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Subject: Fining Owners for others' insurance premium increase
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Author Messages
KerryL1
(California)

Posts:8729


05/19/2018 6:08 PM  
Recently a resident in our high rise tower left water running in a sink for hours, which overflowed causing a lot of damage to three other condos below him. Neither he nor the unit owner have insurance.

The owners' insurance covered their considerable losses and expenses--one must stay in a hotel for a month. BUT their premiums will increase for a couple of years because of their claims.

I've submitted an agenda item suggesting we fine any Owner who cannot show a certificate of insurance. Insurance is required by our CC&Rs. My concern as a director is that an uninsured Owner may cause damage to our common areas and the HOA's premiums would also increase for one or more years. I may even want to add that the uninsured Owner could be fined for any increase in the HOA's premium due to claims on the common areas.

What do you think?

I'd also thought to fine uninsured owners for the increase of premiums of other Owners who suffer damage such as the above. But I'm thinking that that's a neighbor-neighbor issue and none of the HOA's business. Any opinions?
AugustinD


Posts:0


05/19/2018 7:51 PM  
Does the coverage that the CC&Rs require include liability for any damage a member does to other's property? Or does the required insurance cover essentially only damage to property within the member's unit?

Since it's in your CC&Rs, yes, absolutely fine anyone who cannot produce an annual certificate of insurance. I would ask the board to direct that the latter should be put in the unit's file. Also, this is so important that the Board might also want to suspend voting rights.

Insurance aside, do the CC&Rs say anything about a Member's liability for damage to the common areas? If so, I would assess and collect directly.

Sure, go ahead and add a few sentences about the member being responsible for any increase in the HOA's insurance premium. In the worst case, this will not be enforceable. But it could help be a deterrent.

Agreed about the neighbor-to-neighbor scenario.
RichardP13


Posts:0


05/19/2018 8:22 PM  
As a Board member, I wouldn't be discussing this topic on this forum. Your duty is to first speak with the insurance company and to the association attorney. None of us have access to your governing documents.
KerryL1
(California)

Posts:8729


05/20/2018 7:24 AM  
Good points Augustine; sure seems to me to be extremely important to protect our common areas and assets. I also agree that since we Owners are required to carry this insurance, the Board has the capacity to create rules about complying with this requirement, including fines.

Here's the verbiage on this from our CC&Rs: "Each Owner shall maintain property insurance to personal property located within the Unit and to any upgrades or Improvements to any upgrades or improvements located within the Unit..."

The sentence continues with,"...and liability insurance against any liability resulting from any injury or damage occurring within the Unit. The Association's insurance policy will not provide coverage against any of the foregoing."

I've only seen a few other CC&Rs and the above language seems pretty standard. there's no need as Richard seems to suggest to examine our 120 page CC&Rs.

Richard, this forum is exactly for HOA leaders. We may come here to ask advice BEFORE we make presentations to the Board. The Board very well may motion to have our general counsel review this idea. I have no "duty" to get the advice of experts first. Even before the meeting, our PM may phone our insurance agent to get his take. In our HOA, no director has the authority to contact our attorney; it must be a board decisions made at a meeting.

My question to you, Richard is: As a property manager with many accounts, have your ever seen my approach--basically a fine schedule for failure to have insurance-- in an HOA's rules? If not, why do you think this is the case? Or don't you manage any condos. I hope you'll stick with the tpic and not wander elsewhere.
LetA
(Nevada)

Posts:1466


05/20/2018 8:01 AM  
I believe that you can demand the unit owner make you the HOA a lossee on the insurance policy, so that way if the policy lapses or is cancelled the HOA is
notified.
DouglasK1
(Florida)

Posts:1689


05/20/2018 8:26 AM  
Posted By KerryL1 on 05/19/2018 6:08 PM

I'd also thought to fine uninsured owners for the increase of premiums of other Owners who suffer damage such as the above. But I'm thinking that that's a neighbor-neighbor issue and none of the HOA's business. Any opinions?


Assuming some of the "fines" go to the other owners, this goes beyond fining to restitution. I'm not sure if that would be on solid legal ground if not specifically allowed by state law or your governing docs.

Escaped former treasurer and director of a self managed association.
JohnC46
(South Carolina)

Posts:11665


05/20/2018 8:28 AM  
Posted By LetA on 05/20/2018 8:01 AM
I believe that you can demand the unit owner make you the HOA a lossee on the insurance policy, so that way if the policy lapses or is cancelled the HOA is
notified.




We have that but candidly we never paid much attention nor kept it up to date. Also if a new owner, we do not know if they are insured or not.
MelissaP1
(Alabama)

Posts:10590


05/20/2018 8:56 AM  
Our HOA rules don't state that owner's have to have insurance just our vendors. As for fining for not having insurance, don't think so. The owner's choice to carry insurance or not. However, they can't use the HOA's insurance as their own. What would most likely happen in a claim with no insurance, is the claim will go on the "victim's" insurance. That insurance company then would go after the "Offender". No insurance they could be footing a rather large bill in the end.

