Tuesday, June 26, 2012

Up to Our Eyes in Alligators

A recent Georgia Supreme Court decision highlights an obligation that exists on the part of the Association and the residents.  In this decision (the combined Landings Association/Landings Club cases), a relative of an owner in the community was killed by an alligator while walking in the community.  Questions at both the trial and appeals level dealt with what level of responsibility the Association had in providing warnings and a safe environment for residents and their guests. 

In this particular instance, the Court determined that the guest and the Association had equal knowledge about the hazard, and therefore the Association could not be held liable. 

Other communities have faced similar litigation.  The majority of this litigation was also resolved by determining who had superior knowledge about a safety condition - such as trip hazards or criminal activity. The lesson for all communities is that communication is key.  If a potential situation cannot be remedied immediately, it is critical that all residents be put on notice.  In addition, other steps can be taken such as possibly installing signage or temporarily closing dangerous areas, so that everyone has an equal level of knowledge.  The Board cannot afford to bury its head in the sand when such a situation comes to light.  Permitting the problem to fester is negligence.

While Community Association Managers assist in identifying such dangers, the Board should not rely solely on the manager, who may not be around when a hazard arises (such as lighting outages or sinkhole formations over the weekend).  Depending on the terms of the management contract, some managers may only visit/inspect the property once a week or once a month.  Every tragedy is not avoidable, but it is crucial for Boards and residents to partner in policing the common areas for such hazards or potential hazards.
In a perfect world, communities that have taken all appropriate measures would never find themselves in court.  In a perfect world no one would be injured.  
There are several additional actions that a cautious Board may decide to take in order to be best protected, should a situation like this arise. A Board might consider ordering an audit or review of the community’s insurance coverage, as there may be exclusions or inadequate coverages that have not been detected.  Better to discover these in advance!  A Board might also institute a regular maintenance review of the community. A maintenance review, coupled with a capital reserve review by an engineer every few years, can also be an effective way to further insulate the community by relying on the opinions of third-party experts.  Finally, an annual conference with the Association’s attorney to review all contracts, governing documents, and standard practices is a must.  The legal expense incurred for this procedure is minor compared to avoided potential losses.

While not a comfort to the loved ones of the person killed in this alligator tragedy, in the eyes of the law the community did take sufficient actions to avoid being considered negligent.  May the lessons learned during the litigation process of the Landings Association not be lost on the rest of our Georgia communities.

Tuesday, June 19, 2012

Water Water Everywhere

Water is nature’s universal solvent. We all know that its size (volume) changes dramatically when transitioning between vapor, liquid, and ice. But what you probably don’t know, or at least haven’t thought about, is its specific effects on differing building materials.
Concrete and brick are porous by nature, acting as sponges and over time expanding. They are also very susceptible to the freeze-thaw cycle, with parts of the material cracking and chipping off over several seasons. If this type of expansion occurs at the top of a building, imagine the potential safety concerns for those walking below! 

Water can cause corrosion between differing metals adjacent to one another. This then promotes electrolysis, which expands one of these metals and forces surrounding materials (such as concrete) to crack, allowing even more water penetration. Ultimately entire sections of the metal reinforcement to a building can be fully exposed to the elements.

Water poses a big threat to wood. Wood’s porous cellular structure is a great incubator and food source for fungus. As fungus grows, it removes cellular material, leaving a brittle structure and ultimately resulting in dry rot. Going through wet and dry spells is actually worse for wood than when it is being constantly exposed to a damp environment.

Fiberglass insulation is also strongly impacted by water exposure. Normally the glass fibers create air pockets that resist heat flow. The more void air space, the higher the energy efficiency of the insulation. But when exposed to water, this ability to resist heat transfer is lost.
Typical weak points for water penetration are window perimeters, transitions between materials, expansion joints, joints in metal through-wall flashing, barrier wall systems, and roof to rising wall conditions.

Without proper enclosure design, construction and diligent maintenance, buildings will fail under water’s touch. While your community buildings may not be “proper” now, be aware of the following tips when having repairs or upgrades conducted:

  • Do not rely on a sealant as the only line of defense. Use a sheet membrane to bridge the gap between materials or adjacent systems.
  • Lap materials so that they shed water.
  • Provide a robust backup waterproofing system that will drain accumulated moisture out of the exterior walls. Provide ventilation for the drainage cavity so that the materials that become wet from incidental moisture intrusion can dry out.
  • Provide a slope to drain water off horizontal surfaces and projections such as windowsills, stone bands, metal flashing, and roof edge coping.

Remember: Proper maintenance is key to the durability of your buildings. By performing a comprehensive annual survey of the building envelope systems, the safety of your owners and guests can be preserved from the effects of water.

Tuesday, June 12, 2012

Lights Out

Most Community Associations have a handful of utilities that are paid for by the Association fees collected from each homeowner in the community.  These “community utilities” include expenses like common area utility lighting, water running to pools and community bathrooms, trash pickup, etc.  These community-wide expenses are crucial in maintaining the look and expectations of the Association as a whole. All homeowners within the community share in the benefit from the payment of these expenses.

