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Subject: SHOULD HOAs posses Contractors license and Insurance information?

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LynnoraR
(Maryland)

Posts:41

07/29/2008 3:20 PM
I'd like to pick the brains of the may BOD and HOA members that may know the answer to this question. My initial thought would be yes-- you should have copies of their licenses and insurance information in hand prior to the start of the contract. The problem is that our prior management companies never had this information on file. Now that we are self managed, we have hired new contractors back in May and they are doing a great job. What lies in the back of my mind is that we should have this information on hand. Do contractors have rights NOT to provide this information???

SheliaH
(Indiana)

Posts:92

07/29/2008 3:26 PM
Yes, you should have copies of licensing and insurance information - our Association doesn't hire ANYONE without those credentials (anf if the contractor won't give it to you, look elsewhere). You might also check whatever local agency in your community licenses contractors, electricians, etc. In Indianapolis, the city website has a link to a department where you can access its database of licensed personnel, and in many cases, that information should be free or at least quite cost effective to purchase.

GlenL
(Ohio)

Posts:1466

07/29/2008 3:28 PM
Our bids require a copy of their license and insurance information. If they want to withhold the information that would send up a giant red flag that something wasn't kosher.

LynnoraR
(Maryland)

Posts:41

07/29/2008 3:34 PM
I agree; we should have had this information in hand already. We have an issue where our landscaping contractor rammed and damaged a homeowners backyard fence while mowing the common areas. We have witnesses to the incident however; the contractor is completely denying responsibility. Because this happened on private property, the Association cannot pursue legal action BUT we are prepared to support the homeowner with all of our communication attempts we've had with the contractor. If we obtain the insurance information, is the homeowner able to contact the insurance company directly to file a claim?

SheliaH
(Indiana)

Posts:92

07/29/2008 3:55 PM
I don't see any reason why the homeowner couldn't contact the insurance company (or perhaps he/she should contact his own insurance company and let the two duke it out). I would also tell that landscaper that if he cannot or will not work with the homeowner to resolve the matter, it could affect his ability to get more work with your association in the future (if he's playing hardball with a homeowner, what will he do if he does major damage to the common area?)

KirkW1
(Texas)

Posts:1190

07/29/2008 10:53 PM
In addition to keeping a copy of such on file, you should make a call to ensure that the documents are still valid. I would also add to the checklist a call to the BBB. The power of the BBB is to find out a track record before you go down the road. After their only real power is to warn others. Often this is enough to get business to do the right thing. But the BBB is quite limited in what they offer after the fact.

BradP
(Kansas)

Posts:1742

07/30/2008 6:35 AM
It should be part of your contract that the contractor has to give you a copy of their license and insurance....red flag is they don't want to.

LynnoraR
(Maryland)

Posts:41

07/30/2008 6:39 AM
Thank you for your comments. You have given good insight on this matter. I knew we should have had this information in hand prior to the contract date but it seems that none of this occurred to my fellow board members. When I mentioned this, they said "we know he's a good guy" and did not press the issue. Now because we know the contractor has lied about the damage situation, everyone now wants papers in hand. I guess at this point we simply ask him to produce his documents and go from there.

JohnK3
(Pennsylvania)

Posts:565

07/30/2008 8:35 AM
The trouble with these documents is that they're only good as of the day you receive them - as in, they could be canceled the following day. How much extra diligence an HOA puts into "updating" is a judgment call. Our Board asks for them upon a new or renewed contract and leaves it at that.

MicheleD
(Kentucky)

Posts:1866

07/30/2008 1:42 PM
Posted By JohnK3 on 07/30/2008 8:35 AM The trouble with these documents is that they're only good as of the day you receive them - as in, they could be canceled the following day. How much extra diligence an HOA puts into "updating" is a judgment call. Our Board asks for them upon a new or renewed contract and leaves it at that. That's no excuse for not requiring them anyway. If they are canceled the next day or fraudulent, at least when and if you need to, you can show that your board did its appropriate due diligence. That's worth the time it takes to do it.

