Large multi-tenant housing sprinkler break: What property management need to know.

Immediate Safety & Stabilization

Keeping tenants safe and reducing personal harm. Life safety is the first priority.

Evacuate any area with sagging ceilings, bulging walls, or floor movement. Bring in a licensed electrician to check wet electrical panels, outlets, or lighting to prevent further damage and confirm the electric is safe to use.

Determine if leak is from a sprinkler system, broken pipe or broken sewage pipe and if the water is contaminated.

Determine what is wet using IICRC certified equipment to evaluate the safety and proceed with shutting off all utilities to affected units and if necessary, the building. Contact your local utility company if you need assistance.

This includes all local electrical circuits in affected zones, domestic water supply (or isolated risers) and gas in affected areas if there’s structural damage.

Call 911 if there is any structural compromise is suspected, fire alarm/sprinkler system has been damaged or if you are unsure about electrical or gas safety.

Your legal duty is to mitigate: Maryland property policies require you to prevent further damage, not just wait for the insurance adjuster:

• Stop the water source. Call a licensed plumber, emergency sprinkler contractor, roofer.
• Arrange professional emergency mitigation with an IICRC Certified Restoration Contractors to provide water extraction, dehumidification, temporary heat, fire watch, and content cleaning, removal and storage. Protect property: Move or elevate furniture, appliances, and building materials for damage.
• The Restoration Contractor will board up roof and/or windows, tarp roofs as needed to prevent further damage.
• Document everything: who you called, when, and what was done.

Failure to mitigate can reduce what the insurer pays for avoidable additional damage (e.g., mold due to delays).

Call Sequence for a Multi-Tenant Building

Source & Category of Water (This Drives Everything)

In multi-tenant housing, large losses often come from:

• Sprinkler system discharges (freeze, mechanical damage, fire)
• Domestic supply line bursts (kitchen, bathroom, risers)
• Roof failures / wind-driven rain
• Sewer/storm line backups (basements/first floors)
• HVAC or water heater failures

Understanding the type/category matters for both health and coverage:

• Category 1 – Clean water
  Pressurized lines, new sprinkler water, some roof leaks. Many materials can be dried in place if done quickly and correctly.
• Category 2 – Gray water
  Some drain lines, appliance discharges. More selective demolition and disinfection.
• Category 3 – Black water
  Sewage, flood water entering from outside, some ground water is considered to be hazardous to human health.
  • Typically requires removal of porous materials (drywall, insulation, carpets, cabinets).
  • Strong health concerns and potential habitability issues for tenants. Tenants may need to move out temporarily until the issue is resolved, disinfected and cleaned up.

Why it matters:

• The scope of demolition vs. drying, mold risk, and tenant re-occupancy timelines all depend on category.
• Coverage for sewer/drain backup or surface water may be limited or excluded unless specifically endorsed.

Documentation: Protecting Your Claim

Start from hour one:

Photos and video:

• Exterior: roof, walls, any obvious intrusion points.
• Interior: each affected unit and common area, hallways, mechanical rooms.
• Close-ups: damaged finishes, cabinetry, flooring, ceilings, and tenant property that might implicate you (e.g., building system failures).
• Water lines on walls, delaminated materials, collapsed ceilings.
• Save the defected part once it is replaced to provide to the insurance adjuster.

Written records

• Timeline: when leak started or was discovered, who reported it, when shutoffs happened, when vendors arrived.
• Maintenance history:
  • Prior leaks in the same area
  • Inspections or repairs of roof, plumbing risers, sprinklers
• Mitigation logs:
  • Which units/floors were accessed and when
  • Equipment counts and daily moisture readings (your mitigation company should provide this)

Cost tracking

• Emergency work (mitigation, board-ups, temporary heat/power).
• Alternate housing costs if you pay for it.
• Security, overtime for staff, extra cleaning.
• Professional fees (engineers, hygienists, consultants, public adjusters).

Store everything digitally and back it up off-site or in the cloud.

