I really enjoy your column and I have a complicated question. My daughter recently closed escrow on a condominium in Orange County. On the afternoon her loan funded, the homeowner’s association notified her Realtor that there was a leak. The leak was in the vacant unit she was purchasing, leaking into the unit below. At this point, it was too late to cancel the closing. It seemed odd that her Realtor was informed just hours before the end of business on the day the loan funded.
I advised my daughter to ask the association when it first learned of this leak, but she never really received a straight answer. The seller had moved to Arizona several years ago and this unit had been a rental. After escrow closed, the seller paid a plumber to fix the leak in my daughter’s unit. Apparently, the unit below the one my daughter purchased had damage to the ceiling.
I know my daughter isn’t responsible because she was not the owner at the time. I am simply curious how the unit below might rectify this situation.
~ Curious George
Assuming the seller had his/her own insurance policy (as a supplement to the homeowner’s association policy) it seems this would simply be an insurance claim. Although I am a real estate agent and not an attorney, I believe you are correct in assuming it is not your daughter’s responsibility as the leak was prior to her taking ownership.
If the seller did not have an additional insurance policy, this lower unit owner should contact his/her insurance carrier. Otherwise, it seems that the owner of the unit below would have to seek redress from the seller. Depending on the cost of repair it may simply be a matter for small claims court. However, it is my understanding that a person cannot sue for more than $10,000. I am not certain that the other unit can use California Small Claims Court for an Arizona resident.
If all else fails, this unit may try to file a claim against the homeowner’s association policy.