hi, I have a question that I haven't found in earlier discussions, and I'm hoping someone in the forum has had experience with this.
I have a rental condo in a homeowner association in California. The governing documents are being revised, in part to indicate that each owner is reponsible for any damage by their tenant(s) - not only in the individual condo/home, but in common areas and other association facilities. Repair costs would, if necessary, be obtained by special assessment or lien. Apparently this is common wording for recent HOA documents. It might be ok for HOA's with high owner occupancy and tenants with long-term leases. However, there are no guarantees about tenant behavior, and for a short-term vacation rental the risk seems higher. And, the thought of expanding liability to the common areas expands the risk considerably - for HOA's with a clubhouse or other structures; maybe even something like a fire across the premises. Ugh.
I have insurance for the condo itself as a rental, personal property within, and liability. I haven't figured out how to find insurance that would cover tenant damage to common-area buildings, structures, etc. - I'm not even sure what type of insurance it would be, and whether it's available. The association has a master policy, but my insurance agent said that insurance coverage follows what's specified in the governing documents, so if our documents are revised the master policy would not cover tenant damage.
Is this new HOA document revision in response to an incident that you are aware of? What is the scenario here? If your insurance agent can't answer it maybe your lawyer can. More info would be helpful.
From what I understand it's fairly standard (at least in California) in recent HOA document revisions.
It's intended to give the association a way to recover costs for damages by tenants.
It doesn't appear to be related to a specific incident.
I'm pretty sure many owners in HOA's aren't aware of this potential risk because the documents are difficult to read and interpret. I'm aware of one instance (in another HOA) where an owner was charged $10,000 for tenant damage to the common area and was very surprised - but ended up having to pay it.
While that would be scary as an owner, damage caused by renters isn't the HOA's fault either. Perhaps they're right in thinking they, or their insurance, shouldn't have to pay. If this comes to my area, I'll have to adjust my T&C's making my guest take responsibility for any damage they do to common areas.
I agree. The issues I see are (a) how to insure for damage to property that I don't personally own - or perhaps structure the investment in some way that protects personal assets - I'm new to this. And (b) it's not always possible to recover costs of damage from a guest or tenant. In some instances, for example, a credit card wouldn't cover it.