Taking on Additional Maintenance Obligations
The exterior lights outside of each unit in the Passé Pointe Townhome community were past their prime. In connection with giving the community a “face lift,” the Passé Pointe Townhome Association wanted to update the exterior light fixtures to something more modern. The board of directors had even found a supplier and a contractor to install the new lights at a bargain price. In reviewing their community’s declaration of restrictive covenants, however, it became clear that the owners, not the association, had the obligation and, thereby, the authority to maintain, repair and replace the exterior lights. The association wanted to take on replacement of the lights, but at what cost?
The maintenance obligation of a homeowners association or condominium association is usually set forth in the community’s governing documents. Generally, community associations are obligated to maintain the common areas, but there may also be other areas, not owned or otherwise managed by the association, that the association is expressly obligated to maintain. Sometimes, the obligation to maintain a particular portion of property or the improvements thereon is not clearly stated in the governing documents, regardless of the need to perform such maintenance. An association may want to assume the obligation to maintain certain property or improvements, for example, if the need to perform maintenance on certain property or improvements is recognized but is not addressed in the governing documents, if the board of directors of the association determines that having certain maintenance performed in a uniform manner throughout the community is in the best interests of the association, or if the association historically has maintained a particular property. There may be obvious benefits derived from an association assuming additional maintenance: on-going preservation of community facilities, uniformity of maintenance and aesthetics, and economies of scale. These or other benefits may outweigh any risks associated with the association performing assumed maintenance. However, before an association assumes additional maintenance obligations, the board of directors should be aware of the implications of doing so.
First, the board members should determine whether their association has authority to assume maintenance for items not specifically contemplated in the community’s governing documents. The governing documents of some community associations expressly authorize the association to assume maintenance obligations in addition to those specifically set forth in the governing documents. If an association has express authority to assume additional maintenance obligations, the board should make a determination as to whether assuming such obligation is in the best interests of the association and its members. If the association’s authority to perform such maintenance is not clear in the governing documents, the association’s decision to perform such additional maintenance may be challenged by a discontented homeowner. For example, the individual board members may be exposed to potential liability for misappropriation of association funds and/or breach of fiduciary duty. Similarly, if performance of the maintenance is found to be unauthorized, the Association’s common expense assessments imposed on homeowners to recover the costs of such maintenance may be challenged as illegal and improper.
In assuming a maintenance obligation, the association may create an on-going obligation to perform such maintenance. For example, this may occur if the association’s history of performing such maintenance is found to create an implicit agreement to perform such maintenance. Or, if the maintenance performed by or on behalf of an association proves to be defective, the association would likely be held responsible for performing remedial repairs and may be held liable for ancillary damage such defective work may have caused. If, for instance, the Passé Pointe Townhome Association went forward and replaced all of the exterior lights, it may be found responsible for any on-going maintenance or repair needed for such lights. Additionally, if the installation were done improperly and, for example, caused water to leak into the wall behind the light, the association may be responsible for any damage caused.
The board may determine that the benefits associated with the association performing additional maintenance outweigh any potential risks. While it is rarely advisable for a board of directors to act in contravention of the community’s governing documents, the board may have a compelling reason for doing so. In making a decision to take on a greater maintenance obligation than the association is legally obligated to, a board of directors should examine its decision and should record its reasoning in well documented minutes. The board should also consider alternative means of meeting the association’s end goal without having to take on a new maintenance obligation. In the Passé Pointe Townhome community, for example, the board decided to adopt a rule regarding the type of replacement lighting that may be installed in the community. The association also made an arrangement with a contractor to offer the lights to owners at a reduced bulk-price as incentive for the owners to have the lights replaced.
Whenever a community association would like to take on additional maintenance, a unique set of circumstances is presented. The community’s governing documents and the prior maintenance history of the community each may affect the potential benefits and risks to the association and the board members if the association assumes maintenance in a given situation. Members of the board of directors should become informed as to the association’s actual legal obligations with respect to performing maintenance on various properties or improvements, the implications to the association if it assumes additional maintenance, and any alternative options the association may have to assuming such maintenance. The association’s legal counsel may be helpful in performing such an assessment. By understanding some of these issues up front, the board will be in a better position to fulfill its duties and protect the association’s best interests.