A. STATUTORY DUTIES

1. Civil Code 1364: Duty to repair, replace and maintain the common areas; includes a duty to investigate mold issues and pursue claims for mold
2. Corporation Code 7231: Make reasonable inquiries into corporate problems (business judgement rule)

B. CC&Rs

Require the Homeowner's Association to repair and maintain common areas.

C. LAMDEN V. LA JOLLA SHORES CONDOMINIUM ASSOCIATION:

This is an objective reasonableness standard, which may include a duty to consult and rely on experts and document maintenance or repair decisions.

D. MANAGER DUTIES

Reasonable care standards (Negligence Theories); indemnity from HOA; company insurance policies

E. DISCLOSURE BY THE HOA

1. HEALTH & SAFETY CODE 25249.11:
   Notification of dangerous materials to members
2. LABOR CODE 6401.7:
   Notification to employees of workplace hazards and correction of unsafe and unhealthy conditions

A. COMMON AREA CLAIMS (RESULTANT DAMAGE)

1. Ten Years from the date of substantial completion for "latent" defects (not apparent but reasonable inspection - CCP 337.15); applies to real and personal property.
2. Three Years from the date of discovery of the mold (CCP338)

B. PERSONAL INJURY

One year from the date of discovery of the injury and it's cause.

A. COSTS:

1. Investigations to determine the cause, type and extent of mold can cost hundreds of thousands of dollars
2. Industrial Hygienists, forensic consultants, restoration contractors, engineers, epidemiologists, oncologists, neurologists are among those consulted to investigate mold property damage and health claims

B. PROTECTING YOUR FINDINGS

1. Hiring an expert may trigger the 3-year statute of limitation because the association may be on notice of the issue
2. The attorney-client privilege protects expert opinions and findings
3. Consult with counsel before hiring experts or consultants
4. Do not re-print or turn over the report in the board meeting minutes or by discussing the report in open meetings. This could waive the attorney client privilege.

A. PROPERTY DAMAGE REQUIRMENT

There must be damage to either real or personal property in order to trigger coverage under the policy. The extent of damage required to satisfy this requirement is largely unknown as it relates to toxic mold infestation but many believe that even very minor damage will suffice.

B. BODILY INJURY

To be covered by an insurance policy, claims for bodily injuries generally must allege physical symptoms.

C. RELEVANT EXCLUSIONS

For toxic mold claims to trigger insurance coverage there generally must be allegations of property damage or personal injury. However, insurance policies always contain exclusions, i.e. categories of things the policy will not cover. With the emergence of mold claims and litigation most insurance companies are writing exclusions into their new policies that say they will not cover mold related claims. This is something to watch out for with new policies (within the last few years). As to older policies, insurance companies have been trying to escape coverage liability by arguing mold claims fit into existing I traditional exclusions. Some of these traditional exclusions include;

Pollution exclusion: excluding coverage for pollutants -- most courts are refusing to apply this exclusion to indoor air contaminates
Work Performed Exclusion: excludes coverage for damage to the insured's work arising out of he work.

D. HOA POLICIES

1. The coverage issues noted above also apply to HOA policies, most importantly that the claim be for property damage or personal injury.
2. 2. HOA's have a duty to maintain common areas. Coverage should be available for property damage, personal injury damages, and additional living or relocation expenses.
3. Typically, the HOA insurance policy, rather than the individual owner's policy, is implicated because the source of the water intrusion is from defective common area building components (roofs, windows, etc.)
4. Another significant source of exposure for HOA's which should be noted is negligence related to either investigation or abatement procedures. General counsel and CD counsel should be consulted in this regard. (Note: Most HOA policies will have exclusions for defective workmanship or materials 97 how this exclusion will come into play in mold cases past the ten year mark is not fully known.)