Will insurance cover an Irma-related special assessment?

by David G. Muller

Q: My condominium association lost a portion of the roof as a result of Hurricane Irma. The board adopted a special assessment to pay for the repairs. Will my individual insurance for my unit cover this special assessment? T.U.

A: Cash flow is one of the most pressing needs for community associations who are recovering from damage caused by Hurricane Irma. Most associations do not have sufficient cash on hand to meet immediate post-disaster needs. There are several options that are available to deal with this problem, including establishing/using lines of credit, obtaining advances from insurers and adopting a special assessment.

For condominium associations, there may be the ability to use special assessments in an effort to obtain additional insurance contributions. Section 718.111(11)(g) of the Florida Condominium Act states that "a condominium unit owner policy must conform to the requirements of Section 627.714."

Section 627.714 of the Florida Statutes provides that every condominium unit owner’s insurance policy, commonly referred to as the HO-6 policy "must include at least $2,000 in property loss assessment coverage for all assessments made as a result of the same direct loss to the property, regardless of the number of assessments, owned by all members of the association collectively if such loss is of the type of loss covered by the unit owner’s residential property insurance policy, to which a deductible of no more than $250 per direct property loss applies. If a deductible was or will be applied to other property loss sustained by the unit owner resulting from the same direct loss to the property, no deductible applies to the loss assessment coverage."

HO-6 insurance is no longer mandatory for condominium unit owners in Florida but many unit owners carry it, and some governing documents require unit owners to carry HO-6 insurance. As such, a condominium association may be able to get some of the funds necessary to repair certain aspects of hurricane damage from the unit owners’ insurance companies, by levying a special assessment and then having the owners turn to their private insurers for reimbursement.

There are certain technicalities involved and the nature and extent of a community’s damage may play a role in the viability of this option. Any condominium association wishing to pursue this approach should first consult with the association’s legal counsel to confirm the steps and requisite procedure.

Q: I live in a large homeowners' association which is getting ready to vote on several major amendments to the governing documents. Of the 1,200 homes within the community, there are approximately 30 homeowners who are more than six months delinquent in the payment of assessments. Do these owners get to vote? M.R.

A: The answer to your question will depend on whether the board of directors of your association has taken the required steps to suspend the voting rights for these delinquent owners.

Section 720.305(3), Florida Statutes, addresses the suspension of voting rights for homeowners' associations as follows: "If a member is more than 90 days delinquent in paying any fee, fine or other monetary obligation due to the association, the association may suspend the rights of the member, or the member’s tenant, guest, or invitee, to use common areas and facilities until the fee, fine, or other monetary obligation is paid in full…" This statute goes on to confirm that the board must approve this type of suspension at a duly noticed board meeting and must thereafter provide notice to the subject owner.

Since the 30 homeowners referenced in your question are more than 90 days delinquent in the payment of assessments due to your association, your board has the option to suspend their voting rights by following the steps outlined in the above referenced statute. If your board has not followed all of these steps, the subject delinquent owners will still have the right to vote on the proposed amendments at the upcoming meeting (assuming they are otherwise eligible to vote).

Attorney David G. Muller is a shareholder with the law firm of Becker & Poliakoff, P.A., Naples (www.bplegal.com). The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this column does not create an attorney-client relationship between the reader and Becker & Poliakoff, P.A. or any of our attorneys.

Source: Naples Daily News