Deciding Who Pays Condo Fees During Escrow

Question: After ongoing hassles with our homeowners association and two years on the market, we finally sold our condo. But our escrow closing was delayed 10 days by the buyer’s loan company.

If notices of fees that the board wants to charge all homeowners was received within this 10-day period, are we as the seller responsible for paying these fees and for any other maintenance “costs” that occur?

The buyers say that we are responsible and are refusing to pay these costs.

Answer: The Davis-Stirling Act, part of the California Civil Code, is silent on this issue.

As a general rule, fees, assessments, maintenance costs and other charges associated with condominium or common interest ownership are the responsibility of the owner.

One consideration is whether the fees are for maintenance items previously completed or for items in the future.

Fees incurred for maintenance already performed are likely to be viewed as the liability of the seller, while fees for future maintenance may likely be considered an obligation for the buyer.

It is always the “owner” of the separate interest that is liable for the assessment at the time it is assessed.

Depending on the agreement that buyer and seller signed before opening escrow, the buyer’s delay in funding the purchase may or may not have been a breach of the sales contract.

If it was breached, you may be entitled to some measure of damages.

If there was a “time is of the essence” clause, you may be able to rely on that as a basis to recover the fees from the buyer because of their delay in closing escrow as a measure of your damages.

If the fees are small enough and if you want to close the sale, your payment of those fees to close the sale is worth considering.

If the fees are major, and payment by you significantly reduces your sale proceeds and there was a time-essence clause, you may want to insist that the buyer pay.

Whether you or the new owner should pay might have to be decided in court, but assuming the costs and fees are less than $5,000, the matter can be decided quicker in small claims court.

Upkeep of Balcony Falls in a Gray Area

Q: I am president of a 12-unit common interest development. My understanding is that the repair and upkeep of an owner’s balcony is the owner’s responsibility because it is an “exclusive individual use area.”

Does the responsibility for this “exclusive use balcony area” belong to the owners of the common area or the unit itself?

A: Bylaws or CC&Rs; can affect the answer. Generally, the responsibility for repairs and upkeep of exterior areas in the complex is the association’s obligation.

That same duty may extend to the “surface” areas of the balcony. However, if an owner damages that exclusive use area, the owner may be responsible for its repair.

The Davis Stirling Act is not absolutely clear on this particular point. In part, Civil Code section 1364 provides that “unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, or maintaining the common areas, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.”

When a complex is painted and an exclusive use common area’s external surfaces are included, the association pays. Similarly, if the roof of the common area extends over the exclusive use area, the association pays to fix the roof.

Since you do not describe a particular problem that may have occurred, it is unclear whether the association or the homeowner is responsible, but the circumstances outlined can be a guideline.

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Stephen Glassman is a writer and an attorney in private practice specializing in corporate and business law. Donie Vanitzian, J.D., is a writer and arbitrator and manages commercial property. Both live in common interest developments and have served on various association boards. Please send questions to: Common Interest Living, P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to: CIDCommonSense@aol.com.