Why Members Don't Care About Their Community Association

Many community association members are apathetic about association affairs because they don’t see their association as significant to their lives—that nothing the association does or doesn’t do will have a serious effect on them. This attitude often arises from the perception that a sale of their interest will pass any association problems on to someone else.

A community association is not the board of directors. It’s not management. It’s not legal counsel.  A community association is the sum of its members—nothing more, nothing less. The ultimate fate of a community association is always in the hands of the owners. An association is dependent upon its members in numerous ways. Funding is the most obvious example. Without member assessments an association will cease to function—those assessments are usually the sole source of cash flow to pay operational expenses, staff salaries, and to accumulate reserves for future maintenance and repair.

City in a Salt Pond

Future Salt Pond Residents Left Holding the (Sand) Bag

As an attorney who has defended Redwood Shores homeowners and who has represented homeowner associations battling over responsibility for flood protection and the resulting damages when that protection fails, I have watched Cargill’s proposed new city-in-a-salt-pond moving forward in Redwood City’s approval process with growing alarm.

Proponents of this development contend that it will be good for the economy, touting the potential shopping and new restaurants from Burlingame to Palo Alto. But from my experience, future salt pond residents will instead be left with massive, unrecoverable costs. This is particularly true given Cargill’s plan to build a levee that will not only have to be maintained, but raised significantly even to meet their optimistic estimate of sea level rise. All of this at homeowners’ expense after Cargill has taken its profits and left town.

Good Legal Advice or Confidence Game? You Decide.

By Tyler P. Berding and Sandra M. Bonato

     A new community association experiences some leaks. Management tells the board about an attorney who will provide a free seminar on the fiduciary duty of board members in the face of construction problems. The board accepts the offer. So far, so good. The attorney arrives and asks that the “seminar” be held in executive session with just members of the board. The attorney proceeds to tell the board members that they could face personal liability if they fail to thoroughly investigate construction defects throughout the project and bring suit against the developer. The attorney “advises” the board that they should hire him and his consultants. The attorney pulls out a fee agreement for himself and his consultants and urges the anxious board to sign it on the spot.

      The developer offers to fix the problems, but the attorney won’t permit it. The attorney fails to file the necessary statutory notices required by Title 7 of the California Civil Code. The board tries to cancel the agreement for legal services, but is again “advised” by the attorney that they could be held personally liable if they don’t follow his instructions. At a board meeting a motion is made to discharge counsel and the consultants. The attorney tells the board it cannot discharge him or his consultants, again “advising” that they could be personally liable if they were to do that.

What theme does this story present? An over-reaching attorney, who uses the lure of a “free seminar” to get access to the directors of a community association and, once in the door, threatens the board with personal liability if they don’t immediately hire him and his consultants to investigate and pursue a construction defect claim. This scenario is not fiction. It is apparently happening with alarming frequency in the current over-heated market for construction defect legal work. Let’s analyze it.

To read the rest of this story click on the title link above...

Maintenance Manuals for New Associations: How Much Maintenance is enough?

by Tyler P. Berding and Steven S. Weil

(Editors note: This article was originally published earlier this year and prompted the question in the post below)

Many of the statutes in the Davis-Stirling Common Interest Development Act (“Act”) address common area maintenance and the calculation and levying of assessments needed to maintain and reserve for that maintenance. Directors and managers face the challenge of implementing these statutory directives, a task especially difficult during an economic downturn. Decisions have to be made: what must be repaired, what can be deferred; should we replace a component with a “short term” fix or with one that is more costly but will last longer? When the CC&Rs say common areas must be maintained in “First Class condition” is that different than requiring simply that common areas “be maintained”? Answering these and similar questions can affect habitability, enjoyment of the project and property values.

For new developments, the issues are even more complex. Title 7 of Division 2 of the California Civil Code (“Title 7” which, before its enactment, was called “SB 800”) creates new standards and special statutory maintenance requirements for residential common interest developments constructed after 2003.¹ These requirements, which can require compliance with a project “Maintenance Manual,” pose special risks for managers and directors because the failure to comply could reduce the recovery available to associations in construction defect claims or create liability to members or others if the new maintenance standards are breached.

The association's governing documents can add yet another dimension. Typical CC&Rs for new projects often contain specific requirements that the board must follow, including complying with the provisions of the maintenance manual and conducting all necessary inspections specified in such manuals.

Most maintenance manuals are detailed, but the “maintenance” that is required usually consists not of repairs, per se, but rather periodic inspections of various components. The ones that we have reviewed have few actual specifications for work to be performed for which contractor's bids could be obtained. Nevertheless, must the manuals be followed completely and if they are not, what is the consequence? This article is intended to help boards and managers navigate the liability risks created by the new maintenance standards contained in the manuals.

Click the title link above to read the rest of this article...

Are Developers Required to Provide "Maintenance Manuals" to New Associations?

