|
WATER DAMAGE AND
INSURANCE FOLLOW-UP
 Laurie and I want to thank the 1,300 attendees to our webinar. Many of you had questions we could not answer in the allotted time. Fortunately, our Director of Client Relations Miranda Ward was able to compile them. A lot of questions covered the same or similar issues. I will answer those that are most representative.
Water Protocol. Should the association consult legal counsel when adopting a water intrusion protocol?
RESPONSE: It wouldn't hurt. You want to make sure it's thorough and conforms to your governing documents. We developed a fairly comprehensive protocol for our clients.
Insurance Deductible. Can an association pursue payment of the deductible from the owner who caused the damage?
RESPONSE: If a loss can be attributed to an owner's negligence or intentional acts which results in a claim against the association's insurance, the owner that caused it is normally responsible for the deductible. You should adopt a written policy for how deductibles are handled.
Neighbor to Neighbor.  Some HOAs stay clear of unit-to-unit leaks saying that repairs are between the two owners. Is this correct?
RESPONSE: No it's not. The association has a role in the matter because the water travels through common areas. If the board refuses to get involved and the two owners deadlock, a lawsuit will likely follow. It's a virtual guarantee the association will be named. It is better to be proactive. That means keeping a remediation company on speed dial to clean up water and dry out ceilings and walls to prevent mold. Once everything is dry and repairs are made, the association has the power to special assess the responsible party if appropriate. Legal counsel will need to get involved to review the CC&Rs and guide the board through the process.
Inspection Policy. Does an inspection policy really reduce liability to the HOA?
RESPONSE:  I don't know what inspection policy you are referring to, but "Yes" inspections reduce potential liability.
Insurance policies should be reviewed by your broker to make sure they comply with your CC&R requirements--do you have bare walls coverage or all in? Roofs should be inspected and repaired before they leak. Balconies should be inspected and repaired before they collapse. Common areas should be inspected for safety hazards. I could go on, but I think you get the point. It's like going to the doctor for annual checkups to find and treat problems early on. Not going could be fatal.
Insurance Demand. Who is responsible for making a claim on the HOA’s insurance? The board, management or the homeowner?
RESPONSE: The association is the policy holder. The board or its managing agent, at the direction of the board, should make the claim. It gives them the opportunity to manage losses. If the deductible is high and the damage minor, they may choose not to make a claim and cover it out of pocket to keep premiums down.
Maintenance Chart.  If we can't get our CC&Rs amended and we create a matrix, what overrides what?
RESPONSE: Creating a maintenance chart and adding it to your rules is perfectly acceptable. It makes it easy for owners (and board members) to determine who is responsible for what. You want to make sure it matches responsibilities defined in your CC&Rs. This is where legal counsel may be needed since maintenance duties are not always clear--especially in older documents. If there is a conflict between your chart and your CC&Rs, your CC&Rs control.
Access to Unit.  If the only way a leak can be repaired is through a unit and the owner refuses to let the plumber in, what option does the association have?
RESPONSE: I recommend everyone amend their CC&Rs to exile such owners. Short of that, CC&Rs always provide a right of entry to make repairs. If it's a flood and the water can't be turned off, the fire department can force entry into the unit. If it's a slow leak, the association's legal counsel can make a written demand for access and threaten legal action if it's not given. See Right of Entry.
Waterproofing. Is the HOA responsible for waterproofing underground parking?
RESPONSE: Over time, waterproofing will fail (roofs, balcony decks, planter boxes, etc.). Parking structures are part of the common areas for which the association is responsible to maintain, repair and replace. (Civ. Code § 4775.) If water is coming through the walls, it creates two problems. The first is it will damage the structure. Reinforcing steel in the concrete will rust, expand, crack the concrete, and weaken the structure (the same as happened to Champlain Towers in Florida before it collapsed, killing 98 people). The second problem will be potential slips and falls from water pooling on the floor. The board should find out what it costs to waterproof the walls and then find a way to pay for it.
Door Maintenance. We have an owner with mild damage from poor door maintenance on their part and on the part of their upstairs neighbor, but they continue to threaten to involve the HOA's insurance and or sue us. What is the best way to proceed?
RESPONSE: You should have legal counsel review your documents to see if maybe the association is responsible for maintaining the doors. It would be better to hear it from the association's attorney than from a judge. If the owners are responsible for door repairs and waterproofing, then a letter from your attorney to the two owners would be a good start.
No Key.  We have a homeowner who refuses to leave a key with the board for emergency entry. They do not live in the unit. The unit is empty for several months at a time. There was an emergency overflow coming from this unit and it was protracted because nobody could access the unit to check for source of leak from above. Does this affect responsibility?
RESPONSE: Yes, it does. I sense a lawyer letter in the offing.
Remodel. If a homeowner added new sinks, bath shower which included new plumbing pipes inside the common area walls then in the future such areas leak, is this still the association's responsibility to fix? Or are remodels with new plumbing the homeowner's problem?
RESPONSE: The Pottery Barn has a policy of "you break it, you bought it." The same rule applies to remodels. You should put it into your architectural rules that if members change the association's common areas, they are responsible for the changes. You should also put it in the architectural application members must sign when applying for architectural modifications. For things like enclosing a balcony or installing a skylight in the association's roof, I like recording a covenant so all future owners of the unit know they are responsible for maintenance of the alterations and any damage they might cause.
HIRING ATTORNEYS
 We are hiring experienced HOA attorneys as well as those new to this area of the law. We offer a collegial work environment, excellent benefits and flexible work schedules.
If you are interested, or know someone who may be a good candidate, you can contact me confidentially by email or by phone at (800) 464-2817.
|