BradP
(Kansas)

Posts:1742

07/30/2008 2:50 PM
Also that is why you have written in your contract that the contractor must posses a valid license and insurance throughout the job...Nothing is 100%

LynnoraR
(Maryland)

Posts:41

07/30/2008 2:55 PM
I've gone through the contract we have with the landscaper and unfortunately it does not specifically state that he must produce the documents, however; at our BOD meeting we had prior to signing the contract, he stated in front of all BOD members that he was licensed and insured. We hired because he represented himself as being licensed and insured. He does the landscaping work for our Town's facilities and my fellow BOD members were excited to bring him on board. I did mention to them that we need the documents but they were so caught up in the haste that it was not mentioned again. We typically pay him by sending his check to a P.O. Box once he submits us his invoice online. What I plan on doing this month is instead of mailing it to him, I will kindly ask him to please come by to pick up his check for services rendered in July and to please bring us copies of his license and insurance information. I'll see how that rides out!! OH boy!!!

MaryA1
(Arizona)

Posts:2498

08/01/2008 12:36 AM
Posted By LynnoraR on 07/29/2008 3:34 PM I agree; we should have had this information in hand already. We have an issue where our landscaping contractor rammed and damaged a homeowners backyard fence while mowing the common areas. We have witnesses to the incident however; the contractor is completely denying responsibility. Because this happened on private property, the Association cannot pursue legal action BUT we are prepared to support the homeowner with all of our communication attempts we've had with the contractor. If we obtain the insurance information, is the homeowner able to contact the insurance company directly to file a claim? Lynnora, I don't understand your reasoning that you cannot bring a legal action against him because it wasn't assn property that was damaged. He was performing work for the assn when he damaged a fence on private property. Legally speaking, IMO, the HOA is responsible to the homeowner and the contractor is responsible to the HOA. However, you may get off the hook if the h/o is willing to file a claim with their ins co even though it may result in an increase in their premium. If I was the h/o I would be expecting the assn to handle the repair of my fence!

MaryA1
(Arizona)

Posts:2498

08/01/2008 12:42 AM
Posted By KirkW1 on 07/29/2008 10:53 PM In addition to keeping a copy of such on file, you should make a call to ensure that the documents are still valid. I would also add to the checklist a call to the BBB. The power of the BBB is to find out a track record before you go down the road. After their only real power is to warn others. Often this is enough to get business to do the right thing. But the BBB is quite limited in what they offer after the fact. Here in AZ we have a Registrar of Contractor's office which handles contractor's licenses. Any time we have any type of work done on our home we make two calls; one to the BBB and the other to the Registrar of Contractors. This is something the HOA should do b/4 signing a contract and of course, it goes w/o say, they should always obtain workmen's comp ins info and their contractor's license #. In fact most licensed contractors have their license # printed on their business card and in any published ads.

LynnoraR
(Maryland)

Posts:41

08/01/2008 5:02 AM
Mary, I'm sure if it came down to it, this can be pursued legally. That is not necessarily the issue here however; you bring up an interesting point that we (the Assn) can argue. The whole idea of hiring someone who is licensed and insured is so that IF things like this happen on personal property, the owner can pursue action through their insurance company and/or legally. We believe that the Assn is responsible for the contractor to the extent that we conduct an 'investigation' into what happened. We cannot be held financially responsible for actions or mishaps that THEY are responsible for. The owner must pursue action on behalf of his/her property. We will do everything in our power to provide the owner with our correspondence and resolution efforts on behalf of the incident, we'll be willing to provide sworn statements (if needed) and anything else the owner needs to rectify this situation but per other guidance that was given to us; it is not our direct responsiblity to fix the owners damaged fence.

