Every community association will face a major reconstruction project several times in the life of the development. This may occur because of clearly anticipated problems, such as re-roofing or re-painting, but it also will occur because of completely unanticipated (and unreserved-for) problems such as dry rot repair, soil subsidence, and leaks in windows, siding, and foundations. The Davis-Stirling Act only requires that a community association reserve study include those components that visual inspections into accessible areas reveal have a useful life of 30 years or less.
But what about components in areas that are not visible or accessible? What about areas under staircases that sponsor dry rot due to long-term intrusion of water? Framing components under siding that have allowed water to enter slowly for years without any way to get it out except evaporation? Deteriorating concrete walkways or driveways due to the invasion of roots or soil subsidence due to unconsolidated fill? Or, balcony railings rotting off at their interior supports? Three people in Antioch were severely injured recently when such a railing collapsed.
None of these building components would be included in the usual reserve study and unless detected by some other means, would not appear in the maintenance budget, yet the association in a typical condominium and in many planned developments is nevertheless responsible for necessary repairs. This scenario has played out in many associations. Unexpected repairs for which there was no reserve funding.
So now you have a collapsed balcony or maybe a lot of rotted siding--what do you do?
The first thing to do is to retain the services of someone who can advise the association on the proper means of repair. General contractor, architect, engineer, or construction manager? Which expert will you need? A lot depends on the complexity and extent of the problem. If, for example, you have a failed balcony support beamsomething that has rotted due to years of water intrusionjust replacing the failed beam may not be enough. You don't want it to happen again.
The first thing would be to retain someone who is a pro with waterproofing. Would you choose a building consultant or an architect? Architects are more expensive, but for a very complex waterproofing issue you want someone who has enough skill and understanding to re-design the system to make it watertight.
On the other hand, if the basic design is sound, but the materials have failed to do their job, a materials consultant who specializes in waterproof membranes may be the right choice. In our practice, we would start with the architect or an engineer because this particular balcony railing example involves a life-safety issue and because a re-design and/or strength calculations may be necessary.
If their opinion is that the problem is relatively simple to solve such that a re-design of the waterproofing system or a re-calculation of the strength of the system isn't required, and the project simply requires a re-build of the original design, then a building consultant or a general contractor might provide the specifications.
But if the basic structure has proven inadequate for other reasons, such as deflection over time, or failed joists or columns, a structural engineer might be necessary to do the proper calculations and provide a re-design of the structural components. A few hours of an architect's time will usually be enough to determine the level of expertise required for the project, so if in doubt, hire an architect first.In any case, if the job is big enough, it may also be wise to consider retaining a construction manager to represent the board throughout the process.
Once the problem has been analyzed and the plans and specifications for repair have been drawn, the bidding process can start. Normally a list of preferred bidders is prepared. This preference usually comes from past experience or specialty. For political, as well as economic, reasons several bids should be obtained. Even if the board or management favors a particular contractorperhaps because of a successful project performed earlierit is advisable to obtain at least three bids to demonstrate due diligence in the bidding process.
When the bids are opened it is up to the board, with management's recommendations, to choose the right contractor. Price may not be everything. Past performance, specialty, and availability may have important roles to play. All of those factors should be considered before the final choice is made.
Your attorney can assist in reviewing and negotiating the contract. There are a lot of considerations, and good contract drafting is a topic all of its own. But some of the considerations are:
We could go on, but you get the idea. There are many questions that must be asked and which can only be answered in the context of the particular job. Your attorney working with your architect or engineer can fashion a contract that is appropriate for the job.
How will the association pay for all of this, especially if it is a job that no one expected to have to do? Generally speaking there are only a few options. If the job is contemplated and funded in the reserve fund, no problem. But what about those surprise projects?
The association can borrow the moneyeither from a bank or from itself. It can go to its reserves, but generally funds borrowed from reserves must be repaid within a year. Or it can go to the members for a special, or increased monthly, assessment to pay for it. If the proposed special assessment is no more than 5% of the existing budgeted expenses, or the job requires no more than a 20% increase in the regular monthly assessment, the board can simply impose it; otherwise it will have to go to a vote of the members, not usually an easy thing to win. But a big job can quickly outdistance those statutory maximums and if the member vote does not approve the new assessment, recourse to a bank may be the only option.
If all goes well and the job is completed on time and on budget, terrific! But if the contractor defaults, either because he does not complete the job or is proceeding so slowly that it will not be completed on time, or because work has been rejected by the inspectors, it may be time to consider termination of the contract. But before that happens, consult with the association's attorney to be sure that the contract provisions are followed so that the association will not itself be in breach.
A big, unexpected construction job is probably one of the most disruptive events in an association's life. Some associations never recover. This can be avoided with early inspections of all building components, whether visible and accessible or not, so that failure can be anticipated in enough time to adequately reserve for the costs. Like cancer, early detection offers the best chance for a cure.
Once primarily an economic problem, hidden damage has become a much more severe problema matter of life and death.
California COVID-19 restrictions have been lifted, let us help guide your Board as you weigh your options and move forward.
Effective in 2020 and 2021, Davis-Stirling CID Act Amendments affecting association operations.
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