CAN Surety Bond for Florida HOA

Started by StacyS • 7 replies • 2267 views

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StacyS (Florida)
Posts: 19

Posted:

Our HOA's latest treasurer's report shows a payment for CAN Surety Bond. I know what a surety bond is, but as an active board member for several years, our insurance broker never suggested having one. Is this a good thing to have or waste of HOA money?

Stacy

CharlieP2 (Utah)
Posts: 15

Posted:

Stacy,

What is the insurance CAN Surety Bond applicable to? A bond is simply a 3 way agreement for a contract.

For example, if the University of Florida hired a contractor to renovate the stadium before the football season and the contractor was unable to finish the job before football season, the mighty Gators would be out millions of dollars. Therefore, a bond is in place by the contractor in case they can't finish in time to pay for those losses.

How is your HOA responsible for any losses incurred to another party?

If I can help in greater detail, feel free to email or call me.

Regards,

Charlie Peterson
[email protected]
801 521 2421

JohnM3 (Florida)
Posts: 288

Posted:

Stacy: I am the Treas of a HOA in Florida key word Florida. When you read advice here remeber every state has different rules and regs
RE the surety bond yes you do need it. Suppose your treas in cahoots with your mc decides to steal all the operating account the bond gives you back your money. Trust me get it keep it and use it only when you suspect theft. Just call your broker and tell him you have claim under the surety bond and there 30 SIMON AND SIMON AND nypd blue, miami csi get on the job at no expense to you or the BOD. We had it happen they caught the bad guys and the put them in the cooler and we got all of our money back to the penny.
That is just one incident that I witnessed its to long a story to go into here but believe me if any one plays games with your funds you are protected ask your agent to appear at a BOD Meeting and explain everything to you including Terrorist Insurance which is cheap and if your hoa is near an airport seaport or military base you are in a terrorist zone. get it you will be glad.
jack Murphy
[email protected]

MaryA1 (Arizona)
Posts: 7,043

Posted:

Sometimes it's called a fidelity bond and, yes, it's critical that an HOA have this protection.

GlenL (Ohio)
Posts: 5,491

Posted:

Not only is the MC covered by our insurance for theft but our CC&R's require they have a separate surety bond paid for by them naming the Association and requiring a 10 day notification to us by the bond company before the bond can be cancelled or modified.

Studies show that 5 out of 4 people have problems with fractions

MaryA1 (Arizona)
Posts: 7,043

Posted:

Glen,

That's great! All CCRs should have that requirement, but, alas, they don't. Many, if not most, of the mgmt co's here are requiring the prop. mgr. be covered by the assn's fidelity ins. I think this is totally unacceptable -- a business should have their own ins.

StacyS (Florida)
Posts: 19

Posted:

Thanks for all of the info! When I have a question for this forum I put "Florida" in the subject line due to different statutes / regulations for each state. Our HOA is only 73 homes with an operating budget of $6200.00 so I wasn't sure if a surety bond was worth it. After reading your replies I understand what it covers and have spoken with an insurance broker (friend) about it.
Thanks,
Stacy

MaryA1 (Arizona)
Posts: 7,043

Posted:

Stacy,

So glad to hear you're going to contact an ins. agent. I don't think the cost will be very high.

One thing I should have mentioned in my previous post. Some treasurers become offended at the mention of obtaining a surety or fidelity bond. They think their integrity and honesty is being questioned. This type bond is actually for their own protection should someone question their procedures, etc. When I was elected to the board (1st board after declarant control) and became Treas, I insisted we purchase a fidelity bond.

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