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Condo, HOA, and Neighbor Losses

When the loss comes from next door or upstairs, the question isn't just who caused it. It's also whether the condo documents or state law let you pursue them at all. Find the waivers before you find the experts.

What it coversUnit-to-unit water, common elements, falling trees, condo waivers

Step-by-step checklist

Identify

Contact the claim adjuster right away. Ask them to hold the scene and for permission to retain an expert at the client's expense. Note the call in the file.
On every claim, ask the client whether they want an origin and cause investigator to review the scene, or confirm one is already assigned. Note their answer in the file so the decision is on record.
Make sure no evidence is touched or moved until the expert has secured the scene
Get the client's approval for the scene exam cost. Most run at least $1,600 with travel, the day rate, and expenses.
Confirm the source: unit above, a common element, a neighbor's tree, or drainage
Get the condo declaration, bylaws, and master policy
Check the condo documents and state law for waivers of subrogation

Hands off until the expert arrives. Nothing at the scene gets touched, moved, repaired, or thrown out until the origin and cause investigator has secured it. Evidence that's moved early can sink the whole recovery.

Notify

Notify the unit owner or tenant, the association and property manager, or the neighbor
Notify each party's carrier

Investigate

Secure the failed part (see the supply line or water heater guide)
Pull association maintenance records, meeting minutes, and prior complaints
Tree loss? Photograph the stump and break, and get an arborist's opinion.
Drainage? Get before and after photos and records of recent work.

Demand

Review payments and out-of-pocket costs
Sort the supports into photos, estimates, invoices, and reports
Send the full demand packet

Negotiate

Know who owes the master policy deductible under the declaration
Follow up. No response? Send the second demand.
If liability is accepted, negotiate. If not, review for ADR.

Settle

Review the release
Receive payment, issue the deductible and client payments
Final file review, then close

1. Identify

Common scenarios

Scenario	Who may be responsible
Water from the unit above, such as a toilet supply line, tub overflow, or appliance	The upstairs unit owner or tenant, and possibly a product maker (see the supply line guide)
A common element fails, like the roof, a shared riser pipe, or the building's plumbing	The condo or homeowners association
Fire spreads from a neighboring unit or house	The occupant where the fire started (see the fire guides)
A neighbor's tree falls on the insured's home	The neighbor, but only if they knew or should have known the tree was dead, diseased, or dangerous
A neighbor's grading, drainage, or landscaping sends water onto the insured's property	The neighbor, or their contractor
A contractor hired by the association causes damage	The contractor, and possibly the association

Falling trees

A healthy tree that falls in a storm is generally treated as an act of nature, so there's no one to recover from. The claim exists when the owner had notice of a problem: visible rot or decay, dead limbs, a prior complaint or letter from the insured, or an arborist's warning. Photograph the stump and the break before cleanup. Rot inside the trunk is often the best evidence you'll get.

Condo coverage basics

The association's master policy usually covers the building and common elements. Each unit owner's policy covers their unit's interior and belongings, depending on how the condo documents divide it. Which policy pays for what affects who your client is, and who you can pursue.

2. Notify and investigate

Check for waivers first

Many condo declarations and bylaws include a mutual waiver of subrogation between unit owners and the association. Many states that adopted the Uniform Common Interest Ownership Act also require these waivers for certain losses. Before anything else, get:

The condo declaration and bylaws
The association's master policy
The state's condo statute. See the state chart in the sources below.

Who to put on notice

The unit owner or tenant where the loss started, and their unit owner or renter's policy
The association, its property manager, and the master policy carrier
The neighbor and their homeowner's carrier
Any contractor or product maker involved

Evidence checklist

Where the water or fire came from, confirmed by a plumber, investigator, or the association's maintenance staff
The failed part (see the supply line or water heater guides)
The association's maintenance records, meeting minutes, and prior complaints about the same problem
Which parts of the building are common elements and which belong to the unit, per the declaration
For trees: photos of the stump and break, any prior written complaints, and an arborist's opinion
For drainage: before and after photos, and records of the neighbor's recent work

3. Demand, negotiate, and settle

Liability theories

Against a unit owner or tenant: negligence, such as leaving water running or failing to maintain an appliance or supply line
Against the association: negligent maintenance of common elements, especially after complaints put it on notice
Against a neighbor: negligence, including failing to deal with a tree they knew was dangerous

Defenses to expect

Defense	How to answer it
The declaration or state law waives subrogation	Read the exact scope. Some waivers only apply to the extent the loss is insured, or only to certain parties.
It's a common element, not the unit	The declaration's definitions. They decide who was responsible for maintaining it.
Act of nature, for trees	Proof the owner knew or should have known the tree was dangerous.
No notice of the problem	Prior complaints, emails, work orders, and meeting minutes.

Negotiating and settling

Association master policies can have large deductibles. Know who owes the deductible under the declaration.
Unit-to-unit water losses often involve three or four carriers. Put all of them on notice early.
Review the release with the release checklist, then close with the standard closing letter and the deductible reimbursement letter.

4. Letters for this loss

Step	Letter	Sent to
Identify	Subrogation Opening Letter to Insured	Insured
Notify	Notice of Subrogation Interest and Insurance Request	Unit owner, association, or neighbor
Notify	Notice of Subrogation Interest to Adverse Carrier	Each party's carrier
Investigate	Evidence Preservation and Joint Scene Exam Notice and to Responsible Party	All parties
Demand	Subrogation Demand to Adverse Carrier or to Responsible Party	Carrier, or an uninsured party
Negotiate	Second Demand with Escalation Notice, Tolling Agreement Request	Carrier(s)
Settle	Release Review Checklist, Closing (Made Whole) or Pro Rata, Deductible Reimbursement	Client and insured
No recovery	No Recovery Closing Letter	Client, for example when a waiver applies

Sources