A Question from a Reader regarding California's Title 7:

Mr. Berding

Re your article in Community Associations Network ("Maintenance Manuals for New Associations--How Much Maintenance is Enough?"), I found it quite informative. A question:

"Title 7 of Division 2 of the California Civil Code ("Title 7" which, before its enactment, was called "SB 800") creates new standards and special statutory maintenance requirements for residential common interest developments constructed after 2003. These requirements, ... can require compliance with a project "Maintenance Manual"..." 


Does such a manual exist, and if so, how would I go about getting a copy? 


Thank you.

Robert J. Burns, P.E.,R.S.
Burns Associates-Engineers

 Bob, I'm glad you found the article useful.

The two provisions of Title 7 of California's Civil Code which relate to maintenance schedules are the following:

CC 907: A homeowner is obligated to follow all reasonable maintenance obligations and schedules communicated in writing to the homeowner by the builder and product manufacturers, as well as commonly accepted maintenance practices. A failure by a homeowner to follow these obligations, schedules, and practices may subject the homeowner to the affirmative defenses contained in Section 944.

CC 945.5 c): To the extent it is caused by the homeowner or his or her agent, employee, general contractor, subcontractor, independent contractor, or consultant by virtue of their failure to follow the builder's or manufacturer's recommendations, or commonly accepted homeowner maintenance obligations. In order to rely upon this defense as it relates to a builder's recommended maintenance schedule, the builder shall show that the homeowner had written notice of these schedules and recommendations and that the recommendations and schedules were reasonable at the time they were issued.

The statutes refer to "recommendations" "maintenance schedules" and "schedules" in no particular order. The phrase "maintenance manual" is not used. However, these statutory provisions have obviously been considered by builders when they provide maintenance "manuals" or "schedules" for specific projects. There is no standardized maintenance manual of which we are aware. The manuals we discussed in our article were specific to projects that we have been retained to review.

These "maintenance manuals" and other similar "maintenance schedules" are intended by builders to put an association on notice that they must maintain the project properly to avoid problems. This is, of course, good advice. But it also provides the developer a defense that can be used in a construction defect claim. A good expert, however, can separate problems in the design or original construction from those caused by lack of proper maintenance and whether or not the maintenance required by the "manual" was reasonable.

The New Reality: Is Your Condo Project a Candidate for Sale as a Single Parcel?

     The future of many common interest developments resembles the present-day reality of condominium conversions that are often born with serious maintenance issues and a cash deficit. If the association cannot pay for essential maintenance, the value of the units will drop, similar to the recession-caused loss of value today, but they will fail to sell notwithstanding lower asking prices, and the owners, many now under water, will stop paying their assessments. When the association gets to the point where it cannot pay for essential services or do critical maintenance, then the local municipality will have to decide if the units remain habitable. If the answer is “no,” condemnation may be next step...

Click on the title link above to read the rest of this essay...

Beyond The Fourth Stage: A Florida Failure

Banks win delay in demolition of abandoned Fort Lauderdale condo complex

By Scott Wyman September 16, 2010 06:37 PM

Big banking won out Thursday over a Fort Lauderdale neighborhood’s hopes that the city would order the demolition of an abandoned condo complex that’s become a haven for crime.

Debris is strewn across the 58-unit complex along the north fork of the New River. The doors and windows have been stripped away. Vandals have destroyed walls and ripped out copper wiring and plumbing. The city has been paying for metal shutters to keep away squatters.

City inspectors declared the New River Condominium to be a health and fire hazard, but banks won two delays over the summer to prevent its demolition. Residents of the River Gardens/Sweeting Estates neighborhood had hoped Thursday would bring an end to the delay, but instead a city board gave banks another 32 days to try to come up with a plan to salvage the property.

The extension came even though the banks offered the board no evidence of any plans being drawn up. They also had failed to follow through on promises to pay for the shutters – which are costing Fort Lauderdale taxpayers $6,000 a month.

“This is an unsafe structure and there has been delay after delay and continuance after continuance,” neighborhood activist Pamela Adams said.

The neighborhood, along with city building inspectors, began pressing in June to take the drastic step of razing the five buildings just off Sistrunk Boulevard. The complex had been converted to condos in 2005, but then came the recession and now almost every unit is either owned by a bank or in the process of foreclosure.

There’s been no running water for a year. The condo association is defunct. Police officers refer to the area as The Hole because it’s where suspects on the run often disappear. Nearby homeowners say drug-dealing and prostitution is rampant.

Bank lawyers told the city’s Unsafe Structures Board that they are committed to trying to find a way to redevelop the property and understand the city’s patience is at an end.

“I can’t believe it is so unsafe that it must be demolished immediately,” said Justin Hekkanen, a lawyer for Bank of America, which has an interest in about two-thirds of the units.

Members of the city board said the delay was almost certainly the last. Although some of the board said the banks had had enough time to act, others feared that demolition would guarantee the land sit vacant for years as a legal fight ensues over what would happen next.

Click on the Title Link above to read what we learn from this...