HOA's Sued Over Dam Breakage

As you may know a few weeks ago we had severe flooding issues in central SC. Several lawsuits have been filed (more expected) but the more interesting ones have been filed by individuals and one strip mall owner against several HOA's for failure to control/maintain their dams. In the last 40 or so years there were several upmarket developments that created artificial lakes by damming streams/creeks, etc. Several lakes were in a row (different HOA's) like water flowed from one to the other with at least 3 of the dams letting go. Very much a domino effect. They did not not just overflow, but they somewhat collapsed. It has been so long since development that some HOA's were unaware they even owned the dam. In several cases there had been a road built over the top of the dam by the county.

I know one HOA has privately discussed suing the county as they "believe" once the county built the road, the county became responsible for the dam.

We have a retention pond with a very large earthen dam at one end. There is also a concrete "riser" (size of an old phone booth) in the pond with holes in it that connect to a drain pipe (like 36in) in the bottom of the riser for overflow. Ours worked perfectly (pond filled very high but was draining off) or so we thought until the pond kept draining and draining. Turns out there is a leak (bottom of the riser it appears) and it is draining the retention pond. While the leak is not an issue the potential for it expanding and busting through could be. We have had had it looked at and "guesstimates" for correction are $2,500 to $7,500. They are presently draining the pond (via a siphon pipe) to get it low enough to fully expose the riser and drain pipe so they can evaluate the damage.

A good question to all associations if you have any type body of water(s) (even a retention pond as we do) is do you have insurance enough to cover problems?

We own them.

We can NOT afford to maintain them.

The 'county' is off the hook as they are privately owned.

Taxes remain low.

As do (improperly) assessments.

Aaaaaah, the whole POINT of mandated HOAs.

Shifting of REQUIRED drainage costs.

This will create a multitude of 'Special Tax Districts' with the 'dams' being repaired by the 'county' and cost thereof paid over 10-15 years.

Said taxes will be HUGE (compared to present rates) for the affected HOs.

By the way, ALL RESIDENTS, not merely the HOA MEMBERS, will vote on the issue.

The HOA MEMBER/OWNER, however, will pay the tax.

Flood insurance is a tricky issue. For my state, you are NOT required to purchase flood insurance IF your home is NOT in a "Flood plain". If your home is in one, you should have it. As for HOA's that is even a trickier issue. Typically HOA's do NOT own land. Huh? They maintain and manage it. A HOA is made up of the group of owners with a COMMON interest. Which is a Common area of real estate with amenities (pool, clubhouse, tennis courts, retention ponds, and other facilities)or what the homes are "planted" on. The HOA maintains insurance for those amenities and for protecting board members from personal liability.

When you say "sue the HOA" for the flood damage if the dam breaks, it's really the homeowner's insurance that is "suing/making claim" on the HOA insurance. Which is kind of limited on it's liability or responsibilities when it comes to "Acts of God". However, if a board member lost their mind and bull dozed the dam down in a flood, then the HOA would hold more of the burden of responsibility.

I would call up your insurance company and double check on their policy payout on such issues. It may be your HOA is over insuring itself because the burden/responsibility is on the owner to maintain their own homeowner's insurance. So why make everyone pay for someone else's insurance responsibility?

Remember a HOA is ONLY funded by it's members FOR it's members. Most likely whatever the outcome, you ALL will have to pitch in money to cover damages whether to repair, pay insurance claim costs, or to waste money preventing such lawsuits.

Actually, the news article about the issue is quite interesting:

http://www.thestate.com/news/local/article44440407.html

Disagree about failure point.

Design criteria are about retention capacity BEFORE 'topping'.

NO, repeat NO, dam should fail from 'topping'.

An IMPROPERLY capped earthen dam is generally the one to fail when 'topped' due to rapid erosion.

However, many of the failed dams had been leaking for YEARS undetected and uninspected.

A properly 'topped' earthen dam will NOT fail due to topping, merely overflow.

eg. you forget to shut the water to your bathtub - the water is entering faster than the overflow can handle - the tub ITSELF should not collapse simply due to overfilling, it merely overflows

The SC dams COLLAPSED - DUMPING the lakes downstream which had a compounding / cascading effect.

We all (w'all?) did not have time or money to build properly.

We all WILL have time and money to build again.

In the local cases I was referring to, as PITA said, the dams did not just overflow. They eroded/collapsed. The newspaper article was also talking about rivers, creeks, spill ways, etc. overflowing which part of was the utility company releasing water from a dammed lake (Murray) but my post was concerning the HOA owned dam failures and resulting lawsuits.

As part of this, we had a conversation with the original design engineer for our retention pond and he said our retention pond was designed to hold a full pool and overflow without damaging any homes or collapsing but as he said, the event was beyond any design requirements/expectations/demands.

I did learn today the repair cost is expected to be $7,000.00. As we fund our Reserves each quarter and the amount of funding is not mandated, we will be "using" some of that that money to pay with the decision how to recoup it to be made later. We were discussing a dues increase before all this happened so I expect that will be a hotter topic now.

Would that include the Hoover Dam?

There is a happy medium between said dam and a 'beaver dam' erected by a developer to make a quick buck.

Myself, personally, was instrumental a few years back in having my development's dam topped with an engineered layer of concrete and a new weir assembly to avoid this very issue.

The members were SCREAMING about the cost for years ($27,000).

Now, after it did NOT fail and operated perfectly (albeit with some 'ponding' in our lawns) they are silent.

I did NOT, however, EXPECT any words of appreciation.

Geno

The original design engineer said the design took into account having a full pond. As the riser worked properly in draining the pond we never had a full pond. While that is good news, the bottom line is it is going to cost us $7K to repair the riser. There might be something to be said that because of poor construction, workmanship, etc. we might have recourse to the construction company that built it.

My initial reaction is we might could have recourse but we would probably have to lay out more that $7K to do such with no guarantee of collecting anything. My opinion is pay the $7K and move on.

Pita

We do not want to drain the pond as here are many fish (some quite large bass and catfish) in there and the dead fish smell alone could be bad plus some have objected to any fish kill. There is a siphon pipe in there now taking the pond down about 4 feet. Than a sand bagged cofferdam will be built out from the dam and around the riser.

The belief is the original design is sound so it will be more a repair then a replacement.

The reason for the post was to remind people not to ignore retention ponds, dams, etc. If something goes wrong they can be very costly. Some initial estimates of HOA dam repairs in the area are going over $1 million.

Out of curiosity, what happens when a loss claim is rejected due to negligence? Who ends up paying?

ditto

the owner(s) of the dam pay

most HOA members would be behind the 'corporate shield'

so, the HOA, Inc. is responsible

if bankrupt, the members lose ALL the amenities INCLUDING the roads, if private

they maintain an individual 'easement of necessity' to DIRECTLY access their home

it WILL result in RECEIVERSHIP

the dues will most likely quadruple

pay the receiver

repair the dam

build proper reserves

manage properly

A very, very bad day.

Especially for any directors who were guilty of EITHER nonfeasance or malfeasance.

They could potentially have PERSONAL liability depending on any 'statute of limitations'.

The D&O insurance will NOT cover non or mal, but will only cover misfeasance.

So, if any meeting minutes reflect dam maintenance and no action was taken ..... ?