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ARC insurance requirements

Started by DavidG45 • 21 replies • 271 views

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DavidG45 (Delaware)
Posts: 994
Posted:
Unbeknownst to me (board member) our ARC implemented a policy requiring ARC requests to include proof of liability insurance from any contract that a resident might use. Now they are contemplating adding a requirement that contractors also provide proof of workers compensation insurance. I am curious if these are typical requirements, and what the HOA’s interest is in these matters. I am also curious what the procedure would be if the homeowner intends to do the work themselves.

TIA
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Should always hire an insured and licensed contractor. What is the issue?
Former HOA President
BillH10 (Texas)
Posts: 1,217
Posted:
Melissa

You are absolutely correct as regards contractors hired by the Association.

Contractors hired by owners for projects on their private property are another matter. While your comment is absolutely the smartest course of action, unless the Association is specifically empowered to require any contractor hired by an owner to be licensed and provide proof of insurance, it may be a hard row upstream to enforce the requirement.

There is also the matter of enforcement. Who will ensure every contractor involved in a project is insured?

I would ask, how is it the Association can insist on liability insurance for a contractor hired by an owner? What business is it of the Association?
JohnT38 (South Carolina)
Posts: 1,631
Posted:
Quote:
Posted By BillH10 on 02/21/2022 2:41 PM
Melissa

You are absolutely correct as regards contractors hired by the Association.

Contractors hired by owners for projects on their private property are another matter. While your comment is absolutely the smartest course of action, unless the Association is specifically empowered to require any contractor hired by an owner to be licensed and provide proof of insurance, it may be a hard row upstream to enforce the requirement.

There is also the matter of enforcement. Who will ensure every contractor involved in a project is insured?

I would ask, how is it the Association can insist on liability insurance for a contractor hired by an owner? What business is it of the Association?

We are a condo association and 100% of the land is owned by the HOA. If an owner submits an ARC request that is approved we required that their contractor have insurance when anything was being done on HOA grounds.
DavidG45 (Delaware)
Posts: 994
Posted:
Quote:
Posted By JohnT38 on 02/21/2022 2:46 PM
Posted By BillH10 on 02/21/2022 2:41 PM
Melissa

You are absolutely correct as regards contractors hired by the Association.

Contractors hired by owners for projects on their private property are another matter. While your comment is absolutely the smartest course of action, unless the Association is specifically empowered to require any contractor hired by an owner to be licensed and provide proof of insurance, it may be a hard row upstream to enforce the requirement.

There is also the matter of enforcement. Who will ensure every contractor involved in a project is insured?

I would ask, how is it the Association can insist on liability insurance for a contractor hired by an owner? What business is it of the Association?


We are a condo association and 100% of the land is owned by the HOA. If an owner submits an ARC request that is approved we required that their contractor have insurance when anything was being done on HOA grounds.

Our HOA is.single family residences.

Do you require liability, workers comp, or both?
JohnT38 (South Carolina)
Posts: 1,631
Posted:
Quote:
Posted By DavidG45 on 02/21/2022 3:11 PM
Posted By JohnT38 on 02/21/2022 2:46 PM
Posted By BillH10 on 02/21/2022 2:41 PM
Melissa

You are absolutely correct as regards contractors hired by the Association.

Contractors hired by owners for projects on their private property are another matter. While your comment is absolutely the smartest course of action, unless the Association is specifically empowered to require any contractor hired by an owner to be licensed and provide proof of insurance, it may be a hard row upstream to enforce the requirement.

There is also the matter of enforcement. Who will ensure every contractor involved in a project is insured?

I would ask, how is it the Association can insist on liability insurance for a contractor hired by an owner? What business is it of the Association?


We are a condo association and 100% of the land is owned by the HOA. If an owner submits an ARC request that is approved we required that their contractor have insurance when anything was being done on HOA grounds.


Our HOA is.single family residences.

Do you require liability, workers comp, or both?

We required both. Since you are a single family community I assume you own your home and the land. Others would know better than I do but I find it odd they can require you to do this. With that said, I never let anyone work on my previous homes unless they were fully insured.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Let us say a HOA ARC approves some electrical work for a light install. The owner does it themselves or hires a friend. They do it wrong and catches house on fire and some common area. The owners insurance may not cover it nor the HOA if it is known person was not qualified. You all could be on the hook for the damages
Former HOA President
LetA (Nevada)
Posts: 2,679
Posted:
Depends on the scope of the work being done. Like others have said, it is best to hire a licensed and bonded contractor. It might be a stretch for the ARC committee to request these documents be
submitted prior to approval. Here in Nevada those can be easily looked up via the state contractors licensing board and the workman's comp board.
If you are dealing with a properly accredited contractor they will have all of the above.
LoriM15 (Florida)
Posts: 1,009
Posted:


Our HOA is.single family residences.

