When Water Damage Contractors Overreach: Lessons for HOAs, Boards, and Homeowners

A homeowner discovers water damage. A restoration contractor arrives immediately. Insurance gets involved. What starts as an emergency cleanup soon turns into a lawsuit, a mechanic’s lien, allegations of hidden contract terms, and a punitive damages award exceeding $200,000.

In Certified Restoration Services v. Fitzgerald, the court examined whether a contractor could use a simple assignment of insurance benefits to pursue tens of thousands of dollars in additional payments from homeowners after the insurance carrier had already paid more than $56,000. The case also addressed wrongful mechanic’s liens, disputed contract terms, consumer protection claims, and the limits of contractor recovery when documentation is lacking.

For homeowners associations, board members, and homeowners, this case offers important lessons about emergency water damage response, selecting and supervising restoration contractors, reviewing assignments of benefits, avoiding predatory contracting practices, and protecting against improper liens. It also highlights why communities should have emergency response procedures and vetted vendors in place before a disaster occurs.

Members can access the full case breakdown, Attorney Szabo’s commentary, practical HOA guidance, and related resources, including the HOA Emergency Response Checklist.