Year after year clients ask us about hosting social events in the Clubhouse and whether they should either purchase and serve alcohol for a fee or allow residents to consume alcohol on a BYOB basis. The simple answer is that the Association is not in the business of serving alcohol for commercial purposes so the Association shouldn’t serve alcohol for a fee at the Clubhouse. This would also include taking “donations” at the door from attendees to pay for the alcohol that was purchased by the Association.
Allowing residents to consume alcohol on a BYOB basis may be appropriate in some circumstances, but may not in others – such as near a pool or other amenity where there is inherent risk present. It is best to have a policy for alcohol consumption at the Clubhouse and distribute it to the unit owners – and, of course, the Association must actually enforce the policy.
Even if an Association is not actively serving alcohol for a fee, if it is purchasing alcohol to “hand out” to residents at a Clubhouse event for free, or allowing BYOB consumption, this could also lead to trouble for the Association should an incident occur.
In Pennsylvania, the “social host doctrine” provides that a “social host” can be held liable for resulting personal injuries or property damage if the social host served alcohol to a person he/she knew, or should have known, was intoxicated and/or that the person would be driving afterward. To date, Pennsylvania courts have only imposed liability on social hosts who have knowingly provided alcohol to persons under the age of 21, to the point of intoxication. The rationale is that adults are responsible for the consequences of their own actions. Moreover, the Pennsylvania legislature has made a legislative judgment that persons under twenty-one years of age are incompetent to handle alcohol. There is therefore risk in serving or allowing minors to drink at Clubhouse events even if the Association does not actually know if minors are drinking at the event.
If the Association allows rental of the Clubhouse by unit owners, the Association could be named as a party if an incident occurs which involves intoxication of a minor since the event hosting the event occurred at the Clubhouse – this can occur even if the Association had no hand in serving the alcohol to a minor at a resident’s private event. Therefore, if a unit owner wishes to rent the Clubhouse and host the event, the Association should ensure that Association’s policy for Clubhouse use and the rental agreement provide for various protections for the Association, to the extent permitted by law, including language that the unit owner will not serve minors alcohol and providing for indemnity for the Association by the unit owner. While no policy or agreement will be a failsafe against liability, the Association should nonetheless seek to protect itself from liability. In addition to a strong policy and agreement, this would also include ensuring that the Association’s insurance policy would cover/defend the Association and making sure that the unit owner renting the facility has homeowners insurance by way of obtaining a certificate of insurance as part of the rental process.
Finally, even if an intoxicated person that attended an event at the Clubhouse were over 21 years of age, the Association would likely be named as a party in any litigation if it hosted the event or rented the facility to a unit owner. While liability may not ultimately be found against the Association given the current status of the law and precedent, the Association will still need to defend the action so proper insurance for the Association and homeowner and/or indemnity provisions in any rental agreement will serve to protect the Association’s interests.
It is wise to have an attorney review the Association’s insurance coverage and its policy for Clubhouse use and/or the rental agreement for the Clubhouse to ensure that the Association is protected to the best extent possible. Hoffman Law LLC is ready to assist your Association with this and more.
Q: Our association wants to post “swim at your own risk” signs instead of providing lifeguards at our pool. What do we need to do to make sure we’re not liable for any accidents? –Pennsylvania
A: While an association with a private swimming pool is permitted to adopt a “swim at your own risk” policy at its pool and eliminate lifeguards, there are certain procedures and safeguards the association should be sure to enact and follow prior to this occurring.
To begin, the association should create, publish and circulate a policy called “Rules and Regulations for Unattended Pool Use” (or the like) to all of the unit owners. The document should include language similar to the below, in bold letters on the first page:
THIS IS AN UNATTENDED “SWIM-AT-YOUR-OWN-RISK” POOL FACILITY – THERE IS NO LIFEGUARD ON DUTY. USE OF THE FACILITY IS AT THE SOLE RISK OF THE INDIVIDUAL USING THE FACILITY.
