Who Pays for Repairs? Check the Condo Bylaws

A drain on a condominium’s roof – a common element – leaked water into the penthouse apartment, destroying newly installed designer cabinets. Does this mean that the condo board – and therefore all unit-owners – are responsible for replacing those expensive cabinets?

Perhaps.

The declaration and bylaws of a condominium govern who is responsible for repairs to the units. Typically, the bylaws contain a section titled "Maintenance and Repairs” that sets forth the items to be maintained, replaced, or repaired by the condominium board (at the expense of all unit-owners) and those that are the responsibility of individual unit-owners. As a rule, unit-owners are responsible for all repairs in and to their units.

Therefore, the first step in determining responsibility for damage to a unit is to review the declaration for the definition of “unit.” That definition should include a very detailed description of which components are included and which are excluded, and it will also spell out the method of measuring the boundaries of a unit. If the damage falls outside of the definition of unit, the board (and therefore all of the unit-owners) are usually responsible for the cost of repair.

However, if the damage is in or to the unit, there is a second step in the analysis before you can conclude that repairs are the unit-owner’s responsibility. You must determine whether the leak falls under the definition of a “casualty.” If it does, the answer lies in another section of the bylaws titled “Repair or Reconstruction After Fire or Other Casualty.” This section will often result in a completely different outcome than the “Maintenance and Repairs” provision.

Courts in New York have defined “casualty” as a loss due to an accident or to a sudden or unexpected event. The definition of “casualty” was further delineated in 45 Broadway Owner v. NYSA-ILA Pension Trust. The issue here was whether a flood resulting from a rusted gauge on an HVAC system constituted a casualty. Reversing the lower court’s decision, the appellate court found that a casualty need not be an act of God but rather can be an “accident” or an “unfortunate occurrence” which may include damage stemming from human error, such as a failure to perform maintenance to the HVAC system. The court explained that the definition of “casualty” hinges on the description of the event rather than the cause of that event. Accordingly, the court found that, although the damage caused by the corroded gauge would not itself be considered a casualty, the sudden and unexpected flood that occurred at the building did constitute a casualty – even if gradual corrosion triggered that sudden event.

In our scenario, the leak that damaged the penthouse cabinets was caused by the deterioration of the rubber on the clamps holding the roof drain piping. The key question, however, is whether the damage to the cabinets was due to a continuous, slow leak or to a sudden, unexpected leak such as burst pipe. If it was a continuous or a prolonged leak, a court will most likely find, in accordance with 45 Broadway Owner, that such damage is not a casualty. Therefore, the section of the by-laws relating to “Maintenance and Repairs” will govern, making the unit-owner responsible for the cost of repairing the cabinets. Alternatively, if the leak damage was caused by a rupture, then such damage will likely be considered a casualty, and the “Repair or Reconstruction After Fire or Other Casualty” will govern, typically shifting the cost of the repairs to the condominium, even if the triggering event that caused the damage was ongoing.

Read the bylaw provision closely. The board may be responsible only for the cost of restoring the cabinets to their original condition – and not for the full cost of the designer cabinets that were installed by the unit-owner. If the cost of the repair is high, the board and the property manager should make a claim on the board’s insurance policy right away and work with counsel to ensure that the insurance carrier understands the facts that render the event a casualty.

Leni Morrison Cummins is a member and Jennifer D. Miller is counsel at the law firm Cozen O’Connor.