Thursday, January 3, 2013

Assess the Situation


Contingency planning will not cover all possibilities, and homeowner education is critical when disasters loom.  Whether due to deferred maintenance or insufficient insurance, a community may find itself having to vote on a special assessment to address a life safety situation - for example: deteriorated staircases or balconies, a slipping building fa├žade, or a swimming pool unseated by hydrostatic pressure.

It is critical that third-party experts, including the association’s attorney and insurance broker, along with a construction engineer, speak before a gathering of the homeowners to explain the dangers of ignoring the issue and not agreeing to a special assessment.   The cost of a personal injury claim may reach into the millions of dollars, depending on circumstances, plus inflationary cost of repairs afterward.  Better to pay for the “fix” now, rather than facing an unknown cost that potentially damages the value of the entire community.

If an individual is injured due to the community’s negligence, there are more than just medical bills/funeral expenses to cover.  Pain and suffering is calculated using the Martinez Formula, which takes the number of remaining days an individual is expected to live and multiplies by a daily cost composed of reduced salary, scars (physical and mental), and the impact on quality of life with loved-ones.

For example, if 30 year old lady is hit by falling brickwork, and the actuary tables indicate she could expect to live to 80 years of age, this is 18,250 days of life permanently impacted.  If the value of each day is determined to be $500, the Association is looking at over $9 million in damages!

Faced with this information, homeowners will agree that it is less painful for all if the community moves forward with repairs supported by a special assessment.  It will take Board leadership to successfully navigate through this process.

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