Tenant Left Water Running & Overflow Caused Damage - Advice Plz

[Jeff Li]

First year landlord here.  I just found out that my tenant left the shower running all night while the bath was plugged.  Water overflowed to the floor, causing damage to my unit.  Not only that, this is a unit in a Condo building.  The water overflowed to the hallway, causing damage to the common area.  AND the water leaked all the way down, causing damage to multiple units in floors below.  At this point, Condo management is taking care of initial servicing and I'm going in Monday to assess the damage.  

Given my inexperience on a matter like this, I'm soliciting everyone's expertise here.  

1) How should I handle the liability with the building and other unit owners?  Through insurance company?  Through a lawyer?  Myself?

2) What kind of liability should I expect?  Is it enough to just repair the damage in the other units?  Or should I expect to be liable for more that that?  

3) Should I hire a lawyer to assess/protect my liability?  Tenant has admitted fault and building management will confirm that there is no piping issue that caused the overflow.  However, it's not in writing right now.  

4) How should I work with the tenant on this?  Even if he's at fault, I don't want to just leave him to deal with the other unit owners since I'm ultimately legally responsible for that unit; but should I make him financially responsible for everything, or can my Condo insurance be involved?  (He doesn't have renter's insurance)

5) One thing I'm concerned about is insurance.  I initially bought the unit for myself and had Condo insurance under my name.  After renting it out, I never converted it to a landlord policy.  Is that going to be an issue?

6) What kind of professionals should I be working with to help me assess and repair the water damage in my unit?

7) Any other suggestions on this matter would be much appreciated.

I have a feeling this is going to be a nightmare.  So thank you all in advance for your expertise!

[Jeremy Goodrich]

@Jeff Li, total bummer and, unfortunately, super common. Here are some answers:

You should start with the insurance companies. A claim should be filed with three companies:

- your tenant’s renters policy

- your landlord policy

- the condo association policy

There are multiple factors here that you’ve correctly noted:

- damage to your property

- damage to shared condo property

- damage to other people’s property

Your primary concern is liability and that absolutely makes sense but I don’t think it’s time to run out and hire lawyers. It’s time to see how well your insurance company is going to perform.

Here’s what to do:

- get water remediation experts in now!

- File the claims.

- ask for a claim number and contact information for each claim adjuster.

- Make sure to share that info with the other companies involved.

- Wait 24 hours for the adjusters to call you. If you don’t hear, call them.

- BE VERY KIND to each of these people. They are literally the difference between a good and bad experience.

- Ask for a clear step-by-step description of the process.

- UNDERSTAND that this kind of claim will have variables that can’t be perfectly defined right away.

- expect the companies involved to be clear about each step and hold them to following through.

If you have a good quality policy with a good company, you probably won’t hear a ton about what’s going on with the other parties. You’ll simply need to focus on remediation in your own unit.

If you have a local independent agent. Have this chat with her/him. They’ll be your advocate through the process if it’s needed.

Feel free to DM and I’ll share a link to our step-by-step property claim guide. Happy to help.

[Kyle J.]

Originally posted by @Jeremy Goodrich:

You should start with the insurance companies. A claim should be filed with three companies:

- your tenant’s renters policy

- your landlord policy

- the condo association policy

Sounds like 2 of these 3 policies (the renter's policy and the landlord policy) weren't in place according to the post.

@Jeff Li - I'd call your insurance agent, but I'm guessing that the biggest problem you might run into here is that you didn't have the correct policy (you had a homeowner's policy when you should have had a landlord policy).

Hope it works out for you.

[Greg M.]

1) How should I handle the liability with the building and other unit owners? Through insurance company? Through a lawyer? Myself?

Water issues are nightmares. Everyone affected is going to scream mold. The remediation companies are scum. They will scare the HOA and affected homeowners into doing expensive remediation that probably isn't necessary. I don't know if this is an A class or D class building, but this is a potentially insanely expensive issue since it involved water, affects multiple units and the HOA. You need to contact your insurance company ASAP and see if you are covered. If not covered, it might be a good idea to talk to a lawyer.

2) What kind of liability should I expect? Is it enough to just repair the damage in the other units? Or should I expect to be liable for more that that?

You aren't necessarily liable for the other units. You didn't cause this to happen and had no indication it could happen. Your tenant caused the damage and they are liable. However, your CCRs may have wording making you liable for damages to other units. You are almost certainly going to be liable to the HOA for fixing the common areas. The CCRs almost assuredly state that the unit owner is responsible. Your insurance may cover this cost. If not, you can go after your tenant for the cost, but they probably don't have anywhere near enough assets to cover this expense.

