Condo Media - June 2017 - 53

was insincere. In any event, suffice it to
say that the matter got real personal,
real fast, as he deliberately refuses to
reimburse the unit owner the amounts
advanced. Another two months go by
with no action. When pressed, the president explains that he is "revisiting the
numbers". He finally agrees to settle,
but questions all the items agreed to by
the adjuster and is attempting to whittle
down the claim in the hopes, perhaps,
of having a surplus which he could then
deposit into the reserve account.
ASSOCIATION RESPONSIBILITY
The association, through its board,
and further, through its president, if
properly appointed by the board, has
the authority to process the claim, work
with the adjuster and accept the money.
Pursuant to the insurance provisions
in the RI Condominium Act, Section
3.13(d) (1) under the master policy, the
unit owner is an insured person per his
or her ownership interest in the common elements. However, under Section
3.13 (e), the association has the power
to solely adjust the claim, and not the
unit owner affected. In other words, all
claims involving the master association
policy must go through the association,
even though it is the owner's unit that
has been damaged. Here, no other portion of the condominium, other than
the inside of the unit, was damaged.
Moreover, under this section, all proceeds are payable to the association, not
to the unit owner. So then, the board
has the right to adjust the claim and accept the proceeds.
The cost of repair or replacement, in
excess of the insurance coverage, such as
depreciation and deductibles, are a common expense per RIGL 3.13 (h). Accordingly, the board president cannot subtract
those items from the claim. He must pay
them out of the association's own funds.
Under this section (h), the insurance
proceeds must be used to promptly
restore the damaged area to a condition
compatible with the remainder of the
condominium. Here, then, the delay for
personal reasons, whether legit or not,

was not a proper excuse not to resolve the
claim. The fact that the unit owner paid
the claim herself does not justify the delay
in finally resolving the claim.
Section 3.02 of the Condo Act affords
the association much discretion to
delegate its duties to the unit owner to,
in effect, handle the heavy lifting of the
claim, engaging a contractor of the unit
owner's choice, provided he or she is appropriately experienced, insured, and to
work with the adjuster. So, by and large,
the association can stay out of the claim
if it involves the inside of the unit.
The Condominium Act directs
that all duties by the association are
governed by an obligation of good faith,
the breach of which could expose the
association to punitive damages and
attorney's fees per 4.17 of the Act. Here,
once the association delegated its responsibilities to the unit owner, accepted the claim, and received the money, it

has a responsibility to promptly settle
the claim, reimburse the unit owner her
advances, and not, as in the case here,
revisit the claim and start to cherry pick
and double-guess what the adjuster,
unit owner, and contractor had agreed
upon, in the hopes of saving the association some money for a rainy day. Here,
the president thought, wrongly, that
it was his duty to cut or not honor the
previously agreed upon (and paid-for)
amounts from the claim and to pocket
the difference for the association.
To be sure, it is neither the association's job, nor its duty to profit from the
damage claim of one of its unit owners.

n FRANK LOMBARDI ESQ., CCAL
IS A PRINCIPAL WITH THE LAW FIRM
OF GOODMAN, SHAPIRO &
LOMBARDI, LLC.

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June 2017

Condo Media - June 2017

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