Who Pays for Water Damage

The following is an article by Rob Samouce who writes a column on LEGAL MATTERS that I read Sunday December 4th in the naples Daily News. I wanted to share it with anyone interested in finding out who foots the cost of damge to a condominium as a result of water damage. Read on....

Due to many changes in the Florida Statutes affecting condominium associations in recent years, now is probably a good time to review who is responsible for the cost of repairing and/or replacing condominium property damaged by water leaks.

The insurance provisions contained in Section 718.111(11)(f) and (j), Florida Statutes were changed dramatically.

Paragraph (f) now provides that all condominium association insurance policies issued or renewed on or after January 1, 2009 must provide primary coverage for: "All portions of the condominium property as originally installed or replacement of like kind and quality, in accordance with the original plans and specifications" plus any properly approved material alterations to the common elements or association property.

However, Paragraph (f) also states that the association policy "must exclude all personal property within the unit or limited common elements, and floor, wall and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and counter tops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and insurance thereupon is the responsibility of the unit owner.

Paragraph (j) provides that: "Any portion of the condominium property, that must be insured by the association against property loss pursuant to paragraph (f) which is damaged, shall be reconstructed, repaired or replaced as necessary by the association as a common expense."

Some exceptions are then listed in paragraph (j) such as if the damage was caused by the negligence of the owner or if the owner failed to timely reports the property loss to the association which damage or loss would then be the responsibility of the owner rather than the association.

A particular condominium association's members may vote by the approval of a majority of the total voting interests to opt-out of the provisions of paragraph (j) for the allocation of repair or reconstruction expenses and instead allocate repair or reconstruction expenses in the manner provided in the declaration as originally recorded or amended.

Any association voting to opt-out must record a notice in the public records of the county evidencing the opt-out and once opted-out an association could always vote to reverse the out-out effectively opting back in.

So, if an association has not voted to opt-out of paragraph (j) and a water leak occurs as a result of an insurable event such as a pipe break or storm damage and there was no provable negligence by anyone, the association is going to be responsible for the cost of replacing all damaged drywall in and around the unit.

Many association's insurance policies have a $5,000 deductible for water leaks, so the association will end up having to pay out of pocket up to $5,000 for drywall repair.

Many association's declarations provide that the owner is responsible for maintaining all portions of his unit and the boundaries of the units are usually the unfinished surfaces of the perimeter walls. In such cases, the owner is responsible for the maintenance of the interior drywall but unless the members have voted to opt-out of paragraph (j), the association will still have to pay for the interior drywall damage repairs because these drywalls are also insured by the association policy because they are portions of the condominium property as originally installed.

If the owners have voted to opt out of paragraph (j) and the Declaration provides that the owners are responsible for maintaining interior unit drywalls, then the owners will be responsible for the cost or repair of the damage to the interior drywalls rather than the association.

Some associations prefer to vote to opt-out of paragraph (j) in order to make their owners more responsible in preventing water leaks as the individual owners will then have a larger stake in the costs of repair from water leaks.

The question also arises as to who is responsible for the cost of "dry out" of the unit. The statutes are pretty silent on this issue.

However, because the dry out benefits both the unit owner and the association in mitigating the amount of damage to both the owner's property and the association's property, the cost of dry out is usually split proportionally between the owner and the association as to the amount of benefit obtained by each.

There are some other ways to prevent water damage in the first place. We find some of the best methods to do so is to amend the Declaration of Condominium with approval of the members to put strict negligence on the owners for the cost of all damage caused by a water leak if they do not replace their water heaters (within 10 years), utilize steel-lined washing machine hoses, replace dishwashers (within 14 years), contract for ongoing air-conditioning maintenance service, or fails to turn off the main water valve to the unit if the unit will be unoccupied for 48 hours or more.

The above are general guidelines as to how water leak damage costs may usually play out after a leak. However, because the individual facts causing leaks vary greatly, it is best to consult with your association's attorney after a leak occurs to determine exactly how the costs will be shared in a particular instance.

For additional information, visit http://www.smglawfirm.com/.