Reader Questions - Now It’s Our Plumbing?

Hi Kelly,

My spouse and I read your column regularly.

Recently our HOA called a meeting to let us know they want to change our CC&R’s specifically to have homeowners be responsible for the pipes inside our walls. They claim they are having problems with pipes breaking and leaks, and it is draining HOA funds. They also said that having homeowners responsible for their own pipes is a “trend” in HOAs and suggested we could go through our insurance company if we had a problem. They said if they don’t get the CC&Rs change they most likely will have to charge an assessment.

I am curious as to what your take is on all this.

Sincerely,

M.B., Huntington Beach

Dear M.B.,

I am assuming your association residences are configured as “townhouses” in that they are connected side to side, and not “apartment” condominiums in which owners live over other owners. In the townhouse configuration, each residence is usually (not always) constructed with a separate water plumbing system, unlike apartment type buildings in which pipes are shared.

Two issues are in play for the association. The first is whether each owner will be given control and responsibility for their own plumbing, instead of the association. Either way, the plumbing needs to be repaired, but I often find that owners appreciate having control over the plumbing serving their unit. However, to permanently transfer full responsibility (and therefore also control) over the plumbing could require a membership vote to amend the CC&Rs.

If the plumbing system is failing, owners will pay for the repair either way – either individually by hiring for the repairs or collectively through regular or special assessments if the HOA handles it. Switching responsibility for repair of a failing plumbing system has pros and cons. On the one hand, the HOA may be able to get a better deal doing all the repairs at once. However, on the other hand some owners may individually desire and be able and pursue repairs sooner than others.

The second consideration is the role of insurance coverage. In the event of water damage, not only from plumbing, but from roofs, windows, or otherwise, a “bare walls” approach means the HOA will only restore the unit framing and drywall. In a bare walls approach, the association would not repair or replace cabinets or floor or wall coverings – the unit is restored to a shell condition, ready for finishes and fixtures. To accomplish a transition to “bare walls” repairs, an association should check with its legal counsel and its insurance broker. Since insurance cost is one of the reasons associations switch to “bare walls,” checking with the association’s insurance broker is essential.

Association members in “bare walls” associations should make sure they have individual insurance covering what the association does not cover. The policies are normally not expensive, and are known generically as “HO6” policies.

Some associations switch to a “bare walls” plan without checking first to confirm their governing documents permit such an approach. Other associations switch to bare walls system but neglect to modify the HOA’s insurance to match that more limited liability.

Before making such a major change, careful associations should consult with the members, association legal counsel, and its insurance broker.

Thanks for your question,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.