After damage has occurred, the claims process often takes more time than expected. Unfortunately, while this is not always avoidable, delay in reconstruction can cause further losses in rent and keep people out of their homes for longer than necessary.
Associations have a duty to do what they can to mitigate the damages that has occurred as well as a fiduciary responsibility to make repairs and get tenants and unit owners back into their condominiums as quickly as possible.
After a catastrophe such as a hurricane, wildfire, or earthquake, associations immediately contact local contractors to help make temporary and permanent repairs. Often, the best companies are scooped up early and waiting to make contact can result in delays in the repair process and backorders in materials. Many associations retain companies before their insurance claim has been completed.
Associations should review all contracts they sign and be careful to ensure that the terms are clear and definite. Failing to do so, can result in the contract being found void in court if a dispute arises.
In The Gables I Townhomes, Inc. v. Sunmark Restoration, Inc., 687 So.2d 6 (Fla. 3rd DCA 1996), exactly such a situation arose. In that case, the association had problems in the claims process which resulted in delays in receiving payment for damages resulting from Hurricane Andrew. In order to move the claim along, the association retained Sunmark Restoration to help with the claim and, possibly, perform all necessary repairs.
The Gables signed a proposal/contract with Sunmark Restoration, but the document lacked a price. Instead, the final amount to be paid would be the amount negotiated with the insurance carrier when the claim was closed. The contract stated:
All repairs to be specified per estimate and scope as furnished by the insurance co., or furnished by the company and approved by the insurance co. No changes may be made by either party without written approval by both parties.
After payment was tendered by the carrier, a dispute arose between the association and Sunmark Restoration regarding the scope of the contract. The association argued that the contract only covered Sunmark’s authority to negotiate the scope of the loss with the insurance carrier, while Sunmark Restoration argued that the contract allowed them to negotiate a final settlement and then perform the work. When an impasse was reached, Sunmark Restoration sued the association for breach of contract.
The Third District Court of Appeals found the contract was indefinite and could not be enforced. Because the proposal/contract allowed Sunmark Restoration and a non-party to the contract (the insurance carrier) to determine the price terms, the court found there was no “meeting of the minds” and thus no contract. The court advised that in the absence of a definite price or definite method of determining the price not left solely to Sunmark Restoration’s discretion, the contract was not binding.
Associations should always read contracts carefully and make sure that both parties have a clear understanding of what is contained therein. The repercussions of not doing so can be harsh and could lead to needless litigation that will further delay the repair process.