Adams Stirling PLC
  California's Leader in Community Association Law August 17, 2023

The primary duty of an association is to maintain, repair, and replace the common areas. That is why they are created in the first place. Unfortunately, boards failed their duties at Champlain Towers, and 98 people died. In the wake of that tragic loss, new standards were implemented nationwide to help avoid future losses.

Fannie Mae. The first was the imposition of new lending guidelines by Fannie Mae and Freddie Mac requiring boards to answer questions about common area deferred maintenance and unsafe conditions. The new questionnaire is problematic because may of the questions are poorly worded and create potential liability depending on how they are answered.

Reserve Standards. The second development is a positive one involving reserve study standards. A task force established by the Community Associations Institute (CAI) and led by (i) Robert Browning, PCAM, RS, Browning Reserve Group, Carmichael, Calif., (ii) Peter B. Miller, AIA, RS, Miller-Dodson Associates, Annapolis, Md., (iii) Mitchell Frumkin, PE, RS, Kipcon, Inc., North Brunswick, N.J., and (iv) Robert Nordlund, PE, RS, Association Reserves, Westlake Village, Calif. updated national standards for preparing reserve studies.

Long-Life Components. Previously, components with a life of 30+ years were not included in studies. This created problems for many associations. As these components aged, they dropped below the 30-year threshold and were often left out of studies--out of sight, out of mind.

When systems started to fail, especially plumbing, costly special assessments were levied against the membership since no reserve funds had been allocated for their replacement. New reserve standards now require all major components be identified. In addition, Periodic structural inspections are now recommended for buildings. Fortunately, reserve standards allow the estimated cost of these inspections to be included in an association's reserve funds.

Maintenance Manuals. Preventive maintenance manuals are now recommended for all associations. Although not a requirement for the study, disclosures are required whether a preventive maintenance schedule is in place and being used. That disclosure will likely be scrutinized by lenders, which could impact sales of units for those who don't have them.

RECOMMENDATION: For a full description of the updated guidelines, see "2023 Reserve Study Standards." To make sure new standards are followed, boards should use a reserve company that has been credentialed by CAI. The Institute issues a "Reserve Specialist" credential to qualified individuals. Meeting the new standards will save associations a lot of money in the long run, and avoid painful special assessments.

QUESTION: Our 50-year-old association has been experiencing unexpected and frustrating slab leaks. Some are small and may cost $1,000 to $5,000 to repair. Others may cost $20,000 to $50,000. The expenses are unexpected and not budgeted for. Would it be better to special assess for these expenses or continue to pay from our reserves? –Jim M.

ANSWER: 50-year-old plumbing systems are not eternal They will fail. Your situation is a prime example of why the new reserve standards were developed. There should have been a line item in your reserve study for your plumbing system and monies set aside for it.

Your board should have imposed an emergency special assessment to pay for the first round of repairs/replacements since they qualified as unexpected and necessary. Once that was done, directors should have raised the association's reserve contributions to fund future repairs.

If you continue to pay for unfunded repairs out of reserves you will run out of money for replacing roofs, painting buildings, sealing asphalt, replacing water heaters, etc. When those fail, you can't impose emergency assessments since they weren't unexpected. These items are listed in your reserve study, along with their useful lives.

RECOMMENDATION: The remainder of your plumbing is going to fail. In your next budget cycle, your board should raise assessments enough to make significant contributions into reserves--first to replace all the money that paid for plumbing that already failed and, second, to set aside additional funds for anticipated plumbing failures.


Readers have been sending in great recipes and and some really creative names. The cutoff for submitting a recipe is August 31. If you have a special recipe you want to submit, it should be in one of the following categories:

    • Appetizers
    • Soups/Salads
    • Main Dishes
    • Desserts

If you can, submit a picture of your dish so people can see what it looks like. Every person whose recipe is selected for publication will receive a copy of the cookbook. In addition, our readers will be able to download a digital version from our website. CLICK HERE TO SUBMIT A RECIPE.


ADAMS|STIRLING is looking to add two additional transactional attorneys to the firm.

We provide excellent benefits: full health, dental, FSA, 401(k) with employer match, etc. We are entirely cloud-based and paperless, have a low annual billable requirement, offer remote/flexible work-life balance, and have a friendly, supportive atmosphere.

If you know someone who might be interested, please send me an email.

Boards can contact us--we're friendly and our rates are competitive.

Adrian J. Adams, Esq.
Founder & Managing Partner
DISCLAIMER. Our newsletter provides commentary, not legal advice. Boards need to retain an attorney to review all the facts and give a legal opinion on the issues they face. We serve as corporate counsel to California associations only. Request a proposal to represent your association.

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I join Adrian in inviting you to contact us for your association's legal needs.

Hon. Lawrence W. Stirling, Senior Partner and author of the Davis-Stirling Act

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