The law governing condominium insurance requirements, which changed in 2008 as a result of a court decision, has changed again as result of amendments to the Maryland Condominium Act effective June 1, 2009. During the last legislative session, the Maryland General Assembly took action on the issue in direct response to a 2008 Court of Appeals decision concerning the allocation of responsibilities for property damage between a condominium council and the individual unit owners. The new law establishes that the condominium master insurance policy must cover all of the building elements, including the units, except for improvements installed in the unit by the owners after construction. However, where the damage originates in a unit, that unit owner is responsible for any insurance deductable under the council’s policy, up to a maximum of $5,000.
Section 11-114 of the Maryland Condominium Act has long imposed a specific duty on a council of unit owners to maintain “[p]roperty insurance on the common elements and units, exclusive of improvements and betterments installed in the units by unit owners,” along with general liability insurance. In response to this requirement, it was common practice for councils of unit owners to obtain insurance coverage for all elements of the condominium as originally constructed by the developer, including the units, with individual unit owners insuring improvements to the unit not provided by the developer, along with insuring personal property in the unit.
Section 11-114 also provided that any deductable applicable under the property insurance policy was a common expense of the condominium, regardless of whether the cause of the damage originated in the common elements or an individual unit. However, it authorized that the condominium’s bylaws could provide for a unit owner to be responsible for the deductible, if the cause of the damage originated in their unit, but only up to a maximum, initially of $1,000, and then increased to$5,000 by a 2008 amendment.
Then along came the Court of Appeals decision in Anderson v. Council of Unit Owners of the Gables in Tuckerman Condominium, 404 Md. 560 (2008).. The Court granted certiorari to consider two consolidated cases, one arising at The Gables on Tuckerman Condominium in Rockville, and the other at the Bridgeport Condominium in Laurel. In the Rockville case, a leaking water heater within a unit had caused damage to the unit, without damage to any other unit or the common elements. In the Laurel case, a kitchen grease fire caused the sprinkler system to activate, damaging the unit, but, again, causing no damage to other units or the structure. In both cases, the unit owners sued the condominium council to recover the costs of repair.
Interpreting Section 11-114, the Court of Appeals noted that Section 11-108.1 of the Condominium Act provides that, unless otherwise specified in the declaration or bylaws, “the council of unit owners is responsible for maintenance, repair, and replacement of the common elements, and each unit owner is responsible for maintenance, repair, and replacement of his unit.” It ruled that the council’s insurance requirements under Section 11-114 applied “only to damage sustained to the common elements or the structure of the condominium.” Specifically, it found that, while Section 11-114 provided that each unit owner was an insured person under the council’s policy, each owner is “insured under the master policy only as to his or her collective undivided interest in the entire condominium property,” and it is “not meant to insure each owner’s property or individual unit.”
Accordingly, the Court held that the council of unit owners was not required to repair or replace property of an individual owner after any casualty loss. The significant impact of the decision was that it meant that Section 11-114 applied only to “damaged property owned by the owners collectively,” and the council was not responsible for insuring or repairing any portion of an individual unit, regardless of the origin of the cause of the property damage; that is, regardless of whether the cause originated in the common elements or the unit. Damage to an individual unit would then become the sole responsibility of that unit owner in all circumstances, and they would be compelled to obtain their own insurance to protect against loss.
This turned what had been customary practice on its head, and prompted the legislature to intervene. The new law amends Section 108.1 to make it specifically subject to the provisions of Section 11-114. It then amends Section 11-114 to make clear that the council of unit owners is required to maintain insurance “[f]or property and casualty losses to the common elements and the units, exclusive of improvements and betterments installed in the units by the unit owners other than the developer.” The new law also imposes the deductable requirement on any individual owner in whose unit the damage originates, regardless of whether the bylaws so provide, up to a maximum of $5,000. Otherwise, the deductable remains a common expense.
The result is that condominium master policies must cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents. If damage originates in the unit, the owner is responsible for the insurance deductible up to a maximum of $5,000. The new law also requires that condominium annually notify each unit owner of the deductable responsibility and the amount of the deductable, and further requires that public offering statements notify potential buyers of the unit owner’s responsibility for the insurance deductable.
