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Rebuilding a Michigan Condominium After a Fire

Rebuilding a Michigan Condominium After a Fire

Having a fire in a condominium project is a terrifying thought.  In addition to the risk of loss of life, there is a high probability that a condominium unit and the common elements will be damaged, or worse, destroyed.  In the event of fire damage, the condominium documents should designate the condominium association’s and co-owners’ respective responsibilities for the costs of the repairs and replacements of the damage.  An unpublished 2007 case from the Michigan Court of Appeals provides insight into how a condominium association’s bylaws can allocate those responsibilities and what happens if a condominium association takes on more responsibility than the bylaws require.

Facts

In Anton v Brynmawr Condominium Ass’n, unpublished per curiam opinion of the Court of Appeals, issued May 22, 2007 (Docket No. 265828), the plaintiff was a co-owner who owned a unit in the condominium administered by the condominium association.  A fire damaged the plaintiff’s unit in 1999.  The condominium association held an insurance policy covering fire damage, but the plaintiff did not have a separate policy covering the fire damage.  The condominium association received insurance proceeds for the damage and hired a contractor to repair all the damage.

The contractor’s work was substandard, and the co-owner noted 49 instances of poor work inside and outside her unit, which she demanded the condominium association fix.  The trial court found that 31 of the instances were substandard repairs and granted the co-owner equitable relief (i.e., ordering the condo association to make the repairs) instead of money damages.  The trial court also ordered that the contractor indemnify the condominium association for all but four instances of the substandard work.  The co-owner appealed, arguing that she should have received money from the condominium association to make the repairs.  The Court of Appeals agreed in part.

Analysis of the Condominium Documents

The Court of Appeals first turned to the Condominium association’s governing documents.  Under the condominium bylaws, the condominium association was required to insure the common elements against fire damage.  In the event of fire damage, the condominium association would receive the insurance proceeds and distribute the money to the appropriate party.

The condominium bylaws further allocated the responsibility for the repair of the unit and the common elements between the co-owners and the Association.  In general, if the damage was to only part of a condominium unit or the common elements, the co-owner who had the responsibility to maintain the unit or common elements was responsible for the repair.  In all other cases, the condominium association would be responsible for the repair, although not necessarily the costs of the repair.

The condominium bylaws also specifically identified the items that a co-owner would be responsible for repairing:

Regardless of the cause or nature of any damage or deterioration, each Co-owner shall be responsible for the reconstruction and repair of the interior of the Co-owner’s Unit and all personal property, including, but not limited to, floor coverings, window shades, draperies, interior walls (but not any Common Elements there), wall coverings, interior trim, furniture, light fixtures, all appliances, whether freestanding or built-in.

Under the condominium bylaws and subject to the responsibilities of the co-owners, the condominium association was responsible for repairing the common elements, but “[i]n no event shall the Association be responsible for any damage to the contents of a Unit and/or any personal property of any Co-owner or Limited Common Elements for which the Co-owner has responsibility.”  Accordingly, there was a clear delineation of what a co-owner was responsible for repairing and what the condominium association was responsible for repairing.

Taking the provisions of the bylaws together, the Court of Appeals summarized that the condominium association was primarily responsible for insuring the common elements, collecting insurance proceeds, and using the proceeds to cover the costs of repairs to the common elements.  Conversely, the condominium association was required to distribute the insurance proceeds to the co-owner to cover the costs of repairs for which the co-owner was responsible.  Accordingly, the Court of Appeals affirmed the part of the trial court’s order that required the condominium association to fix the substandard repairs to the common elements.

However, the Court of Appeals determined that the co-owner should have been awarded money damages to fix the substandard repairs to the interior of the condominium unit.  The condominium bylaws allocated the responsibility to repair the inside of the unit to the co-owner, and therefore, the condo association should have paid plaintiff a portion of the insurance proceeds to make those repairs.  Because the condominium association was not responsible for the initial repairs, the Court of Appeals determined that the condo association could not be required to fix the substandard repairs.  But the co-owner was entitled to an award of money damages so that she could fix the substandard repairs.

This case demonstrates the importance of adhering to the condominium bylaws.  Condominium associations should be aware of their responsibilities in the event of any damage to the common elements or condo units, specifically with respect to having necessary insurance and the handling of insurance proceeds, and the extent of their responsibilities to repair the damage.  Condominium associations that experience any type of fire loss should contact a condominium attorney for assistance in determining the parameters of the condominium association’s responsibility, assisting in submitting an insurance claim, and in resolving disputes between co-owners or insurance adjusters.

Michael T. Pereira is an attorney with Hirzel Law, PLC and focuses his practice on community association law.  Mr. Pereira received his Bachelor of Arts in Political Science from the University of Michigan.  He then obtained his Juris Doctor degree from the University of Detroit Mercy School of Law, where he graduated second in his class and served as the Executive Editor of Outside Articles on the Detroit Mercy Law Review.  After law school, Mr. Pereira worked as a research attorney at the Michigan Court of Appeals before clerking for the Honorable Patrick M. Meter and the Honorable Anica Letica in the Michigan Court of Appeals.  Mr. Pereira can be reached at (248) 478-1800 or mpereira@hirzellaw.com.

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