Importance of Reviewing Vendor Agreements on an Annual Basis
Homeowners association (HOA) boards need to review vendor agreements on an annual basis to ensure that the vendors are providing the services and products required by the HOA. One reason this is important is because contracts may expire. After a certain period of time, it becomes a lot more difficult to enforce a contract if a vendor has not been complying with the terms of the agreement.
In addition, vendors may change their prices or services during this time frame. To stay in compliance with law and reduce liability risks, HOAs should have a process for reviewing vendor agreements every year. To help with this process, this post by the Tampa association management experts at Wise Property Management will outline key points that should be considered when reviewing vendor agreements.
What to Consider When Reviewing Vendor Agreements
The following are a few questions to consider when reviewing vendor agreements:
- What products and services does the vendor provide?
- What items could be added to the vendor agreement?
- What items could be removed from the vendor agreement?
- How do we ensure that vendors are providing the services promised?
- How do we ensure that the vendor is providing the services at the agreed upon price?
- How can we notify vendors of changes to the contract?
Assessing the Quality of Vendor Services
Quality is another important consideration for HOA boards. As time progresses, vendors may have to discontinue certain services or products. A vendor may stop providing a service because it is no longer profitable, or the quality of the product or service may have declined. HOA boards need to be aware of this. If the quality of vendor services decreased, it might be time to terminate the contract and find a new vendor.
Reviewing Contracts for Changes in Vendor Prices
Vendor contracts are usually signed for a year-long service. That means that every year, your contracts can change or expire. The HOA should check every vendor contract to take note of any changes including prices.
Annual contracts have benefits and drawbacks. A benefit is that the end of the contract means that you can renegotiate it for a lower cost. However, it also means that the vendor can renegotiate for a higher price. Eventually, the price will likely go up due to increasing costs each year. You want to be sure that the pricing that you are quoted is competitive with other companies. You may be able to find better options by shopping around, which is possible since your contract likely ends in one year.
Contract Termination Procedures
One of the most important aspects to consider when reviewing vendor agreements is termination procedures. HOAs should include a process for how to terminate an agreement with a vendor along with a protocol for what to do if a vendor isn’t performing agreed upon services.
Reviewing vendor agreements on an annual basis is important for HOAs. Not only is this important because contracts may expire, but because vendors may change their prices or service offering during the engagement period. It is important for HOAs to follow a process for reviewing vendor agreements every year. Tampa association management companies can help to review vendor contracts. To learn more about Tampa condo management, contact Wise Property Management through our proposal request form.
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