Community Associations Newsletter - September 2018

Date: September 25, 2018

Why You Shouldn’t Deal With Mold Yourself - And It’s Not Just Because You Don’t Have Mr. Clean’s Abs

By: Thomas Mugavero, Esq. 

Originally published in the May 2018 volume of the Washington Metropolitan Chapter Community Association’s Institute’s Quorum.

Mold, technically, is everywhere, in some form or another; it is in the dust on the furniture, in the crumbs left on the counter, and in the air that drifts in from the outside. It is why bread turns green-gray, and why coffee left in the mug on the desk over the weekend will look tan on top. Visible mold, however, is usually a by-product of some other maintenance problem–and usually a sign that that maintenance problem has been going on too long. When mold is given a damp environment and some form of nutrient – either wood, or drywall, or some other building material–it will flourish and grow, creating splotchy discoloration on walls, ceilings and personal property.

All mold needs to grow is a moisture source–a leaky roof, a pinhole leak in a pipe, or an overflowing kitchen sink. It can even form in the drip pans of HVAC units and on air filters, which is why it is important to check the ventilation system on a routine basis. Once a damp environment is created, mold will develop, usually in a matter of weeks; after that, the mold spores will become airborne and begin to spread. Mold can also emit mycotoxins, and volatile organic compounds (VOC), which account for the musty smell one usually finds in a moldy environment. The most common forms of mold found in a residential damp indoor environment are Aspergillus/Penicillium, Cladosporium, and Stachybotros. Bear in mind, though, that these are the genus names–within each set are a number of different but related species.

The question, therefore, is this: what should an association do when there is a complaint of mold growth, and why is the proper response so important? The proper response is two-fold: (1) find and repair the source of the moisture, and (2) remediate the existing mold. Repairing the moisture source means finding the leaking pipe, or roof defect, or HVAC malfunction -- whatever is causing the moisture levels within the area to climb. If building materials are wet, but not moldy, they must be thoroughly dried out, usually with industrial fans, to prevent mold from growing further. Materials that cannot be dried out thoroughly must be removed and discarded.

Mold remediation is one of those tasks best left to the professionals, so where there is unusual mold growth, it is best to contact a certified mold inspector.

Sure, you can probably clean out the mold that accumulates on the grout in the shower, but anything larger than a few square feet requires an expert, for two reasons. First, common cleaners, including chlorine bleach, are not recommended for cleaning mold, since they will not completely eradicate the spores. Even fungicides and biocides do not fully remove the mold spores. Second, unless the affected area is properly contained, and airflow to unaffected areas completely blocked, any remediation efforts will disperse spores throughout the living area, compounding the problem.

Generally, a mold inspector will test the walls and floor for excess moisture, assess the visible mold damage, take air and swab samples to determine what types of mold are growing, and draw up a remediation plan. Good mold inspectors will not actually do the remediation themselves–that represents a conflict of interest. That remediation plan will then be turned over to a remediation company for execution, including hermetically sealing off the area, removing damaged and irremediable materials, and cleaning what can be saved. Again, depending on the extent of the mold growth, remediation may involve the structure and fixtures, and it may involve personal property as well. Fabrics, bedspreads, upholstery, etc. can often times be professionally cleaned; non-porous materials can also be cleaned. Certain porous materials, however, like paper, fabrics, and suedes, may not be salvageable, and will have to be discarded.

If the mold is growing in the common areas, that section of the building will have to be cordoned off during the remediation, in order to prevent airflow to the rest of the common areas. If the mold is within a unit, the resident may have to relocate while the remediation is underway. As with any other repair problem in a community association, the question of who bears the responsibility for the remediation depends on where the water source originated, how the governing documents define the boundaries of the unit and of the common elements, and how extensive the damage might be. But, if remediation is done properly–and if the source of the excess moisture is properly repaired as well–mold growth should only be a temporary annoyance.

