Sunday, September 17, 2017

Community Association Questions Post Hurricane Irma


As with many Florida communities, my HOA Board had questions in the aftermath of Hurricane Irma. Would FEMA pay to pick up all our debris, when should the security guards be asked to return to duty and could we tap into reserves without a membership vote to pay for storm repairs?  Here are a few other questions, I've received from associations statewide who are grappling with the issues presented by a storm like Irma.

Q: We signed up with a Public Adjuster right after Irma but we are now not happy with his contract. It looks like we are being charged 15% of any recovery we receive. Are we stuck?

A: Under section 626.854(6), F.S., you have five (5) business days to to cancel a Public Adjuster contract without penalty or obligation. Also under section 626.854(10)(b)(1), a public adjuster cannot charge more than 10% of the amount of the insurance claim for events that are the subject of a declaration of a state of emergency by the Governor. The Governor declared a state of emergency for all 67 counties prior to Irma.

Q: One of our board members who always is a problem wants to hire someone she knows who is "great" to handle several repairs we need post Irma but this contractor is not licensed to perform work in Florida. What can we say to shoot this idea down?

A: Here are some of the risks associated with hiring unlicensed contractors:

The contractor lacks proper qualifications and, as a result, performs poor quality work in your community.
The contractor lacks insurance and thus provides no protection for your association should individuals be injured or property damaged during the course of the contractor's performance.
The contractor may have a criminal background which explains the lack of licensure.
The contractor may not comply with applicable building codes.

The DBPR also says to watch for "red flags" that indicate you may be dealing with an unlicensed contractor. Some of these include:
A claim to be "licensed and insured" but the contractor cannot produce a license
The contractor wants all or most of the money up front or will only accept cash
The contractor wants a check written to them individually or to "cash"
The contractor wants to proceed with an oral agreement only
The contractor simply showed up at your property to solicit your business.
For the complete list of red flags, please visit:

It is noteworthy that hiring an unqualified contractor and potentially squandering your insurance proceeds exposes the individual board members to potential personal liability.  Please be sure to visit your City's website to confirm whether or not the contractor you are considering is properly licensed in both Florida and in your City.  

Q: We have a number of units in our building which we believe have water damage thanks to Irma. We would like to go in and inspect these units and dry them out. However, we have several uncooperative owners who are refusing to allow us in and to pay for these services. What should we do?

A: Sections 718.1265, 719.128 and 720.316, Florida Statutes, grant boards emergency powers so long as an official state of emergency exists in Florida. Among those powers is the right of the Board to enter into units/homes to assess water damage, to remove water-soaked items such as carpeting, furniture, etc. and to seek reimbursement from the owners for those costs. Should an owner refuse to properly reimburse the association for those costs, the association may enforce its right of access, perform the required repairs, and lien the unit for any costs advanced.

Q: Our high-rise condominium recently transitioned from developer control. We have not yet hired an Engineer to confirm whether or not we have any construction defects in our building. Now that Irma has done some damage to our roof and windows, is our construction defect claim going to be impacted?

A: Developers and contractors will certainly use the hurricane as the cause of any and all exterior wall/window/roof issues. Conversely, if the building manifested no problems as a result of the storm, the developers and contractors will point to the building's performance to prove that there are no defects.  If your building was only minimally impacted by the hurricane, you should proceed expeditiously with your Engineer's Report to document your building's condition particularly as we are still in the midst of hurricane season.

If your building was impacted by the storm and  a claim is made then construction defects may be an exclusion in the policy. There's some recent case law that says that such an exclusion may not be applicable in a concurrent causation setting but the analysis would have to be very carefully done on a policy-by-policy basis. 

Q: I read that the IRS is extending the time for filing a tax return for individuals in certain areas impacted by Hurricane Irma. Would this apply to our HOA as well?

A: The IRS announced an extension for victims of the storm in parts of Florida and elsewhere who will now have until January 31st, 2018, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for taxpayers with valid extensions that run out on October 16th, and businesses with extensions that run out on September 15th, 2017.  Even though most community associations file relatively simple tax returns, your Florida HOA should have additional time to file under this program.
Please note, however, that this extension does not apply to the payment of taxes which were originally due on April 15th, 2017.

