So what keeps you up at night? If you are a condo board member or a property manager, it might be that dreaded phone call reporting calamity at the condominium. Whether it is the report of a fire; or a frozen sprinkler leak; or an injury due to a common element failure, the association’s actions in the past, in the present, or in the future will determine the ultimate outcome of association liabilities.
Condominium associations can assume a wide range of liabilities in this litigious environment we live and this article will not address most of these occurrences such as employee or third party lawsuits; violations of board fiscal responsibilities; and failure to follow administrative directives found in the condo declaration documents, to name just a few. Instead, this article will focus solely on Breach of Duty issues associated with common or limited common elements that could have been foreseen or avoided with proper attention by the community leaders.
Water Infiltration
One of the most common problems facing any building complex is water. Moisture infiltration through the building envelope can develop in virtually any type of structure. Keep in mind the building envelope includes not just the roof surface and exterior wall siding but also windows and doors as well as the foundation itself. Water infiltration takes as many forms as there are states of water, that is, moisture damage can be caused by free running water, ice, steam, and vapor. One of the most important issues to remember is water in any form requires time to cause damage. A short duration wetting rarely caused serious or extensive damage.
A vigilant condo board will have in place protocols and procedures to discover the first signs of water problems through the use of routine building inspection of the common areas and a population of unit owners informed on how to advise the board on water problems in their units. The condo’s building maintenance plan will require a visual inspection of all roof surfaces after any wind event over 50 miles per hour or hail or ice storms. Common area basements and crawlspaces should be viewed after extended rain events. All unit owners should be warned about freezing pipes and sprinkler systems. This is especially true for communities with a large proportion of snow birds taking extended vacations during the winter months. Requirements for low temperature alarms; minimum year-round thermostat settings; and hot water overflow pans should be well understood by all owners.
There should be a guideline in place for what actions are needed when a building envelope water infiltration problem is reported. The action needs to be timely and documented with the issue directed to a pre-determined individual who has the knowledge to understand the seriousness of the problem and the authority to act.
Perils of Poor Maintenance
An example of what can go wrong can be illustrated by the recent case of a relatively new four-story condominium building with a flat rubber membrane roof in Portland, Maine. The top floor unit owner observed some signs of interior wall water stains on the north side of the building. The problem was reported to the property manager who advised the board to hire a roofer to inspect the roof. As the water infiltration appeared to come and go with the way the wind blew, the board felt the problem could be put off as there were more pressing projects. Time passes before the unit owner hires his own building inspector who discovers a tear in a roof membrane seam was allowing water to enter the exterior wall cavity. Further invasive inspection of the exterior wall revealed that not only was the wall oriented strand board (OSB) siding beginning to rot but most of that side of the building’s fiberglass insulation was water saturated and the sheetrock walls had significant mold contamination requiring the unit owner’s family to move out of the unit during the mitigation and costly repair project. All would agree this was an avoidable liability for the condo, if prompt action had been taken.
Similarly, if a unit owner reports recent sheetrock cracks or door molding seams opening and doors not closing properly, the board should not assume it is a unit owner’s responsibility to repair. The interior walls may not be a common element, but the causes of the reported problems may relate directly to a common element such as the foundation or building framing. Taking all such reports seriously will show the owners their concerns are being listened to and potentially head off a widespread global problem throughout the entire complex.
Trip and fall hazards should also be taken seriously to avoid Duty of Care liability. Whether it is missing tiles on the swimming pool deck; damaged carpet in the halls or stairways; or the depressed asphalt pavement that ponds and freezes every winter, these problems are usually well known before the accident happens. You do not want to be the board member in front of the judge when he asks you how easy would it have been to repair the tripping hazard. And don’t forget the hidden fire hazards such as uncleaned common dryer vent ducts or lapsed inspections of the sprinkler system. Don’t depend on hindsight when it comes to risk management.
Article written by Jack Carr, P.E., R.S., LEED-AP, Criterium Engineers
Published in Condo Media February 2020 edition
Download a PDF Version of this Condo Media Article
Condominium associations face a variety of liabilities that can arise from negligence in maintaining common areas and responding to issues. Understanding these liabilities is crucial for board members and property managers to mitigate risks and protect the community's interests.
Common liabilities include injuries due to poorly maintained common elements, such as slip and fall accidents in hallways or on staircases. Additionally, failure to address water infiltration can lead to significant property damage and costly repairs, emphasizing the need for proactive maintenance and timely responses to resident complaints.
