14 Apr 2016

With Great Power Comes Great Responsibility Part 4 of 4

Posted by Orlando HOA Services

Glad you can join us for the last post in this series “With Great Power Comes Great Responsibility”. In this final segment we will talk about necessary damage and summing all the other posts that came before. It’s the same thing with how firemen control wildfires, they intentionally burn dead trees so wildfires don’t go out of control when it happens. Similarly, some construction need to be demolished before it can be built up again.

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Damage Done for the Good of the Community

Sometimes CC&Rs don’t address the issues that are presented when a community association must destroy or damage individually owned property for the common good. For example, perhaps there are exclusive use decks that prevent the HOA from accessing the roof membrane. When it’s time to re-roof the building, the association has to demolish the decks. Who pays?

The HOA may take the position that, because the CC&Rs and Civil Code Section 4775 says that the owner of the separate interest must maintain the exclusive use common area decks, the owner must pay.

The owner will say there was nothing wrong with the deck; it had to be demolished to re-roof the building, and the cost is part of the association’s cost of maintaining common area.

Many courts have made analogies between homeowners associations and mini-governments. Under this analysis, we can conclude that the association, in demolishing the decks, is doing something like what a government does when it takes privately owned property for a public purpose. The homeowners association, like the government, must compensate the property owner for the taking. However, if the deck was nearly worn out, the association should pay only for the deck’s remaining useful life, not for a brand-new deck.

Changing the CC&Rs to Reallocate Maintenance Responsibility

Sometimes, HOAs change the allocation of responsibilities by amending the CC&Rs. This may or may not be a good idea.

Sometimes, the original CC&Rs required owners to maintain particular components. If some owners don’t do this in a timely manner, it can damage other people’s property values. Sometimes, the HOA can achieve economies of scale by replacing all decks at the same time; it would cost a lot more if each owner replaced only one deck. It may be particularly appropriate for an association to assume maintenance responsibilities when it’s impractical for individual owners to maintain a component. How reasonable is it to expect individual owners to maintain, repair and replace windows on a multi-story building? Each owner has to scaffold the building in order to replace one window! That makes no sense. If an association is going to assume maintenance of components, be sure to reserve for the new component.

When an area is inaccessible, it’s often easier to have the owner maintain it. But sometimes, associations with financial problems try to solve them by shifting responsibility for components to individuals. This isn’t always wise; it can lower property values because not all owners have pride of ownership, and fixing each component individually loses all ability to get economies of scale.

Summary

Sometimes, figuring out who pays for what in a community association is a big headache, and the answer makes everyone unhappy. The best ways to avoid these problems are the following:

  1. Amend your CC&Rs to make the solutions to these problems as clear as possible.
  2. Require or encourage each owner to obtain his/her own liability insurance and adequate levels of property insurance.
  3. Adopt clear policies about who pays the insurance deductible.
  4. Act fairly and use common sense.

These steps will help you cope with these thorny issues.

http://www.echo-ca.org/article/how-determine-maintenance-responsibility-hoas

Do you need an expert to keep your self-managed condominium association fiscally healthy? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong well into the future. Contact us at JR@Orlando-HOA.com or check out our website at www.Orlando-HOA.com.


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