A new trend is out mollifying the high cost of association insurance.

After Hurricane Wilma, insurance rates soar to an all time high for community associations. Most existing local insurance companies packed up their bags and left “Dodge City”. This only left one company to carry the burden of insuring Florida associations with only the bare minimum. Citizens Insurance Company, which is a State funded company. After 2004 Citizen insurance more than doubled their rates for most South West Florida’s associations. The High cost of insurance directly affects all Florida homeowners.

There been ruses played by the Florida legislation using political tactics of conversions trying to stray Floridians away from demanding Charlie Crist to keep his promise of lowering Citizens insurance rates. See, “Property Insurance at a All Time High“.

Another feeble attempt by the Florida legislation to lower the ridiculously high price of homeowners insurance. In most classification codes, State has approved a workers compensation rate decrease, which is averaging slightly above 18%. Your association’s insurance agent would have to apply for the new workers compensation policy. Although it has happen before, it’s rare for an insurance agent offer rate decreases. As long as the association maintains a drug free work place and premiums are paid on time, your association should qualify. Again, this saving is peanuts compared to what we pay Citizen’s for Windstorm insurance.

While you have your association’s insurance agent check to see if your community qualifies for Workers Compensation deductions, have them check the new liability rates. General liability supposedly declining approximately 5 – 15%. This would depend on loss history and liability exposures of buildings. Still, the savings are no where near the doubling of insurance rates after 2004.

If your associations roofs hadn’t been checked by a Florida Contractor, might as well do it now. This is the only way Citizen’s give any kind of insurance relief. Beware of roofing mitigation contractors charging 10% of insurance savings. Paid them a flat fee instead. This will save the association money. The average refunds we experienced were 12 to 18% of  windstorm insurance premiums after factoring mitigation costs. Most associations qualify for these deductions. It’s rare for a roof not having proper straps and ties secured in place.

While the State of California is going bankrupt, the State of Florida is banking billions through Citizens Insurance Company. For relative posts see, “Property Insurance at a All Time High” and “Condominium has Regulations, Where Homeowner Associations do not. Regarding Notice of Meeting to Consider Excessive Budget” and lastly “Condomium & Homeowner Association Insurance Updates”. If you are the select few who donate their time to serve on a board of your Association and/or a Florida Homeowner, you do not want to miss any new important posts. Please subscribe to our community. Or our complimentary email services.

Part II; Collection Procedures:

Once collection is being turned over to legal council (the association’s attorney), all inquires are made to legal council only. To avoid a conflict of interest, the association or the manager should never discuss the defaulting property owner issue with any members. After being advised that a particular unit owner is delinquent of assessments, from that day forward, all collections are handled through the association attorney’s office and not through the association or management.

After the initial “demand letter” was sent with no response, the next step is to file a “claim of lien”. Claim of lien does not mean a lawsuit has been filed against the property owner. However, community associations must file for the claim of lien in public records, in the same place and in the same manner as a deed or mortgage, before filing a foreclosure lawsuit.

At the same time the claim of lien is being filed, a certified letter is sent to the unit owner advising the claim of lien has been recorded.The certified letter is the second thirty (30) day notice. The second thirty (30) day notice informs the unit owners that a foreclosure is in process. Also included in the notice is the amount due, including interest, late charges, attorney fees and any other reasonable costs. Without sending this statutory thirty (30) day second notice, condominium and cooperatives would lose their ability to incur a judgment for collection costs and attorney fees. Second thirty (30) day notice does not apply for Homeowner Associations.

There are many steps taken before a judgment can order the clerk of courts, sell the unit at a public auction. After the claim of lien is enforced, the competing interests are considered. Only two superior liens take precedence,  real estate tax and first mortgage, if any. If the lien process was executed in a timely manner, the better chance their isn’t any second mortgages, federal tax liens, construction liens or judgment liens, which would take a superior position in line.

The fewer the encumbrances, the more the property is worth and easier to sell. By naming the holders of competing interests as defendants in a foreclosure lawsuit and by proving the association’s claim of lien will be superior to these subordinate (secondary) interests, the buyer at the foreclosure auction will take title subject to real estate tax, first mortgage and extinguishes down by superior to subordinate interests. 

