How Owners Can Speed Up Quake Repairs

QUESTION: Our 16-unit condominium in West Los Angeles was devastated by the 1994 earthquake. For a year and a half, all residents had to move out of the building. A total of $2 million was supposedly spent on repairs, but when we moved back into the building in December, the lobby and many of the units were not completed, and they are still not finished. We owners had to pay for the carpet in the corridors and repairs inside our units.

When the project began, the contractors stated in writing that the $2 million would pay for all repairs, including carpet and tile inside the units. Now, the contractors say that they have run out of money and that any further repairs will require more money from the owners. The contractor has placed a lien on the property.

For months we have been asking where the money was spent and how we can get the repairs completed. We are not getting any answers. Many of the owners are elderly and they feel victimized. Where can we go to get this problem resolved?

ANSWER: If the contractor failed to fulfill the contract, then the board of directors should consult an attorney. Get some legal advice regarding the contractor’s obligation to complete the work. You may have been victimized, but a thorough review of the contract is necessary to determine your next move.

Check with the State Contractor’s License Board at (800) 321-2752. You will need to know the contractor’s license number to check the records to see if the contractor’s license is still valid and whether there are complaints against the contractor. This information may have some bearing on your case.

In my opinion, the association’s board should have protected the owners by obtaining legal advice before signing a $2-million contract. It is possible that the board was negligent and the contractor is not at fault. The owners may have adequate reason to sue the board of directors.

Manager’s Jobs Include Protecting Association

Q: Our homeowner association is not operating according to the governing documents. No budget was distributed this year, and the board has not held a meeting for more than six months. Money is spent without board authorization, and then we are given the excuse that the expenditure was an emergency.

Our association is managed by a management company. Does the manager or the management company have any liability if the manager allows the association board to operate without concern for the law and the association’s documents? Are management companies regulated by the state?

A: A professional manager should be very concerned about a board that is not operating properly. Technically, the manager takes his or her direction from the board; however, the manager often educates and takes the responsibility to convince board members that they must operate the association in compliance with legal requirements, including the association’s governing documents, state and federal laws.

In my opinion, a manager has a duty to protect the association and its board from liability. The association’s management fees are being wasted if the manager does not provide the guidance and stability that the association needs.

Property management companies are regulated by the state if they manage apartment complexes and other forms of commercial property. Community association management companies must follow certain procedures when handling the association’s funds, but penalties are nonexistent or ineffective.

Managers who voluntarily belong to the California Assn. of Community Managers agree to abide by certain standards of care and a code of ethics. These standards state that managers will comply with association documents and state law in providing management services to their association clients.

The self-regulatory organization, based in Irvine, provides statewide education for managers so they can learn about the state laws that govern the community association industry. Perhaps your manager would appreciate hearing about this organization. The phone number is (714) 263-CACM.

I suggest that you write to the board and management company, telling them that their actions are putting the association’s property values at risk. Mortgage lenders examine the association’s financial records and often require copies of board meeting minutes in screening and qualifying a unit for financing.

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Hickenbottom is a past president of the Greater Los Angeles chapter of the Community Associations Institute, a national nonprofit research and educational organization. She welcomes readers’ questions but cannot answer them individually. Readers can write to her in care of “Condo Q&A;,” Box 5068, Thousand Oaks, CA 91360.