Contracting and Vendor Management Flashcards

A roofing contractor requests a 50% deposit before starting a $200,000 replacement project. What is the BEST practice for the association?

Answer: Negotiate a smaller deposit and tie remaining payments to project milestones

Milestone-based payment schedules protect the association by linking disbursements to verifiable progress, reducing the risk of paying for incomplete work.

What is the PRIMARY purpose of requiring a contractor to obtain a performance bond on a large capital improvement project?

Answer: To guarantee the contractor will complete the work if they default

A performance bond protects the association by guaranteeing project completion by a surety company if the contractor defaults or fails to finish the work.

An association manager notices that a vendor's scope of work in an ongoing contract has informally expanded well beyond original terms without contract amendments. This is known as:

Answer: Scope creep

Scope creep occurs when work expands beyond the contracted scope without formal amendments, often leading to cost overruns and disputes.

Which document should a manager obtain from a vendor BEFORE making final payment on a construction project to protect against mechanic's lien claims?

Answer: Conditional lien waiver upon final payment

A conditional lien waiver upon final payment releases the vendor's right to file a mechanic's lien once the final payment clears, protecting the association's property.

A contract clause states that disputes must be resolved through binding arbitration. What does this mean for the association?

Answer: Disputes will be decided by a neutral arbitrator rather than a court, and the decision is final

Binding arbitration means disputes are resolved by a neutral third party outside court, and the arbitrator's decision is enforceable and generally not appealable.

When a contractor uses subcontractors on a community association project, who remains primarily responsible to the association for the subcontractors' work quality?

Answer: The general contractor who holds the prime contract

The general contractor holding the prime contract is responsible to the association for all work, including that performed by subcontractors.

An association's governing documents require board approval for contracts exceeding $5,000. The manager signs a $7,500 service contract without board approval. This is BEST described as:

Answer: An unauthorized act that may expose the manager and association to liability

Executing a contract above the board-approved threshold without authorization violates the manager's scope of authority and may create personal and association liability.