Approving and Signing Association Contracts
Associations act through their boards of directors. This means that, for an association to take any action, the board of directors must collectively vote to approve that action. As it relates to contracts, boards of directors should vote to approve contracts and document all votes approving contracts in the association’s minutes. The minutes should read something to the following effect: “Motion made by Jim Smith to approve the contract dated July 31, 2023, with XYZ Landscaping. The motion was seconded. The motion carried.”
Once a contract is approved, someone must sign it on the association’s behalf. The board can vote to authorize anyone it wants to sign a contract on the association’s behalf. Like all other votes, a vote authorizing someone to sign a contract on the association’s behalf should be documented in the minutes.
Often, property managers are empowered to sign contracts on the association’s behalf under the management contract between the association and the management company. Even if that is the case with your association, the best practice is to vote to authorize the property manager to sign each contract on the association’s behalf and document each vote in the minutes.
Increasingly, board members, usually those also serving as officers, are signing association contracts. Many worry about whether they can be individually liable for the association’s obligations under the contract, if they are the one signing it on the association’s behalf. Generally, officers signing contracts on an association’s behalf are not individually liable if the officers sign the contracts in their corporate capacities. Board members and officers signing contracts on the association’s behalf should do the following to make it clear that they are signing the contracts in their capacities as a board member or officer: (1) sign your name; (2) write your corporate designation after your signature; and (3) below your signature, write “on behalf of” and your association’s name. For example, if your name is Jim Smith and you are signing a contract as the President of XYZ Condominium Association, you should sign association contracts as follows:
Jim Smith, President
On Behalf of XYZ Condominium Association
If you have any specific questions about signing contracts for your association, contact Williams & Strohm, LLC at (614) 228-0207.
Nicholas R. Barnes
Mr. Barnes has an extensive background in civil litigation with experience in other areas of law, including real estate, community associations, and debtors’/creditors’ rights. He is a member of the Ohio State and Columbus Bar Associations and is admitted to practice law in all Ohio courts, as well as the United State District Courts for the Northern and Southern Districts of Ohio Read Nicholas R. Barnes's full bio.