What Does it Take to Maintain an HOA in “First Class Condition”?
David Sands v. Walnut Gardens Condominium Association, Inc., 2nd App. Dist. No. B282241, 2019 Cal. App. LEXIS 431 (Ct. App. May 13, 2019)
In May, the appellate court weighed in on what it takes for a homeowner association to maintain its common area in “first class condition.” While most homeowner associations (HOAs), have a duty to maintain the common area, some Declarations of Covenants, Conditions and Restrictions (CC&Rs) expressly specify that the property shall be maintained in “first class condition.”
In David Sands v. Walnut Gardens Condominium Association, Inc., the Appellate Court held that a jury could find that, “[a] complete lack of preventative maintenance is evidence the association did not keep the [property] in first class condition.” The Court held that based on this evidence alone, without the need for expert opinion, a jury could find that an HOA breached its contractual maintenance duties.
The Sands’ owned a condominium in the Walnut Gardens development. The CC&Rs required the Association to maintain the common area in “first class condition.” A pipe on the roof broke and water entered the Sands’ bedroom. The Association repaired the pipe and roof, but did not compensate the Sands’ for damage caused by the water leak; thus, the Sands’ sued the HOA and the property manager. At trial, there was testimony that the HOA “was performing no preventative maintenance at all. The roof and pipes over the Sands’ condominium had not been inspected or maintained in years.” The HOA argued that there was no evidence to show that the HOA was “on notice that it needed to make repairs or do something to the roof or the pipes.” The Court dismissed this argument, since the HOA knew that maintenance was not happening. The property manager testified, “[m]aintenance wasn’t happening. It was a very sad situation for the homeowners.” The Appellate Court reversed the trial court’s nonsuit and remanded the breach of contract claim. (The Sands’ negligence cause of action was barred.)
The take away for any HOA Board of Directors and property manager is a reminder that an HOA should not wait until they receive a repair request or damage report to expend funds for common area maintenance and inspections. Annual inspections of all common area components should be conducted and a routine annual preventative maintenance program should be in place, even for relatively new construction. The HOA’s budget will likely need to be adjusted accordingly. By failing to perform preventative maintenance, an HOA runs the risk of breaching its duty to maintain the common area in “first class condition.” Even if an HOA’s CC&Rs do not include the “first class condition” standard, the Sands case could be used by courts to impose liability on an HOA for failure to inspect the common area components and conduct preventative maintenance.