Do you require liability, workers comp, or both?

Our HOA requires licenses and proof of liabiity and workman's comp with our ARC applications. The only exception is if the homeowner states he is doing the work himself, and we only allow that on simple projects like landscaping. For example, no one asking for roof approval could say they were doing it themselves without proof of insurance.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By DavidG45 on 02/21/2022 2:28 PM
Unbeknownst to me (board member) our ARC implemented a policy requiring ARC requests to include proof of liability insurance from any contract[or] that a resident might use. Now they are contemplating adding a requirement that contractors also provide proof of workers compensation insurance.
TIA
First, per the CCRS, I expect the ARC has no rule-making authority. More likely: The ARC can propose rules to the Board (with said rules having a basis in the covenants), and the Board can then agree to create the rule or not.

Second, please ask the ARC to cite the covenant from which the rule derives. I suspect there is no such covenant. I suspect the ARC has overstepped its bounds in a major way.
AugustinD
Posts: 3,698
Posted:
I see BillH10 said similar. I agree with BillH10's post.
DavidG45 (Delaware)
Posts: 994
Posted:
Quote:
Posted By MelissaP1 on 02/21/2022 3:23 PM
Let us say a HOA ARC approves some electrical work for a light install. The owner does it themselves or hires a friend. They do it wrong and catches house on fire and some common area. The owners insurance may not cover it nor the HOA if it is known person was not qualified. You all could be on the hook for the damages

I'm curious about that. I'm sure homeowners regularly hire contractors for work inside their homes. I presume the HOA does not require proof of insurance for those case. We also do not require HOA approval to make repairs; so if a carriage light were broken our residents could hire an electrician to replace it without proving insurance by the contractor.

Of course, if this is considered "best practices" by HOA's across the country I'm not completely opposed to it. So my question is more centered on whether or not this is a normal requirement, or if it is an outlier.
DavidG45 (Delaware)
Posts: 994
Posted:
Quote:
Posted By AugustinD on 02/21/2022 7:24 PM
Posted By DavidG45 on 02/21/2022 2:28 PM
Unbeknownst to me (board member) our ARC implemented a policy requiring ARC requests to include proof of liability insurance from any contract[or] that a resident might use. Now they are contemplating adding a requirement that contractors also provide proof of workers compensation insurance.
TIA
First, per the CCRS, I expect the ARC has no rule-making authority. More likely: The ARC can propose rules to the Board (with said rules having a basis in the covenants), and the Board can then agree to create the rule or not.

Second, please ask the ARC to cite the covenant from which the rule derives. I suspect there is no such covenant. I suspect the ARC has overstepped its bounds in a major way.

I felt pretty comfortable that they had overstepped. However, now you make me wonder whether or not the Board would be overstepping if we were to add this rule. I have trouble finding anything in our governing documents that would give us that authority, but I will review more closely.

I am, as much as anything, just curious as to how common this is.
HenryS7 (Pennsylvania)
Posts: 336
Posted:
Quote:
Posted By DavidG45 on 02/22/2022 7:23 AM
Posted By MelissaP1 on 02/21/2022 3:23 PM
Let us say a HOA ARC approves some electrical work for a light install. The owner does it themselves or hires a friend. They do it wrong and catches house on fire and some common area. The owners insurance may not cover it nor the HOA if it is known person was not qualified. You all could be on the hook for the damages


I'm curious about that. I'm sure homeowners regularly hire contractors for work inside their homes. I presume the HOA does not require proof of insurance for those case. We also do not require HOA approval to make repairs; so if a carriage light were broken our residents could hire an electrician to replace it without proving insurance by the contractor.

Of course, if this is considered "best practices" by HOA's across the country I'm not completely opposed to it. So my question is more centered on whether or not this is a normal requirement, or if it is an outlier.

No, our HOA doesn't require any information on the contractor who is doing work on someone's private home in order to approve the plans. Our Architectual committee approves the plan of what the homeowner wants to do, it does not approve the method in how they go about doing it. If the homeowner has a dozen of trained monkeys working as slave labor perform the work, that would be fine as well.

