Who Fixes What? – Part II

Published in the ECHO Journal, February 2010

“Who fixes What” in a common interest development continues. Part I of this article, which was published in the January 2010 ECHO Journal, discussed the basic concepts pertaining to repair responsibilities in California common interest developments. But the inquiry does not stop at the governing documents, as you will see.

In Part II of the article you will find out how such things as The Davis-Stirling Act, negligence and past practices affect the outcome of who fixes what, and how to set policy to avoid the disputes that commonly arise over such things as water leaks that involve both common area and individual units.

California Law On The Subject of Maintenance and Repair In Common Interest Developments

The law that applies to maintenance in common interest developments in California is found in the Davis Stirling Act-Civil Code Section 1364. That section defers to the CC&Rs if they specifically address a maintenance item but it also forth a default position if the documents do not define who is responsible.

That law is stated below; and I have interjected some commentary (in red) to assist in understanding it. As you can see, the legislators felt compelled to include solutions where termite damage is found and it needs to be repaired.

Civil Code Section 1364

Maintenance, Repair And Replacement Obligations; Termite And Pest Control Responsibilities; Notice Of Repair Requirements; Telephone Wiring And Access

1. Unless the CC&Rs provide otherwise, the association is responsible for repairs, necessary replacements and maintenance of the common areas in a CID, other than “exclusive use common areas,” and the owner is responsible for maintaining his or her separate interest and “exclusive use common area.”

   COMMENT: You have to be careful here because a reading of this statute could lead one to believe that owners are responsible for deck, garage or carport repair and replacement in a condominium project (since these areas are often designated as exclusive use common areas), and that is not necessarily the case. Relying on this statute alone without combing the CC&Rs for language relating to responsibility for maintenance of these items or the structures could lead to a problem. Example: If a deck is cantilevered as opposed to free standing, allowing an owner to attempt replacement could jeopardize the structure. Attorney advice with regard to these maintenance issues is a very good idea.

2. 1. In a community apartment project, condominium project or stock cooperative (as earlier defined by Section 1351), the association is responsible to repair and maintain the common areas damaged, destroyed or infested by wood-destroying pests or organisms (to the extent repairs are required) unless the declaration (CC&Rs) has different requirements.
   2. In a planned development, each owner is responsible to maintain his or her separate interest (usually the entire area constituting a “lot”) as damaged, destroyed or infested by wood-destroying pests or organisms unless the declaration (CC&Rs) has different requirements. This obligation could be shifted to the association upon approval of a majority of members of the association, and the association would then be entitled to specially assess for the costs of repair, replacement and maintenance under this subsection.

      COMMENT: Although (2) says that a majority of owners is enough to shift termite responsibility to the association in a planned development, a question could arise if a CC&R amendment is required for the change and the Declaration requires more than majority approval to amend. It would be wise to seek legal advice if there is a conflict between what the Declaration requires to amend and what the statute says is required to change the scheme of termite and organism damage responsibility. Majority approval might be sufficient for a one time shift; however, if the CC&Rs require, for example, 75 percent to amend, then no amendment can be recorded with majority approval, except under a petition process whereby an HOA can apply for a lowering of the percentage required for an amendment by a judge (Civil Code Section 1356).

3. The costs of temporary relocation, (if relocation is required) necessitated by repairs and maintenance which is the responsibility of the association, must be borne by the owner(s) of the separate interest(s) affected.
4. 1. The association may require temporary relocation of any occupants of a CID as reasonably needed to afford prompt, effective treatment of wood-destroying pests.
   2. The association must give notice to owners and occupants involved of the need to temporarily vacate not less than 15 nor more than 30 days prior to the date relocation is required. The notice must give the reason for the temporary relocation, the date and time of the beginning of treatment, the anticipated time of the termination of treatment, and must let the occupants know that they are responsible for their own accommodations during the relocation time.
   3. Proper notice can be accomplished by either:
      1. personal delivery to the occupants and first-class mail (postage prepaid) to the owners if different than occupants, to the most current address on the association records; or
      2. sending a copy of the notice to the occupants and first-class mail (postage prepaid) to the owners if different than occupants, to the most current address on the association records.
5. “Occupant” means owner, resident, guest, invitee, tenant, lessee, subleases, or any person in possession of the separate interest.
6. Owners (or their service providers) have rights of reasonable access to common areas for the purpose of maintaining internal and external telephone wiring (which is designated as “exclusive use” common area by Section 1351(i)(2). The access and placement of exterior wiring is subject to consent of the association which shall not be unreasonably withheld.

