Summary

An insurance company can’t sue a condominium tenant in subrogation, even if they were negligent in starting a fire.

The Facts

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

When you are headed down the wrong path – TURN BACK.  This applies to owners and associations when they act on their belief of what their documents say, but then learn that their understanding may be wrong.  Often parties who make a mistake, or learn that they might have made a mistake, refuse to reevaluate their situation and at least allow turning back to be an option.  Such appears to have been what happened in the recent case of Fritz v. Lake Carroll Property Owners Association, Inc., (2019 unreported case out of Illinois) where the association passed a rule that required inspection and pumping of the owners privately owned septic system every four years and that if an owner failed to follow the rule they would be fined $250 and $25 per day. 
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Frequently we are asked about either inconsistent association documents or advised that although our documents say X we have always done Y so won’t our past precedent control? The answer is NO.  Your documents control.  You must follow what your documents say, unless there is something in them that is illegal or against public policy. This same point is continually stressed by the courts around the country.
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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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The answer to the question of when are fees unreasonable is simple: when a court says they are.  Fairfield Ridge Homeowners Association (association) is an HOA in Ohio.  The association entered into a management agreement with Elite Management Services, Inc. (EMS) to manage the association, including providing closing certification letters to sellers just before the closing on a sale.  EMS charged a unit owner $395 for these letters along with a $100 fee if they needed expedited service.  The association declaration provided that a “reasonable charge” could be assessed to a unit owner for these letters.  Ms. Barger viewed the $495 in charges as unreasonable and filed a class action suit against EMS.
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