Hurricane Andrew is not the only significant natural disaster of the 1990's. Just as Hurricane Andrew struck, reports were being published concerning long term effects of the cataclysmic fire in Oakland, and the devastation Hurricane Hugo visited upon Charleston, South Carolina. The experiences of property owners in Oakland, Charleston, and South Dade have shown that despite best intentions, slightly more foresight could have significantly reduced post-disaster problems.

While natural disasters cannot be avoided, much of the confusion and delays that occur thereafter can be significantly reduced by some advance planning. The type of planning involved is that undertaken by many businesses and homeowners. For associations the areas of pre-disaster planning fall into matters such as document review, insurance analysis, and office procedures.

Insurance procedures have complicated many recovery efforts. A substantial problem exists for communities that require insurance trustees. Especially in the case of a complete loss, there is very little justification for an Association having an insurance trustee to whom the Association must pay a substantial amount of money just to sign checks. A declaration amendment to delete an insurance trustee requirement may be appropriate.

Some declarations provide that the declaration and the association terminate after a disaster. Automatic development termination provisions that do not detail either the payment of insurance proceeds or the sale of the affected properties invites confusion. If possible, automatic termination requirements should be amended.

Many associations found their insurance coverage to be woefully inadequate. Some associations took a calculated "risk" that there could never be a total loss and thus were under insured. Other Associations did not take into account standard insurance policy exceptions for items such as exterior paint, landscaping and foundations. In Charleston and Miami many Associations apparently did not have flood insurance which is necessary because most premises' coverage does not include damage from rising water. Finally, there was little if any coordination between coverage held by the Association and individual unit owners which has resulted in continuing disputes between insurance companies as to which was responsible for rebuilding.

When there is a loss, an association's first task generally is determining who needs to be contacted, where they need to be contacted, and the extent of damage. Most associations in affected communities had no plan for post-disaster retrieval of information. Still fewer associations kept duplicate critical records off site. As most homeowners and businesspersons know, a duplicate of all insurance policies and critical information should be kept off site in "back-up" files because if the main office is damaged, original information may be irretrievable.

There are many ways that associations can seek to contact missing members after a disaster. At the time of occupancy, a resident should list the name, address and telephone number of a relative outside of the area to be designated as a contact person. Similarly, when a unit owner vacates temporarily, the owner should specify a contact person. Some associations are designating the name, address and telephone number of someone outside the state to coordinate association communications because many times telephones and electricity to an affected area will be cut.

Associations should also consider "walking through" their developments with a video camera. All improvements should be videotaped with an oral commentary. The tape provides documentation of pre-disaster improvements to substantiate a post-disaster claim.

The firm's previous memorandums have advised Homeowner Association clients and their members that new laws affect many non-condominium, non-cooperative associations as of October 1, 1992. The new amendments to the Not-For-Profit Corporations Act apply to homeowner associations not under the control of the developer, having over fifty units, and levying annual assessments of over $150.00. Unfortunately, the legislative effort to swiftly enact the new laws, though only a fraction of the size of the new Condominium Act Amendments, has created tremendous confusion.

The new homeowner association laws fail to define critical terms and use contradictory language. One way that affected homeowner associations are dealing with the problems created by the new laws is to amend their documents. Associations may consider whether to amend their documents to provide clarity as to how the amendments will be affecting them to avoid disputes in the future.

Many condominium associations are re-evaluating their insurance coverage. Re-evaluation has been undertaken because of the Condominium Act's new insurance provisions. The new provisions became effective July 1, 1992. Depending upon an association's declaration of condominium, a condominium association may be able to decrease insurance coverage. One of the theories behind the insurance amendments was that the ability to decrease coverage would result in significant cost savings.

As coverage decreases, the proverbial "flip side" is that certain items will no longer be insured by condominium associations. Most items which will now not be insured by the condominium associations are usually owned by individual owners (generally appliances and items inside a unit). Therefore, most legal commentators strongly recommend that condominium associations advise unit owners of the decrease in association coverage.

This information is provided only for public information purposes and is provided without obligation or fee. It is distributed to the firm's association clients to provide a general notice of recent changes in the law. This information is not to be considered as legal advice. The changes in the law have not been reviewed by Florida courts and may be subject to challenge. Before taking any action you are urged to consult with counsel to ensure that your legal rights are being protected.

© 1992 by Gelfand & Arpe, P.A.