Insuring mixed-use condo buildings

Posted3/2/2019 7:00 AM

Q. Your recent article on mixed-use properties hit home. The building in our Northwest suburban association has retail property on the first floor that is not part of the condominium association, and several floors of residential condominium units above that. What is the best way to handle the cost of casualty insurance for the entire building?

A. Initially, these mixed-use properties are more common than most people are aware. A well-drafted reciprocal easement agreement ("REA") will address this issue. As I noted in the earlier article, the relationship between the condominium property and the non-condominium property in these situations is typically governed by an REA.


Typically, the REA will require the condominium association to procure property insurance for the entire building, and will describe how the insurance cost is allocated between the condominium and non-condominium portions of the property. This recognizes the importance of having the building as a whole insured by a single insurance company.

When a casualty loss occurs, this avoids potential finger-pointing between insurance carriers that could result when each portion of the building has coverage from a separate insurance company. These can be complicated issues, so insurance should be procured from an insurance agent/broker familiar with condominiums, and these mixed-use situations in particular.

Q. I asked the president of our association for the names of the members of the association's board of directors. He refused, stating that the board members are entitled to their privacy. Should I be provided this information?

A. Board members do not serve anonymously, and an owner should be provided the names of all board members. The names should be in the minutes of the meetings where they were elected. If the association is incorporated, as most are, the information would be listed on the articles of incorporation filed with the Secretary of State. Those are available to anyone who asks. Further, the identity and mailing address of the principal officer of the unit owner's association or of the other officer or agent as is specifically designated to receive notices must be provided, on request, to a prospective purchaser.

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Q. I live in a condominium association. I am considering filing a suit against the board for failing to maintain the common element roof because the repeated roof leaks have damaged my unit. The attorney I have spoken with advises me I have a good case, but that I would not be able to recover my attorney's fees from the association. When the association files suit against an owner, it recovers its attorney's fees from the owner. Why is this?

A. In general, a person can only recover their attorney's fees from the other party in a successful lawsuit if the recovery of attorney's fees is provided for by contract or by statute. The typical declaration (a contract) in an association permits the association to recover its attorney's fees from an owner in legal proceedings. However, there is typically no such language in a declaration that would permit an owner to recover their attorney's fees from the association. Similarly, there are statutes that permit an association to recover their attorney's fees from an owner, for example, in actions to collect unpaid assessments.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.

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