What happens when a fire caused within a condominium unit destroys that unit, some common area, and damages other units? It becomes an expensive situation for the association. Even though insurance should pay for all of the damages, the association’s insurance premiums going forward could increase dramatically. This is exactly what happened to a small condominium association in Wisconsin. In this case, one of the association’s unit owners was illegally renting the unit to a tenant who, under the influence of alcohol and drugs, passed out and did not stop a kitchen fire that quickly grew out of control. Following the fire, the association’s insurance premiums tripled, crippling its budget. The association approached the Husch Blackwell Condominium & HOA Law Team for advice. After reviewing the association’s declaration, our team discovered a provision that allowed the association to special assess the increased premiums to the unit owner who caused the fire. Taking our advice, the association special assessed the unit owner. The unit owner refused to pay. A lien was filed against the condominium unit and a foreclosure action started. The unit owner responded by filing a counterclaim for slander of title. The association won the case on summary judgment, successfully persuading the court that the declaration provisions gave the association the authority to special assess not just the increased insurance premiums, but also for the association’s attorney fees.
Lesson: Having quality legal counsel that specialize in condominium law pays off in spades.