Homeowners associations are meant to enforce rules for a community. They are usually set up in condominiums, co-ops, and neighborhoods with single-family homes. When people move into areas with homeowner associations, they agree to the terms and fees associated with the HOA.
HOAs can be attractive to homeowners because it guarantees that your neighborhood will look great, whether this means trash pick up or landscaping. It can also indicate you’ll have access to amenities in your neighborhood such as a swimming pool, fitness center, or playground. When you pay HOA fees it could include the maintenance costs of community spaces within your neighborhood.
Hiring Staff Directly
When an HOA is set up it has to include information on how certain services will be provided to complete necessary tasks to benefit the community. Some HOAs may consider hiring part-time or full-time staff directly.
If you choose to hire staff this way, it’s a good idea to conduct a background check on all potential employees. This is the first step to preventing any risks and chances of employment practices lawsuits. An HOA can add more protection by having employment practices liability insurance. It acts as a safeguard against claims of wrongful termination, discrimination, and harassment.
Hiring Through a Contracting Firm
A homeowners association can also fill positions by using a contracting firm. You’ll usually see this used for construction projects, property management tasks, and other routine services. This allows your HOA to work with a company that already has insurance to cover any issues that may come up. If the contracting firm does not have its own insurance it can create complicated situations for an HOA.
However, this doesn’t mean that an HOA is without any risks when using a contracting firm. Some experts believe that communities are more likely to be subject to poor quality when contracting workers through a third party.
Lowering the Risks
There are steps that homeowners associations can take to help minimize any risks involved with hiring workers. Consider the following:
To minimize risks, maintain thorough records related to any projects initiated through the HOA. Keeping a record of emails, contracts, certificates of insurance, letters, invoices, permits, and other information concerning work done by employees may be helpful if a lawsuit arises.
Always pay your contractors once a project has been completed. Some HOAs pay their contractors in the form of installments. This method helps to prevent contractors from unsuccessfully completing projects and running off with the homeowners association’s money. Use a check to pay so that you will have a record of payment.
Conflicts of interest can cause issues for an HOA. If an HOA board member is accepting kickbacks for a project, it could result in a lawsuit. If a board member is related to a contractor it should be disclosed in front of the other board members before a bid is accepted.
Carefully review any contract involving the HOA. Every detail about the project and timeline should be mentioned in the agreement. Signatures from both parties involved should be included in every contract.
Choose a contracting firm that has insurance. The firm should have general liability insurance, workers’ compensation insurance, and other forms of insurance that benefit the HOA. Without it, it could leave your HOA to be held liable for property damage and bodily injuries that occur on-site during a project.
If you decide to use a contracting firm to help maintain your community, you have to vet the company you plan to hire. This involves checking the contractor’s license, checking with your state’s contractor’s board, and hiring local workers. Some believe that local contractors tend to be more knowledgeable about local laws and building regulations. Also, make sure that you take a look at the firm’s service record. It may also be a good idea to ask for a list of references along with reviewing information on the company with the Better Business Bureau. This will show any formal complaints that have been made against the company.
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