PARENTS/GUARDIANS ARE RESPONSIBLE FOR THE SAFETY AND CARE OF THEIR MINOR CHILDREN AND ASSUME ALL RISK(S) IN THIS REGARD.
IN THE EVENT OF A SERIOUS INJURY OR LIFE-THREATENING EMERGENCY, CALL 911 AND THEN CALL THE MANAGEMENT COMPANY AT _________.
ALL OWNERS/TENANTS/RESIDENTS ARE REQUIRED TO COMPLETE A RELEASE OF LIABILITY FORM ON AN ANNUAL BASIS AND RETURN THE FORM TO THE MANAGEMENT COMPANY.
The policy should discuss unattended pool use, that key fobs are required for access to the pool area as the area will have an auto-locking access gate to limit access, issues related to guests and children, food and beverage consumption, and rules for conduct.
In addition to the policy, a liability release should be created and signed by all owners/residents on an annual basis (the association attorney should draft the release and the policy to ensure the association is best protected).
The association should also confer with its General Liability insurance carrier and/or its agent to ensure that the proposed shift to a “swim at your own risk” pool is acceptable from the perspective of underwriting so as to ensure that coverage will be present should a liability incident occur. While an association can never protect against all liability and risk for accidents or other incidents, it can assure that proper insurance is present to attempt to offset the risk.
As it relates to the physical pool area, there should be appropriate “unattended pool area” and/or “swim at your own risk” signage placed in the pool area as recommended by the association attorney and/or the insurer and the association should also verify if the local municipality also has any requirements. The pool area must be locked out from access for safety purposes – typically a self-locking gate system is installed with key fob access in an unattended pool area.
Finally, going from a pool with a lifeguard to a “swim at your own risk” pool can become a potentially contentious issue within any community – given the subject matter, we recommend that the Board and management openly communicate the issue and the proposed switch to all owners before it decides to move forward with it as transparency will serve the best interests of all involved.
The original version was published in the May/June 2019 issue of CAI’s Common Ground Magazine: https://lscpagepro.mydigitalpublication.com/publication/?i=580131&ver=html5&p=67
Chances are, your community association has a virtual presence on the Internet. Whether your association runs its own website, has a site run by a management company or some other third-party vendor, or is active on a social media site, association leaders and Managers should take some steps in order to protect the community association from potential legal problems.
Step one: Have a plan.
All too often, communities go “online” without really having a plan. The end result is usually a disorganized free-flow of ideas and information that serves no real purpose aside from being able to say that the community is online. Instead of simply throwing content on a website, the community’s leaders should determine exactly why they want the community to be online. Determining why the community is going to be online will then automatically serve to determine what gets put online. For example, if the community’s main purpose in going online is to disseminate information relevant to the community to its member-owners, then the content that is posted should be specifically tailored to that audience. Posting content about topics unrelated to information about the community will only distract from the purpose of the association’s website and may lead to unexpected problems down the road.
Step two: Limit content.
From a liability perspective, the Achilles heel for most association websites is the failure to limit content. Content should be limited, by the association, to matters that benefit the community. A community should never allow unrestricted content to be posted to its website, whether it comes from members or non-members. In other words, the official association website is not the place to allow people to post their gripes about the association, its leadership, other owner-members, the municipality, the landscaper, the Manager or a host of other unsuspecting victims. The association website should therefore not contain an “open-posting” forum, bulletin board or other area where people can freely post anything they want to the website. Remember, this content gets posted to the association website, which means that the association can be held responsible for its content. If owner-members want the community to have an online “bulletin-board” to post garage sales, items for sale, recipes, a community calendar and other events, the community should encourage members to submit this information to the designated contact person for the community website, either by email, mail or in person. This person can then compile the information, edit if necessary, and post it to the website.
