Legal Question in Real Estate Law in California
I own a condo in a building with approximately 80 units. The building is 30 years old and has a history of water leakage problems caused leaking copper water pipes in the common area owned by the HOA. In April 2008 I was contacted by the management company and told that a common area water pipe had leaked and flooded my lower level unit. My unit was vacant and for sale for $295,000 at the time of the leak. I had just completed a $50,000 remodel a few months earlier. The water damage was not discovered for a week or two after it occured so the inside of my unit became moldy and the brand new hardwood floors and drywall was destroyed.
I did not have personal insurance on the unit at the time of the damage.
I notified the HOA of the damage. They took a couple of months to acknowledge responsibility for the damage but eventually agreed that it was their fault. They insisted on being responsible for all repairs to my unit and on hiring and managing the construction contractors.
They took about six months to have the damaged drywall replaced and the unit repainted. During this period the unit was vacant and uninhabitable and I had to take if off of the for sale market. Unfortunately, they did not have the mold treated and only had their contractor put new drywall over the mold.
When I inspected the unit following repairs the mold smell was so bad that I could not stay in the unit more than a few minutes without getting sick. I complained to the HOA that they had not fixed my unit adequately. They had not fixed the warped hardwood floors at all and had not had the mold removed.
The HOA took the better part of another year to have the mold remediated, drywall repaired (again), flooring replaced, repainted, etc. The bulk of the delays were because they had paid their contractor in advance to fix my unit (and had failed to monitor his work) and he had done shoddy repairs (no mold remediation, floor repairs,etc) and then refused to go back and fix the work. They argued with him for almost a year before hiring another contractor to finish the job. The work was finally completed about 17 or 18 months after the initial damage.
About 2 or 3 months after the water damage occured I complained to the HOA that they were taking far too long to fix the damage and it was not fair that I was left with an unsellable and uninhabitable unit for so long. I told them I expected them to pay me $2500 per month for loss of use. The HOA refused to pay.
As mentioned above, at the time of the damage I had the unit on the sales market for $295,000. Between Spring 2008 and the end of 2009 Condo values plummeted. After the repairs were completed I put the unit on the market (about 3 months ago) for $175,000 but have had no offers. My real estate agent says I should list for $140,000 if I want to sell.
I have a couple of questions.
1. Is the HOA responsible for the loss of use for my unit due to my inability to sell or rent or occupy the unit for 18 months?
2. Is the HOA responsible for the decline in value of my unit during the 18 month period I was unable to sell it due to the HOA's negligence in having my unit promptly repaired? I estimate I lost approximately $150,000 in value to my property during the period it was uninhabitable and unsellable. (The combined total of loss of use and decline in value is somewhere between $150,000 and $200,000).
3. Was the HOA grossly negligent in failing to promptly have my unit repaired? ( I complained in writing many times to the HOA only to be told that the HOA Board Members were too busy with their personal business to be bothered with my problems).
4. Is the HOA's insurance policy or directors insurance policy liable for the gross negligence of the HOA? (I filed a claim with State Farm, the condo associations insurance carrier but State Farm denied the claim).
Your thoughts will be most appreciated.
3 Answers from Attorneys
The dollar amounts involved here, the complexity of the issues, the upside and downside potentials, and the sophistication of the other players all tell me you need to retain your own lawyer, and one who has experience in two areas - toxic mold litigation and dealing with HOAs. There should be a number to choose from with adequate experience in both fields to do a good job for you and provide you with a good "return on investment" for their fees.
You're not going to like this answer, but I'm not in the business of telling people what it is they want to hear. The person responsible for all of this is you. When you decided not to spend, say, $500 on homeowners' insurance, you gambled $275,000 to win $500 that nothing bad would happen. You lost this wager. This was extraordinarily poor judgment on your part, especially since you knew of the previous leakage problems. So a situation that your insurance company might have totally handled for you will, at best, cost you thousands in upfront lawyer fees. But wait, there's more. By all accounts, you've waited until after the statute of limitations has expired to seek legal help! (They laughed at your ineffectual "written complaints.") Possibly there is something a lawyer could still do for you, but I'm not optimistic. If I were you I would spend Monday morning frantically calling lawyers in the threadbare hope that you might have a couple of days or weeks left within which to file a lawsuit, and that you can find an lawyer willing to work on an emergency basis.
1. Yes. We would have to establish the fair rental value of the condo, which is the most generally accepted measure of lost use damages.
2. Possibly. I can think of a couple of legal theories that might apply, but I would have to do some legal research to be sure, and that is beyond the scope of a free Q&A.
3. No. They owed you no negligence duty of care to promptly repair. Just because they are liable to you doesn't mean they have any duty to you under a negligence theory. There may be some duty owed you by undertaking the repair themselves, but it would not be negligence, more likely an implied contract of some sort was breached.
4. The HOA's insurance policies my or may not provide coverage, but they don't owe you any coverage at all. You are not an insured under those policies, so you have no rights to make any kind of claim under them.
Also, Mr. Stone is dead wrong. The limitations period for damage to real and personal property is three years. So if the damage was in April 2008, you have a year left. The longer you wait, however, the harder it will be to mount an effective case. You should have had an attorney involved in this from the beginning, in an advisory capacity, to help you document the damage and the problems you have had. Recreating or organizing the information and evidence it will take to proceed against the HOA will only get harder and more expensive the more you wait.
Mr. Whipple is also wrong in part about the expertise needed for your case. This is not a mold case. It is a trespass, property damage and HOA case that experienced Real Estate trial attorneys such as myself are quite familiar with. Although I am based in Northern California, I have a few cases pending in Southern California on a regular basis and maintain an Orange County office facility to serve Southern California clients. This is also the sort of case that could be suitable for a mixed hourly and contingent fee agreement, so that your fees as the case progresses would be much less than on a straight hourly rate. If you would like to discuss your case further and your options for proceeding, please give me a call or send me an email to arrange a telephone consulation.
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