GeorgeB6 (New Jersey)
Posts: 2
Posts: 2
Posted:
The developer is required to post a bond (or other guarantee acceptable to the Agency". This would be to cover the full budget and the reserve balance. I assume this is required in case the developer goes bankrupt or somehow reneges on their obligations.
Here is the statute:
N.J.A.C. 5:26-8 (2016)
.......
(d) Until the expiration of any management contracts entered into while the developer maintains a majority of the executive board, the developer shall insure that a bond, or other guarantee acceptable to the Agency, is posted. For the first year of operation, the bond or other guarantee shall be in an amount equal to the annual budget. For the second year and for succeeding years, the bond or other guarantee shall be in an amount equal to the annual budget plus accumulated reserves. The developer shall provide the agency with such proof of such bond or other guarantee as may be necessary at the time of registration and annually thereafter.
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The issue I have it that when the management company was asked to provide me with proof of the bond they produced an Accord document that showed all of the insurance that the HOA has, liability, building, Directors & Officers, Umbrella, Workmans comp, etc. One of the line items was called "Crime" for 1 million, which would cover the budget and accumulated reserves, but it is part of the HOA's insurance and being paid for by the HOA.
Shouldn't the developer be paying this bill and not the HOA? It seems to me to be a requirement by state statute of the developer and wouldn't be an expense after the developer is no longer in control. It is my opinion that it shouldn't be included in the HOA's policy and should solely be paid for by the developer.
George
Here is the statute:
N.J.A.C. 5:26-8 (2016)
.......
(d) Until the expiration of any management contracts entered into while the developer maintains a majority of the executive board, the developer shall insure that a bond, or other guarantee acceptable to the Agency, is posted. For the first year of operation, the bond or other guarantee shall be in an amount equal to the annual budget. For the second year and for succeeding years, the bond or other guarantee shall be in an amount equal to the annual budget plus accumulated reserves. The developer shall provide the agency with such proof of such bond or other guarantee as may be necessary at the time of registration and annually thereafter.
---------
The issue I have it that when the management company was asked to provide me with proof of the bond they produced an Accord document that showed all of the insurance that the HOA has, liability, building, Directors & Officers, Umbrella, Workmans comp, etc. One of the line items was called "Crime" for 1 million, which would cover the budget and accumulated reserves, but it is part of the HOA's insurance and being paid for by the HOA.
Shouldn't the developer be paying this bill and not the HOA? It seems to me to be a requirement by state statute of the developer and wouldn't be an expense after the developer is no longer in control. It is my opinion that it shouldn't be included in the HOA's policy and should solely be paid for by the developer.
George