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Fine Print Is Too Often Not So Fine

Reprinted from The New York Times

BY JAY ROMANO

Boilerplate is the term used to describe the preprinted, jargon-filled, intensely explicit yet often incomprehensibly vague language in legal documents that only lawyers can love.

And when it comes to negotiating service contracts in co-ops, the wise are wary of boilerplate because they know the devil lurks in the fine print.

Jeffrey M. Heidings, president of Siren Management, a Manhattan property management company, said that when examining laundry-room contracts, he always looks for "pernicious provisions on minimum payments."

"That means that the company includes a clause that says that compensation is based on either a percentage of collections or a certain minimum amount per machine per month," Mr. Heidings said. "It's usually in the fine print."

A better alternative, Mr. Heidings said, is a contract provision that provides the contractor with a percentage of collections and no minimum guarantees.

Other "standard" clauses found in many contracts, Mr. Heidings said, are "automatic renewal" and "right of first refusal" clauses. With the former, he said, companies insert strict requirements for canceling service contracts at the expiration of their term. If a board misses the narrow "window of opportunity," it could find itself in another 7- or 10-year contract with the same supplier -- whether it wants to be or not.

"Right of first refusal clauses are even more onerous," Mr. Heidings said. Such clauses entitle a contractor to a new contract upon the expiration of an old one if the contractor can offer the same terms as a competitor, even if a board is unsatisfied with services being provided. In fact, even some laundry-room service providers complain about them.

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