flooded basement who pays

We recently had 3 units in our association experience flooding in the basement. By-laws indicate that co-owner responsibility is from from cement block in.
Co-owner's basement was finished drywall and carpet, also (full of antiques of substantial value) Co-owner claims that since block walls failed, the association is responsible for not only waterproofing basement but for all losses experienced. I, as board president, do not see it that way and believe that if the association waterproofsas, and brings the unit back to original conditiopn, the finish and contents are the co-owners loss.

Feedback please

Our condo association sounds like yours, Roderick. Our HOA insurance would cover repairing/replacing the walls, but not the Owners' contents. Your CC&Rs (but you say, your Bylaws?) tell you what kind of insurance your HOA has.

The owner, in any case, should not be relying on you, the president, for anything. He should bring his request to the Board. The Board as a whole gets answers from your insurance agent if your CC&Rs and insurance policy are not clear.If you have a community manager, generally, they would handle this Owner's concerns.

Our condo bldg. has underground parking & storage lockers in large rooms. Signs are posted, our CC&Rs and our Rules & regs make it very clear thr owners are responsible for items in their storage lockers. But at least once a year, an owner wants reimbursement for precious stuff in their lockers that water leaks have damaged. My understanding is that the only way the Owner could collect form the HOA's insurance would be if the Owner can show that the HOA was negligent by failing to repair a known leak or other issue that caused the damage.

This will also depend on what types of inclusions, addendum and riders the "co"-owner has. If you don't have coverage in your policy to cover antiques,
the insurance adjuster or certified public adjuster will treat any lost or damaged belongings as regular furniture.

Rod it is not a she/he/you say issue. It it is an insurance/legal issue. The damaged person(s) should file an insurance claim with their insurance company which will begin subrogation which is insurance company against insurance company to find out who pays.

Quite often a damaged party will as why do I need to involve my insurance company when I am not at fault? Well, that is the way the insurance "game" is played.

John is correct. Sometimes an owner will refuse to submit a claim to their insurer, thinking that the association will be stuck with the repairs. Nope - it's who pays for what according to the insurance policies.

Condo insurance (HO6 individual policies and master policies for the association) is designed so that there are no gaps in coverage. It's why insurance agents ask condo owners to provide a copy of their CC&Rs - so that the HO6 policy will provide enough coverage.

As I'd mentioned above, there are basically two types of master policy in condos: all-included and bare walls. The CC&Rs will state which kind your association is required to have.

All-included will cover certain repairs to individual units in the event of an insurable event. Picture the condo as a box, and flip it upside down. Anything that falls will be owner belongings and will not be covered by the master policy - things that don't fall (cabinetry, plumbing fixtures, drywall, flooring, etc.) will probably be covered. Note: the master policy will restore the unit *to its original condition*. It will not cover upgrades the homeowner made after purchase. If the homeowner replaced their laminate countertops with granite and their vinyl flooring with tile or hardwood, the insurance will pay for laminate and vinyl.

Bare walls insurance will not cover repairs to the unit - that's on the owner, which is why their individual condo policy has to cover the additional items.

The board won't be the one who decides or negotiates with the owner - the insurance companies will. They're the professionals, let them do their jobs. If the association takes on any repairs that they're not responsible for, this can create a liability issue and problems in the future. I agree with not talking to the owner about it until the insurers have sorted things out and you're ready to schedule the work. The owner is potentially an adversary at this point, and the board/community manager should not be speaking out of turn.

We invited our insurance agent to attend a board meeting and give a presentation about how condo insurance works. It was really helpful.

One of the questions I asked was whether or not insurers looked at who is at fault, since many condo owners believe that if the source of the problem was in the common areas (ie. a pipe that burst), then the association is required to pick up the entire cost of repair.

Not so, he told us. It's strictly who pays for what according to the policies. In fact, an insurable event is often defined as an event, loss or damage for which the Insured/Insured Person is entitled to benefit/s under the Policy.

I know we've discussed negligence before, and that's a different issue. An insurable event is usually not preventable through normal prudent maintenance. So if a tornado causes a healthy tree to fall onto your home: insurable event. But if a dead or dying tree falls onto your home, then you can make an argument for negligence since the owner of the tree should have been doing something about it.

