The ongoing inspection and maintenance of drains, septic systems, grease traps and plumbing fixtures can provide contractors with a worthwhile supplemental income. Preventive maintenance contracts help to build strong customer relationships and provide ongoing work for crews during the slow times of the year. Additionally, regularly scheduled inspections reveal problems that need correcting — leading to more work for you and fewer emergency calls from unhappy customers.

If you’re ready to add maintenance contracts to your list of offerings, you should first become familiar with the legalities of these arrangements.

“Anytime you have a contract, it’s always an exchange of promises,” says Devin Shanley, Wisconsin attorney. “If you draft this as a standard contract, you want to be aware of what you’re promising to do for the client and what they’re going to be promising for you.”

Bob Johnson, owner of Effluential Technologies in Tiverton, Rhode Island, agrees with this advice.

“Be very specific about what’s going to be done,” Johnson says. Effluential Technologies uses maintenance contracts for different systems in southeastern New England, including conventional septic systems, pump systems and advanced treatment facilities.

“Some contracts are a regulatory requirement, and some are for property owner peace of mind,” Johnson says. His company sustains maintenance agreements with residential, commercial and municipal clients.

Crystal clear

Always use clear and understandable terms. “On the contract, make sure it’s laid out so everybody knows what their responsibilities are so you don’t get, ‘I thought you were doing this,’” he says. For example, the property owner is responsible for contacting the contractor if any problems arise. “It could be alarms. It could be odors. It could be backups.”

Likewise, the contractor is responsible for providing the services outlined in the contract within the specified time frame. Effluential Technologies’ contracts include an inspection, routine services and full cleaning of the system, with the exception of pumping.

“In the contract, we put that septic pumping is done by others. We have a list of vendors we work with, and it’s up to the property owner to make a decision about who they want to work with,” Johnson says.

To reduce the upfront expense when drafting its initial maintenance contracts, Effluential Technologies started with a manufacturer’s template.

Shanley says a template or something similar can be a good starting point, but “Be aware of what you’re trying to protect yourself from and how things can go wrong.”

“The best option is to contact a lawyer — if possible, someone who’s had experience drafting service agreements like this or someone in the construction law field. They can anticipate the issues that you might not even see and have provisions and contingencies already lined up,” he says.

The template made it easy for Effluential Technologies to create cookie-cutter contracts for similar systems. An attorney reviewed the legal language before the agreements were presented to clients.

“On all of our contracts, the general knowledge is the same, other than what we’re going to do or not do,” Johnson says. Spell out very specifically what will be done, even if it seems obvious. One system may have two filters that will be cleaned, for example, while others have only one. 

Shanley says every contract should answer important questions: How and when are you going to get paid? How will you notify the client when services are completed? How does the client communicate with you?

Additionally, every contract should include a certain amount of boilerplate language — the legal terminology that often largely goes unnoticed. Some of this terminology deals with important issues if a conflict arises. To resolve a conflict, do you go to a court of law or some sort of arbitration? What laws are going to be used? Where will the disagreement be resolved?

“It’s probably going to be the state you’re residing in, but maybe if you’re working in two or three different states, that might be an issue,” Shanley says. A contractor might want to specify a local jurisdiction to avoid traveling far from home to reach a settlement.

The length of time a contract covers is something else to consider. Shanley recommends checking with the state’s consumer protection agency or secretary of state for any applicable government regulations. Secondly, he recommends a contract length that makes the best business sense. It’s time to draft a fresh contract when terms or prices change.

“If you’re going to have the contract automatically renew, you need to have the provision built in,” he says.

Mutual agreement

Pipe Masters, a plumbing and piping contractor in Honolulu, prefers to negotiate three- to five-year agreements.

“Not everybody likes to get into a multiyear contract at first, but we educate our customers on the value in doing so,” says Jason Koran, owner of Pipe Masters. The company’s contracts describe the routine maintenance to be performed and offer clients a discount on subsequent cleaning and repair.

Pipe Masters uses individualized maintenance contracts for commercial and municipal customers based on the system covered. The company has select contracts for sewer drains, storm drains, backflow preventers, grease drains at shopping centers and the like. For example, the company’s maintenance contract for drains includes drain cleaning, inspection and leak detection with a thermal camera.

By having a team of attorneys on retainer, Pipe Masters can access legal advice when questions pop up. Generally, Koran does his own contract negotiations and review.

“It helps that I know what I’m looking at nowadays,” he says. “I’ve been doing it long enough that I can easily spot the things I won’t agree to, and I just line out anything like that. If a contract is created by the customer and presented to me, it’s never something I feel forced to sign. It’s just a negotiation. They put on paper what they’re preferring. I tell them what I’m not willing to agree to.”

In his experience, municipal and commercial customers prefer to draw up their own contracts.

“Not much responsibility is on us to create a final version,” Koran says.

However, the company takes a different approach with residential customers who sign membership agreements for plumbing system maintenance. Beginning in July 2019, Pipe Masters started selling memberships to residential customers, offering an annual plumbing inspection and 10% discount on services within a one-year time frame.

“The initial walk-through and aboveground inspection are done as a courtesy. If we think something looks bad enough above ground that we need to understand what’s going on belowground, those are chargeable services,” Koran explains.

Lay the groundwork

He says it took several years for Pipe Masters to develop a smooth transition into residential memberships.

“Going hand in hand with more memberships, you have a lot of follow-up before a job is scheduled and quality control afterward.”

Pipe Masters put three things in place before marketing residential memberships:

1. Personnel: Pipe Masters doubled its office staff from two to four employees.
2. Sales training: Plumbers learned how to present memberships to customers on digital tablets. Using images, they show customers the cost of services and explain how memberships can save them money.
3. Software: Pipe Masters invested in a program created for HVAC and plumbing companies.

“Each is a big-ticket item, and there are no shortcuts,” Koran says. “If you don’t have your systems in place, don’t rush to have contracts.”

Additionally, contractors who are ready to introduce contracts accept a new scope of legal obligations. These obligations need to be clearly outlined for both the contractor and the client. Both parties need to agree on the terms of service, payment, how to communicate and how to resolve conflict — two parties, two promises.