Whose responsibility to repair the apartment?

Question

Hi all,

Hope you are all safe and healthy!

I own a small condo in NYC. The building is undergoing some major renovation. A few weeks ago the pipe had a leak that was so significant that it dampened two walls and the floor. Now the floor is buckling, causing furniture pieces to wobble, etc. My tenant at this point is really concerned and frustrated. So am I.

The building is taking action to fix the wall. However, it is made clear that the floor won't be covered since the floor was not original. I found this rule very awkward. I thought the liability is pinned down due to who caused the damage instead of whether something was in the building or not when it was built initially. But I could be wrong.

Who should I talk to in order to get some compensation for the repair cost? My insurance company? Again, I thought in this case the insurance company for the building should kick in... Will talking to the board be helpful?

A related question is that if the building is only responsible for the things originally built, does it mean it won't cover any even if my appliances were flooded? What if my tenant got tripped by the buckling floor?

Any insight is sincerely appreciated!

Sincerely yours,

Sai

Account Closed · Answer

Condos... get the best of both worlds. The responsibilities of an owner with the association controlling your freedom.

Jonathan R McLaughlin · Answer

@Saikhantal Yu this will almost certainly be on your insurance. Be sure to learn and memorize the phrase “ensuing damage”

At the risk of oversimplifying, lots of insurances don’t cover water/flood damage but they do cover many damages caused by the water or flood.

Sound wacky? Yup.

Bo Bond · Answer

Sai,

Before entering my current position, I spent the last 13 years selling niche products exclusively to community associations (HOA's, Condos, Townhomes, Co-op) all over the country.  You MUST read the "insurance section" of your condo's governing documents to find out exactly who's responsible for what when property damage occurs.

99.9% of the time, the policy that insures the damaged item is the one that pays at the time of the loss.  Liability is rarely an issue when you have resulting property damage because it would take months to battle out who's actually responsible in court.  The unit/s would remain damaged with no parties making payments of fixing anything if everyone's pointing fingers at each other and waiting on a legal determination.

Best case, everyone files a property damage claim and allows their various carriers/adjusters to decide who pays what, and how much.  The condo community's carrier would pay their part, your carrier (as owner) would pay your part, and the tenant's carrier would pay for their part (typically any damages to their personal property).  If the damages you're responsible for are less than (or slightly more than) your applicable deductible, then I'd suggest you hold off on filing a claim.

Condo insurance is actually written in 3 different ways, and again, should be well defined within the "insurance section" of your condo's governing documents.  DO NOT read "maintenance" responsibilities.  Maintenance and Insurance are two very different responsibilities when it comes to condos.  They should never be comingled.  Below are the 3 types of condo insurance today.

Bare Walls - When condos first became a thing (1960's), this was the main way to write condo insurance.  To keep things simple, in this style of coverage, the condo community would be responsible for insuring every building and unit back to its "bare walls".  This means framing, brick, HVAC, electrical, plumbing, slab, and sheetrock is all the condo community is responsible for.  So, as the owner, you'd be responsible for items like texture, paint, flooring, lights, switches, cabinets, countertops, toilets, tubs, appliances, etc.  Essentially, you must completely finish-out the unit.  The tenant would ONLY be responsible for insuring their personal contents.

Original Design (aka Single-Entity or Walls-In) - This has become the "most common" way to insure condos over the past 10-20 years.  In this style of coverage, the condo community's policy would pay for damage to any building and unit back to its "original design" or finish-out by the developer.  As you can imagine, most developers build the condo building and finish out the units so they're move in ready.  In this scenario, as an owner, you'd ONLY be responsible for the cost difference in "upgraded, bettered, or added" items within your unit.  Yes, as an owner, you would be responsible for insuring the cost difference in any upgrades made by prior owners.  Just keep in mind, replacing an item (carpet) in your unit with something similar in nature is "not" an upgrade.  The tenant is still ONLY responsible for their personal contents.

All In (aka All Inclusive) - This is the highest level of condo insurance in the marketplace.  In this style of coverage the entire building and all units are insured by the condo community's policy back to it's "pre-existing condition".  This INCLUDES ALL upgrades, betterments, or additions made within the unit.  In this type of coverage, there's really nothing for the owner to insure from a property damage point of view.  Everything in the unit is fully replaced by the condo's policy, and the tenant is still ONLY responsible for their personal contents.

I hope you find this helpful, as this can be a very confusing issue for investors, owners, tenants, and even condo boards and community managers.  If you have any more questions or issues, let me know.

Jason Brown · Answer

I've got a couple condos. Typically a condo association's master policy covers everything WALLS OUT meaning if the damaged is to any part of the exterior of the building then it would fall upon the association to cover that repair via either direct expense or insurance claim. If the damage is WALLS IN then it would fall upon your HO6 policy to recover the costs.

The issue is not so much who or what inflicted the damage as it is WHERE exactly the damage was inflicted.

That determines the party responsible for repair. Now if this was directly caused the association's renovations then perhaps you could at best, try to negotiate with them for compensation or at worst, file suit against them. However in the end they may just stand their ground on the argument that your insurance policy bear the primary responsibility seeing as how it is unit damage.

Bud Gaffney · Answer

@Saikhantal Yu yours.

Saikhantal Yu · Answer

They meant that the building doesn't OWN the floors so they won't repair or cover the cost like they will the wall.

To me, it's such a fallacy. I don't own your car but it doesn't mean I could just walk away after damaging your car.

Is it true that I will have to pay for it out of my pocket initially anyway, even if my insurance will reimburse me if the cost exceeds the deductibles? I'm trying to get the building to do it instead of me getting a contractor, etc. But then I have to get into chasing the management team, arguing about my rights, etc.

This is why I've been curious if the board will act on behalf of my best interests. I haven't reached out to them yet.

Bruce Woodruff · Answer

Yes, get an estimate of your own asap. I am not an Insurance agent, but I don't see why the floor wouldn't be covered just because it is 'not original'. Does that mean original to the building? Or what exactly? This sounds like a typical insurance company loophole, and I would push back big on this one.

Saikhantal Yu · Answer

Thank you very much for getting back to me, Joe!

Can I follow up by asking that if the estimated cost is no more than the deductible, i.e., I will have to pay for the 100% of the cost unless the building is pushed to compensate, will I be left alone to fight with the building then? Will the board advocate for me in this scenario?

And can I send a contractor to generate an estimation ASAP before the insurance company could send anyone on-site?

Thank you very much for your time again!

Joe Martella · Answer

I would call my insurance company and let them fight it out.  The tenants should put a claim with their renters insurance for their belongings that were damage.

I would want the repairs done as quickly as possible.  That is what I would do.

Whose responsibility to repair the apartment?

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