Insurance policies often have exclusions for things like deliberate or negligent acts. So that's one reason these things are treated differently and why they can get complicated. (It's also why people should read their policies carefully.)

Another example the insurance agent discussed was a leaky roof that results in water stains in a condo ceiling or even mold if the leak isn't found for a few years. This situation is not an insurable event - mold in condos is nearly always a maintenance issue since it can take some time to make its presence known (in my part of the country it's about 4 years - ask me how I know this). In this situation the association would pay for repairs to the roof and any clean up of the common elements (eg. mold on the framing, which is a common element per my CC&Rs). The unit owner would be responsible for mold remediation and repairs for the items that are defined as part of the unit (eg. drywall and insulation).

Our agent said that condo insurance can get pretty complicated and that even the pros scratch their heads sometimes. This is why it's usually a good idea to let the insurance companies sort things out when there are damages involving multiple insured parties.

In deciding how to handle this, I would first consider negligence (fault, liability) and get that out of the way.

Was the association negligent? Did the association know or should have known that the basement would flood? Was there any advance warning, such as these units or other units that flooded in the past? Was the association negligent in maintaining the block wall? Was there any advance notice that repairs or more external waterproofing was required?

If the answer to any of these questions is yes, then than the association was likely negligent, and is liable to pay for all of the damages (including antiques). The association should have taken reasonable steps to protect the property (more waterproofing prior to the incident). If the answer is no, then likely the association was not negligent and is not liable to pay for drywall, belongings or any damages to the unit.

The association is not automatically responsible to repair the owner's drywall (or pay for personal property, antiques) just because the block walls failed or there was a flood. The association only has to pay for extra damages if the association was at fault through negligence (or if there was insurance covering the units). If the association was not at fault, then the association only pays for the common elements (unless the association has extra insurance on the units).

By the way, your insurance is a packgae of different coverages that will include coverage for liability, which will usually pay for all of these damages if you were negligent (not including certain exclusions and insurance company notifications to your association). So, while your property damage coverage may not cover this, your liability coverage may cover it. If you have any question that you might be liable, then put in a claim under your liability coverage.

If you can answer these questions, I'll try to post more later on the other issues.

Yes, but now that it has happened this one time, you need to make sure that it does not happen again. If it happens again, your association may be considered negligent for not taking steps to inspect, evaluate and prevent it from happening again.

When there is no negligence or fault on the part of the association, and no insurance available, then the main principle (which should be in your governing documents) is:
--the association repairs the common elements, and
--the owner is responsible for repairs and damage to their unit and their own property.

This covers the majority of repairs in a condominium, because the association is not usually negligent and many associations have a high deductible so there is effectively no insurance. By the way, this is how most property damage is handled: if there is no fault, then everyone pays for their own damage. Cathy gave the example of a tree doing damage. By the way, this also covers a common pipe that breaks unexpectedly.

So you stick to the common elements. The association pays to fix the block wall (assuming that is a common element), and the owner fixes everything else.

When hiring the emergency service people, you have to make it clear from the beginning that the association will only pay for work concerning the common elements and the owner has to pay for everything else. This propably means that the owner has to agree up front to pay, or else the company may not start work. Most of the damage is typically in the owners unit, (wet walls, wet carpet, etc), so the owner has to pay for most of the remediation.

Your condo declaration probably has provisions that allow the association to take on repairs to a condo unit and send a bill to the owner. Look in your documents for that authority. This means that you can bring in the emergency company and work out the payment later, but it's obvioiusly better to get advance approval from the owner.

You may have to remove the owner's drywall in order to access the block wall. If the drywall needed to be replaced anyway, then you can push the cost of replacing the drywall onto the owner, which they won't be happy about. Some condo declarations will have a provision that if the association does damage to a unit when making repairs (like cutting a hole in drywall), then the association must repair the damage. Removing bad drywall is not doing damage. Removing good drywall is doing damage.

In other cases of costs that overlap (e.g., to remove furniture, which helps both the association and the unit owner), then you just have to be reasonable and share the cost. Work it out, but don't spend the association's money irresponsibly just because the owner is a big complainer.

Damage done by repair crews should be paid by the service company.

Sorry, "restated" CC&Rs.