Top 3 Legal Mistakes Boards Make with Contractors
Introduction
Hiring contractors is a reality for every co-op, condo, or HOA board. Whether it is a major capital project or routine maintenance, the way contracts are managed has significant financial and legal implications. Unfortunately, many boards unknowingly make mistakes that expose their community to unnecessary risk. At Jonasvar, we believe proper procurement is about protecting the association first, not just finding the lowest bid.
The Most Common Legal Mistakes
The three most common mistakes we see are:
Incomplete or weak contracts that fail to protect the association or clarify responsibilities
Insurance that is outdated or missing proper endorsements such as liability or workers compensation coverage naming the association as an additional insured
Unclear scopes of work that do not address deliverables, timelines, change orders, or remedies in the event of a breach, often compounded by the lack of attorney review
Of these, the most damaging is insurance. If a contractor’s insurance is not current or properly endorsed, the association may be left liable for accidents, damages, or claims.
Jonasvar’s Safeguards
Jonasvar has developed a multi-step process for procuring contractors that protects boards at every stage. We collect licenses and insurance certificates with the proper endorsements, including liability, workers compensation, and umbrella coverage. We verify their status with the appropriate authorities and confirm with both brokers and underwriters that policies are current and effective.
We also ensure that scopes of work are robust, detailed, and unambiguous. With support from professionals such as architects or engineers, we clearly define project deliverables, timelines, remedies if performance falls short, and procedures for handling change orders. This prevents disputes and eliminates confusion before work begins.
Oversight During Projects
Our oversight continues throughout the life of the project. We use a graduated payout system tied to the completion of specific milestones. Contractors are paid only when work is completed and verified. If disputes arise, we fall back on the remedies outlined in the contract, typically arbitration or legal resolution if necessary.
Where Others Fall Short
Many boards or managers take a “cheapest bid wins” approach, overlooking critical legal protections. This short-term mindset often results in higher costs later when work is incomplete, delayed, or challenged legally. What appears to be the lowest bid can quickly become the most expensive mistake. Jonasvar balances cost with risk, ensuring contracts provide long-term value, not just immediate savings.
Real-World Value
This process has saved our clients tens of thousands of dollars in legal and financial harm. By procuring contracts that clearly define scope, payment schedules, and remedies for breach, we protect boards from the most common pitfalls. In one case, a board avoided potential litigation simply because Jonasvar required up-to-date insurance endorsements and a milestone-based payout schedule. Strong contracts not only prevent financial loss, they help avoid costly lawsuits altogether.
The Jonasvar Difference
Our process is designed to remove ambiguity and ensure contractors deliver what they promise. We do not just manage contracts — we protect communities. By combining detailed procurement steps with professional oversight, Jonasvar minimizes risk and maximizes value for boards and residents alike.
The Bottom Line
Contractor mistakes can cost communities time, money, and trust. Strong contracts, proper insurance, attorney review, and clear scopes of work are the foundation of responsible management.
Let Us Help
At Jonasvar Inc., we manage your property like it’s our own by safeguarding contracts, verifying coverage, and ensuring every project protects your community’s interests.
Wondering if your community’s contracts are legally sound?