Understanding Indemnification Clauses in Management Agreements

Most agreements for providing a homeowners’ association with management services are standard form documents that have been prepared by the management company. As such, they typically contain language that has been drafted in a manner that is most protective of the manager and not the homeowners’ association. These agreements are then presented to an association’s board of directors for approval and signing. In the typical scenario, one or two members of the association’s board review the document without the assistance of legal counsel, and then present it to the full board of directors for discussion and approval in accordance with their recommendations. In reviewing the proposed agreement, the provisions that are most frequently scrutinized are those that relate to the scope of the services being provided and the cost of those services.