Tuesday, February 26, 2013

Walk This Way

Consider this scenario - A Board member hears talk about someone falling on the common area sidewalk over the holiday.  Nothing has been officially reported to the Board or management, so he thinks nothing of it.  Six weeks later a neighbor confirms seeing a guest of another homeowner slip and fall, but still no report has been received.  On the seventh week a homeowner contacts the Board to state his guest had fallen, claimed she was okay, but later had to go to the hospital for a cracked rib. On the eighth week the community manager notifies the Board about the receipt of a letter from the guest, placing a claim against the Association for the injury.

What actions should the Association take, and when?

The goal in any such situation is to gather information as early as possible, and notify the insurance carrier as soon as possible.  Upon hearing the rumor, the Board member should have notified the manager, who in concert with Board members would ask around to verify the incident.  Once confirmed (as when a neighbor stated actually seeing it), the insurance carrier should be put on notice of a potential claim, although no complaint has actually been received.  This notification does not “count as a strike” against the Association’s record when determining annual insurance premiums.

Policies generally require that notice be given shortly after the occurrence.  Waiting to receive an actual claim by the injured party may be used as a reason for the insurer to deny coverage!  Typically, notice needs to occur within a day or two of the incident – refer to your policy for specifics.

In ideal circumstances, the Board member or manager would be able to observe the conditions of the area immediately after the injury occurred and take photos.  For a “slip-and-fall”, the insurer will want to know what type of surface was walked on, what was the weather and lighting at the time, what type of footwear was used, were walking aids, glasses, etc. being used, and was an ambulance called immediately.  If you should come upon an accident, do not assist in moving the individual unless there is immediate danger to leaving the person in that location.  If the injured person states she does not need an ambulance, call one anyway and let the emergency responder be the one to deal with refused assistance.  All such factors will determine what type of insurance settlement may occur. 

An insurance investigator will come out to inspect the area, snap photos, and interview the parties while working the case. It is important that all information, including any that might appear negative for the community, be shared with this agent.  The Association’s goal is not to find some way to deny the claim:  Insurance exists to make this business decision, removing the emotion out of the process.  The Association’s focus is identifying potential safety issues, and addressing these quickly.  For example, if the injury was due to an uneven/raised sidewalk, the Board may require grinding of uneven concrete edges for all sidewalks in the community.  The injury could have easily happened to your loved ones, and the goal is to make conditions as safe as reasonably possible for all.
Finally, details of the incident and follow-up known by Board members and management should only be disclosed after vetting by legal counsel.  Besides the obvious concern of potential copycat claims from others, items such as disclosing medical details of the injured party (a violation of HIPAA, or Health Insurance Portability and Accountability Act) must be avoided.  In our litigious society, all Homeowner Associations should tread lightly when it comes to addressing items involving insurance.   

Tuesday, February 19, 2013

Fighting Childhood Cancer

St. Baldrick's Foundation Annual Fund Raising Event

Event Date: March 15, 2013
Location: Fado Irish Pub Atlanta, GA

Access Management employee Kent Atzinger has answered the call – yet again - to participate in this year’s St. Baldrick's Foundations annual fundraiser. In order to participate in the program, Kent will literally be shaving his head completely bald. 2013 marks the fifth year in a row that he will participate in this fundraising effort.

Kent says "I'm shaving my head to stand in solidarity with kids fighting cancer, but more importantly, to raise money to find cures. Please support me with a donation to the St. Baldrick's Foundation. This volunteer-driven charity funds more in childhood cancer research grants than any organization except the U. S. government. Your gift will give hope to infants, children, teens and young adults fighting childhood cancers. So when I ask for your support, I'm really asking you to support these kids. Thank you!”

We hope you will join in and help Kent Atzinger to reach his commitment to St. Baldrick's Foundation. If you would like to make a donation, you can utilize the link below to visit the St. Baldrick website and Kent's individual page as well.

Program Results Summary
Kent is very proud of the fact that over the last four years, over $14,270 has been donated to this tremendous charity on his behalf - $1,830 in 2009, $2,728 in 2010, $3,820 in 2011, and $5,892 in 2012.  Kent says “I cannot tell you how happy it makes me to be fortunate enough to have such great people around me to support a cause that has become dear to my heart.  Your past and future contributions are incredibly appreciated.”

Kent’s 2013 Goal
This year Kent has agreed to raise at least $6,000 in donations. Kent hopes that he can reach this goal this goal due to the increased interest in participation. He believes that with your generosity, he can surpass his goal for the fifth straight year! You can find Kent’s shavee website by clicking on this link:


You have the option to make an online donation, download a donation form or call in a donation at 888.899.BALD. 

