Multi-Family Complexes (Apartment and Condo)



...all or most of the apartment units rented to others. The rental usually involves a lease of the premises, spelling out the conditions, privileges, and responsibilities of the owner and the residents.


Condominiums are a relatively new form of apartment ownership, having been created by the passage of condominium laws in various states in the 1960s and having gained prominence as a preferred type of apartment ownership in the 1970s and 1980s. Two kinds of ownership are involved—individual unit owners hold title to the space in which they live, and unit owners in common—usually as compulsory members of a condominium association—own the common property, often including the entire shell of the apartments with the individual unit owner owning only the interior of the unit up to the interior of the exterior “bare walls,” usually including the floor and ceiling as well.

The details of ownership, privileges and responsibilities of the unit owner and the association of unit owners are described in a document in most states called the condominium declarations, or in a companion document—the condominium bylaws. The unit owners have the right to rent out or sell their units to someone else, although the association may in some cases screen the rental or sale and hold the right of first refusal if the prospective renter or buyer does not meet their standard of ownership.

Cooperative Apartment

This type of common ownership of apartments predates condominium ownership by many years, and was and still is found principally in large urban areas such as New York City and Chicago. The individual residents of the “co-op” hold life tenancy to their apartments and own stock in the corporation that owns the property, usually in the same proportion to the total value of the project that their unit’s value or area bears in relationship to the total value or area of the complex. Management of the property is usually handled by a management firm hired by the co-op owners or by an association elected by the owners. As with condominiums, the individual owners may lease out or sell their unit, but in some cases only with approval of the association.

Insurable Property Exposures

Each of these three types of apartments have many insurable property exposures, but with some important differences that must be considered in arranging insurance. All call for building management to purchase insurance on the resident occupied buildings as well as any other property such as a clubhouse, swimming pool, health facility, tennis court, golf course and related personal property, etc., that may require insurance.

Personal property owned by residents is usually the responsibility of the residents to insure, but there may also be personal property owned by the apartment building owners—and this should be included with the building insurance. Standard building coverages (such as provided by the Insurance Services Office [ISO]) will include a description of personal property items that may be included...