MicheleD
(Kentucky)

Posts:1866

08/01/2008 6:54 AM
Posted By LynnoraR on 08/01/2008 5:02 AM Mary, I'm sure if it came down to it, this can be pursued legally. That is not necessarily the issue here however; you bring up an interesting point that we (the Assn) can argue. The whole idea of hiring someone who is licensed and insured is so that IF things like this happen on personal property, the owner can pursue action through their insurance company and/or legally. We believe that the Assn is responsible for the contractor to the extent that we conduct an 'investigation' into what happened. We cannot be held financially responsible for actions or mishaps that THEY are responsible for. The owner must pursue action on behalf of his/her property. We will do everything in our power to provide the owner with our correspondence and resolution efforts on behalf of the incident, we'll be willing to provide sworn statements (if needed) and anything else the owner needs to rectify this situation but per other guidance that was given to us; it is not our direct responsiblity to fix the owners damaged fence. I'm not so sure that position would hold up if challenged. The contractor was hired by the HOA to do HOA work. He is, therefore, an agent of the HOA. It is very possible for the HOA to be held directly responsible for the actions of the contractor during the performance of his work for you. This is the reason why it's important to be sure that contractors are bonded and/or appropriately licensed and insured. He was not out there at his own request, nor was he performing work at the request of the homeowner whose fence was damaged.

LynnoraR
(Maryland)

Posts:41

08/01/2008 7:35 AM
Forgive me for sounding somewhat "ignorant" (unknowledgable) about the Associations responsiblities for its contractors, but what language in the By-Laws, Covenants, Rules or Regs speaks to that level of responsibility? Is this in-house documented knowledge of HOAs or personal opinions? Per the advice we received our responsibility is to ensure that we have someone licensed and insured. If the contractor fails to have either, then we can be held responsible. Once we obtained that information (at a cost of $150 for 1 hr of consultation) then our approach was to see how other HOAs handle this situation. My itention for posting my question on the site was to obtain insight on how other HOAs approach this situation without incurring more consultation fees.

GlenL
(Ohio)

Posts:1466

08/01/2008 8:21 AM
Lynnora our contract with our landscaper specifically makes them responsible for any damage they do and we withhold payment or deduct the amount of repairs from their fees. The H/O could also file suit in small claims against the landscaper or complain to the BBB.

MicheleD
(Kentucky)

Posts:1866

08/01/2008 8:39 AM
Posted By LynnoraR on 08/01/2008 7:35 AM Forgive me for sounding somewhat "ignorant" (unknowledgable) about the Associations responsiblities for its contractors, but what language in the By-Laws, Covenants, Rules or Regs speaks to that level of responsibility? Is this in-house documented knowledge of HOAs or personal opinions? Per the advice we received our responsibility is to ensure that we have someone licensed and insured. If the contractor fails to have either, then we can be held responsible. Once we obtained that information (at a cost of $150 for 1 hr of consultation) then our approach was to see how other HOAs handle this situation. My itention for posting my question on the site was to obtain insight on how other HOAs approach this situation without incurring more consultation fees. Our HOA does not have such "language" written into any of our documents, either. And, I'd venture to say, something like this will vary from state to state, community to community. However, it's not an HOA-only "opinion." We hired a contractor to remove a few dead trees in a common area adjacent to some homes. And, unfortunately, this particular contract did NOT spell out, as Glen's did, that they are responsible for all damages. One of the trees sort of "tried to escape," and ended up crushing one of our resident's fences. Certainly, the contractor was "at fault," since obviously the board was not moving the trees around. However, since he was our 'agent,' working on our behalf, we have some degree of exposure in the damage. Our $150/hour "consultation" recommended that we offer to repair the fence for the homeowner and then go to the contractor to work out an equitable reimbursement. Our contractor, we were very pleased to find out, was more than willing to reimburse us for what we paid the homeowner for her to repair her fence, even though our contract with him did not contain that specific language. Now, of course we've learned to be sure that all contracts with the vendors contain that language, and we also ensure to get all bonding, licensing and insurance information. However, depending on the damage and how far someone wants to push a lawsuit (for example, let's say, god forbid, that some was injured or killed), then that "contract" may not provide the shield we think it will. Again, I'm not saying this is all black-and-white, hard-and-fast rules, however, the more due diligence the HOA does on the front end, the more chance it may have in mitigating it's exposure on the back end.

