October 28, 2022

When a building owner enters into negotiations with a maintenance contractor, the contractor often begins the process by submitting a proposal outlining the work they intend to perform. These proposals typically include details about the scope of work, the compensation to be paid to the contractor, and a proposed schedule for completing the tasks. However, contractor proposals often come with additional terms and conditions that can favor the contractor, sometimes at the expense of the building owner. 

In this article, we’ll break down what building owners should look out for in a maintenance contractor’s proposal and how to protect their interests. 

What to Expect in a Maintenance Contractor’s Proposal

A contractor’s proposal is a document that lays out the details of the maintenance work to be done on a building. These proposals can include: 

• Scope of Work: A description of the specific tasks the contractor will complete. 
• Compensation: How much the contractor will be paid for the work, and the payment schedule. 
• Timeline: A proposed schedule for the completion of the maintenance work. 

While these aspects may seem straightforward, it is crucial to dig deeper and review other aspects of the proposal carefully, as they can contain terms that are less favorable to you as the building owner. 

Common Problematic Terms in Contractor Proposals

Contractor proposals often include terms that may not align with your best interests. Here are a few to watch out for: 

1. Dispute Resolution Location: Some proposals state that disputes must be resolved in the state where the contractor’s home offices are located, which could be far from the building where the maintenance is being performed. This could create unnecessary legal and logistical challenges should any issues arise. 
2. Automatic Renewal Clauses: Many contractor proposals include clauses that allow the contract to renew automatically each year unless you provide notice months in advance. This can be problematic if the terms or pricing no longer suit your needs. 
3. Damage Disclaimer: Some proposals explicitly state that the contractor is not responsible for any damage caused to the owner’s property during the maintenance work. This can be a significant issue if any damage occurs while the contractor is performing their duties. 

How to Protect Your Interests as a Building Owner

When you receive a maintenance contractor’s proposal, it’s crucial to carefully review the terms and conditions. Here are some tips to help protect your interests: 

• Look for Hidden Clauses: Watch for terms that could work against you, such as those related to dispute resolution, automatic renewals, or liability disclaimers. 
• Check for Insurance and Warranties: Ensure the contractor is required to maintain appropriate insurance and provide a warranty for their work. These protections can save you from costly repairs in case something goes wrong. 
• Negotiate Unfavorable Terms: If you find terms that concern you, don’t hesitate to negotiate. For example, you might want to modify the dispute resolution location or remove an automatic renewal clause. It’s essential to get the terms you feel comfortable with before signing. 

Alternatives to Signing the Contractor’s Proposal

While it may seem easy to simply sign the contractor’s proposal and get the work started, you are not obligated to accept the terms as they are presented. Instead, consider these alternatives: 

• Create Your Own Contract: If you are uncomfortable with the proposal, you can draft your own contract or use a standard form contract tailored to your specific needs. This ensures you are not bound by terms that don’t benefit you. 
• Use a Standard Form Contract: Many standard contract templates are available that include provisions for insurance, warranties, dispute resolution, and other important terms. These documents can be customized to fit the specific needs of the building owner and the scope of the work. 

Key Takeaways

Before signing any maintenance contractor’s proposal, make sure to: 

1. Thoroughly review all terms and conditions. 
2. Look for problematic clauses like dispute resolution location, automatic renewal, or liability disclaimers. 
3. Negotiate any terms that don’t align with your interests. 
4. Consider creating your own contract to better protect your property and rights. 

Taking the time to review and negotiate the terms of a maintenance contractor’s proposal can save you from legal complications and unexpected costs down the road. 

By following these steps and staying vigilant, building owners can better safeguard their interests and ensure that the maintenance work on their properties is carried out smoothly and professionally. 

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.