We are often asked whether a professional Property Manager for an Association is considered a debt collector under the Federal Fair Debt Collection Practices Act.  The clear answer to that question is . . . it depends.

The Federal Fair Debt Collection Practices Act was passed to prohibit certain debt collection practices and to further restrict the actions of debt collectors who were engaging in questionable conduct.  Under the Act, a “debt collector” is defined as any person whose principal business purpose is the collection of any debt or one who regularly collects or attempts to collect debts owed or due or asserted to be owed or due another.  However, not all who collect debts are deemed “debt collectors” for purposes of the Act.  For example, attorneys have been deemed debt collectors under the Act, whereas officers and employees of creditors are generally not.  Therefore, a question exists as to whether or not a Manager working at the direction of a Board to collect an Association’s debt would be deemed a debt collector or not, as noted above. 

While there is no dispositive case law in Pennsylvania regarding this issue, a recent case captioned Angela Harris, et al. v. Liberty Community Management, Inc., United States Court of Appeals, No. 11-14362 was reported in the Eleventh Circuit.  While only persuasive on the issue in Pennsylvania, this case is certainly informative.  In this matter, a management company and the manager were sued for violation of the Federal Fair Debt Collection Practices Act.  After years of extensive and likely costly litigation, the court ultimately decided that under the specific facts of the case, the manager was not a debt collector, but rather fell under one of the exceptions after applying the issues to their Planned Community state statute.

In the case cited above, the manager and the management company were found to be not liable to the plaintiff.  In one sense, they won the lawsuit.  In another sense, did they really win given the amount of time, stress and financial resources that went into the lawsuit?   In the case of Wright v. Ross, 2008 WL 190466, *2 & n.7 (M.D. Fla. Jan. 18, 2008), the court indicated in dicta that homeowner and condominium owners’ maintenance assessments might qualify as “debt” under the Federal Fair Debt Collection Practices Act.  While this case does not explicitly state that the manager and management company would be considered “debt collectors” for the purposes of the Act, it evidences a step in this direction. 

As such, it is important to review your collection practices on behalf of Associations in order to bring them into compliance with the Federal Fair Debt Collection Practices Act.  By reviewing your procedures and assuring they are in compliance with the Act, you may reduce the risk of an action being filed against you and your company and reduce the risk of a negative outcome.

Should you have any questions regarding this article or your collection practices, please do not hesitate to contact us.

Automated external defibrillators (AEDs) are now found in a rapidly growing number of locations for use by non-healthcare professionals. AEDs are small devices which are meant to help treat victims of sudden cardiac arrest - one of the leading causes of adult deaths in the United States.

Should your Association consider having an AED available for its pool area or clubhouse fitness center?

Quick access to an AED can save lives and, as a result, laws mandating their installation in public venues have become more common. There is currently no law in Pennsylvania that mandates the installation and/or placement of an AED in private buildings, health clubs, private pools or residential communities. Because of their benefits, however, there is the argument that AEDs are the right thing to do for the Association notwithstanding the potential for a lawsuit. If your Association is considering acquiring an AED, there are certain requirements that the Association must meet in order to avoid liability for its potential failure or misuse.

The Cardiac Arrest Survival Act, 42 U.S.C. §§ 238p and 238q, provides AED operators with conditional Good Samaritan legal liability immunity for any harm resulting from the use or attempted use of an AED. An Association would receive immunity if it follows the below identified guidelines:

• Properly notifying local emergency medical service agencies of the presence and location of the acquired AED(s);
• Properly maintaining and testing the AED(s); and
• Providing appropriate training to expected AED users.

Similarly, the Pennsylvania AED Good Samaritan Act, 42 Pa.C.S.A. § 8331.2, provides civil immunity for trained users of AEDs and requires that "expected users shall complete training in the use of an AED . . . .", 42 Pa.C.S. §§ 8331.2(a), (c). Pursuant to the AED Good Samaritan Act, an Association would receive similar immunity only if the Association:

• Ensures that expected AED users receive training from the American National Red Cross or the American Heart Association or through an equivalent course of instruction approved by the Department of Health; and
• Maintains and tests the AED according to the manufacturer's operational guidelines; and
• Provides instruction requiring the user of an AED to utilize available means to immediately contact and activate the emergency medical services system; and
• Assures that any appropriate data or information is made available to emergency medical services personnel or other health care providers as requested.

To date, there are relatively few lawsuits that have arisen directly involving AEDs. Associations considering acquiring an AED should design and maintain an AED program as a way to manage liability risk. We encourage you to discuss this issue with legal counsel in order to avoid potential future litigation.

The weather is finally changing.  The landscapers are doing a great job and the property looks fantastic.  You are working hard and are on target to have the pool open for Memorial Day.  Life is good!

Then you overhear one of your coworkers talking about a dispute they had at their property last year concerning the pool. You learned that the Board had passed a rule prohibiting children under a certain age from using the pool. Several families within the community with young children said the rule was illegal and discriminated against families with children. The Board countered that the purpose of the rule was for safety reasons and to keep children who are not potty trained out of the pool.

Being proactive, you go and review the policies and rules for all of your communities with pools and learn that many of them have no policy regarding this issue or have similar rules prohibiting children under a certain age. You are concerned that your community may face a similar problem this summer. Now that you think of it, you remember hearing something about a recent law that was passed on another pool related issue. Something about assuring that the pool drains comply with certain safety requirements.

It is amazing how quickly your "to do" list can grow. If one or more of your communities has a swimming pool, we recommend that the Board conduct a careful review of the rules and policies in place pertaining to the use of the pool. Swimming is a wonderful activity, but it is not without risks. We recommend you have your association's legal counsel review its policies and procedures to maximize the use and enjoyment of the pool while minimizing liability exposure to the association.

