“It’s a hot-button issue,” admits Debra A. Warren, principal of Cinnabar Consulting in San Rafael, Calif., which provides training and employee development services to community association management firms and training and strategic planning sessions for association board members.

If your board has hired a towing company to patrol your parking lot and other roadways to tow away people who are breaking your parking rules, be sure to have clear rules in place so that if you tow owners’ cars, you won’t create endless disputes and ill will.

Here’s what you need to know about creating a towing policy that complies with your local laws and provides owners proper notice and a chance to cure their parking problems before their car gets hauled away. We also provide tips if you’re entering into a contract with a towing company.

Your State Probably Regulates Towing

Your state may have laws dictating how you treat towing in your community association. Be sure to investigate before you implement any policy.

New Jersey and California are good examples. In New Jersey, the Predatory Towing Prevention Act governs tows within community associations. It requires that associations have a contract with a towing company and that signs be posted with detailed information, including when parking is permitted and when it’s not and the fees that will be incurred for those who are towed.

California also regulates towing. “Community associations are required to comply with the California vehicle code,” says Warren. “They must have signs at every entrance stating that owners can’t park in certain areas unless they’re authorized to do so. The statute specifies the language that must be used. Then associations have to put a physical notice on the vehicle, and it can’t be towed for 96 hours unless it’s in a fire lane. We used to have to notify the vehicle owner before towing, but for privacy reasons, no longer in California can we search databases to attach a driver to a vehicle based only on a license plate.”

Don’t forget to check with your local government, which can also regulate towing. “In some areas, what you can do varies by municipality,” says Elizabeth White, a shareholder and head of the community associations practice at the law firm of LeClairRyan in Williamsburg, Va.

 “Associations run into all kinds of problems with things like deeded spaces, assigned spaces, and parking stickers,” says Duane McPherson, the San Rafael, Calif.-based pision president at RealManage, an association management firm that oversees properties in Arizona, California, Colorado, Florida, Louisiana, Nevada, and Texas. “It’s best if you can find a towing company that keeps up with local and state laws that can assist and advise you.”

What’s Your Parking Problem?

Before you sign up with a towing company, be sure you need its services. “It’s important for board members to really think through what you’re trying to accomplish and how big of a problem you have,” says Warren. “Often boards will enter into a towing agreement because there are one or two problems—they’re not widespread—and they create bigger problems by entering into these agreements.”

When you do hire a towing company, you’ll need to communicate your towing policy to your owners and visitors. “I’ve seen both—associations that have good policies, and association that don’t,” says McPherson. “You need to be absolutely certain whenever you’re towing a vehicle that you’re towing it legally. Nothing can be more problematic than the wrong car being towed or towing a car when it’s in fact in the owner’s space.”

Warren agrees. “Make sure there’s lot of written communication and posted signs so people understand the risk if they’re going to violate the policy.”

It’s also smart to create checks and balances so that you don’t tow cars improperly. That task can be complicated because of association rules that require boards to provide owners due process before taking corrective action. “In some associations, you have to go through due process before taking any action,” says White, “and the process for towing doesn’t always fit neatly with giving owners 14 days’ notice under due process rules.”

Warren advises you require that your towing company get permission before towing any car. “If your vehicle code doesn’t require a person of authority to sign for the tow,” says Warren, “there should be some double-check with the towing company so it doesn’t have the ability to drive through your grounds and tow without some second level of authorization.”

McPherson agrees. “Have the tow company check with the onsite manager before any car is towed,” he advises. “Don’t just turn over that responsibility because the one who’s ultimately responsible is the association. Owners will come right back at you, not the towing company.”

Protect Your Homeowners Association in the Towing Contract

Towing companies are notorious for nickel-and-diming practices—whether that perception is warranted or not. Read your towing contract to be sure your HOA doesn’t fall victim to that phenomenon. Here are ways to protect your association.

Include minimum notice required. In addition to requiring that the tow company get association sign-off before towing any cars, include in the contract the minimum notice the towing company must provide before towing any car.

Include pricing. Specify what the towing company can charge when the person collects that car. “The association has to look at all the towing company’s extra fees,” says White. “If the fee to the association is $50 to tow, but homeowners have to pay $250 to get their car, you’ll have really unhappy homeowners, and the association will experience a lot of pushback.”

Specify in the contract the fees you won’t accept. “I’ve had some towing companies implement pass-through fees that they’ll bill to the association, like a fee for getting the call initially,” says McPherson. “Be careful that there aren’t any add-on fees in the contract.”

Get indemnification. Be sure the towing company is required to indemnify your association for its lawbreaking and mistakes. “We’ve had situations where the towing company hasn’t followed the local towing code,” says White. “If the company violates that process and the association doesn’t have a good indemnification provision, the association may be paying significant fines for violating the law. Make sure the contract states that if the towing company doesn’t follow local and state rules, it will indemnify the association for any fees the association incurs for the towing company’s violation of the law. We get a lot of pushback from towing companies for that.” But it’s a must.

Ask for evidence of the proper licenses and insurance. “That’s a big issue,” says McPherson. “Check out towing companies just like you would any other vendor because this vendor can really create problems. You’re towing someone else’s personal property, and if it comes back to you, you’re going to have to defend the activity.” White adds, “so many towing companies operate out of someone’s service garage. Deal with a reputable company, and check for complaints before you do business with it.”

HOA Leader

Matt Humphrey is president of the Alameda, California-based, from which this article was adapted.

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