It should be remembered, however, that, because the council is responsible for maintenance and condition of the common elements, where a common element defect, such as a water leak, is the source of damage to an individual unit and property, the council is responsible for the consequential damages to the unit and its contents.
Marylandcondolaw.com is written by Raymond D. Burke, a principal in Ober|Kaler’s Construction Group. One of the region's top construction and real estate development lawyers, Ray has more than 25 years of experience in matters relating to condominium and other multi-use development matters.
Where does a homeowner go to get relief from an out of contraol haraqssing, threatening crazy condo assoc president? Aside from a total disregard for the condo law in which he follows nothing, he stalks harasses and threatens my mother. He dunns her for money for fixing the outside of the home when others he agrees to pay for. This was verified by the property manager. He hires unlicensed contractors and we have sustained damages he wont pay for. His latest antic is when we bought this property in 2003 there was a fence and perm.installed hot tub in rebard and concrect recessed into the deck. He sent us a letter stating (from an attorney) he intends on taking our personal property, attached property in which the original owner gave us the receipts and the hoa approval to install. He held a special mtg last week and again totally not in line with the condo law of MD and again he stated he is taking the fence and hot tub. Can he steak these items? Isnt that theft? He intends on taking 2 other peopls fences as well.
Who can help us? No one wants to get involved except the building inspector who came took picture because everything the previous owner did was fully legal permits, approvals etc. Isnt there laws to protect people in America..honestly where do we go for help?
One of the most critical aspects of condominium living is the need for a capable board of directors, which, in most instances,is vested with the governing authority for day-to-day operations. That authority is subject to abuse, particularly where the membership is, for the most part, inactive and uninvolved. Each condominium is unique in terms of the provisions of its governing documents, which need to be reviewed to determine how best the unit owners can review and control the actions of the directors. Generally, however, there are usually specific methods that give the unit owners a say in the community’s governance.
The most significant means of controlling director misconduct is through the election process. Owners need to protect their interests by exercising their say in who among them is placed in charge.
Another means of oversight is the monthly meeting which all owners are entitled to attend and where issues can be aired on the record.
It should also be remembered that every unit owner is entitled to have access to all of the books and records of the condominium. Availing oneself of that privilege provides a means of oversight with respect to all condominium expenditures. Similarly, the operations all condominiums are subject to a periodic audit by an independent auditor.
It is highly advisable to have the advice of counsel with regard to understanding the condominium’s governing documents and the rights of unit owners.
The matter of “taking” property is a function of law, the circumstances by which the property did or did not become attached to the real estate, and the terms of the condominium documents. The specifics of any such situation need to be reviewed by a competent attorney to ensure that nothing improper occurs.
[INFORMATION OFFERED HEREIN IS NOT LEGAL ADVICE, AND NO ATTORNEY-CLIENT RELATIONSHIP EXISTS OR IS INTENDED BY VIRTUE OF THE EXCHANGE OF INFORMATION HEREIN]
My condo unit flooded over a year ago before the association adopted the $5000 deductible policy. As a result, the condo association agreed to pay for the base-line repair to the flooring that was damaged and our individual policy paid for the betterment or upgrade to that standard.
The water came from rain water overhwhelming an exterior patio drain (we’re a terrace level), into the unit, filled the patio well and spilled into the interior unit. The patio was enclosed by the previous owner and I know that has other implications.
Since the repairs were completed, the condo company adopted the $5000 max deductible and water still comes up the drain, but has not spilled into the unit. We continue to contact condo staff and the board about this issue, but no preventative solution has been found. The exterior landscape has been regraded and the gutters have been replaced, but the drain still is overwhelmed. Water still comes up the drain, even though they installed a drain stopper.
Even though we’re diligent about reporting these issues, we can’t get to a solution and we’re afraid that the water is going to spill into the interior unit again. If this occurs, we’ll likely be dropped by our insurance and have to go through the timely issues with having the floors redone again.
What else can I do to get this issue resolved?
