It’s now winter, the season of broken pipes and water damage. In our September newsletter, we discussed how to analyze a situation when water damage has occurred, and how to develop a policy to handle insurance claims and allocation of deductibles. In this article, Part 2, we’ll dig deeper into the question of how to determine whether a water damage claim may have resulted from someone’s negligence.
Who is responsible for damages due to water loss?
Unfortunately, there is rarely a clear and definitive division of repair responsibilities when a water loss affects multiple units or common elements. Before assessing costs to any units, first review the governing documents to evaluate responsibility for maintenance and repair. Next, investigate to determine the actual cause of the loss and most importantly whether any of the involved parties were negligent in their maintenance responsibilities.
As you review your governing documents to determine who may be responsible for costs incurred as a consequence of a water loss, pay special attention to the definitions of the following terms: unit, common element, limited common element, maintenance responsibilities of owners and the association, insurance responsibilities of owners and the association and enforcement procedures. These provisions may differ for each association.
The general rule
Generally, owners are responsible for maintaining anything they own or that lies within the unit boundaries, and the association is responsible for maintaining the common elements and limited common elements. However, limited common elements are usually allocated to the exclusive use of a unit. Therefore, we frequently encounter provisions where the owner has the maintenance responsibility for a limited common element, or the association may assess that owner for expenses incurred to maintain that limited common element.
Remember that a maintenance obligation of a particular component does not necessarily equate to an obligation to repair the property of another if a water loss originating from such component damages a neighboring unit.
Typical water loss example
Let’s say the water heater in unit A serves only unit A and is included in the definition of the “unit.” This water heater fails and causes damage to unit B. According to the declaration, the owner of unit A bears the expense for repairing his/her water heater and any damage to property within unit A. That does not mean the owner of unit A must pay to repair or restore damaged property in unit B.
So who pays for unit B’s losses? The answer depends on whether the owner of unit A was negligent with his/her maintenance and/or repair obligations of the water heater, and whether such negligence resulted in the water heater’s failure. Colorado law provides that the occurrence of an accident does not in and of itself indicate that negligence existed. An unforeseeable failure of a pipe, for example, is not enough to cause a court to find that the pipe’s owner was negligent.
How do you determine if someone was negligent?
The general rule is that maintenance costs follow the maintenance responsibility in the absence of negligence. Returning to our example of a leak originating in unit A: unless we have more facts demonstrating negligence, the general rule applies and the association is responsible for any repairs to common elements for which it had the maintenance obligation, while the owner of unit B is responsible for any repairs to property in unit B for which that owner had the maintenance obligation.
On the other hand, if there were signs or warnings of an approaching failure of unit A’s water heater, the conclusion may be different. Determining whether those signs of failure existed requires a fact-intensive investigation. The mere fact of age or obsolescence of a fixture or piece of equipment is not sufficient for a finding of negligence. Pipes and water heaters frequently outlast their stated useful life.
Finally, before reallocating repair obligations, the board must determine that the negligence actually caused the damage. An example of such causation analysis could be as follows:
- A pipe which is the association’s maintenance responsibility may be rusting and at near failure and the board has knowledge of this, but does nothing. This would be demonstrative of negligence by the association. Nevertheless, the condition of that pipe is not the cause of the incident resulting in water damage to the unit. The cause was the unit owner’s failure to heat the unit and the pipe freezes and bursts. In this example, the association would not be responsible for repairs to the unit interior because its negligence did not cause the damage.
Associations often confront this common dilemma: the association and the owner of unit B wants the owner of unit A to pay for all the damages caused by unit A’s water heater failure. Unfortunately, that fact alone is not enough to make the owner of unit A liable for the damage. The association must perform a careful analysis of negligence and causation before it can reallocate a maintenance liability. If you are unsure how to do this, please contact one of our attorneys for assistance.