There are, generally, two types of contractors in condominium associations, those who charge a set fee for their work regardless of the amount of time they spend, such as landscapers and snow removal contractors, and those who charge by the hour, such as accountants and attorneys.
In either case, the bylaws (or at a minimum a rule) should make clear no one is allowed to contact the contractors except the board of directors. Without having such clear lines, money problems, real money problems, can arise.
With regard to the first group, i.e. the landscapers and snow removal contractors, roofers, siding installers, etc., they were hired after proper vetting by the board and/or the management company. You may have been a world class landscaper, but now you are just a condo owner. I have known contractors who have quit because of repeated busybodies telling the contractor how to do his or her job. There’s plenty of work out there, and contractors don’t want to lose employees because of being harassed, even in a nice way, by owners. So leave them alone.
With regard to the second group, i.e. those who charge their time to associations, such as accountants and attorneys, boards of directors have a duty to control and direct such contractors in order to maintain costs and come somewhere near what is budgeted. It’s not fair to other owners to have condo fees raised because one overly involved person repeatedly contacts the accountant or attorney with questions resulting in condo fees being raised.
Insurance agents fall somewhere in between these two groups. They neither bill their time, nor have a set contract. Rather, their fees are based, at least in part, on the value of the insurance policies they sell. But this leads to two problems. First, the bylaws (or at a minimum a rule) should prohibit any owner from contacting the insurance company to file a claim. Depending upon the company, just calling can create the opening of a claim. In turn, regardless of whether later denied or withdrawn, it is a mark on the Association’s insurance history. And that raises the premium.
Second, a board of directors may decide not to file a claim. Owners frequently wish for any damage to be covered, but after reviewing the documents with counsel, a board may correctly determine the damage was to an area for which the owner is responsible, not the association.
Further, let’s say the damage to be repaired is the responsibility of the association. Let’s also say an association’s deductible is $5,000. If an owner contacts the carrier or agent and files a claim, the insurance company will likely point out that the whole cost of the project is less than the deductible, so a claim can’t be filed … but now there is a mark on the insurance history increasing next year’s premium, leading to an increase in the condominium fee.
But let’s tweak the situation a bit further and say the damages will cost $6,500. A responsible board of directors may still choose, rightfully so, not to file a claim. Why? Going slightly over the deductible limit will also be a ding on the association’s insurance history. In turn, your agent may well be able to tell you the premiums are going to go up by more than $1,500 this year, and remain higher for several years thereafter, until there is a clear record of no claims. Boards have to decide these matters, for these reasons, not individual owners.
And word is that after many years of rate stability in the insurance industry, condominium insurance policies can be expected to rise as much as 20% this year. Why add to that?
What to do? There should be language in your bylaws that notes no one is allowed to contact, direct, or otherwise interfere with a contractor, as determined by the board, without the written approval of the board. There should also be language that says, for instance, any such contact may result in the imposition of a fine on an owner … and any resulting increase in costs incurred by the association, such as an insurance premium, or bill from the accountant or counsel, may, in the board’s discretion be assessed to the owner.
Simply put, contacting contractors is not a good idea.
Attorney Robert E. Ducharme is a former teacher whose civil practice is limited to condominium law, primarily in Rockingham and Strafford counties. He can be reached at firstname.lastname@example.org and Ducharme Law, P.L.L.C., found at www.newhampshirecondolaw.com. His column appears bi-weekly.