Community Living
Canceling flood insurance could be a costly savings
By RICHARD WHITE
© St. Petersburg Times
published January 11, 2003
Question: We realize that our flood insurance covers only the structure. We want to discontinue the coverage to save money. Can banks require owners to carry flood insurance?
Answer: Ask your insurance agent this question. The board has a fiduciary duty to the members. Its duty is not to save money but to operate the association in a businesslike manner and maintain the property. Flood insurance is a part of the overall insurance package. Most casualty policies will not pay for loss caused by rising water. Suppose you had a high-rise building and floodwater washed out part of the foundation. You could suffer a total loss of the building without flood insurance because local government can condemn the building even though the upper floors were not damaged. When Hurricane Andrew hit South Florida 10 years ago, many associations discovered the hard way that the kind and amount of insurance they carried was inadequate. Ask your agent to review all your policies.
Merging may end problem
Question: Our two identical condo buildings operate as separate associations. We share a common gate with security and a manager. In the past, Condo Number 1 paid for security and management, and was reimbursed by Condo Number 2. Recently, Condo Number 2 has not paid its reimbursements on time. Someone suggested that the way we had been operating amounted to commingling of funds. Is this correct? How can we force Condo Number 2 to pay?
Answer: I would not consider this commingling of funds. I suggest you merge the condos into one association. Many associations have done this for economic reasons; they have found cost savings and economies of scale in merging. You will need the help of an attorney because the declarations will have to be rewritten. Some of the areas that will need attention include the reserve accounts, recent or neglected repairs, voting percentages and representation of board members.
Renters may hold proxy
Question: Our board president allows renters to vote. He says the unit owners have given their proxies to their tenants. Is this allowed?
Answer: In most situations, an owner can name any person to act as a proxy at members meetings. But check your bylaws to see if they restrict who can hold a proxy.
- Write to Richard White, c/o Community Living, St. Petersburg Times, P.O. Box 1121, St. Petersburg, FL 33731, or e-mail him at CAMquestions@att.net. Please include your name and city. Questions should concern association operations; legal opinions cannot be offered. For specific legal advice, contact an association attorney.
Readers may call the state Division of Condominiums Bureau of Customer Service at toll-free 1-800-226-9101 with questions or requests for materials. Access the Bureau of Condominiums Web site at www.state.fl.us/dbpr/lsc/index.shtml; or write to Bureau of Customer Service, 1940 N Monroe St., Northwood Centre, Tallahassee, FL 32399-1032.
Please note that this office provides no information about homeowners associations. The state has no bureau or department covering those associations.
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