Theft from our HOA

Our Board has discovered that a neighboring HOA (The "Master" Association) has been helping themselves to our water for 5 years. During the original construction, they laid water pipes under our walls, tapped into our water supply (after the water meter) to help themselves to our water. They have been paying nothing to water the plants in the common areas outside our walls.

Have any laws been broken?

Our management company and the Master Association's management company are one and the same. It took them 6 months to admit the situation.

Any suggestions?

Does EACH unit have a water meter?

or does your HOA pay for water en masse? If so, how is the rate determined?

If it is YOUR common area is being watered, what is the problem?

The water in question is irrigation water. There are two meters involved.

1. Both our HOA and the Master are doing OK financially. Our individual home owners pay $20 per month to the Master. However there are only 49 doors in our subdivision and about 500 total in the Master. The water in question is irrigation water going to common areas outside of the walls of our subdivision.

2. The landscape contractor for the Master estimated that $250 per month, or about 33%, would cover their share. I think it is much more like $400 to $500 on average. There are 20 large palm trees and hundreds of shrubs outside the wall and only small patches of grass and smaller shrubs inside the wall (our HOA).

There are only two meters in question. The suggestion came from the Master HOA to install two (2) separate meters for the pipes going under the wall going forward next year. The Master HOA offered to split the cost of installing these meters with my HOA. This would be about $7000 or $3500 for us. They did not offer to compensate my HOA for 5 years of theft, however. That is one option. Simply cutting and capping the pipes not going to our HOA needs is a less costly option

In terms of remuneration, I am tempted to ask the Master Association to pay for 100% of the cost of added meters and pay 100% of the water cost for the next 60 months for both organizations. After all, the two meters in question are on our property and we do not need added meters. The Master Association needs them. Furthermore, they took water without paying for 5 years and they should return the favor.

Do you think this sounds reasonable?

Theft seems a bit harsh and judgemental.

Can you prove they knew they were not paying for the water? Maybe you mentioned it and I missed it.

I'm not sure the cost of the meter install should be shared. Consider the past (free) water as your contribution to the solution.

Hi Dennis:

During the original construction it was probably the Developer who laid the water pipes and avoided paying for a separate meter. Was it right … no, but he did the wrong thing not the Master Association. The only thing they may have done wrong, if they knew, was not questioning why they were not being billed for irrigation water. Per your description I do agree with you that they were probably using the higher percentage of water. I am not an attorney but legally it appears it would be difficult to prove the MA was at fault or negligent. Ethically now that the issue has come to the forefront should they possibly consider reimbursing your HOA for their water use … possibly yes. Do they have to … probably not as there is no written contract to enforce with regards to the irrigation. Should you “split the cost” for their meter(s) … well sometimes people ask for things even though they know it’s only a wild dream.

My suggestion would be:

Have a contract drafted where the MA has X amount of time to run their own irrigation lines and install their own meters. I would have them tie into the main irrigation line and not connect to your water lines to avoid future problems on who will be responsible for repairs between the lines. The MA can then put their meters on their property after the tie-in. The MA also should be responsible for the minimal cost of cutting and capping the current improper line at the same time (does not make up for past water use, but will save you a little money). The MA should be responsible for all costs associated for their proper irrigation system including the meters. During this planning/construction time the MA should be responsible for 100% of the costs for irrigation water (very slight compensation for past use). If the MA does not take action with regards to the situation within X amount of time then your HOA can exercise its option of capping the current irrigation line.

Again, they may not have known about this issue and at least it was discovered after only 5 years and not 30 years down the road. If you just cap without giving them options you could be in for a big battle and potential costs for replacing landscaping. This way everything is laid out … if not resolved you will have documentation that you made “good faith” and a more than fair offer to resolve this issue.

I have not dealt with a Master Association setting so others might have better ideas, but at least here is something to consider.

The Developer is not bankrupt but say they have no money.

Thanks for your reply(s). I will post a response from the MA after we have our joint Board meeting next week.

The saga continues and the pipes have not been cut, yet. We met with the MA and agreed to challenge the builder to pay for the cost to separate the two irrigation systems. The builder's rep. was on a conference call speaker phone for most of the meeting. They have a long sad story about how the original developer went bankrupt and then another firm came and went and they "did the city a favor" installing landscaping on our corner.

The MA came up with a work-around plan that will cost less than $8000. The MA has not agreed to pay for any work or any water.

The water still flows and my small HOA still pays for it.

Thank you for keeping us posted Dennis. Did you ask the MA about paying for part of the water during the negotiation process and until the issue is resolved?

I am going to a MA Board meeting this week.

At this point the pipes going to the MA landscape area have not been cut. My HOA gave them till March 7 to either make the fix, with the MA water flowing through an MA water meter, or assume the payments to the water company that we have been making for the last 5 years.

Through MA emails and messages from our management company, the MA has made their position clear. They say they are not at fault, that the builder should step up and make the fix and after the fix, the portion of water used by the MA can be measured going forward. A letter is to be drafted to the builder and jointly authored by myself and the MA President. The message to be that the builder pay for the separation of the two irrigation systems. The final draft of the letter will be discussed at the upcoming board meeting of the MA.

I agree that the MA was not at fault up to the point that they knew what was going on. The minutes of the November, 2010 MA board meeting include the acknowledgement about the hidden pipes.

Do you agree that once they knew, and did nothing to correct the situation or assume payments for our irrigation meters, they have purposefully acted in a reckless and possibly negligent manner? It has been 3 months since they admitted discovery and 6 months since it was brought to there attention.

I am not an attorney and would appreciate the help.

Hi Dennis:

Most of us on here are not attorneys and can only offer our opinions.

I’m not sure I would use the words reckless or negligent. Just as your HOA has a fiduciary duty to act in the best interest of all your homeowners, the Master Association has the same fiduciary duty to act in the best interests of all sub HOA’s under them.

However, your HOA has given them until March 7, 2011 and apparently did not include a signed document that they pay for water during this time. Therefore, now you will need to be patient until after that date.

I would suggest in the letter to the builder that it is made clear the system is to be separated with the MA having their own tie-in to the main irrigation and not off of your line. This will insure in the future all repairs to each system are separate and avoid future issues on who is responsible for any said repairs.

The pipes have been cut!!

A few months ago, the Master Association gave us a letter agreeing to pay for all of the water that they have used. None of us are sure how much $ that amounts to. It is reasonable to assume at this point, based on rough calculations, that it will be about $25,000.00 if one half of the water went to the MA area.

Last week, after our little Subdivision and the Master agreed to split the cost 50/50, the fix was made. The MA has their own water and water meters to water the landscape outside the walls of our Sub. We are on the hook for about $3500 of the cost. This was the only way the MA would move forward with the fix. The builder said "no" to every request made to come back and make it right.

To recover our portion of the expense, I plan on going to small claims court against the builder. If that fails we are still going to come out on the positive side. The MA has been using our water since January 2005.

We plan on keeping tabs on the water meters to see how much they go down. If the average usage has been X, and our new usage is Y then the difference is X-Y=$

The MA will do the same for increased water usage on two meters they tied into and they own. If there is a significant difference in the calculations we may have another argument.

We will see.