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Bulk Telecommunications Contracts

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This Article aims to highlight issues the association should consider when looking to change or enter into a new bulk agreement.

Bulk Agreements and the Law

Before discussing specific issues with Bulk Telecommunications Agreements, it is worth noting that the various community association statutes provide for the authority of associations to enter into bulk communication agreements. Specifically, Section 718.115(1)(d), Florida Statutes, specifically authorizes a Condominium Association to enter into a bulk contract for “communication services,” which would include video, internet and telephone service. Further, the Condominium Act goes on to provide the cost of such bulk contract is a proper common expense of the association. Chapter 720 contains similar language in Section 720.309(2), Florida Statutes, and the Cooperative Act, Chapter 719, contains similar language in Section 719.107(2)(b), Florida Statutes. In addition to the statutory provisions concerning the association’s authority to enter into bulk communication agreements, the association should also review its governing documents to determine if they address the issue.

The Devil You Know

Once the term for a bulk communications agreement ends, many associations consider terminating the agreement to move to a new provider. There are several reasons why an association may wish to do so, such as unsatisfactory service with the current provider, lower costs, or equipment/system upgrades. However, before an association makes the decision to leave its current provider, there are factors that should be considered.

For example, will the new provider be required to install new equipment at the property, such as new wring in the building and will such installation be disruptive. Additionally, the association should also consider its resident population and whether changing providers will be disruptive to their use of the service. Further, if a change in providers is to be made, the association would need to determine the timing of getting any new provider’s system activated and ensure that there will not be a gap in coverage between the old provider and the new provider.  While there may be reasons to change providers, the association should weigh the decision to leave its current provider carefully, given that changing systems can be disruptive and time-consuming.

Latest and Greatest

Assuming that the association has decided to change providers or is activating a bulk communication service provider for the first time, the first and most important issue is to carefully negotiate the service agreement between the association and the new provider. The agreement should clearly outline the level of service to be provided, the cost for the service, and the term of the agreement. Further, the agreement should also address installation issues, including timing for completing the installation and how the property will be protected from damage related to the work. If the new service provider is to do significant construction work at the property, the association should ensure that the agreement protects the association from any liens that could be recorded against the property in the event the provider fails to pay its subcontractors or suppliers. Additionally, the agreement should also specify what end-user equipment will be provided, how that equipment will be installed and whether training will be provided by the service provider to the residents to ensure that they are able to use the equipment. All of these and many other terms should be specifically negotiated with the provider prior to executing the agreement.

Many of these agreements have terms for up to ten years or more. Therefore, any association looking at entering into such an agreement should carefully consider the technological needs of its community and whether locking the association and its residents into a long-term agreement best serves the interests of the community. For example, with the growing rise of streaming services, there is some question as to whether traditional video, “cable television” service will make much sense for the community in five or ten years’ time.

These are issues that should be discussed with your community association attorney before proceeding either with termination of an existing contract or execution of a new contract.

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