Who gets the check for a roofing claim when the roof is a common element of a CIC?
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UPDATED: Jul 27, 2012
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Insurance Question from Heidelberg, MN
Asked on 07/27/2012
Who gets the check for a roofing claim when the roof is a common element of a CIC? The builder sold all but one townhome which was still insured under the contractor's policy. The other eleven townhomes were insured by the HOA. All 12 roofs were common elements of the HOA. A severe hail storm totaled all the roofs. The HOA replaced 11 roofs but the contractor pocketed the money and did not replace the roof of the unit that had not yet been sold. Would the builder's insurance company issue the check solely to the builder even though the roof was a common property of the HOA? In other words, wouldn't the HOA be the first secured party in this case?
Answer given on August 13, 2012
If the unsold unit of the HOA was insured by the contractor’s insurance policy and not insured by the HOA then the insurance company for the contractor would make the payment to the named insured of their policy, which is apparently the contractor. If the contractor chose not to repair or replace the roof and simply pocketed the money, it could pose a problem for the future purchaser of the property. In addition, the HOA could refuse to include the unit under their policy if the roof is damaged. The HOA may want to contact the contractor and advise they will exclude the unit that is unsold until the roof is repaired or replaced. This information will have to be provided to the buyer of the property and may make the unit unable to be sold. If you are a representative of the HOA you should contact the contractor and try to resolve this issue before the unit is sold.
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