The everchanging landscape of the real estate market has created new environmental liability challenges for condominium associations. In the past, these associations collected dues for common area maintenance or use of the clubhouse by homeowners, whereas nowadays these associations are more involved in the day-to-day property management activities including insurance procurement. Condo associations are facing a significant increase in activity related to their operations.
Condo associations typically provide services for the homeowners through the hiring of contractors, regulation of homeowner activities, and in some cases imposing fines for homeowners not following the condo association’s bylaws. If the insurance they purchase has not been structured to address environmental concerns such as mold, asbestos, lead, silica, or other hazardous substances, claims for environmental damage could be denied by their insurance carrier and the condo association may be left to pay for environmental cleanup, bodily injury claims, or property damage claims from adjacent properties.
The environmental exposures that condo associations have are very similar and often overlap with exposures that property managers have. In fact, oftentimes when an environmental lawsuit is filed against a property manager, the condo association is also named in the suit. Property managers and condo associations may share responsibilities or be individually responsible for some of the following activities from which environmental claims may stem:
- Historical site use
- Pollutants coming onto properties from neighboring properties
- Responsibility for waterfront locations vulnerable to spills and discharges from property activities
- Responsible for drinking water quality
- Responsible for complying with storm water runoff regulations
- Spills or leaks of cleaning chemicals
- Pools/saunas/hot tubs susceptible to mold growth or maintenance chemical spills
- Indoor air quality – Mold, Legionella, etc., and building component off-gassing (ex. carpet glue fumes, paint emissions, wood adhesive fumes, etc.)
- Groundskeeping/landscaping chemical run-off
- Fuel tanks (above and belowground)
Stigma loss associated with a contamination event. Many developments are now touting that their buildings are “green” and “environmentally friendly”, therefore, if they have an environmental incident, and it stems from the activities of the condo association or a contractor they hired, this could be publicized very quickly and cause property values to decline.
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