In sounds as though the re-grading and gutter replacement have not fully addressed the excessive water to which your patio is exposed. The association needs to retain consultants to develop a long term solution. This may include the services of a civil engineer to prepare a repair specification to be executed by a capable contractor. If the association will not do this, you may need to retain counsel to convince them that waiting until the next flood is not in anyone’s best interest.
INFORMATION OFFERED HEREIN IS NOT LEGAL ADVICE, AND NO ATTORNEY-CLIENT RELATIONSHIP EXISTS OR IS INTENDED BY VIRTUE OF THE EXCHANGE OF INFORMATION HEREIN]
I own a condo that was rented out to a tenant. The unit was flooded due to a pipe busting in the ceiling of the unit. This caused extensive damgae to my unit and to the property of my tenant. The problem originated in a common area and an insurance claim has been submitted by the condo association, but I have been told that I am liable for the $5000 deductible. In my mind the condo association should be responsible for ALL fees including the deductible and the replacement of my tenant’s property.
“If the cause of any damage to or destruction of any portion of the condominium originates from the common elements, the council of unit owners’
property insurance deductible is a common expense.” …from (Senate Bill 201)
” It should be remembered, however, that, because the council is responsible for maintenance and condition of the common elements, where a common element defect, such as a water leak, is the source of damage to an individual unit and property, the council is responsible for the consequential damages to the unit and its contents.”…from The Council’s Master Insurance Policy Must Insure Both the Common Elements and the Units blog: http://www.marylandcondolaw.com/uncategorized/the-councils-master-insurance-policy-must-insure-both-the-common-elements-and-the-units/#more-71
Ron,
Thank you for your note. If the problem originated in a common element, the council of unit owners is responsible. A unit owner is only required to pay the condo’s insurance deductible when the problem orginates in a component of the unit. Your condominium declaration establishes what components are a common element and what are included in the unit.
The condo association has acknowledged responsibility of a leak in a common area that flooded my unit. The leak occured on Dec 13th and while an insurance claim has been submitted and a scope of work has been issued, the repair work has not been started as of jan 10th. The unit is uninhabitable as a result of the flood and I have subsequently lost my tenant becuase she could live there.
Is there some sort of rule regarding the timeliness that repairs must begin and do you feel that I have a case against them as it pertains to lost revenue and the fact that they still expect condo fees to be paid?
In general, a unit owner is entitled to damages that were proximately caused by water intrusion having a common element source. In addition to the physical damage, that can include economic damages such as loss of a tenant or rental income, as well as expenses related to finding temporary alternative living arrangements. If the unit is, in fact, uninhabitable until the repairs are made, that is clearly an element of damages. The timeliness of repairs is generally subject to a reasonableness standard; that is, what is reasonable under the circumstances.
Does the “units” include limited common areas?
My porch roof has a hole due to the ice that fell from the roof (common area). Is my HOA responsible for this? They are saying that they are not. The ice also caused a structural shift of my front porch, there are cracks on the door trim and it is hard to open and shut my door.
The responsibility for maintenance and repair of limited common elements is established in the condominium’s governing documents. Usually, the unit owner is responsible for rountine maintenance and cleaning, and the council is responsible for structural repairs. As to damage from a common element, the council is generally responsible for any damage caused by a condition of the common elements. Moreover, the council is required to insure all of the property, including the units, that was part of the original construction.
Your condominium documents govern how limited common elements, such as porches or balconies are treated. In most condominiums, it is usually provided that the unit owner is responsible for cleaning and routine maintenance, and the council is responsible for repairs. The council is responsible for insuring any component that was part of the original construction, including porches. The council should also be responsible for damage caused by a common element.
wow is this website helpful! I am a co-owner, and also a Board member, of a condo here in MD. We bought our unit several months ago, it had a long-term water seepage through the foundation and as a result, the bottom corner of the bedroom closet was always damp. The drywall was moldy, which we removed. It had obviously been like this for a long long time, based on observations and talking with neighbors. We have had several estimates to repair this, but our property manager is delaying. She has also told us that since we bought the condo “as-is”, the association is not required to repair the inside. The wall studs were rotted and need replaced, as well as ruined insulation and drywall. I was under the impression that the association’s responsibility extends to the “inner, unfinished walls” – meaning that they would reconstruct the interior walls but not have to paint or paper them, is ths correct? Keeping in mind that the wall in question is an exterior wall in that it is against the exterior foundation wall. I cannot find info on this, and the mgr is rude to the point of hanging up on me. Help please!
