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Articles Posted in Maintenance

*Asked & Answered

Worker-Holding-Asbestos-174899441-56a4a1903df78cf7728353b4Asked Our HOA Board of Directors has recently decided to undertake some deferred maintenance projects which require wall renovations, such as re-piping the condominium buildings. Must the Association have an asbestos survey conducted prior to commencing the work?

Answered – Yes. The South Coast Air Quality Management District Rule 1403 (“Rule 1403”) requires a survey for the presence of Asbestos-Containing Materials (“ACM”) to be conducted and documented prior to the commencement of any renovation. (See SCAQMD Rule 1403(a).) Moreover, Rule 1403 makes it clear that a survey is required regardless of when the structure was built, the size of the renovations, and whether the owner of the structure is aware of the building materials. (See Rule 1403(d)(1)(A).)

Asbestos is a hazardous air pollutant under Section 112 of the federal Clean Air Act. (6 Environmental Law Practice Guide § 46.09 (2019).) Rule 1403 governs work practice requirements for asbestos in all renovation and demolition activities. The purpose of this rule is to protect the health and safety of the public by limiting dangerous emissions from the removal and association disturbance of Asbestos-Containing Materials (ACM). (See SCAQMD Advisory Notice). Due to the serious implications for exposing individuals to ACM, the survey requirement is mandatory with very limited exceptions.

Rule 1403 requires that the survey must be conducted by a Cal/OSHA-certified inspector or, as permitted by Cal/OSHA, an employee of the facility who possesses an unexpired AHERA Building Inspector certificate from a Cal/OSHA approved course. (See Rule 1403(d)(1)(iv).)

Given the serious health risks and liability associated with exposing HOA Members to ACM, HOA Boards should include asbestos surveys within the project budget and/or ensure that the surveys are included in any vendor contract.

California HOA lawyers Your city or county may require you to apply for a permit to conduct asbestos removal, renovation, or demolition. Contact your HOA attorney to conduct an in-depth analysis of your locality’s specific requirements.

-Blog post authored by TLG Attorney, Corey L. Todd, Esq.

*Asked & Answered

Contract-ReviewAsked Our HOA community manager always recommends that our vendor contracts be reviewed by our HOA attorneys before we sign them. Is this really necessary?

Answered – Yes! Contract review is an integral step to protect the HOA against future contract disputes. Oftentimes, HOA Boards of Directors don’t think twice about a contract until there is a dispute with the other party later on. By this point, it’s too late to negotiate contract terms, and the Board is often left to interpret and navigate poorly written and single-sided provisions that do not provide any support or protection to the HOA.

Contract disputes can be extremely costly and time-consuming. Since contract disputes and related expenses are unpredictable, they aren’t necessarily incorporated into the HOA’s annual budget; this can put a lot of financial strain on the HOA and could lead to special assessments on the membership to cover the costs. Furthermore, contract disputes can leave the HOA tied up with a vendor in which they’d rather part ways. This could leave the HOA without the ability to hire a new, better-qualified vendor to perform the job at hand.

Our HOA attorneys are skilled in the review, revision, and negotiation of contracts specific to HOA needs. Our attorneys can spot concerns that may not be obvious to a Board member, recommend alternative or additional language to provide HOA specific protections, and also communicate these concerns directly with the vendor. Additionally, our attorneys can identify whether the Board may be prohibited from entering the contract pursuant to the HOA’s governing documents. Combined, these efforts will result in a more comprehensive contract and more balanced protections for the HOA.

California HOA lawyers By taking the time up front to work with our expert attorneys, Board members can be assured that they are prudently adhering to their fiduciary duties and feel confident that they have taken appropriate measures to mitigate costly and time-consuming contract disputes in the future.

-Blog post authored by TLG Attorney, Joelle M. Bartkins, Esq.

plumbing-890x600*New Case Law

One of the primary purposes for which a homeowners’ association (“HOA”) is formed is to maintain and repair the HOA’s common areas, as well as any other areas designated within the HOA’s recorded Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) (i.e., HOA Maintenance Areas). Faithfully executing the maintenance obligations under the CC&Rs is important to preserve property values and generally enhance the quality of life of all residents residing in the community. Failure to do so may expose the Association to liability.

