Q&A: Management Referral Goes Bad

Q I was referred to an unlicensed contractor by the management company employed by my association. This contractor allegedly was injured while completing work on my complex, and is now attempting to file a suit against me. Am I liable or can the management company be held liable?

—Not Liable in Cape May

A “First, I suggest that you report the claim to your insurance broker or agent. Assuming that you have purchased an HO6 policy insuring the unit, there will be a promise by the carrier to provide you with a legal defense,” according to Samuel J. McNulty, an attorney with the law firm of Hueston McNulty, P.C. in Florham Park. “Second, under the same policy the insurance company will be able to determine whether there is coverage for a person working in your home who is injured. You have not indicated on what basis the claim will be made. Has the injured contractor alleged that some fault of yours or your unit's caused his or her injuries? “Third, I suggest that you report the threatened lawsuit to the management company and board. Depending on the circumstances, the association and its insurers may determine that coverage exists which may provide you with a defense and/or indemnification from the claim. You will also be able to complain that the contractor was referred to you by the manager.

“As to holding the management company liable for referring you to the contractor, I need to obtain more information before I can advise whether there is a claim. From your note, you state that the contractor was "unlicensed" but you do not state how that played any part in the injury or the claim. If the contractor had a history of bad acts and the property manager knew or should have known of the history, perhaps that would be relevant, but I do not fully understand the facts from the brief note provided.

“I note generally that the management company is a contractual agent of the association. Its duties are set forth in the contract between them and the board. I assume that the work was to the interior of the unit as opposed to a common area for which the association is responsible to maintain. If the repair or maintenance was to a common area, then the manager would have arranged for a contractor on behalf of the board. Accordingly, it is unlikely that the property manager is required within the scope of its duties to provide recommendations for vendors to be used by the homeowners in the repair or maintenance of the unit. However, you will want to obtain a copy of the management agreement to determine if such a duty exists. You should make a request for an opportunity to review the document according to the procedures for unit owner access to records established by your association.

“Finally, we would expect that a unit owner would execute a written contract with the contractor setting forth the scope of work, the cost, payment terms, the beginning and end dates and setting forth that the contractor was an independent contractor with his or her own worker's compensation and other insurance. Was there a written contract between you and the contractor? If so, we will look to its terms to guide our action.”    

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