August 4th, 2010
Assign ahead of time the staff members responsible for your disabled residents.
Prior to any disaster, it is imperative you know who and where your disabled residents are located so you can get to them quickly. These residents have very special needs and may not be able to properly handle an emergency situation. In the event of a power outage, disabled residents relying on power will need immediate attention or the situation could become life-threatening!
July 30th, 2010
by Harry A. Heist, Attorney at Law
Condominium, cooperatives and homeowner’s associations, hereinafter “Associations” for this article, have been suffering greatly due to the failure of the unit owners to pay their fees and assessments. These fees and assessments are due monthly, quarterly or yearly according to the Association’s documents; they are not optional payments, but rather a legal, contractual obligation of the unit owner. The inability of the Associations to be able to collect these monies owed from the unit owner, many of whom are also not paying their mortgage payments, have caused the unit owners who are indeed paying to sometimes have dramatic increases in the assessments and fees owed to their Association, and some Associations have to make tough choices like cutting pool hours, no longer including cable, no longer including water, no longer manning the access gates, and cutting staff, clubhouse hours and activities, among many other things. In the past, the only recourse an Association had when dealing with a delinquent unit owner was to file a foreclosure action against the unit owner, which would then often trigger a foreclosure action by the bank against the unit owner, and in the end, the Association would frequently get nothing but a bill from their attorney. Things were quite different in the past, when very few unit owners would simply cease paying the dues, fees and assessments. It happened, but not nearly to the extent of what is going on today. Further, when it did happen, the unit owner usually just sold the property, and the amounts owed were usually recouped by the Association at the closing.
To add insult to injury, many of the unit owners today are renting their units out, and although not paying their mortgage, taxes, insurance, assessments or dues, they have been regularly collecting rent from their tenants. Many property managers are completely aware of this and currently are managing properties in this position, while some managers are not aware of the financial situation of the owner, who really has no incentive to disclose this to the property manager. As can be imagined, this has not sat well with the Associations, and on July 1, 2010, Florida law has been amended to now gives Associations the incredible power to demand that the tenant of the delinquent unit owner pay the Association DIRECTLY, bypassing the owner and the property manager, if there is one in place.
The Rent Demand Letter
In order to have the right to collect the rent from the tenant, the Association must make a written demand upon the tenant in the case of a condo association and a co-op. No written demand is necessary by a homeowner’s association, but this is probably due to a legislative oversight. Without making a written demand, the homeowner’s association would most likely never get paid, so let’s assume that a written demand is necessary or at least will be given for homeowner’s associations as well. This written demand is for the tenant to pay all “future monetary obligations” related to the Association directly to the Association. Does the demand have to be by certified mail? Does it have to be through the use of a Three Day Notice? The law states that the Association may issue notices as per Florida Statutes 83.56, which means that they must follow the same procedure of either posting, hand delivery or mailing of the Three Day Notice. Suppose the Association does not even know the name of the tenant, or that tenants have switched out since the initial approval process. This is just the beginning of many unanswered questions. If the Association makes the demand, the tenant must comply. DO NOT try to override this by collecting the rent and remitting to the owner, or you could have some liability.
What are “Future Monetary Obligations”?
You may or may not have caught that upon your first read. If this applies only to “future monetary obligations”; what about the past monetary obligations which almost certainly are owed by the unit owner? At this moment in time, we do not know the answer to this burning question, but will assume that the legislative intent was to cover all unpaid monetary obligations, past, present and accruing. What will happen once the past amounts are collected from the tenant? Will the Association continue to make demands upon the tenant? How will we know when the Association is “done”? According to the law, the Association will “release” the tenant as some point, but the law provides no such mechanism or form, so most likely it will be in the form of a letter to either the owner, tenant or both. You as manager will probably be the last to know, which will increase the confusion of who paid what to whom and when.
What is the tenant to do?
According to the law, the tenant now must pay the rent or whatever amount of money the Association demands, not to exceed the rent amount due to the owner, each month, directly to the Association. In reality, the typical tenant will receive a letter and will not know what to do; many will decide not to pay anyone, as is often the case in the event the tenant is served with a lis pendens or a foreclosure lawsuit. Tenants who sense uncertainty or get conflicting demands upon their rent often sit back, pay nothing and try to use the confusion as a successful defense later in an eviction action, or at least live rent free and ride it out. After all, for 6 months they have been paying your company, and now they get notice from an Association or their management company with whom they never had prior contact or knowledge, demanding the rent. Upon demand by the Association, the tenant MUST comply and pay the Association directly, or presumably through the association’s management company, if one is being used. If the tenant receives the demand letter and has already paid the rent to the unit owner or the property manager that month, the tenant must provide proof of payment to the Association within 14 days after receiving the demand letter from the Association. This is crucial for the tenant to do. Otherwise, credit will not be received for that payment, and according to the law, the Association can exercise their ultimate power against the tenant, which is an eviction action.