Q: I am the Treasurer for my HOA . We took out a $2.3 million dollar loan for a clubhouse renovation project. We've been paying off that loan.  Should we start including some sort of forbearance period when a state of emergency has been invoked? Associations in SW FL and elsewhere will also experience slower than usual assessment payments. Some of those communities might run into a default with their loan repayments as a result for the first time in their history. I don't want to have to rely on a bank's goodwill in this kind of situation.

A: Irma has taught many of us painful lessons not the least of which is the need to address possible hurricane damage in your more important contracts/agreements. Most loan documents grant a very tight grace period after which significant interest and late fees start accruing but do not grant an association forbearance in terms of making loan payments in the event of a disaster. However, as impacted associations know, Irma will likely delay timely payment of regular and special assessments for weeks or months to come as owners grapple with the costs associated with necessary storm repairs.

Most banks want to work with their customers and do not want to deal with defaults so If your loan documents do not address this challenge, I would suggest you contact your banking representative to have a discussion.  Failure to pay on time, however, without specific approval from the Bank will likely result in a default under the loan documents, potential acceleration of the balance, and an increase in interest rate to the default rate.

 For associations who are currently negotiating loan agreements, I suggest including a clause clarifying that the late fees and interest incurred be different for willful nonpayment vs. nonpayment resulting from a state of emergency. That's not an unreasonable request. Boards shouldn't have to hope that their bank has a heart after the storm; it should be memorialized in their loan docs.

If your community has a question about how to deal with conditions post-Irma, please email me at

Tuesday, September 12, 2017

Associations dealing with unique problems post Hurricane Irma

Thankfully Floridians heeded the call and evacuated where necessary and prepared one and all for the monstrous Hurricane Irma. While Irma was a lengthy and dangerous storm, the effects on Florida were not as devastating as had been feared. However, for thousands of shared ownership communities, volunteer boards, professional managers and residents will be dealing with the aftereffects of this storm for weeks or months to come.

For some communities, these repair and reconstruction projects will be complicated by other issues that pre-dated Irma's arrival. Let's discuss three different scenarios which might complicate your post-Irma recovery.

1. Associations that had contractual obligations (renovation or restoration projects) prior to the storm.  Some communities were in the midst of large and costly repair and renovation projects prior to Irma. I had several clients who were undergoing concrete restoration, lobby and clubhouse renovations and painting projects.  If your community started another project during the summer that has now been impacted due to the hurricane then the Board will need to evaluate if that project needs to be delayed pending completion of necessary storm repairs. Certainly, repairing a roof damaged by Irma now takes priority over that new Lobby renovation. While most force majeure clauses in repair and renovation projects allow the contractor to put the project on hold if the contractor's operations are impacted by a storm or other disaster, the contractor handling your association's renovation project may be ready, willing and able to proceed with a project that is no longer a priority for you and pushing you to continue with the project and your payment obligations. You will need your association attorney to evaluate the contract to see what options are available to you in terms of delaying the project's progression or modifying the scope of work.

2. Associations with fiscal constraints. Did your association head into the path of Hurricane Irma lacking reserves and without a line of credit in place? If so, you will be working under financial constraints when trying to obtain the funds necessary to make any repairs you suffered. At this point, you should discuss with your association attorney how quickly you can levy special assessments (knowing that it will be weeks or months before those funds start coming in and that you are not guaranteed to collect 100% of those special assessments from all owners. You should also explore the possibility of obtaining government assistance in the form of SBA loans, FEMA debris removal, etc.  Homeowners who need financial assistance to repair their primary residence, temporary shelter, or medical assistance should apply for FEMA Individual Disaster Assistance. FEMA asks those with internet access to register for aid at If you can’t get online, call 800-621-3362 or 800-462-7585 (TTY). Registering will enable FEMA to begin the process of determining eligibility for aid and services.  Businesses, associations, and homeowners may be eligible for Disaster Loan Assistance through the Small Business Administration. Visit for more information.

