then and now
Balconies- What has changed ?
The Duty to Inspect before and after SB326. BY RITCHIE LIPSON, ESQ.
Pre SB326-The Duty to Inspect? In a string of recent court decisions around the country, courts have held that Association’s and their boards have a duty to inspect, and bring appropriate claims for the defects, and that this duty arises from the basic maintenance obligation in the CC&R’s.
Tis is consistent with well-established law in California. Although California appellate courts have not directly dealt with the issue of the Board ignoring con- struction defects, it has been well established for 35 years that the Board owes a fiduciary duty to HOA members, since the case of Raven’s Cove Townhomes, Inc. v Knuppe Development Co. Raven’s Cove was a construction defect case, where the HOA also sued former Board members who were employees of the builder. Te 1981 appellate court held that the former Board members had breached their fiduciary duty to the HOA by failing to set aside operating or reserve funds.
In California, an Association owes a fiduciary duty to HOA members to main- tain the common area in a safe manner, and to make a reasonable inquiry re- garding maintenance issues and to enforce the CC&Rs and other governing documents. Tis duty, and its fiduciary nature, has been reiterated by several California courts. It is very likely that a California trial or appellate court would extend the rule first announced in Raven’s Cove and find a breach of fiduciary duty by a Board that does not conduct inspections that would have uncovered construction defects or does not pursue the builder to fund repairs.
In addition, three distinct requirements already exist that mandate regular in- spections of the common area: (1) many CC&R’s require annual inspections of the common area by a 3rd
party independent inspector, (2) the Davis-Stirling Act
requires an inspection of major building components at least every three years as part of the reserve study, and (3) SB800 requires Associations follow mainte- nance requirements from the builder and product manufacturer.
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