How the rent is applied
The unit owner must give the tenant credit for the money the tenant pays to the Association; thus, the owner cannot evict the tenant for nonpayment if he now receives partial or no rent, as long as the rent is being paid to the Association. It will be up to the owner or property manager to investigate and try to figure this out. The law provides no reporting requirement or communication requirement from the Association to the owner or property manager. A tenant who acts in good faith and pays the Association is immune from any claim by the unit owner. Will the Association demand the full amount of rent or a partial amount? We assume that they will demand the full amount of rent to pay the outstanding amount the unit owner owes until such sums are paid in full. Hopefully once paid, they will properly notify the tenant so the rent is then paid to the owner.
Eviction by the Association
If the Association files an eviction action against the tenant, the cost of this will be further assessed to the unit owner, who will go deeper into debt, as now his tenant will be evicted from the premises. You can be pretty well assured that the Association will not approve the next tenant who may be presented to them. Suppose the Association accepts a partial rent payment from the tenant, which they almost certainly will. How will they then proceed? The tenant receives the demand from the Association, is told to pay the full $800 to them, but tenders a lesser amount of $500. We can almost guarantee that the tenants will begin to pay partial amounts to the Associations, as they often do anyway, and many Associations will continue to accept whatever they can, resulting in a tenant who is partially paying each month and an owner who does not know what to do. This will become a complete mess, as the Association is now becoming a “residential property manager” or “rent collector” by default, with absolutely no responsibility to maintain the unit, make repairs to appliances, and which has no obligations to the tenant as if they were the actual landlord. The new law clearly states that the Association does not have to comply with Florida Statute 83.51, which section provides for the landlord’s duties under the Landlord/Tenant Act. A tenant may be legitimately withholding rent because of the failure of the owner to comply with the lease or Florida law. The A/C could be broken, there could be a mold issue, or perhaps an infestation of insects is present, and the Association has no obligation to do a thing, while the tenant has the obligation to continue to directly pay rent to the Association. This could affect an eviction action by the Association if the tenant has legitimate defenses, complicating the eviction, and resulting in higher attorneys fees and costs to the Association, which will be passed onto all the other unit owners, as the delinquent unit owner most likely will not have the money to pay this either. Another interesting issue arises if the tenant fails to pay the Association and the unit owner wants to evict the tenant so he can sell it, but the Association is dragging their feet and decides against filing an eviction because they are low on money. Since the Association is the one who is owed the money, and the owner must provide a credit to the tenant in the amount that the tenant pays, does this mean that the landlord will have a right to file an eviction if the tenant is not paying the Association, or will this exclusively be the right of the Association? Who will coordinate this mess?
Where does the new law leave the Property Manager?
Basically the property manager will be bounced right out of the management situation unless they want to work for free. Not a happy thought. The property manager who has a valid property management agreement with the owner of the property, under which a percentage of the rent paid each month by the tenant is retained in the form of a commission, will have no control over the rent money paid, as the rent money will presumably be paid in part or in full directly to the Association. Under normal circumstances, the manager deducts the commission and remits the balance to the owner, but now the rent completely bypasses the property manager. The property manager now has a choice to either continue managing the property with absolutely no funds coming in and no commission being paid, or decide to drop the owner and terminate the management agreement.
Possible solutions and opportunities
As our firm primarily works for property managers, we are always looking for ways to assist those managers in their duties, enable them to retain accounts and conduct their business profitably. Many managers will choose to discontinue management in situations when the Association makes the demand, and if the manager has the luxury to do so, we recommend that the management agreement is terminated according to its terms, and that the property manager concentrate his or her efforts at finding owners who are solvent enough to own rental property. In most instances, if the owner owes money to the Association, he will also be in foreclosure or close to being into foreclosure. Ideally, the Association should contract with YOU, the current property manager of the managed units, for YOU to collect the rent and remit this rent to the Association. Of course, unless the property management agreement already addresses this issue, which we doubt it does, a separate agreement will need to be signed by the property manager, the owner and a representative of the Association. We cannot forget that the property manager’s loyalty lies with the property owner, and it could be construed as improper if the property manager collects the rent from the tenant and remits it to the Association without the express permission of the owner of the property.
