Property management companies often enter into agreements with vendors for services to the properties they manage. Also, property management companies enter into property management agreements with property owners to manage their rental properties. A common provision in those service contracts is an automatic renewal provision, whereby the agreement will automatically renew at the end of the annual period. Here’s what property management companies should know about the automatic renewal provision.
In Florida, if there is a service contract that has an automatic renewal provision, the service provider must comply with certain procedures and the agreement must contain certain language in the contract. F.S. 501.165 states,
(2) SERVICE CONTRACTS WITH AUTOMATIC RENEWAL PROVISIONS.—
(a) A seller that sells, leases, or offers to sell or lease any service to a consumer pursuant to a service contract that has an automatic renewal provision, unless the consumer cancels that contract, shall disclose the automatic renewal provision clearly and conspicuously in the contract or contract offer.
(b) A seller that sells or offers to sell any service to a consumer pursuant to a service contract the term of which is a specified period of 12 months or more and that automatically renews for a specified period of more than 1 month, unless the consumer cancels the contract, shall provide the consumer with written or electronic notification of the automatic renewal provision. Notification shall be provided to the consumer no less than 30 days or no more than 60 days before the cancellation deadline pursuant to the automatic renewal provision. Such notification shall disclose clearly and conspicuously:
1. That unless the consumer cancels the contract the contract will automatically renew.
2. Methods by which the consumer may obtain details of the automatic renewal provision and cancellation procedure, whether by contacting the seller at a specified telephone number or address, by referring to the contract, or by any other method.
To summarize this statute provision, a vendor or property management company that has a service contract that automatically renews for 12 months or more must:
- -disclose the automatic provision clearly and conspicuous in the contract, and
- -provide notice to the consumer of the automatic renewal provision no less but not more than 60 days prior to the cancellation deadline pursuant to the automatic renewal provision, and the notice must state:
- unless the consumer cancels the contract, the contract will automatically renew, and
- the method by which the consumer may obtain the details of the automatic renewal provision and the cancellation procedure.
If the vendor or property management company does not comply with the statutory provision, the service contract does not automatically renew, and the consumer may terminate the service contract after the term’s natural expiration. There are exceptions to this requirement, however, found in . F.S. 501.165(2)(c), but as always, it is best not to have to rely on exceptions to a rule, because it normally results in litigated issues.
It happens that vendors do not comply with this statutory provision, so if the property management company wants to terminate services of the vendor, the vendor’s failure to comply with this statutory provision would help the property management company to terminate services without having to wait until the end of the automatic renewal period.
Of course, if a property management company wants an automatic renewal provision in their property management agreement, they must comply with this statutory provision to get the benefit of an automatic renewal.
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