Are You Shocked! Shocked! to Find Gambling at Your HOA?

Are You Shocked! Shocked! to Find Gambling at Your HOA?

August 2012
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This article is part of an ongoing series in which we'll take your questions from the discussion forum and get you the answers you need from experts who specialize in association management. If you have a question you need answered, post it on the message board.

A Florida reader is gambling with his fellow home owners on HOA property, but he says he was given the OK. Is that OK?

"We were given permission to play cards at the clubhouse in our community by the HOA. They said we can purchase card tables with our funds, which we did—two tables, very nice, $800 a piece. Now the new board took over from the builder's HOA and told us we have to get the tables out and not play penny–ante games anymore. This is only because of two people on the three–person board who have a vendetta against the players for personal reasons. We play once a week, and anyone in the community is welcome. The tables are used by other home owners anytime they want. We have no problems. We are just improving the community. My question is can they do this? As far as I know, the Florida statute permits penny–ante games to be played. As for the tables, can they remove them even after we had permission from the builder's HOA?"

We'll answer two questions: Does the HOA have any liability if it knows owners gamble—even penny–ante games—on HOA property? What effect should the builders' promise be given by a future HOA board?

HOAs and Gambling

It's unclear what an HOA's liability is if there's small–time gambling going on in common areas. "I don't know the law in California because I've never done any research on gambling," says James R. McCormick, Jr., a partner at Peters & Freedman LLP in Encinitas, Calif., who represents associations. "Our clients are spread amongst Indian and nonIndian land. Indian land is sovereign, so they can allow gambling on it. But for nonIndian land, I'd have to do some research.

"That said, you always ask, 'What liability does the HOA have?'" adds McCormick. "When an association is permitting someone to use a common facility, like a pool house or whatever, I always suggest they have a policy and signed leasing, rental, or usage agreement. It should have a provision saying the person is using the property appropriately. We also include disclaimer language saying owners won't be engaging in violations of the law. You put the onus for compliance on users. You also have them indemnify you for any liability from violations of the law."

You may also be able to control gambling through general provisions in your governing documents. "I don't know if penny–ante gambling is legal in Michigan," says Nathaniel Abbate Jr., a partner at Makower Abbate & Associates PLLC in Farmington Hills, Mich., who represents associations. "But you can also look to your right to prohibit obnoxious behavior. However, if penny–ante gambling isn't illegal, nobody can say, 'It's illegal therefore banned by our provision that says no illegal, obnoxious, or offensive behavior can take place.'

"But there may be people with moral qualms about gambling who don't want their dues paid to maintain a clubhouse where some old farts sit around and gamble," adds Abbate. "So the board might say, 'If you're going to do that, you have to reserve the clubhouse.' The board might also restrict the activity to hours where children normally aren't around.' I'd say this is more of a rule of commonsense and reason. The way to control this is through its time and manner of occurrence."

Did the Association Consent?

Our reader's second question is whether the association has specifically permitted this. The previous board may have, but that doesn't mean a new board has to continue to permit it. "That's where a board needs to try to distance itself from what's happened in the past," says McCormick. "Boards do different things. If the developer approved something that's not legal, you can say you're not going to let it continue."

Bottom line: Yes, the new board can make our reader remove the card tables and stop gambling in common areas.

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