Palmero v. Consulate on Park

OPINION OF THE COURT

Memorandum.

Judgment unanimously reversed without costs and action dismissed.

Plaintiffs instituted this small claims action for damages incurred as a result of defendant’s failure to maintain flood insurance as allegedly required by its bylaws.

Plaintiffs, in the case at bar, purchased a condominium unit managed by the defendant condominium association. The condominium complex is located in a Federally designated flood area. Plaintiffs’ mortgagee required flood insurance as a condition to issuing a mortgage. At the time of the mortgagee’s commitment defendant did not have flood insurance. Plaintiffs incurred additional expenses in seeking a lender which would not require flood insurance. Ultimately defendant obtained flood insurance and plaintiffs were able to obtain a mortgage from their original lender. Plaintiffs in this action for reimbursement for their additional expenses contend that defendant was required pursuant to the bylaws of the condominium association to maintain flood insurance.

The applicable section of the bylaws is section 6.7-1. Subdivision (a) of said bylaw requires the condominium association to obtain multiperil coverage which shall include fire, vandalism and malicious mischief endorsements which shall include, among other items, water damage legal liability insurance. Water damage legal liability insurance is not flood insurance. Rather, said insurance is defined in the Merrit, Glossary of Insurance Terms (3d ed) as follows: "Liability coverage for an insured who suffers a water damage loss which also damages the property of others on the floor below or in adjoining premises.” In view of the foregoing it is apparent that the bylaws do not require the condominium association to obtain flood insurance.

Finally, it should be noted that flood insurance in Federally designated areas is only required as a condition of receipt of Federal or Federally related financial assistance for acquisition and/or construction of buildings in special flood hazard areas (see, 54 Fed Reg, at 29670 [July 13, 1989]). Since the condominium association by its very nature does not have any outstanding mortgages, it is not subject to the mandatory requirement of the National Flood Insurance Act of 1968 (42 USC §§ 4001-4128).

DiPaola, P. J., Collins and Ingrassia, JJ., concur.