Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #100 • January 2013
Construction Defect and Insurance Saga Nets $6,000,000 for Three Homeowner Associations
BerdingWeil Team Successfully concludes both Construction Defect and Insurance Coverage Litigation against Condominium Conversion Developer and its Insurance Carrier.
 
A BerdingWeil construction litigation team headed by Partner Allison Andersen, and assisted by Partner Randy Paul and Counsel John Andersen successfully resolved construction defect claims and a long and complex insurance coverage lawsuit in Sacramento Superior Court for three homeowner association clients.
This case arose out of construction defect actions filed by BerdingWeil in 2007 against an unscrupulous developer who converted three obsolete apartment complexes into condominiums and sold them at the peak of the real estate boom. After doing little more than patching roofs, re-painting and re-carpeting the units, the developer sold these 30-year old rental units as “new” homes to unsuspecting buyers. Inadequate repairs were compounded by the developer's gross underfunding of the maintenance reserves, leaving the three associations completely unable to restore the buildings without imposing significant special assessments—assessments that these low and moderate income buyers could not afford.
The developer was individually named in the suit along with several Limited Liability Companies (LLCs) which he used to convert and sell the condos. These LLCs were not insured, but the members of these companies—other developer investment entities—had a Business Owners insurance policy for the developer's office space—with a $2,000,000 limit for each of the three years that the policy was in effect.
Duty to Repair or Warn.
Court of Appeal affirms judgment in favor of association member on guest's claims that member had a duty to repair or warn of hazard.
by Andrew H. Crowl, Esq.
In the unpublished case of Bollman v. Koklari, 2012 WL 6031225, the Court affirmed the trial court's judgment in favor of an association member on a claim that the member was responsible for a guest's injuries because she did not repair a common area defect or warn the guest of the defect.  Even though she had taken remedial steps to repair a defect to the sidewalk near her condominium, the member had not exercised control over the sidewalk and therefore had no duty to continue to repair or provide a warning to the public.  The guest also made claims against the homeowners association, and they reached a settlement before trial.  But because the member had no duty to repair or warn, her acts of "neighborly maintenance" to the common area likely would not have absolved the association of liability, since the association ultimately maintained and controlled the sidewalk.
Board Members and Managers: this case tells us that the responsibility to properly maintain the common area is not relieved because an owner has taken matters into his or her own hands. In fact, if someone is injured, the association, and not that owner, will likely be found liable. Worse, attempts at "self-help" by owners can often mask a dangerous condition and should be discouraged.
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RENTALS, YES - CONDOS, NO!
By Tyler Berding
 

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