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This Month's
Expert
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Spring Conference for
Community Association Leaders
Facts on How to "Maintain, Enhance &
Promote"
the Value of Your Asset!
CATS presents its Spring Conference for the Community
Association Industry. Topics are focused on the operations and
management of a Community Association. Helpful tips and methods for
improving your management and decision making. Experts in the industry
will provide sound practical solutions that will work to help you
meet your goals and much, much more......
CLICK HERE FOR REGISTRATION
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OWNER RESPONSIBILITY?
Q: If
governing documents for a CH317 Association does not require a
reserve, it requires owner to carry insurance on interior and
exterior; the owner fails to maintain insurance and the unit burns
down. Who is responsible for the cost of rebuild? Owner or all
owners of the association if there insufficient funds in the
budget?
 A: Since
the Association has no Master Policy of insurance and it is the
unit owner responsibility to provide property insurance on the
interior and exterior of the unit, there is no way the Association
can collect its own insurance carrier if the unit burns to the
ground. It is not the other unit owner's responsibility to
provide insurance coverage for the other units. My
recommendation is to opt into Minnesota Common Interest Ownership
Act where a Master Policy of Insurance is required for multi-unit
buildings. You should also review all other portions of your
governing documents to see if there are any other sections that
address "Rebuilding of Units". You should also
check to see if there was a mortgage on the unit and if the
mortgage company had insurance on the unit.
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EXCEPTION TO THE RULE
Q:
Can a board make exceptions to a rule without losing liability
coverage in the event of a law suit? I.e. new owner had three pets
- rules state only two.
 Yes, a board
can make exceptions to a Rule and Regulation and not lose liability
coverage for that particular act. However, if the insurance
carrier finds out that the Rules and Regulations are not being
followed, it is likely that the insurance will be canceled at
renewal and it will be very difficult to find new insurance.
The Board should adopt fair and consistent Rules and Regulations
and then enforce them impartially, not in an 'arbitrary and
capricious' manner, which judges frown upon.
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ARE THEY COVERED?
Q:
Our Association hires homeowners to do general maintenance work
such as pool care and snow shoveling. Are they covered by the
Association if they get hurt doing this work?
 If the
Association "hires" homeowners, I am assuming they are
being paid for their services. In that case the Association
should take out Workers Compensation Insurance to cover any loss
wages and injuries while the workers are performing work for the
Association. Without Workers Compensation, the workers
injuries would need to be covered out of pocket by the Association,
or possibly by the health insurance of the injured worker but they
may subrogate the costs against the Association when they discover
how the injury occurred.
If the homeowners are not being paid, they would be
considered volunteers. Workers Compensation does not cover
volunteers. The Association's General Liability coverage will
respond if the Association is found negligent and was the cause of
the homeowner's injuries. Medical Payments coverage, part of
the Association's Master Policy, may or may not provide coverage.
You will need to read the exclusions regarding Medical Payment
coverage for unit owners. The best defense is to assign low
risk activities to homeowners, pay them for their work so they can
be covered by Workers Compensation or do not have homeowners do any
work and sub contract that work to others.
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GETTING IT DONE RIGHT
Q: We
had a huge hail damage claim and the contractor did poor work, can
we go back to the insurance claims adjuster for help in getting the
work done right?
A: The
adjuster and the contractor should have come to an "Agreed
Amount" for the work to be done. Once the insurance
company pays for the damage, it is up to the Association to work
out any performance issues with the contractor. The work
contract is between the Association and the contractor. The
insurance company just provides the money to do the work.
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I'M NOT PAYING!
Q: We
are a townhouse association and the Board charged the owner(s) in a
fire claim for the insurance deductible. It was $5,000 and the
owner(s) are refusing to pay. What can we do?
 A: This
appears to be a legal issue and not an insurance issue. As
long as your governing documents gave the Board the authority to
assess the deductible, the unit owner is responsible for the
deductible. If you are subject to MCIOA, that Statute gives
you the right to assess the deductible against the owners,
even if your documents are silent on the matter. You could also ask
if the unit owner has an HO-6 policy and contact their agent or
insurance company directly and explain the situation.
Otherwise consult with your legal counsel for collection
advice.
If your owner does not have an HO-6 policy and this is a concern
with other owners, the Board may wish to purchase a policy that
would provide this coverage to the Association.
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SPECIAL QUESTIONS OF THE MONTH!
Q:
How can property managers promote trust from board members?
 A:
Managers promote trust by being trustworthy. Keep your
commitments, so that your clients can have the confidence that
when you say you will do something, that you actually will.
Never 'fudge' to cover up a mistake; if you made a mistake or
forgot to do something, acknowledge it, accept
responsibility, and let them know how and when you will
correct the problem. When asked for your opinion, be
honest, even when that means telling the Board what they
may not want to hear, such as that they need to increase assessments even
though that may be politically unpopular. If you don't
know the answer to a question, don't bluff by guessing but instead
admit that you don't know but will find the answer and get
back to them when you do. If you have a conflict of
interest, such as a relative who works for a vendor who is
bidding on a job for that client, disclose that up
front. Keep confidential information confidential.
Always come prepared to Board meetings, as that demonstrates that
you take seriously your responsibilities to your
clients and that they are important to you.
In short, you earn trust slowly as board members observe your
actions and compare what you do to what you say.
Q: Can
former board members form an ad hoc committee without the present
board's permission? My understanding is that an ad hoc committee is
appointed by the present board to study a specific issue, and not
the other way around. Which one is correct?
A: Legitimate association committees are formed by the board and
serve subject to the will of the board. Ad hoc, Latin for
"for this purpose", committees are formed by the Board
for a short-term project and should have specific, well-defined
duties, and an ending date at which the committee should report its
finding back to the board. Owners in a homeowners association
(including former board members) have the right of free association
and don't need the current board's permission to form whatever group
they want. However, they do not have the right to claim that
they are acting in an official capacity on behalf of the
association if their committee has not been authorized by the
current board. If they do misrepresent their authority or
status, the current board may need to inform the other owners that
this group has no official standing so there is no confusion on
that point.
Q: Do
you have any information regarding methods or templates to evaluate
performance of Association management person/company?
A: CATS has a program called "Managing the Manager" that
will be ready for presentation in January 2010. It will assist in
defining Management services and how to evaluate the performance of
your manager. The April 10th program will
have a section on "Managing the Manager" that will
provide an overview of the course and helpful tips for Board
members. Go to www.catsmn.com for
information on the course and click on Spring Conference for
information on the upcoming conference on April 10th.
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The comments and answers above are general in
nature. Specific interpretations should be confirmed with the
existing legal counsel.
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