Why is it so important that the matter is left to the experts? Because improper or ineffective remediation can only increase the exposure of the association, either to future repair costs or to litigation. The future repair costs come when the mold reappears, usually because it wasn’t properly cleaned in the first place. Where the excess water arose from the common elements (a leaky roof, or a pinhole in a common element pipe), the association would be liable both for the repairs and for the damage caused by the mold. Where the mold has spread to the common areas themselves, either common rooms or into the spaces behind the drywall of a unit, the remediation again will lie with the association. Regardless of who originally had the duty to fix the water leaks, if the association undertakes the repairs and does an ineffective job, the association may be liable for a claim of negligent repair–which is probably not limited by any provision in the governing documents.

That’s where the risk of litigation comes in. Generally, if the association is sued for breach of contract–because the governing documents required the association to remediate and it failed to do so, thereby breaching the agreement with the unit owner–the damages will include the cost of remediation, the cost of relocation during remediation and the cost of any personal property that could not be salvaged. Where the claim is in negligence, however, damages could include medical expenses from mold exposure, pain and suffering, and (if there were gross negligence by the association), even possibly punitive damages.

The medical expenses component is problematic. It is generally accepted that acute exposure can result in transitory respiratory problems, and possibly exacerbation of existing respiratory issues. In other words, acute exposure could cause stuffy noses and breathing difficulties, and could make existing asthma or allergic rhinitis worse. Generally, however, the symptoms would gradually subside once the resident is out of the contaminated environment. Acute exposure over long periods of time, however, can result in permanent medical issues. Think, for example, of farm workers who gather corn into silos for years; they can develop aspergillosis, or mold nodules in the lung tissue itself.

There is, however, no clear dividing line between transitory and permanent exposure. Should a claim go to litigation, the plaintiff will undoubtedly allege that he/she is permanently damaged by the mold exposure, even if the exposure was not severe. And, of course, where there is a claim to be litigated, there are expert witnesses who would be glad to testify on the plaintiff’s behalf, for their usual fee. There are also any number of treatments purportedly designed specifically for mold “detoxification”. The majority of the medical community seems to think that such treatments are junk science, but there is a large enough minority to lend some credence to the claims.

So, if an association fails to properly remediate a mold situation, it may face not only claims for lost property and remediation costs, but also claims of medical expenses, future medical treatment, pain and suffering and anything else the plaintiff can think of, on top of the costs of defending the lawsuit itself. Attorneys, after all, aren’t cheap. Herein lies the last piece of the puzzle: most associations do not have coverage under their general liability policy for mold damages. Thus, if a claim is made for improper mold remediation, the association may find that it has no insurance to protect against the loss, or against the cost of litigation. For all these reasons, it is best to turn as soon as possible to a certified mold inspector and possibly a mold remediation expert, to at least mitigate some of the potential loss.

Maryland Legislative Update

By: Julianne E. Dymowski, Esq. 

A new law effective October 1, 2018 makes it easier for a Maryland Condominium Association to suspend use of common element parking and recreational facilities by delinquent owners. 

The law was adopted in response to a recent decision from the Maryland Court of Appeals that struck down a Condominium Association’s rule suspending a unit owner’s use of recreational amenities for violation of the governing documents. In its decision, the Court of Appeals held that a suspension provision must be contained in the Declaration, not in the Bylaws or Rules. Recognizing how difficult it is for an Association to amend its Declaration, CAI’s Maryland Legislative Action Committee successfully pursued a change to the Condominium Act that allows Condominium Associations to amend their Declaration with a reduced vote of 60% of the percentage interest (in good standing) in the Association. The new law allows for suspension of use of both common element parking and recreational facilities by owners who are 60 days or more delinquent in payment of their assessments. Prior to suspension, notice must be provided to the owner together with an opportunity for the owner to request a hearing.

Other changes made this past legislative session include: Maryland Condominium Act - making unenforceable certain provisions placed in the governing documents that restrict the ability of an Association to pursue claims against a Developer; Maryland Homeowners Association Act – clarifying the number of votes of the Declarant to one per lot that is subdivided, recorded and not yet sold; updates to the Foreclosed Property Registry with required filings by a foreclosure purchaser and notice to the Association (effective January 1, 2019); and updating requirements of elevator testing  - to now be performed by a licensed elevator mechanic in the physical presence of a third-party qualified elevator inspector. 

It was a busy legislative season in Annapolis and 2019 is looking to bring further changes for Community Associations.

