In uncertain political and economic times, a condominium, cooperative or homeowners’ association may instinctively want to pinch pennies when it can, especially when it comes to relatively minor maintenance projects. If an association has in-house maintenance staff – whether that be a full-time super, part-time handyperson, or some combination of the two – then that’s all the better when it comes time fix a creaky door or a squeaky step. But some projects will necessarily fall outside the purview of even the most capable, competent building staff, and require a specialized outside contractor. The ability to recognize the line between small quick-fixes around the property and an endeavor that requires specific training, licensing, or insurance coverage is essential for board and management. Otherwise, an attempted cost-saving operation could open the association up to serious liability headaches.
A qualified property manager can act as a board’s conscience when it’s considering whether to allocate funds to a maintenance project, or attempt a quicker fix in-house. A managing agent or firm should have set criteria on hand as to the type of work that can be safely and legally performed by staff, as opposed to something on a larger scale that demands a seasoned pro.
Nicolas Marin, formerly with Wesley Realty Group in Evanston, Illinois, and now at Navigate Property Management in Bellingham, Washington, lays out a few questions boards should consider when making a work-order decision:
• Personnel: Does your in-house staff have the experience necessary to perform the task at hand safely and competently? Who will supervise them during the work? Is there a possibility that a simple mistake could exacerbate the existing problem? In a scenario where an association has limited staff in general, will attempting this task interfere with the other daily operations of the property?
• Tools, equipment, and supplies: Does the association have everything necessary to perform the maintenance and repair? Some projects may require specific tools which the association doesn’t have on hand, in which case the board and/or manager will have to review whether it makes sense to invest in purchasing those tools. If the association does opt to purchase special tools or equipment, is there an assurance that it will be used safely?
• Licenses/permits: Some types of maintenance and repairs must be performed under license. An association should review the requirements at both a state and municipal level to make sure they’re on the right side of the law. If the in-house staff is not properly licensed, then the association should hire a licensed contractor to perform the work. If a permit is required, then the board should appoint a specific member to apply for that permit and shepherd it through the approval process.
• OSHA standards: Employers are responsible for providing a safe and healthy workplace for their employees. If the board is directing in-house staff to perform some maintenance or repair which requires specific standards be met, the association must rise to the occasion. If a staffer injures him- or herself and the board had failed to review proper Occupational Safety and Health Administration (OSHA) standards prior to commencement of work, then the association may be held liable for damages and legal penalties.
A Day’s Work
Rather than dispatching a handyperson to perform a job only to find that it’s beyond that employee’s knowledge or skill set, and then bringing in an outside contractor, a board owes it to the association to have some ground rules as to what types of projects can be undertaken in-house and what cannot. Not only does this save time and hassle, but it also reduces the chances of property damage, voided warranties, or injury to staff members.
“Plumbing is one area that many buildings try to ensure that their staff is qualified to handle,” says Thomas D. Kearns, a partner at the law firm of Olshan Frome Wolosky LLP in New York. “Plumbing issues arise regularly, and having skilled staff on-hand who can handle the basics is a real convenience and cost-saver. Areas that should generally be avoided include major exterior pointing projects, or anything involving electrical components that are beyond the expertise of the staff. These days, thermostats, elevators, and security systems all tend to be quite sophisticated.”
The obvious advantage of addressing an issue in-house, rather than bidding out the job and bringing in a contractor, is that by handing the task to someone who they’re already paying, there is no additional cost to the association – theoretically, anyway. Also, the association has greater control over how the work is performed.
The downside, according to Edward J. Mackoul, President of Mackoul Risk Solutions, an insurance firm that has offices in New York and New Jersey, is that “If the staff causes damage or injury, the association has nobody to whom they can transfer risk. If they were to hire a contractor and dot their I’s and cross their T’s, if the association was to be sued for injury or damage caused by the contractor’s work, they could rely on that contractor’s insurance policy to provide them with coverage. With the staff doing the work, the association’s only recourse is its own insurance. Also, the staff may not possess the experience or the knowledge of an outside contractor who performs the type of work in question day in and day out.”
And, as Kelly Elmore, a principal attorney at the Illinois law firm of Kovitz Shifrin Nesbit, notes, there are other disadvantages outside of liability when it comes to taking on a project in-house. “Staff members who are tasked with a large maintenance or repair project may neglect or otherwise be diverted from other important tasks or jobs within the association. This may have some unintended consequences for the association, and create further issues. In addition, there may be certain liability risks associated with a specific maintenance or repair project, and the association should ensure that the job is included in the scope of work that the particular employee is trained in and authorized to perform. Requesting that an employee perform a job or task outside his or her scope of work could also have insurance and other legal consequences for the association.”
An outside vendor is referred to as a ‘contractor’ for good reason – there’s an ample amount of paperwork that must be signed before a job can commence. “I do a lot of contracts for roofing projects, siding projects, snow removal, landscaping and those types of services,” says John E. Shaffer, an attorney with Marcus, Errico, Emmer & Brooks in Braintree, Massachusetts. “Clients often do not involve an attorney as much as they should, as these documents really should be reviewed. All of those services come with potential liabilities, and it’s our job to protect an association and its unit owners. Anyone doing anything on an association’s behalf is a potential source of liability. Bad things can happen even if someone is just mowing the lawn.”
So, given that utilizing an on-site employee avoids much of the legal paperwork associated with a contractor, it’s imperative that an association ensure that any work being done by staff is well within its means, or else those precious pennies saved may quickly turn into a substantial debt.
As proper insurance has been a running theme thus far in regard to whether or not a job can be handled in-house, it’s worth delving further into the specific requirements thereof.
“If a building staff member is doing work for the association, they do not need their own insurance coverage,” says Mackoul. “In the event that they were injured on the job, the association’s workers’ compensation coverage would provide benefits. In the event the staff member caused damage or injury to someone and were sued, the association’s general liability coverage would respond and defend them. The issue is when a staff member is working for a resident, and is being paid directly by that resident. Once a staff member is being compensated by someone other than the association, that staff member is not working for the association at that time. Were they to be injured, they could conceivably be ineligible for workers’ compensation benefits. And if they were to cause damage or injury and were sued, they would not be covered under the association’s general liability policy, since they may not be considered an employee at the time they caused the damage or injury.”
Thanks to that important caveat, boards and staff alike have to be wary when a resident approaches with a request or complaint that would require work to be done to their unit. “Realistically, if something doesn’t fall under the association’s responsibility – such as hanging cabinets in someone’s unit, for example – then the in-house staff should not do it, especially if it’s something that the staff is not qualified to do,” says Mackoul.
“In the event the work isn’t done right or causes damage or injury, the association is going to be responsible for fixing it or responding to a lawsuit by the unhappy resident,” he continues. “Poor claim history is the single biggest reason why insurance premiums increase. The resident should hire their own contractor to perform the work and make sure that they have insurance in place, naming them, the association and property manager as additional insureds. If a staff member is going to be doing for work for a resident for which they will be paid, then that staffer should maintain their own workers’ compensation insurance and general liability insurance as, if they are being paid and are uninsured, that’s the equivalent of allowing an uninsured contractor to do work in the building.”
While it may seem financially preferable to let someone who professes knowledge of a particular repair handle it at little cost, the risk of injury or damage more often than not nullifies any savings and then some. A board is well-advised to consult with a property manager or even an attorney before attempting to deploy a staffer to engage in any endeavor that may be outside their normal range of function, lest the consequences prove dire.
Michael Odenthal is a staff writer/reporter for The New Jersey Cooperator.