For example, in the recent case of Sands v. Walnut Gardens Condominium Association, the California Appellate Court held the HOA could be responsible for damages sustained by a homeowner as a result of a plumbing leak originating from a pipe on the roof of the condominium building (i.e., HOA common area). ((2019) 35 Cal. App. 5th 174, 176.) In Sands, the HOA repaired the pipe and the roof, but did not compensate the homeowners for the damages they sustained to the interior of the unit and their personal property. The homeowners sued the HOA for breach of contract and negligence.

In addressing the former first (i.e., the breach of contract claim), the Court of Appeal noted that the HOA had a contractual obligation under the CC&Rs to maintain the common area in “a first-class condition.” (Id.) A jury could find that the HOA breached that contract by failing to perform preventative maintenance, and by failing to periodically inspect the pipes and roof. The Court dismissed the HOA’s argument “no evidence showed [that] the [HOA] was ‘on notice that it needed to make repairs or do something to the roof or the pipes.’” (Id.) Rather, it was sufficient that the HOA knew that no maintenance was being performed, which a jury could find as a breach of the CC&Rs’ requirement that the common area be maintained in a first-class condition.

However, as to the second cause of action for negligence, the Court sustained the trial court’s judgment of nonsuit (i.e., the homeowners failed to present sufficient evidence to conclude that the HOA was negligent). The Court noted that “the [HOA] had no independent duty as to the pipes and roof arising from tort law.” (Id. at p. 177.) In other words, absent a showing of a duty independent of the CC&Rs, an HOA cannot be held liable for the tort of negligence.

This case is important for several reasons. First, while the Rule of Judicial Deference generally requires courts to defer to maintenance decisions made by HOA boards even if a reasonable person would have acted differently in the same situation, the rule does not protect HOAs when they fail to perform any preventative maintenance and/or periodic inspections. Thus, a HOA should not wait until it receives maintenance requests and/or notice from homeowners concerning the need for common area repairs; rather, the Board should consult with experts and establish a preventative maintenance program addressing all common areas.

Second, there is no separate tort claim (e.g., negligence claim) for a HOA’s failure to maintain the common area. This is not to say, however, that a HOA will not be liable under a negligence theory for other reasons. For example, if a HOA voluntarily assumes a duty to protect residents from criminal activities and breaches that duty, the HOA may be held liable for negligence. (See Frances T. v. Village Green Owners Association (1986) 42 Cal. 3d 490.) The language contained in Frances T. also seems to suggest that a HOA may be found negligent for failing to maintain the common area which results in personal injuries. (Id. at p. 499.)

California HOA lawyers The case of Sands v. Walnut Gardens highlights the importance of properly executing maintenance obligations under the CC&Rs. While the Board is granted judicial deference in determining how the common areas are to be maintained, a HOA may be held liable for its failure to investigate maintenance problems and to take reasonable action. (See Affan v. Portofino Cove Homeowners Association (2010) 189 Cal. App. 4th 930 [the deference afforded to HOA Boards may not extend to situations where the Board fails to act or to investigate the scope of required maintenance or repairs].) HOA Boards should therefore consult with experts to establish and execute an appropriate common area maintenance plan.

-Blog post authored by TLG Attorney, Matthew T. Plaxton, Esq.

P9110024*New Legislation

Senate Bill 326 (“SB 326”) was recently enacted by the California Legislature and will take effect January 1, 2020. The bill accomplishes 3 main objectives: 1) it requires associations to conduct mandatory inspections for exterior elevated elements, such as decks, balconies, and walkways; 2) it invalidates and prohibits provisions in an association’s governing documents that restrict the board’s authority to initiate a legal proceeding against a developer for substandard construction; and 3) it requires an association to discuss with the membership the potential impacts of a construction defect action against the developer prior to the initiation of such an action.

Exterior Elevation Inspections

SB 326 introduces Civil Code Section 5551, which sets forth brand new requirements for associations with three or more multifamily dwelling units. For these associations, all exterior elevated elements that are supported in substantial part by wood or wood-based products, such as decks, balconies, stairways, and walkways, must be visually inspected every nine (9) years by a licensed structural engineer or architect (“Inspector”). The inspections are intended to determine whether the exterior elevated elements are in a generally safe condition and performing in accordance with applicable standards. These new requirements follow in the wake of a catastrophic balcony failure that resulted in a number of tragic deaths.

