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March 1, 2007
TOWING - IS A CONTRACT NECESSARY?
Readers are asking - does an HOA need a towing contract?
Apparently, towing companies are resisting contracts, and so thus boards are asking the question as to whether one is needed. Many boards do not understand that a contract already exists whether they get a written contract or not. The question is: does it go far enough to protect the Assn, especially in light of the new towing laws aimed at predatory tow practices?
Although associations are not required to have a written contract, it is highly recommended (by me). Why? Protection for the HOA and its members of course - that is what I am all about.
The "agreement" to allow the tow company in and tow vehicles is present even if not written and implies that a contract exists - they can come in, and they can charge owners for tows. There is no law (and if there is no documentary requirement) requiring it - it works simply because the Tow Company is willing to provide the service without a written contract on an as needed basis. However, if the Tow Co wants to make any charges to the HOA for the tows, without an "agreement" (contract), they would be unable to do that, unless the Association simply acquiesced, which would form an "implied" contract. All mutually beneficial services are defined by some kind of agreement (contract), oral or written.
If the association requires proof of insurance protecting the drivers, things should be okay unless a driver attacks someone on premises or harms someone (like dropping a car on them, intimidating them, or punching them?). The agreements that are made orally or implied, do not cover that sort of thing. And if the employers insurance terminates, the Association becomes a target. The "unwritten" contracts do not cover that either.
And say the tow driver gets beat up on association property by an owner. Without an agreement protecting the HOA, the driver could conceivably sue the HOA. This applies to any vendors who come on the property. The claim might be based on failure to warn of violent propensities or anything else, whether grounded in fact or not. The HOA insurance would likely step in and the HOA might have to pay, especially if the employers insurance is nonexistent or inadequate. With an agreement protecting the association, the company would have to cover the damages and if written to the max, the defense costs of the HOA as well.
All of the above fall outside the other reason HOAs should have a tow contract, and that is because the new laws in California on towing in HOAs is tough - the purpose of it was to attack predatory towing practices, and there are many punishments including monetary damages, fines, and even possible jail time for knowing violations of the law. What HOA wants to assume that kind of liability exposure for acts of the tow company?
The HOA will be responsible for damages or claims related to groundless tows that it authorizes - if a contract says so. Fair enough. But what about groundless tows that a tow company driver does, without the new "general or specific" authorization? Think you are immunized as an HOA? Think again.
So, are you going to listen to the tow companies that say "naw, you don't need a contract?" Or are you going to pay attention to the risk factor and act?
If you want a tow contract, I, of course, write them. In fact, the newsletter I am now working on "California Homeowners Legal Digest" for Jan-Feb 2007 (yes, I am behind) is on this very topic. To obtain either of these, visit the guru at http://www.californiacondoguru.com. See you there!
Posted by Beth Grimm at March 1, 2007 2:05 PM