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Community Living

Insurance, not bankruptcy, is answer

By RICHARD WHITE
Published January 28, 2006

Q. Most of our condominium units suffered extensive hurricane damage, and rumors have been circulating that we may seek bankruptcy protection. What does that mean for unit owners?

A. Unless you find yourselves in an extreme financial situation, I don't believe you can persuade a bankruptcy judge to declare your association bankrupt. Most of your damage costs should be recoverable if you had proper insurance coverage. Deductibles and anything not covered can be paid by a special assessment of the members. Most of the time owners' private property insurance will cover the special assessment under loss-assessment coverage.

Q. Who is responsible to get competitive bids? Our board leaves it up to the office clerk. Would it be considered a competitive bid if our present insurance agent gets bids from companies he brokers? In that situation the agent could actually control the premium by getting bids only from the companies that offer the best commission. If we don't get bids from other agents, how do we know what is a good value for our money, or if there is some coverage we don't have but should?

A. The board of directors is responsible for approving bids. This does not mean that board members have to do the work to acquire bids. The board should establish bid guidelines or requirements and then designate the manager, a committee, or a board member to obtain bids. Then the board examines the bids to see that they comply with the specifications and to review the backgrounds of the vendors before voting to accept one of the bids.

Insurance may be the exception to the bidding process in that it is usually best to stay with the same agent. Insurance companies review the records if clients change companies and may refuse to bind a new policy or may raise the cost. The same would be true of the association's attorney and CPA.

Q. Our homeowner covenants contain a provision reading: "No noxious or offensive activity shall be carried on upon any lot nor shall anything be done which may be or may become an annoyance or nuisance to the neighborhood." How do we define these activities? For example, if a resident is parking vehicles in the street in a careless manner and the neighboring homeowners complain to the association, would that be "noxious or annoying behavior" for the purposes of this covenant?

A. This wording is so vague that it could mean anything or nothing. Consult with your association lawyer. Properly used, it can be a strong tool. Improperly used, it can open you to charges of discrimination or capricious behavior.

"Noxious or annoying" behavior could include such things as bad smells, loud noises, junk stored on the patio that becomes a fire hazard, ranting and screaming at other people, or wandering around outside dressed only in one's underwear.

In the parking situation you describe, I suppose you could call that "noxious or annoying" behavior. I'd send a letter advising the resident that he is parking in a way that could create a dangerous situation. Be specific about what he's doing wrong (parking in the crosswalk, or blocking one of the driving lanes) and what he needs to do to correct the problem.

- Richard White is a licensed community associations manager. Write to him 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@cfl.rr.com 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.

[Last modified January 27, 2006, 10:48:05]