Former HOA President
RichardP13


Posts:0


05/20/2018 10:55 AM  
Posted By KerryL1 on 05/20/2018 7:24 AM
My question to you, Richard is: As a property manager with many accounts, have your ever seen my approach--basically a fine schedule for failure to have insurance-- in an HOA's rules? If not, why do you think this is the case? Or don't you manage any condos. I hope you'll stick with the tpic and not wander elsewhere.


Yes, I do manage condos, and yes, I have run into this same situation, but NO, I wouldn't have fined an owner for not having a HO-6 policy. There are other remedies available to an HOA if they are involved.
KerryL1
(California)

Posts:8729


05/20/2018 5:17 PM  
Why shouldn't an HOA board craft a rule that fines owners for not carrying HO6 insurance that covers damage to the HOA's common areas? Just because none of your accounts seem t have this rule f doesn't mean it's a bad idea. I'm looking for reasons why it is a bad idea, but you haven't supplied any.
CA
You say there are other remedies, Richard. What are they? Can you, as a PM, direct me to literature on this topic?

We could have our PM request insurance certificates from all 200+ owners, but that would take a lot of time and would have to constantly be updated as JohnC suggests.

Having been out of the country for a couple of weeks, I didn't see the damage to the one unit till today. Dryers & fans are still running after 10 days or so and workers have torn out her ceilings in about 1/2 her 1,000 sf unit. She also has some ruined baseboards & hardwood floors, which'll mean replacement of all her wood. The rest looks pretty good. She'll be getting a very large electric bill when all is over. Now, if this were the common area, all owners would be paying for the deductible, dryers, reconstruction, likely premium increases, etc., if the Owner who caused the damage had no insurance.

Melissa, Owners do not have a "choice." As I made very clear above: Our CC&Rs require Owners to carry insurance. The issue is how to enforce this covenant? I'm looking forward to Richard's remedies that he referred to.

good way to put it, Douglas. Owners need to fend for themselves re: their personal property, loss of use, etc.
RichardP13


Posts:0


05/20/2018 8:17 PM  
Can you tell us which homeowner insurance policy covers for the common area. Who is going to maintain the list of each owner and their polices and if their policies lapse and the HOA didn't follow up, YOU will be liable.

You can't fine for damages, you can assess them for the expense the HOA incurred, but you cannot assess them for the damage caused to another unit. That is a issue between the neighbor. Let the insurance company handle this.

That is why I said to speak to your insurance company and ask your questions to them, as they have experience with your complex, not us.
KerryL1
(California)

Posts:8729


05/20/2018 9:58 PM  
I already wrote above, Richard, that I doubted it was a good idea to get owner/owner topics involve-at least twice.

Please re-read my posts--you're wandering off topic.

Our CC&Rs do, like ,pst or all, permit us to fine Owners for damages to the common areas in the form of assessments.

I already said a list to keep track of evidence of insurance certificate is impractical, Richard. Maybe tomorrow I'll find different words to express my approach better. It's sounding more and more unique, which could be a weird thing....or something that most don't think of.

Meantime, you said there ARE "remedies." What are theY?
RichardP13


Posts:0


05/20/2018 10:29 PM  
Posted By KerryL1 on 05/20/2018 9:58 PM
I already wrote above, Richard, that I doubted it was a good idea to get owner/owner topics involve-at least twice.

Please re-read my posts--you're wandering off topic.

Our CC&Rs do, like ,pst or all, permit us to fine Owners for damages to the common areas in the form of assessments.

I already said a list to keep track of evidence of insurance certificate is impractical, Richard. Maybe tomorrow I'll find different words to express my approach better. It's sounding more and more unique, which could be a weird thing....or something that most don't think of.

Meantime, you said there ARE "remedies." What are theY?



Good luck in your research!
RichardP13


Posts:0


05/20/2018 10:29 PM  
Posted By KerryL1 on 05/20/2018 9:58 PM
I already wrote above, Richard, that I doubted it was a good idea to get owner/owner topics involve-at least twice.

Please re-read my posts--you're wandering off topic.

Our CC&Rs do, like ,pst or all, permit us to fine Owners for damages to the common areas in the form of assessments.

I already said a list to keep track of evidence of insurance certificate is impractical, Richard. Maybe tomorrow I'll find different words to express my approach better. It's sounding more and more unique, which could be a weird thing....or something that most don't think of.

Meantime, you said there ARE "remedies." What are theY?



Good luck in your research!
MelissaP1
(Alabama)

Posts:10590


05/21/2018 5:10 AM  
From what I understand insurance is a personal choice. Not having insurance has ramifications. It's your choice not to have insurance to face those ramifications. I don't see having a HOA use their insurance to cover for someone else's lack of. Meaning that the HOA doesn't need to step in where it doesn't belong.

