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Subject: HOA fee surcharges
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JimA15
(Florida)

Posts:13


01/04/2020 1:36 PM  
our florida HOA has a covenant that requires homeowners to carry appropriate home insurance ( we have a number of duplexes). as usual one homeowner refuses to furnish proof of insurance. can the Board put insurance on and add the cost as a surcharge to the monthly HOA fee?
SheliaH
(Indiana)

Posts:2851


01/04/2020 3:02 PM  
That's a legal question and you should run that by your association attorney and perhaps your association insurance. That said, I'm not sure a person can be compelled to carry insurance (a mortgage company usually requires this as part of the mortgage agreement). It is a good idea - apparently, this person doesn't know or care that the association's policy typically protects the common areas and external building (a.k.a. skin) of the building, but not a homeowner's personal property or everything inside the house (in my community, utility lines from the point they enter the building are also homeowner responsibility). If this homeowner or his/her guests or household members did something that damaged the roof, siding or whatever the master insurance covers, he/she might be held liable for the repair bills (that's how our master policy works)

Perhaps a strongly worded letter by your attorney could persuade this person - I'd also keep that letter in the homeowner's individual file. This way if something does happen, the master insurance carrier knows you tried to collect proof and then it can decide what happens. In the meantime, sending homeowners an annual reminder to provide proof and perhaps a number their agent could call if he/she needs information on the master policy should be done. By obtaining information on the master policy, the individual insurance policy can be compared so there's no problem with under or over insurance coverage.

GeorgeS21
(Florida)

Posts:1829


01/04/2020 3:27 PM  
I have friends with a part time home in Florida - their association not only requires specific forms of insurance, it also requires, in the case of part time residents, an on-call caretaker in case of any issues.

This is not uncommon in some of the upscale areas of Florida.
MelissaP1
(Alabama)

Posts:8875


01/04/2020 3:32 PM  
When the HOA pays for something it means ALL the HOA members/owners pay for it. So NO I would NOT want any of my HOA dues going toward 1 idiot owner who doesn't want to prove they have insurance. Which doesn't mean they don't have it just not showing it upon request.

Keep in mind that some HOA members often ASSUME the HOA insurance is their Homeowner's Insurance. It isn't. The HOA insurance is to cover common areas and liability of board members. Can't tell you how many times owners seem confused in thinking if something happens that the HOA insurance will pay.

Example: We had a situation where a tree fell on the next house over. The neighbor whom the tree was on did not carry insurance. The next door neighbor did have it. The HOA insurance only covered Common area. So the owner whom the tree fell on their homeowner's insurance covered the repairs. Their insurance then went after and sued the neighbor. The HOA insurance (if we had claimed) would have ONLY covered the expense of cleaning up the tree debris laying on the ground. Which is what I had us pay for was tree cleanup/removal.

So if someone decides NOT to carry insurance. It isn't the HOA's business. It's going to be that person's responsibility when things go badly...and they will...

Former HOA President
GeorgeS21
(Florida)

Posts:1829


01/04/2020 3:41 PM  
I think the OP meant the HOA would buy insurance for that one house, then assess the cost only to that owner.
MelissaP1
(Alabama)

Posts:8875


01/04/2020 4:03 PM  
Regardless George if the HOA pays it's still ALL the member's money. It still means that one owner owes ALL the owners the money. What if they don't pay the "surcharge"? How is the HOA legally going to be able to go after them? The HOA can only collect dues. This isn't a "dues".

Former HOA President
SteveM9
(Massachusetts)

Posts:3508


01/04/2020 5:13 PM  
Posted By JimA15 on 01/04/2020 1:36 PM
our florida HOA has a covenant that requires homeowners to carry appropriate home insurance ( we have a number of duplexes). as usual one homeowner refuses to furnish proof of insurance. can the Board put insurance on and add the cost as a surcharge to the monthly HOA fee?




Does your documents require the HOA to manage, request proof, etc, etc. Or just it just say "it requires homeowners to carry insurance" ?

