If you manage or are a board member of an HOA with employees, consider reviewing the HOA’s insurance policies to make sure you and the HOA are covered should an employee ever sue or make a claim. Many insurance policies HOAs carry do not cover employment-related claims. HOAs who employ at least 15 employees are vulnerable to discrimination claims, and an HOA need employ only 1 employee to be subject to a sexual harassment or wage and hour claim.

Employment Practices Liability Insurance (EPLI) covers these and other types of employment related claims. If an employee (or ex-employee) makes such a claim or sues, EPLI may pay for the costs of defending the HOA, manager, and/or board members. EPLI may also help pay to settle claims or lawsuits.

Of course, like HOAs and the communities they serve, every insurance policy is different. We encourage HOAs with employees to work with us, their broker and their insurance carriers to address whether EPLI should be part of the HOA’s overall insurance package.

The information contained in this HOA Tip is for informational purposes only and is not specific legal advice or a substitute for specific legal counsel. Readers should not act upon this information without seeking professional counsel.

Review Governing Documents Before Entering Into a Contract

Whenever an association is renewing or entering into a new contract, there are many issues to consider.  With so much focus on finding the right company at a good price, it is easy to overlook the requirements that may exist in the declaration and bylaws.

 Some governing documents require that certain contracts be approved by the members or by a specific percentage of the board (such as 2/3 or 75%).  Other times, documents place limits on the length of term for a contract.  For example, an association’s bylaws may limit contracts to no more than one-year terms.  Such a requirement could impact many possible contracts, such as landscape contracts, management contracts, or security contracts.

 Governing documents may also require that contracts contain specific terms allowing for termination of the contract.  For example, the governing documents may require that the contract contain a provision stating that the contract can be terminated with 30 days’ notice.

 Finally, some governing documents contain specific requirements on who must sign the contract (such as the President and the Secretary).

 Associations should be mindful of these types of requirements and limitations in their governing documents so that, once the association finally finds the right company at the right price, the contract does not get challenged or invalidated over a technicality.  If your association has questions about contracts, please contact Lynn Krupnik at 480-922-9292.

Theinformation contained in thisHomeownersAssociationTip isfor informational purposesonly and isnot specific legaladviceor a substitutefor specificlegalcounsel.Readersshouldnot actupon thisinformation withoutseeking professionalcounsel.

Ifyou do not want usto contactyou by e-mail,you may unsubscribefrom our onlinecommunity by replying to thise- mail withtheword “Remove”in thesubjectline.

© Ekmark& Ekmark,L.L.C.2012.

We often get the following questions from associations, board members and community managers:  If we obtain a judgment against an owner, will it negatively impact their credit score?  Can we report the judgment to one of the credit bureaus?  Will the credit bureaus find out about the judgment?

As you may know, Arizona’s medical marijuana statute provides for certain individuals with debilitating medical conditions to be able to receive a card from the Arizona Department of Health Services (“ADHS”) that entitles them to use medical marijuana.  The law and accompanying ADHS rules also provide for the approval and operation of medical marijuana dispensaries to grow and distribute medical marijuana to approved patients.

To write off or not to write off?  That is the question many associations are asking when it comes to past due balances of former owners who have been foreclosed upon.

Employee Volunteers

By Lynn Krupnik

Federal and state wage and hour laws require employers to compensate employees for their work. Sounds pretty basic, right?  This can get confusing, however, when hourly employees “volunteer” their time.  For example, what if the association maintenance man “volunteers” to stay late to finish repairs?  What if the association administrative assistant “volunteers” to attend an association holiday event, perhaps to take tickets or pass out food?  Are these hourly employees really volunteering their time or are they working?