Maintenance, Repair & Replacement: Drawing Lines of Responsibility Your Way!
May 1, 1999
This article, reprinted from the April/May 1999 issue of the Common Area Communicator, helps you answer the question of "Whose responsibility is this, the owner's or the Association's?"
This article sets forth a clear and concise strategy for helping Associations determine who is responsible for what components, and more importantly, how it should be.
*Please note: The article reprinted here is informational only, and has not been updated. Do not rely on any of the information set forth herein without obtaining legal advice as to current law and the particular circumstances of your situation.
by David F. Feingold, Esq.
One of the most common, and often most difficult, tasks for a community association is to determine proper lines of responsibility for the maintenance, repair, and replacement of components. Inevitably, associations have been or will be faced with the unanticipated failure of certain components which raise never before addressed questions of who is responsible to pay for repairs.
Your first instinct is to look to the traditional authorities: your Governing Documents, the Davis-Stirling Act, and past precedent. However, for those associations with older or generic documents, the answer is almost certainly not there. Looking for something that doesn't exist is not only very frustrating but could interfere with coming to the right decision. Save yourself the time and aggravation, and don't dwell on trying to find the answer there. We suggest instead that you take a somewhat unorthodox approach to the issue of determining responsibility; that you aspire to make it the way it should be and work backwards to find or create the authority for that determination.
Let's dream a little. Imagine that you have been appointed Component Czar. For those components which are not expressly and clearly addressed in the Governing Documents, you can decide for your community whether a component is an owner responsibility or an association responsibility. You can decide who owns it, who controls it and who pays for its maintenance, repair and replacement. Mix and match the variables; use your creativity. Ask yourself how it should be, visualize persuading your neighbors why you're right, and craft an implementation strategy that works.
This article will provide you with a ten question formula to determine how the lines of responsibility should be drawn, discuss the important distinction between ownership, control and financial responsibility, and finally, recommend an implementation strategy for handling those troublesome components.
The Ten Question Formula
As Component Czar, where do you start? How do you get your bearings? Here's what we suggest: for every component about which you are uncertain, ask the following ten questions:
- Are there economies of scale that will reduce the cost to the members if the association takes responsibility for the component?
- Can the component be easily accessed so that a large scale project can be efficiently coordinated and managed?
- Is the component one that is traditionally thought of as an association responsibility?
- Do all owners use the component in an equivalent manner?
- If there is a casualty loss, is the component one that is typically covered by the association's master policy?
- Has the association established precedent by doing some or all of the work on the component in the past?
- Is the component an exterior element which is visibly prominent?
- For this component, do all owners have the same or comparable features?
- Will neglect pose a risk or have a negative impact on other owners?
- Are owners willing to pay more in regular or special assessments to have the association take responsibility?
If the answer to most or all of questions in the ten part formula is yes, then you have identified a component that most likely should be an association responsibility. If most or all of the answers are no, the conclusion may be that the owners should take responsibility individually. Let's look at an example - how about shower pans in a fictional condominium association.
- Economies of scale? No. While some discount may be available for a large project, the impossibility of dealing with tile upgrades and allocating owner responsibility for the tile will overshadow any potential savings.
- Easy access? No. A big pain for the association to coordinate.
- Traditionally an association responsibility? No. The better thinking is that the shower pan is part of the tile system, therefore part of the finished surface, and thus an owner responsibility.
- Used in an equivalent manner? No. The number of people living in a unit may differ widely, and, let's face it, some residents bathe far more frequently than others.
- Casualty loss? Yes. Most master policies cover the tile system.
- Precedent? No. In our fictional association, the Board did authorize association repair of one or two, but only to get a handle on the problem.
- Visible from the exterior? No.
- Same for all owners? No. While every owner has a shower pan, they have widely different tile installed and subsequent remodels have altered the original construction.
- Risk? Yes. There is a risk of decay and water damage to lower units if neglected.