COMMENT: Subsection (a) provides the general overview, but subsections (b) through (f) provide more specifics on maintenance and repair. If the CC&Rs define the obligations differently from the statute, the CC&Rs generally control. “Appurtenant” practically speaking means adjacent to, touching, or meant to be a part of and cannot be separated legally from. Sometimes exclusive use areas are described in the governing documents for the association and sometimes they are not. They are described above in Section 1351 (i). Figuring out responsibilities for maintenance, replacement and repair obligations is often difficult because of a lack of specific language so it may be necessary to seek the assistance of knowledgeable legal counsel. Besides reviewing and considering the CC&R provisions and the statutory references and requirements, past and current practices, reserve studies and policies may have some effect should a legal claim arise and consistency of enforcement may become an issue. Since this is a common area of dispute and disagreement, it helps to have an experienced professional assist in handling the issues and questions that arise. Sometimes it requires a CC&R amendment to clarify things.

**

As already stated above, in a condo situation the association is usually responsible to maintain all common area (which includes the buildings) except for exclusive use common areas. In a planned development, the owners are usually responsible for maintenance of everything on the individual lots, unless, as to both of these types of developments, the Declaration says otherwise.

This is definitely an area where you want to have good legal counsel. As you can see what seems should be a simple topic becomes complicated when you have to determine which controls, the documents or the statute, or the case on topic.

The sooner you get the correct information in such a situation, the better for everyone. Boards get into real hot water sometimes if they misinterpret the maintenance obligations. They might collect money for years for repairs to some component that is not the association’s responsibility, or alternatively, fail to collect reserves for a component that is the responsibility. The association can be sued and board members sued for breach of fiduciary duty in either scenario.

How To Set Legally Enforceable Policies and Rules Regarding Maintenance Obligations

Now, to answer the rest of the questions:

Can the Board decide who fixes what if the documents do not say?

Answer: the board (with the right kind of expert help) is in the best position of anyone to decide what the correct interpretation of responsibilities is by analyzing the existing facts and intentions of the developer (by review of the first few reserve studies and any past practices), and by seeking input of a knowledgeable expert about what the law adds to the inquiry.

What if the Board is too slow? Can an owner fix something and get reimbursed?

Answer: This is a risk for an owner. If the documents contain language allowing for this, it is clear. If not, then an owner might be able to get some recovery of money spent in small claims or another court venue, or through attempts at ADR (Alternative dispute Resolution such as mediation or arbitration.) However, there are no guarantees.

What if the reverse is true; i.e., the owner is too slow? Can the board do the work and get reimbursed by the owner?

Answer: this depends completely on what remedies are provided in the governing documents. Look for language on reimbursement assessments, individual assessments, fines, and the like. It is also important to know that, if the association is going to take this kind of action, it is best first to offer the owner a reasonable opportunity to do the maintenance, and also to give the owner notice and an opportunity to appear at a hearing if the owner is going to be charged for something in this scenario. If the documents do not authorize any of these remedies, or entry onto the separate interest property of the owner, then the board may have to go to court.

What’s the benefit of having a maintenance policy?

Answer: Hopefully the idea of good business judgment and application of the business judgment rule, which is the same type of consideration described in the Lamden case above.

Can the board just adopt a policy or do owners have to vote on it?

