Condominium Documents charge the Board of Directors with the responsibility of the proper management and maintenance of a Condominium Association, including the maintenance, repair and replacement of various common elements. To fund that responsibility, the Board is authorized to levy assessments against co-owners and properly manage the Association funds, for the benefit of the entire community. Because the Directors are also co-owners and have to pay the assessments themselves, or because of pressure from the community, there is often a tendency to keep the assessments as low as possible. In order to do so, Boards will often delay or ignore maintenance problems, or make repairs in a temporary manner. From my experience, few Boards regularly assess adequately to make all necessary repairs when they are needed. Too often, Boards try to hold down the level of assessments and ignore the need for substantial repairs in the community until an emergency arises or conditions become so bad that the need for repairs can no longer be ignored.
What happens when the Board fails to make the repairs when they should? First, the cost of the repairs usually exceeds the costs that would have been incurred had the repairs been timely made. For example, seal coating or joint sealing roads clearly extends their life and when those preventive measures are ignored, more extensive road repairs are likely, including the replacement of the road base. Regular roof inspections and repairs extend the life of the roof and reduce the deterioration of the roof structure. Regular caulking and painting programs extend the life of siding, windows and doors; ignoring that will cause the premature deterioration of the wood and the underlying structures. And by extending the life of these elements, long term maintenance costs are decreased and the appearance of the community is enhanced.
It is also important that the repairs be made by competent personnel using appropriate equipment and techniques. A painter who fails to properly prepare the surface, uses cheap paint or caulking, is not providing a professional service to the Association, even though the bid might be the lowest. Or, painting over rotten wood is a temporary patch at best. It is important for a Board to seek and utilize qualified professionals to ensure that the work is properly performed and the Association obtains the best value for its money.
Another effect of inadequate or untimely repairs is on the property values of the community. Delayed repairs often are readily visible to even a casual observer and may make a unit more difficult to sell or reduce its selling price. I was involved with a community some years ago that had delayed major repairs so long that the appearance of the community appeared so deteriorated that units were difficult to sell. Paint was peeling, roads were collapsing and carpeting was frayed. Finally, the Board and co-owners came the realization that a significant assessment was necessary and the Board levied a multi-thousand additional assessment. When the repairs were made, property values increased almost 50% and the units were again in demand.
Insurance premiums are also impacted by inadequate maintenance programs. Most Associations experienced ice damming problems over the last few years, typically caused by inadequate roof ventilation and insulation. The large number of claims has caused many insurance carriers to cease writing condominium policies in Michigan. And those carriers that remain have substantially increased their premiums. Associations must not only repair the damage caused by the ice damming, but must also solve the underlying cause of the problem. Otherwise, such damage will continue in the future, resulting in the cancellation of the Association’s insurance, significant increases in insurance premiums, or policy exclusions for ice damming claims.
Another cause for the cancellation of insurance are slip and fall claims, where co-owners or guests fall on the ice, a trip point in a sidewalk or a raised sprinkler head. Often these claims could have been avoided had the Association promptly maintained those items.
A new problem facing Condominium Associations are mold claims. When leaky pipes, roofs, basements or windows are not promptly and adequately repaired, various types of mold can grow in the moist areas. Co-owners then claim that they are suffering physical effects from the mold and demand that the Association repair the leak and remediate the entire unit, such as the removal of all of the drywall, insulation, wall covering, floor covering, etc. And, co-owners sometimes claim that the Association should compensate them for their physical injuries and pay their alternative living expenses while the unit is being repaired. To make matters worse, many insurance policies have exclusions for mold claims, forcing the Association to pay the entire cost of defending against the claim and any damages that are awarded against it. The prompt attention to the leak would likely have eliminated the mold claim or substantially reduced its cost.
If a Board fails to properly maintain the condominium it may be sued. The Board has an obligation under the Documents to properly maintain the condominium, and a fiduciary obligation to do so. Such litigation only adds Court costs and attorney fees to the operating costs of the Association.
Every Board should develop a comprehensive plan to deal with the ongoing regular and periodic significant maintenance issues of the Association. If repairs are necessary and additional assessments are required, don’t hesitate to levy them. You will certainly get complaints from co-owners who don’t want to pay the increased fees but the Board has a fiduciary obligation to properly maintain the condominium and it may be liable to the co-owners if it fails to do so. While Boards should be sensitive to the financial resources of its co-owners, including those on fixed incomes, hard economic decisions must be made to ensure that the property is adequately maintained.