What Is the Affidavit of Non-Liability?
An affidavit of non-liability is a signed written statement submitted by the owner of the property or the person with a legal interest in the property under which the individual states that he or she will not be held responsible for costs associated with construction of improvements on the property. Such affiliated are used at the request of the contractor (or bonded subcontractor in the case of a bonded subcontractor) who holds the contract to build on or improve the property.
The California Contractors State License Board has a downloadable "Affidavit of Non-Liability" form available on its website. The form can be eo either for the owner of the property or an individual with either a future interest in or a legal or equitable ownership interest in the property . Contractors may ask property owners to sign such an Affidavit to ensure the owner’s express consent to construction or alteration of the property. Importantly, an Affidavit of Non-Liability does not eliminate the owner’s fiduciary duties to be fair, reasonable and non-discriminatory in dealing with the contractor.
An owner might wish to avoid personal liability for costs of construction on the property, or might simply wish to record his or her non-consent to construction of the improvements on the project. There are also other circumstances where a property owner and a contractor may wish to use an Affidavit of Non-Liability.
When To Use Affidavit of Non-Liability In California?
When to Use an Affidavit of Non-Liability in California: A Closer Look at Its Practical Application
While the use of an affidavit of non-liability can be an essential step in resolving potential liabilities, there are specific circumstances that dictate when this form is utilized in California. The most common scenario for the completion of a non-liability affidavit involves motor vehicle accidents. In such cases, if a driver believes they are not liable for damages caused in an accident, and the other party involved is likely to seek compensation, the non-liability affidavit may be required. Other instances where an affidavit of non-liability may be necessary include property-related liabilities, such as those resulting from property damage or destruction. For example, if one party damages or destroys another party’s property, and a claim for damages is likely to arise, completing an affidavit sworn to under penalty of perjury may be important to avoid remittances on the claim. The affidavit of non-liability may also be used in various business and commercial transactions, where a party may be found liable for a loss or other liability that they do not actually owe. For instance, in the case of a joint venture agreement, partners sometimes agree to assume one another’s debts and liabilities. This may be a key scenario where a sworn affidavit of non-liability comes in handy. In short, a non-liability affidavit can be a useful tool in a complex network of transactions, where unforeseen liabilities may arise. It can also help one party to avoid bearing the brunt of another party’s mistakes, or to prevent claims based on an unequal distribution of liabilities.
How To Complete the Affidavit of Non-Liability Form
In California, a standard affidavit of non-liability form is a simple one page document. The sections of the form you’ll encounter are:
1. Party’s Information.
Most affidavit forms contain party contact information at the top of the form. Some examples of the party’s information are name, address, phone number, and email address.
2. Description of Incident.
This is where you will describe the incident or property that you were accused of being a tenant of. At a minimum, the description should include the street number, street name, city, and state. The description may also include the zip code, county, parish, or other information such as Unit 4C, apartment number, or similar information for shared buildings.
3. Affiant’s Signature.
The affiant is your actor under the affidavit, and is the person executing the form who should be the alleged victim of the wrongful nonpayments. The affiant is different from the signee, who is the person executing the form on behalf of the alleged victim of the wrongful nonpayments. The form will have space for a signature, printed name, and title for both the affiant and the signee.
4. Notary Seal.
Depending on the form you complete, the affidavit of non-liability may either be notarized or undelegated. This difference is due to decisions made by the maker of the form.
Legal Implications Of Signing An Affidavit of Non-Liability
While affidavits of non-liability are a way for homeowners to prevent homeowners’ association assessments being levied against their property, they come with risks and consequences. "Although [the affidavit] eliminates personal liability, it does not preclude associations from levying special or regular assessments or special liens against the property," advises Janet A. Teichner of SwedelsonGottlieb, a firm that specializes in community association law in California. "Associations are still permitted to foreclose on the property to recover those amounts."
Surprising as it may seem, not all lenders will allow the use of an affidavit of non-liability form. "Some mortgage lenders will not permit the use of the affidavit, nor will they provide a Certificate of Title," notes Kenneth Holly, HOA attorney of HOA Resource, director of the Elite Community Management Association (ECMA), a national non-profit organization that serves managers and executives in the community association industry. "Mortgage lenders take the position that they do not wish to be subordinate to the association as a lien creditor."
