HOA BOD Making Erroneous Decisions

I’ve been off my board for a few years now. Recently a neighbor had suffered damage from a leak that is coming from the roof. Our Board of Directors is insisting that the internal damage caused from the leak is the responsible of the individual homeowner. We have not changed our CCR’s in over 10 years and I know for fact that this is not always been the case damages that were due to or non-maintained HOA property. I provided my neighbor with a list of damages that were repaired over the years that I served on the board for the example plumbing that backed up that was an HOA related pipe, flooring being replaced, etc.. I’ve poured over RCC ours. I cannot see where it indicates who is responsible for the internal damage despite being an HOA maintenance issue. Is this on the Davis Sterling California members? Any California HHA members please chime in. I’m just trying to figure it out what they are referencing.

This is what some boards do when they believe their duty is to keep fees as low as possible. They basically try to cheat homeowners.

Mich

Without reading your docs, I say your BOD is wrong. This issue may well end up in the hands of and attorney.

People in condos often assume that all damage originating in the common elements such as the roof is the responsibility of the association.

Not true.

Generally responsibility to "maintain, repair and replace" the interior of a condo is the responsibility of the unit owner. For example, if the roof has a slow leak that eventually results in water stains and other damage in a ceiling, that interior repair is on the condo owner. Mold is nearly always a maintenance responsibility because it grows over time. The CC&Rs will define who is responsible for what.

This can change if the damage is the result of an insurable event: eg;. a storm tears off part of the roof away and rain damages the interior of home. Then insurance comes into play.

To remind Melissa and others, the "flip the box over" analogy ONLY WORKS IF YOUR ASSOCIATION HAS ALL-INCLUDED INSURANCE. If it carries "bare walls" insurance, the interior of a unit won't be covered. The CC&Rs should say what kind of insurance your association must carry, and the insurers will work out who pays for what. Read the policy documents and/or consult with your insurer.

Even if the damage to the interior is not caused by a storm, it's possible an owner's HO6 policy will cover repairs. And yes, the owner is generally responsible for the association's deductible. It will all depend what the various policies say. Call your insurer.

Nowadays a board can be reluctant to put in an insurance claim, because insurers are dumping clients or raising premiums "through the roof" (heh, heh). This can change the calculus. For example, when I was on the board, if the total cost for repairs was close to the deductible amount, we'd pay out of pocket and not put in the claim.

The procedure when one's unit suffers damage, even from outside source such as a roof leak, they file a claim with their insurance company who will the subrogate with the HOA's insurance company.

I can hear the scream now: but I did not cause the damage so why do I have the get my insurance company involved? Sorry but that is how the game is played.

A warranty will complicate the decisions beyond what it already is. Whatever is due under the warranty agreement will come first, I think. But I encourage boards to put this in the hands of the professionals who deal with these issues all the time. You're much more likely to get a good decision.

With Cathy, let's ban the "flip-the-box" wording FOREVER!

What kind of insurance coverage the HOA's master policy has is DETERMINED by the CC&Rs. There is a CC&R article on insurance. Insurance agents READ this Article so that they know what kind of master insurance coverage to provide to an HOA.

My multi story condo bldgs.' CC&Rs state that Owners are not covered by the HOA policy for the repair/replace damage in their units even when caused by a common area problem.* This commonly is called "bare walls" insurance. The master policy ONLY covers the replacement of units' sheet rock (but not its paint) on the walls or ceiling, and repairs to the sub flooring-- but NOT including floor coverings.

Other condo bldgs.' HOA master coverage -- commonly called "walls in"-- is all inclusive, it does cover the fixtures & cabinets & flooring materials too (I think?). It, of course is much, much more expensive than "bare walls" insurance.

In these days of horrendous increases to HOAs' master policies, it's easy to see that many HOA Boards would like to switch from "walls in" to "bare walls." But they may NOT do that IF the CC&Rs require "walls in" without a vote of the members to amend the CC&Rs.

In Michelle's case, on one hand, it's possible the HOA does have "walls in" coverage, but the Board is trying to cheat and pretend there is no such coverage. On the other hand, earlier Boards may have been mistaken and misunderstood their HOA's coverage, which in reality is "bare walls."

So, Michelle, scrutinize your CC&R's article on insurance. Also read your HOA's master policy. Let us know what you find. (I suspect you've been reading the Maintenance article of your CC&Rs)

Finally, our restated ('22) CC&Rs require that owners carry an HO6 policy. They also make owners responsible for mold no matter the source.

Terri has misinterpreted the proposed legislation she cites. I won't go into it because it's ONLY proposed and it's not relevant to this post. It is not about insurance.

*Unless damage was cause by HOA "negligence."

Michelle is asking for help from California contributors. My post was intended to be informative for possible very near future shift in who is going to be responsible for what. Please don;t censor others' comments.
https://legiscan.com/CA/text/SB900/id/2942954

At a recent board meeting with the association attorney (general info only, no privileged discussions) she brought up recent challenges with insurance that everyone is facing. She said that they're trying to come up with ways to help their clients keep costs down and mentioned switching from all-included to bare walls coverage. Up goes my hand, and I pointed out that our Declaration requires all-in. (I suspect that the type of insurance coverage is going to depend in part on the structure of the buildings, which nobody can change.)

Stuff like this is why they keep me around...

Anyway, our insurance agent once mentioned that even the pros scratch their heads when they deal with condo insurance, so I'm not surprised boards get it wrong.

It took me a long time to understand HO-6 insurance and how it plays out with our Master Policy. Our HOA board and previous boards spent +$1,000's paying for repairs that we didn't need to.

It may be state specific - In NC, stacked condo's have to be insured by the HOA as if it's the HOA's own.

HOA deductible is $10,000. In NC, the owner's insurance is responsible for the first $10,000 regardless of where the damage came from. HOA is responsible for the repair of the cause. If there's $15,000 worth of damage, owner's HO-6 covers the $10,000 and the Master Policy covers the rest, as it's own. If the damage is under $10,000, it's all on the owner.

It can be very confusing and it's difficult to understand. I asked lots of questions and never got a straight answer from our PM or insurance agent. Don't really think they understood it either.

If an owner experiences a casualty and is not getting straights answers, it's best that the owner file a claim against their owner's policy and let the insurance companies determine the outcome. Then the owner and the HOA can determine to go ahead with the claim or cover the repairs "out of pocket".

Who is obligated to maintain/repair/replace is in your maintenance article/section of your CC&Rs (aka declaration, covenants, did restrictions) Gregory. It's about WHO must do maintenance/repair/replace.

What kind of insurance is required in your HOA's CC&Rs is in the insurance artilce/section. It's about WHO pays for the repair/replace.

Where the water originates does matter: If you clog your sink & it overflows damaging something in your unit, your HO6 pays. If water intrusion originated in the common area, the HOA pays to fix it. WHO pays to fix damage in your unit depends on the insurance your CC&Rs require and that your HOA presumably has.

Your unit boundaries should be defined in a CC&Rs section called Unit.

Nice citation via Jeff from Davis-stirling.com, Michelle. I need to add, though, that if the HOA has "all in" insurance, it will pay for damage to the unit's improvements.

Also see. https://www.davis-stirling.com/HOME/W/Water-Damage-Insurance’Master Policies.