Condo Insurance Claim Yields Extra Money for Association

S.B. from New Haven County writes:

Dear Mister Condo,

Dear Mr. Condo, our management company received an insurance check due to a water damage claim for one unit, which has been repaired for the most part. However, at least 40+ items on the insurance adjuster’s report were not repaired according to the unit owner. Is our Association supposed to get the unused money from the insurance payout if these repairs don’t need to be done?

Mister Condo replies:

S.B., thank you for writing. You have a few different things going on here so let me try to make some general sense of what happened and what should happen. It sounds like a unit owner suffered water damage and a claim was placed against the association’s insurance policy. That claim yielded a check for an amount of money that was greater than the amount of money needed to make the repair as ordered by the associations. However, the unit owner has had an insurance adjuster evaluate the damage and is now claiming that there is much more repair work needed than what the association had ordered. Further, the insurance money that was received went to the management company, who is still holding the excess funds for the repair until this matter of further repairs needed (according to the unit owner’s adjuster) is settled. Your final questions are about who gets the excess funds if they are not used for any further repair.

First off, I am not an attorney so please consider my advice as friendly. You may well need to get a legal opinion about how to deal with the unit owner’s claim that the association has not made adequate repairs based on the insurance adjuster hired by the unit owner. It is possible that the association has fulfilled its duty to repair as outlined in the documents and that the further damage is the unit owner’s responsibility and that those repairs should be covered by the unit owner’s homeowner’s insurance. It is also possible that the association is on the hook for further repairs, in which case the excess funds from the claim will be sued to make those repairs.

Regardless of the outcome, the money received by the management company is the possession of the association. It should be in an account owned by the association. Is that not the case? If not, it’s time to take a look at how your management company is handling the association’s money.