In a recent decision by the North Carolina Court of Appeals, the Court held that a condominium association was not responsible for out of pocket expenses incurred by an owner when she was forced out of her unit while repairs were made.
In Gehrke v. Gates at Quail Hollow Homeowners’ Ass’n, an owner sued her condominium association for all the costs she incurred while she was forced out of her unit for repairs. To read the full case, click here.
Marguerite Gehrke was a unit owner in The Gates at Quail Hollow Homeowners’ Association, Ltd. (the “Association”), in Charlotte, North Carolina. In 2015, some of the condominium buildings in the community, including the owner’s, began experiencing significant settling issues. The Association hired an engineering firm to investigate and make repairs. The condominium building required extensive repairs to its foundation, forcing the owner to move out of her unit. The initial timeline for repairs was four to six months—but repairs ended up taking two years. The owner spent nearly $40,000 and brought claims for out of pocket moving, storage, and living expenses she incurred while forced out of her unit. The Association refused to pay these additional expenses, asserting that it was not obligated to do so. The owner sued her Association. At trial, the Association was successful, but the owner appealed.
The North Carolina Court of Appeals affirmed the lower court’s ruling, finding that the plain language of the Declaration created no duty for the Association to be responsible for the owner’s out of pocket expenses. Consistent with the governing documents in similar associations, the Declaration here made the Association “responsible for the maintenance, repair, and replacement” of structural parts of the condominiums, such as the foundation, and also provided that if “any incidental damage” occurs to the unit during repair work, the Association “shall, at its expense, repair such incidental damage.”
This type of scenario where one owner wants to be reimbursed for what they perceive as “unfair” costs is common. Many boards of directors mistakenly assume that just because it seems fair to reimburse an owner, their association must do so. In reality, this is often not the case.
Additionally, the types of costs at issue in this case are often covered under a homeowner’s insurance policy as an additional living expense. Even though additional living expense coverage usually has limits, in a condo those limits tend to be higher.
Obviously, facts matter, and the language in the governing documents for your association may be different than those in this case. But, the fact remains that homeowners associations and condominiums are often not responsible for additional costs that many people assume would be fair for their association to pay. If your association has questions about costs connected with repairs, reach out to one of our experienced community association attorneys.