If it didn't, I wouldn't even bother enforcing something your not required to enforce. The homeowner knows its required.
AugustinD


Posts:2335


01/04/2020 6:02 PM  
Posted By JimA15 on 01/04/2020 1:36 PM
our florida HOA has a covenant that requires homeowners to carry appropriate home insurance ( we have a number of duplexes). as usual one homeowner refuses to furnish proof of insurance. can the Board put insurance on and add the cost as a surcharge to the monthly HOA fee?
And what if there is a slip-and-fall in the member's house but the amount of insurance which the HOA has arranged is insufficient to cover the accident? The victim then goes after the HOA member in whose house he fell. Can the HOA member then sue the HOA for providing insufficient insurance (while all along leading him to believe he had sufficient insurance)?

I think much argues against this.

Your HOA should institute a fine schedule and apply it to this member.
MarkW18
(Florida)

Posts:351


01/04/2020 6:17 PM  
Posted By MelissaP1 on 01/04/2020 3:32 PM
When the HOA pays for something it means ALL the HOA members/owners pay for it. So NO I would NOT want any of my HOA dues going toward 1 idiot owner who doesn't want to prove they have insurance. Which doesn't mean they don't have it just not showing it upon request.

Keep in mind that some HOA members often ASSUME the HOA insurance is their Homeowner's Insurance. It isn't. The HOA insurance is to cover common areas and liability of board members. Can't tell you how many times owners seem confused in thinking if something happens that the HOA insurance will pay.

Example: We had a situation where a tree fell on the next house over. The neighbor whom the tree was on did not carry insurance. The next door neighbor did have it. The HOA insurance only covered Common area. So the owner whom the tree fell on their homeowner's insurance covered the repairs. Their insurance then went after and sued the neighbor. The HOA insurance (if we had claimed) would have ONLY covered the expense of cleaning up the tree debris laying on the ground. Which is what I had us pay for was tree cleanup/removal.

So if someone decides NOT to carry insurance. It isn't the HOA's business. It's going to be that person's responsibility when things go badly...and they will...



I know this is very difficult for you to understand, but there are many complexes that the units are covered by HOA insurance, specially condo and townhomes.
GeorgeS21
(Florida)

Posts:1829


01/04/2020 6:24 PM  
Jim,

Houses or condos?
MelissaP1
(Alabama)

Posts:8875


01/04/2020 6:29 PM  
I generally play by what someone posted here in the past... "You live in a box, whatever falls out when you turn over that box is your responsibility. The box itself and what turned over the box could be HOA's insurance". That typically applies to individual homes and/or attached properties like condo's.

So if someone falls coming up to your house and the HOA owns/maintains that property, then it can be HOA. If you own separate homes and the land, then it's on your home policy. Either way if they did fall, it's going to be an insurance fight between owner's and HOA. Just understand the HOA's deductible is most likely MUCH higher than yours. Ours was 20K. So filing a claim on our HOA insurance didn't do you much favors except take out of everyone's pocket and/or subject to loss/higher rates.

Former HOA President
MarkW18
(Florida)

Posts:351


01/04/2020 6:36 PM  
Posted By MelissaP1 on 01/04/2020 6:29 PM
I generally play by what someone posted here in the past... "You live in a box, whatever falls out when you turn over that box is your responsibility. The box itself and what turned over the box could be HOA's insurance". That typically applies to individual homes and/or attached properties like condo's.

So if someone falls coming up to your house and the HOA owns/maintains that property, then it can be HOA. If you own separate homes and the land, then it's on your home policy. Either way if they did fall, it's going to be an insurance fight between owner's and HOA. Just understand the HOA's deductible is most likely MUCH higher than yours. Ours was 20K. So filing a claim on our HOA insurance didn't do you much favors except take out of everyone's pocket and/or subject to loss/higher rates.



You have much to learn.
MelissaP1
(Alabama)

Posts:8875


01/04/2020 6:52 PM  
If so, how would you put this on the accounting spreadsheet for the HOA? A homeowner's insurance premium is NOT a HOA expense. HOA's funds are to be used for HOA business only. It receiving money to compensate for the insurance premium expense can't be considered a "dues" payment. I would say this could have some kind of tax ramifications.

