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In October of 2005, condo owners collectively breathed a sigh of relief when the New York state court of appeals overturned a decision that said unit owners could be held personally liable for injuries resulting from defects in the common areas of the condos. However, this ruling may provide condo owners with a false sense of security, some legal experts claim. Many condo lawyers contend that the decision is not what it seems to be and are encouraging condo owners to take the steps requisite to protect themselves.
The original decision was based on a case where a man suffered serious injuries when a piece of chain-link fence fell off the roof of a condo and struck him as he was walking by. The pedestrian sued not only the condo association, but also the owners of the units in the building. The man won the case, as a State Supreme Court justice ruled that individual unit owners could indeed be held personally liable for the pedestrian’s injuries. As mentioned before, the case was overturned, but it still leaves many unresolved questions about whether individual condo owners can be held liable for such events.
Real estate lawyers are urging condo owners not to interpret the overturning of the decision as complete immunity from personal liability for condo common area defects. Condo lawyers point out that the case actually poses more challenging and novel questions about the personal liability of condo board members. Further, the case does not really provide individual condo owners with any real protection against personal liability. If the rationale of the decision is adhered to, it can not be assumed that board members are completely insulated from personal liability. Although an insurance policy is one way of protecting board members, no insurance policy can cover every claim under any circumstances. As a result, condo lawyers claim that board members must be reimbursed by you, a condo owner, to the greatest extent possible for any amount for which they are found liable.
No matter how you slice it, this case necessitates higher insurance coverage for both individual condo owners and condo associations. Real estate law experts recommend that condo owners carry an umbrella insurance policy that will protect them from this kind of personal liability. Condo associations also would do well to increase their coverage, as most carry only $1 million in basic liability coverage and $1 million in errors coverage for officers of the condo association. By carrying more insurance as a condo owner, you can protect yourself from costly liability suits, even if the resulting damage or injury was not related to your individual unit.