Our office has developed a form which we are testing to use which can be signed by the owner, the Association and the property manager which will accomplish the goal of having the property manager collect the rent, deduct customary commissions, and then pay the Association. Since we are in such an early stage of all this, in order to access this form, we would ask that you call our office first and speak with me directly. There is no charge. Simply put, all parties through this agreement authorize the property manager to collect the rent, and depending upon the terms of the agreement, deduct the usual management fees, THEN remit the balance to the Association. This is by far the smartest way for the Association to accomplish their goals of collecting the money; the tenant does not have to be involved in any way, and the property manager is able to continue managing the property, maintaining the property and receiving payment for the all the property management services that they are rendering. It is the proverbial WIN-WIN, but the Association will have no idea that this is even an option unless YOU let them know.
Taking a Proactive Approach
We receive phone calls almost every day by property managers whose tenants already received the rent demand letter from the Association. Rather than wait for the Association to take action and push the you right out of the picture, we urge you to go straight to the Association or the Association’s management company that are connected to the units you manage to see if they will allow you to use our agreement, or a variation with which everyone is comfortable, thus allowing you to stay in the loop. The person best situated to collect rent is you, the current property manager, not an Association, attorney for an Association or even the Association’s management company.
Many property managers are caught by surprise by all this, as they assumed that their owners were paying the fees and assessments of the Association. It is time to check each and every account right now, and confirm that the owner has been current in his or her payments, and if there is a delinquency, work with the owner immediately by telling the owner about the new law and doing what it takes to get any delinquent amount paid to the Association before it is too late.
July 29th, 2010
Case Study: Rapid Response When Disaster Strikes
The Damage:
When fire destroyed all 20 apartments in the 42,000-sq.-ft. Enclave apartment building, Coastal Reconstruction Group reacted quickly and played an integral role in the rebuilding process.
The Response:
Enclave’s membership in Coastal’s Rapid Response program allowed Coastal to manage the damage assessment; facilitate immediate, on-site safety measures such as security fencing; and oversee complete demolition on the property including sub-ground and plumbing.
The Reputation:
The owner of Enclave at Mountain Brook, refers to Coastal Reconstruction Group as its “go-to contractor.” The reputation and rapport Coastal maintains with insurance adjusters helped to streamline the claims negotiation and scope approval process, resulting in a more cost-effective rebuild.
To learn more about Rapid Response, please call (877) 708-5501 or visit http://www.coastalreconstruction.com/rapid-response.
July 27th, 2010
Check vacant units prior to storm — Shut off power, water, and other utilities.
It is very important to know which units on your property are vacant. Shut off all electric breakers, turn off water to unit, and disable gas utilities if possible. Remember, vacant units cannot report damage after the storm passes, so be pro-active and immediately check the vacant areas to ensure that no damage was sustained.
July 22nd, 2010
Insurance Implications of the Gulf Oil Spill
Most times “Oil and water don’t mix”…until now. With hurricane season just underway and oil still gushing into the Gulf of Mexico, it might only be a matter of time before oil and water do mix to create a potential insurance claim. So, if oil ends up in/on your insureds’ property, is it covered?
First, it is important to note that insurance policies differ. Therefore, the discussions herein are restricted to standard ISO coverage forms. Insurance practitioners and policyholders must consult the specific policy which insures the damaged property in order to make a final determination as to whether or not there is coverage. Also, in many instances, coverage will be fact dependent and the necessary generalizations in a coverage discussion such as this may or may not apply to your insured’s specific circumstances and policy forms.
Fundamental to any direct property damage claim is the requirement for damage to covered property by a covered cause of loss. (Note: Some indirect coverages such as business income may only require damage to property – not necessarily covered property – to trigger coverage.)
Numerous coverage provisions of the current ISO HO 00 03 Homeowners policy and the ISO CP 00 10 Commercial Property coverage form could come into play in a hurricane, such as direct property damage, loss arising from orders of civil authority, additional living expenses, business income and extra expenses, debris removal, and so forth.
However, all these coverage provisions require that there first be damage by a covered cause of loss. Therefore, the key to determining whether or not any of these various coverage provisions would apply to a hurricane-and-oil loss would hinge on what role the hurricane played in putting oil into or onto an insured’s covered property.
Since damage by a hurricane has a water component and a windstorm component, each requires examination.
Read the full article HERE.
Article Source: Independent Insurance Agents and Brokers of America
July 20th, 2010
Know ahead of time what to do with displaced residents.
