HOA liability in letting a property go to ruin (not timeshare)

[rickandcindy23]

I am pretty annoyed by the HOA of our rental property, a townhouse we bought in 1997. When we bought it, the property was valuable, nicely upkept, and it was built around 1985, so in pretty good shape. This is no longer the case. The exterior needs paint and some siding replaced, the parking lot needs paved (huge potholes), and the roof is old and needs reshingled.

We went to the property today because the basement flooded with the rain we had last night. The gutters were full of leaves, which caused a dam in the gutter, which overflowed out of the gutter and right down the window well. It's a large window well.

We keep the inside of the unit nice even replaced all of the windows this year with triple-glazed ones. The windows made a huge difference in the tenants' heating and AC bills. We remodeled the kitchen and finished the basement. But the carpet is ruined. When we called to ask the liability of the HOA, they said water in the basement is not their responsibility. But the roof and gutters are their responsibility.

Anyway, I am looking at $1,000 in new carpet (carpet is only two years old), and we are going to install "Gutter Helmet" to keep this from happening again. We are also going to rework the back of the unit with the window well to divert rain, and we are going to build a window well cover as well, and it will be tilted to keep rain out of the basement.

We will do what we can, but the HOA is really letting the exterior of the units go. I am hoping to talk to the HOA president and see what they plan to do. I have always thought the HOA dues were too low to keep the place up. Now it looks so bad, I would be willing to cough up an appropriate amount of cash to get it back in shape.

 

[Passepartout]

It is the owners who vote for the HOA board. Very hard to convince the other owners to vote to replace the existing board with one that will surely raise rates.

You might consider suing if you think you can prove negligence with the uncleaned gutters, but if there is no money to clean gutters, there is no money to pay legal fees and clean gutters. You'd in essence be suing yourself, since you and the other owners would be responsible in the end.

Sorry.

PS. DW says to check with your own insurance for coverage.

 

[SnowDogDad]

The HOA board is in a tricky position between trying keep dues/fees affordable and also keep the property looking as good as absolutely possible.

I have seen too many properties where the initial HOA fees were poorly estimated and the owners ended up paying numerous special assessments in order to fix things.

What would your owner community think if your HOA fees suddenly were increased by, say, 20%? (No clue what yours would need to be raised by.)

If I were in your shoes, I'd contact the board members and bring up your concerns. Including specific things you see that are wrong. Maybe it is just your management company that is not holding up their end of the bargain... Regardless, though, you have to hold your board responsible and accountable for the appearance of your property.

Also, if you have evidence that poorly maintaned property (such as clogged gutters) contributed to damaged within your unit, take pictures. And make thorough notes of what you found, who you talked to, and the dates/times.

 

[davidvel]

Your CC&Rs should set forth what the HOA is responsible for, what maintenance is required, and what types of reserves are necessary. Often this is set by law in your state.

As to the flooding issue, seems odd that an overflowing gutter would cause a basement to flood. If very heavy rain were directed to the window, it still shouldn't flood the basement, gutters or not.

 

[tompalm]

It is the owners who vote for the HOA board. Very hard to convince the other owners to vote to replace the existing board with one that will surely raise rates.

You might consider suing if you think you can prove negligence with the uncleaned gutters, but if there is no money to clean gutters, there is no money to pay legal fees and clean gutters. You'd in essence be suing yourself, since you and the other owners would be responsible in the end.

Sorry.

PS. DW says to check with your own insurance for coverage.

Good info above, but most people say when you sue your HOA, you are suing yourself because if you win, the maintenance fees will surely go up and there will be a record of the suit that will cause property values to go down.

One of my five careers was being a Property Manger for a large corporation that managed over 200 HOAs (most of them high rises on Oahu) in Hawaii. I was responsible for 10 of those and worked for the Board of Directors of each condo. I did the reserve studies, budgets, all the contracting for any required maintenance like elevators, refuse, painting, roofing, etc... The Board for each building was entirely different. Some buildings save a lot of money and wanted a large reserve while others fudged the numbers on the reserve study by extending the required maintenance. So if a 100 unit townhouse HOA was scheduled for a new roof two years from now, one of the board members would say that it will last another five years and lets move it until later so that we don't have to raise maintenance fees. Hawaii has a law that requires boards to save money, but the board has the flexibility to move things as they see fit. Qutie often, board member have their own agenda and don't want to raise maintenance fees because maybe they plan on selling their unit and want to present a low MF, or maybe they just don't see the big picture and will not listen. What happens a few years later is that when work is needed, there is not enough money and all the owners get a special assessment or a big jump in maintenance fees.

