Condo Media - December 2017 - 37

ASK SERVICE PROVIDERS ON
WHOM YOU RELY (MANAGEMENT
COMPANIES AND LAW FIRMS,
FOR EXAMPLE) TO DETAIL THEIR
DISASTER PLANS.
For example, Markel says all the attorneys in his firm have laptops. "If a
storm is approaching, we tell them not
to let those laptops out of their hands.
As long as we have a power source, we
never lose the ability to operate." "Disaster recovery is our business," Solemina says. "If a major storm is coming,
the first thing we do is shut down our
regular construction work. Everyone in
our company is cross-trained in emergency services. They all become part of
our emergency service crew."
REVIEW THE ASSOCIATION'S
INSURANCE COVERAGE AT
LEAST ANNUALLY.
"Take insurance and the risk management process seriously up front
every year," Pierce emphasizes. "It's
something the board should consider
regularly, not just when dealing with a
disaster." As part of this general insurance review:
n Make sure the estimated replacement
cost tracks increases in construction
costs. Report the addition of amenities or other changes that could affect
the replacement cost on which the
coverage limits are based. Document
(with pictures) all components that
could be subject to damage claim.
n Review the requirements for providing
notice of and filing insurance claims.
Verify that the board is designated
as the insurance trustee, authorized
to receive insurance payments. Otherwise, the disbursements could be
delayed. The policy should also name
the association as agent for each unit
owner and for the holders of liens on
all units. This will give the board the
authority it needs to adjust all insurance claims under the master policy,
including those covering damage
inside individual units.

n Remind owners periodically that
they need an individual HO6 insurance policy to cover their personal
property. Lack of owner's insurance
is a problem not just for the owners,
who may have huge uninsured losses,
but also for the association itself. Uninsured or under-insured owners may
not be able to pay their share of the
association policy deductible or they
may not be able to make needed
repairs for which they are responsible
in their own properties.
n Make sure the association has a good
quality camera and video equipment.
This seems an odd addition to a list
of disaster planning essentials, but
Markel explains: "After Harvey, some
communities were documenting
[multi-million-dollar] losses on an
I-phone. That is ridiculous."
REVIEW THE ASSOCIATION'S
GOVERNING DOCUMENTS TO
IDENTIFY SPECIFIC OBLIGATIONS
AND LIMITATIONS ON THE BOARD'S
AUTHORITY TO RESPOND TO
EMERGENCIES.
Many documents contain an automatic
termination provision, specifying that
if the renovation costs exceed a stated
percentage of the development's
market value, the association will be
terminated unless a specified percentage of the owners vote to rebuild. This
would create a major impediment to
the recovery process, to say the least.
Because it is hard to imagine many
situations in which rebuilding
would not be the best choice,
association attorneys
generally advise
amending this
language to

require an owners' vote to terminate
the association, making rebuilding the
default position.
REVIEW AND UPDATE YOUR
DISASTER PLAN ANNUALLY.
Solemina recommends putting it on
the board's agenda quarterly to ensure
periodic reviews, and circulating it to
owners-or sending a reminder that it
is available to them-annually as well.
Equally important, Markel emphasizes,
"Make sure you have a funding mechanism in place to make it viable. Having a
plan you can't implement is worse than
not having any plan at all."
EXPECT TO BE SUED FOR WHAT
THE ASSOCIATION DOES, DOESN'T
DO, OR BOTH.
"If there is the potential for disagreement, someone will almost certainly file
a claim related to it," Markel says. He
predicted that "within a week or less"
after Harvey struck in Houston, "association boards would begin getting
demand letters from owners looking to
the homeowners' association to take
care of a lot of things, including things
that aren't, strictly speaking, the association's responsibility." Boards can't
prevent litigation, but they may be able
to reduce the risks, at least somewhat,
by educating owners about the association's obligations, and reminding them
periodically where the association's
obligations begin and end.

December 2017

Condo Media - December 2017

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