Why isn’t the pool open? What am I paying my assessments for anyway!?

The Fourth of July is a little less than 100 days away.  Memorial Day, a little less than 60 days away.  The Coronavirus crisis continues.  Why are we talking about the pool now?

Some contracts are already in place.  What do we do with them?  Should we modify?  Should we cancel?  Should we breach? Will we be sued?  What will the damages be?

Pool vendors want contacts signed now.  Understandably pool vendors want to plan their season, staffing and financials.

Memories are short.  As every property manager and board member knows, memories are short.  Even after a national crisis, manager and board member appreciation cannot be expected.  Why isn’t the pool open again?

Pool Demand: We May Want the Pool Open at Some Point. People have been shut in their homes for weeks and will likely be shut in their homes for weeks to come.  If the coronavirus crisis abates, residents will want to use the pool immediately.  Pool vendors may not be able to get pools open in a timely manner.

Pools require maintenance anyway. 

Pool contractors have an interest in making money and keeping their employees working.  While allowing for their self-interest, some pool experts recommend opening, operating at a minimum level and closing even if the pool is never open to swimmers in 2020 (the “No Swimming Option”).

Reasons cited include:

-pools that are not maintained can become a breeding ground for mosquitos and other pests,

-pools that are not opened and maintained become swamps and will take longer to open,

-equipment works better when it is runs rather than when it idles for more than a year and a half,

-last year’s winterization may only be good for last year: plugs may have fallen out, lines may have filled with water, chemicals may have dissipated. The pool should be winterized again.

So?  Communicate the conundrum to your residents.  Attempt to understand consensus.  Do not underestimate the value of relationships.  Pool vendors want to work with you and with your management company.  You should want to work with them.  My experience has been that there is not an overabundance of good pool vendors.

Be optimistic about the coming pool season.   The Associations and the vendors should consider their BATNAs.  What’s the best alternative to a negotiated agreement?  Fighting is a lose-lose.  Incorporate a No Swimming Option in agreements.  Although I strongly prefer guarded pools, under certain circumstances, Association pools may go without guards anyway.  Estimate damages in case of breach.  Damages are often far less than the contract price and may justify the No Swimming Option anyway.  Negotiate a discount for prepayment – vendor cashflow is key to many or, negotiate a longer payment period – association cashflow is key to many. Regardless, the coronavirus crisis will pass, and Association management, counsel and pool vendors should be able to reach accommodations acceptable to all.

The above information is not legal advice and shall not create an attorney-client relationship.  This information is general and may not be applicable to your particular circumstances.  You should review your particular circumstances with Association counsel.

Contractor Relations & Disputes

1.         Do not sign the contractor’s proposal.
2.         Have an attorney prepare anything larger than a nominal contract.
3.         Make sure any conflicts of interest are fully disclosed and acknowledged in writing.
4.         Review the contract’s termination language carefully – how do you get out if you have to
5.         Keep current proof of insurance on file.
6.         Communicate dissatisfaction in writing.
7.         Terminate the contract according to the contract’s termination provision.
8.         Do not hire a replacement contractor until the old contractor is terminated.
9.         Keep the money if performance has been unsatisfactory.
10.        Advise your attorney of any dispute early.
11.        Bite back if you have a claim against the contractor.
12.        Preserve all evidence if possible.
13.        Notify your insurance carrier of damage, dispute and/or lawsuit.
14.        Get signed release agreements before paying anything toward disputed sum.

We are regularly asked how Associations can save money on attorney fees.  Some argue: “go with an hourly agreement, that way the Association can control the attorney’s work.”  Others might argue: “flat-fee retainer agreements are best; budgeting will be easier.”  Still others might say: “a contingent fee arrangement is best, that way the Association won’t have to pay unless the attorney wins.”

While these answers and others may be right in certain circumstances, the real answer, sure to save attorney fees in virtually every Association, is: “Hire strong management, pay fair management fees and use management personnel properly.”

Seems like a simple answer but, counterintuitively, at a time when few manager resumes are circulating, management fee proposals are bent on a race to the bottom.  I do not know what is driving this. Board demands?  Desire for market share?  Ability to sell ancillary services?  Increased technology usage?  A combination of these factors?  Regardless, isn’t it a matter of pay management today or pay way more in legal tomorrow?  Worse, isn’t it a matter of pay management today or pay way more in legal, audit, engineering, contractors etc. tomorrow?

Experienced, trained and dedicated managers are effective.  Among many other things, they help with risk management and insurance; specifications, bidding and moving projects forward, managing the budget, collecting delinquent fees, managing personnel, maintaining books and records, resolving disputes, etc., etc.

Failure to properly deal with risk management leads to more insurance claims.  Failure to properly deal with insurance claims means coverage denial.  Failure to properly deal with specifications, bidding and project management leads to flawed projects, cost-overruns and lawsuits.  Failure to properly budget and collect Association fees leads to lack of reserves, special assessments, large increases, borrowing and collection lawsuits.  Failure to properly manage human resources leads to unnecessary costs, work not getting done and lawsuits.  Failure to properly maintain books and records leads to an inability to manage, member suspicion and lawsuits.  Failure to promptly address disputes leads to lawsuits.

We do not own a management company, but we work with most of them.  Associations should be keenly aware that the management fee supports the manager and much more.  When considering a management company proposal, the cost should be one selection factor but not the primary factor.  We perform great legal work and appreciate Associations paying our legal fees, but we encourage Associations to hire strong management, pay fair management fees and use management personnel properly.