Best Practices for Property Management
Effective property management is essential for minimizing risks associated with condominium association liabilities. Implementing best practices can help ensure that maintenance issues are addressed promptly and that the community remains safe for all residents.
Best practices include regular inspections of common elements, maintaining detailed records of maintenance activities, and establishing clear communication channels with residents. By fostering a culture of accountability and responsiveness, property managers can significantly reduce the likelihood of liability claims against the association.
The Importance of Proactive Maintenance
Proactive maintenance is a key strategy for condominium associations to prevent potential liabilities. By addressing issues before they escalate, associations can protect their residents and their financial interests.
For instance, regular roof inspections can prevent water infiltration problems, while timely repairs of common area amenities can reduce the risk of accidents. Establishing a maintenance schedule and adhering to it can help boards prioritize essential repairs and avoid costly liabilities in the future.
Responding to Resident Concerns Effectively
Effective communication and timely responses to resident concerns are vital for condominium associations. Addressing issues quickly not only fosters a positive community environment but also helps mitigate potential liabilities.
When residents report maintenance issues, such as cracks in walls or water damage, it is essential for the board to investigate promptly. Establishing a system for tracking and resolving complaints can ensure that all concerns are addressed and that the association remains compliant with its obligations to maintain common elements.
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Frequently Asked Questions
Why does my HOA need a reserve study?
The necessity of a reserve study for your HOA lies in its ability to assess and plan for future maintenance and repair costs. This ensures financial stability and helps avoid unexpected special assessments for homeowners.
What does an HOA reserve study company do for the association?
An HOA reserve study company provides essential services to the association by assessing the current condition of common property assets, estimating future repair and replacement costs, and developing a funding plan to ensure financial stability for ongoing maintenance and improvements.
How often should an HOA do a reserve study in Florida?
HOAs in Florida should conduct a reserve study at least every three to five years. This ensures that the association accurately assesses its financial needs for future repairs and replacements, maintaining the property's value and integrity.
What is a reserve study for an HOA?
A reserve study for an HOA is a financial planning tool that assesses the community's long-term repair and replacement needs, helping to determine appropriate reserve funds to ensure the maintenance and sustainability of shared assets.
How to read an HOA reserve study?
Reading an HOA reserve study involves understanding the financial projections for future repairs and replacements of common property elements. Focus on the funding plan, projected expenditures, and the current reserve balance to assess the community's financial health.
How to calculate HOA reserve fund?
Calculating the HOA reserve fund involves estimating the total costs for future repairs and replacements of common area components, then dividing that figure by the expected lifespan of those components to determine annual contributions needed.
Why do HOAs need reserve accounts?
HOAs need reserve accounts to ensure they have sufficient funds for future repairs and maintenance of common areas, preventing financial strain on members and ensuring the community remains well-maintained and attractive.
How often should an HOA do a reserve study?
An HOA should conduct a reserve study every three to five years. This ensures that the association has an accurate assessment of its long-term financial needs for maintenance and replacement of common property assets.
How often does an HOA need to do a reserve study?
HOAs typically need to conduct a reserve study every three to five years. This frequency ensures that the association accurately assesses its financial needs for future repairs and replacements, maintaining the community's property values and overall integrity.
What can HOA reserve funds be used for?
HOA reserve funds can be used for major repairs and replacements of common elements, such as roofs, pools, and landscaping, as well as for unexpected expenses to ensure the community's long-term financial stability.
What is a healthy HOA reserve?
A healthy HOA reserve is a fund that is adequately funded to cover future maintenance, repairs, and replacements of common property elements, typically amounting to 10-30% of the total budget, ensuring financial stability for the community.
What factors influence HOA reserve study frequency?
The factors that influence HOA reserve study frequency include the age and condition of the property, changes in maintenance costs, significant repairs or improvements, and state regulations or requirements. These elements help determine how often a reserve study should be conducted to ensure financial stability.
How is an HOA reserve fund calculated?
The calculation of an HOA reserve fund involves estimating the future repair and replacement costs of common property elements, assessing their useful life, and determining the appropriate funding level to ensure financial stability for the community.
What are common expenses in HOA reserves?
Common expenses in HOA reserves include maintenance and repair of common areas, landscaping, insurance, and replacement of major components like roofs and elevators. These costs ensure the community remains well-maintained and financially stable.
How can an HOA improve its reserve fund?
An HOA can improve its reserve fund by conducting regular assessments of property needs, establishing a clear funding plan, and increasing contributions from homeowners to ensure adequate savings for future repairs and replacements.
What is the purpose of an HOA reserve study?
