Private Road Association

[Dave L]

Jurisdiction

California

I am a member of an unincorporated non-profit road association by virtue of owning my home. The CC&R's are on the property establishing the association. I have lived here for more than 20 years and we periodically seal and perform other maintenance and repairs to the road with the costs being split among the association members. We have by-laws and a volunteer board of 4 who obtain bids for maintenance and based on the bids, make a recommendation to the association members who vote on the proposed maintenance, majority rules. The association does not own the land under the road, but maintains the road via a right of way over other members' properties. There is now a discussion as to concerns of liability regarding the road.

Assuming the road has not fallen into disrepair (it hasn't), do the association members have a liability for an automobile accident that occurs on the road? It does not snow here so snow removal is not an issue.

Are the road association members liable for someone tripping and falling on the road? The road is paved and well maintained.

Are the road association members liable for a tree falling on a car on the road? The road association does not own the land adjacent to the road, that is owned by the home owner.

Do the volunteer association board members have an additional liability over and above that of the other ordinary members?

If there is a liability, to what extend does my homeowners insurance cover me? We are all single family residences.

Thank you for your time.

 

[zddoodah]

Assuming the road has not fallen into disrepair (it hasn't), do the association members have a liability for an automobile accident that occurs on the road?

Who owns the road? Has the road been dedicated for public use? Is the road accessible to and/or used by the general public or is it used exclusively by the association members and their guests?

Subject to your answers to those questions, determining liability for a hypothetical accident is impossible without some facts. However, liability would only exist if negligence could be proven.

Does the association carry liability insurance? Do the association members have any liability insurance beyond what's provided in their homeowner's policies?

Are the road association members liable for someone tripping and falling on the road?

I can't really conceive why they would be just because some person trips.

Are the road association members liable for a tree falling on a car on the road?

Liable to whom and for what? A tree falling on the road (as opposed to falling on a car or a person) wouldn't create any liability for anyone.

Do the volunteer association board members have an additional liability over and above that of the other ordinary members?

Potentially, depending on the relevant facts, maybe.

If there is a liability, to what extend does my homeowners insurance cover me?

That's a question for your insurance agent.

We are all single family residences.

I assume you meant that you own SFRs, not that you are SFRs.

 

[Dave L]

Who owns the road?

The land underneath the road is owned by the different home owners who live along the road. The road surface itself is, I guess, owned by the association as the home owners aren't allowed to dig it up nor are they individually responsible for maintaining it. I never considered ownership of the road surface.

Has the road been dedicated for public use? Is the road accessible to and/or used by the general public or is it used exclusively by the association members and their guests?

The road sign at the entrance of the road says "Private Road". That being said there is no gate preventing public access. However, it is not a through road and therefore the only people who are ever on it are association members, their guests and delivery, garbage and mail trucks.

Subject to your answers to those questions, determining liability for a hypothetical accident is impossible without some facts. However, liability would only exist if negligence could be proven.

Does the association carry liability insurance? Do the association members have any liability insurance beyond what's provided in their homeowner's policies?

The association does not have liability insurance. This is part of the discussion that we are having. I am trying to understand the liability the association members and board currently have (and have had since 1989 when the road was built). I have an umbrella policy that would cover anything my home owners does not, but other association members may not.

David Lehrian said:
Are the road association members liable for someone tripping and falling on the road?

I can't really conceive why they would be just because some person trips.

David Lehrian said:
Are the road association members liable for a tree falling on a car on the road?

Liable to whom and for what? A tree falling on the road (as opposed to falling on a car or a person) wouldn't create any liability for anyone.

As the road association doesn't own the land adjacent to the road and therefore has no legal authority to trim the home owners trees, I would agree with you. The home owner would be liable for not maintaining their trees and allowing a dangerous situation to occur if a tree were to fall on a car or a person.

David Lehrian said:
Do the volunteer association board members have an additional liability over and above that of the other ordinary members?

Potentially, depending on the relevant facts, maybe.

Assuming the road is maintained and the board acts in good faith, is there any additional liability?

David Lehrian said:
If there is a liability, to what extend does my homeowners insurance cover me?

That's a question for your insurance agent.

Fair enough.

I assume you meant that you own SFRs, not that you are SFRs.

;-) Yes, we all own SFRs.

 

[zddoodah]

The land underneath the road is owned by the different home owners who live along the road. The road surface itself is, I guess, owned by the association as the home owners aren't allowed to dig it up nor are they individually responsible for maintaining it. I never considered ownership of the road surface.

It is unlikely and would be pretty well unheard of for the ownership of a road and land under the road to be separate.

While I think the risk is pretty small, I think the association would be unwise not to obtain liability insurance, and each individual owner would be well-advised to do a review with an insurance agent.

 

[Dave L]

The road association has a "right of way" over the home owners land. Does that entitle ownership to the road association? Or would it work the other way around and entitle ownership of the road to the individual home owners whom relinquish right of way?

Do you think it would be necessary for the association to incorporate? Or simply remaining an unincorporated association and purchasing liability insurance would be sufficient? I do remember reading that CA law limits an associations liability to the extent of the insurance (minimum $500k for less than 100 members which we are).

 

[zddoodah]

"Right of way" typically means an easement. The other questions call for legal advice and are beyond the scope of an internet message board. The board members should consult with legal counsel about the advisability of incorporating.

 

[adjusterjack]

Do you think it would be necessary for the association to incorporate? Or simply remaining an unincorporated association and purchasing liability insurance would be sufficient?

