HOAs and Condo Associations are having a rough time in this economy. Forces are working against them making it harder to collect delinquent assessments from the “walk aways”. (See new post on AB 2273 in my other blog, California Condo and HOA Law Blog, accessible on the mainpage of my website at www.californiacondoguru.com and send your support letter!).
Lots of HOAs and Condos are underfunded in reserves and lots are dealing with deferred maintenance. One of my readers writes in a lot about these issues and feels her home is falling apart around her, and that management and the HOA leadership is not doing anything about it. Here is the latest source of frustration for her (and I am sure she is not alone!!).
“I hope there can be new legislation that helps
tighter controls via reserve studies and hopefully does something about
deferred maintenance. That’s where most problems arise; that and the property
managers aren’t monitored, don’t have to be licensed, certified and have way
too much control. I resent the fact that they are protected by our liability
I can assure you that there are many situations where someone would like to place blame, and many situations where people make mistakes, underestimate maintenance and replacement needs, and then there are the situations where the boards simply cannot find a way to squeeze enough money out of the membership to do what is needed.
All that said, there is a lot of frustration over who should protect whom. Indemnification clauses come under scrutiny all the time. Many assume that management is fully protected by the indemnity clauses that appear in the management contracts (which because of the marketplace are often non-negotiable). But because of fairly recent case law, that is not necessarily the case. In the Queens Villas case in California, the appeals court did not let a management company out of litigation on a summary judgment motion when the company asserted the contractual indemnity protection. One point made in that case by the court was that if a management company does not fulfill its contract with the association,it cannot assert the indemnification clause to protect itself.