Now having a claim for common area is a bit different. Let's say that one floods their sink and it gets into the hallway. It warps the boards. The HOA has to replace those boards. The HOA could claim it on their insurance or they send the owner the bill for that work. Now if the owner doesn't have insurance they are on the hook for their own repairs and the HOA's repairs or their insurance premium if need be.

To fine someone in addition doesn't really encourage anyone to purchase insurance. It's probably the opposite effect. I believe one should have insurance but you can't force it down their throat. It's not like Car insurance in our state it's required to have liability. They send out post cards occasionally to verify or have to bring it to get tags. Otherwise, the state doesn't know till an accident occurs like everyone else.

Former HOA President
TimB4
(Tennessee)

Posts:17852


05/21/2018 5:49 AM  
Kerry,

As others have said, there are different levels of insurance. Unless the CC&Rs specify what level, there may be issues.

Keep in mind that a $50 fine is not going to make the individual purchase insurance. However, the legal actions by the other damaged parties against that individual might.

Now, fining for any increase is, in my opinion, punishment that wasn't on the books prior to the crime (so to speak). It appears to me that you simply want to go after this individual vs. enforce the covenants. I would also contend that the Covenants specify that costs of the Association are shared equally. Therefore, an unknown increase (that may have been done for several reasons) should be shared by all.


You asked what we thought.
Those are my thoughts.
LetA
(Nevada)

Posts:1466


05/21/2018 6:21 AM  
Posted By MelissaP1 on 05/21/2018 5:10 AM
From what I understand insurance is a personal choice. Not having insurance has ramifications. It's your choice not to have insurance to face those ramifications. I don't see having a HOA use their insurance to cover for someone else's lack of. Meaning that the HOA doesn't need to step in where it doesn't belong.

Now having a claim for common area is a bit different. Let's say that one floods their sink and it gets into the hallway. It warps the boards. The HOA has to replace those boards. The HOA could claim it on their insurance or they send the owner the bill for that work. Now if the owner doesn't have insurance they are on the hook for their own repairs and the HOA's repairs or their insurance premium if need be.

To fine someone in addition doesn't really encourage anyone to purchase insurance. It's probably the opposite effect. I believe one should have insurance but you can't force it down their throat. It's not like Car insurance in our state it's required to have liability. They send out post cards occasionally to verify or have to bring it to get tags. Otherwise, the state doesn't know till an accident occurs like everyone else.





After witnessing firsthand what water damage can do in a high-rise condo, not only do I think an HOA should fine an owner for not having approbate
insurance coverage , or hold in in an escrow account enough money to cover potential damages. The HOA should purchase a policy and bill the owner for said policy
for violating the CC&R's.

As JohnB stated, his HOA dropped the ball. Sure it is easy to name the HOA as a lossee, It is utterly the the community manager's or the treasurers's responsibility
to act when an insurance premium is about to lapse. At that point it should be the duty of either party to reach out to the owner to find out if they are switching
carriers or just don't care, Then it is the responsibility of the HOA to protect their assets.
AugustinD


Posts:0


05/21/2018 6:53 AM  
Posted By LetA on 05/21/2018 6:21 AM
After witnessing firsthand what water damage can do in a high-rise condo, not only do I think an HOA should fine an owner for not having approbate
insurance coverage , or hold in in an escrow account enough money to cover potential damages. The HOA should purchase a policy and bill the owner for said policy
for violating the CC&R's.

As JohnB stated, his HOA dropped the ball. Sure it is easy to name the HOA as a lossee, It is utterly the the community manager's or the treasurers's responsibility
to act when an insurance premium is about to lapse. At that point it should be the duty of either party to reach out to the owner to find out if they are switching
carriers or just don't care, Then it is the responsibility of the HOA to protect their assets.


I too know of a few water damage situations at my condo. I think each owner having insurance for their condo's interiors is so important to property values that I would fine per a set frequency: Maybe $50 for each month the unit has no insurance, starting from the first month the absence of insurance was noticed? Insurance is cheap enough that this should make the choice (buy insurance or do not buy insurance) for owners easier. As long as the CC&Rs require it, and as long as fines are allowed, I think the Board has wide latitude in setting fines as best as it can in proportion to the importance of property values.
TimB4
(Tennessee)

Posts:17852


05/21/2018 6:58 AM  
I will add that, if you don't have it in place already (and I believe you don't due to this incident), the Board may want to require members provide a certificate of insurance to the Association annually. Most insurance companies provide this free and will mail it to the Association. Therefore, it's zero to minimal cost to the member and actual documentation to the Association that as of mm/dd/yyyy a policy was in place (although, it may have been cancelled a week later).
KerryL1
(California)

Posts:8729


05/21/2018 8:59 AM  
Thanks for actual advice and insights (to almost), everyone. It really helps me think about this topic. I'm going to summarize now to make sure I haven't missed anything.

