Your elevator contractor just sent over a renewal. The document is 12 pages of terminology you've never encountered. "Examination agreement." "Annual escalation." "Anniversary cancellation." "Liquidated damages."
Here's the problem: the same concept has five different names. "Exam & Lube," "Oil and Grease," "Limited Coverage," and "Maintenance Only" all mean the same thing. Contract language is designed to confuse, not clarify. This glossary cuts through it.
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Contract Type Terms
The foundation of every elevator contract is whether parts are covered.
| Term | Also Called | What It Means | What It Costs |
|---|---|---|---|
| Full Maintenance (FM) | Full Service, Comprehensive | Parts and labor included. Repairs are the contractor's problem. | ~2x Examination |
| Examination (Exam) | Oil & Grease, Limited, Maintenance Only, Exam & Lube | Labor only. Parts billed separately. | Baseline |
The core distinction: FM works like insurance. Something breaks, contractor pays. Exam works like pay-per-repair. Something breaks, you pay. A deep dive on FM vs O&G covers the full financial implications.
FM contracts typically run $3,500 to $9,000 per unit annually. Exam contracts run $2,000 to $4,000. The savings on exam evaporate when parts fail, and parts always fail on aging equipment.
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Coverage Terms
Even "Full Maintenance" contracts exclude certain items. Know what these terms mean when you see them.
| Term | What It Means |
|---|---|
| Covered | Included in your monthly payment. No additional charge. |
| Excluded | Not included. You pay parts plus labor when needed. |
| Major Component | Big-ticket items: controller ($8K-$12K), door operator ($20K-$23K), machine ($60K-$80K) |
| Minor Repair | Small adjustments and parts. Usually covered on FM, billable on Exam. |
| Routine Maintenance | Scheduled items: lubrication, adjustments, inspections. Covered on both contract types. |
| Vandalism/Abuse | Always excluded. No exceptions. If someone kicked in your hall button, you're paying. |
The phrase "parts included" is meaningless without a defined parts list. If your contract says "routine parts included" without specifying what qualifies, the contractor defines "routine" at billing time.
Hidden fees in maintenance contracts explains the most common exclusion traps.
Time and Response Terms
Response time guarantees sound straightforward until you read the fine print.
| Term | What It Means |
|---|---|
| Regular Time (RT) | Weekdays 8 AM to 5 PM. Service during these hours is typically included. |
| Overtime (OT) | Nights, weekends, holidays. Often billable even on FM contracts. |
| Entrapment Response | Passenger trapped in cab. Realistic: 30 min RT, 1 hour OT. |
| Routine Response | Standard service call. Realistic: 3-4 hours. |
| Guaranteed Response | Contractual obligation with defined penalties. Contractors charge a premium for this. |
"24-hour response" means different things for different situations. Entrapment is a safety issue. A noisy door is not. Clarify which triggers which.
Cost Escalation Terms
These terms determine whether your contract gets more expensive every year.
| Term | What It Means | Watch Out For |
|---|---|---|
| Annual Escalation | Percentage increase each year. | 3% annual compounds to 49% over 15 years. |
| CPI-Linked | Tied to Consumer Price Index inflation. | CPI varies. Some years 2%, some years 8%. |
| Rate Cap | Maximum annual increase allowed. | A 5% cap is meaningless if escalation is 3%. |
| Evergreen Clause | Auto-renews unless cancelled in narrow window. | Miss the 90-day notice? Locked in another term. |
Evergreen clause traps explains how these automatic renewals catch property managers off guard.
A "reasonable" 3% escalation looks harmless in year one. By year five, you're paying 16% more than you started. By year fifteen, 56% more. The math compounds faster than most property managers realize.
Termination Terms
When you want out, the contract fights back. Know these terms.
| Term | What It Means |
|---|---|
| Early Termination Penalty | Fee to exit before contract end. Industry standard: 50% of remaining contract value. |
| Contract Void | Contract ends with no penalty. Triggered by equipment modernization. |
| Anniversary Cancellation | You can only cancel on specific dates, usually contract anniversaries. |
| 30-Day Notice | Rare. The most flexible cancellation clause. Get it if you can. |
| Liquidated Damages | Pre-agreed penalty amount for breach. Can exceed early termination cost. |
Here's a useful fact most property managers don't know: when equipment is modernized (controller replaced), the existing maintenance contract is voided, not terminated early. Modernization kills the contract without penalty.
