Boards must plan for leaks, act quickly to avoid further damage

Over the 12 years that I have been writing this column, from time to time I will address the different aspects of disaster planning. From terrorist attacks in downtown Chicago, to 12 inches of snow, community associations need to have a contingency plan in place to deal with extreme situations not normally contemplated in the day-to-day operations of an association.

Considering the weather extremes of the Chicago area, (you don't like the weather in Chicago? - wait five minutes because it will change!) properties providing essential services need to react swiftly with efficiency and compassion to avoid property and life-threatening situations.

Once again we have gone through a cycle of heavy rains and massive flooding and the first question you must ask yourself is, if this happens to us, what do we need to do?

Sitting down with the board and/or a special committee, the property manager and perhaps the lawyer, a board can do proactive planning so action is swift and effective. Leaks

Probably the No. 1 problem, whether it is roof, windows or foundations. Obviously, nothing can be done until the rain stops. The board must make sure that all exterior water entries are secured, whether it is with caulking, flashing, patches, etc. When there is water entering the property, even if it is just a few drops, it could be indicative of a much more serious problem.

A wet spot on the ceiling in one unit can be caused by a roof leak on the opposite side, where the water has found a path along a roof truss. The manager and a qualified contractor can usually identify these problems quickly and address it as soon as the rain stops. Sometimes, it is necessary to bring out a roofer or even a structural engineer because the problem is more complex and cannot be solved with just a plug. The most important thing is to get the leak fixed quickly and then worry about who pays for it, after the fact.

Ignoring seeping water will only lead to far more expensive repairs down the road such as wood rot, mold, allergens, etc.

Once the problem has been secured, the board can then deal with the issue of insurance claims, owner vs. association responsibility for damages, and putting the property back the way it was.

Insurance coverage

Do you have flood insurance? It seems like a simple question, but no two insurance policies are the same. Some companies cover sewer backups, some do not. And when purchasing both association insurance as well as your own owners insurance, it is important to understand who covers what - the one area where most people, whether they are board members or owners, will make assumptions is in the area of the coverage they bought.

Sometimes the insurance coverage is broader than what the declaration and the statute require. These issues create the single largest number of conflicts between boards and owners, and either the manager or the lawyer needs to establish who pays for what before it winds up in the courthouse.

In doing year-end planning before adopting a new budget, a board must consider self-insuring the deductible amount for association claims, reserving enough money to cover unanticipated expenses, and reviewing its coverage for the coming year. In reviewing rules and regulations, having a tool that outlines "who pays for what" in the event of a loss is usually helpful in explaining the policy in advance and will curtail future disputes.

Lastly, when the policy is up for renewal, or even as a "special event," the board should invite it's insurance professional to a meeting, from time to time, to explain the coverages, the exclusions, and what if any additional insurance can be purchased to minimize losses. In the course of inspecting the property each year, the board should make sure that all potential sources of leaks are secured through preventive maintenance.

What could be better for property values than being able to tell any prospective buyer that you have never had any water leaks?

Additions and improvements

Whether it is personal property, collectibles, floor coverings or decorating, it is the duty and sometimes the obligation of each owner to make sure that they have adequate owner's insurance. For condominiums, it is designated as an HO-6, and for other owners it is generally comprehensive owners coverage. Associations have the right to make this mandatory, and even demand proof, although monitoring and administering this can be an enormous burden, but by keeping owners educated this can alleviate future disputes.

When the damages are the result of owner negligence or lack of diligence, the association can look into whether any deductibles paid out by the association can be charged back to the offending owner. However, not all losses are the result of anyone's fault, so again, it is important to identify the problem, fix it, and then allocate the costs later.

Mold

The hot topic several years ago, the fury and intensity of mold claims seems to have died down somewhat. Initially fueled by a large jury verdict out of Texas, there was almost a paranoia about the growth of mold in association property. It became a cottage industry among a group of self-styled experts, but the bottom-line was that mold has been around longer than man, and with some good abatement and clean up, the problem can be solved quickly and inexpensively.

Left unattended for an extensive period of time, mold can make a property uninhabitable. It just requires swift action. Cut off its main source of nutrition, first, (water), than you can minimize the damages and solve the problem quickly. Remember, most insurance coverage now excludes mold remediation and damages and an association and an owner must be prepared to cover the cost and/or suffer a loss. Also, in most instances, it is the owner who will bear the loss, not the association.

These are some of the more common problems a board and its manager will have to deal with, but like any other problem, if you are proactive, anticipate the situation before it occurs and have a plan of action, you can breath a sigh of relief as you watch the floodwaters recede and drive to work past all the wet furnishings sitting out on the driveway waiting for the garbage truck.

• Condo talk appears alternate Saturdays in New Homes. Jordan Shifrin is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at jshifrin@ksnlaw.com. This column is not a substitute for consultation with legal counsel. Past columns can be read at www.ksnlaw.net.