1. Our CC&Rs state: "Each Owner shall maintain property insurance to personal property located within the Unit and to any upgrades or Improvements to any upgrades or improvements located within the Unit and liability insurance against any liability resulting from any injury or damage occurring within the Unit." In condo land this is a common CC&R requirement and means each of us MUST have coverage for our unit's damage to our own, to others' units or to the common areas. The standard policy is called an HO6. Mine is $550/ann.

2. The question is: HOW to enforce this? One suggestion here and from a director here 5 hears ago is to require that Owners provide our PM a certificate of insurance annually. New owners would have to, too, of course. But our HOA attorney back then advised us not to require those as it would make the HOA liable if a unit damaged other units and the unit at fault had no insurance. The argument would be the HOA fell down on the job of making sure that EVERY Owner among 200+ had an HO6 policy. I also don't like the extra work for our PM. If it could be done as simply as Tim suggests, though, this might work. Still, HOW to enforce?

3. My approach is to fine Owners, using proper due process if they do not produce a certificate within 15 days of a hearing notice. I'm thinking about $250. This would be a proposed rule sent out for a CA-mandetory 30-day comment period, and publicized in our newsletter. In addition the rule include a section where the HOA can potentially apply an enforcement assessment in the amount of any increased premiums to the HOA because we had to use the HOA insurance. this will be easy to learn from our HOA insurer after a covered incident.

We already have a CC&R that Owners pay for unit-caused damage to the common area after notice and hearing. So....we might consider assessing the insurenceless-owner INSTEAD of tapping into our HOA insurance. But these losses can be VERY large and something an Owner might fight. I'll need to see what our board & PM think of this, but add your thoughts....

RichardP13


Posts:0


05/21/2018 9:12 AM  
Posted By KerryL1 on 05/21/2018 8:59 AM
Thanks for actual advice and insights (to almost), everyone.
1. Our CC&Rs state: "Each Owner shall maintain property insurance to personal property located within the Unit and to any upgrades or Improvements to any upgrades or improvements located within the Unit and liability insurance against any liability resulting from any injury or damage occurring within the Unit." In condo land this is a common CC&R requirement and means each of us MUST have coverage for our unit's damage to our own, to others' units or to the common areas. The standard policy is called an HO6. Mine is $550/ann.


Since this provision was already in your CCRs, why wasn't it being enforced on behalf of the owners that WERE following the rules. Seems to me the Board is the responsibility party if the premiums increase due to owner non-compliance.

In your case, since you have the luxury of having a on-site GM and assistant working exclusively on your property, there should be less of an excuse.
KerryL1
(California)

Posts:8729


05/21/2018 9:25 AM  
As usual, your answer isn't helpful, Richard. I can only reply that no one thought of an enforcement mechanism.

As you can see in my most recent post, a director did want all Owners to show proof of HO6 insurance some years back, but the GC put the kibosh on it.

What do you advise to your accounts, Richard? How do they enforce this common CC&R? I'm puzzled why you don't address this question.
TimB4
(Tennessee)

Posts:17852


05/21/2018 11:03 AM  
Kerry,

I think your attorney gave you bad advice.

Their reasoning that the Association would be held responsible if someone didn't have insurance can be equally argued that the Association is responsible because they failed to make sure everyone had insurance (as required by the CC&Rs).

I believe that is the point Richard is making. Since the Board failed to make sure that owners had insurance as required by the CC&Rs, this may open the Association up to legal action. I know that if I were in your Association, I would bring action against the individual directly responsible and bring action against the Association for failure to make sure insurance was covered by all - especially if it was brought up in the past and the Board voted not to verify.

AugustinD


Posts:0


05/21/2018 12:14 PM  
Posted By KerryL1 on 05/21/2018 8:59 AM

1. Our CC&Rs state: "Each Owner shall maintain property insurance to personal property located within the Unit and to any upgrades or Improvements to any upgrades or improvements located within the Unit and liability insurance against any liability resulting from any injury or damage occurring within the Unit." In condo land this is a common CC&R requirement and means each of us MUST have coverage for our unit's damage to our own, to others' units or to the common areas. The standard policy is called an HO6. Mine is $550/ann.

2. The question is: HOW to enforce this? One suggestion here and from a director here 5 hears ago is to require that Owners provide our PM a certificate of insurance annually. New owners would have to, too, of course. But our HOA attorney back then advised us not to require those as it would make the HOA liable if a unit damaged other units and the unit at fault had no insurance. The argument would be the HOA fell down on the job of making sure that EVERY Owner among 200+ had an HO6 policy. I also don't like the extra work for our PM. If it could be done as simply as Tim suggests, though, this might work. Still, HOW to enforce?


Regarding --

1.
I do not interpret the covenant as saying that, if Member Jones's water heater fails and leaks water into the next-door condo unit, Member Jones's insurance is liable for the damage to the next-door condo unit. The covenant seems clear that the insurance need only cover damage and injury /within/ one's own unit. Kerry, can you explain why you said otherwise?