MaryA1
(Arizona)

Posts:2498

08/01/2008 3:16 PM
Posted By LynnoraR on 08/01/2008 7:35 AM Forgive me for sounding somewhat "ignorant" (unknowledgable) about the Associations responsiblities for its contractors, but what language in the By-Laws, Covenants, Rules or Regs speaks to that level of responsibility? Is this in-house documented knowledge of HOAs or personal opinions? Per the advice we received our responsibility is to ensure that we have someone licensed and insured. If the contractor fails to have either, then we can be held responsible. Once we obtained that information (at a cost of $150 for 1 hr of consultation) then our approach was to see how other HOAs handle this situation. My itention for posting my question on the site was to obtain insight on how other HOAs approach this situation without incurring more consultation fees. Lynnora, Perhaps there is no such language in your gov. docs; however, that doesn't remove the HOA from their obligation. The HOA's resp. doesn't end with the fact that the contractor is licensed and insured. The contractor is performing work for the assn; therefore the assn is resp. for any damages committed by the contractor. As I said earlier, the h/o has a claim with the assn; and the assn has a claim with the contractor. Common sense tells me this!

LynnoraR
(Maryland)

Posts:41

08/01/2008 3:34 PM
I understand that completely. Don't get me wrong, we have been on this situation since day one and battling it out with the contractor on behalf of the owner. As a matter of fact, the owner and the contractor have never even spoke directly to each other about this issue. The homeowner was on vacation at the time of the incident and as soon as she arrived back, we brought this to her attention and showed her the pictures we took. We are not ignoring this and leaving the owner high and dry to fend for themselves; we are simply trying to bring a peaceful resolve to this situation all while knowing where our responsiblities as the Association lies.

GlenL
(Ohio)

Posts:1466

08/01/2008 3:58 PM
Lynnora are you saying there is no clause about damages at all in the contract? Let me guess they just signed the contract that the landscape company provided. So theoretically if they decided to say prune the bushes in the middle of a heat wave so that they were only six inches tall or if you have a sprinkler system and they knock the heads off there's no penalty built into the contract? Although we are a COA and have different requirements here are a couple of sections from an old contract: Grass must be blown away from the patios and mowers must be kept away from air conditioners. Any mower or weed eater damage will be the contractor's responsibility to repair or replace. Ornamental grasses are to be cut back in the fall. Mowing is to be done as needed throughout contract (average 25 mows). No cutting permitted in the rain or after a rain. Contractor must use discretion so that if there has been excessive rain or a heavy rain, the contractor must determine if the mowers will damage the turf or leave ruts. Should the contractor mow when the ground is too wet and lawn is damaged or ruts result, the contractor will be responsible for all repairs. No cutting permitted when lawns are exceedingly dry.

LynnoraR
(Maryland)

Posts:41

08/01/2008 7:07 PM
Glen, You are correct by saying that the contact was basically signed without any of the other board members addressing ANYTHING!! I don't want to put my fellow board members out there but trust me when I tell you that I feel sometimes I'm fighting a losing battle with the majority. I should also point out that of the 38 units (homeowners) we have, only 4 of us serve actively on the board and attend meetings. The majority members wanted to have him on board as soon as possible and ok'd the vote while I was on maternity leave. Now they are biting their nails because they don't know what to do about this situation. Nevertheless, I tell you that this is a learning experience for me and I guarantee that if I have anything to do with the board by next year, the contract will definitely be reviewd and revised according to our specific needs!!

MicheleD
(Kentucky)

Posts:1866

08/01/2008 7:40 PM
Lynnora, that's good to hear. I do hope it gets worked out to everyone's satisfaction, and that nobody gets screwed over in the process. I was discussing this with my husband tonight at dinner. He knows exactly what sort of position your HOA is in. He owns a small business in an enterprise zone section of town. His company is in an old historic building in the middle of an older historic residential part of our downtown. His partner had contracted with someone to clean the gutters on the building. The guy he used was a friend. He was licensed and insured, but the "contract" was really no more than a sort of generic thing typed up on a word processor. As you can probably guess by now, the language holding my husband's company harmless for any damages incurred by the contractor was nowhere to be found. As (bad) luck would have it, this contractor damaged the roof and the porch of the building next to my husband's company. I'm not exactly sure of the details but apparently he misjudged the distance between the properties while navigating his truck with a cherry picker on it between them. My husband and his partner had no idea that anything at all had happened until they got a letter from the neighbor's attorney. My husband's attorney gave him the same advice our attorney gave us: the contractor was engaged in activity on their behalf, they are ultimately responsible for his actions. Fortunately they were able to work something out before a lawsuit had to be filed. The contractor avoided responsibility for quite a long time, but ultimately my husband's partner was able to get him to reimburse the company for the costs.

