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No Good Deed Goes Unpunished: When Damage Occurs During Planned Repairs Heidi Hankins-Hughes, Esq.


Your association is enacting a major repair and—OOPS—more damage is sustained. A roof leaks mid-repair or a worker causes damage. Who is responsible? What can you do to make sure you’re adequately protected? Before starting a major project, these are scenarios your board and owners need to consider to ensure that you are prepared before the unexpected happens.


A couple years ago, a condo client was putting a new flat roof on their building. About half way through, there was an unexpected weekend storm that caused leaks into 8 of the 32 units. The contractor had insurance, but it had an “open roof” exclusion, so insurance declined to pay. The association had property insurance with a “rainwater” exclusion, so it would not pay either (but the policy was very reasonably priced!). Ultimately, the association had to contract for water remediation itself – and pay for it. To make matters worse, multiple owners refused to allow access to dry out their units, increasing the costs and causing substantial discord.


The results were significant unbudgeted expenses, a decision to get more appropriate insurance (at additional cost), threats of litigation against the contractor and board, significant increases in expenses for roofing consultants and attorneys, challenges by owners of special assessments required to pay for it all, and finally a rewriting of the condo declaration to deal with the owners’ and the association’s rights and obligations during an emergency.


Stuff like this happens. Associations need to be prepared for problems during construction. For any repair project, hire only licensed and insured contractors. Look at the insurance! Anyone can be licensed; you don’t need to show any level of skill or competence – and not all insurance policies are created equally. Just because a contractor has insurance, does not mean there is any coverage for damage he causes. It’s also not safe to assume that your association policy will cover damage caused to your property by contractors.


Make sure that your contractor’s liability insurance does not exclude you (condos!) and does not exclude the kind of work being performed, or types of damage which could occur. This will protect the property while the contractor is working. For example, if an


electrical wire is accidentally cut causing a fire or if a plumber nicks a pipe flooding units below, the contractor’s liability insurance should cover the damage.


If the contractor does not have liability insurance, the association and owners could be stuck with the repair costs. Your property policy should protect you, but only if it does not contain exclusions. Have an expert look over your insurance policy and any contract you enter into to advise the association of potential problems. Get an opinion on the contractor’s insurance. Sometimes, more expensive contractors are better insured, and that should be considered in selecting a vendor.


Once you decide on a contractor, anticipate problems and ask “what if?” During a roofing project, what if a sunny day turns into a rainstorm? How will the interior of the building be protected? During a small leak repair, what if a plumber causes a major flood? What is the plan to prevent further damage, and what is the emergency plan to stop damage if it occurs? Make sure you, your owners and your contractor have a plan for these scenarios. It is crucial for your association to have a process that provides access to the units for emergency repairs.


Despite taking all precautions to minimize your risks during a major project, let’s face it – accidents happen. When they happen, stay calm! Put out the fire and stop the leaks to prevent further damage. Submit your claims to insurance and follow the damage and destruction provisions in your association’s governing documents. It is important to get the damage repaired quickly, but it is also important to take a few minutes and gather the information necessary to follow the appropriate remedial process. Ensuring that the appropriate process is followed can save the association significant time and expense.


Educating your association and owners before work begins will put you in a better position in case something does happen. Ensuring that you have the proper precautions in place will make the difference between a minor inconvenience and a major problem.


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