Question: It has been the practice at our condominium for the Board to permit independent contractors to work on our common elements without proof they are licensed or that they are properly insured (workers comp. and liability coverage). Everything I have read makes it clear it is important that the association not operate in this manner. There appears to be the added problem that if an “independent contractor” is injured, the cost of his medical care and disability could become the liability of our association. I am concerned about continuing this practice. Even with liability insurance in our Master Condo Policy, this may be a situation that could result in real hardship on all of our Association Members and particularly on the Board Members.
Our legal documents require our Board approve an expenditure before it is incurred. For this reason, I am asking you 1) Do you think that the board should proceed with a legal opinion of our procedure for hiring contractors to work on our Common Element? 2) Can you give us an estimate of the cost that we would incur for you to proceed with this matter? Jimmy.
Answer: Jimmy. Thanks for asking for my assistance, but I do not mix my column writing with my legal practice. I am competent community association attorney in your area to assist you – if you really need such assistance.
Frankly, I don’t think you have to spend any money on a legal opinion. It is “condo 101″ – or for that matter “common sense 101″ – that when anyone hires a contractor, he/she/it must be licensed in your state and must have proof of insurance.
The association’s insurance agent – who handles your master policy – should be able to provide you with the guidance you need to protect the association, including all board members.
And when you hire a contractor, for jobs over an amount – say $3000 – a written contract must be entered into. Too many contractors use what I call the “two page special”; it spells out a price, gives little detail as to the scope of work, and states that the association (or the homeowner) will be responsible for attorneys fees should they default in payment.
That’s not adequate. Good contracts can be obtained from the American Institute of Architects (AIA.org). They should contain, at a minimum, (1) exactly what work will be done, (2) when it will start and when it is projected to be completed, (3) how payments will be made, (4) what rights do you have if the contractor is in default, and (5) should you litigate or arbitrate if there is a dispute -2- and in either situation, the prevailing party will be entitled to attorneys fees and costs.