Who’s in Charge?

The writer discusses the need for contractors to obtain the proper authority when working on a condominium project.

By Daniel Wasserstein

Is your firm providing services to a condominium, be it to the common elements or to individual units? If so, you need to know that the law in most states requires such contracts be in writing. An oral agreement will not suffice.

Additionally, does the individual signing your contract have proper authority to enter into that agreement with your firm, whether it be on behalf of the association or on behalf of a unit owner?

Be aware that there are different types of authority recognized by the law and each can potentially impact on the legal strength and validity of a contractor’s agreement with a representative and ability to get paid. As a contractor, you ideally want the party signing your agreement to have actual authority, meaning he or she has both express and implied authority to engage you.

Having “express authority” means that the individual has been given the power to enter into all types of legally binding contracts on behalf of the association, or a unit owner, including the very type of the agreement that you have entered into. Express authority is the most legally enforceable form of authority.

On the other hand, “implied authority” is where an individual representing an entity or someone other than him or herself enters into a contract which is made legally binding simply by virtue of that person’s position, even though the individual may not have been actually authorized to enter into the particular transaction.

This could easily occur, as there are often many manager types on site, especially at condominiums under construction, many of whom are only too ready and willing to sign contracts even though they lack the express authority to do so. These individuals can include property managers, general contractors and engineers, who by virtue of the position they hold, may believe they can bind the association or a unit owner, even though they lack express authority to do so.

The contractor holding one of these contracts would defend its validity by contending that the signer had implied authority to contract on behalf of the third party by virtue of his or her position at the property, but if the agreement is contested, this could be an uphill battle.

Apparent authority can be equally difficult to prove and enforce. This occurs when an individual has not been given any actual authority to contract at all, but who, because of his or her affiliation with another, “appears” to have authority. Where a former board member tells a contractor that he has authority to sign contracts on behalf of the association and does so in front of a current board member who says nothing to dissuade the contractor from believing this to be true, then a contractor could easily believe the former member has apparent authority.

The representation made and the inaction of the current board member could support the contractor’s belief that he had a contract, but as this example points out, this type of authority is potentially problematic.

For work within individual units, it is more difficult to argue that anyone other than the unit owner has any degree of authority, especially given the legal requirement in many jurisdictions that work performed within individual units must be expressly authorized by the individual unit owner.

In such a scenario, a contractor can subsequently lien the property for any unpaid work. As a contractor, if you are providing services within an individual unit, you want to ensure that your contract was signed by the unit owner, unless someone can show you written documentation proving that they are indeed an agent of the owner acting with actual authority.

Contractors would do well to be sure that those with whom they deal are legally authorized to engage them. A few questions, a little research of available Secretary of State records, and a good measure of caution will go far in protecting your rights if you take on work in a condominium.

Daniel Wasserstein is an associate with The Barthet Firm, a Florida law firm. He can be reached at mail@barthet.com