• Public v. Private Content
With respect to any content that is posted by the association to its website, the difference between public and private content must be examined very carefully by the association. In a nutshell, public content is content that the whole world can see, for example, the association name, the location of the community, amenities and photographs of common areas. Public content is generally included in an association website to show people why that community is, in fact, a great place to live. Some associations post association documents, like committee forms, budgets, meeting minutes and other items as public content. Generally, associations should post these items to a designated “owners-only” area that requires a username/login and a password for access. While people who do not live in the community might, for some odd reason, want to read the association’s budget or check out last month’s meeting minutes or a blank architectural review committee application, they are not entitled to have access to these documents. These types of documents are relevant to those who live in the community and access to them should therefore be limited to residents.
An association’s controlling documents might provide the association with the ability to post information on a community bulletin board, electronic or otherwise, including the names of owners that are more than 90 days delinquent on their assessments. This information should not be posted to the “public” portion of the website because of privacy concerns and fair credit issues. For instance, if Mrs. Jones in unit 2B is 120 days in arrears on her assessments, a quick Internet search of “Mrs. Jones, unit 2B, town of XYZ” might provide this information to a potential employer, creditor or other person that might wrongly or illegally hold it against Mrs. Jones. Sometimes sharing information becomes a problem not only for those whom are the subject of the information, but also for those who are innocently providing the information for some good-faith purpose. Remember, the general rule is that once information is out in cyberspace, it can’t be taken back or permanently deleted. Therefore, it is better to ensure that the content that is posted on the association website is really content that is safe for public consumption.
Dealing with private content is a bit trickier since there are two levels: (1) private content which all members of the community have access to; and (2) private content specific to each individual owner. All members might have access to association forms and documents. If an association wants to post its various community documents online for the benefit of its owner-members, the association can easily set up a designated area that requires a login and password to gain access to this downloadable information. The designated website administrator should be the only person able to upload documents to the website, so that the association can control which documents are posted.
Associations should also include the community’s online bulletin board, calendar and contact information for the Manager in the private members-only area rather than on the public portion of the website. While this is “private” content which only members of the community can view, associations should limit the content that goes in this area just as they limit the content that goes in the public area of the website. For example, while the association might be allowed to post the names of owners that are more than 90 days delinquent on their assessments, it doesn’t mean that the association should do it— even on the “private” portion of the website. Common sense should come into play and an evaluation of why the association is posting this information should be undertaken. Moreover, if it decided that this arrearage information will be posted to the private portion of the website, the association must uniformly apply this standard to all members of the community on a consistent basis, and not just a handful of people in a piecemeal fashion. Otherwise, the association might find themselves defending an “unequal enforcement” or defamation to reputation lawsuit brought by the owner that feels like they were singled out by the association.
The second level of private content, content that is specific to each individual owner, is an area that is ripe for potential legal problems if the information were to get into the wrong hands. This content includes, but is not limited to, banking and account information for electronic assessment payments by owners, the owner’s account history and other Personally Identifiable Information (PII) like Social Security numbers, vehicle license plate numbers, birthdays, private telephone numbers and an owner’s age. Therefore, if an association chooses to post this content on the Internet, it must do so with the understanding that this information is confidential in nature and every possible precaution must be undertaken to protect this information. Aside from the normal login & password requirements, the portion of the site should also utilize a secure connection (usually Transport Layer Security, or TLS, in the form of an “https” page over the Internet) to protect the information. Associations should use a qualified, professional management company to provide such a service or a third-party vendor that specializes in this area of information technology. Retaining a third party to handle managing and protecting the private content is a good idea, but this may not completely absolve an association from liability should there be a breach of information. However, every association should strive to be proactive when it comes to protecting private content. A failure to be proactive can lead to potentially devastating consequences for an affected owner and a strong likelihood that the association will face some sort of legal liability for the breach.
Step three: Monitor, monitor and monitor some more.