Plus it is NOT a function of the HOA to provide or require an insurance policy. Unless they will be collecting on the policy on some shape or form, it's none of the HOA's business. A bank does have an interest in an owner having insurance. It covers the money they are owed by the mortgage.

Former HOA President
MarkW18
(Florida)

Posts:351


01/04/2020 7:12 PM  
There are HOA documents that require the HOA to maintain a list of owners with their HO-6 policy. I had to do that with a couple of HOA's where the HOA carried earthquake insurance. In order for the HOA to do that, every owner, per their CCRs was required to carry loss assessment insurance, to cover the special assessment to cover the high deductible.

Lenders are now requiring that owners carry a HO-6 policy in addition to the HOA master policy. Managing a townhome or condo is a far cry from single family detached home, where apparently, your expertise comes from.

If an HOA had to force the insurance, it is legal and it would be set up in the income column as HO Insurance policy and expense the same way. End result, zero income or expense.
GeorgeS21
(Florida)

Posts:1829


01/04/2020 7:15 PM  
Again, there are many HOAs in south Florida with this sort of insurance requirement.
CathyA3
(Ohio)

Posts:655


01/05/2020 6:50 AM  
I agree with Sheila and Augustin: run this by the association's attorney and insurer, and do not buy insurance for the homeowner. In the latter case there is the liability issue, and it's possible the HOA couldn't even buy this insurance -- there are laws forbidding the purchase of insurance on property that you don't own (because of the temptation to burn the place down). However, there may be specific requirements in Florida depending on the type of housing, which is why the OP needs the opinions of the pros.
CathyA3
(Ohio)

Posts:655


01/05/2020 6:52 AM  
Posted By MelissaP1 on 01/04/2020 6:29 PM
I generally play by what someone posted here in the past... "You live in a box, whatever falls out when you turn over that box is your responsibility. The box itself and what turned over the box could be HOA's insurance". That typically applies to individual homes and/or attached properties like condo's.




This comment came from my association's insurance agent, and it applies specifically to "all included" insurance in condominiums. I wouldn't assume it applies to anything else without asking my insurer about it.
JimA15
(Florida)

Posts:13


01/05/2020 8:59 AM  
that is correct, the surcharge would be a special assessment on the home/homeowner who did not carry insurance
JohnC46
(South Carolina)

Posts:9041


01/05/2020 9:00 AM  
We are an HOA of 40 duplexes, one story, common wall and 32 single family homes thus 112 owners. Our Covenants call for each owner to maintain homeowners insurance and if they do not the HOA can purchase it for them and bill them. That said, we have no method in place to assure each owner has the insurance.

Covenants also say the HOA will be co-payee on the policy so one cannot take the money and run.
GeorgeS21
(Florida)

Posts:1829


01/05/2020 9:30 AM  
Jim,

Same question ... perhaps I missed your answer.

Houses or condos?
GenoS
(Florida)

Posts:3477


01/05/2020 11:47 AM  
Posted By CathyA3 on 01/05/2020 6:50 AM
In the latter case there is the liability issue, and it's possible the HOA couldn't even buy this insurance -- there are laws forbidding the purchase of insurance on property that you don't own (because of the temptation to burn the place down).

Can you please provide any details about that? My HOA's master property insurance covers the outside shells and roofs of all buildings including residences. That's provided for in our CC&Rs. And yet, all of the homes are fee simple ownership and every owner has his or her own deed for their lot. Our CC&Rs say that an owner has to obtain his own liability insurance and HO-6 property insurance for the interior contents of the home. The language in the CC&Rs was carefully written to mirror insurance provisions in Florida's condo law (FS 718), but we are not a condo.

What you wrote suggests it might be illegal for the HOA to purchase property insurance on the exterior shells of the homes and the roofs).
GeorgeS21
(Florida)

Posts:1829


01/05/2020 12:14 PM  
Jim’s answer may be instructive - let’s wait for it.
CathyA3
(Ohio)

Posts:655


01/05/2020 12:33 PM  
Posted By GenoS on 01/05/2020 11:47 AM
Posted By CathyA3 on 01/05/2020 6:50 AM
In the latter case there is the liability issue, and it's possible the HOA couldn't even buy this insurance -- there are laws forbidding the purchase of insurance on property that you don't own (because of the temptation to burn the place down).

