Legal Question in Real Estate Law in California
I am on the board of an association with over 400 condos. Recently, I requested a copy of the management contract because we are unhappy with our current company. The contract has not been renewed since 2005. We have been month to month. In the contract, it states that there shall be no ammendments unless both parties agree and sign an ammendment. In our contract, the management fee is $5500 per month and postage, envelopes, copies, etc for all correspondence are included in this fee. We are being charged $6900 per month and $1500 each month for postage on the monthly ledger.
I emailed our management company and asked if there are any signed ammendments. Our management company stated that it was agreed to in a board meeting (around 3 or 4 years ago) that the fee would increase and it was put in the minutes. Would this be considered an official ammendment? It seems strange that it wasn't done formally.
Is it unreasonable for me to assume that the mgmt company should have included all ammendments when they provided me with a copy of the original contract? Or at least a copy of the minutes showing the rate increase?
I'm uneasy about the management company thinking the minutes are as sufficient as a signed ammendment. I'm still waiting for a copy of the minutes. Any feedback or suggestions?
2 Answers from Attorneys
If parties actually perform in accordance of an informal modification of a contract that requires formal written modification, the parties 99.9% of the time would be found to have mutually waived the written modification requirement. Parties to a contract are always allowed to waive any provisions they choose to, as long as the party who benefits from the term, or both if it is mutual term such as this, agree to the waiver. As for what they should have provided in response to your request, that is not a legal question.
In addition to the waiver theory, courts also "rescue" expired contracts by finding a "contract implied in fact" from the on-going performance of the parties, and the increased size of the payments would be treated as one of the implied contract's terms. So, I think an attempt to recollect any part of the recent payments via a lawsuit would likely fail.
It isn't unusual for parties to a contract to sign it and forget it. In this day of rapid creation and development of businesses, where a corporation can be worth $10 billion or more within five years of its formation, contracts are written (or plagarized) and signed without being read, and once signed, performace of sorts begins, but often in disregard of requirements of the contract, which neither party wrote, read, nor understands.
If the current contract hasn't drained the treasury too badly, I think you should focus on negotiating a new contract, then setting up procedures within your organization for monitoring each party's performance under the contract, including ticklers of some kind so the future expiration date won't be forgotten, and board action calling for a written amendment won't be overlooked.
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