- Owners willing to pay more in assessments? No. Never. The cost per unit to reserve for repairs and damages will be significant.Thus, applying the ten question formula gives us an 8-2 spread in favor of the conclusion that maintenance, repair and replacement of shower pans should be paid for by the owners individually. Of course, each question may be weighted differently, depending on the component. While the risk of damage if shower pan repairs are not made is troubling, that risk does not involve a life safety issue and can be managed by notices to owners and consistent enforcement.
Ownership, Control and Responsibility
If, after sizing up the component with the ten question formula, the way is still not clear, ask yourself three additional questions: Who owns it? Who controls it? Can financial responsibility be assigned or shared?
For example, in a planned development, the member might own the exterior wood siding outright, but the association controls what the member can do with it, and, depending on how the line of responsibility is drawn, either the member or the association may be financially responsible for its maintenance and/or repair and replacement. Other examples of planned development components for which ownership, control and financial responsibility can differ include entry walkways, fences, and landscaping.
In a condominium project, the member might not own the front door outright (because it is defined as Exclusive Use Common Area) and most likely does not have control over it, but might have financial responsibility. Some additional condominium components where ownership, control and financial responsibility may be split include the cast iron flange and wax seal of the toilet assembly, fireplace boxes and flues, the bathtub p-trap, the waterproof membrane which is (you hope) behind the shower tile, sprayed on acoustical ceilings (which may contain asbestos in buildings constructed up to the mid-1970's), doors and windows and related components, and elastomeric decks. The list is endless. Select a component that is vexing you and apply the ten question formula and think about the distinction between ownership, control and financial responsibility. Once you reach a decision, you need an implementation strategy that is effective and will convince your neighbors that you have made a reasonable determination.
The Implementation Strategy
Obviously, you may have to deal with the issue of who pays for a particular component on an urgent basis. You have failing toilet flanges or p-traps under tubs, or elastomeric decks, which must be addressed immediately. The implementation strategy we find most effective is the adoption of a formal Board policy dealing with the component at issue. Of course, if you are clearly changing the requirement of the CC&Rs or altering the lines drawn by Civil Code §1364, a policy will be subject to challenge. At that point, you may need to jump directly to a formal amendment of the CC&Rs. However, where the CC&Rs are silent or ambiguous, a policy is a good start. The policy should be backed up by a written Board resolution which recites:
- the reason for the policy (e.g., toilet flanges have failed and caused damage to adjoining units...);
- the Board's authority (e.g., the Board has the authority and duty pursuant to the Davis-Stirling Act and the Governing Documents to adopt policies addressing maintenance, repair and replacement which are not in conflict with the CC&Rs and which enhance the value of the community...);
- the "reasonable inquiry" made by the Board in developing the policy (e.g., the Board consulted with a licensed contractor and its counsel...);
- why the policy serves the best interest of all owners (e.g., address the ten question formula above); and
- the provisions of the policy itself. Another good idea is to provide the membership with a draft of the policy, as well as notice of the meeting at which the Board intends to adopt the policy. Encourage open dialogue. Maintain the posture of objectivity, and be open to exploring with the membership how best to draw the lines. While many owners look first to the association, a.k.a. "the government," to pay, the prospect of a steep increase in assessments to adequately reserve for or repair a component may alter their view. Don't forget that anytime the issue of who pays for a component is addressed, the impact on the Reserve Study must be considered. Once a formal policy is adopted, the association can give it a test drive. Thereafter, it could be incorporated into an amendment to the CC&Rs if necessary.
The key to trouble-free Association management is drawing lines of responsibility that make sense for everyone in the community. This goal requires anticipating the gray areas, working together to decide how best to accomplish and pay for repairs, and clearly assigning that responsibility by amendment or policy. By focusing on how it should be, you will often find the community as a whole in agreement about the best way to draw the line.
Reprinted from the April/May 1999 issue of The Common Area Communicator.
David F. Feingold, Esq., is a partner with the San Rafael law firm of Ragghianti, Freitas, Macias, Wallace,and serves community associations in the Bay Area as general and litigation counsel.
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