REOPENING . . . POOLS, CLUBHOUSES AND AMENITIES, OH MY!
Over the last month or so, with COVID vaccinations becoming more commonplace and governmental restrictions easing to some extent, Hoffman Law LLC clients have been inquiring about reopening pools, clubhouses and other amenities. Below is a concise (though not exhaustive) summary of where we appear to be at this stage:
- Follow current CDC and PA Department of Health restrictions, recommendations and guidelines as it relates to [still] dealing with COVID – masks, social distancing, number of people, outdoor vs. indoor issues, cleaning, sanitizing, disinfecting, etc., and stay informed of potential changes.
- The Board must use due diligence, act reasonably and use proper business judgment in making decisions on reopening.
- There still appears to be no insurance coverage to Associations available for COVID-related claims.
- Legislative immunity for COVID-related claims (for Associations or otherwise) is not yet available in Pennsylvania.
- If it is determined that the risk outweighs the potential benefit and/or that the Association cannot adequately and safely handle the opening of pools, clubhouses and other amenities due to budgetary, staffing, logistical or other concerns, the Association should not open them.
If the Association determines that pools, clubhouses and other amenities can be adequately and safely opened given the current state of restrictions, recommendations and guidelines:
- At this stage, the Association cannot make vaccinations mandatory for the use of pools, clubhouses and other amenities, nor can the Association ask people if they have (or have not) been vaccinated due to privacy concerns. Similarly, the Association should not “recommend” that people get vaccinated.
- Purchase and install “easel” or other appropriate signage for both indoor and outdoor use for the posting of specific instruction(s) related to safety, use and restrictions.
- Only Unit Owners and residents/tenants should be permitted to access – no outside guests at this stage.
- Advise Unit Owners and residents/tenants that if they feel sick, have a fever, or have other symptoms they should not utilize the facilities.
- Utilize a Google Calendar or other virtual tool for “signups” to limit maximum use per hour.
- If necessary, move/relocate/remove furniture to ensure proper distancing is occurring.
- Limit the number of users for facilities as required (i.e., one person at a time in the fitness room, etc.).
- Limit the hours of operation to ensure that proper and timely cleaning, sanitizing and disinfecting of pools, clubhouses and other amenities (including restrooms) can occur in accord with applicable restrictions, recommendations and guidelines.
- Ensure that hand sanitizer stations, wipes, sinks, soap dispensers, paper towels and other items are made readily available for people to utilize, as applicable.
- Manage expectations of the community as it relates to potentially opening some amenities while keeping others closed.
- Communicate with the community before opening and continue to do so following opening to ensure the community is well-apprised of issues, concerns, restrictions and other issues.
- Have Unit Owners and residents/tenants execute an assumption of risk/release document prior to allowing use of any facility.
- If applicable restrictions, recommendations and guidelines change, and closing pools, clubhouses and other amenities that have already opened is required, facilitate the closure(s) quickly and properly and communicate to Unit Owners and residents/tenants.
Finally, remember that we are all still in this, and are in it together. Feel free to contact Hoffman Law LLC as it relates to reopening or other issues your Association may be facing.
Edward Hoffman, Jr., CCAL
Hoffman Law LLC
SAVE YOUR NAME! HAS YOUR NON-PROFIT COMMUNITY ASSOCIATION FILED ITS DECENNIAL REPORT?
Your community association may, or may not, have received a postcard from the Pennsylvania Department of State as it relates to filing a Decennial Report. I’ve been getting some questions related to what this is all about, so I thought I would share my thoughts on this issue with you.
To begin, all domestic and foreign business corporations, including non-profit corporations (such as non-profit corporation community associations) that have not made a new or amended filing with the Pennsylvania Department of State’s (DOS) Bureau of Corporations and Charitable Organizations from January 1, 2012 thru December 31, 2021 mustfile a report that they continue to exist. This is true even if your community did not receive a postcard from the DOS. This report must be filed during the calendar year in 2021. Fictitious names and trademarks are not required to make decennial filings.
Why is this required and why am I recommending that community associations take this seriously and file the Decennial Report? Because if a community association fails to do so, the DOS may allow for the reissue of your association’s corporate name as the Commonwealth of Pennsylvania may believe that your association’s name is no longer being used by your association (I would also recommend trademarking your association’s name, for other reasons, but that’s a discussion for another day). The end result in failing to file a Decennial Report would be that your association would no longer have exclusive use of its name on or after January 1, 2022. While the association, as a business entity, would continue to exist, the association’s name becomes available for any entity registering to do business in the Commonwealth of Pennsylvania which may request it.
To file the Decennial Report, a community association must complete and file a Decennial Report of Association Continued Existence and pay a filing fee of $70.00. Should your community need assistance with filing its Decennial Report, please contact our office and we will be happy to assist.
Edward Hoffman, Jr., Esq., CCAL
Hoffman Law LLC
DOES MY ASSOCIATION REALLY NEED DIRECTOR AND OFFICER (D&O) LIABILITY INSURANCE?
Based upon many years of serving as counsel for and defending associations in all types of litigation, my answer to the above question is yes. However, exactly what is Director & Officer (D&O) Liability Insurance, and what does it cover?
In short, D&O provides protection against claims alleging loss arising from mismanagement or wrongful acts. This may include a breach of duty (fiduciary or other), neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the directors and officers. Claims may be brought for money damages and/or other types of relief (i.e., injunctive relief to challenge or prevent a board decision or action).
But wait… doesn’t the association’s General Liability policy of insurance cover these types of claims anyway? In short, the simple answer is: probably not. Although the term “general liability” in and of itself leads many people to believe that this type of insurance will cover almost every type of claim imaginable, in reality, General
Liability insurance will not protect directors and officers in the same way as D&O because General Liability insurance usually covers third-party bodily injury and/or property damage claims, not claims for mismanagement or wrongful acts by board members, directors, officers or managers.
Claims which could trigger D&O coverage and are likely not covered by General Liability policies of insurance include:
- Defamation;
- Disputes over architectural issues and control;
- Discrimination claims (i.e., ADA and Fair Housing Act) [note: these types of claims are likely not “covered” by a D&O policy because they are illegal and/or are against public policy, but defense costs might be paid];
- Self-dealing;
- Willful acts and wrongdoing;
- Breach of fiduciary duty;
- Failure to properly pay association debts;
- Claims of improper personal gain(s) made against directors and officers;
- Failure to disclose information which results in harm/damage(s) to the association and/or its members.
Based upon my experience in defending associations against these types of claims, some things to consider when choosing a D&O policy include:
- Does the policy cover the association, directors and officers (current andpast), committee members and other volunteers (this is often overlooked), employees and other members of the association acting under the direction of the Board of Directors?
- Does the policy also cover the estates, heirs, legal representatives or assigns of board members, directors and officers, committee members and other volunteers?
- Does the policy afford coverage for the community association’s manager who is not an “employee” of the association, but rather, is contracted?
- Does the policy cover wrongful-employment related claims?
- Does the policy cover board members that were developer appointed?
- Does the policy cover defense costs for claims of intentional/wrongful conduct?
- Does the policy cover defense costs for claims that are contrary to public policy, such as discrimination?
- Does the policy cover punitive damages claims?
- Does the policy cover claims for non-monetary claims (i.e., injunctive relief sought by an aggrieved unit owner)?
- Does the policy provide for defense cost payments to be made directly by the insurer or must the association first pay legal costs and wait for reimbursement by the insurer?
- Does the policy include coverage for claims that occurred years ago but are now presented to the insurer (i.e., retroactive date/full prior acts)?
- Does the policy provide for coverage of “non-owners” that sit on the Board of Directors?
Finally, the association’s Board of Directors must realize and understand that if there is no D&O coverage present for the association, its directors and officers, committee members, employees, manager and/or other members of the association acting under the direction of the Board of Directors, these people, who are often serving in a voluntary capacity for the benefit of the community as a whole, can potentially become exposed to personal liability for claims that are brought against them and are not covered by the association’s General Liability policy of insurance. Accordingly, obtaining a comprehensive D&O Liability Insurance policy is a must for every association in today’s day and age. Your association really needs it!
– Edward Hoffman, Jr., Esq.
Originally published in the March/April 2020 and January/February 2011 issues of Community Assets magazine.
SHOULD HOAS PUBLISH A LIST OF DELINQUENT OWNERS?
I am not going to beat around the bush here: it is generally a horrible idea to “publish” a list of delinquent owners for others to see, even if the [usually decades old] governing documents in the community provide that it is permissible. This is even true if a delinquency list is not posted electronically but is still published in paper form and posted on the clubhouse bulletin board to “shame” the delinquent owner (which was the original intent of provisions in governing documents which allowed for such actions) – because all it takes is for someone to take a photograph of the delinquency list on their smartphone and post it on social media – then it is literally disseminated for the entire world to see! Also, for example, what if the delinquency information was viewed and utilized by a potential employer to deny a position to a “deadbeat” applicant, and, what if the delinquency information being relied upon was incorrect? It’s like a snowball that rolls down a mountain and becomes an avalanche.
Moreover, if the Association (or management company) is found by a court to be a “debt collector” under the Fair Debt Collection Practices Act (FDCPA) (which can differ by federal circuit and would, to some degree, be fact specific for each suit or claim), posting a delinquency list could be viewed as “blacklisting” owners and could therefore be found to be discriminatory conduct. The legal repercussions could be severe (i.e., expensive) if a violation of the FDCPA were to be found. See15 U.S.C. §§ 1692-1692p. Section 805 of the FDCPA, “Communication in connection with debt collection”, provides as follows in Section (b), “Communication with third parties”:
Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a post-judgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
All of this is becomes especially true if the wrong information is published and disseminated and that information is used to the detriment of the unit owner. This opens a whole new can of worms for liability for the Association (and potentially the management company).
Finally, even if an Association may not currently be considered a debt collector under the FDCPA in many jurisdictions, this should not be the deciding factor on this type of issue. Rather, the Association should examine the entirety of the issue and the risk associated with sharing a delinquent unit owner’s private account information with other unit owners before making a decision that will likely end up costing the Association more (in many ways, not just financially) than it would benefit the Association. The correct analysis is therefore: “we might be permitted to do this, but is it in the best interest of the Association?”. The answer is likely no.
My advice: do not “publish” a list of delinquent owners!
Edward Hoffman, Jr., Esq., CCAL
* The content for this Blog post is based upon the [abbreviated] prior written work of the author as originally published in the March/April 2020 issue of CAI’s Common Ground magazine and in CAI’s HOA Resources Blog.