Risky Business; HOA Approved Clubs and Organizations

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J.S. from New Haven County writes:

Dear Mister Condo,

We have many independent clubs and organizations which are approved by the HOA.  Many of them collect dues.  What is the HOA’s responsibility or liability if the treasurer or president absconds with the funds?

Mister Condo replies:

J.S., sounds like your HOA is vibrant with many clubs and organizations active. Since you used the word “independent” to describe them, I assume that they have their own charters and by-laws that deal with things like misappropriation of funds and theft. If not, it is still likely their responsibility. You also used the word “approved” by the HOA. I am not sure how an HOA can approve an independent club or organization other than to agree to let them use HOA facilities (clubhouse, common grounds, etc.) for their activities. If the HOA has any liability in their activities, your insurer should be brought in to provide an opinion on any risk to the association caused by these independent clubs and organization. For instance a Chess Club using the club house for tournaments may pose little risk but a skateboarding group using the parking lot for riding lessons may pose a great deal of risk. It would be better to ask your insurer ahead of time what risk is being put on the association before there is a problem. Good luck!

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