Perhaps one of the most disputed issues in community association life is water leaks. Not the kind caused by a malfunctioning roof or flashing, but the kind that starts in one unit and seeps, flows or gushes into another.
Who pays for the damage? Logically, it seems fair that the owner in whose unit the leak originated is the responsible party, but that's not always the case.
Many factors are involved in assigning liability, said insurance agent and association specialist Karyl Dicker Foray of Rosenthal Brothers Inc. in Deerfield.
Among them are the extent of damage, type of insurance carried by the association and the owners, the association's policy on handling deductibles and everyone's good nature.
"I feel the largest part of the problem is the fact that each insurance company handles situations differently and interprets declarations and the Illinois Condominium Property Act differently," Foray said. "I have also seen different adjusters from the same insurance company handling claims differently."
If you incur damage from a neighbor's leak, the first thing to know is what your association's insurance covers.
Condominiums, whether designed with stacked units or side-by-side units, are governed by insurance provisions in the condo act.
"Condominium associations are responsible for the common elements — the drywall, primer, insulation, studs, exterior and roof — regardless of what happens or why it happens," Foray said. "The homeowner is responsible for the paint, floor coverings and personal property."
Therefore, if water from a neighbor's pipe break runs into your unit, the association's insurance will cover any ruined drywall, but you will replace your soggy wallpaper and draperies, she said.
Condo owners need to insure themselves with an HO-6 policy, Foray added.
Non-condominium associations, which oversee side-by-side units, may insure differently. They have no statutory mandates, although their declarations might give direction.
Many non-condo associations choose to insure condominium-style, so no one needs to worry about whether the neighbors carry insurance. If the roof of a six-unit town home building is damaged by hail, for instance, it is repaired or replaced under one policy rather than under six policies.
Other non-condo associations require owners to insure their individual portions of the entire building, just as if they were insuring single-family homes. The association will insure a clubhouse or other amenities but not the residential buildings. Any water infiltration, damage or reimbursement issues are dealt with owner to owner, without association responsibility or involvement.
Owners whose associations insure like condominiums need HO-6 policies, and owners whose associations insure like single-family homes need to buy HO-3 policies, Foray said.
If you live in a condo, getting reimbursed for expenses from a leak you didn't cause is tricky. The law is conflicting. Section 9.1 (a) of the condo act says a unit owner is "liable for any claim, damage or judgment entered as a result of the use or operation of his unit or caused by his own conduct." But Section 12 (3) (h) of the condo act says the owner is liable for the deductible and any damage not covered by insurance required by law.
Because some insurance companies reference the first section, and some reference the second section, reimbursement amounts can vary, Foray said.
Deductibles are another matter. Condo law gives boards options for recovering their deductibles, but you probably are on your own.
"Some personal insurance companies will go after the party that caused the damage for the deductible reimbursement on behalf of their insured, and some will not," Foray said. "Depending on the amount, some unit owners just say, 'Forget it,' as they don't want to get into a fight with a neighbor."
Boards occasionally intervene in damage and deductible claims for aggrieved owners, said Marcia Caruso, president of Caruso Management Group Inc. in Naperville.
"But if you do, now you have a precedent, and you have to keep it up," she said. "It's best to have a plan in place to deal with these issues or not."
"There is no one-size-fits-all solution," said association attorney David Sugar of Arnstein & Lehr LLP in Chicago. "The matter is very fact-specific. You can't generalize."
As a last resort, you could sue the neighbor with the leak for damages and deductible, but whether you win is "up for grabs," he said.