Requiring contracts for large projects - tell me I’m not crazy

I’m beginning to feel like I’m going a bit crazy dealing with our PM. Tell me if I’m way off base here.

Background - We had some significant property damage to a condo building resulting in damage estimates over 500,000. We finally have the bids to rebuild and are working through final approval with the insurance now.

The proposal from the construction company is a half page and that’s it. There is no contract to be signed.

I can’t imagine doing any major type of work without a contract in place, particularly a six figure construction project. We know this company and trust them but I feel we need to be protected. I started asking about things like work comp, liability, liability for subs, warranties, payment terms, termination for non-performance, etc and most of the answers are “oh we would require that” “oh they are great at that”.

I work for a very large entity that requires contract for nearly everything we do so that may be skewing my view. Am I completely out of line for thinking a fairly detailed construction contract needs to be in place here? I don’t want to hold up rebuilding but also don’t want to expose the association to unreasonable risk.

Need more details. What is the involvement of the PM with this company? Who is going to be signing the contract? The PM or the HOA?

Why would the company doing the work not put a contract together after the proposal? They need protected too. A proposal is different than a contract. So maybe it hasn't been drafted yet?

You said you're working with the insurance company. The work to be done should be included in the insurance adjuster's report. When we had a smaller insurance repair job, the vendor's report was very short and referred to the adjuster's report. I do recall signing off on it. It wasn't as large as this, but our insurance company held the funds until the owner and HOA signed off that the work was completed.

Many years ago, I was on the Board during the very end, we had a building burn with 4 condos. Insurance made draw payments against the work done once they were approved by the Board. It did take almost a year for the work to be completed.

Though a CA HOA attorneys' website, visit Davis-stirling.com and scroll to Contracts and then click on Contracts Checklist. It's very useful.

Thanks for confirming what I was feeling. I’ll try to answer a few questions...

1) This is the only company that we have considered for the work.. they are the original builder and the nature of this reconstruction will effectively have them tearing down half a building and rebuilding while residents continue to occupy the other half. Given their knowledge of the existing structure they are probably the best suited to the job.

2) Our insurance is full replacement cost so as long as the insurance company signs agrees it should be covered.

3) The PM has primarily been the interface with our insurance as well as the multiple insurance providers for resident units. The PM has also interfaced pretty closely with the contractor in the initial steps of recovery.

4) As crazy as it sounds this company actually claims they don’t have a standard contract form they use. They primarily build new neighborhoods and commercial buildings that are turned over to the owner after the structure is completed.

5) I am the president of our board and have convinced even the non business savvy members that this isn’t a handshake agreement kind of deal.

6) thanks for pointing out the DS Checklist. That will come in handy for discussions.

I wouldn't ASSUME they are the best for the job based on "familiarity". Built in mistakes are built in mistakes to keep covering up. You don't know what they built isn't subject to scrutiny. I would get atleast 2 other bids to see where they go. I've worked in construction field before. No builder is perfect and do things alike. Even the best builders build in bad ideas...

The fact being "Undisclosed issues". Do you really want the same group who didn't tell you about they built something wrong keep working? I've learned the hard way about ASSUMPTIONS when it comes to construction... Just saying don't have assumptions but reasons...

nps,

you nailed it with one hit