In a perfect world, condominium associations would hire a structural engineer to inspect their property every couple of years. The engineer would inform the association of any compromises to the building’s structural integrity or electrical system, and the association’s board of directors would authorize repairs in timely fashion, simultaneously managing risk and controlling costs —including the cost of condo association insurance.
In such a world, few outside of Greater Miami would ever have heard of Champlain Towers South, the 12-story condo building in Surfside, FL, that collapsed on June 24 of this year, killing 98 people.
Had the board of the Champlain Towers South Condominium Association adhered to an inspection schedule and followed inspectors’ advice, it’s likely the building would still be standing and those 98 victims would still be alive. The 2018 engineering report the board did commission — which warned of a “major error in the development of the original contract documents” prepared by the architectural firm that designed the 1981 building — would have been issued many years earlier, when necessary repairs would have been less extensive and far less costly. The repairs would have been completed shortly thereafter, and regular inspections and maintenance would have averted disaster.
But of course the world we live in is far from perfect.
A July 10 report in USA Today details years of wrangling between the Champlain Towers South board, who had pushed for an assessment to pay for repairs, and the owners of the building’s condos, who had balked at the price. An April 9, 2021 letter from the board president to the condo owners reads in part, “A lot of work could have been done or planned for in years gone by. But this is where we are now.”
Six weeks after the date of the letter, one wing of the building came down in a deadly collapse. Within two weeks of the tragedy, victims’ families filed at least six lawsuits accusing the condo association of negligence. The insurance coverage the association had in place won’t come close to covering the damages.
In a July 1 emergency meeting with Miami-Dade County Circuit Judge Michael Hanzman, attorneys for the association said they were aware of a $30 million Property Insurance policy, as well as $18 million in Liability Insurance coverage. Based on a recording of the meeting posted by the Miami Herald, Claims Journal reports the judge as saying: “It looks like for the property damage claims and for the injury and death claims there’s going to be a total of $48 million, which will obviously be inadequate to compensate everyone fully for the extent of their losses. I don’t know whether there are any third-party claims. Maybe there are, maybe there aren’t. But we are dealing certainly with a limited pot as far as insurers go.”
Indeed. Losses from the Surfside condo collapse are estimated to total about $1 billion.
Condo Association Responsibilities and Coverage
Composed of individual unit owners, condo associations are responsible for the management of the property where the condominiums are located. Most elect a board of directors — typically including three to seven members — to make decisions regarding expenses, routine maintenance, repairs and Property and Casualty Insurance, including Liability Insurance. The board operates under a set of association bylaws and a declaration that establishes which elements of a complex are to be covered under the association’s master policy and which features are the responsibility of individual unit owners. The master policy typically covers shared risks – i.e., the building (or buildings) itself and common areas, such as a pool, grounds and parking lot. In some instances, it also covers standard fixtures that originally came with the unit, such as cabinets and sinks. Typically, board decisions regarding major expenses are voted on by a quorum of the entire association. Continue reading