The purpose of an HOA reserve study is to assess the long-term financial health of a homeowners association by evaluating the condition of common property elements and determining the necessary funding for future repairs and replacements.
How do reserve studies benefit HOA members?
The benefits of reserve studies for HOA members are significant. They provide a comprehensive assessment of community assets, helping to ensure adequate funding for future repairs and maintenance, ultimately promoting financial stability and preserving property values.
What should be included in a reserve study?
A reserve study should include an inventory of the community's major components, their condition assessments, estimated remaining useful life, replacement costs, and a funding plan to ensure adequate reserves for future repairs and replacements.
How often should reserve studies be updated?
Reserve studies should be updated every three to five years or whenever significant changes occur in the property, such as major repairs or alterations, to ensure accurate financial planning and maintenance assessments.
What are the consequences of inadequate reserves?
The consequences of inadequate reserves can lead to financial strain on property owners, resulting in insufficient funds for necessary repairs, increased special assessments, and potential declines in property value.
How do reserve studies impact HOA budgeting?
Reserve studies significantly impact HOA budgeting by providing a detailed assessment of future repair and replacement costs. This enables HOAs to allocate appropriate funds, ensuring financial stability and preventing unexpected expenses.
What is the role of a reserve study company?
The role of a reserve study company is to evaluate and analyze a property's long-term maintenance needs and financial planning. They provide detailed reports that help homeowners associations and property managers allocate funds for future repairs and replacements effectively.
How can an HOA assess its reserve needs?
An HOA can assess its reserve needs by conducting a comprehensive reserve study, which evaluates the current condition of assets, estimates future repair and replacement costs, and determines the appropriate funding level to maintain those assets effectively.
What is the difference between reserves and operating funds?
The difference between reserves and operating funds is that reserves are designated for future capital expenditures or emergencies, while operating funds are used for day-to-day expenses and regular maintenance of the property.
How do reserve studies affect property values?
Reserve studies significantly influence property values by providing a clear assessment of a property's future maintenance and repair needs. This transparency assures potential buyers that the property is well-managed, ultimately enhancing its marketability and value.
What guidelines exist for HOA reserve studies?
Guidelines for HOA reserve studies include following industry standards, such as the National Association of Realtors (NAR) recommendations, ensuring accurate assessments of property components, and conducting regular updates to reflect changes in property conditions and financial needs.
How can technology assist in reserve studies?
Technology enhances reserve studies by streamlining data collection, analysis, and reporting processes. It enables accurate forecasting of future repair and replacement costs, ensuring informed decision-making for property managers and homeowners associations.
What are the best practices for reserve funding?
The best practices for reserve funding include regularly assessing and updating funding needs, establishing a clear funding goal based on a reserve study, and consistently contributing to the reserve fund to ensure adequate resources for future maintenance and repairs.
How do state laws affect HOA reserves?
State laws significantly impact HOA reserves by establishing requirements for reserve funding, maintenance, and reporting. These regulations ensure that associations maintain adequate financial resources for future repairs and replacements, promoting fiscal responsibility and property value preservation.
What challenges do HOAs face with reserve studies?
The challenges HOAs face with reserve studies include accurately assessing property needs, ensuring adequate funding for future repairs, and navigating member expectations. These factors can complicate the planning and budgeting process essential for maintaining community assets.
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Our engineering services also include structural evaluations, feasibility studies, and project management, all conducted by experienced professionals. By leveraging our knowledge and expertise, we help clients navigate complex engineering issues and achieve their goals efficiently and effectively.
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We understand that every project is unique, which is why we take the time to listen to our clients and tailor our services accordingly. Our commitment to providing fast, reliable service ensures that you receive the support you need, when you need it, making us the go-to choice for engineering consulting in your area.
Client-Centric Approach
At Criterium-Hardy Engineers, we place a strong emphasis on client satisfaction. Our approach is centered around understanding your specific requirements and delivering customized solutions that exceed your expectations. We believe that open communication and transparency are key to fostering successful client relationships.
Our testimonials reflect our dedication to service excellence and the trust our clients place in us. By focusing on your needs and maintaining high standards throughout our process, we ensure that you receive the best possible outcomes for your engineering projects.
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Requesting services from Criterium-Hardy Engineers is a straightforward process designed to save you time and effort. Whether you need a reserve study, property condition assessment, or any other engineering service, our user-friendly interface allows you to easily submit your request online. Simply fill out the service request form, and our team will get back to you promptly.
Additionally, we offer options for clients to pay invoices online, simplifying the transaction process. Our goal is to make your experience as seamless as possible, allowing you to focus on your property while we handle the engineering details.
