– By Laurie S. Poole, Esq. (originally published in Spring 2002)
Our office receives many questions regarding license and maintenance agreements. The use of these types of legal documents can be confusing; however, under the appropriate circumstances, they can be a useful asset to homeowners associations. The following are answers to questions we frequently receive regarding these agreements:
Q: What is the purpose of a license/maintenance agreement? Is it just for architectural improvements?
A: Generally, the purpose of this type of agreement is twofold: First, it enables an association to allow a homeowner to use part of the common area (the “license” portion) when appropriate circumstances warrant (e.g., for installation of a satellite dish on a common area element) without the necessity of selling the common area to the owner (which may, under the association’s CC&Rs, require approval of the membership or lenders). Second, it sets forth the requirements under which the license is granted, such as specifying that the owner is now responsible for the maintenance and repair of the affected portion of common area.
These agreements are not necessarily limited to architectural improvements, however, they are more commonly utilized in conjunction with a proposed architectural alteration.
Q: What should the scope of a license/maintenance agreement include? i.e. all improvements contemplated or just those that affect the common area?
A: Because the association is granting an owner the right to use a portion of the common area, the scope of the agreement usually concerns only the affected part of the common area. However, if the owner’s proposed improvements on his or her own property may have an impact on the common area, it would be prudent to include provisions to specify the owner’s responsibility with regard to that potential impact.
Q: What, if any, is the difference between a license and a maintenance agreement?
A: If the purpose of the agreement is to allow an owner to use a portion of the common area, it must include a “license” or “easement” to use that property because that is the mechanism which legally allows the owner to use that property. If the agreement is to clarify maintenance responsibilities in conjunction with an owner’s proposed architectural, landscape or other improvements on his or her own property, it does not need to include the license or easement portion.
Regardless of which type of agreement is used, all license and/or maintenance agreements should include appropriate language regarding indemnification. Generally, the owner agrees that he or she will protect and defend the association in any legal action relating to the owner’s use and maintenance of the affected common area.
Q: Why is it necessary to record a license/maintenance agreement on the property?
A: Because the agreement involves legal rights to real property, it is necessary to record the agreement with the office of the county recorder to put all potential third parties (including prospective purchasers) “on notice” that the license exists and the terms upon which it was granted. Although most license/maintenance agreements are revocable, it is necessary that all third parties be aware of the terms prior to revocation.
Q: Can I use the same license/maintenance agreements for different owners and different situations without review by legal counsel?
A: Although the agreements appear to be very similar, it is not prudent to use the same agreement for different situations. First, there may be reasons to distinguish whether it should be a license or easement agreement. Second, the maintenance terms will vary on a case-by-case basis. Third, the agreements will have different legal descriptions and different descriptions of the property affected. Fourth, it is always wise to have legal counsel review any documents that are legal in nature, affect legal title to property and shift legal liability from one party to another.
As indicated by this brief question and answer article, these agreements can be very helpful to an association. For owners who install landscaping in the common area, to owners to install a pool or fence in the common area, these agreements can “legalize” the installation and protect the association from potential liability. If you are facing a situation which might benefit from a license and maintenance agreement, feel free to contact our office for a review of the situation.