Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #78 • September 2011
Staying In or Selling Out?
by Tyler P. Berding, Esq.
The interests of short-term owners can conflict with the interests of owners who are in it for the long-term and with the overall interests of the homeowners association. Community association boards that cave in to political pressure and avoid developer claims or keep assessments artificially low are depriving the remaining and future owners of critical leadership.
We hear it all the time, especially now with home sales so hard to close. Members of a community association, who have their property listed for sale or those who are seeking alternate financing, complain that their association's board is taking actions that are contrary to their interests. What actions? Raising assessments to comply with the recommendations of a reserve study. Imposing a special assessment or applying for a bank loan to raise funds for long-deferred repairs. Initiating an investigation of the condition of the project that might lead to a claim against a developer for construction defects.
No owner likes any of this, but owners whose interest in the project is short-term like it least of all. Higher assessments will mean it may be harder for a prospective buyer to qualify for a loan. A pending special assessment may have to be reflected in the sales price. Bank loans that the board may secure for repairs will undoubtedly lead to higher owner assessments. The results of a construction investigation may have to be disclosed to prospective buyers. But these are—or should be—the realities of managing a community association and are often very important to the long-term financial and operational stability of the development. While actions like those above may be taken as contrary to the short-term interests of some owners, they are consistent with the long-term interests of the association itself. So whose interests have priority?

Recovering for Damages Caused by Evicted Tenants or Squatters
Part III
By Gabriel P. Rothman
What if the owner's unit had been occupied by a squatter rather than a tenant?
Recap - Your best bet might be to pursue the squatter in small claims court for compensation, but for obvious reasons, collecting would be a challenge. The Board should carefully consider the risks vs. the rewards of pursuing the unit owner for damage caused by a squatter because the unit owner is going to be extremely upset about being assessed for damage caused by someone who illegally gained access to his unit. The best course might be to simply submit an insurance claim and negotiate with the unit owner to split the cost of the deductible.
Ok, so whose policy, the Association's or the unit owner's, should get the claim in this case?
It depends. First, you will need to determine whose insurance offers coverage for the damage. The Association's insurance policy will most likely cover the damage to your Association's garage area regardless of whether it was caused by a squatter or an evicted tenant. At the same time, unless the unit owner specifically purchased a unit-assessment rider, his insurance policy probably only covers damage to his unit, while specifically excluding common area damage.
If your Association is in the situation described above, obviously the Association's policy will have to pony up for the damage.
On the other hand, from the Association's perspective, it shouldn't matter. Even if the unit owner's insurance policy offers coverage, the Association would be best served by filing a claim for the damage with its own insurance company in order to protect itself against the possibility that the unit owner refuses to submit a claim or the unit owner's insurance company refuses to cover the claim despite the fact that the policy appears to offer coverage. In that regard, the Board's duty is to ensure that the Association is saddled with as little financial burden as possible - let the Association's insurance company fight with the unit owner's insurance company about which is required to pay for the damage.
Ironically, if the Association's insurance carrier is aware that the Association's CC&Rs have a reimbursement provision for damage arising out of or originating from an owner's unit, or that the unit owner has been negligent in allowing the squatter access to the unit, the Association's insurance company may ultimately sue the unit owner for indemnity anyway. While this situation might undermine the Board's goal of dealing with the situation delicately, the Board has a duty to act in the best interests of the Association first and foremost.
Bottom line: The Board's job is not to analyze the insurance policies; its job is to protect the Association. Tender the claim to your insurance carrier and let the chips fall where they may.

Copyright ©2011 BERDING | WEIL
All Rights Reserved.
BERDING | WEIL LLP - 3240 Stone Valley Road West | Alamo, CA | 94507-1558 | P: 925.838.2090 | F: 925.820.5592 | Contact Us
Disclaimer | Privacy Policy | Site Map | Search
2175 N. California Blvd., Suite 500 | Walnut Creek, CA | 94596 | P: 925.838.2090 | F: 925.820.5592 | Contact Us
©2017 BERDING | WEIL LLP. All Rights Reserved | Website Development by CENTERGRAPHICS