Liability, Cost, & Reopening Amenities The Summer of COVID-19, Round 2

Last spring, amidst the panic and confusion of the burgeoning pandemic, condominium, co-op, and HOA communities were faced with the difficult task of deciding what to do about their shared amenities. Gyms, pools, clubhouses, and other popular amenities were closed as a hedge against infection by a little-known enemy—though community leaders and boards of directors hoped at the time that the closures would be temporary. The thinking was that as more was known about the virus and its transmission, and then as the pandemic waned, a return to normalcy would await us.

Now, a full year into the worst public health crisis in over a century, we seem to be faced with conditions not much different from back then. While our knowledge about the virus is certainly greater, and mass vaccinations are underway throughout the United States, we’re still facing a second summer of COVID-19—now with new factors of increased costs and liability, continued misunderstanding of the short-, medium-, and long-term realities of COVID-19, and perhaps most difficult of all to maneuver: politics.

At the heart of the matter is whether boards and residents are comfortable with reopening, and what the basis for their decision to do so or not is. “Most adoption of rules for reopening gyms are born out of Department of Health and Governors’ office recommendations and regulations,” says Dan Wollman, CEO of Gumley Haft, a real estate management firm in New York City. “In those buildings where we have opened or are planning to open gyms, we are suggesting a ‘one person, one family,’ policy. In New York, the Department of Health does a virtual inspection, starting with your building canopy to confirm your address. They then render a decision of whether or not you can reopen based on a video tour. It takes some time. With respect to other amenities—for instance, we have one building with an open-air space on a garage roof with benches, trees, and walkways—rules were promulgated by board members with our counsel, using reasonable common sense based on how one can catch COVID-19. For example, they instituted time limits and sign-ups to use the space.” 

Liability

Perhaps the greatest impediment to communities reopening their amenities—even in full compliance with CDC and other health department recommendations—is the fear of liability. Surveys of insurance providers and brokers have indicated that insurers have taken a position against most if not all COVID-19 claims, stating that viral infections and whatever results from them are excluded under existing coverage and policies. Insurers refusing to entertain any claims potentially moves liability to associations, corporations, and even individual board members—a risk many are loath to take on. Hence, there is a high likelihood that many community amenities will simply remain closed this spring and summer.

Joe Balzamo is the COO of AR Management, a property management firm located in New Jersey. According to him, “One of the biggest problems right now in terms of opening amenities is that insurance companies don’t cover viruses, etc., as part of their coverage. The impact is simple: if someone gets sick and sues the association, there’s no ability for the insurer to validate the litigation. Associations would own the litigation and the claim. All the risk is on the association.”

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