So, the first thing you should look at is the reserve study to see if there is a schedule of upkeep that is supposed to be done and see if there is enough money in the reserve to do the work. If there is money, get the BODs going to have the work done. If not, get involved with the BODs and try to get them to find out how much money is needed and send out a special assessment to get money so the work can be done. The management company will do all that work, but it will take a lot of time. The last resort is getting on the board yourself or selling your unit.

When I owned a house in a HOA, I was the president because I was concerned that the board was going to spend all the money on useless stuff, or mismanaged the property. It is the only way to ensure things get done right. So, I feel your pain. Good luck.

 

[Ken555]

Tom offers good advice. I've been on my HOA board for years and have experienced similar situations. In California the board may raise maintenance fees up to 20% each year without a vote of all owners. Special assessments are rare for many reasons, but also for the fact that the law (or so I am told) requires they be voted in a certain manner all of which costs (legal and mailing fees etc). My board has decided that we would raise rates to permit us to allocate sufficient monies to our reserve so that we are not caught empty handed in the future, though it is difficult to be 100% covered.

Reserve studies are not always transparent, since the numbers are often adjusted by the consultant performing the research and the work. It has been my experience that reserve studies are not always good indicators of reality, though they are the only "objective" documentation we have. For instance, several years ago our reserve study showed we were 76% funded (which is a very good amount, from what I'm told). The next year we were 54% funded even though we had since increased our reserve contribution considerably...and very few new expenses were added the budget. Needless to say, the board discounted that reserve study altogether and the year after we hired a different company to do the work (they were much more thorough, though still not perfect).

With the above in mind, I will say that other HOAs in my area operate similar to your rental property. Almost every major expense requires a special assessment for those properties, which incurs the extra cost of running the SA, and is a major pain for those involved with management and the board. Nevertheless, I would suggest you request copies of the last five years of reserve studies to review yourself, along with the corresponding five years of budgets for your association. In California, we perform different types of reserve studies annually with a few review only every several years. You want to be sure to review the full review along with any subsequent annual reports (it may be that three years is sufficient). This would give you greater insight into the operations of the HOA and allow you to anticipate when major expenses should be allocated. It will also help you understand if the board has been remiss in their duties...or have simply ignored the recommendation of the reserve study (however you wish to define that...).

A new roof, painting, and general upkeep are essential to the stability of a property. As for your basement water damage, I would call your HOA insurance agent and obtain a copy of the policies and inquire as to coverage. In addition, I would call your insurance and file a claim. In the end it may be easier for you to let your insurance handle it, especially if the HOA is not being helpful, as they would subrogate the claim against the HOA...assuming they wish to bother with a small claim and assuming your policy covers this type of damage etc etc.

On a related issue, my building had water damage earlier this year during a storm. Several units were impacted with water damage caused by a missing drain cover on the roof which permitted debris to clog a drain...and water then made its way into the building. Our HOA insurance covered everything, including emergency water remediation assistance. I would assume yours should do likewise, especially if the HOA is responsible for the roof and gutters and it's agreed that the state of the roof/gutters is the cause of the water damage. But, is the HOA responsible for clearing the gutters or are you?


Sent from my iPad

 

[laurac260]

Perhaps this may have been covered in other's posts, but does your state require your HOA to have a certain amount of money "in reserves" to cover these sorts of things? I know Ohio does. There have been a number of laws passed down in the past few years that REQUIRE HOA's to operate in a certain manner, laws that didn't exist before.

My husband was HOA president in our neighborhood until March of last year (we since moved to a non HOA community). He told me about all the new laws, thought I don't remember what they are now. Check with your state, county, city, whomever governs HOA's. Doesn't really help you with your carpet though.