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Contract Red Flags Checklist
Review your elevator service contract against these 15 items. Any "yes" answer is a red flag that needs attention before signing or renewing.
Terms & Conditions
Does the contract auto-renew without written notice?
Look for evergreen clauses that lock you in unless you cancel 60-120 days before expiration. Most property managers miss this window.
Is the cancellation window shorter than 90 days?
Anything under 90 days is tight. You need time to get competing bids, review proposals, and negotiate. 30-day windows are a trap.
Are there early termination penalties?
Some contracts charge 50% or more of the remaining contract value if you exit early. Know this number before you sign.
Coverage & Exclusions
Does "full maintenance" actually exclude major components?
Read the exclusions list. Many FM contracts exclude controllers, hydraulic cylinders, cab interiors, and door equipment. That's not full maintenance.
Is there a parts markup clause you can't audit?
Some contracts allow 100-200% markup on parts with no transparency. You should be able to see actual parts costs.
Are callbacks billed separately on a "full maintenance" contract?
If you're paying for full maintenance but callbacks are T&M (time and materials), that's not full maintenance. Period.
Pricing & Escalation
Is the annual price escalation above 5%?
Industry standard is 3-5% annually. Anything higher compounds fast. A 7% escalation doubles your cost in 10 years.
Can the vendor raise prices mid-contract?
Some contracts allow "market adjustment" clauses that let the vendor increase pricing at any time. This should be fixed for the term.
Is overtime billed at 1.5x or higher with no cap?
Emergency callbacks after hours add up fast. Know the OT rate and whether there's a cap per incident.
Service Standards
Are callback response times missing or vague?
If the contract doesn't specify response time (e.g., "2 hours for entrapment, 4 hours for non-emergency"), there's no accountability.
Is there no maintenance schedule or visit frequency defined?
You should know exactly how many times per year the tech visits and what gets checked. "As needed" is not a schedule.
Are performance metrics or reporting absent?
No monthly or quarterly reports means you have no way to track whether the vendor is actually maintaining your equipment.
Legal & Liability
Does the vendor's liability cap seem low?
A $50K liability cap on a building with 4 elevators and 200 tenants is inadequate. This should match your risk exposure.
Is there a broad indemnification clause favoring the vendor?
Watch for language that makes you liable for the vendor's negligence. Indemnification should be mutual.
Does the contract restrict your right to hire other vendors?
Non-compete or exclusivity clauses prevent you from getting second opinions or emergency service from another company.
Scoring guide: 0-2 flags = solid contract. 3-5 flags = negotiate before signing. 6+ flags = get competing bids immediately. For a detailed analysis with negotiation talking points, try the Contract Red Flags Analyzer.
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