QUESTION: If a board were to grant a member exclusive use of the association's clubhouse for a particular activity, does that constitute an exclusive use of the common area requiring approval of 67% of the membership under the Davis Stirling Act?
ANSWER: Some associations allow facilities to be rented for weddings, birthday parties, etc. This is not an exclusive easement as described in Civil Code §4600. Rather, it's a short term license. It allows a member to use the facilities for a limited purpose for a limited period of time. Members who reserve the facilities are sometimes charged a rental fee by the association.
Rental Agreement. Many associations establish written agreements for private events. They include provisions related to hours of use, noise, trash, parking, and insurance.
Insurance. Optimally, the owner should produce evidence of both bodily injury and property damage liability coverage and agree to have his insurance carrier name the association as an "additional insured." Unfortunately, it's nearly impossible (except for the most expensive of carriers) to get a company writing a personal lines homeowners policy to add an endorsement extending coverage to a common interest development. As a result, more communities are requiring the owner to purchase a one-day special event policy which names both the owner and the association as an insured. These policies are readily available and are written for all kinds of special events, including weddings, anniversaries, birthday parties, bar mitzvah's, etc.
Cost of Insurance. The cost of a special event insurance policy can range from $250 to $400, with the premium dependent upon the number of guests, the type and extent of celebrating (music/dancing) and whether or not food and alcohol are being served. Alcohol is the single greatest potential for liability. As a result, some associations prohibit alcoholic beverages, even when the event is catered and the server is licensed and insured. Having the association named as an "additional insured" is important since most boards do not want claim activity from parties to spoil the association's insurance loss history.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.