What contracts should a new director review?

Start with the big contracts

You do not need to read every service agreement the association has ever signed. Start with the management contract, since it governs who does the day-to-day work and how much authority they have. Then add whatever contracts carry the largest dollar amount or the biggest risk if something goes wrong: landscaping, pool or spa service, elevator maintenance, or any contractor currently mid-project. Ask the property manager or treasurer for the current, signed copy of each, not a draft or an old renewal letter.

What to check in each one

For every contract, look at the same five things: the term and termination provisions (how long it runs, how much notice either side must give to end it, and whether it auto-renews), the scope of services (what the vendor is actually obligated to do), fee escalation (whether and how the price can increase), indemnification and insurance requirements (indemnification is the clause about who covers a loss if something goes wrong), and the dispute resolution clause (how a disagreement gets resolved if it comes to that).

Do not rely on your own read of the legal language, especially indemnification and liability clauses. Have the association's attorney review any contract before the board acts on an interpretation of it.

Why this is part of your job, not busywork

Reviewing contracts is how a director satisfies the fiduciary duty of care, the obligation to exercise the care an ordinarily prudent person would use in the same position. Florida's nonprofit corporation statute states this duty explicitly for Florida HOAs; most states impose a similarly worded duty under their own nonprofit corporation law, and you should confirm the exact standard that applies to your association.

A board that investigates before it acts also gets the law's protection if a decision is later second-guessed.

"where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development's common areas, courts should defer to the board's authority and presumed expertise."

Source: Lamden v. La Jolla Shores Clubdominium Homeowners Assn., 21 Cal.4th 249 (1999), Supreme Court of California

This is a California Supreme Court holding; other states apply their own version of this rule to community associations, and the exact contours differ by jurisdiction. The takeaway that travels everywhere: read the contract, document what you found and why the board acted, and the decision is defensible even if an owner later disagrees with it.