Have you ever signed up for a service that you thought was a one-time expense only to find a recurring monthly charge on your credit card statement afterward? There’s a similar tactic built into elevator maintenance contracts called an “elevator contract auto-renewal clause”. This clause will automatically lock you into longer-term, sometimes for as long as 5-10 years!
Elevator contracts can be long and tedious to read through, making this clause easy to miss. Our guide will help you understand the elevator contract auto-renewal clause and how to avoid it.
Here’s what you need to know:
WHAT IS AN ELEVATOR CONTRACT AUTO-RENEWAL CLAUSE?
An auto-renewal clause is a statement in your contract that allows the elevator company to automatically renew your contract if you do not cancel within the given amount of time.
Here’s an online review to help illustrate the issue.
HOW TO SPOT IT?
This clause is typically found under ‘TERMS’ in your maintenance contract. Each requirement can vary in timeframe and method of notice. You will need to review the language carefully.
Here’s an example found through public record:
This agreement is effective for five (5) years starting on 01/02/2019. This agreement will renew automatically for successive five (5) year periods, unless either party issues written notice, sent by certified mail, at least 90 days and no more than 120 days before the end of the initial five (5) year period or any subsequent five (5) year renewal period.
We’ll breakdown the details in the next section.
WHAT’S THE DOWNSIDE?
What’s the biggest issue with an auto-renewal clause? It’s the contract renewing sooner than you think. Most people send notice 30 days before the contract ends. Many times that is too late.
In our example (above), cancellation is required 90 days before the contract end date. In fact, this contract only allows cancellation in a 30-day window. Considering the contract is five years, it’s a small window of opportunity to cancel.
If you overlook your window, you could get locked into a longer-term with a company that you aren’t satisfied with. You could also miss out on hiring a competitor that offers a lower price.
Another flaw is that many contracts require a cancellation letter by certified mail. Most people use email and rarely place a letter in the mailbox. This oversight could result in a missed cancellation.
See the online review above. If your termination is late, but still decide to end the contract, you risk being hit with cancellation fees.
IS AN ELEVATOR CONTRACT AUTO-RENEWAL CLAUSE LEGAL?
As a result of customer complaints, many states created codes to protect customers. Several states require companies to disclose their policies “clearly and conspicuously”. However, there are restrictions.
You can check your state’s regulation with Faegre Baker Daniel’s Free Guide.
WHY DO ELEVATOR COMPANIES ADD THIS CLAUSE?
At this point, you may be wondering why companies have this, especially given the frustration it causes their customers. One reason is convenience. The auto-renewal allows the company/customer relationship to move forward without renegotiating the terms. This clause would also promote consistent billing and help avoid a gap in service or a missed inspection.
I MISSED MY WINDOW, WHAT CAN I DO?
First, send in your cancellation as soon as possible via written letter and email. Stay on top of the communication and make sure you get a response. If the company replies that you are “too late”, you can review your state’s contract law.
HOW CAN I AVOID MISSING MY NOTIFICATION WINDOW?
Contract management is a necessity to reduce your risk of an unwanted auto-renewal. You can set a calendar reminder, or you can use ElevatorLab’s Elevator Contract Tracker. This free tool will review, track, and notify you by email (and regular mail) well before your contract renewal deadline.
Perhaps the best tip we can offer is to write a better contract. Feel free to ask for our help.
Have you fallen victim to a contract’s auto-renewal clause? Comment below.