Do you know for a FACT that your condominium association or HOA has all of the insurance the law requires you to have? Learn about the insurance coverage your condo or HOA should get in less than a minute.
Want to learn more about Wisconsin condominium and HOA law from experienced condo and HOA
How much insurance should your HOA or condo carry? Are your directors and officers covered? What happens in the unlikely event of a disaster? Please join Husch Blackwell’s Condominium and HOA Law Team and guest speakers Erica Joyce and Ryan Maloney, as they discuss critical insurance issues every board member, manager and unit owner needs to understand.
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An insurance company can’t sue a condominium tenant in subrogation, even if they were negligent in starting a fire.
The Declaration required the association to “obtain and maintain a … policy of all risk property insurance” for the association. The Declaration also required the policy to name as insureds the unit owners and their bank mortgage holders (Mortgagees) and that “any insurance maintained by the association shall contain [a] ‘waiver of subrogation’ as to the Units and Mortgagees.” Finally, the Declaration also prohibited the owners from obtaining fire insurance and required all occupants and tenants to comply with the Declaration.
One of the unit owners leased its commercial unit to the tenants (Defendant). The lease did not specify who would carry fire insurance.
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Facts: The facts in the case of Forrest v. The Ville St. John Owners’ Association, Inc., No. 2018-CA-0175 (La. Ct. App. Nov. 7, 2018) are straightforward. In March of 2016 there was a fire. It damaged common element and the Forrest unit. The Association had two insurance policies: one for Property and one for Community Association Management Liability Coverage. The Property policy was issued by Lloyd’s of London. Lloyd’s paid on its policy, for both the common element and unit damages, but the funds were insufficient to repair the common elements and the unit. So the Association repaired the common elements.
Trial Court: The unit owner, Forrest, filed suit against the Association alleging breach of fiduciary duty and various other claims under state law.
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IMPRESSION: The ruling in Great Am. Ins. Co. v. State Parkway Condo. Ass’n, No. 17-cv-3083 (N.D. Ill. Sept. 11, 2018), should serve as a cautionary tale to Condo and HOA boards.
DETAILS: In Chicago, a unit owner of a condominium located at 1445 North State Street filed an Illinois state discrimination claim in 2007 against the State Parkway Condominium Association (“SPCA”) for failure to accommodate his hearing disability during SPCA Board meetings. The SPCA defended the claim under its 2006-2007 Non-Profit Management and Organization Liability Insurance Policy (“policy) issued by Travelers Casualty and Surety Company of America (“Travelers”).
A settlement between parties was reached in September 2007; but six months later, the SPCA sued the same unit owner in an entirely unrelated matter.
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Issue: If your association was destroyed by fire or some other hazard, and it did not make sense to rebuild, how would the funds be divided?
Problem. Odds are that you don’t know the answer. The fact that you don’t know should scare you. Is every unit in your association worth the same amount? I doubt it. Do you each pay the same amount in assessments? Does that control? What does your declaration say about the distribution of insurance proceeds if the unit owners elect not to rebuild? Do you understand what it says? Does it even make sense?
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In Illinois, a Court recently ruled on a Condominium Association’s attempt to charge back an insurance deductible to one of its members (Gelinas v. Barry Quadrangle Condominium Association, 74 N.E.3d 49 (2017)). This particular association had a fire originate in an owner’s unit resulting in damage to not only the specific unit, but the entire building. The Association made a claim with its insurance company and received reimbursement for the necessary repairs to be made. The Association then held a hearing and levied an assessment against the Unit Owner in whose unit the fire originated.
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This issue arises more than one might suspect. Because of association apathy, many committees go unfilled and often even boards don’t have members. The results of this apathy could be much different than you would expect.
Facts. In a 2017 case, the relevant property “was subject to a 1996 restrictive covenant that required the approval by an architectural control committee [‘ACC’] before any building … could be erected.” The ACC consisted of two named persons within the documents, one of which was dead and the other refused to act. The owner of the property filed a declaratory judgment action seeking to have the court declare the covenant unenforceable based on impossibility of performance. Other property owners objected, claiming the covenant could be made enforceable by modification. The documents did not provide a means by which new members could be added to the ACC.
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Condominium associations and homeowner associations are sued every day. These suits can arise based on construction claims, contract claims, negligence claims and various alleged statutory violations – We all know about the Fair House Act! Or the Wisconsin (or whatever state you are in) Consumer Act! Associations seem to attract people who feel that they are entitled to something because they now live in an association. Of course they are entitled to what the law and documents allow them, but for some that never seems to be enough. Often these types of owners or residents make up stuff or read the internet until they find some article or statement that supports their point of view and then cite it as fact. Yes, we have all dealt with those people. However, despite the validity (or lack of validity) of any lawsuit, there are some basic steps that every association should follow once served or notified of a suit.
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Water leaked through a bedroom ceiling in a downstairs condominium unit causing a small amount of damage and a significant amount of inconvenience for the owner. Approximately one year earlier, a similar event took place as a result of a frozen condensate line in the upstairs unit owner’s air conditioner, which caused water to back up and drip down through the floor into a common area between the floors and then through the ceiling of the lower unit, causing some of the ceiling drywall to fall. When part of the ceiling fell a second time, the association installed a drip pan that would automatically shut off the air conditioner if the pan filled. The total cost was less than $300. When the association sought to recover the $300 from the upstairs unit owner, he denied liability and claimed that the problem did not arise from his air conditioner, but from the duct work that ran between the floor of the upper unit and the ceiling of the lower unit, and that responsibility for the problem fell on the association.
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