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Over the last two months, I have explored Illinois and Michigan law as it relates to the allocation of responsibilities for property insurance coverage between unit owners and condominium associations. In neighboring Wisconsin, the general rule is similar: Condominium associations are responsible for insuring and maintaining common elements, while unit owners are responsible for their personal property and the interior of their units.

According to Wis. Stat. § 703.13(1) a “Common Element” is defined as any portion of a condominium other than the units. Under § 703.15, associations are obligated to maintain, repair, and replace these common elements.

Meanwhile, § 703.17 outlines insurance responsibilities:

703.17 Insurance.

(1) An association shall obtain insurance for the property against loss or damage by fire and such other hazards for not less than full replacement value of the property insured and a liability policy covering all claims commonly insured against. Insurance coverage shall be written on the property in the name of the association as trustee for each of the unit owners in the percentages established in the declaration. Premiums shall be common expenses. Provisions for such insurance shall be without prejudice to the right of each unit owner to insure his or her own unit for personal benefit.

(2) Insurance proceeds shall first be disbursed by the trustees for the repair or restoration of the damaged common elements, and the unit owners and mortgagees shall not be entitled to receive payment of any portion of the insurance proceeds unless the association has determined not to rebuild, or the court has ordered partition of the condominium property, or there is a surplus of insurance proceeds after the common elements have been completely repaired or restored.

What Does This Mean for Condominium Owners?

Like Illinois and Michigan, Wisconsin places great weight on a condominium’s governing documents. Under § 703.10, every association must adopt bylaws and a declaration that clearly defines who is responsible for each part of the property. Courts in Wisconsin defer heavily to these documents when disputes arise, often overriding general assumptions in Chapter 703. However, simply because Wisconsin relies heavily on governing documents doesn’t mean that a good advocate does not raise the issue.

One notable case that illustrates this is Rydland v. Marina Cliffs Ass’n, 375 Wis.2d 325 (Wis. App. 2017). There, the Rydlands sued their condominium association for failing to maintain the atrium roof, which allegedly caused water damage and mold inside their unit. At trial, the Rydlands requested that the court instruct the jury that the association was responsible for the atrium roof’s maintenance and repair. However, the trial court denied the request, stating that (1) the issue was raised too late on the second day of trial and (2) the parties litigated for years assuming the atrium roof was the owner’s responsibility. Here, the appellate court held them to their earlier position and the declarations, which resulted in a ruling against them. While Wisconsin places great weight on a condominium’s governing documents, the argument that the responsibility was that of the association should have been raised much earlier. Unfortunately for the Rydlands, because it wasn’t, the appellate court ruled it was waived.

Takeaways

  1. If the damaged area is within the unit boundaries, the unit owner pays.
  2. The courts will enforce governing documents strictly, even when damage is caused by elements that interact with common areas.
  3. It is important to identify and assert critical legal arguments early in your case.

As I discussed in my prior blogs, Michigan Condo Repair Dilemma: Will the Association Pay, or Are You Stuck with the Bill, and Illinois Condo Repair Dilemma: Will the Association Pay or Is it Coming Out of Your Pocket, it is crucial to understand the law in your state and how responsibilities are allocated in governing documents. Because responsibilities vary widely, don’t assume the association will cover the damage. Check your governing documents and know the law. But what is more, as an advocate, it is important to identify and assert critical legal arguments early, preserve them through appropriate motions, and align the entire case strategy around them.

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