If an association decides that it wants to allow some level of interactivity or unrestricted posting on its website, then it is imperative that the association monitor what is being posted on the site. Monitoring the content that is posted to the site should be done on a consistent, timely basis by a designated moderator. The moderator should enforce the ground rules that must be listed on the site as it pertains to posting. Ideally, the association should have a policy for posting that the site visitor must agree to prior to being able to post any content to the website. Any violation of the policy can be grounds for removal of the post and a ban on all future posts on the association’s website. This type of content monitoring and moderation can also be performed on social media websites like Facebook, so long as the association sets up and runs the social media page on behalf of and in the name of the association. Never allow an owner or some other person to set up a social media page on behalf of or in the name of the association, because (a) others may think it is the official association page and (b) the association won’t be able to manage/restrict the content on the page. The future trend is for the association to create an acceptable use policy for members who want to post to an “open” association website as well as a social media policy identifying the association’s social media pages as the official page.
Finally, while implementing acceptable use and social media policies and monitoring posted site content is surely proactive behavior, these actions can’t completely relieve an association of potential liability for improper, damaging, false, inflammatory or defamatory content that is posted to the association’s website or social media page. The key is to never acquiesce, either by way of action or by a failure to act, to potentially harmful postings on the association site.
Step four: Be on the lookout for the association in cyberspace.
Cyberspace, like outer space, is a seemingly endless place. Just as exploration of outer space is possible, so is exploration of the Internet. However, rather than using spacecraft, all we must do to explore the Internet is log a few keystrokes. In other words, we can utilize the myriad of search tools available on the World Wide Web to pinpoint the exact information we need. Using sites like Google and Yahoo!, for example, we can search most of the information that is publicly available on the Internet for free and with very little effort.
Thus, my advice is to perform a search, every so often, on the association’s name. This is due to the prevalence of copycat websites which purport to be the official association site, as well as an increasing number of “anti-association” sites created by disgruntled owners, former owners, non-community member neighbors or others that have an axe to grind with the association. An association should act quickly to remove a website which purports to be the official site. This is no easy task, and it usually involves litigation against the copycat site operator.
Similarly, should an “anti-association” website be located which contains negative, inflammatory, defamatory, false, confidential or damaging information on the website, the association must take affirmative steps to try and have this website taken down or at least have the harmful information removed from the site.
On social media sites, associations may discover unofficial pages run by owners, former owners and others, related to the association. If run by current owners, the association should ask the owner to remove the non-official page and ask all owners to join, “like,” or follow the official page for the community.The situation is a bit more problematic when groups of owners maintain their own page. These members of the community may use the social media page, which is sometimes public in nature due to a lack of privacy restrictions set up by the page administrator, to vent about issues of concern to the community. Association leaders or Managers should try to monitor these pages, if at all possible, and do the best they can to have the social media users limit their comments about the community or other owners. Of course it’s not always possible find every page that is somehow related to the community, but if one is found efforts should be made to try and protect the interests of the community.
Finally, community leaders, Board Members and Managers should avoid connecting with association members on social media sites. By limiting their virtual relationships, they can avoid issues surrounding favoritism and ever-present fiduciary duty issues. If not “friending” others in the community is simply not possible, then the community leaders and Manager must refrain from posting comments about the community or community issues on any website that is not designated as an official community site. Similarly, even if the community leaders and Manager are not posting comments about the community or community issues on their own or their friends’ social media walls, they have an obligation to look out for the best interests of the association when reading comments that are made by others about the association.
Associations must be proactive in cyberspace, in order to preserve the “virtual brand” of the association and protect the best interests of the association. When there is doubt as to what to do, association leaders and Managers should seek the advice of qualified legal counsel so the association can stay in control and stay out of court.
By Edward Hoffman, Jr., Esq.
* The content for this Blog post is based upon the prior written work of the author as originally published in the November/December 2011 issue of Community Assets magazine and the May/June 2012 issue of Common Ground magazine.