Can you please provide any details about that? My HOA's master property insurance covers the outside shells and roofs of all buildings including residences. That's provided for in our CC&Rs. And yet, all of the homes are fee simple ownership and every owner has his or her own deed for their lot. Our CC&Rs say that an owner has to obtain his own liability insurance and HO-6 property insurance for the interior contents of the home. The language in the CC&Rs was carefully written to mirror insurance provisions in Florida's condo law (FS 718), but we are not a condo.

What you wrote suggests it might be illegal for the HOA to purchase property insurance on the exterior shells of the homes and the roofs).





You're correct that this may not apply to things like HOAs where the CC&Rs require insurance. My community is like yours - owners have HOA6 policies and the association has "all included" insurance, which does actually cover some of the owners' property if there is an insurable event (such as cabinetry and flooring).

But if we lived in a single family home community where there is no association, we couldn't buy insurance on someone else's home. I'm also pretty sure that, as a condo owner, I could not personally buy an HO6 policy on a neighbor's home, even though the CC&Rs may possibly allow the association, of which I'm a member, to buy it. I think it has to do with the differing types of ownership and the likelihood of fraud in each case. (Should double-check that with an insurance agent, though.)

GenoS
(Florida)

Posts:3477


01/05/2020 12:41 PM  
Posted By CathyA3 on 01/05/2020 12:33 PM
But if we lived in a single family home community where there is no association, we couldn't buy insurance on someone else's home. I'm also pretty sure that, as a condo owner, I could not personally buy an HO6 policy on a neighbor's home, even though the CC&Rs may possibly allow the association, of which I'm a member, to buy it. I think it has to do with the differing types of ownership and the likelihood of fraud in each case. (Should double-check that with an insurance agent, though.)

Thanks, that makes a lot of sense. Our own insurance arrangement has always seemed a little strange to me. If it actually turned out that we were doing something against the state's insurance regulations then I would not have been surprised to find that out. On second thought, though, we're probably good. We've never had trouble getting an insurance agent to put together a coverage package for us and I think if there was any legal funny business they surely would have pointed it out by now.
CathyA3
(Ohio)

Posts:655


01/05/2020 12:58 PM  
Posted By GenoS on 01/05/2020 12:41 PM
Posted By CathyA3 on 01/05/2020 12:33 PM
But if we lived in a single family home community where there is no association, we couldn't buy insurance on someone else's home. I'm also pretty sure that, as a condo owner, I could not personally buy an HO6 policy on a neighbor's home, even though the CC&Rs may possibly allow the association, of which I'm a member, to buy it. I think it has to do with the differing types of ownership and the likelihood of fraud in each case. (Should double-check that with an insurance agent, though.)

Thanks, that makes a lot of sense. Our own insurance arrangement has always seemed a little strange to me. If it actually turned out that we were doing something against the state's insurance regulations then I would not have been surprised to find that out. On second thought, though, we're probably good. We've never had trouble getting an insurance agent to put together a coverage package for us and I think if there was any legal funny business they surely would have pointed it out by now.




Our insurance agent says that even the pros scratch their heads over this stuff. I think condo ownership is more complicated than single family ownership (even in an HOA). Typically though, the buildings' structure, foundations and roofs are considered common elements - and in my community all homeowners own an undivided interest in them, so it makes sense for the association to insure them.

