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LindaC2 (California)
Posts: 5
Posted:
I am new to our Board and I can't find an answer to this: Our insurance company is charging us 33K for California worker's comp insurance to cover a vendor that the management company brought on to work in our community. It was later discovered that this vendor was not licensed, insured and no more than a handyman when he represented himself as a contractor. I wonder where to find the answer that the HOA is responsible for this or is the management company who authorized the work be done? PS: this handyman was a BOD member also!!
BradP (Kansas)
Posts: 2,640
Posted:
Linda:

I would think your HOA is responsible for that. Without knowing the size of your subdivision and all the common elements you have to take care of maybe you are better off hiring an independent contractor and making worker's comp insurance their responsibility.
LindaC2 (California)
Posts: 5
Posted:
Thanks for your response. We have 220 owners divided into 52 fourplexes in our community;a medium amount of common element. We thought the management company was responsible for making sure that independent contractors are insured, bonded, licensed as needed. They didn't in this case and now the insurance carrier is saying we need to purchase the insurance. We have changed mgmt companies as of last month, that guy (so-called contractor) sold and moved out (with about $450K of our money to boot) and we are left with a bill from the insurance company now.I don't feel we should have to pay it. Can you respond again please?
RogerB (Colorado)
Posts: 5,067
Posted:
Linda, did your Board hire this contractor or did the MC. If it was the MC does your Management Agreement allow them to hire contractors without Board approval. If so the Board needs to change the Agreement. If not, then the MC may be responsible for this insurance bill.

The President of the Board or the Board's authorized person should sign contracts. The Board should require all bidders on contracts to provide proof of insurance prior to chosing a contractor and signing the contract.

You need to discuss this with your Managing Agent. It appears that your Board needs better guidance.
BradP (Kansas)
Posts: 2,640
Posted:
Linda:

Roger had some great points, with 33K on the line I would talk with an attorney about your options. How did this guy get 450k of your money, did he do that much work or did he swindle someone?
LindaC2 (California)
Posts: 5
Posted:
For your responses; great input guys;
The so-called "contractor" was a Board member at the time! We kept complaining to MC about conflict of interest to no avail. He coaxed the MC into allowing all the work to be done by him or shady sub-contractors. He even came up with at least 2 fictitious business names for different invoices. MC approved anything he submitted as far as I can research the paper trail. He also worked with the treasurer of our Board and she approved and signed checks for every invoice he submitted with only 1 signature instead of the required two. It's such a tangled web now, all of the past Board members sold out and disappeared. We are looking for an attorney who might take the case on a contingency basis, but that is a little down the road. Right now we are struggling to survive with all the bills and nearly being bankrupt. We had to assess 220 homeowners 8K each. I've contacted the police re embezzlement, fraud, and other criminal matters but we want to try the Civil route for breech of contract etc., before the Criminal and try to recoup some of our loss. It's an uphill battle right now. Court system requires so much hoop-hopping. As a new Board, we have changed the way things were done with the previous MC and I think we are checking every vendor to the hilt. The 33K is insult to injury. Please keep advising.I'm only an elementary school teacher--this is so beyond me!
WilliamT (Arizona)
Posts: 489
Posted:
You may want to weigh the advantages of pursuing the criminal avenue first. This is no cost to you as the county prosecutor office does that work.

The burden of proof is higher in a criminal case than in a civil case. If you win the criminal case then you have a much geater chance of winning the civil case.

If you lose the criminal case, it has not cost you anything, however, you have access to all of the discovery and court records which you can use in your civil case. With the burden of proof being less in a civil case, you may still win in civil court even though you lost in the criminal case because of the burden of proof difference.

Bill
BradP (Kansas)
Posts: 2,640
Posted:
William is right, you definitely need to pursue the criminal aspect. You really need to get the advice of an attorney, my first thought is refuse to pay the 33k bill, but an attorney can better answer the legal ramifications of things like that. Good luck, justice will prevail, will just take time.
LindaC2 (California)
Posts: 5
Posted:
Thanks everyone. I'm taking it to the Board and going down to our local PD this week to see if we can do anything. What a great forum this is. I'm so glad I found some help. Linda

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