question about condos

I have a fairly basic question about condominiums. If I own a condominium and some kind of disaster (e.g. earthquake) knocks the building down, what happens next? The thing I owned (the unit) is gone and I (presumably) have some insurance money, but I don’t own the land. I want my condo rebuilt; am I reasonably assured that that will actually happen? Is it possible that the law obligates the condo association (if that’s the right entity to be speaking about) to rebuild in such an event and/or to be insured sufficiently to be able to do so?

Mortage Companies require the association to hold certain minimum amounts of structural coverage as well as defining the exact type of coverage and rating of the insurance carrier. They will not allow a sale to go through without proof of said coverage. My fairly small (8 unit) building has a $1.5 million policy.

The condo documents and bylaws may contain language that allows the trustee (usually the condo’s board of directors) to determine what happens if the building is damaged beyond repair. They may vote to divide the insurance monies among the mortgagees to do with as they please.

You do, sort of, just not on your own. The association still exists after the building(s) are destroyed, and as a member, you can ask/fight for reconstruction. You could even run for a spot on the board.

In the 2 cases that I am familiar with, the condo owner is responsible for the unit, “from the drywall out”. Anything from the drywall into the rooms are the owners responsiblilty to insure. The structure of the buildings are insured by condo association.

In case of major damage, the condo board would decide if the insurance money would be used to rebuild, or divided out to the unit owners. Yes, it would be possible for the board to vote to not rebuild, even if you would prefer that they did.

As far as the land, you do own it, jointly, along with everyone else in the association.

I lived in a condo that was moderately damaged during the Northridge, CA earthquake in 1994.

The condo association was required to hold an earthquake insurance policy and they bore the responsibility of rebuilding/repairing all of the damaged units (structure) and common areas. This included the structure itself (foundation, framing, etc.) as well as interior stairs, drywall and painting. I was responsible for everything inside of my unit (personal property, cabinets, floors, carpet, etc.)

Your association bylaws should tell you. Mine specifically says that the association can vote to rebuild or not if the building is condemned. There are 80 units in 6 buildings, so it is fathomable that 60 of us could vote to not rebuild 20 units that were destroyed by fire or something. I don’t know exactly how much the 20 displaced people would be paid, but they will be paid by the insurance that the condo association has on the structure. I insure from the unfinished walls in. Patty O’Furniture is exactly right about the mortgage company, too, Mine requires a yearly written confirmation of the insurance policy held by the association. If you are not yet a condo owner, read the condo association documents and finances thoroughly before you commit. If you are already in one, the association and the mortgage holding company may already know each other and that is why you haven’t seen much of the paperwork. Probably half of the 80 units here are mortgaged by the same company.

It might be possible; it would depend on what state you’re in, and you didn’t give that location. But probably unlikely; most states don’t have a law requiring you to have any insurance on your residence, that’s up to you to decide.

Some friends of mine have a winter condo in Florida, and were slightly damaged (broken window & wet carpet & furniture) in the storms last year. Luckily, they had insurance to cover the furnishings & contents of their unit.

But in the process of getting things fixed, they discovered that the insurance policy on the building itself, held by the condo association, is far too small. The amount would not be enough to rebuild the building, or even to do major repairs in the case of something like a damaged roof. The amount seems to be set at the original construction cost of the building, about 20 years ago. But construction costs have increased, and the value of condo buildings in Florida has risen greatly. The condo association is now seriously under-insured for the building itself.

My friends are pushing this some, but the condo association board does not want to pay higher insurance premiums. All of the residents are retired, and on fixed incomes. So while my friends have adequate insurance for the contents of their unit, the insurance on the whole building is inadequate. And they can’t even buy extra insurance to protect their condo, since the association, not them personally, is the legal owner of the building. Frustrating, and very worrysome for them.