While the concept of visual inspections may sound fairly straightforward, the mechanics of the required inspections under Civil Code Section 5551 track unique and complex extrapolation protocols commonly employed in construction defect litigation. As a preliminary matter, not all elevated elements are required to be inspected. Rather, a statistician must be enlisted to prepare a randomized list of all the elevated elements qualifying for inspection (i.e. the total universe of those components that extend beyond the exterior walls of the building to deliver structural loads to the building from decks, balconies, stairways, walkways, and their railings, that have a walking surface elevated more than six feet above ground level, and that are supported in whole or in substantial part by wood or wood-based products). The randomized list must be prepared in such a way that the results of the inspections are representative of the project as a whole, within a margin of error of five (5) percent. This protocol allows for limited visual inspections (which will be a significant savings for the association), but provides confidence that those inspections are representative of the global onsite conditions.

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contractorportal_12columnOur industry depends on a close network of skilled industry professionals who are dependable and responsive.  Emergencies are common, particularly in condominium developments where breaks in shared or common water lines can lead to disaster.  Quick action by association vendors can extinguish the root cause of the emergency and potentially reduce, if not eliminate, thousands of dollars of damage.  Ideally, the vendor’s scope of work should be limited to those actions only; however, vendors occasionally wade into dangerous waters when they (albeit innocently) strike up conversations with residents about damage responsibility.  Do the following real-life examples sound familiar to you?

A plumbing invoice states:

“Service call.  Performed leak detection.  Source of leak found to be Owner responsibility.  Water line is leaking and needs to be replaced.”

A resident says the following to the association’s community manager, “Your roofer told me that the ceiling leak is the HOA’s responsibility.  Why shouldn’t I believe him?  Wasn’t he hired by the HOA?”

Community managers and board members routinely rely upon trained vendors to provide competent services in one of two (2) contexts: preventative maintenance and reactionary repairs.  As to the latter, reactionary repairs, which are usually of an emergent nature, may involve vendor entry into a separate interest and the presence of a concerned resident.  In that circumstance, residents have been known to question the vendor regarding loss responsibility.   Cornered, the vendor might feel obligated to provide an answer.  Vendor communication in that regard is rarely beneficial to the association – especially in those infrequent situations where the resident seeks to manipulate the dialogue to develop a potential legal claim.

When working at a residence, vendors should try to limit resident dialogue except as necessary to perform the work that they were hired to perform.  Why? Vendor opinions regarding fault or responsibility may not be correct.  Responsibility likely depends upon a review of the association’s governing documents, among other things.  Most vendors are not trained to analyze the responsibility allocations set forth in the association’s declaration; indeed, a responsibility allocation in one context may not necessarily be the same in another situation because governing documents usually differ.  Second, vendor statements can create public relations challenges for management and board members when they try to explain to an upset resident why the vendor’s in-field statements are not accurate.  Most significantly, vendor representations could potentially bind the association under a legal theory called ostensible agency.

Ostensible agency occurs when the principal (i.e. the HOA) intentionally, or by want of ordinary care, causes a third person (i.e. the resident) to believe another (i.e. the vendor) to be his agent who is not really employed by him (Civil Code Section 2300).  Under California law, a resident can argue that the vendor is an [ostensible] agent of the association by proving that the association carelessly created (by want of ordinary care) the impression that the vendor was an agent or employee of the association; and that the resident was harmed because he or she reasonably relied on his or belief (California Civil Jury Instruction 3709).

How do management professionals and board members avoid the possibility of binding statements by an unassuming vendor?  Exercising ordinary care by vendor education at the outset of the vendor relationship.  If possible, vendor agreements should include contract language which prohibits vendor communication (orally and in writing) with residents regarding responsibility after a loss.  Before repair work begins, vendor employees should be told that their role is limited to stopping the problem and, if warranted, developing a repair plan.  They should be reminded that they have been hired by the association, and as such, are obligated to report their factual findings only to the association; vendor invoices should not include responsibility or fault determinations.  Perhaps most importantly, vendors should be forewarned about the possibility of resident confrontation – and instructed to politely tell residents that their responsibility inquiries should be directed to management or the board for review.

California HOA lawyers Existing vendor and association relationships can be strengthened by a mutual understanding of the vendor’s expectations when interfacing with a resident.  It is critical that vendors and HOA leaders stay aligned so that potentially inaccurate in-field responsibility determinations do not become the basis of a future legal action involving the association.

-Blog post authored by TLG Attorney, Kumar S. Raja, Esq.

employee-vs-contractorIn the recent case of Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court set forth a new test that employers should utilize to determine whether their workers are appropriately classified as independent contractors or employees.  (Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal. 5th 903.)  The new test will likely have a significant impact on the obligations and liabilities of employers for matters involving payroll taxes, worker’s compensation insurance, IRS reporting, and minimum wage and overtime requirements. In light of the Dynamex decision, all California employers, like homeowners associations, should re-evaluate whether they have appropriately classified their third-party vendors as independent contractors.

