Contracting Checklist

In every contracting situation, from the smallest everyday project to the largest construction project, consider the following issues:

Does the contractor have a valid California contractor’s license for the relevant specialty?

Does the contractor have minimally acceptable levels of general liability insurance, automobile insurance and worker’s compensation insurance?

Has the association been named as an additional insured on all of the contractor’s insurance policies?

Have all the subcontractors submitted proof of their contractor’s licenses and insurance policies?

Have all HOA and insured versus insured exclusion and contractor’s condition endorsements been deleted?

Has the contractor complied with all of the association’s bidding requirements?

Has the contractor supplied references and have the references been checked?

Is there a written contract?

Has the scope of the work to be performed been clearly defined?

Does the association have to pay start-up costs to the contractor? Is the amount of the start-up costs reasonable (less than 10% of the total contract price)?

Are progress payments required at reasonable intervals? Have payment obligations such as “upon delivery” been deleted?

Have the payment provisions been written so that the association only pays for work that has been satisfactorily completed?

Is the contractor required to submit mechanics’ lien releases before each payment?

Should the association write joint checks to the contractor and subcontractors if unconditional lien releases are not provided?

Can the association hold retention from each progress payment until the end of the contract?

Is final payment required after all mechanics’ lien rights have expired?

Are the starting and completion dates clearly specified?

Is there a liquidated damages (predetermined monetary payment) provision in the contract?

Would a performance bonus provision provide incentive to the contractor to finish earlier than required?

Can the association terminate the contract “without cause?” If “cause” is required, is it clear under what condition(s) the contract can be terminated?

Has the contractor clearly indicated the warranties being given? Are there any materials manufacturer’s warranties?

What exclusions are there in the warranties? Are these exclusions reasonable?

Will the contractor be required to supply a performance bond or labor & materials bond?

Is the contractor required to indemnify the association for its negligent acts and omissions?

Have all obligations of the association to indemnify the other party been deleted from the contract?

Have limitation of liability clauses been deleted?

Does the contract require some form of Alternative Dispute Resolution (mediation or arbitration) prior to or in lieu of litigation?

Is there an attorneys’ fee provision in the contract?

Has the contract been reviewed by legal counsel?

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