Determination the order of superior to subordinate competing interests, the attorney will file a foreclosure complaint. After the unit owner is property served and any other defendants, the case can move forward. Delivery of the foreclosure complaint is called, “Service of Process”. The service of process is executed in a formal manner and has many restrictions.

If no technicalities arise and after the judge enters the judgment, a foreclosure sale is set. Twenty (20) to thirty five (35) days later, the foreclosure sale should be final, resulting in the association being reimbursed for all associated costs. Of course, the association could elect to buy the property. Or the defaulting owner owes more than the property’s worth. Before any business decisions are entertained, the association should always consult with their attorney. 

For relative posts see, “Developers are in Business too Make Money” and “Fining Procedures for Homeowners Associations” and lastly “Condominium & Homeowners Rules for Parliamentary Procedures”. If you are the select few who donate their time to serve your Association and/or a Florida Homeowner, you do not want to miss any new posts. Please subscribe to our community. Or our complimentary email services.

Part I; Collection Procedures: 

Collection of quarterly assessments is the lifeline utility of community associations. Without the collection of association dues, the budgetary commitment of the association could not be met. The services, maintenance and the preservation of the association are dependent of association dues. Since some community association disputes are over quarterly assessments, consistent operational procedures should be in place, so automatic collections can be conduced without prejudices. 

The rights to collect quarterly assessments are outlined in the community documents and Florida Statutes. These documents also give Board’s authority to prepare an income and expenses annual budget with a reserve schedule.  If the Board does not follow collection procedures described in the governing documents, there may be counter claims, which can cause unnecessary costs to the association. By following these documents, the Board can rightfully collect dues without dispute or recourse.

Condominium documents regarding, “Failure to Pay” are mostly standard. Below is an example of Condominium Declaration of Covenants, Application of Payments; Failure to Pay; Interest:

Assessments and installments thereon paid on or before ten (10) days after the date due shall not bear interest, but all sums not so paid shall bear interest at the highest rate allowed by law, calculated from the date due until paid. The Association may also impose a late payment fee (in addition to interest). Assessments and installments thereon shall become due, and the Unit Owner shall become liable for said assessments or installments, on the date established in the Bylaws or otherwise set by the Board of Directors for payment. All payments on account shall be applied to interest, late payment fees, court costs and attorney’s fees, and delinquent assessments. The Association may refuse to accept a partial payment, which bears a restrictive endorsement, and such will be the equivalent of no payment. No payment by check deemed received until the check has cleared.

Every association should establish and follow uniform collection procedures. The collection should have the same procedures for all members, directors and officers equally.

For example, the association might prepare a “reminder” letter. Customarily, a ten (10) or fifteen (15) day past due “reminder” notice. Anytime after late fees are added, the Association is entitled to begin lien processing. To avoid being last in line of competing interests (encumbrances), the account should be turned over to legal counsel no later than thirty (30) days of delinquency. Once the account is turned over, a “demand letter” will give owner thirty (30) days to pay in full, including interest, late fees and attorney costs. If the defaulting owner does not pay in full within the thirty (30) days, “the claim of lien” process begins. For Homeowner associations, a forty five (45) day demand notice is required before a claim of lien can be filed. Usually after this point, the owner pays in full and the remaining interest, late fees and dues are collected and returned to the association.

Condominium owners beware; if any assessments become delinquent, in most Condominium and Cooperative documents have an “acceleration clause”. This means, if a claim of lien is recorded in public records, then the association has the right to collect all assessments for the entire fiscal year. See sample Condominium Declaration of Covenants, Acceleration:

If any special assessment or installment of a regular assessment as to a Unit becomes more than thirty (30) days past due, and a Claim of Lien is recorded, the Association shall have the right to accelerate the due date of the entire unpaid balance of the Unit’s assessments for that fiscal year. The due date for all accelerated amounts shall be the date the Claim of Lien was recorded in the public records. The Association’s Claim of Lien shall secure payment of the entire accelerated obligation, together with interest on the entire balance, attorney’s fees and costs as provided by law; and said Claim of Lien shall not be satisfied or released until all sums secured by it have been paid. The right to accelerate shall be exercised by sending to the delinquent Owner a notice of the exercise, which notice shall be sent by certified or registered mail to the Owner’s last known address, and shall be deemed given upon mailing of the notice, postpaid. The notice may be given as part of the notice of intent to foreclose.

