Who pays when a condo leak damages the unit below?

The source of the leak decides it. A.R.S. 33-1247(A) says that, except as the declaration provides, "the association is responsible for maintenance, repair and replacement of the common elements and each unit owner is responsible for maintenance, repair and replacement of the unit." The statute then covers damage done during repairs: "If damage is inflicted on the common elements or any unit through which access is taken, the unit owner responsible for the damage, or the association if it is responsible, is liable for the prompt repair of the damage."

In practice the source sorts into three buckets:

The pipe that straddles the unit boundary is the row people miss. Under A.R.S. 33-1212(2), "If any chute, flue, duct, wire, conduit, bearing wall, bearing column or other fixture lies partially within and partially outside the designated boundaries of a unit, any portion serving only that unit is a limited common element allocated solely to that unit." A limited common element is, by definition in 33-1202, "a portion of the common elements," so the default in 33-1247(A) puts its repair on the association, not the owner. Under 33-1255(C)(1), "Unless otherwise provided for in the declaration," any common expense for maintaining or repairing a limited common element "shall be equally assessed against the units to which the limited common element is assigned." So the association usually does the work, and the cost can come back to the unit or units it serves. This all starts from "Except as provided by the declaration," so check yours.

The bottom two rows are where neighbors argue. Whether a leak was a sudden failure or a tub left running is a question of fact, so a plumber's written finding of what failed, with photos, is the most useful document you can have. Our page on who fixes a leaking pipe in a condo covers how unit boundaries decide whether a pipe is yours.

The association has to carry property insurance, and it is the primary policy for covered losses. A.R.S. 33-1253(A) requires property insurance on the common elements and, "if required by the condominium documents, the units, insuring against all risks of direct physical loss commonly insured against." A.R.S. 33-1253(D)(4) adds that "If, at the time of a loss under the policy, there is other insurance in the name of a unit owner covering the same property covered by the policy, the association's policy provides primary insurance."

Two details matter to the neighbor below:

• Report to the association first. Under 33-1253(E), "Prior to reporting a loss under the association's master property insurance policy, a unit owner shall report the loss to the association and give the association ten business days to provide the unit owner with a written decision whether the association will be reporting a claim to the master policy." If the association declines, the written decision has to give the reason.
• The master policy does not cover everything. Under 33-1253(B), the coverage "need not include improvements and betterments installed by unit owners or the personal property of unit owners." Upgraded flooring, cabinets, and furniture usually sit under the owner's own policy.

Money from a covered loss does not go to the owner in cash. Under 33-1253(F) the proceeds are "payable to any insurance trustee designated for that purpose, or otherwise to the association," and are used first to repair or restore the damaged property.

Not under the association's policy. Section 33-1253(D)(2) requires that "The insurer waives its right to subrogation under the policy against any unit owner or members of the unit owner's household." Subrogation is the insurer's right to recover what it paid from whoever caused the loss. So when the master policy pays for the wet drywall in the unit below, that insurer cannot turn around and bill the upstairs owner for it.

That waiver is narrower than it sounds. It binds the master policy's insurer. It does not stop a downstairs owner's own insurer, who paid for the owner's personal property or upgrades, from looking at the upstairs owner. It also does not touch the deductible.

Often an owner does. A.R.S. 33-1253(K) requires the association to tell owners in writing every year about "The unit owner's responsibility for the association's insurance deductibles for all property and liability coverage," along with the amount of each deductible. Whether a given loss lands on the association's budget, the upstairs owner, or the owner who suffered damage depends on the declaration and the assessment rules.

One more statute is worth knowing. A.R.S. 33-1255(E) says "If any common expense is caused by the misconduct of any unit owner, the association may assess that expense exclusively against that unit." The word is misconduct, not "any leak," so an ordinary failed supply line is a harder fit than something like ignoring a known leak after being warned. Read your declaration and ask the association for its position in writing.

Expect the association process to stop short of owner-versus-owner disputes. The Arizona Department of Real Estate's HOA dispute process handles disputes between an owner and the association, and its page says "The Department cannot accept Petitions filed by or against renters, non-owners, directors, representatives, other homeowners or community management companies." A fight between two owners over who caused a leak is not something that process hears. It goes through insurers, negotiation, or the courts, so an attorney is the right call for a disputed amount. The Department also states that it cannot advise what an HOA may or may not do.

1. 1Stop the water. Close your unit's shutoff. If the leak is in a shared line, the association or its manager controls the building valves. See who can close the main shutoff in a condo building.
2. 2Photograph everything before cleanup: the source, the ceiling, the floor, and the affected rooms in both units.
3. 3Get the cause in writing from a licensed plumber. A cracked supply line at an angle stop and a corroded riser joint lead to very different answers.
4. 4Notify the association in writing and your own insurer the same day. Our water damage claim guide lists what adjusters ask for.
5. 5Start drying promptly. Wet drywall and insulation do not wait for the claim to be decided.
6. 6Do not agree to pay anything until you know which policy responds. The neighbors can settle among themselves later, with the documents in hand.

Standard condo policies do cover this kind of event. The Triple-I guide lists, among covered perils, "Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance," and tells readers that policies vary and to check the specific perils. Sewage backing up through a drain is a different event with different coverage. See who pays for a sewer backup in an Arizona condo.

If the failed part was inside your unit, HQ repairs and replaces supply lines, valves, and water heaters, and gives a written price before work starts.

This page explains general Arizona rules, and your declaration controls. It is not legal advice.