A Note from Kent
This year, instead of honoring a specific child on the St. Baldrick’s site, I have decided to go a different route.  For my fifth and final year, I am shaving my head to honor all of my friends and family members who have gone through (or are currently going through) the struggles of being close to a child with any kind of illness or disease.  I honor the strength of all of the children that are no longer with us - and those who fight every day to battle these illnesses.
I thank you in advance for your kindness and generosity. Any amount of money that you can donate will be going to a great cause and will be greatly appreciated by myself, and all those affected by children's cancer.

Tuesday, February 12, 2013

Going Rogue

Board members are humans too - so unfortunately, there are occasions when an individual elected/assigned to the Board proceeds to act in ways placing both himself and the Association at risk. 

Such a situation occurred in a condominium community, when a newly-elected Treasurer took it upon himself to call and severely reprimand each vendor, and withhold all payments.  Each vendor immediately severed relations with the Association.  All other vendors in the region refused to bid on work requests after hearing about the poor treatment.  The damage extended all the way to the management company, which promptly gave 30 days’ cancellation notice, drained what little was left of Association funds (the management company had deferred many months of management fees so the Association could make its water payments), and left the community to be self-managed and self-maintained.  All of the above transpired during the first couple of months of the Treasurer’s reign, with nearly two more years left in his term of service.

When the rest of the Board realized what had transpired, they mounted a campaign to have the Treasurer recalled (removed) from the Board by homeowner votes.  After holding a community hearing, where the Treasurer attempted to play a guitar and sing to the homeowners about why he should remain on the Board, ballots were cast, and the Board declared that the required 51% had been achieved for removal.

However, one Board member remained behind after the meeting to ensure all procedures had been correctly followed, and discovered that ineligible votes had been counted.  Although all those who had attended or delivered proxies had voted for removal, voter apathy prevented the Treasurer’s dismissal.

The Board resigned itself to stripping the Treasurer of his title, issuing letters to every vendor they could think of to ignore any communications, and attempted to conduct business in the face of constant disruptive behavior.  It was years before the community could attract reputable vendors.

Had the Board sought legal counsel, they might have learned that the State of Georgia does permit another avenue of removing a Board member.  Under the Nonprofit Corporation Code, suit can be brought by either a vote of the Board, or 10% of the homeowners, to have a judge strip a Board member of his position and bar him from future service. Granted, this is not an inexpensive option, running well into the thousands of dollars, but the cost of not acting may have been greater.  

If your Board or community does decide to pursue this route, it is critical that you can demonstrate to the judge that you have taken all reasonable steps to first resolve the situation, that the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, or that he violated one of the duties (such as fiduciary duty) to the Association. 

Having an attorney assisting throughout this procedure is a “must”, as the courts do not lightly interfere in such matters.  Be prepared to provide extensive documentation to support your contention that the Board member is a hazard to the Association.  The presence of such paperwork is often sufficient to convince the wayward member to resign, prior to an actual court date.

To avoid a future repeat:  While the issue is still fresh on the minds of the community, propose an amendment that will expand the reasons for removal beyond the traditional “miss three meetings in a row” rule.  

Tuesday, February 5, 2013

Indemnify, Indemnify, Indemnify!

A standard item in most management contracts is that the Association guarantees to protect the manager against most claims.  These apply to third party claims, not those between the Association and the management company.   It also does not cover willful misconduct, gross negligence or criminal actions.

This concept is known, more commonly, as indemnification. This principle has been accepted by Homeowner Associations’ legal counsel for the last several decades. Association insurers often automatically name the management company as an additional insured, usually at no additional cost, due to the agency relationship between the management company and the Association.  Without the financial resources provided by insurance, it is unlikely an Association would have sufficient funds to legally defend a manager, defeating the whole notion of a Board hiring an agent, rather than itself handling all the daily minutia.

Insurance carriers depend on the indemnification language within the management contract in order to underwrite the management firm. Departing from this standard would immediately drive up management fees charged to Associations, and create pressure for management companies to consolidate or close, reducing choice for Homeowner Associations.

Management and Association must work seamlessly, jointly pursuing a defense with both parties in the same boat, rather than having an adversarial relationship.  It would be difficult to manage the Association’s affairs if attorneys and insurance carriers for each side were constantly angling to shift blame between the two.

A management company’s indemnification provisions differ from what would apply to standard third party vendors engaged by the Association. Unlike other third parties, managers are acting not at their own discretion - but at the Board’s discretion. The manager steps into the shoes of the Board to implement Board directives.  The management company is rarely, if ever, solely negligent.  In most instances a homeowner’s lawsuit names the manager, because the manager performed or implemented a board directive or policy and the owner dealt with the manager, not the Board. 

Similar indemnification requirements govern employer / employee relationships (for the employee’s negligence in the course and scope of his work) and in corporate relationships (such as the Board of Directors are indemnified by the Association).

The current approach works. Attorneys and insurers are hard pressed to find an example of a situation in which the management company's indemnity paragraph left the Association with significant legal or financial challenges.