Fire Codes, Sheds and Contacting the Insurance Company - Update

I wrote this update on the legality of the BOD installing 24 4X6X6 sheds under our buildings without acquiring any permits to do so..... and now I have an update regarding this issue that pertains specifically to whether a homeowner should contact the insurance company>

Bringing up to speed:
One of the more interesting developments I haven't shared yet here is what has happened with the storage shed project. Fascinating. BOD announced the purchase of 24 4X6X6 sheds, with plans to buy as many as 60, to be placed under the buildings and sold and rented to owners. No input from owners and the annual meeting got quite contentious with the BOD president taking a clear side in favor of the sheds and intimidating anyone who questioned it. Legitimate questions were ignored. Only 50% of owners would have gotten a shed. By late Nov. the fire inspector puts a stop work order on the sheds citing fire code violations as well as the news that the BOD had not bothered to file any applications for permits with the town to install these large sheds. I keep checking the online data base to see if a permit application appears but never does. BOD finds out that all the sheds cannot be placed under hte buildings or in parking spaces leaving literally no where else to put them. BOD reveals in January 14 minutes that they had authorized the MC to contact the town about the legality of large owner storage units under the buildings. This triggers a further examination of the permit records and the Town informs the BOD that the complex had only been originally permitted 17 years ago for parking, not parking and storage. Not only their sheds had to go, everything had to be removed in 30 days. Owners' deck boxes, bikes, kayaks, chairs, storage closets, boogie boards...it all had to go.

The drama on social media has been angry and active. Some blame me and husband for tattling to the town even though there's no evidence we did. Others are furious because they want their storage and they don't care how many laws have to be broken to have it. And some rightly place the blame on the BOD for not applying for the permits at all. Because this has riled so many owners I've been using the situation to drive home that this was an example of a failure of fiduciary responsibility wasting $$$$$$ on sheds that cannot be used, exposing the association to insurance liability, out of control BOD doing whatever they wanted to the owners' detriment, etc. It is interesting to see how this plays out eventually.

Now the update:

My husband and I spent an hour last Friday morning talking with the director of development service for our town. He oversees all the departments (zoning codes, building codes, fire). What we learned: The MC had requested a 90 day extension. It was denied. The developer's engineer had originally wanted the building to be classified as a 3 story building because 3 story buildings have fewer code restrictions than a 4 story story building. It was denied, our buildings are 4 story with the under building parking level coded as the ground floor and 3 residential stories above. Further, the engineer had wanted to use a variety of materials that further restricted the storage. It was never permitted to have storage, ever, in this configuration. Could we ever have storage on the ground level? Only if there is a significant alteration to the buildings (enclosed closets with sprinklers in each) that would pass town codes and even that is debatable since we currently have the bare minimum of required parking area.

Director told us he communicates with insurance companies, attorneys every day in order to stress to us the importance of being code complaint and compliant with insurance policy. He gave several examples of bad situations that have gone to court. What these cases always boil down to is, guilty or not guilty by "matter of law", a legal term meaning that the judge refers to the law to answer the question, "Was it code compliant?" If something tragic had happened to our building, a fire for example, the legal system would have determined us to be "guilty by matter of law" for having storage that not code compliant and this would have determined the insurance company's decision to not cover the cost of damage. Our BOD placed all the owners in significant insurance liability by allowing storage under the buildings and then taking it even further by buying and installing huge sheds, as many as 60, under the buildings.

I did not bring the next topic up, the director specifically encouraged me to consider contacting our HOA insurance carrier and informing them of what is happening. That the consequences could be the BOD receives a warning letter from the insurer warning to start complying with the law. Here's the rest of that conversation:

Me: Interesting you would suggest that. Just last week I asked a group of HOA people, some current HOA board members, some are former HOA, a few property management people, what the pros and cons were of contacting the insurance company about obvious code violations the BOD perpetuates. I was told this was a bad idea, that I would be labeled a tattletale, and be seen as a pariah by owners.

Director: Or their savior.

So, there you have it. Not sure yet what I will do. One thing that I did conclude was that the BOD is either lying blatantly with the claim the HOA attorney "approved" the shed storage project or the HOA attorney, a community association law specialist, is grossly inept.

WHy? 1. I was not prepared to discuss that area so I was not prepared when he brought it up. 2. There wasn't enough to time to delve into it so I gave a "bumper sticker" comment.

We have a new problem. We met the contractor doing the repair of the water damage caused by frozen pipes to four buildings and he gave us his business card. I could not find him or his business in the NC contractor licensing database. The last time there was a frozen pipe/water damage problem in those same buildings 6 years ago, the BOD meeting minutes mentioned the delay caused by the town permitting process. I could find no permits applied for in the town permit database for the current repairs and that makes sense since in NC only licensed contractors can pull permits. I need to read our insurance policy but I suspect the hiring of unlicensed contractors invalidates some part of the policy.

Did you check the covenants for what, if anything, they say about the use of licensed contractors (and contractors having workers' comp insurance)?

Yes, I read them. There is no mention of hiring any business or whether the business is required to have workman's comp insurance. However, town, city and state laws supercede anything written in the by-laws. Back in 2017 the pipes froze and burst in three buildings causing about $200K damage. The BOD's meeting minutes, when they used to actually publish them, indicated there was a delay in completing the repairs due to waiting on the town permits for those repairs to be approved. Repairing plumbing inside of walls and electrical work requires a licensed contractor who pulls the permits for this work. Fastforward to December 2022 and the pipes freeze and burst in the exact same buildings. The "contractor" we met who claimed to be working on these buildings says he has rerouted the plumbing from the ceiling to inside the walls. The sprinkler heads in the condos are in the ceiling so changing this most certainly would be a permit matter for building/fire codes. We get his business card which has no mention of his license or insurance/bond. I search the town permit database and find no evidence permits have been applied for to change the plumbing in the buildings. I do further search and find the "contractor" has used at least 2 different aliases and there is no evidence he is licensed under any of the names he uses.

So, we have yet another case of our BOD not applying for permits. The board's motivation could be to save the association money by not applying for permits that cost money, hiring unlicensed contractors who charge less, and keeping it from the insurance company lest the premiums go up.