It is very important for property managers to have a plan for what you will do with residents that have been displaced from this residences due to damage. Trying to come up with proper plan in the heat of the battle is a bad idea. Have a definite game plan ahead of time and make sure your staff is aware of their specific roles. The time to plan is NOW!
July 14th, 2010
Natural disasters occur every day and cause billions of dollars in property damage annually. When destructive elements like rain, wind, lightning and hail strike, the result can be roof and structural damage, water intrusion, mold, electrical failures, plumbing problems…the list goes on.
In the midst of a weather emergency, coordinating restoration for an entire community is a daunting task. More often than not, multifamily developments face two separate losses – both to individual homes and exterior damage to common areas. Thus, it is critical to plan ahead.
Organize and Communicate
It’s difficult to remain calm when faced with impending disaster, and once a threat is identified, it’s easy to panic – rushing to buy supplies and secure buildings. But often, one major precaution is overlooked: forming a plan for remediation in the event damage occurs. Making arrangements beforehand will help get the community back to normal as efficiently as possible. With that in mind, establish an emergency plan to prepare for the following:
Create the Plan
When dealing with hundreds of homes, repairs must be completed promptly to both decrease resident displacement and mitigate general hazards.
While the actions of each individual homeowner or tenant can’t be controlled, easy-to-follow instructions can be provided. Ask the following questions before drafting an emergency plan:
Choosing a Disaster Contractor
Searching for a reputable contractor after a natural disaster occurs increases the chances for fraud and price gouging – especially if the destruction is widespread. Securing that relationship in advance reduces that risk and alleviates tough decision making during an already chaotic time.
Therefore, one of the most important preemptive measures a property manager can make is contacting a disaster contractor. Damaged roofs and walls, broken windows, flooding and mold require companies with different expertise. Disaster contractors can bundle all these services – even coordinating multiple sub-contractors for their clients, if needed – thereby eliminating extra hassle. Beyond being equipped to handle building repairs and complications from water intrusion, (like mold, for example), these companies are well-versed in working with insurance agencies to settle claims efficiently. In addition, many of them stockpile basic supplies like lumber and tarps. Also, early enrollment allows for a property survey ahead of time to note emergency electricity and water shut-offs for each building, among other preparatory measures.
Keep in mind that restoration can take anywhere from a couple weeks to a few months to finish. Because the hired contractor is going to become part of the property’s daily operations throughout the duration of repairs, make sure it’s a company you’re comfortable working with – and working around. Begin researching now, enroll for appropriate services and ride out any storm season with confidence.
Final Steps to Secure the Community
In addition to forming a relationship with a disaster contractor, follow these precautions:
About the Author
Scott McCurdy is co-owner of Coastal Reconstruction Group and is active in more than 19 trade associations, including NARPM. With his vast experience in insurance mitigation, disaster preparedness and remediation from wind, water, mold, fire and termite damage, Scott is an expert resource on disaster recovery and building restoration.
Coastal Reconstruction’s Rapid Response services provide post-disaster reconstruction to residential and commercial structures throughout the Southeastern U.S. For more information, call (877) 708-5501 or visit www.coastalreconstruction.com.
July 14th, 2010
Establish a relationship with a Disaster Contractor.
Begin researching today. Find a general contractor who specializes in disaster restoration and is knowledgeable about handling insurance claims. When disaster strikes, knowing that you have a contractor on-call is priceless.
To find out how to receive a cost-free membership to Coastal’s Rapid Response Program, click HERE.
To track all named storms and potential for development, bookmark the Storm Tracker page at http://www.coastalreconstruction.com/storm-tracker.
July 12th, 2010
According to the National Hurricane Survival Initiative, coastal residents are complacent about this upcoming hurricane season.
From the article:
Even in Florida, the state with the longest coastline that historically has been battered by killer storms, one in three residents say they have no family disaster plan or hurricane survival kit.
This past May, Mason-Dixon Polling and Research conducted a National Hurricane Survival Initiative survey of residents from Virginia to Texas who live within 30 miles of the coast. Among the most alarming findings:
As disaster contractors, we see devastation daily. Don’t think “it can’t happen to you.” It can – so be prepared, plan ahead, buy supplies and establish a relationship with a contractor to fast-track repair and recovery.
July 9th, 2010
The Atlantic hurricane season has already produced its first named storm, Alex. As the season progresses, more tropical disturbances may occur. Are you prepared? In the event a major storm heads to your area, planning ahead and buying supplies will save time – and headache – later.
Make sure you have the following on site:
Please visit the National Hurricane Center’s website for a complete list.