Working With Mitigation & Restoration Contractors

For a Towson-area multi-tenant building, insist on:

• Commercial multi-family experience
  Student housing, apartments, condos, or mixed-use with retail below.
• Ability to handle:
  • Dozens or hundreds of units simultaneously
  • Contents handling and storage (for both owner- and some tenant-owned property, where appropriate)
  • Moisture mapping (infrared + meters) and daily documentation
  • Asbestos/lead testing coordination before significant demolition is required for all building built before 1978. (very important for older Baltimore County buildings)

Key contract points

Clarify who they are contracted with (you, association, management company – not just “the insurer”).

Ask for documentation and commercial costs:

• Scope of work (by area/unit)
• Rate sheets (labor, equipment, materials)

Insurance Companies require:

• Daily activity summaries
• Moisture logs by unit/room
• Clear explanation on what is being dried in place vs. removed and why.

This documentation is crucial for insurance and to defend against tenant claims later.

Insurance Focus for Multi-Tenant Housing in Maryland

When you review your policy (and have your agent or attorney review it too), concentrate on:

A. Covered cause of loss

• Sudden pipe burst or sprinkler discharge is usually covered.
• Long-term or repeated leaks may be limited or denied as maintenance issues.
• Sewer backup / sump overflow / storm drain failure often requires an endorsement with a sub-limit.
• Flood (rising outdoor water) is generally excluded unless you have separate flood coverage required for properties in a flood zone.

B. Whose property is whose?

In multi-tenant housing there are multiple interests:

• Building (shell, structure, systems, common areas) – usually the Homeowners Association (HOA) policy.
• Tenant improvements and betterments – depends on the lease/ownership; sometimes:
  • Owner insures build-out.
  • Tenant insures their finishes.
• Tenant personal property – typically covered under tenants’ renter policies, not the building policy.

Make sure your claim separates:

1. Building/common areas
2. Owner-owned unit finishes
3. Tenant improvements (if you’re liable per lease)
4. Tenant contents (usually tenant’s claim, unless your negligence caused the loss)

Loss of rents / Business Income

For apartments and student housing, look for:

• Loss of Rents or Business Income coverage:
  • How is rent loss calculated?
  • Waiting period (24/48/72 hours).
  • How long coverage lasts (Period of Restoration) – until repairs reasonably should be completed.
• Extra Expense:
  • Additional costs to keep tenants housed or minimize vacancy (temporary units, trailers, expedited work).

Ordinance or Law / Code Upgrade

Critical for older buildings:

• If code now requires:
  • Fire/life safety upgrades
  • Electrical or plumbing upgrades beyond simple replacement
  • ADA / accessibility improvements in affected areas
• Ordinance or Law coverage helps pay for costs beyond like-kind replacement.

Without this, required code upgrades may be an out-of-pocket expense.

Limits, deductibles, and sub-limits

Pay attention to:

• Per-occurrence deductible, and whether a water damage deductible is higher.
• Sub-limits for:
  • Mold and microbial contamination
  • Debris removal
  • Sewer backup / drain overflow
  • Professional fees

Claims Strategy for a Large Multi-Unit Loss

For six- or seven-figure events, consider:

• Public adjuster or independent consultant
  • Help scope all affected units (including hidden damage between units and in chases).
  • Prepare Xactimate or similar estimates that match the carrier’s format.
  • Negotiate on your behalf on scope (how much is opened up, what’s replaced vs. repaired) and pricing.
• Separate claim components
  • Building/common area damage
  • Residential unit damage (by stack/line of units)
  • Loss of rents / business income
  • Extra expense (temporary relocation, temp utilities)
  • Code upgrades / ordinance or law

Clear separation reduces disputes and speeds partial payments.

Tenants: Habitability, Communication, and Liability

A. Habitability and relocation

After a major water loss, some units may be:

• Temporarily uninhabitable due to:
  • Category 2/3 water (sewage/contaminated)
  • Loss of essential services (power, heat, water)
  • Extensive demolition / open walls and ceilings.

