Community associations need to be hurricane-proof, too

As Mike Tyson said, “Everybody’s got a plan until they get hit.” This hurricane season is confirming the need for community associations to develop the right plans, learn from their experiences and continually refine their plans.

Many volunteer community association boards and their managers already know they should have date-stamped videos of their properties and enough money on hand (fully funded reserves or lines of credit) for storm repairs. Some highly prepared boards also have pre-negotiated debris removal pricing from landscapers, have adopted and tested emergency plans and have recently reviewed their insurance policies with their insurance agents and association attorneys to ensure they properly understand their coverage limits and deductibles.

Prepared communities will fare better in direct strikes from major storms than unprepared communities in less fearsome storms. Boards can best protect their communities by taking key steps:

  • Separate the urgent from the important: After storms, boards should immediately secure buildings from water intrusion, clear debris, and dry out units. Florida condominium, cooperative and homeowners’ associations have emergency powers whenever the governor declares a state of emergency, including the right to enter units, remove water-soaked items, dry out units and lien owners who fail to reimburse the association.


Selecting contractors and others to repair long-term storm damages require the same due diligence as do regular renovations or repairs. Boards must avoid signing full repair contracts and assigning insurance benefits to contractors under pressure and without taking the steps they would ordinarily take when hiring contractors.

  • Don’t rely solely on insurance company adjusters. They are not there to protect associations’ claims. Boards should consult association counsel to help retain independent adjusters and/or engineers or architects to fully evaluate and compile claims.
  • Wait for high-quality contractors who would ordinarily be hired for nonemergency projects. Don’t settle for unlicensed and/or out-of-state contractors.
  • Maintain up-to-date emergency contact information. Websites, emails, texts, phone calls, and postal mail are important channels to keep members and residents informed of the condition of buildings, when they can safely return to their homes and expect repair work to start. Proof of consistent, informative communications can defuse potential negligence claims levied against boards.
  • Prepare for an avalanche of scare tactics and misinformation after the storm , including from associations’ own insurance companies. Some insurance companies are advising policyholders that retaining independent adjusters and/or attorneys for their claims will delay their claims. Clearly, this is false.
  • Continue addressing daily business. Boards that had units in collections pre-Irma might be tempted to postpone collections efforts and focus on more pressing matters. However, it is critical to continue collections, as the ability to make storm repairs depends on assessments. Abating or delaying collections activities sends the worst possible message when boards have to assemble resources to cover repairs.
  • Learn from experience. As Hurricane Maria confirms, there will always be another hurricane. Hurricane plans should be updated continuously based on the problems and best practices identified in prior storms. Boards that lacked funds to address urgent matters should begin funding reserves or pursuing lines of credit before the next storm season begins. Those whose landscapers removed debris late and/or charged exorbitant prices should pre-negotiate these services and pricing. If residents expressed confusion, frustration, or anger regarding board communications, boards should confirm what went wrong and establish effective communications channels.

While we will never control Mother Nature, we can take the right steps before and after storms strike to help ensure our communities recover quickly and efficiently.

Written by Donna DiMaggio Berger is a shareholder at the law firm of Becker & Poliakoff. Originally posted on Florida Condo HOA Law blog.


D&O Insurance

Congratulations! You have decided to donate your time and energy to serve
on the board of directors for your community and have convinced your neighbors that you are the right person for the largely unthankful role. Guess what? In addition
to the time and energy you will spend as a director, you have also taken on legal liability. In other words, you can be sued for merely being a member of your association’s board of directors. Yikes! Before you run to submit your
resignation, let’s discuss what your protections are when you serve as a director.

Florida appellate law is replete with holdings that community association directors will not be held personally liable for decisions made in their official capacity absent fraud,
criminal activity or self-dealing/unjust enrichment.

While it is great that Florida law protects directors who are trying their best to fulfill their obligations to their community and their neighbors, it cannot prevent someone filing a lawsuit that names individual directors. Even if the lawsuit is ultimately without merit, litigation is expensive and time consuming. This is where director and officer insurance policies (“D&O”) come into play. In its most general sense,
D&O insurance is purchased so that an insurance company will provide a defense for the association and its policy makers acting in their official capacity. There is nothing
within the community association statutes which mandate that associations carry D&O insurance (although there may be such a requirement in your community’s governing
documents). There are several things you need to be aware of with respect to D&O insurance:

  • Not all policies are the same: Policies can vary with respect to what claims are exempted (e.g. claims of breach of contract are usually excluded from the D&O
    insurance policy) and vary with respect to who is covered by the policy (e.g. most D&O insurance policies will cover not only the directors, but also the manager or other employees or agents of the association).
  • Settlement: Ultimately, the parties to a lawsuit control settlement. However, most (if not all) D&O insurance policies contain a clause explaining what happens
    if the insurance company recommends settlement but you disagree with that recommendation.  In some policies, the D&O insurance carrier can refuse to
    pay for any further legal costs if you disagree with its recommendation to settle; in other policies there may be a split in the legal costs going forward if you
    refuse to settle.
  • Timing on claims reporting: All D&O insurance policies require the insured to timely place the insurance underwriter on notice of any claims made so that the
    insurance underwriter can take actions to protect its position. Additionally, it is important that if you switch insurance carriers that you put the new carrier on
    notice of any potential claims that may exist at the time of the carrier change.