Answer: A maintenance policy – or maintenance “matrix” which is a type of policy defining maintenance responsibilities in chart form (a very beneficial tool if accurate) generally can be approved by a board after pre-adoption circulation of at least 30 days to members to allow a comment period. It would be treated like a rule modification and be subject to the requirements of Civil Code Section 1357.100 and the series following. Some documents require owner approval of rules so it is best to get a legal opinion on the proper procedure. No one wants a rule or policy or matrix that is problematic in enforcement because of a procedural adoption issue.

What if someone causes the damage that needs to be repaired; is he or she responsible to fix it?

Answer: Ahhh, this is a very good question. And it is important to know this!

How Negligence Fits Into Any Inquiry About Responsibility

Most people would naturally go to the cause first and assume that whoever caused the damage that required the repair or replacement is responsible to do the work. By doing so, one may forget to check the documents!

A good example of how the failure to check the governing documents can cause problems is found in the California case Franklin v. Marie Antoinette Condominium Owners Association, Inc. (1993). In this case, a central plumbing system in a condominium association leaked and caused damage to an owner’s hardwood floors. The owner demanded replacement of the damaged flooring. The association was responsible generally to maintain the common area (and therefore responsible to fix the leak) but it was not held responsible to pay for the damaged flooring. This was because of an “exculpatory clause” (one allowing “escape” from liability) in the CC&Rs. The court said:

“Although the CC&R require the Association to maintain and repair the common area (see § 1364, subd. (a)), the CC & Rs do not require the Association to reimburse a condominium owner for property damage caused by a central plumbing leak which occurred in the absence of negligence by the Association. The CC & Rs contain an exculpatory clause which states in relevant part: “[T]he Association … shall [not] be liable for … damage to … property in the project … resulting from … water … which may leak or flow from outside of any unit or from any part of the building, or from any pipes, drains, conduits, appliances or equipment or from any other place or cause, unless caused by the gross negligence of … the Association, its Board, officers, the manager or his staff.” ^FN7”

A few things important to note that came from this case are:

1. Such an exculpatory clause is not against public policy.
2. Such an exculpatory clause would not apply if the association had been found negligent.
3. Negligence of one party otherwise protected by language in the documents would negate an exculpatory clause.
4. An exculpatory clause like this does not negate the responsibility to insure that is otherwise stated in the governing documents.

An example of negligence that would have hurt the association in the above or any similar situation would be to ignore a leak in the common area once it has been reported, and allow it to cause damage to a unit or units by the failure to repair, or to take the mistaken position that it does not have to fix the leak because it is in an area of plumbing that is the owner’s responsibility. This can occur by failure of a board to investigate when a leak is reported. And this can lead to responsibility also for damages to a unit that would otherwise be the owner’s responsibility.

Recap and Conclusion: Benefits of Good Policymaking 

As you can see, identifying components and repair, maintenance and replacement responsibilities is an important aspect of running homeowner associations. Similarly, a board can use some good expert help in the area of reserves planning and also interpretation of the documents, law and other factors such as intention of the developer and past practices. It is important to understand that negligence can change responsibilities as well, even those set forth in documents, or a policy or matrix.

However, the importance of good and consistent policies cannot be stressed enough. Remember that boards can get some court deference if challenged on a position related to maintenance obligation if a policy, procedure and/or plan is developed to deal with any or several maintenance requirements. Policy setting is straightforward. And gather all of the information and expert assistance that you need to draft the policy. With regard to maintenance policies, consider setting up a Maintenance Matrix that presents the board’s interpretation of responsibilities for maintenance, repair and replacement of improvements in the development. Such a policy would help greatly in terms of:

• Promoting consistency in enforcement of obligations from board to board.
• Identifying problems areas before there is a “fire” to put out (or a complaint).
• Engendering cooperation on part of owners because of a written policy as opposed to off the cuff statement.

Beth Grimm is the principal at the Law Office of Beth Grimm, in Pleasant Hill. She is a member of ECHO and various other industry organizations and is the current co-chair and a long-time member of the ECHO East Bay Panel. She is host of a website called www.californiacondoguru.com and author of many helpful community association publications.