The Sinking Millennium Tower & The Importance of HOA Insurance

The story of Millennium Tower is a curious and cautionary one.  It all began in 2016, when residents of the 645-foot, 58-story luxury condo building were first notified that their condominium tower was slowly but surely sinking into the ground, resulting in San Francisco’s own version of the Leaning Tower of Pisa. When residents discovered the developer had been aware of this issue for 8 years, they were quick to become litigious. As of late 2017, the building has sunk an incredible 16 inches with a precarious 10-inch lean at the top of the tower—enough tilt for homeowners to have objects roll across their floors. The literal downfall of Millennium Tower is a poignant reminder of the need to obtain HOA insurance even before an HOA is fully operational or has any residents.

Costly lawsuits are now ongoing between the tower’s homeowners’ association and the developers and owners of the building, Millennium Partners. The luxury condominium tower’s HOA is asking for $200 million to help offset the costs of repairing the foundation of the building. Defendants named in the suit include the developer, its executives, the general contractor, the architect, the engineering firm and the Transbay Joint Powers Authority (TJPA). The developers have responded publicly to the lawsuit blaming the TJPA for its “reckless behavior” at a nearby construction zone causing the tower to sink, but the TJPA is denying all responsibility. Meanwhile, the architecture firm is blaming “geotechnical issues” that it says are not within their responsibilities or duties.

The Millennium Tower homeowners are hoping to recover the value of their properties, claiming their units are nearly impossible to sell now. Residents are also accusing  the developer of withholding information on the severity of the continuing sinking. Millennium Partners claims it is releasing this information but only within the legal mediation process with the HOA and not directly to the residents. The endless finger pointing among multiple parties and the inability to settle out of court are costing the HOA several years of ongoing legal fees.

If the Millennium Tower board has the right amount and coverage of HOA insurance, the legal fees associated with this slow-moving calamity could be covered. Without enough insurance, the HOA may become completely insolvent, leaving residents with no other avenue to recover their losses and fix the foundation issue. Few cases underscore the needed for HOA insurance more than the Millennium Tower, and other associations should heeds its warning. HOA boards should regularly review their policies to ensure they can meet the demands of a lengthy legal battle.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our President Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (877) 807-8708 to speak with one of our representatives.