3. Associations with significant ongoing collection challenges. If your community had units in the collection process prior to Hurricane Irma's arrival, it may be tempting to forget about those collection efforts post-storm. After all, you have more pressing things on your mind at present. However, I would urge you to continue with those collection efforts as the Board's ability to undertake necessary storm repairs depends on your ability to collect assessments. Abating or delaying your ongoing collection efforts sends the worst possible message when you need to assemble resources to pay for repairs. 

Hopefully our Florida communities will ride out the rest of Hurricane Season (we're finished on November 1st) without incident. I am sure the rest of you share my opinion that the following visitors are most unwelcome:

Wednesday, September 6, 2017

Your Florida Board of Directors Now Has Emergency Powers as a Result of Hurricane Irma; What Will You Do With Them?

Governor Scott has declared a Florida-wide state of emergency which now deploys the emergency powers for volunteer boards found in Sections 718.1265, 719.128 and 720.316 of the Florida Statutes. Hurricane Irma may prove to be the testing ground for these emergency powers to determine, post-storm, if boards abused these powers and therefore the powers need to be reduced or if volunteer boards needed more help to cope with Irma than the current emergency powers provided and thus, these powers need to be expanded in the upcoming 2018 Legislative Session.

The intent behind the statutory emergency powers is to provide volunteer boards with more flexibility to deal with disaster situations. You can see from the list below that certain protocol regarding meeting notices, membership approval and limits on board functions and authority are all modified in the face of a disaster. For instance, your board has the authority under these emergency powers to take the necessary steps to dry out individual units and you can lien the owners who fail to reimburse the association for those expenses. You can specially assess the owners without their approval even if your documents would ordinarily require such approval. You can also borrow money without the need for membership approval even if your documents ordinarily require such membership approval.

 Pursuant to Florida law, condominium, cooperative and HOA boards can now take the following steps as long as the state of emergency in Florida continues:

  1. Conduct board and membership meetings with less and different types of notice than typically required by law.
  2. Cancel and reschedule any association meeting.
  3. Name as assistant officers person who are not directors, which assistant officers shall have the same authority as the executive officers to whom they are assistants during the state of emergency to accommodate the incapacity or unavailability of any officer of the association.
  4. Relocate the association's principal office or designate alternative principal offices.
  5. Enter into agreements with local counties and municipalities to assist counties and municipalities with debris removal.
  6. Shut down or off elevators; electricity; water, sewer, or security systems; or air conditioners. Any residents who stay in the face of such shut-downs do so at their own risk!
  7. Declare portions of the property unavailable for entry or occupancy by unit owners, family members, tenants, guests, agents or invitees to protect the health, safety or welfare of such persons.
  8. Evacuate the property in the event of a mandatory evacuation order in the locale in which the community is located. Should any unit owner or other occupant fail or refuse to evacuate the property when the board has required evacuation, the association shall be immune from liability or injury to persons or property arising from such failure or refusal.
  9. Declare that the property is habitable. However, such determination is not conclusive as to any determination of habitability pursuant to the declaration.
  10. Contract for the removal of debris and to prevent or mitigate the spread of fungus, including, but not limited to, mold or mildew, by removing and disposing of wet drywall, insulation, carpet, cabinetry or other fixtures on or within the condominium property, even if the unit owner is obligated by the declaration or law to insure or replace those fixtures and to remove personal property from a unit.
  11. Contract, on behalf of any unit owner or owners, for items or services for which the owners are otherwise individually responsible, but which are necessary to prevent further damage to the condominium property. In such event, the unit owner or owners on whose behalf the board has contracted are responsible for reimbursing the association for the actual costs of the items or services, and the association may use its lien authority to collect those expenses and fees. Without limitation those services may include the drying of units, the boarding of broken windows or doors and the replacement of damaged air conditioners or air handlers to provide climate control in the units or other portions of the property.
  12. Levy special assessments without a vote of the owners.
  13. Without unit owners' approval, borrow money and pledge association assets as collateral to fund emergency repairs and to carry out the duties of the association when the operating funds are insufficient.
Just remember, your residents are counting on you to use these emergency powers wisely and in their best interests. Wishing you all safety in the face of Irma.