You need liability insurance on the association whether it's incorporated or not. A liability policy on the association includes every member as an insured.

I do remember reading that CA law limits an associations liability to the extent of the insurance (minimum $500k for less than 100 members which we are).

Nope. That's not how it works. Read the statute - Civil Code 5800-5810:

http://leginfo.legislature.ca.gov/f...ivision=4.&title=&part=5.&chapter=9.&article=

 

[Dave L]

Yes, I read through this and as I read it at the end of the day, as long as the board is volunteer, acts in good faith and doesn't break any laws, the members and board are limited in their liability to the $500k insurance policy. I'm not talking about the fiduciary responsibility of the board. Please explain where I am misunderstanding. And thank you greatly for your time, I appreciate your help in understanding this issue.

 

[adjusterjack]

Please explain where I am misunderstanding.

You're misunderstanding the distinction between an officer/director and a homeowner. You wrote that the board consists of 4 people. They would be protected if the policy limit was at least $500,000.

Individual homeowners would not be protected unless the policy limit was at least $2,000,000.

This type of liability insurance is rather inexpensive and often comes in increments of $1,000,000 to as high as you want.

Talk to insurance agents that insure your homes and/or cars and shop around for coverage.

 

[Dave L]

So the members, those who don't own the land but use the right of way to access their home and pay to maintain the road, are liable up to $2,000,000? Is this collective for all the homeowners or for each homeowner?

It seems odd, and I know that laws don't necessarily make sense, but that the directors, those who are actually making the decisions and paying the bills, are held to a lesser liability that the home owners who simply drive on the right of way. Are there any statues or any case law that govern this?

Again, your time and experience in understanding this issue is much appreciated.

 

[army judge]

It seems odd, and I know that laws don't necessarily make sense, but that the directors, those who are actually making the decisions and paying the bills, are held to a lesser liability that the home owners who simply drive on the right of way. Are there any statues or any case law that govern this?

the BEST thing the people can do who MIGHT be impacted IF a lawsuit ever commences is to BUY an hour or two of a real estate lawyer's time to discuss the "INS & OUTS" of ALL potential fallout if something occurs and you're all sued.

You could arrange for this meeting/discussion be held in a nearby meeting facility (if you don't own one) and ask the lawyer to brief you about the rights and responsibilities of people in your position.

An alternative would be to designate five or six people to meet with the lawyer in her or his office.

The community members could ALTERNATIVELY submit written questions asking the lawyer to respond in writing.

I wouldn't trust my finances to free advice from strangers.

Whatever you decide, I hope you achieve satisfaction.

 

[adjusterjack]

So the members, those who don't own the land but use the right of way to access their home and pay to maintain the road, are liable up to $2,000,000? Is this collective for all the homeowners or for each homeowner?

Let's see if I can clear it up for you.

Section 5800 caps the personal liability of a volunteer officer or volunteer director to $500,000 if the association carries a liability insurance limit of at least $500,000.

It does not cap the liability of the association itself so the association should carry limits above $500,000 commensurate with the value of any assets that the association has.

Section 5805 says something entirely different. It says that individual home owners cannot be sued at all if the association carries liability insurance with limits of at least $2,000,000.

I'll give you an example. Somebody has an accident on the road in front of your house due to some defect in the road. A $1,000,000 lawsuit is filed naming you and the association as having negligently contributed to the cause of the injury.

A - The association policy limit is $2,000,000 or better, you immediately get dismissed from the lawsuit without a care in the world.

B - On the other hand, the association policy limit is, say $500,000. You don't get dismissed from the lawsuit. The association insurer likely excludes homeowners from coverage due to the low limit that doesn't comply with the statute. It's up to you and your own insurance to defend against the lawsuit. Worst case scenario let's say you are found to be negligent and the association isn't. You get hit with a $1,000,000 judgment against you and if your homeowners liability limit is the usual $300,000 or even $500,000 you'll have to pay the plaintiff the balance out of your personal money or file bankruptcy to get rid of the debt.

Every homeowner has that risk if the association doesn't have at least a $2,000,000 liability limit.

That's an extreme example and the chances of claims like that are relatively low so the cost of the liability insurance is likely to be rather low.

 

[Dave L]

Thank you very much for your response. California Code, Civil Code - CIV § 5805 would seem to clear things up regardless of who actually owns the road. I mention that because 5805 says, "common area owned in tenancy-in-common". The association doesn't hold title to any land, the road is installed on easements across private property. I was thinking that the road surface and the base rock would be owned by the association but the land underneath would still be the property of the homeowner. Kind of like power lines, they are owned by the power company even though they are installed on private property via an easement. And the power company, not the land owner, is responsible if their property fails and causes an accident.

So at the end of the day it would seem that obtaining a $2,000,000 liability policy would limit everyone's liability. Thanks again for all your time, it was enlightening.

 

[Deborah Thompson]

I found this thread via searching Google and wonder if any insurance company was found in California that actually DOES insure a 501C3 Road Association?? We have a PRIVATELY maintained PUBLIC access road that we have a Road Association formed for maintenance We can't find ANY insurance to cover liability..

 

[army judge]

wonder if any insurance company was found in California that actually DOES insure a 501C3 Road Association??

Have you contacted insurance companies about your query?

You'll probably get better answers by contacting insurance agents or insurance companies, rather than posting to an 18 month old thread!!!