Real Estate & Property Law

HOA Board Adds Improvement - Uses Volunteer Services - Is That Okay?

I get some really interesting questions every day, and here is one about adding improvements without owner approval but with owner involvement. A lot of assumptions are made, some of which may or may not be correct. See below:

"A [type of recreational court] was proposed as no cost to the homeowners. The Board used unlicensed and uninsured homeowners to install it which constitutes a breach of its Fiduciary Duty. The Association is required by the Association?s insurance carrier to hire only individuals who are licensed and insured for the services that they intend to provide to the Association.

**** I read this to mean the homewoners who put the court in are responsible for the costs to maintain it. Am i reading this right?"

First of all, it is unlikely that the association's insurance policies have any language requiring or limiting use of contractors to licensed and bonded/insured contractors. Certainly, for types of construction requiring a license, a board should use licensed/insured contractors for various reasons that provide certain protections. And some CC&Rs require a board and/or owners to use licensed and bonded/insured contrabuoctors for performing work on facilities or buildings etc.

However, these days, boards are looking more toward using volunteer services when possible. I still would not advocate using volunteer services from unlicensed, unbonded/uninsured contractors for building construction work and utility, electricity or plumbing work. But for digging a court, laying cement or the like? It's a matter of balancing the risks.

As for the question of homeowner liability? If a homeowner does work in the common area that is requested or approved by the board, he or she can hardly be responsible for the costs unless it is something that confers benefit on the individual, and is legal of course.

Here is an addendum question:

"After telling the owners here this would be no cost to them, the Board has approved the cost of $[____] to move the sprinklers in the way of the court.... Not fair, but illegal???"

Sometimes the governing documents are specific and limiting about what expenditures can be made without owner approval. If not, there are legal limits in California law if the expenditure requires a special assessment or increase in reguliar assesments over a certain amount (see other blogs on assessments). Otherwise, there may not be a legal barrier to the action/cost that occurred. Determining that would require a legal opinion involving a review of the documents of the association, the amount of the budget and things like that.

Full post as published by California Condo & HOA Law on December 03, 2009 (boomark / email).