From this practitioner’s perspective, D&O insurance is an important protection for community associations to purchase for its leaders so that they may be able to serve
the best interest of the association without fear of legal reprisal. However, please READ the D&O policies and know your rights and obligations contained therein.


Written by Jay Roberts, Esq and originally posted on Florida Condo HOA Law Blog.

New Condo Laws Have Potential to Increase Litigation

During the 2017 legislative session, new laws were adopted
which significantly change the way condominium associations are managed
and operated. Many of the new provisions are well-intentioned, but raise a
number of questions that remain unanswered and have the potential
to increase litigation in some condominiums. This article will address two particular issues—term limits and recalls—and provide suggestions for fixing them
during the next legislative session, which is scheduled to begin
in January 2018.

Term Limits
The new law provides that a board member may not serve more than four consecutive twoyear terms, unless approved by an affirmative vote of two-thirds of the total voting interests of the association or unless there are not enough eligible candidates to fill  the vacancies on the board at the time of the vacancy. One of the unanswered questions raised by this new law is whether it applies to boards with one-year terms.
The plain language of the statute suggests that it does not apply to one-year terms. Another unanswered question is whether the law is intended to be applied retroactively or prospectively beginning with terms starting after July 1. In other
words, if prospective, the earliest that a board member would be prohibited from running because of term limits is 2025. If retroactive, many directors may be
“termed out” now or at the next election. Interestingly, when Floridians
voted to amend the Florida Constitution to impose term limits on state office holders, it was implemented prospectively. The constitutional amendment was adopted in 1992 but became effective in 2000, thereby allowing sitting legislators to serve an additional eight years. The Division of Condominiums, Timeshare, and Mobile Homes has not announced its interpretation, although only an interpretation by an appellate court would be binding in the legal sense. As such, associations face uncertainty and will need to consult with counsel to decide how the law applies to them.
Another issue with the new law is that it allows a “term-limited” board member to continue to serve if approved by two-thirds of the total voting interests of the
association (i.e., two-thirds of all members). Assuming this means that the two-thirds vote is determined in conjunction with the election, (which is also debatable), it is my experience that the chance of getting two-thirds of the members to vote in a condominium election is slim to none. Further, the condominium law only requires 20 percent of the members to cast a ballot in order for there to be a valid election, acknowledging that it is hard to get condominium owners to vote. I suggest changing
the two-thirds threshold to twothirds of those who vote, and to allow an omnibus “opt out” from the statute to be included in the association’s bylaws. The “twothirds
of those who vote” threshold will still allow an incumbent director to be defeated if owners are truly opposed to the director continuing to serve on the board, or if enacted through the bylaws, would require super-majority support for an “opt out.”

Under the “old” recall law, when the board was served with a petition for recall, the board was required to “certify” or “not certify” the recall. This gave the board the opportunity to review the recall petition to make sure it was actually signed by a majority of the owners. If the board did not certify the recall, the board was required to file a petition for arbitration with the Division of Condominiums, Timeshare, and Mobile Homes, and the arbitrator would decide whether the recall was valid or not. The old law was criticized because owners argued that boards were using their power to not certify a recall, even if clearly valid, just to stay in control of the association for as long as possible. The intent of the “new” law appears to be to make recalls effective immediately upon receipt by the board of directors of a recall petition. The intent also appears to be to require the individual board members who are recalled to file a petition for arbitration if they believe the recall to not be effective. However, the law leaves in the provision which requires a board meeting to be held when the board is served with a petition for recall arbitration, but removes the provision requiring the board to certify or not certify the recall. So, what is the board supposed to do at the
board meeting? Also, what is the board’s responsibility or duty with respect to a recall that is on its face is invalid, or that clearly is not signed by a majority of the owners?

In my opinion, the law should require the board to make an initial determination as to whether the recall petition is facially valid. The law should be amended to list the things that would make a recall petition facially valid—the most important being that it was signed by a majority of the owners. If the legislature wants to place the burden of challenging a recall petition on the board members being recalled, it should at least require that the petition be facially valid. Otherwise, the law could be easily abused, and would have the unintended consequence of undermining the integrity and reliability of the election process.

Written by Yeline Goin and originally posted on Florida Condo HOA Law Blog.