Master Condo Policy

[Milkman1265]

Here's tough question that i cant find the answer to

A 5 year old condo building was built, they have 10 units. They bought a master condo policy for the building.

Now every 5 years, there is a fire marshal hydro pressure testing done, and when they came the sprinkler system entirely failed inspection.

It was missing all the required pieces and items. The contractor who built the building is no longer around and now the association is stuck with the bill of reinstalling a proper sprinkler system.

Will the master condo policy pick up the bill from the building ordinance/law coverage part or they should be looking the contractor to see their options or their pretty much stuck with the bill?

 

[Sales71]

Here's tough question that i cant find the answer to

A 5 year old condo building was built, they have 10 units. They bought a master condo policy for the building.

Now every 5 years, there is a fire marshal hydro pressure testing done, and when they came the sprinkler system entirely failed inspection.

It was missing all the required pieces and items. The contractor who built the building is no longer around and now the association is stuck with the bill of reinstalling a proper sprinkler system.

Will the master condo policy pick up the bill from the building ordinance/law coverage part or they should be looking the contractor to see their options or their pretty much stuck with the bill?

Unless it was a covered claim the condo policy will not pay for upgrades to the building. Tell them to pay for it and move on.

 

[VolAgent]

As I recall, ordinance/law relates to necessary upgrades following a covered claim. IE, the building was originally built to code without sprinklers, but due to a covered claim significant repairs were needed and now sprinklers have to be installed to meet code.

In this case, it sounds like they accepted the building without a proper inspection.

I hope the board has D&O, because I could easily see the homeowners going after them for not ensuring the building met code.

 

[Milkman1265]

everyone is part of the board though, its one of those small condo associations. now they are getting a quotation done, and its not pretty.

everyone on the board takes turn being president every 2 years. they'll be suing themselves and in the end they still pay out of pocket.

condo has no reserve fund either.
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heres a question that kinda spurred up while reading this

since there is only 10 unit owners, if they all agree to not sue or D&O for reimbursement if something goes wrong, and they sign a waiver of suing the board.

Is D&O necessary?

 

[VolAgent]

everyone is part of the board though, its one of those small condo associations. now they are getting a quotation done, and its not pretty.

everyone on the board takes turn being president every 2 years. they'll be suing themselves and in the end they still pay out of pocket.

condo has no reserve fund either.
- - - - - - - - - - - - - - - - - -
heres a question that kinda spurred up while reading this

since there is only 10 unit owners, if they all agree to not sue or D&O for reimbursement if something goes wrong, and they sign a waiver of suing the board.

Is D&O necessary?

I guess it is time for them to pony up and pay to fix the sprinkler system.

As to the D&O, you are forgetting about third party. What if another party is injured due to the negligence of the board?

 

[Bertolinoins]

Construction defect claim against the GC and the sprinkler contractor. There is a 10 year tail for construction defect.

 

[djs]

I'm not sure every state has a 10 year tail. I think that happened in CA after the Northridge Earthquake and all of the related issues that came out of that.

But, even if the general contractor is out and completely gone, the sprinkler subcontractor is likely on the hook for this part. I'll put money on it though that they didn't get paid and didn't complete the work. It was probably never signed off. Still worth pursuing.

Dan

 

[Milkman1265]

yeah for the last 5 years no one checked, there are no tags, no inspection signage, no bell, pretty much missing a lot of up to code things.

it was never inspected either, they only really found out because they received a ticket from a inspection from the state.

i will look up the laws for the 10 year tail. i'm interested as well.

(i found a list of the entire US on the statue of limitations for defects if you are interested, go here
http://www.mynewmarkets.com/downloads/us-map-comparison.pdf )

 

[Bertolinoins]

Even if the GC is gone, you can make a claim against their GL policy. The bank that originally financed the project will likely have the insurance info.

 

[sludgesurfer1]

Many GL policies don't pay out for construction defect. First the potential claim would need to meet the definition of an occurrence. For example if there was a fire and the sprinkler system failed, this would be an occurrence. But simply having an incomplete sprinkler system would most likely not be an occurrence and therefore is most likely to not be a covered claim.

Then the policy would need to actually cover the loss. Some policies view the "Your Work" clause liberally and exclude claims that occur due to the workmanship of the contractor. Even if there was an actual "occurrence", it's possible that the loss might have been otherwise excluded on the policy.

Recommendation: pony up for the consultation with a lawyer experienced in construction defect litigation. I know it's tough to pony up without knowing if it will be throwing good money after bad, but as person representing an HOA in a legal matter it's absolutely critical that you handle yourself in a legally credible way.