Request For Proposals (RFP) and written contracts, are they necessary?

AJ writes:

Dear Paul: I am a new director on the board of a 40-unit condominium and learning as I go. One item that struck me as odd, is the fact that we hire contractors without a request for proposals or written contracts. I am afraid that one day this practice will get us into trouble. What do you think?

Paul replies:

Dear AJ: First, I would like to congratulate you for serving on your board. While owners should be interested in the affairs of their corporation, very few are courageous and generous enough to step up to the plate to contribute to its operation. Bravo!

You are wise to be concerned about the lack of requests for proposals (RFP) and written contracts. RFP demonstrates to owners that the board has done its due diligence to obtain quality contract services at a cost that the corporation can afford. Several quotes also minimize the chances that the board as a whole or one director, in particular, might benefit personally from the contracting business.

A written contract, in my opinion, is a must. While an oral contract can still be a valid contract, should something go wrong, it will degenerate into a debate in which both sides believes it is right. Disputes involving large sums of money will in all likelihood be settled in court where the best evidence is always a document that was originally signed by both parties. Smaller corporations who may be reluctant to spend the money for a lawyer to draft a contract for every hired service might want to have a lawyer write a generic contract that can easily be modified to suit the circumstances.

If you have a property management company, it should be able to provide you with some information regarding RFP and written contracts to get you started down the right path. Best wishes!

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