termination for convenience clauses, allowing a party to terminate on 60 or 90 days’ notice for any reason. Contracts should also have termination for cause clauses which are not overly complicated or onerous and actually permit the condo corporation to get out of the contract without having to satisfy impossible conditions or wait an inordinate amount of time before the effective date of the termination. While there are of course exceptions to this, these are rare and should be carefully considered before being entertained.
Boards and managers should read proposed service contracts carefully, paying particular attention to termination clauses, and consider consulting with your favourite condo lawyer for advice.