Legal Lines – Should We Rent Out Our Facilities?

Your association has a beautiful pool and great clubhouse.  You’ve heard of other associations that have rented their facilities out for private parties and you are considering similar rentals. Also, summer is time for swim team practice and competitions.  Teams from all over the metro area are going to be coming to your pool for competitions.  Here are some things to consider before you start renting out your facilities or holding swim team competitions.

  1. Check your association documents to determine whether or not they, as written, permit the renting out of facilities and use of the pool by swim teams.  If you find anything in them that would hinder these uses, speak with your attorneys about amending your documents.
  2. Contact your insurers: a) to be sure your current policies provide protection for these activities; b) to conduct an inspection of the premises, if necessary, to ensure that these facilities are in safe and operable condition, and c) to tell you steps that they want taken in order to limit the association’s liability.
  1. Review your rules and regulations regarding the use of the clubhouse and swimming pool for these activities.  Like all rules, they must be motivated by legitimate concerns for the health, safety and welfare of all users, must not discriminate by age, familial status, or other protected categories, must be easy to enforce, and must be enforced in a consistent manner.
  1. Georgia courts have stated that the association exercise ordinary care to prevent injury to those guests invited to attend the functions in the clubhouse or pool.  While the facts of each case are different, the courts have given us some guidelines to follow.  In one case the court stated the association was liable for damages when a lifeguard, provided to the association by an independent company, did nothing to stop guests of a private party from throwing other guests into the shallow end of the pool.  In another case, the court ruled in favor of the association when an invited guest of a private party in the clubhouse used poor judgment and dove into the shallow end of a closed, unlighted pool, causing his own injury.
  1. Have swim team members and guests sign releases or waivers prior to using the facilities.  In Georgia, waivers of liability by participants in sporting or recreational events are valid and binding for the release of certain liability.  These releases will not work, however, if the association is found to be grossly negligent.
  1. The association should contact professionals to determine the impact that compliance with the ADA requirements for “public” facilities would have on its facilities.  If you choose to rent out common areas, this may make them public according to the courts and government agencies.  [Associations are currently required to comply with reasonable requests for reasonable accommodations for residents with disabilities (see Common Ground, January/February 1997, “Dealing with the Disabilities Act”, Powers & Graves)].
  1. Finally, notify the association’s accountant.  The rental income may impact the way the association chooses to file its tax return at the end of the year.
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