LynnoraR
(Maryland)

Posts:41

08/01/2008 7:56 PM
Wow... how about that! I suppose the homeowner in our situation could in fact could come against us if the contractor refuses to rectify the situation. That has yet to happen since the homeowner has told us that they want to pursue this with the contractor. It is possible they can change their mind. I was talking about all the informative comments I received on this site with one of the other board members this evening and we were discussing "doing the right thing". It does make sense that as the 'agent' of the contractor, we would be ultimately responsible for his actions. Especially considering the fact that the contract we have is (as you stated) " a sort of generic thing typed up on a word processor". That's basically what our contract is. We talked about proposing to the other board members to repair the owners fence and seek reimbursement from the contractor. Now... I also brought up another scenerio as a result of "doing the right thing". We would have to disclose that action taken at our board meeting, since the funds will come out of our operating account. Regardless of the fact that 94% of the homeowners DON'T attend those meetings, all homeowners contribute to that account so we must disclose what we did. What if that opens the flood gates for all the other homeowners to start submitting claims on alleged incidents regarding our landscaper? If they see we fixed the fence for one homeowner, who's to say some may not try to get a "fee fix" out of the Association as well??? Let's keep it real... folks can be real shady and slick these days and those things can happen. What are we to do then???

MicheleD
(Kentucky)

Posts:1866

08/01/2008 8:16 PM
That's an interesting hypothetical "worst case" scenario. I guess my question would be, how much damage is this guy doing?! It would seem to me that someone would have to prove that there was damage by this guy. A broken fence is pretty durn obvious. I'm curious what other here think about that question. (Personally, I wouldn't be concerned about it. The homeowners were aware that we fixed the other homeowner's fence in the case where the tree removal guy smushed it. We were not deluged with other homeowners claiming damage, and there are about 5 or 6 homes adjacent to that area.)

BradP
(Kansas)

Posts:1742

08/02/2008 8:28 AM
Posted By MicheleD on 08/01/2008 6:54 AM Posted By LynnoraR on 08/01/2008 5:02 AM Mary, I'm sure if it came down to it, this can be pursued legally. That is not necessarily the issue here however; you bring up an interesting point that we (the Assn) can argue. The whole idea of hiring someone who is licensed and insured is so that IF things like this happen on personal property, the owner can pursue action through their insurance company and/or legally. We believe that the Assn is responsible for the contractor to the extent that we conduct an 'investigation' into what happened. We cannot be held financially responsible for actions or mishaps that THEY are responsible for. The owner must pursue action on behalf of his/her property. We will do everything in our power to provide the owner with our correspondence and resolution efforts on behalf of the incident, we'll be willing to provide sworn statements (if needed) and anything else the owner needs to rectify this situation but per other guidance that was given to us; it is not our direct responsiblity to fix the owners damaged fence. I'm not so sure that position would hold up if challenged. The contractor was hired by the HOA to do HOA work. He is, therefore, an agent of the HOA. It is very possible for the HOA to be held directly responsible for the actions of the contractor during the performance of his work for you. This is the reason why it's important to be sure that contractors are bonded and/or appropriately licensed and insured. He was not out there at his own request, nor was he performing work at the request of the homeowner whose fence was damaged. I would disagree with your approach Michele. The contractor is NOT an agent of the association. He is a vendor, hired to do a service for the association. He was not acting on behalf of the association. That would be like saying a contractor hired to cut my grass is my agent, they would not be, they are a contractor hired to do a job. For this person to say they are not responsible for the damage is ludicrous...What is his defense, the HOA MADE me go out an mow the lawn? It was his choice to be out there, he didn't have to perform the job. Now, I do agree with the fact that if they refuse to pay the association could be sued, however, I would be suprised if any judge would rule against the HOA in this case. That would be you hiring someone to build a house and the contractor drops a truss on your neighbors car by accident, are you responsible? They did not cause the damage, if the contractor refuses to pay up I would suggest the homeowner take them to small claims court and ask the association to be a witness or provide a notarized statement on their behalf.