I specific answer to your question requires a review of the condominium’s governing documents to ascertain what components are part of the common elements and the units, as well as the defined responsibilites as between the association and the unit owners. In general, however, water intrusion comes through the exterior envelope, for which the association is usually responsible. That you bought the unit “as is” relates only to the responsibilites between you and the seller. The association remains responsible for damage caused to a unit by exterior water intrusion. If the water was from a defect in the common elements, the association is responsible for all consequential damages, including damage to interior components and finishes, paint and paper included.
I have been attempting to acquire a copy of the most recent Maryland
Condo Law manual. I called the attorney general’s office on several occasions, left a voice mail with telephone number, but to no avail. Is there any othercontact source?
There is no condo law manual. If you are referring to the Maryland Condominium Act, it is available online at michie.lexisnexis.com/maryland. Look under Marland Code – Real Property – Title 11. It is also available as a link on my blog. Look under “Resources” for “Marylad Condo Laws.”
I live in a condominium association (townhouse condominiums) that has never covered the individual units in their master insurance policy. There have been questions as to whether or not the association is required to follow the new condominum law requiring the master insurance policy covering the units. For 20+ years the homeowners have all gotten their own insurance policies. It is my understanding that the association must follow the Maryland Condominium Law.
The condominium is required to provide insurance for the common elements and the units as originally finished by the developer. The unit owner insures changes made to the unit since construction, and the contents.
[INFORMATION OFFERED HEREIN IS NOT LEGAL ADVICE, AND NO ATTORNEY-CLIENT RELATIONSHIP EXISTS OR IS INTENDED BY VIRTUE OF THE EXCHANGE OF THIS INFORMATION]
I bought a condo in Maryland about ten years ago. Beginning in the fall of 2007, the condo above me started leaking and water intruded into my condo causing damage. I complained to the condo association but ended up covering the repairs on my own. Water again came back in the spring of 2008 and fall of 2008 due to the condo above, causing more damage to my condo. I demanded the condo association cover these costs through the master insurance policy and again they have denied any assistance. The damage is so extensive this time that I do not have enough money to renovate. I have been fighting with the condo association ever since. If these damages occurred prior to the amendments in the Maryland Condominium Act of 2009, can I take advantage of the new law on insurance coverage or am I stuck with the pre-2009 statute?
The 2009 law that you refer to was intended to clarify the practice that should have existed. Nevertheless, you can only obtain coverage under the master policy to the extent that the policy in effect at the time of the loss provided coverage. If the assiciation did not have coverage for the entire condominium building, insurance will not be available. Regardless of whether there is insurance or not, however, a leak from outside of you unit is either the responsibility of the association, if the source of the leak is a common element, or the responsibility of the unit owner above, if the source of the leak is a component of an adjacent unit. So someone other than you is responsible for the damages to your unit. Since you have had no success with the association, I suggest you retain an attorney to assist you.
A Maryland condo Board is stating that those who want parking permits must have MD drivers license with association address and MD tags. Does this overstep their rights? What about military and short term rentals? They conducted a survey and only got ~25% response. Of those 80% said there was no parking problem. Furthermore, this is going to increase condo fees and decrease property value. There is no parking problem, just few want to have reserved spot in front of their home. Can the Board members be named in a law suit and hold them responsible for their idiotic measures?
The authority of the Board to impose such a measure depends on what is provided in the declaration and bylaws, along with any rules and regulations that have been adopted. An attorney would have to review those documents to provide a specific answer to your questions. As to suing the Board, they are responsible for their negligence, and have directors liability insurance for that purpose.
