As lawyers representing community associations, we are often asked about whose job it is to fix/replace/pay for this-or-that building/tree/lightbulb. The answer is not always clear, but the questions usually stop when we say: it’s the owner’s responsibility or it’s the association’s.
Recently, though, we had an unusual follow-up question from one of our condos: Even if it’s the owner’s job to fix/pay, can the association decide to take on the work and costs instead?
In this article, I discuss the answer to this unusual question. Buckle up folks, we’ve got the Ohio Revised Code and case law this time.
EMERGENCY REPAIRS: THE WORK
(Not yet touching on the matter of the cost—that’s in the next section.)
Generally, in fairness to all owners and to avoid setting bad precedent, it is advised that an association not take on work specifically allocated to unit owners—whether by statute or under its bylaws. However, Ohio’s Condominium Statute describes circumstances under which a condominium association may be advised to do so:
Specifically, a condominium association may authorize and perform “maintenance, repair, or service of any common element located within [a unit’s] boundaries or of any portion of the unit” if, in the opinion of the board of directors, to do so is necessary for public safety or to prevent damage to any other part of the condominium property. O.R.C. Section §5311.03(F).
Another part of the statute offers further guidance: Subject to the Declaration, a condominium board (and/or its agents) may enter a unit for “bona fide purposes” only when there is “imminent risk” of harm to condominium property or to the health or safety of occupants. Sec. 5311.081(B)(16).
So, in simple terms—Under this statute, Ohio condominium associations can take on owner responsibility for maintenance if there is some imminent threat and the board further finds it necessary for damage prevention and public safety. Seems intuitive. But do the owners still have to pay, or could a Good Samaritan condo association elect to take on the cost?
PAYING THE COST OF OWNER WORK—IS IT ALLOWED? IS IT FAIR?
My first thought was—I don’t know that it’s forbidden, but it’s probably not advisable.
The association’s time and money don’t belong to any individual owner (or group of owners)—but rather to the association as a whole. So, it seems at least rather unfair to use association funds for the benefit of any particular owner(s). Moreso, it may even be seen as a misuse of association funds.
And I think that the Ohio Eighth District Court of Appeals would agree. In Pointe at Gateway Condo. Owner’s Ass’n v. Schmelzer, this court upheld an injunction against the association from using reserve funds for legal expenses. Specifically, it recognized testimony that use of reserve funds “for purposes other than those identified in the reserve study” may cause depletion of units’ value and of the association’s reputation. The court also noted sections of the association’s Bylaws and Declaration which emphasized that the reserve funds are meant “to meet the cost and expense of repair and replacement of the Common Areas and Facilities,” and not to pay for litigation. So, it at least sounds like this court recognized the potential harm in misuse of association funds.
Yet, Ohio courts haven’t exactly said that the association can’t cover owner costs, in some cases. Recently, in STE Invs., LLC v. Macprep, Ltd., the board allegedly passed off the expenses of one owner—the developer—onto the remaining owners, and spent association funds to the apparent benefit of the developer. The Ohio Sixth District Court of Appeals did not exactly pat the board on the back for this, but nor did it explicitly recognize any wrongdoing on their part, and the court did uphold a dismissal of claims against the board members.
THE LAWYER’S ANSWER—IT DEPENDS!
This was not a question with a simple, one-size-fits-all answer. Given what I’ve explored here—I believe that a condominium association could elect to perform work allocated to unit owners if, in the board’s opinion, it is necessary to prevent imminent damage to the condominium property or for public safety. The association might only bear the cost of such work if the board, reasonably and in good faith, further decides that to do so would somehow be in the best interest of the association as a whole.
Board decisions are generally reviewed under a standard called the “business judgment presumption.” A court will usually uphold decisions in favor of the board, as long as (1) the board decides in good faith, (2) the board exercises reasonable care, and (3) the board reasonably believes that they are acting within the best interests of the association. And lest we mustn’t forget: the board must adhere to the association’s governing documents.
As is often the case in this line of work—there are no easy answers. This is why we suggest that boards ask an experienced attorney about any matter of allocating cost and responsibility for work that needs doing.
As it happens, the EQUES Law Group has one of the few Ohio HOA and condo law experts on our team. We are well-practiced and well-equipped to advise our community association clients on all matters relating to allocation of repair duty, proper use of reserve funds, and defense against related liability.