Another potential negative outcome of signing an affidavit of non-liability can stem from its wording. A poorly written affidavit can place the signer at risk for legal action from the homeowners’ association due to the unwanted impression of the signer’s liability. "A common mistake is a Lender refusing to sign an affidavit intended to eliminate all liability when only a homeowner’s association liability under CC&Rs is to be eliminated," explains Holly. "The result is the affidavit will not achieve the desired objective of eliminating the liability for association assessments."
Lack of understanding of prior liens can also spell trouble for homeowners who sign an affidavit of non-liability. "An Affidavit of Non-Liability form does not eliminate any other liens on the property," warns Teichner. A mortgage lien, an association lien, and other superior liens in priority are still valid and exist, and an affidavit does not freeze or shorten the period of time that they are valid."
Finally, although an affidavit of non-liability is designed to have a positive outcome for the homeowner, it doesn’t always work and can have unpleasant consequences. Teichner explains that an affidavit form may be executed when there is a pending application for foreclosure. However, the association has until the close of escrow to file its prior assessment lien and be assured of payment from the sale proceeds. Unfortunately, if the homeowner signs the Affidavit here, the homeowner may be liable for both the regular and special assessments during foreclosure as well as late fees and attorney fees from the time the lien is recorded to the date of sale.
Holly shares a similar warning. "If the seller or buyer creates a lien situation over and above an existing mortgage mortgage lien, then all lien creditors become necessary parties to that mortgage foreclosure action," explains Holly. "If the lien creditor is judged to be subordinate to the mortgage lien, then only the mortgage holder is required to be notified of the sale of the property."
Common Pitfalls To Avoid
Despite how simple this form may seem, there are pitfalls that could affect a case. Here’s where litigants frequently run into problems and how to avoid them:
Mistake #1 – The form is incomplete
In California a mistake or omission on the Affidavit of Non-Liability form is not a basis for finding the plaintiff liable. Nevertheless, it defeats the purpose of the statute, which is to encourage a dialogue between the homeowner and the secured creditor to inform them that there is a dispute.
The law states that the secured creditor must respond to the affidavit within 4 days of receipt and provide the homeowner with contact information of someone who can explain the debt. If the creditor fails to do so, then the obligor is protected from liability in the action in which the affidavit is submitted.
Mistake #2 – Ignoring the deadline
A party who lacks personal knowledge of a fact that is material to the case should object to that evidence and not simply ignore it. Homeowners must file an Affidavit of Non Liability within 45 days of entering into a "Contract of Sale" to avoid personal liability in a fraud action.
A home buyer who executes a purchase agreement having no knowledge of the deceptive nature of the sale and who later acquires actual knowledge of its truth, should promptly file the Affidavit . Otherwise, they are foregoing an opportunity to protect themselves from liability.
Mistake #3 – Using the wrong form
California Civil Code Section 1714.10, requires lenders, sellers, brokers and agents to file an Affidavit of Non-Liability when sued for fraud or wrongful conduct in connection with a residential property sale. Often this type of case arises when a bank forecloses on a property and the new homeowner discovers something negative about it, such as a prior hoarder, or over-valuation, defects, or liens against the property. If the buyer lives in California, they should file in the right county where the case is pending. Some people who have property in more than one state mistakenly file in the wrong state. Be sure not to file in Federal Court unless there’s a federal cause of action.
If the Affidavit form is filled out incorrectly, it will be dismissed. This is especially true of the last sentence which, by mistake, is frequently omitted. The affidavit must contain a statement that the affiant "..will thereafter indemnify and hold harmless the plaintiff from all loss, costs and expenses, including attorney’s fees, in accordance with the provisions of Section 1714.10 of the California Civil Code."
Where To Find a California Affidavit of Non-Liability Form?
If you’re wondering where you can find a California Affidavit of Non-Liability form, take a look at the official Orange County website. On this resource page, you’ll find a downloadable form (CS-1) for both Hazardous Substances and Non-Liability that you can use to report leaks, spills, and other hazardous substances.
Alternatively, call or visit your local county’s health or environmental organization. Many of these offices will have a copy of Form CS-1 available in person or online. They may also provide more information if you have questions about the form or how to fill it out.
Consult With a Legal Expert
If you are ever unsure about whether to sign or fill out an affidavit of non-liability, it is a good idea to consult a California construction lawyer. A legal professional can review the document in question and ensure that you are not opening yourself up to liability for a potential work or service that you did not agree to perform . In addition, the lawyer will be able to advise you on how to fill out the form properly if you choose to. Lastly, if there was a prior contract with the company requesting the proposed work, the lawyer will be able to review it and give you legal advice on the language and details of how the work fits into the contract terms.