The Supreme Court simplified the test that was previously used to classify workers.  Prior to the decision in Dynamex, a multi-factor test was utilized.  The principal factor was whether the employer had the right to control the manner and means in which work was performed.  However, the courts also considered several other secondary factors, such as whether the employer could discharge the worker at will; the level of skill required to perform the work; whether the employer supplied the tools and location to work; the length of time to be worked; the method of payment (whether by time or by job); whether the worker usually performed this type of work; and the subjective beliefs of both parties.  This “totality of the circumstances” test created a substantial amount of uncertainty among employers.

The new Dynamex test, referred to as the “ABC Test,” makes is easier for employers to determine in advance whether their workers should be classified as employees or independent contractors.  Although the new test is easier to utilize, employers will now find that it is more difficult to classify their workers as independent contractors.  The ABC Test begins with the presumption that all workers are employees.  To classify a worker as an independent contractor, the employer bears the burden of proving three elements.

First, the worker must be free from the employer’s control and direction, both in actuality and in contract.  This prong is essentially a restatement of the principal factor in the pre-Dynamex test, which requires genuine independent contractors to control the manner and means in which they perform their own work.

Second, the worker must perform work for the employer that is outside of the employer’s usual course of business.  For example, a homeowners association would likely be able to satisfy Part B, when dealing with workers hired to perform janitorial or landscaping services.  This is because homeowners associations are not in the janitorial or landscaping business; rather, homeowners associations are in the business of managing and maintaining Common Interest Developments.

Third, the worker must be customarily engaged in an independently established trade, occupation, or business of the same nature of work performed for the employer.  Using the example from above, a homeowners association could satisfy Part C of the test, if it could show that its janitor or landscaper provides the same janitorial or landscaping services for other homeowners association as well.  True independent contractors have their own business cards, a separate place of business, and their own book of clients.

California HOA lawyers It is important to note that the Supreme Court specifically limited its Dynamex holding to disputes involving Wage Orders issued by the Industrial Welfare Commission.  In order words, the case’s holding should only be applied to lawsuits that allege violations of Wage Orders (i.e., involving meal and rest breaks and overtime wages).  At this point, it is uncertain whether the new ABC Test will be applied to all other legal claims brought against employers.  Nonetheless, homeowners associations that routinely hire independent contractors should carefully re-evaluate their hiring procedures to ensure that their workers are properly classified under the ABC Test.

-Blog post authored by TLG Attorney, Sarah A. Kyriakedes, Esq.

hoa-water-damage-claims*New Library Article!

Many condominium associations face problems due to a misunderstanding of how their association’s policies of insurance operate and should be utilized—especially in connection with property damage emanating from broken pipes or plumbing fixtures. Those problems include, among others: (a) denying owners the benefit of the insurance coverage to which they are entitled; (b) having the association assume broader repair responsibilities than what it legally must or should; and (c) failing to adopt policies to allow for losses to be resolved in consistent, equitable and cost-efficient manners.

Our HOA attorneys have authored a new article to address these problems by dispelling some of the confusion at their core. In doing so, we provide recommendations as to how condominium associations should approach water damage claims with the assistance of their HOA legal and insurance professionals. Those recommendations include what we believe every condominium association should adopt as part of their operating rules: a “Water Loss Policy.”

hoa laws The article, entitled “Water Damage Claims in Your Condo Association,” is available for download from our firm’s library. You can access the article by clicking here.

hoa-condo-solar

The California Solar Rights Act (“Act”), found at Civil Code §§ 714 and 714.1, provides certain protections for homeowners seeking to install Solar Energy Systems (i.e., solar panels) on their properties (“Systems”). The intent of the Act was to prevent associations from broadly banning Systems for aesthetic reasons—whether through an explicit ban, or through onerous architectural restrictions that greatly increase System costs or reduce performance. To that end, the Act rendered void and unenforceable any provision of an association’s governing documents that “effectively prohibits or restricts the installation or use of a solar energy system.” Civ. Code § 714(b). The Act does permit associations to place “reasonable restrictions” on the installation or use of Systems, as defined in Civil Code § 714(b).  However, in reality, those “reasonable restrictions” are extremely limited in scope.  To illustrate, any restriction which increases the cost of a System by more than $1,000, or which decreases its performance by more than ten percent (10%), from what was originally proposed by the homeowner is not a “reasonable” restriction and therefore unenforceable. Civ. Code § 714(d)(1)(B).

