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A Blog about Real Estate, How it Can Be Damaged, and Disputes Over its Transfer

This blog is a personal blog written to discuss legal issues affecting Georgia property, and how it is damaged, transferred, and fought over. I write this partly to keep abreast of the law, and partly to offer a forum for my writing. In order to find content, I often analyze Georgia Supreme Court decisions. I try to update this blog as I can, but writing is a time consuming process.

Saturday, January 29, 2011

Parties Responsible for Detention Ponds Cannot Contract Away Liability

Associations and developers will often attempt to hang responsibility for maintenance of detention ponds and storm water drains, pipes, and structures on homeowners in order to defeat their liability for negligent construction.  Provisions of covenants and contracts that attempt to engineer such a result should be void where the effect of the provision is to evade all liability, including liability for the association or developer's own negligence in constructing, changing, repairing or maintaining the structures.

Analysis of this issues starts with the law enacted by the Georgia General Assembly.  Section 13-8-2(b) of the Official Code of Georgia Annotated provides as follows:

(b) A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair, or maintenance of a building structure, appurtenances, and appliances, including moving, demolition, and excavating connected therewith, purporting to require that one party to such contract or agreement shall indemnify, hold harmless, insure, or defend the other party to the contract or other named indemnitee, including its, his, or her officers, agents, or employees, against liability or claims for damages, losses, or expenses, including attorney fees, arising out of bodily injury to persons, death, or damage to property caused by or resulting from the sole negligence of the indemnitee, or its, his, or her officers, agents, or employees, is against public policy and void and unenforceable.
(Emphasis added).

In a recent case of the Georgia Court of Appeals, the court held that a developer could not contract away all liability for responsibility for the effects of a negligently constructed detention pond.  The provision examined by the court provided as follows:

[T]he plain language of the Assignment and Assumption Agreement require[d] the NCHA
to indemnify, defend and hold Kennedy harmless for and from any debts, claims, actions, damages, judgments or costs ... which arose prior to the date of this Agreement and are related to the construction, maintenance, repair or operation of Newton's Crest Subdivision or are in any way related to the Declaration [of Covenants] or the Detention Facility Agreements.
Newton's Crest Homeowners' Ass'n v. Camp,  306 Ga. App. 207, 216  (2010).   The court held that under O.C.G.A. 13-8-2(b), a developer could not hang a property owner association with the consequences of its own negligence in the alteration and construction of a detention pond causing a nuisance to a property owner.

Recently, many subdivision associations have started to try and use lawyers to amend their covenants and declarations to evade financial responsibility for continuing maintenance of storm water system components that their original covenants assigned to them.   Associations, which are often controlled by the same people that play on the ALTA tennis teams, would rather spend their money on expensive lighting systems for their tennis courts rather than the costs to muck out a detention pond that no one in the community can see.  

The issue that begs to be addressed is that if developers cannot enact language that exculpates the developers from liability for negligent construction of detention ponds and drainage pipes, why should an association be treated any differently where it attempts to cram down a covenant amendment to excuse them of responsibility for failure to maintain deteriorating storm water systems?   Metal pipes and detention ponds do not last forever even if constructed in a sound manner.  

The same language in the Georgia statute the court cited in the opinion in the Newton's Crest Homeowners' Association case also applies to contracts that attempt to evade liability for negligence in maintenance of a structure.   The case is not limited to construction liability. 

The impact of the opinion in the Newton's Crest Homeowners' Association case is not limited to developers.  In fact, a homeowners association itself which has responsibility for continued maintenance of a detention pond would be likewise prohibited from attempting to hang homeowners and lot owners with the consequences of the association's own failure to maintain detention ponds arising out of the association's negligence.  The law in Georgia should not permit corporation from using contracts to evade responsibilities that affect public policy or that are illegal or immoral.   Contractual attempts to evade responsibility are exactly the sort of provision that Georgia laws are intended to prevent.   In fact, preventing associations from using their lawyers to write off their responsibility to homeowners is consistent with public policy and the history of association existence.   After all, associations exist not to serve as social recreational clubs for tennis players, but also function as a private organization that shares the common costs of a community that are not borne by the government.

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