Terms That Increase Price
Consultants and procurement departments sometimes add clauses without understanding the cost implications.
| Term | What It Adds |
|---|---|
| Minimum Maintenance Hours | Contractor must spend X hours per month onsite. Drives up price. |
| Performance Bond | Insurance the contractor will finish work. Adds 1-3% to contract value. |
| Strict Response Guarantees | Penalties for late response. Contractors build this cost into premiums. |
| Liquidated Damages | Pre-set penalties. Higher than typical early termination fees. |
Every clause that protects you costs money. That's fine if you know you're paying for it. The mistake is adding clauses without understanding the premium increase.
What to Do Next
Contract terminology is designed to keep you at a disadvantage. The contractor wrote the document. They know what every clause means. Most property managers sign without understanding half of it.
Don't be most property managers.
Related Resources
- Elevator Contract Review Guide - The 5 traps these terms hide
- Full Maintenance vs Oil & Grease Contract - The FM vs Exam decision in depth
- Escalation Clause Hidden Costs - How annual escalation compounds
- Evergreen Clause Tricks - Decoding the auto-renewal language
- Hidden Fees in Elevator Maintenance Contracts - The exclusion terms that cost the most
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Frequently Asked Questions
What is the difference between Full Maintenance and Examination elevator contracts?
Full Maintenance (FM, also called Full Service or Comprehensive) includes parts and labor, meaning repairs are the contractor's problem and cost approximately 2x an Examination contract ($3,500-$9,000 per unit annually). Examination (also called Oil & Grease, Limited, Maintenance Only, or Exam & Lube) covers labor only, with parts billed separately as they fail (baseline $2,000-$4,000 annually). FM works like insurance: something breaks, contractor pays. Exam works like pay-per-repair: something breaks, you pay. The savings on Exam contracts evaporate when parts fail, and parts always fail on aging equipment. The gap between O&G and FM can be less than one major repair event on older equipment. The critical trap: even Full Maintenance contracts exclude certain items (major components like controllers $8K-$12K, door operators $20K-$23K, machines $60K-$80K, and vandalism/abuse always). The phrase parts included is meaningless without a defined parts list.
What is an evergreen clause in an elevator contract and why is it dangerous?
An evergreen clause means the contract auto-renews unless cancelled within a narrow window (typically 90 days before the contract anniversary). If you miss the 90-day notice deadline, you are locked into another full contract term with no exit option except early termination penalties. This combines with annual escalation clauses to create compounding cost increases: a reasonable 3% escalation looks harmless in year one, but by year five you are paying 16% more than you started, and by year fifteen you are paying 56% more. Evergreen clauses catch property managers off guard because the cancellation window is buried in contract fine print and contractors do not remind you when the window opens. The only way out after missing the window is early termination (typically 50% of remaining contract value) or equipment modernization, which voids the contract without penalty because the controller replacement eliminates the equipment the contract covered.
What contract terminology increases my elevator service costs without adding value?
Five clauses increase price without clear value: 1) Minimum Maintenance Hours (contractor must spend X hours per month onsite, whether needed or not; drives up price with no performance gain), 2) Performance Bond (insurance the contractor will finish work; adds 1-3% to contract value for work you already contracted them to do), 3) Strict Response Guarantees (penalties for late response; contractors build the penalty risk premium into your monthly rate, so you pay for the guarantee whether they miss deadlines or not), 4) Liquidated Damages (pre-set penalties that can exceed typical early termination fees; sounds protective but increases base pricing), and 5) CPI-Linked Escalation without a Rate Cap (ties increases to Consumer Price Index, which varied from 2% to 8% in recent years; unlimited upside for the contractor). Every clause that protects you costs money. The mistake is adding consultant-recommended clauses without understanding the premium increase. Contract terminology is designed to keep property managers at a disadvantage because the contractor wrote the document and knows what every clause means.