For planned developments with detached homes, the application of the Act is relatively straightforward because it applied to Systems that were installed on a homeowner’s “separate interest.”  However, what was less clear was the extent to which the Act applied to homeowners within condominium developments.  In a condominium development, a System would not be installed within or upon a homeowner’s separate interest.  Rather, the System would be installed on common area components such as the roofs, garages or carports.

This issue was at the heart of AB 634 which was signed into law in 2017. AB 634 amends Civil Code § 714.1 and adds Civil Code § 4746. Under the new law, which became effective January 1, 2018, associations are prohibited from establishing policies prohibiting the installation or use of Systems installed on the roof of the building in which the owner resides, or a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. It also adds an exemption to the membership approval requirements associated with granting exclusive use of common area to allow for such grants for System installations. Civ. Code § 714.1(b)(1)-(2).  In simple terms, condominium associations are no longer able to broadly prohibit Systems from being installed on common area roofs, garages or carports.

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SolarThe Governor has signed AB 634 into law changing HOA control over solar energy system (“Solar”) installations. HOAs may no longer adopt policies and guidelines that prohibit Solar installations on common area roofs protecting HOA property and homes from damage and members are stripped of the right to protect common area property by membership vote. HOA’s must conform to a statewide, one-size-fits-all Solar policy summarized here.

Civil Code § 714.1 now provides that Associations are prevented from . . .

  • Establishing a solar energy system policy that prohibits condominium owners from installing solar panels on the common area roofs of condominium buildings or the owner’s adjacent garage/carport (exclusive use common area);
  • Requiring membership approval for an owner’s encroachment for Solar equipment on the common area.

New Civil Code § 4746 declares HOAs reviewing requests for Solar installations on common area roofs of multifamily dwellings . . .

MUST require:

  • Applicants to notify each owner in the building of the proposed solar installation, AND
  • Owners/successive owners to maintain homeowner liability coverage, providing the HOA with proof of insurance within 14 days of approval and annually thereafter;

MAY impose reasonable provisions that:

  • Require owners to provide a survey of “usable solar roof area” prepared by a licensed contractor/knowledgeable salesperson;
  • Require survey to include equitable allocation of usable solar roof area for all owners sharing the roof/garage/carport;
  • Require owners/successive owners to be responsible for:
    • Costs for damage to any common area resulting from installation/maintenance/repair/removal/replacement of Solar installation;
    • Costs for maintenance/repair/replacement of Solar installation until its removal;
    • Restoration of all common area and separate interests after removal;
    • Disclosing the Solar installation to prospective buyers and all related responsibilities

Civil Code § 4600 now includes Solar installations as an exception to the rule requiring approval of 67% of members before the HOA can grant exclusive use of any portion of the common area to a member.

California HOA lawyers In light of AB 634, HOAs should have their legal counsel review their current architectural guidelines with respect to the installation of solar energy systems.

-Blog post authored by TLG Attorney, Terri A. Morris, Esq.

mechanics-lien

Vendor professionals frequently provide a variety of services on behalf of community associations and individual homeowners.  Under California’s Constitution, unpaid vendors possess a legal right to lien the property upon which they work for the value of their rendered services or furnished material.

AB 534 (Gallagher), effective January 1, 2018, seeks to clarify how mechanic’s liens are to be used in common interest developments by amending Civil Code Section 4615 and by adding new Civil Code sections.

Under existing law, if a vendor intends to preserve the ability to impose a mechanic’s lien at a later time for work performed at a property, then such entity must first secure advance authorization from the property owner. Similarly, under existing law, a vendor seeking to enforce its claim to payment by way of a mechanic’s lien must notify the owner of the property which will be subject to a lien.

In the context of community associations, ownership of common area property can take a variety of forms: that property can be owned by the association, or it can be owned by all of the homeowners jointly, as tenants in common.  As such, the vendor is often burdened by the obligation to identify the legal owner of the common area property when attempting to obtain that advance authorization and when seeking to provide legal notice of an impending lien.

AB 534 circumvents the challenges associated with identifying property ownership by imputing association authorization for a common area improvement to all members, and by making the association the agent for the members for purposes of receiving notices and claims during the lien enforcement process.

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