C.S. from Lake County, Florida writes:
Dear Mister Condo,
My air conditioning unit was damaged by a vendor of the association causing a Freon leak. We do not know what vendor damaged the unit – either the tree trimming company, the landscaping company or the pest control company. The association has paid for Freon on five separate occasions on my unit, costing over $1000.00. This is not fixing the air conditioner, it is damaged completely and needs to be replaced. I have submitted several bids to replace the unit. The association has sent out several vendors to submit bids but the association’s board of directors have refused to pay for replacement of the unit. The board approved only 1/3rd of the cost to replace the unit. Their explanation is, prorated value only because they don’t want to set a precedent in the community. Everyone will want their unit replaced! If the unit was damaged by a vendor, either their insurance or association’s insurance should cover the full replacement cost. Do you have any suggestions on how to handle this situation?
Mister Condo replies:
C.S., I am sorry that your air conditioner has been repeatedly damaged. I am sorry that your association has hired contractors that have been careless around the common areas that they have damaged not only your property but the property of other unit owners as well. The Board’s handling of this damage has me a bit confused so let’s start with what I think should be done and we can try and put ourselves in the Board’s position to try and figure out why they are handling it the way that they are. It is typical and legal to use the prorated value of any item that is damaged. I know that seems harsh when you take a loss on a big-ticket item such as an air conditioner. The reality is every state has its own laws but it is typically the prorated value that is used to settle damage claims. Even though an air conditioner may last for 15 to 20 years, it’s prorated useful life may be as little as seven years or less. That means that, in theory, a seven-year-old air conditioner that is fully functioning may have $0 in prorated value, even though it still works. This is an important concept to consider when deciding how to reimburse an owner for damage.
The Board has hired the various contractors you have mentioned. I assume the Board requires these vendors to carry insurance in case they cause any damage. It is possible that the Board is reluctant to pursue these contractors for the damage they have caused although I am uncertain as to why. You might want to ask them. Whether the vendor or the Board assumes the liability, the claim against the association might be eligible to be placed against the association’s insurance. However, many Boards are reluctant to do so because an increase in claims can lead to an increase in insurance premiums or dropped coverage by the underwriter. The Board is wise to examine the cost/benefit of making claims against the association’s policy.
Which brings us to your particular offer of a prorated settlement. Since the Board doesn’t seem interested in pursuing the vendor for the damage and have elected to settle with you directly, I think you should take them up on their offer of a prorated settlement. Even if they had gone through their own insurer or the vendor’s insurer, I doubt you would be offered much more. I would also suggest you let the Board know that they should hold their vendors to a high standard of accountability when it comes to damaging unit owner property. There is no reason that better vendors can’t be brought in if the current lot is regularly damaging property. All the best!