When potential buyers consider buying in a community governed by a HOA, a very important question to ask should be “What does the HOA fee cover?” or “What utilities are covered in the HOA fee?” In some instances (more often in condominium and townhome communities) there can be utilities that are also covered for individual homes, so it’s obviously important to know what you are paying for!
The answers to these questions vary depending on the individual community.  In communities that consist of single-family homes, you generally do not see any individual utilities covered through the Association.  However, that does not mean it cannot happen.  Each community is unique, so make sure to research before any purchase. 

As stated before, it is much more common to see the inclusion of one or more utilities within HOA fees in townhome and condominium communities. For example - water, sewer, trash, cable, internet, landscaping, etc can all be incorporated in the monthly HOA fee.  These items can create a big benefit to potential buyers when contemplating a purchase (i.e. the potential money savings by having these utilities included vs. paying separately).  Depending on the amount of utilities covered and the general cost, the assessments vary widely from one community to the next - regardless of size.

In addition to knowing what the Association fee covers, it is also important to understand what happens if the community experiences a high delinquency rate on collecting assessments.  Defaults in Association payments may delay or even prevent the payment of day-to-day bills that keep the community running.  Even a 10% delinquency rate may result in the inability to pay a power bill, resulting in a loss of lighting in a common area. 

Delinquencies do not just impact utilities in common areas. Another important question to consider is what can happen to an individual homeowner’s utilities when he/she has become delinquent?  Some Associations actually have the right to cut utilities for a single residence in the event of nonpayment.  The Georgia courts have been clear that this action is permissible, and it is not considered to create hazardous conditions if water or power is cut.  Rather than face such an inconvenience, owners usually quickly pay when faced with this reality.  It isn’t fair to force neighbors to cover the utility bills of a delinquent owner.
As a homeowner, don’t be afraid to ask questions about where your money is going because it is, in fact, your money. You have every right to know how it’s being applied.  It is important that you understand where these dollars go, so no one gets left in the dark asking, “Who turned off the lights?”

Tuesday, June 5, 2012

Legal Priority

“How do I determine which rules control my home, and what takes priority?” This is a question that frequently comes up as being confusing for homeowners. Below, in descending order of importance, are various legal documents you may come across when investigating this issue:

  • Georgia Condominium Act / Property Owners’ Association Act.  These statutes establish the legal authority for the existence of housing corporations, and define and control their operation.  These default rules may in some instances be modified by any of the following documents.
  • Articles of Incorporation.  This creates the official entity of your Association and sets restrictions as to its nature.  Associations must abide by the Nonprofit Code Statute – this is a good place to look for ideas of how the Board is to conduct itself.
  • Survey.   This lays out the exact boundaries of the development, and may have restrictions on property usage listed.  There are usually so many restrictions that these have been relocated into another document - the Declaration.
  • Declaration.  This is considered the controlling document for defining details of the Association, and laying out restrictions on usage and interaction.  It is recorded at the Courthouse (just like the two documents above).  If you are purchasing a home, the law assumes that you have gone down to the courthouse and obtained a copy of the Declaration and made yourself aware of its restrictions.  Ignorance is no excuse.
  • By-Laws.  This springs from the Declaration, and details the method and actions of governance, such as how votes are conducted and qualifications to be a Director.
  • Rules & Regulations.  These flow from both the Declaration and By-Laws, and give very specific rules, such as the type of pets you may have, or the hours in which you may use a hammer to do work in your home.  Typically these are easily changed by the Board, without prior approval from the Community, unlike the other items above, which require formal votes of the Association in order to alter.
  • Resolutions.  These memorialize decisions on specific topics and may be changed as often as the Board desires.  The four types are Policy (architectural control or enforcement), Administrative (collections, meeting times), Special (authorizing a lawsuit, addressing individual situation), and General (budget adoption or contract approval).     
Case law resides above all of these documents:  The courts’ interpretation on the interplay of these regulations with other state and federal laws and specific situations, which may not have been contemplated by the creators of the various documents. 
 Each court jurisdiction (magistrate, state, superior, federal) may have some overlap on resolving disputes, and each resolution is both costly and time-consuming:  It is always best if Associations can resolve differences without resorting to the legal system.

While individual disputes may be addressed at the trial level, what matters most are determinations made on appeal, since these will be referred to when addressing similar disputes in the future.  As in other areas of law, the State Supreme Court trumps lower levels of appeals, and Federal appeals, if granted, are above those of the state level.  While one state is not bound to the decisions in other states, judges do frequently refer to out-of-state decisions to clarify a line of thinking.  Federal appeals cover multiple states, and one federal jurisdiction may look to others when reaching a determination. 

As consensus on a particular issue forms across the country via the judicial system, wise Boards of Directors keep track of such developments to avoid pitfalls made by others.  While a Director should avoid practicing law on behalf of his or her Association, there is a responsibility to self-educate so potential problems can be recognized in advance and experts consulted for the good of the community.