MaryA1
(Arizona)

Posts:2498

08/02/2008 12:40 PM
Posted By BradP on 08/02/2008 8:28 AM Posted By MicheleD on 08/01/2008 6:54 AM Posted By LynnoraR on 08/01/2008 5:02 AM Mary, I'm sure if it came down to it, this can be pursued legally. That is not necessarily the issue here however; you bring up an interesting point that we (the Assn) can argue. The whole idea of hiring someone who is licensed and insured is so that IF things like this happen on personal property, the owner can pursue action through their insurance company and/or legally. We believe that the Assn is responsible for the contractor to the extent that we conduct an 'investigation' into what happened. We cannot be held financially responsible for actions or mishaps that THEY are responsible for. The owner must pursue action on behalf of his/her property. We will do everything in our power to provide the owner with our correspondence and resolution efforts on behalf of the incident, we'll be willing to provide sworn statements (if needed) and anything else the owner needs to rectify this situation but per other guidance that was given to us; it is not our direct responsiblity to fix the owners damaged fence. I'm not so sure that position would hold up if challenged. The contractor was hired by the HOA to do HOA work. He is, therefore, an agent of the HOA. It is very possible for the HOA to be held directly responsible for the actions of the contractor during the performance of his work for you. This is the reason why it's important to be sure that contractors are bonded and/or appropriately licensed and insured. He was not out there at his own request, nor was he performing work at the request of the homeowner whose fence was damaged. I would disagree with your approach Michele. The contractor is NOT an agent of the association. He is a vendor, hired to do a service for the association. He was not acting on behalf of the association. That would be like saying a contractor hired to cut my grass is my agent, they would not be, they are a contractor hired to do a job. For this person to say they are not responsible for the damage is ludicrous...What is his defense, the HOA MADE me go out an mow the lawn? It was his choice to be out there, he didn't have to perform the job. Now, I do agree with the fact that if they refuse to pay the association could be sued, however, I would be suprised if any judge would rule against the HOA in this case. That would be you hiring someone to build a house and the contractor drops a truss on your neighbors car by accident, are you responsible? They did not cause the damage, if the contractor refuses to pay up I would suggest the homeowner take them to small claims court and ask the association to be a witness or provide a notarized statement on their behalf. Brad, I guess we'll have to agree to disagree on this one. I share Michelle's opinion that the contractor is an agent of the assn. He was hired to perform a service and in doing so he caused damage to another homeowner's property. The assn. is the point of contact for the homeowner. If the contractor refuses to pay for the damages, the assn is on the hook because they hired him. It would be up to the assn to go after the contractor. He didn't perform his job as he was hired to do. I doubt the contract stated if he damaged anyone's property while performing his job it would be OK with the assn!

LynnoraR
(Maryland)

Posts:41

08/02/2008 12:48 PM
I will agree with Brian on this because that is also the impression that was given to us by an attorney when we consulted with them about this. We were advised to go after the contractor (which we did) and be prepared to support the homeowner at all costs (which we are). It was our duty to ensure that the contractor had a valid license and insurance. If we find that he does not, then we will be held responsible for all damages.

MaryA1
(Arizona)

Posts:2498

08/02/2008 1:00 PM
Posted By LynnoraR on 08/02/2008 12:48 PM I will agree with Brian on this because that is also the impression that was given to us by an attorney when we consulted with them about this. We were advised to go after the contractor (which we did) and be prepared to support the homeowner at all costs (which we are). It was our duty to ensure that the contractor had a valid license and insurance. If we find that he does not, then we will be held responsible for all damages. Lynorra, I didn't see any responses from Brian. But, if you meant to say Brad, then I'm really confused. Brad's opinion is that the homeowner would have to go after the contractor.

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