The only thing that we sometimes require is for a homeowner to provide evidence that a permit has been obtained by the City. This wouldn't be for something simple, like a new light bulb, but rather for a home remodel where the house expansion is getting close to the property lines. We don't spend our time reviewing a plan that is not acceptable to the city so we require that the city first provide approval.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By DavidG45 on 02/22/2022 7:28 AM

I felt pretty comfortable that they had overstepped. However, now you make me wonder whether or not the Board would be overstepping if we were to add this rule. I have trouble finding anything in our governing documents that would give us that authority, but I will review more closely.

I am, as much as anything, just curious as to how common this is.
I am betting the CCRs of condos may tend to have such requirements, on account of the close quarters and general closeness of common areas. E.g. often the walls and plumbing of a unit are common areas or are in direct support of common areas.

But for single family homes with no adjoining walls, I would expect governing documents nationwide to not have such requirements for insurance.

Requiring the proper permits be obtained from the city or county is another matter. This should go without saying but I for one recommend the ARC approval papers include a requirement to obtain the appropriate city/county permits.
DavidG45 (Delaware)
Posts: 994
Posted:
Quote:
Posted By AugustinD on 02/22/2022 7:35 AM
Posted By DavidG45 on 02/22/2022 7:28 AM

I felt pretty comfortable that they had overstepped. However, now you make me wonder whether or not the Board would be overstepping if we were to add this rule. I have trouble finding anything in our governing documents that would give us that authority, but I will review more closely.

I am, as much as anything, just curious as to how common this is.
I am betting the CCRs of condos may tend to have such requirements, on account of the close quarters and general closeness of common areas. E.g. often the walls and plumbing of a unit are common areas or are in direct support of common areas.

But for single family homes with no adjoining walls, I would expect governing documents nationwide to not have such requirements for insurance.

Requiring the proper permits be obtained from the city or county is another matter. This should go without saying but I for one recommend the ARC approval papers include a requirement to obtain the appropriate city/county permits.

Thanks. Yes, we have always required permits.
HenryS7 (Pennsylvania)
Posts: 336
Posted:
Quote:
Requiring the proper permits be obtained from the city or county is another matter. This should go without saying but I for one recommend the ARC approval papers include a requirement to obtain the appropriate city/county permits.

We actually talked to our attorney about this and received a legal opinion on it. Our attorney's opinion is that we don't have to worry about city code in our approvals. That's the cities job and not our job. We are fine if we approve something that violates city code because we are not experts in city code. The city has professionals that deal with that.

However, I don't want to waste ACC time and Board time reviewing things that won't be approved by the city, so it's logical to make the homeowner get city approval first.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By HenryS7 on 02/22/2022 8:02 AM
We actually talked to our attorney about this and received a legal opinion on it. Our attorney's opinion is that we don't have to worry about city code in our approvals. That's the cities job and not our job. We are fine if we approve something that violates city code because we are not experts in city code. The city has professionals that deal with that.
The City/County will deal with it if they know the work is going on.

Of course it's not required in ARC approvals. To me, it's more to put the owners on notice not to screw around with non-permitted work, and a neighbor or even the HOA might very well make a report to the city or county if the owner is doing work that is supposed to be city- or county-permitted.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
I think people are getting a bit side tracked. One should demand licensed/bonded contractors when there is common walls, ceilings, flooring for the protection of all but necessary for stand alone homes. For standalone home ARC approval does not require insurance issues.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By JohnC46 on 02/22/2022 8:09 AM
I think people are getting a bit side tracked. One should demand licensed/bonded contractors when there is common walls, ceilings, flooring for the protection of all but necessary for stand alone homes. For standalone home ARC approval does not require insurance issues.

CORRECTION

but not necessary for stand alone homes.
AdamL1 (UnitedStates)
Posts: 559
Posted:
Quote:
Posted By JohnC46 on 02/22/2022 8:11 AM
Posted By JohnC46 on 02/22/2022 8:09 AM
I think people are getting a bit side tracked. One should demand licensed/bonded contractors when there is common walls, ceilings, flooring for the protection of all but necessary for stand alone homes. For standalone home ARC approval does not require insurance issues.


CORRECTION

but not necessary for stand alone homes.

Agreed., as stated by Augustin and Bill above.

For detached SFH, it would seem the HOA has no authority or jurisdiction to require insured/licensed/bonded contractors and frankly none of the HOA's business (unless your governing docs specifically say otherwise).

Of course, that is separate and independent from the general advice and concept of hiring competent, well-trained, and insured contractors for your work....but again, that's separate and independent and outside the HOA's jurisdiction.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
For standalone homes, I can see the ARC having a say in what external things are to be done is as far as "looks" but nothing else.

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