Question: This year our condo association's insurance costs have gone through the roof. We have to borrow about $60,000 to pay the premiums, and our monthly fees will rise. Our manager told me I could help by shopping for new insurance. Where do I start? My own homeowner's policy has increased by about 40 percent, and I know a number of people who have dropped homeowner's coverage because they just can't afford it.
Answer: This is a serious problem for associations. Residents should be aware of the increasing cost of insurance: A 40 percent increase is on the low side. As associations begin working on budgets for next year, be sure to anticipate higher insurance premiums.
There are a lot of reasons for the increase: casualty losses and reduced earnings for insurance companies, which have to answer to their shareholders. If they don't make money on their investments, they must make it up somewhere else, i.e., by increasing premiums.
I'm very concerned that some homeowners are canceling their insurance. If a disaster strikes, there may be homes in your community that will not be repaired or rebuilt. That, of course, will devalue other homes and units.
Before you cancel, consider alternatives, such as a higher deductible or a fixed replacement cost or a co-insurance percentage (i.e., the percentage the insurance company will pay after you meet the deductible).
Get on the phone and start calling insurance agents to find out who will insure condos, homeowner associations and personal properties. Don't let your property insurance lapse.
For a copy of my six-page report on insurance, send a long, stamped, self-addressed envelope to me at the address below. Mark your outer envelope Risk Management and Insurance.
No talking allowed
Question: When we attended our first annual meeting last winter to elect the board of directors, we were allowed to speak from the floor, but now the rules have changed. We have to notify the management company a week in advance and wait for the board president to put us on the agenda. Why can't we talk at a meeting to the people we elected? What if the board is discussing something we'd like to question or comment about?
Answer: There are two basic kinds of meetings: the annual meeting, at which members elect the board and discuss association business; and board meetings, at which the directors conduct business. Neither of these is the appropriate forum for members to stand and ask questions or register complaints.
The way to do that is in writing, in advance of the meeting. An association is not a democratic government in which operational power is vested in all the owners. It is a republic, like our federal government, in which elected directors govern. You wouldn't drive to Tallahassee and try to stand up at the State Capitol and discuss a problem in front of your state legislators and demand an immediate response. Instead, you would get the attention of your legislators by letter. Your association operates the same way.
The purpose of the board meeting is to make business decisions about matters brought before the board. To make smart decisions, directors need to review and study motions before the meeting. They do this by reading the proposals and the backup material before they get to the meeting. If there is an issue you want to bring to the board's attention, do it in writing, marshal your information, present the facts and suggest a course of action.
Unit owners may speak at board meetings, but only on issues that are on the agenda. The board can establish rules for public comment. For example, it may limit the amount of time for speakers, say, to three minutes per person. The board can require that those who wish to speak register or sign in in advance. A board meeting is not a gripe session or a free-for-all.
The unfair share
Question: A few weeks ago our board levied a special assessment. The association has been unable to collect bad debts from a couple of unit owners and has decided to liquidate those debts by charging the rest of us. Why should we have to pay because some deadbeats won't?
Answer: Every year your association establishes a budget and sets fees to cover the expenses. From time to time people don't pay and the revenue side falls short. The board has no choice but to charge other owners to make up the difference. Your association has no other source of income.
If these people won't pay or can't pay, the board has little leverage against them. Pay the fee.
- Write to Richard White, c/o Community Living, St. Petersburg Times, P.O. Box 1121, St. Petersburg, FL 33731. Sorry, he can't take phone calls or provide personal replies by mail, but you can 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 800 226-9101 with questions or requests for materials. Access the Bureau of Condominiums Web site at http://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.
