Clubhouse rentals

Our association makes available to all members the use of the community clubhouse with certain amendments. One of these amendments to rent the clubhouse is the member is required to obtain proof of insurance refleting current and valid insurance listing the HOA as an additional insured on the certificate of insurance. Here's the problem. Many of the homeowners insurance companies will not issue or request a high fee to issue such a certificate. The only suggestion that the HOA insurance carrier could supply, was for the homeowners to buy one day special event insurance. After looking into this, which also is very costly, the Board has basicly come to a stand still regarding this issue.
Any ideas???????

Hi Charles,

I live in an HOA with a clubhouse that can be rented by the members for parties. We have a three page rental agreement where the renter is resposnible for all the damages. It doesn't require them to add the HOA to their liability insurance, but their responsibility and liability are clearly outlined.

We prohibit things like alcohol and open flames, such as those little Sterno cans used for heating food, to reduce the chances of any problems. We have an inventory list of everything in the clubhouse, so after the party we can make sure that nothing is missing. In 20 years, we've never had a problem worse than soft drinks or cake spilled on the carpet.

We look at the clubhouse as we do any other part of our common area. If an owner damages any part of the common areas, the landscaping, the fences, the pool furniture, whatever, they are responsible for the damages. Since we know exactly who is renting the clubhouse, and the renter knows that we have all their information, they are quite responsible.

Work on a rental agreement where the renter's responsibilties and liabilities are clearly outlined. Put a limit on the number of guests, perhaps 2/3 the number of the room's maximum capacity, restrict the hours so they don't go late into the night, ban alcohol, open flames, live music, whatever works for you.

Hopefully, you have enough mature people who will realize that renting the clubhouse puts the onus on them to abide by the rules.

Charles

Our 500 home association has a similar provision where the "rental" is really a perquisite of being a member and the nominal fee involved largely covers incidental HOA costs. We have a licensing agreement which was reviewed by our attorney and our insurance agent has been aware of the practice from the beginning. It is considered one of the normal uses from a risk standpoint and no added insurance is required. Companies hired by the resident to cater the affair must have insurance. The resident is resposible for setup and cleanup but may hire someone to help. The HOA insists that a paid part time person, who knows the rules and how the clubhouse works be present during the event, and this is covered in the fee. The host may provide alcohol as long as it is done within the laws of the County.

Our only issue came up when it was discovered that our basic liability insurance has an "alcohol exclusion" clause. A proposed solution was to require event insurance on the part of the licensor, but this would have made the cost prohibitive to the point of making the benefit useless. The fact that the HOA was not providing the alcohol, and was several steps removed from liability, did not assuage the fears of the Board or the Attorney. Fortunately it was discovered, and confirmed by our insurance agent, that our second $10M umbrella policy did not have such an exclusion. The Board was willing to accept the risk of the higher deductable associated with the umbrella policy.

Another issue, which we have not fully resolved, is to what purpose the rental may be put. It is natural to think in terms of wedding reception or family party but should a resident with a business be allowed to use it for a commercial purpose? (e.g, a reception for local realtors to promote another property). At present we have no provisions that would preclude this and the feelings of the Board are mixed.

Liability is a fact of association life and it must be dealt with responsibly. But the fear of being sued should not paralize a Board to the point where members can no longer enjoy what they pay for.