February 23, 2009

by Ronald Perl, Esquire

Community associations may have a duty to warn homeowners of potential deficiencies within units even though the associations have no responsibility to maintain or repair such deficiencies. On December 16, 2005, the Appellate Division of New Jersey's Superior Court ruled in Siddons v. Cook that a condominium association may be liable in damages to a unit owner whose unit was flooded by a broken dishwasher hose in the unit above because the association was aware that similar hoses had previously broken in other units. In a case of apparent first impression, the court ruled that an association has a duty to warn unit owners of a potential problem which it has no responsibility to correct but of which it has knowledge.

In this case, the plaintiff unit owner sued the upstairs unit owner for damage caused by flooding from the broken dishwasher hose on grounds of strict liability and negligence. The plaintiff also sued the association claiming that it had a responsibility to warn unit owners of the possibility that the hoses would break and cause flooding. The trial court dismissed the complaint, finding that the upstairs unit owner could not be held strictly liable and was not negligent and that the association had no duty to warn. The plaintiff appealed.

The appellate court noted that a condominium board has a fiduciary obligation to the unit owners similar to that of a corporate board to its shareholders. It quoted the well-known Papalexiou v. Tower West Condominium case in which a lower court had held that condominium association board members are required to act reasonably and in good faith. The court acknowledged that the dishwasher hose in question was not a common element, that, under the by-laws of the association, its maintenance and repair were the responsibility of the unit owner, and that the association had no duty to inspect or maintain.

However, in analyzing the appropriate duty of care, the court looked to cases which it felt were similar in context to the condominium association/unit owner relationship and referred to the common law obligations of land owners to persons injured on their premises. For example, it cited Monaco v. Hartz Mountain Corp., in which the New Jersey Supreme Court held that although a property owner did not own or install a stop sign which had fallen down, the property owner had a duty to reasonably inspect its property and the abutting sidewalk and to either correct or give warnings of the hazardous condition. The Siddons court also cited to cases holding that a duty to warn of a dangerous condition is independent of a duty to inspect, repair or maintain. It concluded that "under some circumstances the knowledge of a dangerous condition, regardless of control over that condition, may impose upon a person a duty to warn third parties of the danger."

The court applied a three-part test involving 1) the relationship of the parties, 2) the nature of the risk and the association's ability to exercise care, and 3) the interests to be served by the proposed solution. Relying upon the association's fiduciary duty to the unit owners and the powers of the association to protect the owners' property, the court concluded that the close relationship weighed in favor a duty on the part of the association in these circumstances to warn unit owners of the potential for flooding.

In this case, the risk associated with the dishwasher hose was known to the association but not to the majority of the unit owners. The association was in the best position to warn the owners of this condition, and it would not have been unduly burdensome to do so through a newsletter or some other reasonable means. Warning the unit owners of the potential danger would better enable them to protect their personal property and assist the association in safeguarding the common elements from the potential flooding. The court concluded that "the imposition of this limited duty upon a Condominium Association to warn of known defects in personal property located in the individual units that could damage other units or the common elements is not inimical to the purpose of the Act or the Condominium Association by-laws."

Interestingly, the court affirmed dismissal of the case against the upstairs unit owner, finding that the unit owner could not be held strictly liable and that the plaintiff could not prove that the unit owner was negligent. Although it reversed the dismissal as to the association, it held that the plaintiff still needed to prove that the association's failure to warn constituted a breach of duty and that the breach proximately caused the damage.

However, the import of the decision is that if an association is aware of a potential condition which can cause damage within units, it should warn the unit owners of the possible problem. Such a warning will help the unit owners protect their property, will help the association preserve the common elements, and, if the problem does cause damage, may absolve the association from any liability.

This article provides information of general interest and is not intended, and should not be used, as a substitute for consultation with legal counsel. Any questions regarding the specific issues raised in this article should be directed to Ronald L. Perl, Esq. (609) 734-6349 or by email: info@hillwallack.com