Special Assessment Is in Limbo Over Privacy Concerns
Question: I’m on the board of my condo association in Santa Monica. There are 43 units, and we have no management company. One of our homeowners is threatening to sue us. We have incurred unbudgeted legal and repair expenses because of her, and we believe she was negligent in not promptly reporting her problems to the board.
The association is now placed in a situation where we have to specially assess to cover the costs to repair her unit. When we do a special assessment, we like to give our owners as much information as possible. Can we reveal her address and unit number to the other homeowners? Can we reveal her address information at our annual meeting? Are there privacy laws that prevent us from revealing her name?
We resent the fact that other homeowners are incurring costs because of her actions, yet after months of meetings, our attorney refuses to give us either a yes or a no on identifying the homeowner.
The attorney wants it to be the board’s decision.
Answer: Since identification and the way the homeowner is identified may be libelous, any determination regarding the board disclosing individual homeowner information and the ramifications of that disclosure in connection with a lawsuit that has not yet been filed rests with the homeowner association’s attorney, the one best situated to determine the repercussions of such acts.
A lawyer’s inability to give the advice you need to make an appropriate decision may mean it is time to find a new attorney, but a board gains nothing by insulting and embarrassing a homeowner, regardless of legal advice.
If a lawsuit is filed, and the case is not ordered sealed by the court, anything contained in the papers may then be disclosed, including names and addresses.
If the statements the board makes about this homeowner meet the legal test for libel, your board could be responsible for paying damages for slander (spoken statements) or libel (written statements). Being sued for those statements does not contribute anything of value to the association or to the other homeowners.
The homeowner has no legal duty to report common area problems, although it is often the first indication that a problem exists. The board does have a duty, under Civil Code section 1364, part of the Davis-Stirling Act, to inspect the common area for problems.
That the board chose to seek the advice of its attorney as to who was responsible for the repairs does not make the legal expense “unbudgeted.” The payment by the board for the repairs indicates the attorney believed it was a common area problem and probably advised the association of its responsibility to repair. The board cannot pass blame to the homeowner for negligence when it is the board’s duty to inspect, repair, replace and maintain.
The Davis-Stirling Act requires the board, at least once every three years, to conduct “a reasonably competent and diligent visual inspection of the accessible areas of the major components which the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association which excludes the association’s reserve account for that period.” These are steps the board must take whether or not a homeowner reports a problem.
If the board did not conduct a diligent inspection or did not discuss the problems with the homeowner when they were first raised, the board may be admitting it has violated the law and breached its duties to all the homeowners, not just this one.
The board’s concerns need to be focused on its performance of duties, degree of care and good faith (Corp. Code sec 7231) in fulfilling its responsibilities to all homeowners rather than exacting some form of revenge by revealing an individual’s identity or other information in hopes of embarrassing that person.
Good relations between boards and homeowners begin with communication. Avoiding a lawsuit is always preferable to being involved in one, and the costs incurred do nothing to repair or maintain your complex.
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Stephen Glassman is a writer and an attorney specializing in corporate and business law. Donie Vanitzian, J.D., is a writer and arbitrator and manages commercial property. Send questions to Common Interest Living, P.O. Box 451278, Los Angeles, CA 90045 or to cidcommonsense@aol.com.
