Cash-strapped homeowner associations (HOA) may want to consider outside use of its common area facilities to both pad out the budget and reach out to the community.

Tough economic times warrants a second look at a practice that's often over looked for fear of certain risks and liabilities.

"All too often, I hear other people in this industry (board members, managers and attorneys) cringe at the very idea of anyone wanting to use the association clubhouse or facilities for money-making enterprises," says "The Condo Guru", Beth Grimm, a homeowner association law attorney from Pleasant Hill, CA.

"The board should never 'just say no' without giving due consideration to the big picture, the benefits, and how the risks might be minimized," added Grimm in "Third Party Use Of Common Area Facilities -- Is It A Good Idea?" a report produced for the ECHO Journal.

ECHO Journal is the trade publication of the San Jose, CA-based Executive Council of Homeowners, Inc. (ECHO), a non-profit trade association offering financial, legal, insurance, maintenance, and management education and information services for homeowner associations.

Homeowner associations are the governing bodies of common interest developments, planned unit developments and similar communities, which often are comprised of condos and town house homes.

Ownership in the communities often come with amenities that include the right to use on site swimming pools, club house facilities, parking facilities, playgrounds and other common area facilities that typically are not freely available to residents in the surrounding community.

Grimm says too often associations and their attorneys focus on the negative effects of allowing others onto common area facilities without considering the positive possibilities.

She's represented associations that have allowed the use of playgrounds for Little League activities, pools for swim meets and lessons and the club house for outside community group meetings.

"Obviously, there is added risk in any situation where the association is increasing the population or visitation within the association and use of facilities. The positive and negative effects have to be weighed and balanced in considering whether or not to allow these things," say says.

She says in addition to an added source of income to help pay for the upkeep of a facility that isn't always used by the association's members, there are other positive aspects of opening the door to the outside community.

Grimm cites a Union City, CA homeowner association that allows the Union City government to use its swimming pool and cabana to give swimming lessons, which generates income both for the community and the city.

It has also created jobs, recreational activities for teenagers, discounted swimming lessons and, for the association, beneficial contacts within the city.

Such benefits are available so long as the association has a solid contract that spells out the parties involved, the purpose of the agreement, compensation, terms of use and other considerations.

To guard against liability suits, Grimm says the association must be adequately insured against accidents, guard against negligence by regularly performing safety inspections and maintenance and be sure to school all facility users about harassment and discrimination.

Associations must also be consistent about allowing outside use.

"If the association allowed Sunday services or Bible study or religious use of the clubhouse by one member of the community or group, it could get in trouble for denying the same right to another group of people whose basis stems from a protected class," says Grimm.

For more articles by Broderick Perkins, please press here.

Published: August 17, 2001

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.