Property Manager's Guide to Elevator Contracts

The Property Manager's Guide to Elevator Maintenance Contracts

Your elevator contract is probably the most expensive service agreement in your building that you've never fully read. This guide breaks it down.

The Three Contract Types

Every elevator service contract falls into one of three categories. Understanding the difference is the foundation of managing your costs.

Which one is right for your building? It depends on equipment age and reliability. Newer equipment (under 10 years) with low callback history can save significantly on O&G. Older equipment with frequent issues usually costs less on FM because repairs are included.

What "Full Maintenance" Actually Means

Here's the deal: most FM contracts aren't truly full maintenance. Read the exclusions section. Common items excluded from so-called "full maintenance" contracts:

• Controllers -- The most expensive component ($50,000-$70,000+). Many FM contracts exclude controller replacement.
• Hydraulic cylinders -- $15,000-$30,000+ to replace. Often excluded.
• Cab interiors -- Cosmetic damage, flooring, lighting panels. Almost always excluded.
• Vandalism and misuse -- Standard exclusion, but the definition of "misuse" can be broad.
• Code-required upgrades -- If your state adopts a new code version, bringing your elevator into compliance is usually not covered.

Ask your vendor for a complete exclusions list in writing. If they won't provide one, that tells you everything you need to know.

The Numbers That Matter

When comparing contracts or evaluating your current agreement, focus on these metrics:

• Monthly base cost per unit -- FM: $400-$1,300/month. O&G: $200-$650/month. These ranges vary by equipment type (hydraulic vs. traction vs. MRL) and market.
• Annual escalation rate -- Industry standard is 3-5%. Above 5% compounds quickly. A 7% escalation doubles your cost in roughly 10 years.
• Callback response time -- Entrapments: 30 minutes to 1 hour. Non-emergency: 2-4 hours. Get these in writing with consequences for non-compliance.
• Parts markup -- Ask what the markup percentage is. Some vendors mark up parts 100-200% with no transparency. You should be able to audit parts costs.
• Early termination penalty -- Know this number before signing. Some contracts charge 50%+ of the remaining contract value.

5 Things to Negotiate

Every elevator contract is negotiable. These are the five highest-impact items to push on:

1. Cancellation window -- Push for 90+ days notice. Shorter windows don't give you enough time to get competing bids.
2. Response time SLA (Service Level Agreement) -- Get specific times in writing with credits or penalties for missed targets.
3. Escalation cap -- Lock in a maximum annual increase (3-4% is reasonable). Reject "market adjustment" clauses that allow unlimited increases.
4. Performance reporting -- Require monthly or quarterly reports showing callbacks, response times, and maintenance completed. No data means no accountability.
5. Exclusions reduction -- Push to include more components, especially door operators (the #1 source of callbacks). Every exclusion is a potential surprise bill.

Red Flags That Should Stop You

Walk away or renegotiate if you see any of these:

• Auto-renewal with less than 90 days notice required
• No defined callback response times
• Annual escalation above 5% with no cap
• Exclusions that gut the "full maintenance" promise
• No performance reporting or maintenance logs
• Broad indemnification clauses that shift the vendor's liability to you
• Restrictions on hiring other vendors for second opinions