South Bay-Beach Cities: 2 on a lot townhomes.. Will your homeowner’s Insurance cover you?


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Many  people who buy a 2 on a lot townhome seem to think that as the units are often freestanding that they don’t have to deal with a Homeowner’s Association.  Based on this assumption,  a lot of people don’t set up an association or a reserve account.  They believe that they can  pay their own expenses and  don’t need a common account.  Most owners think if they get their own homeowner’s insurance they are covered and don’t have to do anything else.  But that may not be true.These are not single family homes. While there are not many of these properties  in El Segundo, they are widely found in Manhattan Beach, Hermosa Beach and Redondo Beach


A recent LA Times article posed the question about homeowner insurance coverage on 2 on a lot townhomes that is worth reading.  For years there has been a rumor circulating that insurance companies could deny coverage if something happens in the “common areas” and there is not an Association insurance policy in place. If someone had an accident in the driveway between the townhomes  your individual  insurance might not cover the accident.  You and your neighbor could be personally liable if you don’t have a condominium owners insurance policy.


One of the issues is that these 2 on a lot townhomes are not freestanding single family homes.. they are condominiums according to the state of California.  That means that you are supposed to have an Association in place and a reserve account.  It also meas that there are common areas  and those areas are governed by the Association. Everyone in one of these properties received a copy of the CC&R’s during escrow.  While you may have ignored it,  the fact is the state is very specific that you are part of an association and as such must follow the rules.


It is easy for people to ignore this little requirement and many do. You might be able to get away with each owner paying his own fees and or maintenance for awhile but after time passes there are often consequences to be paid.  A quick tour of some of the older units in many cities shows a number of them that are showing their age. You may have been able to ignore the lack of paint on your co-owner’s unit or his failure to keep up the exterior of his unit but I guarantee a potential buyer won’t and neither will an appraiser.


Now might be a good time to check with your insurance agent. While some companies say they will cover you the fact is that they often don’t.  When dealing with insurers it is all in the fine print so you need to see what your policy actually says. You might also want to have a talk with your co-owner about the importance of maintaining the integrity of the Association (aka the individual units).



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