Laundry rooms can be a value-add amenity, but only if the vendor is living up to its end of the bargain. But what if it's not? You may be dealing with faulty machines that repeatedly break down or go days without being repaired (or both)—and stuck in a contract that typically lasts eight to 10 years. 

Having shoddy equipment and service might seem like easy grounds for ending the relationship. But laundry vendor contracts are notoriously vague and often contain clauses that make termination even harder.

"The starting point is to check the contract," says Dean M. Roberts, a real estate attorney at Norris McLaughlin. 

"If it's a one-sided deal that the board signed, sometimes we have to break it to them that their rights are few and far between," says real estate attorney Jeff Reich, a partner at Schwartz Sladkus Reich Greenberg Atlas.

On the other hand, a well-executed contract that was reviewed by your building's lawyer will be a blueprint with baked-in exit strategies. 

Either way, your options are outlined below.

Is the contract a license or a lease? 

If it's a "license to use," which only grants the company the right to run its operation on the premises, you are in a much better position than if the contract is a lease agreement.

That's because, according to Reich, it is much easier to evict a licensee than a tenant—vendors are afforded the same rights as renters under New York's landlord-tenant laws. It will also be easier to actually have them removed upon termination of the license. "You don't want to get into a situation where you're afraid to remove the equipment or of being sued if you do," he says.

Better still is if the license can be revoked "at will" by the board, meaning without having to show any cause, though most companies will balk at that one-sided language. 

And even if both parties agree to call it a license, courts will look for terms that back that arrangement up—namely that the building retains 100 percent control over the premises (unlike in a lease where the tenant takes possession) and furnishes the necessary water, utilities, and other services to operate the machines. 

Is there an explicit escape clause? 

This is another best-case scenario where a clause states that if X, Y, or Z happens, the board can terminate the contract. 

Roberts says the clause is ideally based on very high-performance standards—no machines cannot be out of service for more than a specified number of days and all repairs must be initiated within 24 hours of notification.

Then it becomes a matter of documenting the failings with a detailed track record (more on that below).

Know, too, that vendors who agree to such a provision will often negotiate a time in which they can cure the problem, such as 90 days. They also say companies will usually meet that requirement, taking the teeth out of the provision unless it's "without cause," which Roberts says most companies would never agree to.

Are there default provisions? 

Barring an escape clause, Roberts says you have to find a breach issue—and provide documentation of the breach.

Specifically, you need to look at the default provisions in the lease, and a good contract will clearly delineate what constitutes a default.

"First, we have to identify the relevant provisions and match up the situation with one of those points of termination," Reich says.  

For example, Reich typically stipulates that the company must repair or commence to repair equipment within nine hours, seven days a week; provide seven days per week service on the "smart card" value transfer machine; and replace equipment that requires servicing three or more times during a consecutive 30-day period within 10 days of notice. And here's the hammer: "In the event that licensee shall fail to cure any default within fifteen (15) days of written notice, licensor may terminate this license."

In the event of default as proscribed in the contract, Reich will send notice to the vendor in the manner in which the agreement provides, and if the issue is not cured within the stated time, he will seek to evict the company in the appropriate avenue—landlord-tenant court if it's a lease or civil court if it's a license. 

The key is having good records that back up your claims. Per Roberts, "you can't just say that shareholders are complaining all the time." Instead, you need detailed evidence along the lines of "The big machine was out of service for three days, from Sunday at 10 am to Wednesday at 6 pm." 

Scott Greenspun, an attorney at Braverman Greenspun, a NYC real estate firm specializing in cooperative and condominium law, also emphasizes the need to make sure everything is well documented (service records, call logs, etc.) and will either sway the vendor against fighting termination or convince it to step up. 

If your contract doesn't have default provisions, Roberts says it will be hard to show a breach. "You want very clear language about what the service should look like," he says. "Stating 'the vendor will service the machines' without a time stamp doesn't stipulate what constitutes a breach." You can still argue the case—and if you have a lengthy paper trail that shows a spotty service record, you might be able to persuade the vendor to agree to end the contract rather than have a court decide the matter. 

What if the vendor has a right of first refusal? 

This grants the vendor the one-sided ability to match another offer at the end of the term, meaning you might be stuck with them forever. 

Most attorneys strike this clause out, declaring it a non-starter. But if your contract has one, Greenspun says to do some due diligence to see if the right is enforceable—some are drafted in a way that they would not be. 

Otherwise, Roberts says you can try and negotiate your way out of it—especially if the relationship has gone south due to their poor performance. Or you can find another company that can give you a deal that would be unpalatable to the current vendor—say, the new vendor has state-of-the-art equipment or offers a service plan that is not feasible. 

Just be aware that companies have consolidated in NYC, leaving a handful of big players. So you want to make sure you are getting a bid from a competitor rather than an affiliate. 

What if you see a "right of first offer?" Reich explains that this clause only means the vendor can come to you with their best and final—but you are not obligated to accept it. If that describes your situation, you are free and clear. 

What about automatic renewal clauses? 

Here's another so-called evergreen provision, aka automatic extension, where Roberts sees the most problems occur. 

It essentially requires the board to affirmatively terminate the contract within 90 or 120 days of the end of the term or it will automatically renew for another seven to 10 years. Or the clause might call for automatic renewal to kick in if the company installs any new equipment during the last year of the term. 

Reich says these clauses are often hidden away in others that do not relate to the issue, so you'll need to look carefully. 

If you find such language, and the circumstances in the provisions apply to your situation, you may have to plead your case in court.

"We've argued that there's a general obligation law statute that applies and makes those provisions ineffective, but it's an argument because the language of the statute isn't perfectly clear with respect to this type of service," he says. 

Can you mediate instead of going to court?

Greenspun says there should a clear dispute resolution policy in the contract that provides for litigation or mediation, and that the vendor will cover attorney fees if the building prevails. So once again, the terms may dictate your path of recourse. 

Although laundry vendors haven't been open to mediating in the past, Roberts is seeing more contracts allow for this because "it's a useful tool if you prefer to go to a forum that's more friendly than court." 

It is also potentially less likely to drag on for years and run up costs.

Otherwise, you will have to take the vendor to court. 

A final word of warning from Reich: "Oftentimes vendors include language that says, 'Until there's a final judgement, the board agrees not to remove the machinery or interfere with the use of the machinery,' and in New York lawsuits can take many, many years. Given the value of these contracts, it doesn't make sense to go the litigation route. So having a termination provision is the solution."

Lesson learned. 

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