When Condo Fires Strike......

In condominium communities and other communities responsible for exterior maintenance and repair, the worst four letter word that can be uttered is “fire.” Obviously, fires can be very destructive and they can injure or kill. All reason enough to hate them.

But assuming no one is hurt, fires test associations and management companies to their core .

First, you have the issue of repair. How will this be funded? Will the association’s insurance policy pay? Or the unit owner’s or perhaps the tenant’s policy (if the unit was being rented?

Perhaps the answer will be one of the carriers. Or all of them may assign some percentage of responsibility and pay the costs.

How will funding be obtained? Will the carriers contract directly with the contractors and pay as invoices are presented ? Or will the management company pay and then seek reimbursement.

Who will keep track of re-imbursement? Hint: this is much easier to do if one carrier is footing the bill rather than several. It becomes more complicated when multiply carriers are paying at different percentages.

Also, someone needs to watch what the carriers’ per claim limit is. If its one carrier, its pretty simply. If a few are paying, and each have different caps –well, good luck!

Will the responsible party be asked to pay any amount that is not covered by insurance? If so, what will you do when he/she/it refuses? Right it off? Take enforcement action? Refer to counsel? What does state law have to say about this?

And will the unit owner who has been displaced be paid for lost rent or re-location? That answer may depend on insurance coverage issues, liability determinations, and local law?

Also, while the association my be responsible for the exterior and everything but the finished walls –who will pay for cabinets, other improvements and contents? And will this be coordinated with the other contractors?

Will you use a claims adjuster? They can help secure the best deal with the carriers and may help with coordination of the re-construction. But they charge a significant fee for their services. They may be worth the expense –but this must be factored in.

These are only some of the issues. Since a burned out unit may take a year or more to resolve, tensions and frustration levels can run high. Which makes this a very defining moment. Are you up for the challenge?


Celebrating our 10th year, Lieberman & Blecher represents many Homeowner Associations and Condominums throughout New Jersey. http://www.liebermanblecher.com/