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.
Continue Reading Sued! What Should Our Wisconsin Condominium or Homeowners Association Do NOW?

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.
Continue Reading Association Successfully Recovers From Unit Owner Who Refused to Fix Leaking Air Conditioner

Husch Blackwell’s Condominium & HOA Law and Construction & Design teams defended a condominium association in a mold and water intrusion jury trial in Milwaukee County.  The plaintiffs consisted of a family of four who alleged that they had to move out of their condominium unit because of significant health injuries caused by the water and mold to the father and one of the children.  The plaintiffs’ complaint asserted claims of negligence and breach of contract.  
Continue Reading HB Aids Association in Successful Defense of Mold & Water Intrusion Suit

It has been said that insurance is the only product that both the seller and buyer hope is never used. That certainly rings true when it comes to community Associations’ insurance policies, but it does not diminish the need for Associations to protect themselves and their unit owners from an ever-widening array of damages they could suffer. Wis. Stat. § 703.17 requires Condominium Associations to obtain insurance against potential hazards, but only discusses scope by saying that the Association must acquire insurance “for not less than full replacement value of the property insured against.”
Continue Reading It’s Never Too Late to Ensure Your Association is Properly Insured

Governing Documents for Condominium and Homeowner Associations don’t age well. They are not like a fine wine.  They are more like cheap cheese.  Remember, they were likely written by a developer who really only cared about them until it had sold all of its units or lots (assume 10 years or less).  So if your documents were written before 2008, it is unlikely that they have anything in them to deal with:

  1. Emotional Support Animals;
  2. Drones;
  3. Short Term Rentals (AirBnB was founded in 2008 in San Francisco);
  4. Medical Marijuana; or
  5. Unit or Lot Owners buying insurance to cover a large insurance deductibles that could be assessed against them if their actions cause an insured loss.


Continue Reading Our Governing Documents Have Aged Nicely

In Wisconsin condominium associations are required to insure all of the property (other than the personal property) of the unit owners. (See, Sections 703.17(1) and 703.02(14) Wis. Stat).  Many unit owners worry (needlessly I would contend) that their neighbors have improved their unit more than they have and then argue that they don’t want to pay the insurance for those improvements.  Ignoring for the moment that those improvements also likely increase the value of their neighbors unit and therefore increase the value of their unit, which they are more than happy to accept, this argument simply misses how insurance companies actually insure condominiums in Wisconsin.  The law requires all of the property to be insured.  The law requires that the insurance be paid as a common expense.  (Section 703.17(1) Wis. Stat).  Accordingly, arguing over who has to insure what, considering the clear language of the statute, wastes both the time and resources of an association.  However, there is something a board of directors can do to increase the insurance it provides unit owners without any material cost to the association.  To adequately explain where these savings can be obtained, I first need to explain how insurance companies currently charge premiums and pay condominium claims in Wisconsin.
Continue Reading Free Money from your Association Insurer

It is well known that Association Board members (directors) have fiduciary duties to their unit owners and associations. It is almost as commonly known that the officers have the same fiduciary duties.  Yet associations, directors and officers are often sued for failing to meet their duties. Unfortunately, directors and officers often contribute to their risk by doing things that enhance the likelihood of suit. For fun I thought I would write this post from that standpoint.
Continue Reading 12 Things My Board and I Do When We Want to Be Sued

A fiduciary duty creates an obligation to act for another’s benefit. A board of director’s fiduciary duty is to the association and its members.  So what are the core duties of an association director?  Individual loyalty, good faith and fair dealing in conducting the association’s business, care, and obedience to follow and enforce the association’s documents.
Continue Reading Fiduciary Duties 101 – Limiting the Liability of the Board

My points below exaggerate problems that I commonly see, but the advice is sound:

  1. “Are your three brain cells still talking to each other?” Knowing how to deal with difficult people is a prerequisite to property management. Don’t aggravate a situation by making a challenging person even more difficult to deal with – this won’t solve the problem. Attempt to always maintain a professional, positive attitude. We all fail or become less than we want to be at times. Forgive yourself and others, but even in forgiveness bad actions by unit owners have consequences.
  2. “This is the insurance company/policy you should approve.” Property managers are usually not licensed insurance brokers or agents, and their recommendation may be wrong. Does your association insurance cover you for those types of opinions if they are wrong? Property managers can certainly identify options.  However, the Board, ideally on the advice of an insurance committee, should be deciding on the amount and types of coverage purchased.
    Continue Reading 6 Things Community Property Managers Should Never Say

Is your condominium or homeowners association currently controlled by the declarant/developer? Would you like to be prepared when the developer is ready to hand over the reins to you, the owners?  In Wisconsin, developer turnover is governed by Section 703.15 of the Wisconsin Statutes.  To ensure a seamless transition, there are certain steps associations should take both before and after developer turnover.

Before turnover, it is essential that you obtain all financial and corporate records of the association, all construction documents, all association contracts, as well as a complete list of the names, address and contact information for all unit owners and mortgagees. You should meet with the developer and project manager to determine if there are any ongoing issues (financial, construction, etc.).  Set up an insurance committee of unit owners to review your insurance policies.  Decide if your association is going to hire a management company and interview potential managers.  Hire a knowledgeable condominium attorney to represent the association for the turnover.
Continue Reading Turnover – Considerations for your Condominium Board of Directors and Officers