Many people have asked me, "what should I be most concerned with when signing a service contract"? If only there was a simple answer. Every scenario is different, but even with these differences, there are certain elements that are true with just about every contract. First, let me say that I'm not an attorney and this is not to be taken as legal advice. This is a compilation of my experience in the management field and the issues that I feel have been most important to me. I always recommend to seek advice from a legal professional before signing any contract.
This being said, in my experience, you're going to certainly find the following items mentioned.
1. Contract Value
2. Contract Term
3. Parties to the contract
4. Service address
5. Services to be performed
6. Auto-renewal clause
7. Expectations and actionable items expected by both landlord and vendor.
8. And finally, and what I consider to be one of the most important parts of any contract, How do you cancel?
Although they may all seem equally as important, in my experience the one that I pay the most attention to is No. 8. So why is canceling so important? You figure every contract can be cancelled with minimal written notice or a small cancellation fee right? Well, this may be the case on short term low value contracts, but when you're handling multiple year agreements that can be increased at will by the vendor according to market conditions and then have the right to renew unless you submit the proper notice within the proper time to the proper address, it starts getting complicated.
It's important to watch out for auto-renew contracts. Although there are protections against this for consumers, these same protections do not extend to commercial agreements. In other words, business to business. So, if the contract states that after 5 years they can renew for another 5 years unless they receive notice no earlier than 90 days but no later than 60 days as of the contract's end date, you have 30 days within that 5 year period to cancel that contract the right way or you could be stuck with them for another 5 years and there is very little that can be done about it.
There are several reasons a property owner can find himself in need to cancel a contract. The two that I usually encounter are unreasonable escalations in fees and poor service. When you're not getting the service you expected, you'll have to keep very good records of all conversations, notices, and photographs if possible. Even then, it may not be enough and you can find yourself in a legal battle with your vendor. If it's a matter of escalations in fees, go through the contract and see exactly what can or can't be raised. If after some due diligence on your part you see that there really isn't much that can be done, you may have to have to visit the cancellation clause on your contract.
If you find yourself in this situation and want to break the contract early, read and see what the terms are for an early cancellation. There may be a clause referring to a certain fee equal to a number of months of service. If the terms of cancellation aren't feasible, try re-negotiating at a better rate and possible shorter term. Of course, the closer you are to the end date of your contract the more leverage you have. So give it a try. If they say no, try again later. Ultimately, the renewal date will arrive and they're going to want to keep you on the hook. So at some point, the negotiation will turn in your favor.
Remember, a bad contract can cost you, the property owner, thousands if not managed correctly. Take your time and read things through. Ask someone else to look it over whether it's an attorney, property manager, or other professional in the field. Because once you sign, there is very little that can be done after the fact.
This being said, in my experience, you're going to certainly find the following items mentioned.
1. Contract Value
2. Contract Term
3. Parties to the contract
4. Service address
5. Services to be performed
6. Auto-renewal clause
7. Expectations and actionable items expected by both landlord and vendor.
8. And finally, and what I consider to be one of the most important parts of any contract, How do you cancel?
Although they may all seem equally as important, in my experience the one that I pay the most attention to is No. 8. So why is canceling so important? You figure every contract can be cancelled with minimal written notice or a small cancellation fee right? Well, this may be the case on short term low value contracts, but when you're handling multiple year agreements that can be increased at will by the vendor according to market conditions and then have the right to renew unless you submit the proper notice within the proper time to the proper address, it starts getting complicated.
It's important to watch out for auto-renew contracts. Although there are protections against this for consumers, these same protections do not extend to commercial agreements. In other words, business to business. So, if the contract states that after 5 years they can renew for another 5 years unless they receive notice no earlier than 90 days but no later than 60 days as of the contract's end date, you have 30 days within that 5 year period to cancel that contract the right way or you could be stuck with them for another 5 years and there is very little that can be done about it.
There are several reasons a property owner can find himself in need to cancel a contract. The two that I usually encounter are unreasonable escalations in fees and poor service. When you're not getting the service you expected, you'll have to keep very good records of all conversations, notices, and photographs if possible. Even then, it may not be enough and you can find yourself in a legal battle with your vendor. If it's a matter of escalations in fees, go through the contract and see exactly what can or can't be raised. If after some due diligence on your part you see that there really isn't much that can be done, you may have to have to visit the cancellation clause on your contract.
If you find yourself in this situation and want to break the contract early, read and see what the terms are for an early cancellation. There may be a clause referring to a certain fee equal to a number of months of service. If the terms of cancellation aren't feasible, try re-negotiating at a better rate and possible shorter term. Of course, the closer you are to the end date of your contract the more leverage you have. So give it a try. If they say no, try again later. Ultimately, the renewal date will arrive and they're going to want to keep you on the hook. So at some point, the negotiation will turn in your favor.
Remember, a bad contract can cost you, the property owner, thousands if not managed correctly. Take your time and read things through. Ask someone else to look it over whether it's an attorney, property manager, or other professional in the field. Because once you sign, there is very little that can be done after the fact.
written by: Victor A. Abreu