Check:

• Maryland landlord-tenant law and local ordinances regarding:
  • Habitability standards
  • Rent abatement or reduction when units are partially or fully unusable
• Leases for:
  • Who pays for temporary housing
  • Whether rent abates automatically when units are uninhabitable
  • Tenant obligations to carry renters’ insurance

Even if not legally required to pay for hotels or relocation, many owners offer some assistance in large losses to reduce disputes and reputational damage.

Communication best practices:

• Notify tenants quickly:
  • What happened
  • Affected areas/floors
  • Immediate safety steps
  • Who to contact for unit-specific concerns
• Provide regular updates:
  • Estimated timelines for dry-out, demolition, and rebuild
  • Access restrictions (e.g., no entry during mitigation hours)
• Use multiple channels:
  • Email plus written postings in common areas
  • Portal/text if your system supports it

Keep a communication log:

• What you sent, when, and how.
• Tenant questions and your responses. This helps if there are later disputes or claims of non-response.

Tenant property and claims

Generally:

• Tenants look to their renter’s insurance for personal property damage and additional living expenses.
• Your building policy covers the building and your owned finishes.

However:

• If the loss is alleged to be due to your negligence (e.g., ignored known plumbing problems), tenants may assert claims against you or your liability coverage.
• Good documentation of maintenance history and rapid response reduces exposure.

Local & Regulatory Issues in Towson / Baltimore County

Expect to deal with:

• Permits and inspections
  • Required for significant reconstruction, electrical, plumbing, mechanical work, and sometimes large-scale demolition.
  • Structural repairs or large areas of drywall removal may trigger  a more formal review.
• Asbestos & lead
  • Many older buildings in the Towson/Baltimore area can have asbestos-containing materials and/or lead-based paint.
  • Disturbance during demolition requires:
    • Testing before aggressive removal of building materials
    • Licensed abatement from a certified company if positive
  • The restoration contractor/general contractor should coordinate this.
• Fire/life safety systems
  • If sprinklers, alarms, or standpipes were impacted:
    • Temporary measures (fire watch) may be mandated until systems are restored. A fire watch is when a security guard remains on site for 24 hrs. a day to insure no further emergencies occur when the major systems are turned off, e.g.: sprinkler system
    • Coordinate with the local fire marshal and your fire protection contractor.
• Disposal of contaminated materials
  • Category 3 water or mold-contaminated materials must be disposed of per local/environmental requirements.

Mold: Fast Decisions, Long-Term Risk

In a multi-unit building, mold can quickly become a building-wide, reputational, and legal problem.

• Mold can begin to grow within 24–72 hours if wet materials are not properly dried.
• Hidden cavities (party walls between units, shaft walls, behind cabinets, under flooring) are common problem zones.

To protect yourself:

• Insist on thorough moisture mapping at the start and before demobilizing equipment.
• Consider hiring an independent industrial hygienist to:
  • Advise on mold risk in complex or Category 2/3 losses.
  • Provide clearance testing in severely affected areas before re-occupancy.
• Ensure HVAC systems (especially vertical fan coils, corridor units, shared ductwork) are inspected and cleaned if exposed to water or excessive moisture.

Remember: many policies have low mold sub-limits, so proactive drying and correct initial mitigation are critical.

After the Event: Strengthening the Property & Program

A loss is an opportunity to make improvements and changes to:

• Building systems
  • Replace problem-prone piping or fittings.
  • Improve roof design, drainage, and flashing details.
  • Add leak detection (especially in mechanical rooms, risers, or historically problematic stacks).
• Emergency planning
  • Clear shutoff maps and labels for staff (water, gas, electrical for each riser/wing).
  • Vendor pre-agreements with large-loss mitigation firms and plumbers/roofers.
  • A standing tenant communication protocol.
• Insurance program

Work with a Commercial Insurance Broker to reassess the building values, to avoid underinsurance. Review and, if necessary, increase:

1. Loss of rents/BI and Extra Expense limits.
2. Sewer backup, mold, code upgrade coverage.

Clarify responsibilities in leases so tenants understand what the property building/management/owner insure and are responsible for repairing. What the homeowners/tenants are expected to insure property insurance and unit upgrades.