We run into this a lot. Water leaks are the number 1 source of damage inside a rental property. A pipe breaks or an appliance leaks – the rental property at the source of the leak is damaged, and potentially, multiple units below are affected.
How should the repair be handled and who is ultimately responsible for payment?
Like many things in residential property management, the answer is… “it depends.”
The complex maze that must be navigated when determining liability and the parties potentially on the hook for the cost of repairs looks something like this (and this is an abbreviated version of the thought process):
- The tenants, either individually or through a renter’s insurance policy. Did the tenant overload the washing machine? Did they turn off their heat while on vacation during the winter and a pipe froze? Did they back up a toilet causing an overflow? Did they fail to report a small leak ongoing over time?
- The landlord. Did the landlord fail to require a renter’s insurance policy? Did the landlord know of a leak (or should they reasonably have been expected to know) and did they look the other way? Did the landlord hire an unlicensed plumber to perform work previously, that was done incorrectly and is now causing the issue?
- The landlord’s insurance policy. Was there an unforeseen broken pipe or another major leak that originated from the landlord’s rental, and do the HOA rules indicate the unit owner is responsible?
- The HOA. Do the HOA’s rules indicate they are responsible, either because it was a common/shared pipe or because of an HOA vendor that performed work previously?
- Third party vendor. Did a vendor perform work in violation of industry standards that caused the leak?
As you can see, matters like this are complicated. In practice, we can tell you that no party wants to take responsibility for the necessary mitigation and repairs.
Ensuring the right party is held accountable and rental properties are protected is just one small reason to hire the professionals at Real Estate Solutions.
by Greg Weik
Filed under: Denver Property Management - Market Trends