Owner Claims Against HOA - Water Intrusion

The most common claim made by the owners of condominium units against their homeowner associations is that their unit is experiencing water intrusion because the association has failed to maintain the common area. Generally, this involves leaking roofs, decks, planters, walls, and windows, and often improper slopes and drainage.

When a condominium unit owner (plaintiff), makes a claim against the association (defendant), it is often because the statute of limitations has run and therefore a claim cannot be made against the developer of the condominium community. When a condominium unit owner has exhausted his or her patience with the board and files a lawsuit against the association, (not the board), the association will almost always contact its insurance company. Assuming there is coverage, the insurance company will hire a law firm to represent the association and the law firm will then hire any appropriate construction experts needed to investigate the situation and provide advice on how to remedy the problem.

As part of the process, the plaintiff's attorney will hire one or more experts on behalf of the plaintiff to provide advice and repair cost estimates.

After all experts have completed their investigations, have developed a scope of repairs, and cost estimates, a mediation session will be arranged so that the parties can avoid further litigation and settle the matter short of going to court. In about 90% of these cases, the dispute is settled in mediation.

Settlements usually, but not always, consist of the following:

  • The association agrees to repair the common area in a manner that is acceptable to the expert working for the plaintiff's attorney;
  • The association agrees to pay the plaintiff a dollar amount sufficient to make interior repairs and pay for loss of use; and
  • The association agrees to pay all of the plaintiff's attorney fees and costs.

Most importantly, depending upon the insurance coverage, the cost of settling the case will normally be paid in part or completely by the insurance company.

Lawsuits by owners against their association for the failure to maintain the common area, causing harm to an owner, usually follow these steps:

  1. The owner places the association once in writing demanding that the association make the needed repairs;
  2. If the owner's demand is ignored or rejected a final demand letter is sent to the association by an attorney along with a Request for Resolution for mediation; and
  3. A lawsuit is filed if the association fails to make all of the required repairs or refuses to commit in writing to do so within a reasonable period of time. Approximately 90% of the time, the case will settle in a post filing mediation, but there is never a guarantee of results.

There are costs to the HOA during each step which can only be approximated as follows:

  1. A final demand and Request for Resolution is sent after a review of the association's CC&Rs, photos, any Operating Rules, relevant reports, and all relevant correspondence. Sometimes an inspection may be required. The average cost to the plaintiff is usually based upon two or three hours of attorney work. Most of the time, the request for a mediation at this stage is rejected which requires the filing of a lawsuit against the association. In the unlikely event that mediation is accepted, the client will be responsible for the cost of mediation described below.
  2. If a lawsuit is filed, a law firm may represent the plaintiff on a contingency basis. This means that the firm will be paid only from a settlement or judgment. However, the plaintiff will usually be responsible for paying some or all of the out of pocket costs associated with filing the lawsuit. This is likely to include a court ordered or voluntary mediation after expert investigations. The costs of litigating will include some or all of the following:
  • Filing Fee (Payable to the court)
  • Service Fee (Payable to the process server)
  • Expert witness consulting fees
  • Possibly mold and/or asbestos testing fees
  • Post filing Mediation Fee (Generally both parties pay 50% of the cost) the plaintiff's attorney
  • Deposition Fees (If the plaintiff's attorney takes a deposition, the defendants expert must be paid and the court reporter must be paid by the plaintiff. Court reporter fees also apply to any other depositions, Depositions are usually taken only after a mediation that fails to result in a settlement.

Given that most cases settle in a post filing mediation, the plaintiff's attorney may never take the depositions of people on the defense side of the case.

While the information presented in this article is general in nature, it provides a basic outline of a typical case, It does not constitute legal advice. For legal advice about a specific claim, you should consult an experienced attorney who can review the facts of your situation.