In the U.S. Supreme Court case
of American Society of
Mechanical Engineers v. Hydrolevel, the justices concluded that a nonprofit association could be held liable for the actions of its officers,
directors & volunteers - even when the association did not know about,
approve or benefit (as long as the volunteer appeared to outsiders
to be acting with authorization). In
this particular instance, a volunteer chairman issued written responses to
another company, making assertions that were not supported or approved by the
Community associations must
take steps to outline the authority of each agent, regulate access and use of things such as letterhead, a community logo or community website, and immediately act when it
sees unauthorized activity. A typical
example is that of a former Board member who continues to interact with vendors
or government officials as if he were still on the Board, directing or influencing
others based on this false perception.
- Having the
association’s legal counsel issue a cease & desist letter to the former
- Limiting access to
- Notifying vendors and
all association members of the volunteers change to non-director status
- Placing the insurance
carrier on notice
actions are not limited to former volunteers.
Disgruntled homeowners or vendors may choose to act on behalf of the
association as a means of retaliation.
It is vital that social media and other forms of public communication be
frequently reviewed to detect and respond to such activity, before the
situation becomes expensive.
Supreme Court case, the Association ended up paying $6 million (in 1982) in
damages and legal expenses because of one person’s unauthorized actions – be
sure your community does not face the same exposure!
Post a Comment