Condos and HOA's

Does your association need to levy a special assessment to pay for Irma damage?

There has been some very heavy Hurricane Irma cleanup and repair costs for many Southwest Florida condominiums and neighborhoods. Of course none of these unexpected costs were in the association’s budget for this year. So, how are associations going to pay the Irma damage and repair bills coming due?

There are basically three ways to pay these bills: Borrow from the bank, raise the regular assessments in the 2018 budget, or levy special assessments.

As most associations don’t want to pay bank interest unless necessary, and they also don’t want to raise regular assessments that much year to year, the most chosen method we are seeing associations using is levying special assessments.

After Hurricane Wilma in 2005, the state Legislature enacted broad emergency powers for association boards to use after hurricanes to address these types of issues. For condominium associations, it is Section 718.1256, Florida Statutes; and for homeowners associations, it is Section 720.316, Florida Statutes. The emergency language is almost identical for both types of associations.

Section 718.125(1)(l), Florida Statutes provides that: “To the extent allowed by law … in response to damage caused by an event for which a state of emergency is declared … in the locale in which the condominium is located, may, but is not required to, exercise the following powers: … (l) Regardless of any provision to the contrary and even if such authority does not specifically appear in the declaration of condominium, articles, or bylaws of the association, levy special assessments without a vote of the owners.”

Section 718.125(2), Florida Statutes goes on to provide that this power “shall be limited to that time … reasonably necessary to mitigate further damage and make emergency repairs.”

So association boards can levy such special assessments at a board meeting to cover the cleanup and repair costs from the hurricane.

For condominium unit owners that have unit insurance, this special assessment can be a bonus to them because under their regular HO-6 Unit Insurance Policy, they have $2,000 loss assessment coverage, which they can recover from their insurer less any applicable unit deductible. Usually, all the insurer requires to pay off such coverage is a copy of the association’s notice of the special assessment levied and maybe a copy of the minutes from the board meeting at which the assessment was levied.

Some unit owners may have purchased higher loss assessment coverage than the $2,000, and some homeowners may have purchased such coverage in their homeowner’s policy.

So if you get a special assessment for hurricane damage, check your unit or home policy to see if you can collect some or all of the special assessment from your unit or home insurance carrier.

Rob Samouce, a principal attorney in the Naples law firm of Samouce & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners’ associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.