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The responsibility rests with the owner of the property on which the rotting tree is standing. However, the person whose property is damaged may have the burden of proving the tree owner knew it was a hazard (foreseeable versus merely potential) and that the damage was caused by negligence rather than an "act of God". A person is responsible for insuring his or her own property for damage caused by unforeseen accidents.

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Q: If a tree is partially over the property line on your neighbor's property who is responsible for potential damage from a rotting tree that is still standing?
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