Penny Pinchin'

One compelling reason to do annual increases to the community’s budget:  The courts' intolerance of delayed maintenance work.  In the last few years, judges have made it clear that they do not accept excuses for refusing to increase assessments.  One community opted to discontinue landscaping service, rather than raising dues.  Commercial units in the association sued since this was directly noticeable by their clients.  The judge was not happy.  A special assessment was ordered.  In another community, the Board felt it was too expensive to repair the exterior of the building, and black mold took hold.  A court order and a million dollars later, not only was the building repaired at greater expense, but penalties were tacked on for the Association shirking its duties.

Now another critical reason prompts us to thoroughly maintain common areas:  Cancelled insurance policies. 

Insurance inspectors are tightening up on property reviews, and we have had several instances in the last few months where the carrier dropped a homeowners association, or threatened to do so - if action wasn't taken within 90 days to address basic items such as new roofs and pool resurfacing.  And it doesn't stop there - insurers are also dropping property, liability and directors & officers coverages.

Unless your community's bank account is flush with millions of dollars, the above should be terrifying.  Without insurance to personally protect you, no intelligent person willingly serves on a Board of Directors. Next, all mortgage lending dries up, since a master insurance policy is a basic requirement.  Things snowball from there.

An insurance inspector will not be fooled by substandard work resulting from ‘going cheap’.  Boards of Directors can no longer push for cutthroat contract rates and refuse to increase assessments over two or three years. 

The best course of action is educating your homeowners on the above.  Share with them the basic conclusions of your engineering study, analyzing the life expectancy and replacement cost for big ticket items.  Items such as road resurfacing, detention pond maintenance, clubhouse renovation, sewer line repairs and tree replacement can’t be neglected.

Bottom line - Uninsured is unacceptable.