Condo Court

What are an association’s responsibilities to residents after a crime is committed in the common area? Can the association and its manager be held liable to a resident who is the victim of a subsequent common area assault? Could a manager who did not know about prior criminal acts nevertheless be held liable for telling a prospective resident that the complex is safe and there is no crime in the area?

Facts of the Case: Yu Tan was shot in the neck (rendering him a quadriplegic) during an attempted carjacking which occurred within the ungated portion of his apartment complex’s common area parking lot. During the two years immediately prior to the attack on Mr. Tan, there had been three similar violent attacks in the ungated parts of the common area.

Moreover, when deciding whether to move into the complex, Mr. Tan relied upon the apartment complex’s leasing agent’s statement to him that the property was safe and there was no crime in the area. At the time the agent made these statements, he had not made any effort to educate himself about criminal activity in the area.

Mr. Tan sued the property management company and the owners of the apartment complex, claiming that they were liable for his injuries.

Ruling of the Court: In Tan v. Arnel Management Co., 2008 DJDAR 6242 (April 2008), the California Court of Appeals ruled in favor of Mr. Tan.

The three prior similar assaults put the property complex owners and management company on notice that there was a risk of violent criminal assaults on the common area. Consequently, the court found that the complex owners and management company had a legal duty to provide “relatively minimal” additional security measures — such as installing a gate at the entrance into the common area parking lot and closing a small gap in the fencing around the entire complex – neither of which would have required the expenditure of significant funds. The court concluded that their failure to do so exposed both the management company and the complex owner to liability for the attack.

The court also held that the statements to Mr. Tan that the property “was safe” and there was “no crime in the area” were misrepresentations. Although the agent of the complex did not have any actual knowledge about the prior criminal activities, he should have known about the three prior assaults and other property related crimes which had recently been committed at the complex. Therefore, both the management company and the complex owner were found to be liable for these misrepresentations by their representative.

Recommendations: Liability for criminal acts on common areas is a very important concern for associations and their managers. Since both community associations and apartment complexes have common areas which are controlled by the association or landlord, courts frequently rely on apartment cases when deciding issues involving the association’s common area duties. Therefore, the Tan case should be carefully reviewed by all associations and their managers. If there have been criminal acts within an association, appropriate investigation and remedial action should be taken after consultation and advice from the association’s legal counsel.

Facts of the Case. For fifteen years, several fourth floor unit owners at The Landing HOA had been using (without HOA approval) the common area attic spaces next to each of their units for storage. Each of these attic spaces was only accessible to the adjacent unit. After one owner complained, the board of directors conducted an investigation.

The board eventually decided that, based upon their interpretation of the CC&Rs and the results of their investigation, it would grant each owner a license to use 120 square feet of their adjacent common area attic space for storage, provided that the owner signed a permission form and obtained insurance.

Additionally, the directors amended the Association rules to specifically allow the fourth floor owners to use their adjacent attic spaces, conducted an election wherein the membership overwhelmingly approved the rule change, and passed a resolution transferring to fourth floor owners the exclusive right to use the common area attic spaces.

The complaining owner believed that the board had improperly given away part of the Association’s common area to individual owners, and sued the association.

Question for the Court. The court was asked to decide whether the board properly allowed the fourth floor homeowners to exclusively use the common area attic spaces next to their units.

Decision of the Court. In the case of Harvey v. The Landing Homeowners Association, 2008 WL 903096 (2008), the court ruled in favor of the Association.

The court found that the Association’s CC&Rs did not require that the board act in a specific way. Instead, the governing documents gave the board the discretion to decide whether the fourth floor owners could use the adjacent common areas for storage. Therefore, the court’s responsibility was to defer to the Board’s “authority and presumed expertise regarding its sole and exclusive right to maintain, control and manage the common areas.”

In this case, the board properly made a discretionary “economic decision” to allow the fourth floor owners to use the common area attic spaces, after conducting a “reasonable investigation” and making its decision “in good faith, and with regard for the best interests of the community association and its members”.

Recommendations. When confronted with an issue involving the interpretation of a particular governing document provision, it is very important to distinguish between mandatory and discretionary provisions. Some provisions are mandatory: These must be strictly followed by the board (unless unenforceable for some other reason, such as violation of law or public policy). However, other sections give the board wide discretion as to how it can act and what decisions it can make. If the applicable provision is discretionary, then before making a decision, the board should conduct a reasonable investigation, act in good faith, and base their decision upon what is the best interest of the association as a whole.