With the onset of summer, communities around Georgia are readying their recreational amenity areas for a new season. In addition to regular use by association members, many communities allow non-members to use the recreational facilities by virtue of hosting swimming competitions and tennis tournaments or by allowing members or non-members to offer recreational instruction, such as swim or tennis lessons, to other members or non-members. The threshold determination for the board of directors is whether allowing use of the association’s amenities in this manner is a proper association function and in the best interests of the members. Presuming the answer is “yes,” before allowing these types of activities, members of the Board of Directors should know and understand some of the implications of allowing non-members to use their association’s recreational facilities and should plan accordingly.
A Board of Directors should ensure that their recreational facilities are appropriately sized to accommodate both the proposed special event and the availability of the facility as anticipated by the Association members. Typically, the maximum number of people allowed to use a community’s recreational facilities is fixed by the local health department. Concerns regarding capacity and the practicalities of, for example, hosting a large number of contestants and attendees for a competition event may require that during the special event the swimming pool or tennis courts, as the case may be, are unavailable for regular member use. For larger events, parking and accommodation for spectators should also be considered.
An increase in the number of people using an association’s recreational facilities typically results in a corresponding increase in the association’s exposure to liability for claims arising from personal injury. Typically, community associations protect against these claims by carrying liability insurance covering potential claims for injuries or damage which may occur on association property. Such liability insurance may protect the association as to claims made by owners and their individual guests; however, it likely would not cover teams that have been invited to the community for competition nor would it cover commercial activities such as swim or tennis lessons offered independently to third parties by a community member. In connection with allowing use of the amenities for competition or lessons, the association should require the coordinator of the event to obtain and maintain adequate liability insurance naming the association and its directors and officers as additional insureds and to provide evidence of the coverage before the event. The board of directors should consult with the association’s insurer to determine the coverage amounts sufficient to protect the association from the risks inherent in the proposed activities. For example, the risk of a personal injury claim in hosting a swim meet or allowing a member to offer swim lessons to children may be greater than the risk inherent in allowing a member to offer meditation classes in the clubhouse. In addition, it is always a good idea to have event organizers sign a waiver and indemnification agreement to the effect that if they or one of their guests are injured on the association’s property, they will not hold the association responsible and will protect the association from any claim brought by the injured party.
The board of directors should bear in mind that they do not have recourse against non-members under the recorded covenants if, for example, an event rental fee for the amenities is not paid or if an attendee causes property damage. Under most recorded Declarations, an association may specifically assess costs incurred for services provided at the request of a member and costs for repair and maintenance arising from a member’s activities. These charges, if left unpaid, would become a lien against the member’s property and collectable as assessments. The association does not have these tools with respect to non-members, and collecting against a non-member could only be through a civil action. Any recourse the association has for property damage or failure to pay an event rental fee should be detailed in the event contract between the event coordinator and the association. The association should consider requiring payment of a damage deposit that may be applied to any repair necessitated by property damage incurred during the event.
Finally, the board of directors should consider potential unintended consequences of hosting non-members in association facilities. For example, typically, associations do not have to comply with the Americans with Disabilities Act (“ADA“) if the association strictly limits the use of its recreational facilities to residents. However, if an association allows non-member use of its amenities, for example by hosting swim competitions or selling memberships to members of the public or even allowing members to host events that are open to non-members, its facilities are more likely to be considered a “public accommodation” that is subject to the ADA. Application of the ADA to an association’s amenity area may require that the association perform expensive upgrades to its facilities, such as retrofitting pools with lifts or ramps to ease access for disabled visitors. Of course, an association may already be obligated to make certain modifications or accommodations under the federal Fair Housing Act, to which all associations are subject. In addition, any revenue collected by the association for rental event fees or similar charges would be considered taxable income resulting in federal tax liability. Such income and any associated taxes can be addressed in the association’s annual tax return, however, the board of directors should anticipate the tax liability and plan for it before tax time.
There are many reasons why an association may want to allow non-members to use their community’s recreational facilities. Before permitting such use, members of the board of directors should understand the implications of doing so. Depending on the proposed use and the terms of such use, board members would do well to consult the association’s insurer, accounting professional and legal counsel for assistance in planning accordingly to ensure that the association and its interests are protected.