Is it too soon to start talking about the 2018 Hurricane Season?

No! If Hurricane Irma taught us anything it is that adequate preparation before the storm will go a long way towards addressing issues after the storm.

Now is the time for associations to communicate with its owners about insurance- and liability-related issues. One of the often-confusing areas for many is understanding the scope and reach of the association’s insurance coverage versus the insurance coverage obligations of individual unit owners. Generally speaking, the association’s insurance coverage will only address the common elements. It will be up to individual unit owners to secure adequate insurance coverage for their own units.

If there is any confusion associated with insurance-coverage-related issues, the time is now to speak with an insurance agent to ensure that both your community and personal unit are adequately insured.

Speaking of insurance, associations should safely store copies of all of their applicable insurance policies. To the extent digital copies can be arranged for these insurance policies then that should be arranged too. These policies should be stored not just safely but stored in a manner that permits the association to easily gain access to the information contained in those policies after the storm has passed.

In the event that an insurance claim will need to be pursued then it is important to have “before” photos and videos of the property. In other words, take the time now to document, photograph and video your property. This will allow you to compare and contrast the extent of your damage “after” the storm hits. You can then present both “before” and “after” photographs, and videos, to an insurance company in support of your insurance claim.

Associations should also develop a plan to address a catastrophe. Since many associations are not just communities, but also families, these plans should include items such as cell phone communications and even meals. In the event of a lengthy power outage the association may want to take steps to have a generator present to have warm meals prepared for its members. The generator may also serve as a means to permit many individuals to charge their cell phones and other electronics to permit the members of the association to adequately communicate with their loved ones. The point here is that in addition to the traditional hurricane planning associated with many communities that focus on protecting the property, take some time to consider quality-of-life issues for the community in the event of a lengthy power outage or other related issues.

After a hurricane we often see many individuals, and companies, swoop in from out of town and promise many associations millions of dollars in insurance proceeds. But these groups often fail to deliver on those promises. Rather than falling victim to the overzealous, post-storm claim professionals promising riches, the better practice is to put your team in place before the storm hits. That way as soon as the storm passes and it is safe to start working on your insurance claim, your pre-screened professionals can begin the process for you. It would also be just as important to discuss all of these issues with your association’s legal counsel as well.

Addressing these issues now will ensure that your community is prepared for the 2018 hurricane season before it even starts.

 

Written by Hugo Alvarez, ESQ and originally posted to the FL Condo HOA Law Blog

Conflicts of Interests – Condominium Service Providers

An association’s officers and directors, along with their family members and anyone who has a financial relationship with the director and/or officer, are completely prohibited from entering into an agreement with the condominium association.

Prior to July 1, 2017, §718.3026(3), Florida Statutes, was the only statute applicable regarding conflicts of interest. It permitted the association to enter into a contract or transaction with one or more of its directors or an entity in which one or more of its directors are directors or officers or are financially interested. In doing so, the Statute only required compliance with the conflicts of interest requirements of Chapter 617.0832, the not-for-profit corporation statute, and only required the approval of 2/3 of the directors to approve the conflict.

After July 1, 2017, however §718.112(2)(p), Florida Statutes, went into effect and it set forth the prohibition as to service provider contracts.

“(p) Service providers; conflicts of interest.—An association, which is not a timeshare condominium association, may not employ or contract with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer. This paragraph does not apply to a service provider in which a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer, owns less than 1 percent of the equity shares.”

The only exception to §718.112(2)(p), exists when the ownership giving rise to the conflict constitutes less than 1% of the equity shares.

So what is a service provider? Unfortunately, the term is not defined, which leaves the association to determine if certain contracts are “service” contracts or not. A decision that should not be made without the assistance of counsel and, when made, should be tempered with an eye toward erring on the side of caution until a legal precedent that defines the term “service” comes into existence.

 

Originally written by Elizabeth “Beth” A. Lanham-Patrie and posted on FL Condo HOA Law Blog