HOA drops insurance but not fees

Started by DaryleH1 • 7 replies • 1535 views

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DaryleH1 (Colorado)
Posts: 3

Posted:

What recourse does a homeowner have if the HOA which formerly covered roofs, etc, now has dropped insurance. Just got notice that it will reduce fees ($215) month by $10. How can we fight this? How can we get rid of builder/management HOA for good?

LarryB13 (Arizona)
Posts: 4,099

Posted:

If the CC&R's make the HOA responsible for the roofs, then it is still responsible whether it has insurance or not.

Is yours a condo, is it still under the developer's control, and when if ever do you expect the project to be 100% sold?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Daryle,

If your a condominium, you will never be able to get rid of the Assocation a there are just too many common elements that can't be passed onto individual property owners.

If your not a condominium, it will depend on the type and amount of common elements your development has, as these must be maintained.

If you are able to sell, give or transfer responsibility of common elements, you will then likely need to amend your governing documents, this typically requires 2/3 to 100% agreement of all lot owners (which can be done but is difficult).

Even if you are able to abolish the entity known as your Association, the CC&RS (aka deed restrictions) would still be intact. The difference would be that they would have to be enforced by individual property owners through the court system (i.e. neighbor against neighbor).

As Larry said, if the builder is still in charge, they typically have the controlling votes which allows them to do what they wish. Once lots are sold, the members will be in charge and things may become better or worse. The best way you can make sure it's better is to become involved with the operations of the Association.

Tim

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By DaryleH1 on 04/14/2012 4:28 PM
What recourse does a homeowner have if the HOA which formerly covered roofs, etc, now has dropped insurance. Just got notice that it will reduce fees ($215) month by $10. How can we fight this? How can we get rid of builder/management HOA for good?

I don't know how things work where you are, but lenders who have provided the mortgages for the owners of the units may not be happy about the idea. Often lenders require the HOA to maintain a master policy as well as requiring homeowners to maintain insurance on their individual units.

RogerB (Colorado)
Posts: 5,067

Posted:

DaryleH, The Board has placed every owner in jeopardy and this needs to be corrected ASAP. Check your CC&Rs, they need to require the HOA carry minimum amounts of D&O and Liability insurance. If the CC&Rs do not require it they should be amended to require insurance by the HOA. Also, the HOA coverage should be reinstated and those Board members who foolishly voted to drop the HOA's insurance be replaced.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The most important part is if this is still under the builder's control and NOT the owners. The builder may have other arrangements in covering the roofs than spending it on the insurance. They may choose to instead fix the issues themselves instead of carrying a larger monthly insurnace fee. We don't know the situation to know if this is an issue that shouldn't have been dropped or not. They could have had a situation of double insurance or changed the setup of the HOA to not need to cover roofs. Don't know if these are separate homes or shared housing.

Need more details before deciding this situation is a good or bad thing....

Former HOA President

RickE1 (Louisiana)
Posts: 17

Posted:

Not only should you check your By-Laws or Covenants, but many States have Condominium laws in their Civil Code requiring insurance coverage to replace most common property items of however many buildings you may have. I can't imagine a valid (or legal) reason to drop the type of coverage you talk of.

RickE1 (Louisiana)
Posts: 17

Posted:

Additionally to above: If it's just replacement of roof from normal wear & tear, this is something to be covered in a Reserve Fund.

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