As Bob Dylan noted in 1964, “The Times They Are A-Changin’.” While this anthem of societal change may seem unrelated to the 2011 residential real estate market, in actuality, Dylan’s poetic title track serves as a template for today’s buyers. Back in 1964, most buyers were limited to “traditional” home ownership. Today’s buyers have a myriad of options, including living in a common interest community (CIC).
In a nutshell, CICs are formal legal entities (usually non-profit corporations) created to provide a common basis for the maintenance and preservation of the homes and/or the property contained in the community. In Pennsylvania, CICs are generally set up as either homeowners’ associations (HOAs) or condominium associations. CICs are subject to the statutes that govern both non-profit corporations and common interest communities. Most homes that are located within a CIC are purchased subject to Covenants, Conditions & Restrictions (CC&Rs), which are restrictions placed upon each home to maintain uniformity within the community. This uniformity will hopefully lead to a preservation of property values for the homes located within the community. Homeowners pay dues or assessments so the CIC can pay expenses related to maintaining common property in the community, including roads, gated entrances and drainage basins and often to provide various services and/or amenities that are common to all of the homes in the community, such as trash removal, snow removal, security, landscaping, a fitness center, a swimming pool, a community center, or a playground.
Today’s buyers interested in purchasing a home in a CIC should consider a few important things, including:
Reserves
Make sure that the reserve funds set aside for maintenance of common areas are adequate to fund a large scale capital improvement project, like repaving a road or replacing a roof. Owners will be issued a special assessment to pay for the project in addition to the normal assessment if the reserve funds are not enough. If not enumerated in the resale certificate issued to the buyer prior to closing, the buyer should ask for a breakdown of the reserve funds as well as expected, upcoming capital expenditures.
Budget
Ask the CIC Association or the seller for a copy of the budget. Pay careful attention to the Association’s outstanding debts and liabilities, as well as the percentage of homeowners that are not paying their assessments. If the majority of homeowners are not paying, this spells financial trouble for the Association as well as its member-owners. This could also have a negative impact on a potential buyer’s ability to obtain a mortgage to purchase a home in a condominium association. Freddie Mac, Fannie Mae and the Federal Housing Administration, which purchase and/or insure a majority of mortgages, place a 15% cap on assessment delinquency rates in order to approve lending for homes in the community.
Insurance
Ask for a copy of the Association’s insurance policy to make sure that the community’s coverage is adequate. This is separate and distinct from an owner’s homeowners’ insurance policy. Ask your insurance agent to look at the Association’s policy. Coverage should include but not be limited to general liability coverage with no general aggregate, director & officer liability coverage, environmental impairment coverage, guaranteed replacement cost coverage and employee dishonesty coverage.
Number of Investment Properties
If a potential buyer is looking to live in the home as opposed to using the home as an investment vehicle or rental property, the buyer should look into the percentage of homes that are actually owner-occupied versus how many are leased to tenants. A high number of rental properties in the community could mean that a low level of owner involvement is present in the community. A high level of rental properties in a community can also have a negative impact on a potential buyer’s ability to obtain a mortgage to purchase a home in a condominium association. Freddie Mac, Fannie Mae and the Federal Housing Administration currently require a 51% owner occupancy rate in order to approve lending for homes in the community.
Covenants, Conditions & Restrictions (CC&Rs)
Look at the CC&Rs for the community to make sure that you, as a potential community resident, can live with the limitations imposed on all owners in the community. For instance, many communities require that curtain backs–the side of the curtain that faces the window–be one color so that all of the community’s homes have a uniform appearance from the outside. If you must have fuchsia curtains for the world to see in every one of your windows, then perhaps buying a home in a common interest community is not the best choice for you.
Homeowners living in a CIC enjoy many attractive benefits and amenities, including security, access to recreational facilities and activities, and fewer worries about property maintenance. By carefully reviewing contracts and asking questions, homeowners will be able to determine whether living in a particular community is right for them.
By Edward Hoffman, Jr., Esq. Originally published in Lehigh Valley Marketplace, December 2011
It’s safe to say that there’s no avoiding social media use these days whether it is for personal use, commercial use or even for the benefit of a Community Association. So just how should your Association be handling social media?
