Archives: FAQs

What are mediation and arbitration, and when are they required?

Mediation and arbitration are methods of alternative dispute resolution (“ADR”). Their purpose is to save time and money by resolving disputes without going to court. Mediation involves a neutral person who attempts to help the parties resolve their dispute through discussion and compromise. A mediator does not make rulings or decisions. Consequently, mediation is always …

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Who pays the attorney’s fees in a dispute between an owner and the HOA?

The law provides that in any legal action brought by an owner, or by a homeowner association, to enforce the provisions of the governing documents, the prevailing party shall be entitled to recover his/her attorney’s fees and costs, provided they are reasonable. Some governing documents broaden the right to recover attorney’s fees and costs so …

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Is the HOA legally required to enforce the documents?

Yes, associations must enforce their governing documents. In some cases, HOAs have discretion whether to enforce the governing documents if the dispute can be better resolved between a few neighbors. This discretion is removed, and enforcement is mandatory in instances where the governing documents explicitly require association action. But regardless of whether enforcement is mandatory, …

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How can an owner act independently to enforce the documents against another owner?

Each owner in a condominium project or planned development has the right to independently enforce the governing documents against any other owner. The mechanism for enforcement is either the court system or alternative dispute resolution depending on the nature of the violation and the dispute resolution provisions of the governing documents. Owners interested in pursuing …

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What happens to the HOA and the other owners if an owner defaults on his/her mortgage?

When an owner defaults on his/her mortgage, the lender is entitled to undertake a foreclosure procedure that ultimately results in an auction-like sale of the defaulting owner’s unit. The lender has no recourse against the association or any other owner. The purchaser at the foreclosure sale must comply with all the provisions of the governing …

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What is a mechanic’s lien, and what happens if one is placed against a unit or lot?

The term “mechanic’s lien” describes a document that can be recorded with county government by an unpaid contractor or construction materials supplier. The recording of a mechanic’s lien relating to a property effectively prevents the owner from selling or refinancing the property without either paying the bill or establishing in court that the lien is …

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Can the HOA limit the type or number of people who can live in a home?

Statutory law explicitly prohibits housing discrimination based on race, color, gender, religion, familial status, national origin, and disability. The law against discrimination is so broad that any occupancy restriction could be interpreted as discriminatory, including limits on the maximum number of occupants in a home. The only limitations that are clearly valid and enforceable are …

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Who is responsible for a tenant’s compliance with the governing documents?

An owner is responsible for his/her tenant’s compliance with the governing documents and can be fined or penalized for the tenant’s violations. Any owner who rents his/her unit should have a written rental agreement incorporating all the governing document usage restrictions, and making the tenancy subject to any additional restrictions that are enacted by the …

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Who is responsible for insuring the homes and the common areas for property damage?

The governing documents contain detailed property insurance requirements. In condominium projects, these typically require that the association obtain property damage insurance (sometimes called casualty insurance) for everything located on the property except the contents of the units. These policies usually cover damage to interior walls, floors, and ceilings within units, but do not cover damage …

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Are there minimum requirements for the amount of property insurance that must be carried?

Most governing documents include a minimum insurance requirement by stating that the limits of coverage shall not be less than the full current replacement cost of the structures. In other cases, the documents allow the board to determine the appropriate amount of insurance. Regardless of what the documents say, the board is empowered to exceed …

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Is earthquake insurance required?

Most governing documents do not require earthquake insurance, and it is not required by law. Since earthquake insurance is expensive and typically involves a large deductible, its benefits are debatable, and a board should not face liability for choosing not to obtain it if the decision was based on competent advice from an insurance professional.

What happens if there is not enough property insurance to cover repair costs?

In general, when insurance proceeds are insufficient to pay repair costs, the association must levy a special assessment to cover the shortfall. But most governing documents describe a procedure for dissolving the association and selling the property following a very large uninsured or underinsured loss. These procedures are intended to provide an alternative to a …

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Under what circumstances can HOA directors and officers be held liable for damages resulting from their service?

The law provides that a volunteer director or officer cannot be held liable for damages resulting from his/her service to the association if he/she performs his/her duties (i) in good faith, (ii) in a manner which he/she believes to be in the best interests of the association, and (iii) with such care, including reasonable inquiry, …

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Under what circumstances can an owner be held liable for personal injuries that occur in another home or in the common area?

If the personal injuries were caused by a property condition and not by the actions of a person, and if the association is incorporated, an individual owner should not be responsible for personal injuries that occur in another owner’s home or in the common area. If the association is unincorporated, an individual owner can be …

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Are there minimum requirements for HOA liability insurance?

The law does not require a minimum amount of liability insurance, but most governing documents specify minimum policy limits. The law does state that if certain statutory policy limits are met, the individual owners cannot be held responsible if the damages exceed the coverage.

What disclosures must be made to a prospective purchaser when there are construction defects in the project?

The seller of a unit or lot is required by law to disclose all material defects in the property, including defects located in the common area, and defects located in other units or lots if they affect the unit or lot being sold. The disclosure requirements extend to all defects of which the seller is …

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Under what circumstances does an owner need HOA approval for an improvement or alteration?

Condominium governing documents usually require association approval for improvements and alterations which: Change the appearance of any exterior area; Change any interior common area (except entirely separated exclusive use common areas such as storage closets); Impair structural integrity; May interfere with another owner’s use or enjoyment of their unit (such as installation of hardwood floors …

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