I experienced water leakage in one of my bathroom,It was unknowing to me that there was a leak in the bathroom due to the fact it was behind the walls. It was not until the ceiling pf the bathroom begin to swell and dried brown stains in the bath tub. my first thought was the leakage was due to a busted water pipe behind the wall. It was discovered that the water came from the shower from the unit above mine. My contracter took pictures that showed poor maintance of the bathroom in the unit above mine; cracked sealant around the tile. Water seeked between the tiles. Utilimately the water damaged my walls and mode begin to grow around the toilet area. My unit was to be rented out but was unable to rent my unit due to the mode growth and the damaged walls. The owner above waited four months to make repairs to her bathroom therefore I was unable to make repairs to mine. I subsequently lost 4-months of rent. The owner above mines insurance has denied claims for the repairs of my unit stating the tenant was not negligent due to her not knowing the water was seeping behind her walls. I feel the tenant was negligent due to lack of care to her unit. This is not the only insident since the bathroom situation the owner above radiator leaked into one of my bedrooms and damaged the wall. The owner has not responded to my messages about repairing those damages. Is the owner responsible for my lost rent and repairs to both the bathroom and bedroom?
In Maryland, the condominium’s master insurance policy is responsible for damage to your unit and consequential damages due to lost income. The unit owner in whose unit the problem originated is responsible to the Council of Unit Owners for the policy deductible, up to the statutory maximum of $5,000. The owner could be directly liable to you to the extent that insurance does not cover your losses.
Hello,
I received a report of a leak from a tenant and wet carpet in the condominium that I rent out. I hired a plumber who came and said that the leak was not in the unit and most likely was in a condensate line or was a washer/dryer overflow from the unit above. The occupants of the unit above would not allow the HOA access so tomorrow the HOA will enter with a locksmith. Likely the reluctance to allow entry signifies some sort of problem. Is the HOA responsible for paying the cost of my plumber’s assessment since I paid the service fee myself?
Additionally the HOA now claims that the tenant fabricated the story of the leak and wet carpet in order to have the carpet cleaned. The HOA had sent someone into my unit to dry the carpet which that vendor did. Prior to my e-mailing a copy of my initial’s plumber’s assessment, the HOA indicated that because it turned out that they believed that the tenant fabricated the story and the carpet was never actually wet, they plan to send me the bill for the carpet drying expense.
I would imagine that if the HOA decides to make a repair – necessary or not – then that repair is their financial responsibility and can not be billed back to the homeowners. is this accurrate?
Thank you.
In order to specifically address your questions, I would need to review the governing docuemnts for your condominium. In general, however, if the leak orginated from the unit above, the damage to your unit is the responsibility of the council of the above unit owner depending on the source of the leak.
Since your plumbers assessment establishes that the leak story was not fabricated, there should be no charges to you.
The HOA can charge back repair costs if the leak orginated in a component of an individual unit as opposed to a common element, but only up to the insurance deductible.
Hello,
Who is responsible for damages under $5k? Is it still the unit owner where the damage originated responsible? My unit had a leaky ice maker line that damaged the ceiling of the unit below. My insurance company says the condo association is responsible and the association says they are not responsible for any damages below $5k.
Thanks
It depends on the amount of policy deductible. The unit owner in whose unit the problem originated is responsible for the policy deductible, up to a cap of $5,000.
If a pipe in the common wall bursts due to faulty installation from the time the buildig was constructed, is that generally considered a common pipe covered in full by HOA insurance?
It does not matter if the problem arises from original construction. The pipe burst should be covered under the policy. The insurance company is entitled to subrogation if the condominium makes a claim against the builder.
My neighbor’s garbage disposal in the condo above me broke, causing water to leak into my unit, resulting in about $1,000 worth of drywall damage. My neighbor refuses to pay for the damage. My HOA basically said that they would facilitate the repair, but only once my neighbor agreed to recompense the HOA for the cost.
Should my HOA fix the damage then pursue my neighbor for the $1,000, or am I obligated to pursue my neighbor myself?
It is impossible to answer such questions definitively without reviewing your community’s declaration and bylaws. Generally, however, the damage should be covered under the association’s insurance policy, and your neighbor would be responsible for the deductible up to the statutory maximum of $5,000.
You should not be held hostage by the association. You are entitled to have your unit repaired, and it is for the association to collect from your neighbor.