Condo Media - September 2018 - 31

owners' units. Fireplaces and dryer
vents are obvious examples because
of the fire risks related to them. While
owners should maintain equipment
inside their units, Abel notes, "the
trust has a duty to ensure the safety
of owners and to protect their property
and common areas." Many associations
deal with these issues by adopting
maintenance resolutions specifying
the maintenance obligation of owners.
(See related sidebar, page 33.)
The board's authority to mandate
maintenance isn't limited to health
and safety issues, Brooks notes. Although the board's control typically
ends outside the door of an owner's
unit, there are some "catch-all" provisions in association documents that
can unlock it. "Almost all documents
have a general clause requiring owners
to properly maintain their unit." he
notes. "It's great language, we use it all
the time" to require owners to address
maintenance issues the documents
may not clearly define.
The architectural integrity provision also may give the board a basis for
intervening if a unit's appearance fails
to meet the association's standards,
Brooks suggests. The potential negative
impact on the association's appearance
and property value provides another
argument boards can use to impose
maintenance obligations on owners.
Some boards conclude that it is not
only easier, but more efficient and more
cost-effective to make what are arguably owners' maintenance obligations
a shared common area expense. The
problem, Moskowitz notes, is "you're
allocating the costs based on percentage
interest [when they should reflect] the
costs incurred by individual owners."
In addition to risking challenges from
owners who question the fairness and
legality of this approach, boards also
risk setting a dangerous precedent, Abel
notes. If the board assumes the maintenance responsibility for one exclusive
use component, why not others? And
once you take the first step on this path,
he asks, "where do you stop?" Having
the association assume some owner-

MAINTENANCE
CONFUSION

onfusion and conflicts over maintenance responsibilities
(see feature article, page 26) aren't the only consequences
of poorly drafted association documents; the lack of clarity
may affect the association's insurance coverage and costs as well.
"If maintenance requirements aren't spelled out clearly, the
result may be maintenance neglect and deterioration," which
could increase the frequency and severity of insurance claims,
Gregory Pierce, CPA, LIA, senior vice president at NorthStar Insurance Services, Inc., explains. And those are red flags for insurance
companies, he notes.
Underwriters use maintenance as both an "objective" and a
"subjective" measure of a community's risk profile, Pierce explains.
The "objective" analysis would focus on the potential damage
resulting from poor maintenance-for example, a deteriorating
roof or neglected plumbing components that might leak, damaging
units and/or common areas.
The association's master policy would cover the damage, Pierce
says, but it wouldn't cover the cost of repairing or replacing the
roof or the plumbing system. "Insurance isn't a maintenance
contract or a warranty," he points out. And if the community has
multiple water damage claims, all stemming from the same maintenance deficiencies, the insurer is likely to increase the premium and
may decide not to offer insurance to the community at all.
Poor maintenance of essential components creates "identifiable
risks," and those risks "will affect the community's insurability in the
marketplace," Pierce says.
The "subjective" insurance assessment related to maintenance
is based on the community's appearance, he explains. Peeling
paint, a landscape covered with weeds, cracks in sidewalks and
parking areas all reflect neglect. "They don't suggest a heightened risk of a fire loss," Pierce says, "but they do
speak to a general lack of pride in ownership," which, in an insurer's view, "could
correlate to possible claims."
"Insurers want to see an engaged
community association that is proactively maintaining its property,"
Pierce emphasizes. If your association is ignoring maintenance
that affects the appearance of
the community's property, he
cautions, "insurers will wonder,
what else are you ignoring."
September 2018 CONDOMEDIA

Condo Media - September 2018

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