2.
I would ask the HOA insurer if it has anything to say on the point. For the sake of property values, right now I think obtaining the annual certificate of insurance, and a fine like what Kerry proposes, is appropriate.
MelissaP1
(Alabama)

Posts:10590


05/21/2018 3:32 PM  
The HOA does not own the house. It's kind of like enforcing your tenant to have renter's insurance. How do you do that? Write it in the lease agreement? How do you then prove they have it each month and did not let it lapse? Does it give you the right to evict them based on not having the proof of insurance or to raise their rent?

Some people may be under the mistaken idea that the HOA carries insurance for them. Like it's part of the dues. Which there is a liability insurance (or should be) for the HOA's common property and/or board members. It is paid for by the dues. So someone may see "Insurance" and think that extends to them personally. Something that may sound like common sense that isn't.

I don't agree with fining an owner for not having insurance nor keeping up with it. It's just another item to keep up with. When the time comes to make a claim, that is when we let the insurance company fight it out. Whether or not the person is or was insured.

BTW: We did have a tree fall on a house. The owner did not have insurance. The tree was on common property. All we had to pay for was the cleanup of the debris. The fence, roof, and household items damaged were NOT the HOA's responsibility. The owner who was damaged did have insurance. Their insurance company put the claim on their insurance and pursued the non-insured owner for the money.

Former HOA President
TimB4
(Tennessee)

Posts:17852


05/21/2018 4:03 PM  
Posted By MelissaP1 on 05/21/2018 3:32 PM

The HOA does not own the house.




Melissa,

This is a high rise condominium development.
Therefore, different rules apply.

Per my understanding (overly simplified), the owner owns from the drywall in and the Association owns the structure.
DouglasK1
(Florida)

Posts:1689


05/22/2018 7:31 AM  
Posted By MelissaP1 on 05/21/2018 3:32 PM
The HOA does not own the house. It's kind of like enforcing your tenant to have renter's insurance. How do you do that? Write it in the lease agreement? How do you then prove they have it each month and did not let it lapse? Does it give you the right to evict them based on not having the proof of insurance or to raise their rent?


Apartments around here require tenants to carry insurance and be listed on the policy. Since the apartment is listed, they get notified if the policy lapses or is cancelled, very much the same way mortgage holders get notified if homeowners insurance is canceled and banks get notified if car insurance is canceled before the car loan is paid off.

I don't have a lease in front of me, but it can certainly carry penalties for not having insurance, the most common probably being that the lessor will acquire insurance for the lessee and add it to the rent. Again, this is very similar to the practice of mortgage holders and companies that make car loans, they will add insurance payments to your mortgage or car loan payment amounts if you don't carry the required insurance.

The CCRs are a contract between owners, and whether you agree with them or not, if you buy a property that is affected by them, you have the obligation to abide by the terms. Those terms can include requirements for insurance, and if the insurance is not in place, the association can have penalties or remedies to enforce compliance.

Escaped former treasurer and director of a self managed association.
KerryL1
(California)

Posts:8729


05/22/2018 6:22 PM  
Good question, Augustin. Our HOA insurance agent and all other firms that have covered neighbor -to -neighbor losses insist that the below excerpt of that lonnnnng sentence for our CC&Rs says I must must have insurance to cover any "liability" resulting from any damage or injury in my unit. I agree the wording is very ambiguous and vague. We're in the process of rewriting our CC&Rs and our HOA attorney will work on this. Meantime, after 16 years, there haven't been any debates about this topic.

Ironically, one day before the flood, our newsletter ran an item by our insurance agent explaining what the HOA ins. covers ("bare walls") and what Owners must purchase. Our move-in pak reminds new Owners, too, to purchase an HO6 policy

CC&R: "...and liability insurance against any liability resulting from any injury or damage occurring within the Unit."

Since neither you nor I are attorneys, Tim, I don't think we qualify to say whether ours gave us "bad" advice or not. I'm kind of surprised seeing such strong condemnation from you. As a board, we did listen to this expert and thereby followed the BJR. I am not interested in what we shoulda, coulda have done, or who is/might be responsible for this recent incident, but what anyone would advise on a going-forward basis: HOW to enforce our CC&Rs? That's been my question all along.

Thanks to Augustine and Douglas for their counsel. I like Douglas' quote: "The CCRs are a contract between owners, and whether you agree with them or not, if you buy a property that is affected by them, you have the obligation to abide by the terms. Those terms can include requirements for insurance, and if the insurance is not in place, the association can have penalties or remedies to enforce compliance."

Having seen no reason not to proceed with this agenda item, I'll stick with it. I'll raise again the question of certification requirement. Still haven' heard any positive ideas form Richard.

While we do have an onsite PM and mgr. asst., no one here would call them "luxuries." As a mechanically and financially complicated twin high rise HOA, these two are necessities. We also have a major project in progress and are seeking proposals on another--just finished installing bases on our cooling towers and a booster pump.

I also appreciate Tim & Augustine's attempt to explain high rise issues to Melissa.
KerryL1
(California)

Posts:8729


05/22/2018 6:30 PM  
Good question, Augustin. Our HOA insurance agent and all other firms that have covered neighbor -to -neighbor losses insist that the below excerpt of that lonnnnng sentence for our CC&Rs says I must must have insurance to cover any "liability" resulting from any damage or injury in my unit. I agree the wording is very ambiguous and vague. We're in the process of rewriting our CC&Rs and our HOA attorney will work on this. Meantime, after 16 years, there haven't been any debates about this topic.

Ironically, one day before the flood, our newsletter ran an item by our insurance agent explaining what the HOA ins. covers ("bare walls") and what Owners must purchase. Our move-in pak reminds new Owners, too, to purchase an HO6 policy

CC&R: "...and liability insurance against any liability resulting from any injury or damage occurring within the Unit."

Since neither you nor I are attorneys, Tim, I don't think we qualify to say whether ours gave us "bad" advice or not. I'm kind of surprised seeing such strong condemnation from you. As a board, we did listen to this expert and thereby followed the BJR. I am not interested in what we shoulda, coulda have done, or who is/might be responsible for this recent incident, but what anyone would advise on a going-forward basis: HOW to enforce our CC&Rs? That's been my question all along.

Thanks to Augustine and Douglas for their counsel. I like Douglas' quote: "The CCRs are a contract between owners, and whether you agree with them or not, if you buy a property that is affected by them, you have the obligation to abide by the terms. Those terms can include requirements for insurance, and if the insurance is not in place, the association can have penalties or remedies to enforce compliance."

Having seen no reason not to proceed with this agenda item, I'll stick with it. I'll raise again the question of certification requirement. Still haven' heard any positive ideas form Richard.

While we do have an onsite PM and mgr. asst., no one here would call them "luxuries." As a mechanically and financially complicated twin high rise HOA, these two are necessities. We also have a major project in progress and are seeking proposals on another--just finished installing bases on our cooling towers and a booster pump.

I also appreciate Tim & Augustine's attempt to explain high rise issues to Melissa.
TimB4
(Tennessee)

Posts:17852


05/22/2018 6:34 PM  
Posted By KerryL1 on 05/22/2018 6:22 PM

Since neither you nor I are attorneys, Tim, I don't think we qualify to say whether ours gave us "bad" advice or not.




I disagree completely. Attorneys are paid to offer advise (that is an opinion). The actual decision to do x or y is still the boards.

I explained why I thought the advice was bad. To rephrase, the reasoning your attorney gave to do x can be the same reasoning to do y. Therefore, and I do think I'm qualified to make this decision, your attorney didn't really substantiate the difference between doing x or y. Hence, in my opinion, that was bad advise. If I received such advice without additional info, I would be seeking a second opinion.


Posted By KerryL1 on 05/22/2018 6:22 PM

I'm kind of surprised seeing such strong condemnation from you. As a board, we did listen to this expert and thereby followed the BJR.




Just as you appreciated my attempt to explain about condominiums to Melissa, I was simply trying to explain (in different words) the perspective Richard provided.

Posted By KerryL1 on 05/22/2018 6:22 PM

I am not interested in what we shoulda, coulda have done, or who is/might be responsible for this recent incident, but what anyone would advise on a going-forward basis: HOW to enforce our CC&Rs? That's been my question all along.




I believe I answered that question. Require a COI (certificate of insurance) to be provided to the Association on an annual basis. Failure to do so results in a $xxx monetary penalty.


AugustinD


Posts:0


05/22/2018 7:15 PM  
Posted By KerryL1 on 05/22/2018 6:30 PM
Good question, Augustin. Our HOA insurance agent and all other firms that have covered neighbor -to -neighbor losses insist that the below excerpt of that lonnnnng sentence for our CC&Rs says I must must have insurance to cover any "liability" resulting from any damage or injury in my unit. I agree the wording is very ambiguous and vague. We're in the process of rewriting our CC&Rs and our HOA attorney will work on this. Meantime, after 16 years, there haven't been any debates about this topic.

Ironically, one day before the flood, our newsletter ran an item by our insurance agent explaining what the HOA ins. covers ("bare walls") and what Owners must purchase. Our move-in pak reminds new Owners, too, to purchase an HO6 policy

CC&R: "...and liability insurance against any liability resulting from any injury or damage occurring within the Unit."


I have been pondering the above line from the CC&R and can kind of see how the "resulting from" could be interpreted to mean that, say, a broken water heater within Unit X that yields flooding in Unit Y means Unit X's insurance is liable to Unit Y's owner for damage resulting from the flooding.

It seems a tough grammatical question. Is the covenant saying the "injury or damage... within the Unit" shall be covered under liability insurance? Or is the covenant saying that the liability for accidents that occur within the unit, but also cross the boundary to damage another unit, shall be covered under liability insurance?

Regardless, it sounds like your HOA has resolved this issue with the HO6 policy requirement. No disputes over this is great news.

My condo's CC&Rs also require that each owner have insurance. The covenant is pretty specific about what the insurance must cover (paint, wallpaper, cabinets, carpets, floors). I see now that the covenant also states that my HOA may purchase insurance for any unit not having it and bill the owner exactly as if this were an assessment. Hooah.

I happen to think TimB4's reasoning, rebutting your HOA's attorney, is on the money. I think his point about how, if the Board had been put on notice in the past that owners were not purchasing insurance, and the board did nothing in response, is a good one. From my reading in the past year,the latter is also classic grounds for suit. I know a Board cannot cover all bases and can only do the best it can. I know people can sue for anything. But I think many of us here do get the importance of condo owners complying with the insurance requirement. Regarding noncompliant owners, I'd fine them. I'd take away voting rights and amenity rights. I'd pull the plug on their cable TV. I'd post a sign in front of their private parking space with a scarlet V for "Violator." This is because when their un-insured Unit catches fire (because of course the slob is a smoker who does not use ash trays) and is gutted, and sits for the next year with everyone smelling smoke when they pass by and seeing the mess through uncurtained windows, it affects my property values.

As for your HOA's attorney saying otherwise, I figure: Competent HOA attorneys do the best they can. But even on major issues, and even when in the same firm advising the same client, they do not always agree.

As I have mentioned elsewhere, I think experienced board members can have a better handle on HOA law.
RichardP13


Posts:0


05/22/2018 9:42 PM  
I am not a fan of finding homeowners. I believe that to be the LAZY way to handle situations. I also believe based on personal experience your attorney gave you bad advise.

I believe you are going abou this in the wrong manner and you wouldn't take my advise anyways. You have a PM, attorney and an insurance agent. You need to seek their advise seek you're paying for it.
JeffT2
(Iowa)

Posts:638


05/22/2018 10:12 PM  
An alternative is for the association to purchase insurance coverage of the condo units in addition to the common areas. That way everything is covered and it does not matter as much if the unit owner has insurance. Some states require this by law. It seems like a better, simpler system than gathering certificates and fining owners.

It costs more for such coverage, which has to come from assessments, but the unit owners may pay less for their HO-6 policy.
JeffT2
(Iowa)

Posts:638


05/23/2018 10:34 AM  
"Recommendation: Associations should amend their CC&Rs to require both owners and tenants to carry insurance. To avoid potential liability, the amendment should also relieve the association of enforcement requirements related to the amendment. In addition, boards should regularly publish reminders that owners and renters need to carry their own insurance."

this is from here:

https://www.davis-stirling.com/HOME/Owner-Renter-Insurance#axzz3gTVqah3Z

RichardP13


Posts:0


05/23/2018 11:08 AM  
The way I see it, the only winner is the attorney who suckered the HOA into getting you to consider changing your CCRs.
KerryL1
(California)

Posts:8729


05/23/2018 11:23 AM  
Augustin asked: "Is the covenant saying the 'injury or damage... within the Unit' shall be covered under liability insurance? Or is the covenant saying that the liability for accidents that occur within the unit, but also cross the boundary to damage another unit, shall be covered under liability insurance?" According to numerous others, it means both.

You also wrote: "I see now that the covenant also states that my HOA may purchase insurance for any unit not having it and bill the owner exactly as if this were an assessment." Aha! Maybe we can do something like that when we're rewriting out CC&Rs.

Interesting thought, Jeff. Appreciate it--I'll present anything to my board that makes sense. Unlike when our previous attorney--who does have a fine rep, but who who can't grasp our three reserves accounts & the DRE docs that inform them, gave us his advice, we now have a different GC and two attorneys on our Board. So far, the latter have been useless even tho' one's served on other neighborhood boards.

I'm fully aware, Tim, that the buck stops at the board. We did comply with the BJR by following doing our due diligence & by following our attorney's advice.That's water way under the bridge. Yes, you and others suggest a COI and a fine if it can't be produced within x days. I do appreciate that from you & others. I've poked around other sites and have found something else that might help, but none have suggested fining Owners--as one method to enforce our CC&R. We use fines to enforce other CC&Rs and Rules. Not sure why Richard thinks it's "LAZY."

I stated waaay above, Richard that after our board meeting and any other ideas our board might come up with, then we'll consult with our attorney. I don't know why you think I wouldn't take your "advise [sic]" as I have occasionally complimented you in the past and agreed with you on some topics.

TimB4
(Tennessee)

Posts:17852


05/23/2018 3:12 PM  
Carol,

I never intended to imply that the BOD didn't due it's due diligence. The Board sought and obtained legal advice. I simply said that it appears that that advice was bad as it didn't keep this situation from happening and, as has been pointed out, might cause additional liability issues due to the Board's failure in verifying that section of your CC&Rs.

Now that you and your Board are aware the advice you received wasn't the best, you are taking steps to find better advice. That is commendable.

To be realistic, there is likely only a small chance (if any) of additional issues coming up because the Board didn't verify the insurance coverage.
RichardP13


Posts:0


05/23/2018 3:29 PM  
So I did some research and found language similar to your CCRs:

11.3 INDIVIDUAL INSURANCE Each Owner shall maintain property insurance against losses to personal property located within the Unit and to any upgrades or Improvements to any upgrades or Improvements located within the Unit and liability insurance against any liability resulting from any injury or damage occurring within the Unit. The Association's insurance policies will not provide coverage against any of the foregoing. All Owners hereby waive all rights of subrogation against the Association, and any insurance maintained by an Owner must contain a waiver of subrogation rights by the insurer as to the Association provided, however, that a failure or inability of an Owner to obtain such a waiver shall not defeat or impair the waiver of subrogation rights between the Owners and the Association set forth herein. No Owner shall separately insure any property covered by the Association's property insurance policy as described above. If any Owner violates this provision and, as a result, there is a diminution in insurance proceeds otherwise payable to the Association, the Owner will be liable to the Association to the extent of the diminution. The Association may levy a reimbursement assessment against the Owner's Condominium to collect the amount of the diminution.

If this is similar to your CCRs then the policy required does not insure against loss to another unit. If the HOA does not pay for any damage to a unit damaged by another, why would the HOA be involved? If the HOA has to spend funds to fix a unit not insured by a HO-6 policy, then it should be an assessment, NOT A FINE, against the unit. WHY? Because you can lien on an assessment, but not on a fine.I would also put this my community handbook for residential owners, as this might be something they would refer more than the CCRs.

Based on what you are asking and IF they are similar to yours, then an amendment to the CCRs would be required to handle what you're asking for.

Just my opinion.
AbdulS
(South Carolina)

Posts:6


05/04/2021 2:39 PM  
Posted By KerryL1 on 05/20/2018 5:17 PM
Why shouldn't an HOA board craft a rule that fines owners for not carrying HO6 insurance that covers damage to the HOA's common areas? Just because none of your accounts seem t have this rule f doesn't mean it's a bad idea. I'm looking for reasons why it is a bad idea, but you haven't supplied any.
CA
You say there are other remedies, Richard. What are they? Can you, as a PM, direct me to literature on this topic?

We could have our PM request insurance certificates from all 200+ owners, but that would take a lot of time and would have to constantly be updated as JohnC suggests.

Having been out of the country for a couple of weeks, I didn't see the damage to the one unit till today. Dryers & fans are still running after 10 days or so and workers have torn out her ceilings in about 1/2 her 1,000 sf unit. She also has some ruined baseboards & hardwood floors, which'll mean replacement of all her wood. The rest looks pretty good. She'll be getting a very large electric bill when all is over. Now, if this were the common area, all owners would be paying for the deductible, dryers, reconstruction, likely premium increases, etc., if the Owner who caused the damage had no insurance.

Melissa, Owners do not have a "choice." As I made very clear above: Our CC&Rs require Owners to carry insurance. The issue is how to enforce this covenant? I'm looking forward to Richard's remedies that he referred to.

good way to put it, Douglas. Owners need to fend for themselves re: their personal property, loss of use, etc.



I agree there must be a policy to the fine homeowner who doesn't have insurance
SheliaH
(Indiana)

Posts:4291


05/04/2021 7:34 PM  
I think it's a great idea - and the association's master insurance would appreciate it as well. The part about the owner being responsible for the HOA's premium is a nice touch - sometimes people need a smackdown in the wallet before they behave like responsible adults.

You may want to talk to them and perhaps your association attorney about crafting the new policy. I also hope the resident who caused the damage is sued in a big way. In fact, this should be an object lesson for everyone there.
SheliaH
(Indiana)

Posts:4291


05/04/2021 7:36 PM  
Whoops - this is an old topic.

Whoever bought this up, please note the date of the original post - if it's over a month old and you have questions, it's best to start a new conversation. What was true a few years ago may be completely different today (although there's a lot about this one that's still timely).
AbdulS
(South Carolina)

Posts:6


05/05/2021 2:06 AM  
Posted By SheliaH on 05/04/2021 7:36 PM
Whoops - this is an old topic.

Whoever bought this up, please note the date of the original post - if it's over a month old and you have questions, it's best to start a new conversation. What was true a few years ago may be completely different today (although there's a lot about this one that's still timely).




yes I cam to know that's old topic sorry for that
AbdulS
(South Carolina)

Posts:6


05/05/2021 2:12 AM  
Posted By SheliaH on 05/04/2021 7:34 PM
I think it's a great idea - and the association's master insurance would appreciate it as well. The part about the owner being responsible for the HOA's premium is a nice touch - sometimes people need a smackdown in the wallet before they behave like responsible adults.

You may want to talk to them and perhaps your association attorney about crafting the new policy. I also hope the resident who caused the damage is sued in a big way. In fact, this should be an object lesson for everyone there.




I agree it will increase owner value as well, and overall peace in the society lol
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