Q. My neighbor’s washing machine drain hose became loose in our condo building, and the leaking water caused damage to my unit. There are conflicting clauses in our legal documents. One says that a unit that causes damage to another unit or to a common area is responsible for fixing it. Another clause says that subrogation shall be waived if both units have insurance.
Because of the second clause, my neighbor’s insurance will not accept liability. It looks like I will have to sue my neighbor for the deductible and other out-of-pocket costs. I am assuming breach of duty. The hose could have been secured. Do I have a good small claims case?
A. First, I cannot provide specific legal advice in this column; you should discuss your situation with your own lawyer. Second, whenever I get involved with insurance matters, especially relating to community association, I always seek advice from insurance professionals.
Was the master insurance policy for the entire association advised of the damage? It seems to me that the master should be responsible, specifically to reimburse you for the damage to your unit. Typically, the master policy will cover damage to walls and floors, but will not cover what is known as “betterments” — new things added to the original unit, such as a new kitchen or parquet flooring. And typically also, the deductible will be a common expense, paid for by all owners.
I assume from your question that your insurance policy paid for your damage, and it is your deductible that you want your neighbor to pay. I do know that the law in some states does not allow the insured to sue for the deductible, but this is something your attorney can tell you.
However, there’s a good lesson here: Every condominium owner should have insurance coverage for problems that occur inside the unit. The insurance industry calls it an HO-6 policy, and the relatively nominal cost may be well worth it in the long run.
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One more suggestion: Washing machine hoses are notorious for causing leaks. Many associations require their owners to install heavy-duty, stainless-steel braided hoses, often called “burst proof.” If the unit owner cannot prove that these hoses have been installed, the condo board is authorized to fine the owner on a daily basis until the installation is made. Suggest this to your board of directors.
Q. On July 30, I had settlement on the purchase of my first home. It was an FHA mortgage and the mortgage insurance premium (MIP) was financed. The upfront fee was approximately $5,500 and the monthly MIP was approximately $144. I received a letter on Sept. 18 from the bank that bought my mortgage telling me that I would no longer be required to pay the mortgage insurance premium because it was not disclosed to me in my closing documents and that any premium already collected would be reimbursed in approximately 30 days.
I have not received any reimbursement, but my monthly mortgage bill has been reduced and does not include the MIP. When I called the lender, they told me to check with the title company or the original lender. The title company referred me to that original lender who insisted everything was disclosed correctly and that they never heard of such a thing. They feel that my new lender made a mistake. They agreed to check on it for me, but never called me back.
Who do you think has the money? Do you think I am entitled to reimbursement of the $5,500? If so, I would definitely want to pursue this. If not, I made only one monthly premium of $144, which may not be worth the hassle of figuring out what is going on. Also, if I pursue this, they may indeed have made a mistake and I may then have to begin making the additional payments. What would you suggest?
A. Interesting; I rarely hear of a lender giving up money. I suppose you could independently — without identifying yourself or your loan account number — research the matter. Try reviewing the information about mortgage insurance premiums on the Internet; this may assist you in determining if, in fact, you are obligated to obtain such insurance. Typically, if you do not put down 20 percent of more of the purchase price of your house, you have to obtain MIP. This protects the lender should you go into default.
My take: Don’t rock the boat, but keep the letter from your lender stating that you do not need that insurance. They may come back to you later, and your letter will be your best defense.