Legal SPF: Summer Protection For Community Associations

We are on the cusp of Spring, which means Summer is just around the corner. And pool season is the hallmark of Summer. In addition to securing a pool service contractor and/or lifeguards, community associations should consider the broad spectrum of responsibilities and measures related to the pool. Below is our suggested checklist of items for community associations to review well before the start of pool season for maximum protection.

Negotiate and Understand Terms of Pool Contract

One of the most important measures forecasting pool season is the contract with the pool contractor. Associations typically receive proposals for pool services that list basic business terms. These proposals, however, may lack other terms that are important to protect an association, such as contractor insurance requirements and indemnification obligations.

Associations should ensure that the agreed-upon terms contained in a proposal are formalized into a contract and that such contract also contains other essential provisions to best protect the Association. For example, include language that requires the contractor to be adequately insured and to name the association as an additional insured under the contractor’s policies. In addition, include terms whereby the contractor indemnifies the association for any claims related to the pool (and remove any indemnification obligations of the association). Moreover, make sure that there are measures in place if the contract is breached and remedies need to be pursued.

Ask the contractor for the contract itself and if one is not available, have your association legal counsel draft one. Having association legal counsel review or write a pool contract is a lifesaver when problems run afloat.

Obtain Adequate Insurance Coverage

Pools are fun, but pools carry risk. In the event of an incident at the pool, such as when someone is injured (or worse), the community association may be liable, or at the very least, named as a defendant in a legal action, and if the community association agreed to indemnify its pool contractor for an incident, the association may now be responsible for doing so. For any of those scenarios, the cost of defending the community association can be expensive in addition to paying any monetary damages demanded by or awarded to the plaintiff. These amounts will significantly increase if the community association has any indemnification obligations for its pool contractor in the pool contract.

Community associations should meet with their insurance broker or agent to discuss the types of insurance coverages and exclusions that are in place related to the pool and whether additional policies and/or coverages should be purchased for extra protection, particularly if the community association has any indemnification obligations. Such insurance policies may include general liability insurance, workers’ compensation insurance, and/or an umbrella policy.

Apply Due Process Procedures Before Suspending Pool Privileges

For community associations with pools, pool privileges are important amenities that are facilities and services provided by the Association. If an owner is more than 60 days past due in the payment of assessments and the condominium instruments or rules and regulations (for a condominium) or declaration and rules and regulations duly adopted pursuant thereto (for a property owners association) expressly so provide, there may be no better incentive to pay or no more effective way to collect than loss of pool privileges. Before doing so, however, the association must go through due process procedures. It simply is not enough to withhold a pool pass or deny access once an owner is more than 60 days past due.

Due process is a set of steps to take to ensure an owner has notice and an opportunity to be heard before suspension occurs. Prerequisites to due process include an owner being more than 60 days past due in the payment of assessments and the condominium instruments or rules or POA declaration or duly adopted rules containing the requisite authority to suspend for non-payment. Assuming these prerequisites have been met, then due process requires:

• providing a written notice of default and a reasonable opportunity to correct
• if not paid, then providing written notice of a hearing at least 14 days in advance, by hand delivery or certified mail return receipt requested to the owner at the address required for notice of meetings, and advising that the association may suspend pool privileges (and any other actions that may be taken)
• hearing before board or other committee established for this purpose as opportunity to be heard and represented by counsel at owner’s expense to determine whether suspension should occur
• within 7 days of the hearing, providing notice of the hearing result must be hand delivered or mailed by certified mail return receipt requested to the owner at the address required for notice of meetings

Pool season approaches about the time that defaults for the current fiscal year begin to exceed 60 days. Due process is a process, however, and takes time. This can be an effective remedy for a community association that gets its ducks in a row. These steps should be taken in advance of pool season. If an association does not have the underlying authority in its documents or rules, this time before pool season also can be used to adopt rules or an appropriate amendment to the recorded documents.

Review Pool Rules for Compliance with Fair Housing Laws

Does your community association have pool rules that containing any of the following:

a) “Adults-only” swim the last ten minutes of every hour;
b) All non-toilet trained children are prohibited from using the pool;
c) Children under 18 must be accompanied with an adult while using the pool;
d) All minors must pass a swim test before using the pool; and/or
e) All persons using the pool must wear traditional swimsuits.

If so, the pool rules for your community may constitute impermissible discrimination against individuals because of their status in a protected class; specifically, familial status and/or religion, which are protected classes under the fair housing laws.

All Virginia community associations are subject to the federal Fair Housing Act (“FHA”) and the Virginia Fair Housing Law (“VFHL”) (FHA and VFHL collectively “Fair Housing Laws”). The Fair Housing Laws prohibit discriminatory housing practices against individuals based on their race, color, religion, sex (including sexual orientation and gender identity), national origin, familial status, handicap or disability, and the VFHL provides additional protection to individuals based on their elderliness, source of funds, or military status.

Fair housing laws come into play in pool rules because of one’s status in a protected class, which discrimination can occur in one of two ways: disparate treatment or disparate impact. Disparate treatment is where a community association has rules, policies, procedures, or practices that intentionally treat persons in a protected class differently. The pool rules mentioned in a) through d) purposely treat individuals with familial status differently than others. On the other hand, disparate impact is where a community association has rules, policies, procedures or practices that appear neutral on their face; however, they actually cause persons in a protected class to be treated differently. The pool rule mentioned in e) may treat some who, for religious reasons, do not wear traditional swimwear differently than others.

Pool rules that are discriminatory against those with familial status or because of an individual’s religion (or any other status) are not permissible under the Fair Housing Laws. To the extent pool rules may treat individuals in a protected class differently, the rules need to serve a legitimate interest and be narrowly tailored. Many pool rules are made with good intentions, but are inadvertently discriminatory as written or in effect. To avoid getting burned by a complaint of discrimination, community associations should consult with their legal counsel to review existing or proposed rules and policies before pool season heats up. In addition, community associations should consult with their insurance broker or agent to determine what, if any, insurance coverage may be in place or available for defending a discrimination claim.

Disclaimer: The information in this article is for general information and is not legal or tax advice. Nor does any exchange of information associated with this article in any way establish an attorney-client relationship.