Article Courtesy of The Forum
Publishing Group
By Chris Guanche
Published January 24, 2007
Still reeling
from the havoc of past hurricane seasons, condo associations soon may be
given a specific way in which to deal with insurance claims after the next
session of the
Florida
Legislature, which starts March 4.
The new legislation will be introduced by state Sen. Ted Deutch, D-
Boca Raton
, and would require associations to pay for every common element they
insure. The new legislation also directly addresses a policy reversal by
the Department of Business and Professional Regulation, which changed the
way the department interpreted two landmark cases in condo law.
A ruling handed down in the case of the Fountains South condominium in
January by Administrative Law Judge John Van Laningham of the Division of
Administrative Hearings was guided in part by an earlier ruling in the
case of the Plaza East condominium in
Broward County
, which declared that associations were responsible for covering any
damages to common elements that they insure. Citing the earlier ruling
from the Plaza East case, the department directed the Fountains South
association to pay for the repairs.
The Fountains
South case decided whether the association should cover the costs for
balcony screens that were damaged during Hurricane Wilma in 2005. Although
only the balcony is covered by the association, a unit owner filed a
complaint with the Department of Business and Professional Regulation to
make the association pay for damage to a screen enclosure that the unit
owner installed. Coverage conflicts are common because of the changing
nature of condominium documents, said Kenneth Direktor, an attorney with
the law firm Becker & Poliakoff, which is helping to write the new
legislation.
Direktor said that over time, associations began insuring elements such as
drywall, windows and sliding doors, which the documents didn't necessarily
identify as common elements, making it difficult to understand exactly
what each association would cover. Now associations must follow only what
is in their individual documents.
"What you had is the association insuring these things, but under the
documents the owner is being obligated to reconstruct them if they were
damaged," Direktor said.
Many cases involving damage repairs have been decided by the department's
interpretation of those two landmark cases, Direktor said, and the
reversal by Laningham could open a veritable Pandora's Box of new cases.
"Do we have to go back and reconcile and assess the owners whose
units were damaged, and reimburse the people who paid their shares, when
they shouldn't have been charged those shares?" Direktor said.
While the new legislation does require associations to pay for whatever
elements they insure, an association can also vote to opt out and have
unit owners insure certain elements on their own. The legislation also
includes an exemption that makes owners responsible for damage to common
elements caused by their own negligence, such as forgetting to put up
shutters during a hurricane.
Deutch believes the legislation would make the situation more fair for
owners.
"Improvements that are installed by the unit owner are covered by the
unit owner's policy," Deutch said. "That way the unit owners
don't all share the cost of damage to one particular screen that had been
installed by one specific unit owner."
|