If you are liable, you're going to have to cover the cost of water remediation. Don't underestimate this. Remediation companies are scum and they'll bring in 3 industrial fans to dry the place and charge you $350 a fan per day for 5 days. They also rip off large sections of dry wall and molding and tear up sections of carpeting. I've seen remediation bills well above 10K for a small condo and not much damage. Then there will be the repair costs. There may also be relocation costs as some people may need to leave their units while they are being dried out and later repaired. Then the costs to replace all the person items damaged.

3) Should I hire a lawyer to assess/protect my liability? Tenant has admitted fault and building management will confirm that there is no piping issue that caused the overflow. However, it's not in writing right now.

Start with your insurance company. If they will cover this, they will hire a lawyer on your behalf if it is necessary. Even your current homeowners insurance (assuming you have a policy) may have some protection for this. If they say they will not cover it, it would be a good idea to talk to a lawyer.

4) How should I work with the tenant on this? Even if he's at fault, I don't want to just leave him to deal with the other unit owners since I'm ultimately legally responsible for that unit; but should I make him financially responsible for everything, or can my Condo insurance be involved? (He doesn't have renter's insurance)

Outside of the CCRs saying otherwise, just because you own the unit doesn't mean you need to get involved with the other units. The person at fault for the damage needs to be involved. That is your tenant, not you.

As for no renters insurance... you just learned a very important and potentially extremely expensive lesson. You absolutely 100% require renters insurance. If they had renters insurance you would not need to worry about any of this. A $10/month policy could have avoided all this pain and suffering. Also, many HOA's require renters insurance. Hopefully your doesn't, since if they did and you didn't have your tenant buy it, you could be on the hook.

5) One thing I'm concerned about is insurance. I initially bought the unit for myself and had Condo insurance under my name. After renting it out, I never converted it to a landlord policy. Is that going to be an issue?

Very possibly. They could potentially deny all claims you make and all those brought against you.

6) What kind of professionals should I be working with to help me assess and repair the water damage in my unit?

Get someone in there ASAP to remove any damaged drywall. Since this is a rental and you don't want liability from not doing things properly, get a remediation company to dry the place out.

7) Any other suggestions on this matter would be much appreciated.

Contact your insurance company ASAP and tell them the truth about the situation. If it is something that they fell they will cover, step aside and let them handle everything. If it is not, you need to determine what you are actually liable for. Contact a lawyer. Don't be surprised if the insurance companies from the building and other affected units contact you to reimburse them for what they paid out.

I would also contact the HOA / Building Management and be extremely helpful and apologetic. You don't want to be the guy whose tenant caused a major problem and they never heard from you. You want to be the responsible owner who was accessible at all times and tried to assist in any way possible.

[Jeremy Goodrich]

Hmm, yeah re-reading that now. Apologies for missing that in the original post.  @Jeff Li, I'd continue as described above and see how the insurance company handles it. @Kyle J. is right though, there's a high likelihood that insurance isn't going to play the role it could.

As for advice outside of insurance, it's going to be tricky.  You're right to consider the expertise of a good lawyer.

[Jeff Li]

Thank you everyone for your very detailed responses!  Very helpful.  I have filed a claim and will be working with my insurance company.

In somewhat of a breath of relief, I confirmed that I didn't change my policy and it is a landlord policy.  So I will be going through them.  

Will keep you guys posted.

[Jeff Li]

A quick update on this.  My insurance company has opened up two claims on my behalf.  1) Dwelling claim for damages to my unit.  2) Liability claim for damages to all other units. (since my tenant doesn't have renters insurance and my Condo declarations holds owner responsible)

At this point it doesn't appear I will be on the hook for any monetary loss other than my insurance deductible.  Thank goodness!  

For any one interested, I have one additional take away about the insurance claiming process.  Understand your owners/landlord policy inside and out and have your own idea of what should be covered.  It's a legal document and there is always room for interpretation.  The claim adjuster is representing the insurance company and will always try to get away with paying the least amount.  

My insurance company initially tried to deny damages to the common area, but when I pointed to the relevant section on my policy, they agreed to cover it.  I'm not even saying I was right in the matter; but adjusters have incentive to settle claims quickly.  So if you're prepared and push back, you have a good chance at getting a better settlement offer.