Who pays when water from one unit floods another unit?
Q. A resident of a condominium unit on the third floor of our building fell asleep while filling a bathtub. As a result, the tub overflowed and damaged the drywall ceiling and walls of the unit below. Who is responsible for this damage.
A. The Association’s property insurance should be triggered to pay for damage to the drywall to the primer coat. The owner of the damaged unit would be responsible for damaged wall covering (wall paper/finish paint), and would make a claim with their insurance company.
That said, with respect to the deductible portion of the Association’s property insurance policy, the board may, in the case of a claim for damage to a unit or the common elements, (i) pay the deductible amount as a common expense, or (ii) after notice and an opportunity for a hearing, assess the deductible amount against the owner who caused the damage or from whose units the damage or cause of loss originated, or (iii) require the unit owners of the units affected to pay the deductible amount. So, the owner of the unit who caused the damage or from whose unit the damage or cause of loss originated could be responsible for the association’s deductible under alternative (ii).
Q. I recently purchased a unit in a condominium. I received a large amount of documents in connection with the closing. One of the items in the 22.1 Disclosure caught my eye in particular. It is captioned: “statement of capital expenditures anticipated by the unit owner's association within the current or succeeding 2 fiscal years.” It goes on to only state that “Capital expenditures are described in the approved budget.” The budget was not provided. Is this a sufficient response?
A. Among the various matter to be described in the 22.1 Disclosure is “(a) statement of any capital expenditures anticipated by the unit owner's association within the current or succeeding 2 fiscal years.” There are issues with what you were provided.
The statement provided in the 22.1 Disclosure here is essentially nonresponsive. The current budget could only speak of capital expenditures for the current year. Further, if the 22.1 is going to refer to the budget, that budget should be included with the 22.1 Disclosure. Further, the statement includes no detail with respect to the succeeding two fiscal years. That a future approved budget would include capital expenditures does not meet the requirement that anticipated capital expenditures be described in the 22.1.
Too many associations do not adequately prepare, review, update their 22.1 Disclosure. This can unnecessarily expose the association to liability for incorrect information.
Q. The bylaws for our association provide that a board member can only be removed “for cause.” What is considered “cause?”
A. Cause generally refers to the reason(s) why a board member’s removal is being sought. Examples, but by no means a complete list, of “cause” may be misconduct, breach of fiduciary duty, dereliction of duty, poor performance, or inability to perform. Note too that if a director is being removed for cause, the director should be given an opportunity to present their story at the meeting before a vote of the owners is taken.
Removal of a board member is typically a last resort, when other informal means to bring a board member into line have failed.
Q. At a recent board meeting, our common interest community association president said she was only going to vote if there was a tie. Can you please clarify the president’s responsibility as a board member to vote?
A. The president of is a member of the board and has a fiduciary duty to vote on matters that come before the board. The only time the president should not vote is if they have a conflict of interest, or if there is a legitimate reason to abstain.
This notion that a board president only votes to break a tie is generally due to a misapplication of municipal law to the association setting. Notably, in the municipal setting, the president is not a member of the city council. In the association setting, the president is a member of the board.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.