Statutes in California reportedly immunize Homeowners and Unit Owners who are members of their Homeowners' Association or Condominium Association, respectively, if certain conditions are met. One of those conditions is the purchase and maintenance of appropriate Commercial or other General Liability Insurance Coverage, and Directors and Officers Coverage. If the required Insurance Coverage is maintained, then Statutes in California reportedly provide that "the individual owners in an association" shall not be personally liable for Damages assessed against the Association and, further, that a "'volunteer' director," i.e., member of the Association Board, cannot be held personally liable either so long as certain required Insurance Coverage is maintained by the Association. [See your jurisdiction's Statutes to determine if these things hold true in your jurisdiction as well.]
Parenthetically, another requirement for board members to be immunized from personal liability is that their acts must have been committed in Good Faith. Stephen Glassman and Donie Vanitzian, "Homeowners Association Insurance Protects Board and Titleholders From Liability/Without The General Insurance and Directors and Officers Coverage, Directors and Officers Can Be Held Liable and Would Be Negligent in Permitting Individual Titleholders to Be Liable as Well" (Los Angeles Times Online, Sunday, November 7, 2010).
In fact, there is a view in California that as a result of these Statutes and the immunities they confer if followed, that failure to purchase the Insurance Coverage the Statutes require may be Negligence:
Without the general association insurance and directors and officers coverage, the individual directors and officers may not only be held liable but also would be negligent in permitting individual titleholders to be held liable.
According to the authors of the linked Q and A report from California, if any Insurance can be canceled it "is the coverage for the management company and its personnel. A professional company should carry and pay for its own insurance. If the management [company] cannot provide its own insurance coverage, it should not be providing services to your association." Id.
Note that standard Commercial General Liability or "CGL" Policies ordinarily include "Your Real Estate Manager" as an Additional Insured, for which there typically will not be a separately stated Premium.
Please Read The Disclaimer.
Comments