Penny Wise, Pound Foolish: When Asking Too Much Of Your Community Manager Becomes Risky Business – You Need Expert Advice

By: Susan L. Truskey, Esq. 

Originally published in the May 2018 volume of the Washington Metropolitan Chapter Community Association’s Institute’s Quorum.

Community association managers fill many roles for the communities they manage, such as contract negotiators, on-site foremen, accounting and budgeting gurus, strategic planners, psychologists, mediators … the list goes on. Managers are incredibly adept at utilizing their vast array of professional experiences to assist directors with making many important decisions, but good managers also recognize their limitations. An integral–if often under–appreciated–aspect of association managers is recognizing when an expert opinion is warranted.

All too often, directors make well-intended decisions that save money in the short-term but wind up costing their associations more in the long-run. When professionals and experts are not consulted at the right time, it can be risky for boards and potentially costly for associations. Consulting with a subject matter expert at the outset of a project, although potentially expensive, can immunize boards and associations from potential liability, limit risks, and ensure appropriate long-term solutions. The following examples highlight the risks of shortsighted decisions to bypass industry experts:

  • Signing a contract (or worse, signing a proposal or estimate) without first having it reviewed by legal counsel. Anyone who has been around associations long enough has heard the following scenario: something goes wrong in the performance of a contract and when the board reaches out to counsel they are surprised to learn that the contract has an unreasonable termination provision and that litigation, if necessary, must occur in some far away state.
  • Repairing a sagging unit floor without first hiring a structural engineer to determine the cause of the problem and developing a proper scope of work to address the underlying cause (surprise, it’s the foundation!).
  • Hiring a company to perform mold remediation without first hiring a mold inspector to determine the type and levels of mold present and developing an appropriate action plan.

Directors face tough spending decisions all the time. As fiduciaries for their associations, directors must act prudently and diligently when spending association resources. Directors have an obligation to discharge their duties in good faith and to act in the best interest of their associations. Namely, directors are duty-bound to exercise the skill, care, and diligence of a reasonable person when making decisions.

In discharging their duties, directors are not expected to become lawyers, engineers or accountants; rather, they are justified in relying on expert opinions given by legal counsel, professional engineers, public accountants, and other qualified individuals as long as they believe, in good faith, that the opinion given is within the person’s professional or expert competence. Directors who exercise proper due diligence will generally not be liable for the decisions they make even if they don’t always pan out the way the board had hoped.

When directors attempt to keep costs down by leaning on community association managers to provide expert advice (on matters outside their expertise), they place themselves and their associations at risk by inviting liability for unqualified determinations and failing to exercise good business judgement. Community association managers wear many hats (and can probably leap tall buildings in a single bound), but they are not professional engineers, attorneys, mold experts, public accountants, or radon mitigation experts, and directors should not ask or expect their managers to perform such professional services for the association.

Does this mean that directors need to consult with outside experts on every project? No, of course not. Boards and community managers will have to make this determination on a case-by-case basis. The factors that should be considered would include the size, scope, and complexity of a given issue or project and the potential risk to the association if the project were to go awry. For instance, should an association have legal counsel review a small landscape contract for new pansies in the spring? Most likely not. On the other hand, a multi-year landscaping contract may warrant the minimal expense associated with a legal review.

No one wants to spend more for something than is necessary–but it can be risky to place too much emphasis on cost.

The additional cost for an expert’s opinion is often justified, just as the decision to select a higher bid can be. Directors should make an effort to understand both the risks involved as well as the benefit of the bargain before selecting a bid. Of course, the price is an important factor to consider, but there may be value in other aspects of a proposal such as stronger warranty terms, better construction methods, higher quality materials, or a contractor’s proven reputation. Directors should not feel compelled to forego an expert opinion and select the lowest bidder strictly because of the price. Higher priced proposals are often justified for a multitude of reasons, as is the additional expenses of consulting an expert.

In short, know when to call on experts. Directors should always put forth the effort to gather information they feel is necessary to make an informed decision and discharge their duties as directors in good faith. I recommend evaluating the complexity, cost, and scope of an issue or project and, when in doubt, seek expert advice.