Bulk Cable Contracts
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BULK CABLE CONTRACTS

QUESTION: Can a board make owners use one company for cable/TV/phone, negotiate a contract (and rack up legal fees for review), and then add those costs to dues? Doesn't each owner have the option of who should provide them with those services? And if the board can negotiate a contract for the entire project, doesn't it have to go to a vote of the membership?

ANSWER: It depends on your governing documents. If they grant the authority to do so, your board can enter into bulk cable agreements without membership approval. Absent any authorizing language, however, the board must take it to a vote of the membership. This issue was litigated last year in Pennsylvania. The board of the River Park House OA entered into a contract with Comcast which required all residents to pay for cable so the entire association could obtain a substantial discount on the service fees. One of the members argued that (i) cable television was a luxury not a necessity, (ii) not everyone used the service and (iii) the board lacked authority to contract for the service. He refused to pay for the service and the association sued.

Proper Authority? The association argued that it had the best interest of its residents in mind when it contracted for the bulk rate. The court, however, was more interested in whether the association had the authority to do it. The court examined the association's governing documents and found language authorizing the board to incur expenses related to "operations, health, maintenance and safety decisions." The justices determined that cable television did not fit into any of those four categories. Although the board acted in good faith, it acted outside the scope of its authority and the court ruled against the association. (River Park House Owners Association v. Crumley 47 A.3d 870 (Pa. App. 2012).)

COMMENT. The result would likely be the same if bulk cable agreements were litigated in California--a board would need authority either from the governing documents or by a vote of the membership before contracting for the service.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC