Condo Q & A
Q: I live in a condominium and some units suffered flood damage and some just wind damage from Hurricane Ian. Can you explain the basic difference in coverages? S.C., Fort Myers
A: You have asked for an overview of the division of insurance coverages for the units that Florida Statute 718.111(11) controls. It provides the following:
The association’s wind coverage insures all of the condominium property including the units except for “personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.”
Further, the association is responsible for the wind deductible as a common expense and will perform all reconstruction for the items covered by the insurance and any excess expense as a common expense.
In regard to flood insurance carried by the association, often times it will cover more than the wind insurance, such as floor coverings and cabinetry. While the statute is somewhat unclear on rebuild responsibility for flood damage it is our opinion that the association will be responsible for the rebuild except for the same items excluded under the wind coverage listed above which the unit owner will be responsible for but may receive some funds from the association's flood insurance for that purpose. You should check with the association’s legal counsel as he or she may have a different view.
Q: My condominium board says it has the right to hold meetings without proper notice to deal with issues regarding Hurricane Ian. Is this true? K.P., Bonita Springs
A: Generally, yes. The Condominium, Cooperative and Homeowner Association (HOA) laws provide boards with emergency powers during a declared state of emergency. The powers for condominiums and cooperatives are the same and almost the same for HOA’s. The basic powers include the following:
Conduct board and membership meetings with less than the regular required notice.
Based on the advice of public officials, engineers or other professionals declare the condominium units and cooperative units unsafe and require the units to be vacated and the property closed to re-entry. HOA’s can declare the common area amenities closed but cannot order individual homes to be vacated.
Enter condominium and cooperative units to mitigate the spread of mold and remove drywall, insulation, carpet, cabinets, fixtures and personal property. HOA’s cannot enter individual homes for this purpose.
Borrow money without a vote of the owners if one is required in the governing documents.
Levy special assessments with less than regular 14 days mailed and posted notice.
Q: I live on the bottom floor of a condominium building. My unit was flooded by Hurricane Ian. The association did not carry flood insurance. Is that legal? C.U., Fort Myers
A: Unlike hurricane wind insurance the condominium act does not expressly require the association to carry flood insurance. So, unless the governing documents required it, it was probably legal for the association to forego flood insurance. In the absence of flood insurance, the obligation to repair the damage will be controlled by the maintenance, repair and replacement provisions of the governing documents. However, you may be entitled to FEMA assistance for your personal unit. You can apply for FEMA assistance at fema.gov/assistance.
Q: If I buy a condominium unit and months after I close the association adopts a special assessment for hurricane damage costs prior to my buying the unit do I have to pay it or does the old owner have to pay it? B.N., Naples
A: You have to pay it. The obligation to pay assessments is on the owner of the unit at the time the special assessment is adopted, not when the damage was caused.
Q: If my association adopts a special assessment for Hurricane Ian damage and I pay it but then I sell my unit, what if the association gets reimbursed by the insurance company? Do I get my special assessment back? H.K., Fort Myers
A: No, any surplus or refund will go to the association. If the association decides to reimburse owners, the owner of the unit at the time the refund is given is entitled to the refund. If you were considering selling your unit after the special assessment you could negotiate with the buyer for the return of the future refund, if any. However, also keep in mind that your personal insurance policy has $2,000 of loss assessment coverage. So, if you get specially assessed you should file a claim for it with your personal insurance.
Q: I am concerned that my board is signing contracts to deal with the aftermath of Hurricane Ian. They claim because of the emergency they do not need the contract reviewed by legal counsel. What are your thoughts on this? D.F., Bonita Springs
A: I understand that boards feel extreme pressure to sign whatever document the mitigation vendor is presenting to them just to get the work started. However, under normal conditions all contracts that an association enters into should be reviewed by legal counsel first. This is even more critical now because there are many out-of-state vendors swooping in to claim a piece of the pie so to speak and the contracts often contain very problematic terms that work against the association. Allowing legal counsel to review the contract before it is signed should not delay process if the legal counsel has experience in this area. Typical things we look for and remove are out-of-state venue clauses, one-sided indemnification clauses, allowing the vendor to have total control over the insurance proceeds, mandatory arbitration clauses and clauses that make the contract subject to another state’s laws rather than Florida law.
Q: I am wondering what happens when a condo building is condemned or damaged beyond repair from a hurricane? I understand the association has to meet its deductibles with insurance companies, but what happens beyond that? Are associations required to rebuild? If not, what about the land? L.B., Estero
A: That is a very good question, and this is a real possibility depending on the extent of damage to your condominium. The Condominium Act in Section 718.117 provides for termination of the condominium and generally requires 80 percent of the owners to approve termination with no more than 5 percent voting against termination. However, most condominium declarations will contain provisions on when the owners must terminate or vote not to terminate based on the extent of the damage, habitability of the units, time frame to rebuild and the amount of available insurance proceeds to do so. You should have your association legal counsel review the declaration and advise you. If the condominium is terminated the land will typically be sold and the proceeds distributed to the owners based on the requirements in the declaration and the Statute.
Richard DeBoest, Esq., is partner/shareholder of the law firm Goede, DeBoest & Cross, PLLC. Visit www.gadclaw.com or to ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
This article originally appeared on Naples Daily News: Condo Q & A
