HOAleader.com - Tip of the Week - March 1, 2013
Published: Fri, 03/01/13
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Manager's Surprise: Your HOA Has an $18,000 Bill! Who Pays?
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In this week's tip, we answer a reader's question
about who has to pay a surprise $18,000 bill for a
vender hired by the management company to clean up
after interior water damage. The board assumed the
association's insurer would cover it, but the claim
was denied. Now the management company wants the
board to pay up.
Does the association have to foot this bill?
The answer is that it depends, but probably.
"Start by looking to the contract between the
association and the manager," explains Matthew
Zifrony, who advises homeowners and condo
associations at Tripp Scott, a Ft. Lauderdale
law firm, and who's also served as the president
of a 3,000-home association. "I highly recommend
that associations have spending limits in their
management contracts. You don't want to have
managers' hands tied so tight they can't do a
$100 expenditure without seeking board approval.
But at the same time you want to put a cap in
there so the board isn't going to be responsible
if the manager incurs an expense the board didn't
approve.
"However, there are usually exceptions for
emergencies and health and safety situations,"
adds Zifrony. "The general rule I tell managers-
and I also explain to board presidents-is that
if it's an expenditure that can wait until the
next board meeting to be approved, they should
wait. If it can't wait and it falls into that
category, then go for it."
It's unclear from our reader's description whether
the work was done on an emergency basis. However,
it is clear the board knew the work was being done
and assumed it would be covered by insurance. That
probably weighs against the board now claiming it's
not responsible for covering the expense. Another
negative for the board? Its claim that this is the
first it's seen this bill. At any point it could have
asked the manager the amount of the bill so that it
could be prepared if its insurer denied the claim,
which is always a possibility with an insurance claim.
The question over who must pay the bill also turns
on whether the manager had apparent authority to hire
the vendor to take on the work. "What it comes down
to is whether the person the money is owed to had
reason to believe the manager had authority to bind
the association," explains Zifrony.
Learn more, along with tips on how to avoid this
problem in the future, in our new article:
http://www.hoaleader.com/members/822.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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HOA Presidents' Club: Time to Join or Start One?
In this week's tip, we build on one Florida HOA president's bright idea:
Bringing other HOA presidents together to share ideas. That organization,
the Oviedo HOA Presidents Association, now represents about 40
communities and has monthly meetings featuring a sponsor, a speaker, and
updates from local politicians, first responders, and others.
Click here to read full article:
http://www.hoaleader.com/public/HOA-Presidents-Club-Time-to-Join-or-Start-One.cfm
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Should You Form a Local HOA Presidents' Club?
One Florida HOA president had a bright idea: Bring other HOA presidents
together to share ideas. That organization, the Oviedo HOA Presidents
Association, now represents about 40 communities and has monthly meetings
featuring a sponsor, a speaker, and updates from local politicians, first
responders, and others.
Click here to read full article:
http://www.hoaleader.com/members/Should-You-Form-a-Local-HOA-Presidents-Club.cfm
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HOA Boards: Beware Lenders' Questionnaires
In this week's tip, we provide a timeless warning: Loose lips sink ships.
Click here to read full article:
http://www.hoaleader.com/public/HOA-Boards-Beware-Lenders-Questionnaires.cfm
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HOAs and POAs: What You Should Know
An HOAleader.com reader asks, "I have two months remaining on a three-year
commitment to my HOA. Located within my HOA is a small POA. My HOA (I disagree)
will allow POA members to run for our board. The State of South Carolina
doesn't address this issue. Our covenants and bylaws don't cover the issue
of POA members being elected to my HOA board. However, the POA restricts
members of the HOA from running for the POA board."
Click here to read full article:
http://www.hoaleader.com/members/HOAs-and-POAs-What-You-Should-Know.cfm
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HOA Websites: Where to 'Meetup' Online With Your HOA's Owners
We recently discussed some of the risks of creating an HOA website. In
response, one HOAleader.com member wrote in to explain how his HOA's using
Meetup instead of a website as an internal communication vehicle. Here's
how it works.
Click here to read full article:
http://www.hoaleader.com/members/HOA-Websites-Where-to-Meetup-Online-With-Your-HOAs-Owners.cfm
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