HOA Volunteer Projects: Cost-Saving or Liability in Waiting?
It is not uncommon for HOA Boards to need and want additional help with projects around their HOA community. This help often can come in the form of volunteer Homeowners and self-help projects undertaken by Board members. While this form of help can be cost-saving for many HOAs, the Boards must consider the potential liability and legal ramifications of unfettered volunteer-based projects in their Associations.
Because of the legal complications that may arise when Board members or Homeowners undertake volunteer projects, these sorts of projects should be approached with caution and with consideration of potential legal issues that could occur. One potential issue stemming from volunteer projects is the matter of paying the Board members or Homeowners who perform the task. Although paying a person from the Community may be cheaper than hiring a business or contractor, HOAs must be careful to avoid conflicts of interest and liability to the volunteer & Association. Community Associations in Colorado are required by state law to have a “Conflict of Interest Policy” adopted to govern situations such as these and other conflicts. Such a policy delineates when a Board member is deemed to have a conflict of interest and how such conflict can be resolved. For example, the Board members must be careful to disclose if they will receive a personal benefit from a volunteer project or from volunteering on a project, apart for reimbursement for actual expenses, and should follow the Conflict of Interest Policy if such a situation occurs.
Even if the volunteers are not being paid for their work, HOAs must be mindful of the potential liabilities that can arise from the physical or mental nature of the undertaken projects. If an HOA allows volunteers to help with some community landscaping, for example, what are the potential repercussions should a volunteer get injured on the job or cause injury to another party? The injured party can sue the HOA for damages, which will be both a lengthy and expensive process. In addition, an injury to a Homeowner or the potential lawsuit stemming from it may hurt the sense of community many HOAs are striving to achieve. Thus, an HOA Board must consider how to protect the Association from such liability if a volunteer is injured or causes injuries to another during a project.
One way an HOA can protect itself from liability is through obtaining a Waiver of Liability from the volunteering parties. Your legal counsel can draft these waivers of liability that would need to be signed by the volunteer party before any work is undertaken. These waivers have the volunteer agree to not hold the Association liable if injuries should occur during the work.
HOAs can also treat the volunteers as “independent contractors.” This means that the HOA should require any Board member, Owner, or person that is doing volunteer work to obtain and retain insurance. The insurance that the volunteers hold should cover property damage, bodily injury, indemnification, and possibly reputational harm and other injuries. Having the volunteers carry their own general liability insurance can help protect the HOA’s interest in case of mishaps.
Another main way for HOAs to protect themselves from liability during volunteer work is to make sure they have adequate liability insurance for the Association. By making sure your HOA’s insurance policy has numerous protections for liability, and that those protections are up-to-date and expansive, your HOA will be better protected if a volunteer project is undertaken.
A final consideration before allowing volunteer work to occur is to consider the type of work that is being done. If the project at hand is remedial, using volunteers may be an acceptable way to address issues quickly and affordably. However, for projects that are dangerous or require more physical exertion or otherwise specialized knowledge, it would be best to hire experts to perform the work.
Though allowing volunteer projects to occur on behalf of the Association is generally discouraged due to the potential legal ramifications, the lengthy insurance process, and the chance for injury and damages, should your HOA choose to take these projects on, the Board should be mindful to have the proper protections in place to avoid liability. These protections include complying with and updating your HOA’s Conflict of Interest Policy, maintaining adequate liability insurance for the HOA, requiring volunteers to maintain their own liability insurance (similarly to independent contractors), and having volunteers sign waivers of liability before work begins. If your HOA implements these things, it will have the necessary protections from the multitude of complications that may present themselves during such volunteer-based work.
WesternLaw Group is a Colorado law firm specializing in Community Association law. Our practice focuses on the preventive aspects of HOA procedures and interpretation of governing documents.
Gabriel Stefu is the founder and a senior attorney for WesternLaw Group and specializes in HOA litigation, transactional work, and collections.