If you are already involved in Park City property management you may have heard of SB 167, a law passed by the Utah legislature in 2011. This law has strong implications if you own a property that is part of a condominium association. Today I will cover the basics of the law and how it is applied and then share an experience I have had since this law was instituted. If you participate in Utah property management you should consider additional research into this law and, as always, I am not an attorney and this should not be considered legal advice. Let's begin.
SB 167 And Insurance
In speaking with attorneys that represent condominium associations and work in Utah property management law they have described the reasoning behind the legislature passing this law as a preemptive measure to avoid problems occurring in other states. Prior to this law being enacted insurance claims were handled in a different manner. In the example of a fire in a condominium building the property where the fire began and the person responsible would file a claim for their property, the condominium association would also file a claim, and the two insurance companies would determine who paid for what. As you may already be able to tell this could lead to problems, particularly when determining fault and which entity is responsible for what parts of the building. The Utah legislature noted that this problem was occurring with condominium properties in other states and took action to define clearly how these problems would be handled in Utah.
Primary Policy
SB 167 establishes a condominium insurance policy as the primary policy for all claims, regardless of cause or fault. It doesn't matter if Billy Bob and Suzie start a grease fire in their kitchen and the building burns down, the association's insurance is first in line for claims. The 
law also establishes that any property owner or owners involved in a property loss must pay the deductible for the association policy. If there are multiple properties involved in a single event of loss then the cost for the deductible is split between the multiple owners based on the percent of damage that occurred in each property. For example: $100,000 worth of damage occurred at a condominium association involving three separate properties, and the percent of damage is split 55%, 30%, and 15% respectively. The property owners would be responsible for 55%, 30%, and 15% of the deductible for the association and the association insurance would cover the rest of the $100,000. If you have a condominium property in Utah and participate in Park City property management make sure you are aware of the deductible for your condominium association.
Problems With The Law
Unfortunately this law is not without its problems. A recent incident at a condominium association I manage highlights a problem with this law. A drain line in a property on the third floor of a building became detached from the main drain for the building. The drain line only serviced the third floor property and was therefore the responsibility of that home owner per the condominium rules and regulations. This drain line was connected to the kitchen sink, dishwasher and washing machine so whenever these were used water would flood into the second and first floor properties. A claim was submitted to the condominium insurance but the total cost for repair came to around $3500, well below the $10,000 deductible for the condominium insurance. The cost for repairs for the second and first floor properties were then the responsibility of the property owners themselves, even though the cause was another owner who had no water damage in their property. Instances like this stress the importance of having insurance on a property even though there may be a condominium insurance policy in place as well. Park City property management professionals should be well aware of this possible scenario.
If you would like to learn more about property management Park City Utah download our free white page "5 Questions Every Landlord Should Ask Themselves".
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