By Mark T. Guithues, Esq.
Engineers and fact finders are investigating the specific causes of the failure(s) and responsible parties for the sudden and unexpected collapse of the 40 year-old Champlain Tower condominium structure. Concurrently therewith, “interested parties” (whether for altruistic or business development purposes) are meeting and developing language for their legislator of choice to propose this January. As an industry and as humans we are quick to blame certain individuals. Instead, I invite you (and our legislature) to focus on mitigating some obvious systemic problems within community associations which cause predictable failures.
First, Leave the Board (and Board Leadership) Alone.
To be sure, one failure at the Towers appears to have been an “us vs. them” mentality of owners verses the volunteer directors trying to raise assessments to make repairs. That is, while nobody saw the sudden and unexpected collapse of a 40 year-old concrete building coming, most members were aware of significant and expensive structural challenges ahead. With no omnipotent dictator to demand immediate repair, members (logically) assumed there was opportunity to disagree with methods, costs and processes of repair. In that space and time, the board was nothing more or less than a microcosm of the membership which elected it – a conflicted group of amateurs doing their best to quantify overwhelming operating and maintenance costs in the face of limited finances.
So, we need to pause and accept that the most palpably amazingly awesome aspect of community associations – self-governance – is a likely culprit here. The very design of allowing owners to elect their representatives, regardless of professional experience and sometimes based on nothing more than a promise “not to raise assessments,” has real and continuing implications.
That doesn’t mean that the legislature should step in and change this design, it means that the legislature needs to acknowledge that such a design has a propensity to underappreciate and underfund the continuing care requirements of the property, leading to predictable failure.
Here are some structural elephants (within our HOA industry) that our legislature might consider in trying to avoid a repeat of the Surfside Tower tragedy.
- Require HOA Property Management Certification.
Require all association managers to be “certified.” This isn’t a guarantee of competence, but at least signifies the person taking direction from the board has some minimum amount of training. When we legislate its requirement, we validate the need for even more advanced management training, raising respect, professionalism, and esteem for our managers. The legislature got close once with B&P 11504 defining certification, but then fumbled the ball by not actually requiring it.
To be sure, such a certification will not invite the ear of die-hard directors who threaten to fire any manager daring to suggests a special assessment for building maintenance, but then a community’s serial replacement of trained and certified managers will serve as a significant red flag to folks looking to purchase therein.
- Require Periodic Assessment And 70-100% Reserve Funding.
Civil Code §5600 requires “…the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this act.” This needs to include reserves. The legislature should require 70-100% funding of reserves, accomplished over the next five years.
Reserve Studies occur when an unbiased third-party professional is retained to evaluate the condition of the common area, analyze a repair protocol and develop an assessment schedule which addresses upcoming required maintenance for the community’s next 30 years. We do this now, and while acknowledging that such reports may be flawed (either high or low) in their predictions, directors generally disregard these studies, underfunding reserves because raising assessments gets them voted out of office. We need the legislature to do the unpopular heavy lifting here and establish a non-negotiable minimum percentage of financial funding, so directors can focus on arranging maintenance.
- Require Periodic Building Certification.
Recently (and in response to the deaths of those who rode a balcony multiple stories) our own California legislature implemented a “balcony bill” (SB 721) requiring certain “elevated exterior elements” be regularly inspected and certified by an architect or structural engineer. This law needs to be expanded to include inspections of multi-family condominiums to meet minimal fire and safety standards. To be sure, we are legislating the price of housing out of the reach of median California earners. Watch video of the Tower collapse and you’ll realize we cannot sit by while owners routinely vote to imperil themselves and their neighbors simply by underfunding the very entity charged with maintaining their housing.
- Require Minimum Board Member Training.
There’s been quite a few bills, most recently AB 1410, designed at imposing ethics training, fair housing training, and more on those who volunteer their time to serve as directors. We should adopt a similar standard for a board member’s training on maintenance and structural safety. Requiring a one or two-hour board bootcamp, where members receive basic training on the maintenance obligations and corporate requirements of the association will help board members understand and appreciate the maintenance recommendations of managers. While not required by law, these types classes are widely available (and often free) through professional organizations and local law firms. When directors understand the scope of their duties, they generally focus on how best to accomplish same.
In the end, we need to recognize that like Florida’s Surfside Towers, the design of our self-governance has predictable failure points which can and should be addressed so this horrible tragedy does not repeat itself in the future.
About the Author: Mark Guithues is a member of the executive committed of the San Diego County Bar Association Real Property Law Section and the founding partner of Community Legal Advisors Inc. a San Diego law firm providing general counsel and litigation services to its 300+ community association clients, subdivision services to its developer-declarant clients, and mediation and arbitration services to its homeowner clients. You can obtain more information at www.AttorneyForHoa.com.