AVOIDING ‘FLAKEY’ SNOW CONTRACTS

D. Douglas Alexander

Attorney And Counselor At Law

Snow contracts generate considerable trouble for too many associations.  Their cost ranks in the top five or six budget line items for many associations, yet too little attention is given to the contracting process, and too much attention is given to “saving money.”  This is one job that, if done wrong, can result in property damage, people being inconvenienced, injured or killed.  As such, it should be approached carefully and with the assistance of a professional property manager when possible.  You may also need to review the contract with legal counsel, and let us not overlook the association’s insurance provider as well.

PRICING TERM

Chances are, you want a snow plowing contract, not just a snow removal contract.  The specifications should require plowing, blowing and shoveling to accomplish the mission, as otherwise an unscrupulous contractor may simply run pickup trucks through the project spreading de-icing agents.  While this may eliminate the snow, it may also eliminate your reserve funds if de-icing agents are provided at an extra charge.

Seasonal flat fees versus "per push" pricing represent another important choice to establish in your specifications.  If I were the contractor, I would always quote a flat fee that would enable me to make a profit despite an above average winter.  Many boards prefer these flat fees because they think it makes budgeting easier, and perhaps because of the perpetual hope that they will “save” their association a lot of money if a really severe winter is experienced.  More likely, they are just paying extra each year until the bad winter arrives and the contractor suddenly demands more money or walks off the job.  Ask yourself why the contractor would risk an unprofitable year which by itself could put him out of business?  The risk of a lawsuit will appear very attractive as an alternative once the flat fee has been expended on payroll and gas; after all, what is left to garnish?  If the reverse occurs, and a very mild winter is experienced, asking for a refund of the “unearned” flat fee (as some of our clients have done) is not realistic.

Pricing specifications should also call for a separate price per de-icing agent application and clearly cover what circumstances justify the application and its charges.  Specifying the agreed quantity per application will avoid some problems as well.  Here is where a property manager can also save the day and your money, assuming that they are actively monitoring your site.  The type of de-icing agent must also be specified, as rock salt should not be applied to any concrete surface.

Many contracts require services based on snow depth; considering the huge local variations in snowfall, perhaps the on-site snow depth is the best trigger.  The board should always have the right to order extra de-icing agent applications if it determines that they are necessary or appropriate.        

OTHER SPECS TOPICS

Service quality is of utmost importance and the most likely topic to create a mob scene at the next membership meeting after a problem winter.  The contractor should be available and responsive, twenty four hours a day.  The board must recognize that these contractors have numerous clients and are not free to immediately return to deal with a complaint.  A wise board will arrange to verify ongoing service quality and the existence of a proper basis for a complaint before making demands; a good property manager is often the best at this.

The contract must also cover damages to the site.  Expect some sod and improvements damage to occur, as it is usually unavoidable.  Deal with it by arranging for a holdback percentage (often ten percent) from each contract payment, pending a joint walk-through at season’s end and agreement on the tab.  Photos are a must, as is common sense and a reasonable deadline for repairs.  If the snow contractor is also your lawn maintenance contractor, things can often be resolved very easily.

Sooner or later, some serious damage will occur and/or someone will present an injury claim.  What happens next depends in part on the contract.  Does it require that the contractor indemnify and hold the association, its officers, directors, agents and co-owners harmless?  Did it mandate adequate insurance be carried by the contractor, and did anyone obtain and verify the coverage certificates?  The association’s insurance carriers should receive prompt, written notice to assure coverage is not denied.

Additional critical topics for the contract to address include insurance, hold harmless and indemnity clauses, as well as alternate dispute resolution mechanisms, to mention just a few.

WHAT TO DO?

Hopefully, the above discussion has provided enough information to signal the importance and complexity of the issues involved in contracting for snow removal.  Obviously we have just scratched the surface of the topic, and the prudent board will recognize that it will do its membership a good service by planning ahead and with the guidance of knowledgeable advisors, such as a credentialed and experienced property manager and attorney.  Once a reliable contractor has been found and you have a season of successful services under your belt, it may be best to continue the relationship rather than shopping around in a misguided effort to “save money” by looking for a lower bidder.