For relative posts see, “Changes for Homeowner’s Association” and “The Florida Regulatory Council of Community Association Managers Changed the Florida Statutes Again.” and lastly “Responsibilities of Association Directors & Officers“. If you are the select few who donate their time to serve on a board of your Association and/or a Florida Homeowner, you do not want to miss any new important posts. Please subscribe to our community. Or our complimentary email services.

Gulfshore Property Mgmt. is moving forward into another good month. We already have five (5) pending management contacts, four (4) in Marco Island and one (1) in Naples Florida. Also this month, we have been receiving record-breaking unique and returning visitors to our website. To show our appreciation, if your have a local business or website in South West Florida, email us and we will feature your business via text link under, “Favorite Businesses” for free. If your Business were located in Marco Island and Naples area, your company would receive guarantee additional customers relative to our site. Also, since our website is growing on a daily basis, if any companies interested in being the first to advertise with us, please look under, “Contact” and email your proposal. You will not believe the incredible deal you’ll receive.

Gulfshore Property Mgmt. is currently accepting new accounts. With the new season beginning, we are forecasting a record breaking Community Association Management changeover. Because of the high cost of gas, housing and local living expenses, management companies are being forced to cut back the number of associations, services and/or raise their prices. Associations are being forced to either cut expenses or raise their quarterly dues. Whatever the real reasons, compared to last year, we are seeing an influx of activity.

If your Association were considering hiring a new community association management company, the decision of the new company should never be base solely around advertisements. For seeking quality property management companies, advertisements from yellow pages, newspapers and Internet should be ignored. For comparisons and competitive bids, arrange for us to meet with your association directors so we can give a presentation. Or at least have us sent you free written information about our qualifications and experience.

For relative posts see, “Complimentary Management Services” and “How to Choose the Right Community Association Management Company” and lastly “Job Description & Some Basic Functions of a Property Manager”. Also, if you are the select few who donate their time to be a Director and Officer of your Association and/or a Florida Homeowner, you do not want to miss any new important posts. Please subscribe to our community. Or our complimentary email services. Read the rest of this entry »

Occasionally we hear how Director and Officers accept private association deals from contractors who will in-exchange return the favor in the form of money, services or free trips. Or they will hire a contractor friend that will offer a service for a similar service. This is commonly known as a “kickback”.  There is sometimes a misconception that since the Director or Officer are not a licensed manager it’s all right to accept these types of kickbacks.  See Condominium Act and Cooperative Statutes below:

The Condominium Act (1) Corporate Entity:

An officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. Any such officer, director, or manager who knowingly so solicits, offers to accept, or accepts any thing or service of value is subject to a civil penalty pursuant to s. 718.501(1)(d).

The Cooperative Statutes (8) Corporate Entity:

The officers and directors of the association have a fiduciary relationship to the unit owners. An officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. Any such officer, director, or manager who knowingly solicits, offers to accept, or accepts any thing or service of value is subject to a civil penalty pursuant to s. 719.501(1)(d).

What is interesting enough, we can’t find similar regulations regarding Homeowner Associations. This by no means Homeowners are exempt from these rules, we simply can’t find any Homeowners Act or Statute with similar rulings.

Although we are sure there are bad apples out there, we never experience a Director or Officer engaged in these types of activities. The majority of Directors and Officers volunteer their time with no strings attached or with no hidden agendas. They donate precious time to serve their community and even at times criticized for it. It’s a wonder why now and again we hear the phrase, “Being a Director and Officer is a thankless job”.

For relative posts see, “The Board has the Right to Adopt Reasonable Rules” and “Condominium Verses Homeowners“. If your are a Director or a Florida Homeowner, please don’t miss any important posts by subscribing to our community. Or by our complimentary email service.