Should you have any questions regarding your association's policies pertaining to pools or other recreational activities, please do not hesitate to contact us at your convenience.

In last month's Newsletter, we discussed whether an individual owner sitting as a Member of the Board of Directors assumes personal risks associated with actions taken by the Board.   This edition continues with that theme by discussing the benefits and protections afforded to Associations by retaining a qualified expert when needed.

Have your Board Members ever asked you as a professional property manager whether a tree looks dangerous?  Have they asked you whether or not a retaining wall looks like it may be leaning a bit too far?  Have you been asked for advice on detailed topics like complex financial investing?

While property managers are experts in the field of property management, which encompasses many topics, managers are often asked for advice on complex issues outside their scope of expertise.  At those times, you may wish to advise the Board to seek the advice of a qualified expert in the field at issue, such as attorneys, engineers, accountants or other professionals.

There are many benefits to obtaining the advice of a qualified expert.  The Board is obtaining important information that will allow it to fulfill its fiduciary duty and make the best decision possible on behalf of the Association.  Further, as we discussed in the August edition of the Newsletter, a decision based upon the advice of a qualified expert protects the Association generally and the individual Board Members specifically from allegations or lawsuits alleging that they have failed to meet their fiduciary obligations.  And finally, an insurance company will have greater difficulty denying coverage in the event that a lawsuit is filed, when the Board has relied upon the advice of a qualified expert.

Often the authority to consult experts is granted by the Association's governing documents and, in the event they do not, both the Uniform Planned Community Act, at Sections 5302 and 5303, and the Uniform Condominium Act, at Sections 3302 and 3303, specially provide the Board with this power.  This power is retroactive and, as such, most likely applies to all Associations regardless of the date on which they were created.

We hope that this Newsletter is helpful to you and we welcome your feedback and suggestions, particularly on topics that you would like to see featured in a future edition.  Thank you.

With autumn fast approaching, many Community Associations are beginning preparations for their annual meeting and many face the reoccurring problem of a lack of candidates willing to run for the Board of Directors.  One concern which may keep unit owners from running, and which is often shared by sitting Board Members, is personal exposure to liability for actions taken by the Board.

As a general rule, Board Members are well protected against personal liability which may arise from actions they take while discharging their fiduciary duties as Board Members.  The sources of this protection often include the Association's governing documents, Pennsylvania law, including the Uniform Planned Community Act and the Uniform Condominium Act, and federal law, including the Volunteer Protection Act of 1997.

As permitted by Section 5302 of the Pennsylvania Uniform Planned Community Act and Section 3302 of the Pennsylvania Uniform Condominium Act, the governing documents of many Associations require that the Association defend and indemnify its Board Members.  The Governing Documents may also require that the Association secure Officers' and Directors' insurance.  Furthermore, pursuant to Sections 5303 and 3303 of these Acts, Board Members have no personal liability so long as they discharge their duties in good faith, exercising care to make informed decisions and act in the best interests of the Association.  Finally, some additional protection may be provided by the federal Volunteer Protection Act which offers protection, with some exceptions, to volunteers acting within the scope of their volunteer responsibilities.

Of course, the laws and governing documents cannot offer protection for actions that are criminal, such as embezzlement, or intentionally wrongful acts.  One of the best protections against personal liability is to consult the opinion of an expert when required.  We will discuss the Board's power to consult experts in more detail in our next Newsletter.  Ultimately, so long as Board Members make informed decisions and act in the best interests of their Association, the risk of personal legal liability is minimal and should not deter volunteers from running for election to the Board of Directors.

Swimming pools are certainly popular with property owners in condominium and homeowners' associations - especially those with small children. However, the tragedy of a preventable drowning death and the resulting civil liability for such an event could have a devastating impact on a community.  Condominium and homeowners' association boards should ensure that their pools and spas are safe before allowing the summer fun to start.  This article presents some essential practices that may keep you out of legal trouble.

Condominium and homeowners' associations that have a pool or spa should have a process in place to evaluate whether they are in compliance with recently enacted federal law relating to pools and spas, as well as municipal ordinances and the Association's rules and regulations which may set additional standards.

The Virginia Graeme Baker Pool and Spa Safety Act (the "Act") was enacted by Congress and signed by the President in late 2007.  The goal of this legislation was to improve pool and spa safety by reducing the risk that powerful suction could trap a person underwater.  The Act applies to all "public pools and spas" which term is defined by the Act to include pools and spas that are open exclusively to residents of residential real estate developments or other multi-family residential areas.  Condominium and homeowners' associations are included within this general definition and, therefore, must comply with the Act's provisions.

The Act requires the installation of certain types of anti-entrapment drains and/or devices over pool and spa drains.  The law also requires barriers to protect small children from gaining unsupervised access to a pool or spa.  Seasonal pools and spas that are currently closed must be in compliance with the Act on the day that they reopen in 2009.  Municipalities may also set their own standards, including chemical guidelines, inspections, record keeping, and equipment and fencing requirements.

A thorough inspection of the pool, the surrounding areas and all pool equipment should be done before opening each year and a record should be made and retained of that inspection.  In order to deal with the myriad of legal and regulatory requirements relating to pools and spas, the Association may want to appoint a pool committee to be responsible for reviewing and updating the Association's rules, rule distribution, administering periodic inspections and overseeing the pool contractor.  We recommend having a manual that dictates the responsibilities of the pool committee and/or board member liaison to the pool contractor.  The Association should also consult with legal counsel periodically to ensure that their rules comply with the Fair Housing Act requirements relative to protected classes, such as handicapped persons or familial status.

Following these guidelines will hopefully lead to a safer and fun-filled summer.