Protect Your HOAs

Understanding Inspection & Testing Requirements

By Joe Seltzer, Esq.

Most experienced community managers are familiar with the general rule that an association is responsible for the maintenance and repair of common areas within a given development, while homeowners are responsible for the maintenance and repair of separately owned unit / lot components (See Civil Code § 4775).

Also known by most is that the project CC&Rs and other governing documents help delineate, some more clearly than others, which site improvements are part of common area and/or association maintenance areas, and which are within the boundaries of individual units/lots.

Original budget worksheets prepared by developers and submitted to the DRE as part of the subdivision public report application process, provide a roadmap for annual maintenance, as well as long term maintenance and repairs per the reserve schedule.

The majority of routine scheduled maintenance is thus performed in accordance with these pro-forma budgets, as they are amended each year during the annual budget submission and approval process.

Less known by most managers is that, in addition to routine scheduled maintenance provided for in the operating budget and reserve account, periodic inspection and testing requirements also arise pursuant to the project CC&Rs, as well as under the Civil Code.

Failure to properly maintain the common areas in compliance with these requirements can result in negative financial and legal consequences. Examples include:

Breach of the Governing Documents

The project CC&Rs and other governing documents are equitable servitudes, enforceable by the association and/or any homeowner as part of a claim for breach of the governing documents pursuant to Civil Code § 5975.

Special Assessment

Each association has an obligation to maintain and repair the common areas, regardless of financial considerations. When maintenance and repair expenses exceed available funds, Civil Code § 5600 requires an association to levy special assessments sufficient to perform its duties.

Construction Defect Claims

Failure to maintain common area systems and components in compliance with the CC&Rs and/or maintenance manual can negatively impact a younger association’s ability to successfully pursue claims for construction defects against a builder or other responsible party. Civil Code § 945.5 excuses an otherwise responsible party from liability if a showing is made that the claimed damage is caused through improper maintenance.

But fear not. By identifying these specific inspection and testing requirements, managers can easily budget for compliance, while also ensuring that problems are identified at an early stage and can be addressed over time without the need for a special assessment of the membership!

Inspection & Testing Requirements Per the Governing Documents & Civil Code

Many CC&Rs contain provisions requiring the association to retain experts and construction consultants to conduct regular inspections of the common areas. In many cases these CC&R provisions further require consultants to produce an annual inspection report, to determine whether the common areas are being properly maintained, to identify the existence of hazards or defects, and to recommend preventative measures, as necessary.

Inspection and testing requirements also arise under the Civil Code. For example, Civil Code § 5551 now requires associations with buildings containing three or more attached units to conduct periodic inspections of elevated elements such as decks, walkways, balconies and stairs that are supported in whole or in substantial part by wood or wood-based products.

Reserve Study Limitations

You may be asking, aren’t these requirements satisfied through the reserve study inspection and reporting process? Unfortunately, no. While extremely important for the long-term management of an association and the equitable funding of major repairs over time, reserve studies do have important limitations.

Reserve studies contain standard disclaimers which state that no destructive testing was undertaken as part of the inspection process, as well as disclaiming that the study does not purport to address any latent and/or patent defects or premature deterioration due to improper design or construction.

In basic terms, this means that unless there is clear visual evidence of damage or distress, the reserve study assumes that each component is constructed properly and will last its entire expected useful life.

Compliance with Inspection Requirements

With these inspection requirements and reserve study limitations in mind, what simple and easy steps can managers take to ensure compliance?

The first step is to identify what specific inspection requirements exist at a given property. Periodic inspection requirements are typically located in the same article as the association’s routine maintenance obligations, generally under a subsection entitled “association inspections”, or something of the like.

Review these provisions with a preferred maintenance vendor to determine the best and most efficient means of compliance, including an estimated budget for that work on an annual basis. Once known, these costs can be easily calculated into the annual budget and operating account.

Initial inspections of deck and other elevated elements pursuant to the requirements of Civil Code § 5551 must be completed by January 1, 2025, and once every nine years thereafter. Unlike annual inspection and maintenance costs, the best way to budget for these less frequent requirements is through the reserve account.

Obtain an inspection and compliance proposal from a preferred vendor and work with the association’s reserve study analyst to incorporate these costs into the reserve schedule, as necessary.

These simple budgeting steps will ensure compliance with inspection and testing requirements per the CC&Rs and Civil Code. Importantly, through these compliance steps, you will also be protecting your association clients from unexpected financial hardship.

Recent advancements in technology such as sensors, infrared, borescopes and other tools not only allow efficient and cost-effective inspections, but also a highly informative forensic inspection process. Through routine inspections of the common property, experts and consultants can detect and document water intrusion and premature deterioration of the major systems.

As mentioned earlier, reserve studies assume that each component is operating properly and will last its expected useful life. When problems and/or performance defects that have reduced the expected useful life of a common area system or component are identified early, reserve schedules can be adjusted to avoid catastrophic failure and the potential need for a special assessment of the membership.

Joe Seltzer, Esq.

Joe Seltzer, Esq., is a partner with Riley Pasek Canty LLP, who works with community association managers and boards of directors to investigate and pursue claims for common area construction defects.