HOAleader.com - Tip of the Week - February 19, 2021
Published: Fri, 02/19/21
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Who Covers Condo Damages When Insurance Doesn't? It's Complicated
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In this week's tip, we answer an HOAleader.com reader's question about an issue that's so common: "Our HOA insurance policy covers cost less depreciation. This means in a recent claim, the homeowner wants the HOA to make up the difference because the insurance money doesn't cover the full cost of replacing all the cabinets and countertops in their bathroom so they all match. The homeowner now wants the HOA to make up the difference. Is the HOA obligated to make up the difference from HOA funds, or should the HO6 policy cover the difference?"
This issue comes up frequently, and the answer here isn't obvious at first, says Molly Peacock, counsel at Rees Broome in Tysons Corner, Va., who has represented condos and HOAs for 15 years.
Wil Washington, founder of Chadwick, Washington, Moriarty, Elmore & Bunn in Fairfax, Va., who is licensed in Virginia, Washington, D.C., and Maryland and has been practicing community association law for more than three decades, agrees. "Insurance is a crazy place," he says. "You have insurance rules running against maintenance rules in documents and general tort law and contract issues. There's a great blend of issues that happen."
For starters, HO6 policies are policies condo owners purchase for their unit. "HO6 policies, in my neck of the woods, are alive and well, and often they're legally mandated by the state," explains Peacock. "But isn't there a condo master policy or another liability policy, too? Yes.
"Let's start with what the HO6 covers," she adds. "It covers betterments and improvements to a condo unit—that's typically anything that's above the builder grade. That raises a whole host of questions as to what's a betterment or improvement. But usually, that can be figured out even in a 50-year-old building. HO6 policies also cover personal property.
"We see this all the time that the homeowner wants the condo to make up the difference between what the HO6 policy covers and the full extent of the damages," states Peacock. "The answer to whether that should happen depends on the governing documents."
Read more, and find out how you can head off this problem with a policy, in our new article: https://www.hoaleader.com/members/4278.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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55-and-Over Condo/HOA Communities: A Primer
An HOAleader.com reader has asked for a primer on 55-and-over communities. Specifically, our reader wants to know what they are and what they aren't, along with who can purchase in them, and what communities must do to maintain their status as such a community. Here, we oblige.
Click here to read full article:
https://www.hoaleader.com/members/55-Over-Condo-HOA-Communities-Primer.cfm
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HOA Board Members and Fiduciary Duties
Join us for in an in-depth webinar on March 25 led by two community association experts who will explain in layperson's terms what it means to act as a fiduciary for your association.
Click here for info:
https://www.hoaleader.com/products/hoa-board-fiduciary-duties-a.cfm
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Condo/HOA Attorney Contracts: What to Include and What to Reject
Last month, our experts offered tips on strengthening the association's position in a construction contract. This month, we discuss another contract issue: What should be covered in your contract for services with your community association lawyer?
Click here to read full article:
https://www.hoaleader.com/members/Condo-HOA-Attorney-Contracts-What-Include-What-Reject.cfm
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Virtual Condo/HOA Meetings: When Muting Makes Sense
One great feature of online meetings is your ability to force attendees to be silent. That, of course, raises thorny questions: Who makes decisions about who's muted? And what criteria should be used to determine whom to mute and when? Here, our experts offer guidance.
Click here to read full article:
https://www.hoaleader.com/members/Virtual-CondoHOA-Meetings-When-Muting-Makes-Sense.cfm
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Management Company Files Liens, Board Says It Was in the Dark
An HOAleader.com reader asks: "We've recently discovered that our management company has filed new loans on all our homeowners' credit reports in their name without notifying the board or anyone in the association. No one knew. Can they do this?"
Click here to read full article:
https://www.hoaleader.com/members/Management-Company-Files-Liens-Board-Says-It-in-Dark.cfm
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