Where it gets a little weird and confusing is with "all in" insurance where the association actually does insure parts of the interior, even though the individuals are responsible for maintaining them. My governing docs require the association to carry "all in" insurance, although not every condo association's CC&Rs do. When someone buys a home in my community, we have to provide them with a copy of the master policy so that the person's agent can write the HO6 policy properly and not have any gaps in coverage.
CathyA3
(Ohio)

Posts:655


01/05/2020 12:58 PM  
Posted By GenoS on 01/05/2020 12:41 PM
Posted By CathyA3 on 01/05/2020 12:33 PM
But if we lived in a single family home community where there is no association, we couldn't buy insurance on someone else's home. I'm also pretty sure that, as a condo owner, I could not personally buy an HO6 policy on a neighbor's home, even though the CC&Rs may possibly allow the association, of which I'm a member, to buy it. I think it has to do with the differing types of ownership and the likelihood of fraud in each case. (Should double-check that with an insurance agent, though.)

Thanks, that makes a lot of sense. Our own insurance arrangement has always seemed a little strange to me. If it actually turned out that we were doing something against the state's insurance regulations then I would not have been surprised to find that out. On second thought, though, we're probably good. We've never had trouble getting an insurance agent to put together a coverage package for us and I think if there was any legal funny business they surely would have pointed it out by now.




Our insurance agent says that even the pros scratch their heads over this stuff. I think condo ownership is more complicated than single family ownership (even in an HOA). Typically though, the buildings' structure, foundations and roofs are considered common elements - and in my community all homeowners own an undivided interest in them, so it makes sense for the association to insure them.

Where it gets a little weird and confusing is with "all in" insurance where the association actually does insure parts of the interior, even though the individuals are responsible for maintaining them. My governing docs require the association to carry "all in" insurance, although not every condo association's CC&Rs do. When someone buys a home in my community, we have to provide them with a copy of the master policy so that the person's agent can write the HO6 policy properly and not have any gaps in coverage.
GenoS
(Florida)

Posts:3477


01/05/2020 4:38 PM  
Posted By CathyA3 on 01/05/2020 12:58 PM
Where it gets a little weird and confusing is with "all in" insurance where the association actually does insure parts of the interior, even though the individuals are responsible for maintaining them. My governing docs require the association to carry "all in" insurance, although not every condo association's CC&Rs do. When someone buys a home in my community, we have to provide them with a copy of the master policy so that the person's agent can write the HO-6 policy properly and not have any gaps in coverage.

We have weirdness, too. When the county first entered the property and lots into its databases ca. 1989, its software systems were "DOS based" if not primitive. There was no "HOA" category at the time so county employees put us in as a "CONDO". Which we are most assuredly not. New owners looking to insure their homes, however, have their insurance agents research the property and they all conclude we're a condo because of the way everything is coded in the county systems. It's a case of "two wrongs make a right" because then those insurance agents steer the homeowners toward an HO-6 policy, which is the right choice anyway. The downside is so many people are absolutely convinced that we're a condominium association.

A worse downside is about a dozen homeowners and their insurance professionals have opted to obtain a full homeowner's policy, HO-3, and that's not going to be good for them if there's ever a claim because their company is going to find out about the master policy that already covers the outside shell and roof of the building. That won't be pretty.
SteveM9
(Massachusetts)

Posts:3508


01/05/2020 5:32 PM  
the county first entered the property and lots into its databases ca. 1989, its software systems were "DOS based" if not primitive.


My town still uses some DOS based software. It still works fine. Not worth upgrading to do the same job. No reason to upgrade if it still works.
GenoS
(Florida)

Posts:3477


01/05/2020 10:34 PM  
Posted By SteveM9 on 01/05/2020 5:32 PM
the county first entered the property and lots into its databases ca. 1989, its software systems were "DOS based" if not primitive.


My town still uses some DOS based software. It still works fine. Not worth upgrading to do the same job. No reason to upgrade if it still works.

That's how the county sees it. I don't disagree.
JimA15
(Florida)

Posts:13


01/07/2020 9:56 AM  
folks, the many responses are helpful and appreciated. prompted by these responses and the suggestions provided were have consulted with our insurance agents and our lawyer . simply put we will abandon this strategy and go to the stratgy of removing rights ,fining and eventually placing a lien .
we received much helpful advice........thank you folks
GeorgeS21
(Florida)

Posts:1829


01/07/2020 10:06 AM  
Jim - did you ever answer my question? Houses or condos?
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