Condo Media - October 2021 - 41

The types of structures included
in any public policy may be focused
on structural concrete and structural
steel construction. However, if this
were the case, note that best practices
recommendations would likely require
wood frame construction as well,
but any proposed legislation may not.
In addition, the inspections may look
at structure, façade, and mechanical
systems. It is unknown at this time
as to whether seismic concerns will
be proposed for legislative change
or whether land subsidence will be
a legislative fix or best practice.
With the building inspection
requirement, there would likely be
some guidance as to funding for any
repairs the engineer states must be
done. Funding would likely be by
a combination of reserves, special
assessments, and condominium
association loans.
RESERVE STUDIES
AND RESERVE FUNDING
It is debatable whether a reserve
study would have prevented the
Surfside collapse. Reserve studies are
sometimes not done by P.E.s, and if
they are, the premise is that the building
components are all good so design
flaws and deterioration like that
caused by salt-air at oceanfront properties
would not be part of a reserve
study in any event. However, legislators
looking for a fix will likely think
reserves and reserve funding are part
of the solution, so attention is being
paid to state and local government
comments about reserve funding,
and the CAI National Task Force appears
to be leaning towards requiring
reserve studies and reserve funding.
Included in the reserve budget should
be amounts for periodic structural
building inspections.
Best practices are that proper
reserve funding be in place which
means managing the " low " year
by funding reserves in the other
years so that there are enough funds
in the year that work will likely
be necessary.
INSURANCE AND
RISK MANAGEMENT
The Champlain Towers South Condominium
was insured for $48 million.
Experts says this may likely have been
too little. The good news is that the
insurer has already tendered the full
$48 million plus an additional $30
million to the condominium. However,
be cautious, because the insurer likely
paid in full and more as a public relations
decision. While the likelihood
of the collapse being a covered loss is
uncertain, the result at least warrants
exploring the idea of associations performing
insurance replacement studies
to ensure the condominium is insured
for 100 percent of the insurance replacement
cost. This is not the same as
fair market value, since valuable land,
among other things, is not part of the
insurance replacement study.
CAI believes that any legislation
should not be limited to condominiums
or homeowner associations and co-ops
but rather should also include apartment
buildings and perhaps office
buildings and hotels.
THE FINAL MILE
After Public Policy and Best Practices,
education of board members, managers,
and unit owners is critical so that
public policy and best practices are
understood by all.
CAI's goal is to ensure that there
never again be a collapse such as the
tragic collapse at Champlain Towers
South Condominium.
Stay tuned.
This article was drafted on August 5, 2021.
The date is important since action is ongoing at
a furious pace and is likely to be changed by the
time the article is published.
n STEPHEN MARCUS IS A RETIRED
FORMER FOUNDING PARTNER AT
MARCUS, ERRICO, EMMER & BROOKS.
THE VIEWS EXPRESSED HEREIN
ARE SOLELY THE OPINION OF THE
AUTHOR AND ARE NOT NECESSARILY
THE OPINION OF CAI OR CAI
NEW ENGLAND.
October 2021 CONDOMEDIA 41
Condo Media - October 2021

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