Hurricanes can cause a lot of damage to condos, and there’s often a big fight over who has to pay for the repairs. This battle involves insurers, condo associations, and individual unit owners. The main issue is figuring out who is responsible for paying for repairs that insurance doesn’t cover. If this issue isn’t resolved, it could lead to a lack of funds for repairs, which could hurt the owners and their investments, as well as the lenders. This article looks at the conflict between the duties to insure and repair, and suggests a way to make things more logical and fair. The high deductible amounts in insurance policies for condominiums can cause major financial problems when repairs are needed. There are four main reasons for this: owners are in charge of the association, the laws about what parts of the building are insured keep changing, the documents that outline the relationship between owners and the association are often complicated, and the lender for the project has a big say in how insurance costs are divided. This could also start to affect homeownersâ associations in a similar way. The Florida Legislature tried to make everyone happy when it came to condo insurance, but it was a tough job. They put a lot of rules on associations and insurers to make sure everyone was protected. But over time, insurers complained and some things, like wall and floor coverings and appliances, were no longer covered by the association’s insurance. This meant unit owners had to get their own insurance, which cost more money. Then Hurricane Andrew came and caused a lot of damage, and the rules had to change again to make sure everyone would be okay. But some owners still didn’t get insurance, which made things even more difficult for their condos. Starting in 2004, all insurance policies for our condo must cover:
1. Anything outside the units
2. Stuff inside the units that was originally there, or replacements of the same quality
3. Anything the condo rules say the association has to insure In a condominium, the association has to get insurance to cover certain things, but it doesn’t have to cover everything inside individual units. The unit owners are responsible for insuring their own stuff inside their units. After Hurricane Andrew, the law changed to make unit owners responsible for getting their own insurance, but many of them didn’t realize this and didn’t get the right coverage. This created a problem because there was a gap between what the association’s insurance covered and what the unit owners’ insurance covered. In Florida, many retirees living in condominiums didn’t have insurance when hurricanes hit in 2004 and 2005 because they didn’t have mortgages and weren’t required by lenders to get insurance. The legislature is trying to make sure that all condos have insurance coverage to protect the people living there. However, it’s hard to get insurance that covers the full cost of replacing damaged property. There’s also a question of who is responsible for repairing damaged property in individual units. These issues weren’t clear before the hurricanes, but now they are causing problems for condo owners. In a condo, the owner is responsible for fixing things inside their unit, while the condo association is responsible for insuring them. After a big storm, some owners found out that the insurance money may not be enough to cover the repairs. The condo association might have a budget for these extra costs, but sometimes they don’t. If there’s not enough insurance money to fix everything, the common areas get fixed first. Whatever’s left is split up among the damaged units, so the owners have to pay for any leftover repairs. If your unit didn’t get damaged, you don’t have to pay anything. The Division of Florida Land Sales, Condominiums, and Mobile Homes of the Department of Business and Professional Regulation has the authority to regulate and interpret laws related to condominiums in Florida. After the hurricanes of 2004 and 2005, many condominium associations were facing repair bills that their insurance couldn’t cover. To address this issue, the division issued three declaratory statements, known as the “Plaza East trilogy,” to change the law and declarations of condominium. This caused controversy and a shift in the battleground of who pays for repairs. Is Plaza East Association allowed to charge unit owners for repairs that should be covered by insurance? No, the department ruled that the association cannot charge the unit owner for repairs not covered by insurance, even if the declaration says otherwise. This decision was unusual and may not have been within the department’s jurisdiction. The legislature limited the Department of Financial Services’ authority over condominium insurance, and the Office of Insurance Regulation has to report to the legislature, not the department. The department tried to use a previous case to make a new policy for everyone, but that’s not allowed. The decision also goes against the legislature’s directions on defining common expenses in condominiums, and the department didn’t make any rules on insurance. The legislature hasn’t made condo associations the last-resort insurer, and unit owners are supposed to get their own insurance for certain things. The condominium association may not be able to insure everything, like fences and other items. This can cause problems because unit owners may not want to take care of their property if they know the association will pay for damages. There have been a few court cases about who is responsible for paying for damages to certain parts of the property. The decisions in these cases have been similar, but some people think the decisions were based on wrong information. The current situation in the condominium association is not good. The law and the condominium rules don’t match up, so it’s causing problems when it comes to getting insurance money for damaged things in the units. The government needs to step in and make some new laws to fix the situation. They should make it so the association has to fix things that it insures, and they should give the association the power to collect money from unit owners for repairs when there’s a big problem, like a major storm. They should also allow the association to use money from its savings for repairs, so unit owners don’t have to pay as much. The legislature should allow condo associations to create a fund to cover insurance deductibles, and this fund could be tied to increases in deductible amounts. There should be exceptions for condo associations that have different insurance requirements in their declarations. The legislature should also encourage preventative maintenance and hold unit owners responsible for damages caused by their negligence. The Florida Bar is working on a solution for condominium associations to deal with insurance shortfall. The committee has studied many proposals and recommended a new plan, which can be found on their website. Some people are calling it “Plaza East lite,” but it gives a logical way for decisions to be made about repairs. This decision is made by the citizen’s representatives, not by policymakers who were not authorized by the legislature. Summary: The Florida Legislature is responsible for addressing issues related to condominium laws in the state. These laws govern things like property ownership, association rules, and insurance requirements for condominiums. It’s important for lawmakers to make sure these laws are fair and protect the rights of both property owners and developers. The laws can affect things like building codes, insurance coverage, and disputes between property owners and associations.
Source: https://www.floridabar.org/the-florida-bar-journal/the-plaza-east-trilogy-not-a-nursery-rhyme-but-scary-warfare/
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