In a nutshell, the Association should own its online presence. To begin, every Association should copyright its official, corporate name, as well as other names that may frequently be utilized. This may serve to prevent others from being able to use the Association’s name online.
The Association should also affirmatively run its “official” online presence as it is good practice to never allow an owner or some other person to set up a social media page on behalf of or in the name of the Association because (a) others may think it is the official Association page and (b) the Association won’t be able to manage/restrict the content on the page. If an owner is hosting such an unofficial social media page, the Association can politely ask the owner to remove the page and can concurrently direct all owners to “join” the “official” social media page for the community by informing the owners by way of newsletter, e-mail or otherwise. If an owner or other person who is hosting the “non-official” social media page refuses to take it down, the process of trying to have an “unauthorized” Association social media page removed from the hosting social media site frequently involves litigation and can be lengthy, expensive and stressful for an Association to endure. In addition to the logistical and economic aspects involved in such an undertaking, first amendment freedom of speech issues would most certainly be implicated, and the end result is not guaranteed. However, this being said, the Association most certainly has a duty to at least make a reasonable effort to deal with any unauthorized sites which purport to be the Association site, regardless of outcome.
As for Association run social media, it is recommended that Associations create an Acceptable Use Policy (AUP) for members who want to post as well as a similarly structured social media policy (SMP) identifying the Association’s social media page(s) as the official page(s) for resident use. Having owners sign a copy of each policy would put them on notice as to the existence of each policy and may dissuade negative behavior associated with a breach of either policy. While the legal enforceability of each type of policy in a Community Association setting currently lies in uncharted waters, given the prevalence of technology in a Community Association setting these issues will most certainly be litigated at some point in the near future. An example of what the AUP should provide for includes, but is not limited to, the following:
The posting of harassing, discriminatory or otherwise threatening comments and/or material is prohibited;
The posting of pornographic, obscene, hateful, incendiary, violent, unlawful or otherwise illegal comments and/or material is prohibited;
The uploading of copyrighted material or images is prohibited;
The posting of defamatory comments of any kind is prohibited;
The posting of personal views as representing those of the Association is prohibited;
The posting of “junk” messages, advertisements or other solicitations, not related to the Association in any way, is prohibited;
The Association reserves the right to remove offending post(s) without any prior notice and/or reserves the right to terminate access to any person who does not abide by the posting policy.
Any violation of the AUP can be grounds for removal of the post and a ban on all future posts on the Association’s website. This type of content monitoring and moderation can also be performed on social media websites like Facebook, so long as the Association sets up and runs the social media page on behalf of and in the name of the Association.
While implementing acceptable use and social media policies and monitoring posted site content is surely proactive behavior, these actions can’t completely relieve an Association of potential liability for improper, damaging, false, inflammatory or defamatory content that is posted to the Association’s website or social media page. The key is to never acquiesce, either by way of action or by a failure to act, to potentially harmful postings on the Association site. Associations should contact their insurance professionals and inquire about obtaining standalone cyber-liability insurance and/or adding a cyber-liability rider to their current insurance coverage in an attempt to insure against and offset any potential liability to the extent possible. Such insurance should cover employee technology use, data breach and notification issues as well as “other” potential liability that may arise from and/or out of the Association’s online presence (i.e., defamation, fair credit issues, etc.).
Finally, community leaders, Board Members and Managers should avoid connecting with Association members on social media sites. By limiting their virtual relationships, they can avoid issues surrounding favoritism and ever-present fiduciary duty issues. If not “friending” others in the community is simply not possible, then the community leaders and Manager must refrain from posting comments about the community or community issues on any website that is not designated as an official community site. Similarly, even if the community leaders, Board Members and Manager are not posting comments about the community or community issues on their own or their friends’ social media walls, they have an obligation to look out for the best interests of the Association when reading comments that are made by others about the Association.
