Published on: February 22, 2005
Insurance companies hate mold and they aren’t terribly fond of water, either. This will hardly qualify as news to any community association that has purchased an insurance policy recently or tried to renew existing coverage after having filed a claim for mold or water damage. A mold or water claim on your insurance record is the equivalent of a scarlet letter, virtually guaranteeing that your insurer will increase your premium costs and possibly refuse to cover you at all.
Obviously, the fewer claims you file the better and filing no claims is best of all. If you don’t have leaks or water infiltration, you won’t have water damage; if you don’t have water damage or excess moisture, odds are you won’t have mold either, or the legal liability it can spawn. Because associations control their common areas, boards can take the necessary steps to prevent water and mold problems there. But they don’t have the same direct control over what happens or doesn’t happen in individual units, which, unfortunately, is precisely where many water and mold problems begin.
A washing machine that overflows or a hot water heater that cracks in one unit can soak through the ceilings and walls of all the units below it. Mold that grows in one unit can infiltrate the walls of connecting units and spread throughout an entire complex. The association can immediately fix leaking windows and attack mold growing in the common areas, but how can the board make sure owners respond equally fast and effectively to problems in their own homes?
Putting it in Writing
Apartment owners, who have far more control over rental units than association boards have over individually-owned residences, have begun to add language to leases requiring tenants to notify management of water and/or mold-related problems, and making tenants liable for any resulting damage if they fail to do so. We recommend that associations adopt similar language, in the form of a board resolution that details the obligations and legal liability of unit owners as well. A model resolution we have developed for our association clients:
- Specifies the reasonable measures owners must take to reduce the risk of mold and water damage in their units;
- Requires them to notify the board of water or mold-related problems within their units that they cannot control; and
- Makes it clear that owners will be liable if their actions damage other units or common areas, subject the association to damage claims, or increase the association’s insurance costs, any or all of which could result if water or mold problems spread beyond an individual unit.
Owners are quick to assert their right to control what happens within their walls; this resolution simply underscores their obligation to act responsibly to prevent problems in their units from damaging other units or the community as a whole.
While the resolution obviously responds directly to concern about the potential for costly mold damage claims (which insurance policies don’t cover), the language we have drafted addresses a variety of unit-specific problems that have plagued community associations for almost as long as they have existed, primary among them – floods in individual units resulting from faulty washing machine or dishwasher hoses or broken water heaters. Our model resolution specifies that owners must replace water heaters before their warranty expires; use braided metal hoses or their high pressure equivalent on washing machines; and use only linseed plumbers and electricians for electrical or plumbing work within their units.
Housekeeping and Maintenance
The resolution also details a number of specific housekeeping and maintenance activities that seem obvious but are often ignored or neglected, such as cleaning and dusting surfaces regularly; immediately removing moisture that accumulates on windows, windowsills, or other surfaces in the unit; leaving heating, ventilation, and air conditioning ducts unobstructed; properly caulking, repairing, and if necessary, replacing windows and skylights to prevent leaks and condensation; immediately cleaning, drying, and disinfecting spills and leaks within the unit; and retaining a professional remediation company, if necessary, to mitigate any damage to the unit resulting from interior spills, leaks, or other water damage.
Recognizing that cold temperatures can cause broken pipes while hot, humid conditions encourage the growth of mold, the resolution directs owners to maintain a minimum interior air temperature of no less than 55 degrees and (if the unit has an air cooling system) no higher than 77 degrees, while maintaining the relative humidity indoors to between 30 percent and 55 percent “at all times.”
Additionally, the resolution notes that it is the sole responsibility of the owners to ensure that all exhaust fans and appliances (clothes dryers, stove, and bathroom exhaust vents) are vented property to the exterior, and to inspect, clean and otherwise properly maintain the vents (including changing the filters) at least annually to make sure they are unobstructed and functioning properly.
In many cases, what would otherwise be a relatively minor, or at least a controllable problem – a leaking pipe or a burst water heater —balloons into a full-fledged multi-unit crisis because the owners aren’t home to stop the leak or call for help, or because they ignore the problem or fail to deal with it appropriately. To address those risks, one provision of the resolution requires owners to notify the board in writing when they will be away from their unit for two days or more and to provide the name and phone number for someone who can be contacted in an emergency. Another provision requires owners to report “immediately, in writing, delivered to the board” any evidence of leaks, water infiltration or “excessive moisture” in their units or in common areas; any sign of mold or fungi growth within the unit that the owners are unable to remove with “a common household cleaner, and any failure or malfunction of a heating or cooling system serving the unit. The obvious goal is to ensure a fast and appropriate response to any water-related problem, which is the single most effective means of reducing the water damage itself and preventing the growth and spread of mold.
The resolution states clearly that owners will be liable for any damages resulting from their failure to comply with the terms the resolution details. Those damages include:
- Expenses the board incurs for cleaning, maintenance, repairs, or mold remediation within the unit that the owner fails to handle or fails to handle effectively.
- Expenses the board incurs to remediate damages to other units or common areas, including, but not limited to, attorneys’ fees and the cost of hiring industrial hygienists.
- Any fines, other costs or attorneys’ fees the community association incurs to enforce the resolution as well as damages suffered by the association or other unit owners and occupants.
The resolution hasn’t been challenged in the Massachusetts courts, but we don’t think there is any question about its enforceability or about the board’s authority to adopt it. Condominium by-laws typically require owners to maintain and repair their units; the resolution simply defines in more detail obligations the board has the clear authority to enforce.
Spreading the Word
Although boards don’t need owner approval to implement a resolution of this kind, as with most matters, it is a good idea to inform owners well in advance that the idea is being discussed and to solicit their input before taking final action. After the resolution is adopted, the board should circulate copies to all owners and tenants, post the resolution on the association’s Web site if it has one, publish it in the association’s newsletter, post it on community bulletin boards, and take similar reasonable steps to make sure all residents of the community are aware of the obligations the resolution defines.
In addition, the board should make sure the resolution is recorded at the Registry of Deeds to give future owners constructive notice that they are purchasing units subject to these duties. Although the general wording in the model resolution is probably broadly applicable, some communities may have specific concerns that this language does not address. For that reason, and because this is a legal document, boards should have their association’s attorney draft the resolution to make sure it is enforceable and responsive to their community’s needs.
Simply having this resolution in place obviously won’t prevent water or mold damage or the litigation resulting from those conditions. However, clearly detailing the obligations of owners may short-circuit any suits filed against the association involving damages caused by the owner or the owner’s negligence, and should shift liability away from the association is the litigation proceeds.
And while the resolution alone won’t guarantee lower insurance rates of your community, it may encourage a more favorable response from insurers, especially in combination with an increasingly common resolution, requiring affected owners to pay the master policy deductible when the association’s coverage is triggered. The resolution’s most likely and most desirable effect, however, will be to reduce the risk of water or mold-related problems that could spread to other units or affect the community as a whole. The single most effective way to control your insurance costs and improve your insurance prospects is to reduce your insurance risks. And that is precisely what this resolution is designed to do.