Tuesday, September 5, 2017

Five Mistakes Your Board of Directors Can Avoid if Hurricane Irma Hits

In the aftermath of Hurricane Harvey's destruction and with Irma fast approaching the eastern US coastline, I could blog about the steps your community needs to take to prepare. I've written that blog post many times before and I often wonder how many board members, managers and community association residents have followed that advice.  At this point, most of you already know that you should be date-stamping video of your property to memorialize pre-and post-storm condition. and should arrange to have money on hand (either in the form of fully funded reserves or a line of credit) to use for storm repairs.  Some of you also have pre-negotiated debris removal pricing from your landscapers, have adopted and tested emergency plans and have recently reviewed your insurance policy with both your insurance agent and your association attorney to confirm and clarify your understanding of your coverage limits and deductible responsibilities.  To those highly prepared communities I say "Bravo"; your residents are lucky to have planners at the helm of their association as experience has taught that prepared communities will fare better in even a direct strike from a Category 3 or higher storm than unprepared communities will in less fearsome storms.

The surest way to make mistakes after a storm is to have failed to make adequate preparations before the storm.  However, when a storm is bearing down on a community which might not have taken all the recommended advance steps, all hope is not lost. Boards need to focus on taking the right post-storm steps as follows:

  1. Separate the urgent from the important.  Your board can and should undertake the urgent steps needed to secure your building from further water intrusion, to clear debris and to dry out units. Important items such as selecting a contractor and other professionals to help repair your long-term storm damage require the same amount of due diligence as a regular renovation or repair project would.  There is no reason for your board to abandon sensible steps such as compiling bids, vetting contractors, having your attorney review contracts before signing and hiring the right professionals to oversee the construction project simply because the repairs are needed due to storm damage. The first mistake your board must avoid is signing full repair contracts and assigning your insurance benefits to contractors under pressure and in the absence of taking the steps you would ordinarily and prudently take when hiring contractors to perform work in your community.
  2. Do not rely solely on the insurance company's adjuster to evaluate your claim. The insurance company's adjuster is not there to protect you and your association's claim. Your board needs to consult with your association counsel who will assist you in retaining your own adjuster and/or engineer or architect to fully evaluate and compile your claim.  All of the foregoing professionals can help ensure that your insurance company maximizes rather than minimizes your anticipated recovery.
  3. Don't allow the circumstances to control you. The most sought after, high quality contractors and consultants will be in short supply in the aftermath of a disaster.  It is always preferable to hold out for the quality of contractor you would hire for a non-emergency project than to settle for an unlicensed or out of state contractor.
  4. Don't forget that communication with your members is vital. Hopefully you have up to date emergency contact information for most of your members. Websites, emails, texts, phone calls and regular mail are all important channels to keep your members and residents informed about the building's condition. Those communications will help inform your residents when they can safely return to their homes, when to expect repair work to commence, etc.  It should come as no surprise that the boards who are the poorest communicators in the aftermath of a disaster don't tend to fare well at the next annual election. Even more importantly, proof of consistent and informative communications can defuse a potential negligence claim levied against your board.
  5. Lastly, one of the biggest mistakes some boards make is not learning from their mistakes. There will always be another hurricane. Whatever problems or deficiencies you discovered dealing with this year's hurricane should result in an evolution of your hurricane plan for the following year.  Did you find yourself in a bind due to a lack of funds on hand to deal with either the urgent or the important matters which needed attention? Next time you will be certain to have reserves you can use or a line of credit in place prior to storm season. Did you find that you could not get your landscaper out to remove debris promptly and when he did show up the cost was astronomical? Next time, you will pre-negotiate these services and the price before the start of hurricane season on June 1st.  Did your residents express confusion, frustration or anger for months after the storm?  Next time, you will establish and utilize more communication channels and have better contact information to keep your residents informed and involved in the reconstruction process.
According to the former heavyweight champion and sage, Mike Tyson, "Everybody's got a plan until they get hit".  If the worst happens this year and your community does get hit, be sure to minimize your pain by avoiding the foregoing mistakes. As for having a plan, check out our hurricane plan at: