By Sean Davis, DHA Construction Management
Buying a new home is a milestone experience full of choices for your colors, flooring, and finishes. For months, you stop by and check on the progress. The anticipation builds until, finally, you close on the home and move in. As the months go by, you notice little flaws here and there but nothing that raises those little red flags. A couple of years go by, and you start seeing more prominent flaws in your home and neighborhood. The builder is long gone and so is the warranty. You begin to fear the problems are systemic and will only continue to worsen.
I know what it feels like; I’ve been through this both as a homeowner and board member. It can be very emotional; after all, it's your home. It's where you create so many incredible memories. Buying a lemon should not be one of them.
Is there anything the HOA board of directors can do? The answer is yes. The most likely option is to consult a construction defect attorney, but when should you call one? Here are a few questions to help guide you.
If you answered yes to two or three of these, you should call an attorney and get their opinion.
Once you start down the path of a construction defect claim, there are a couple of things to expect. First, it is a slow process and your board must be committed to staying the course. The board and community manager must keep excellent records to ensure continuity as board members and managers change over time. We had three different community managers and four different board members by the time the entire litigation process, preconstruction, and construction had concluded.
Once an attorney accepts your case, they will gather evidence and conduct destructive or intrusive testing. A team of construction experts will most likely remove relatively small sections of the buildings in the community. Then a forensic engineer will inspect the openings and other observable defects. They will note their observations, take pictures, and then the construction team will return to repair the test sections. The legal teams will generate and exchange many reports to prepare for a trial or negotiated settlement. This process can take several months to complete.
Once the legal process has run its course and nears completion, the board will be given copies of all the files from the claim, including pictures, reports, engineered drawings, and emails. In our case, there were more than 140 GB of files. To give you a sense of the enormity of information, it's about 15,000 volumes of the Encyclopedia Brittanica!
You will also receive an essential document called the Rough Order of Magnitude, also known as the ROM. It is the detailed list of defects, associated measurements, and costs for the entire claim. There are a couple of critical points to keep in mind. The list of defects may be lengthy, and some will be more serious than others. It would be beneficial to ask your attorney to provide a matrix that details what defects were noted at each home and for the forensic engineer to give a qualitative rating based on their observations. It will help the upcoming preconstruction team prioritize the defects.
Finally, it is possible that the financial outcome will not be enough to cover the repair cost for every defect. The board may need to prioritize the most severe defects to be addressed first. Ask to meet with the legal team and their forensic engineer to review the ROM and the settlement together. They will have the most insight into the depth and breadth of defects and help build the foundation moving forward in the reconstruction phase.
Sean Davis, PMP, MBA, is the President of DHA Construction Management. He has served on his HOA Board of Directors for more than seven years and led their effort for a successful construction defect claim. His company provides advice and construction consultation to Colorado community associations. With more than thirty years of construction experience, his mission is to help HOAs by eliminating construction risk, increasing the quality of construction, and maximizing the construction budget for them and the community managers who care for them.
By Joseph A. Bucceri, Orten Cavanagh Holmes & Hunt, LLC
Anyone who works in the community association industry in Colorado knows by now that the legislature imposed major changes to the Colorado Common Interest Ownership Act (“CCIOA”) during the 2022 session which significantly affects the operation and governance of common interest communities. HB22-1137 became effective on August 10, 2022. While the final version was less draconian and onerous than the initial drafts, it still represents an overreaction to a small number of bad actors. Unfortunately, for the vast majority of associations, the new requirements force associations into a one-size fits all system which seems to assume that most covenant violations are insignificant, and which fails to take into account the wide variety of building types and living arrangements that make up owner associations in Colorado.
How has the new law changed the face of covenant enforcement in Colorado, and what are some of the unintended consequences?
Major Changes and Challenges
HB22-1137 represents a major overhaul for association covenant enforcement and assessment collections. For covenant enforcement, there are several major changes to the way associations are now required to operate:
Another challenge with health and safety violations is that associations can’t take legal action until at least 72 hours after the owner has received written notice of the violation. Will associations be forced to prove the owner received notice, or can they rely upon a “deemed received” standard?
What Didn’t Change?
Some enforcement remedies other than fining or filing a lawsuit are still (ostensibly) permitted under the new law. While an association is required to give an owner at least 60 days to cure a violation on their own, there are no express legislative constraints on associations exercising self-help remedies (if authorized by the governing documents). Additionally, default or individual assessments can arguably still be assessed against the property as long as they represent actual costs to the Association.
As with any type of legislation, HB22-1137 has a number of unintended consequences that could, paradoxically, result in increased costs and assessments to owners. Because of the specificity of the notice requirements and capping fines at $500, the new law may lead to more lawsuits being filed by associations. An Airbnb generating $100 per night is not going to close from a $500 fine. If the matter is referred to an attorney, associations and/or owners may incur substantial attorney fees.
Another example of unintended consequences is an association choosing to tow for parking violations in lieu of imposing nominal fines. Before HB22-1137, if an owner parked in an authorized parking space, the association could impose substantial fines without a mandatory cure period. Now, associations must (1) send a violation, (2) wait at least 30 days, and (3) after 30 days, conduct an inspection to determine if the violation still exists before the association can impose an initial fine. Consequently, some associations may elect tow vehicles instead of levying fines.
In addition to the challenges identified above, there are many other questions raised by HB22-1137 that will need to be addressed in order for an association to proceed with enforcement with confidence. The new law states that “the total amount of fines imposed for the violation may not exceed five hundred dollars.” But what is “the violation?” If an owner gets a notice for weeds, and pulls them all but they grow back, is that the same violation or a new one?
Another major uncertainty is how a violation may be “cured” if it is not an ongoing condition. For an excessive noise violation, if an owner has 29 days straight of raucous parties, but doesn’t have one on day 30, has the violation been cured? What if there is another party on day 35 - can the association send the second violation notice?
While there is always hope that a future bill could clean up some of these issues, or remove some of the more cumbersome requirements, it is likely that many of these are here to stay and homeowner associations in Colorado will have to get used to these new requirements moving forward.
Joseph A. Bucceri is an attorney at Orten Cavanagh Holmes & Hunt, LLC. He provides covenant enforcement services to community associations throughout Colorado.
By Kerry Wallace, Goodman and Wallace, P.C.
There is little difference between a unicorn and the right of a Colorado Common Interest Community (“CIC”) to hold an “informal board meeting.” While most people have heard of them, they do not really exist. A legally cringeworthy response to whether minutes were taken at a Board meeting is: “But that was just an informal work session and not a Board meeting.” The Colorado Common Interest Ownership Act (“CCIOA”) requires all regular and special meetings of a CIC Board, including committees, to be open to attendance by Owners (see C.R.S. 38-33.3-308). Minutes documenting all such meetings must be maintained as an Association record. See C.R.S. 38-33.3-317 (1) (c) which requires a CIC to maintain, “Minutes of all meetings of its unit owners and executive board, a record of all actions taken by the unit owners or executive board without a meeting, and a record of all actions taken by any committee of the executive board.” Additionally, a CIC’s Bylaws will address Board meetings including how Board meetings are noticed and held. CCIOA requires the adoption of a policy regarding conduct of meetings. See C.R.S. 38-33.3-209.5. These requirements cannot be circumvented by calling a Board meeting “informal” or a “work session.”
When a CIC Board acts without a meeting pursuant to the CIC’s Bylaws or the Colorado Revised Not for Profit Corporation Act (“CRNPCA”)at C.R.S. 7-128-202, all written communications must be maintained by the CIC such as emails among, and the votes cast by, board members. See C.R.S. 38-33.3-317 (d). Board members should always use diligence and caution when communicating with fellow Board members or management regarding Board matters as those writings could be subject to record retention requirements. Often it is preferable to call a meeting versus permanent retention of email stream communications.
Even executive sessions require documentation. While a CIC Board may hold an executive session at which attendance may be restricted to the Board and persons requested by the Board, matters for discussion are limited and minutes indicating that an executive session was held, and the general subject matter of the session are a required to be maintained as a CIC record. See C.R.S. 38-33.3-308 (3-7). The only matters that may be discussed at an executive session are the following (Note: Section (5) was recently expanded by HB 22-1237):
In summary, every Board meeting must be called, noticed, and held in accordance with the CIC’s Bylaws and CCIOA. Per CCIOA, a CIC must have and maintain as an association record minutes for all Board meetings. Truncated minutes are even required for executive sessions. If a Board decides to act without a meeting, the requirements for action without a meeting found in the Bylaws, CCIOA, and the CRNCPA must be adhered to with written communications among Board members, including votes, being maintained as the “minutes.”
Do not get busted by a myth and treat all Board meetings the same with notice, agenda, and minutes.
Kerry H. Wallace grew up in Denver, Colorado and after leaving Colorado to attend the University of Notre Dame du Lac (BA 1987), she returned to Colorado for her law degree from the University of Colorado School of Law (JD 1991). Kerry is a Partner in the law firm Goodman and Wallace, P.C. located in Edwards – 15 miles west of Vail. A perfect location to enjoy favorite past times of skiing, hiking, and biking. Kerry’s practice focuses upon resort based common interest communities guiding communities through the ever-changing legal landscape. Her work has included the first reported case interpreting community record keeping and disclosure obligations under the Colorado Common Interest Ownership Act. Kerry served on the Eagle County Planning and Zoning Committee from 2003-2007, is a current Business Partner of CAI-RMC, and has been a speaker and panel member at numerous CAI Colorado - Rocky Mountain conferences. Kerry can be reached at 970-926-4447 or Kerry@goodmanwallace.com.
By Amalia "Mia" Gonzalez, 3.0 Management
As the growing residential real estate market in Colorado continues to support new housing projects across the State, developer to owner transitions are becoming more common. It is essential for Community Association Managers to familiarize themselves with the process and legal requirements for these transitions as it is a critical step every developing homeowners association must take.
The biggest tool a Community Association Manager should have in their toolbox during a transition is the Colorado Common Interest Ownership Act (CCIOA), as this document prevails over the Declaration. The next tool every manager should utilize is homeowner engagement. Without willing homeowners, there is no Board of Directors. In order to acquire homeowner engagement there needs to be consistent communication. Communication is key for any successful and smooth transition from declarant to owner control. The purpose is to educate the owners on the role that the Board of Directors plays for the association and the function of an association.
Preparation for the transition meetings should occur before the first unit is sold to ensure that the timeframe and requirements are met. CCIOA requires that associations sequentially be turned over to the owners as units are sold. Typically, three special meetings are anticipated during the declarant control transition. There could be more meetings (and possibly fewer meetings although fewer meetings are not recommended). Per Section 303 (6) and (7) of CCIOA:
Per Section 303(5)(a)(I) of CCIOA, the declarant control termination limits are as follows:
Within 60 days after the earliest of these three events occurs, the third meeting must commence, records must be turned over, and a transition audit performed.
Within 60 days after the owners have taken control of the association, the declarant must provide several required documents per CCIOA Section 303(9). A few worth mentioning are the governing documents (recorded declaration, articles of incorporation, bylaws, plots and maps, meeting minutes, etc.). Obtaining and understanding the governing documents will lay the foundation for the association’s operation and maintenance needs. All financial information is another element that is essential to the transition. This should occur when the owners have the majority control of the Board. It’s prudent to consider an owner board member serving as the board treasurer before the transfer of control to reduce owner concerns and reassure order for the association’s bookkeeping. A transition audit should also be performed, accounting for the association’s funds and financial statements from the date the association began receiving funds to the date when the declarant control period ended. It is highly recommended that this audit is performed by an experienced CPA.
Keep in mind that the best time to start the transition is six months prior to the official declarant to owner transition. Waiting until, during, or even after the transition, may make it more challenging to obtain important and necessary documents from the developer.
Once the owner controlled Board has taken over the association, the Board should consider the following:
In conclusion, the transition from developer to owner control is an important part of the life of an association. There is a lot to be done but ensuring the transition is smooth requires knowledge, preparation, and clear communication. Complying with legal requirements and working within the set timelines during the transition process will set the association up for success in the long run.
Amalia Gonzalez also known as Mia is the Community Association Manager of Developer Relations at 3.0 Management. Mia has been in the industry for 5+ years and has a passion for making communities a better place to live for owners.
By Elizabeth Caswell Dyer, Sopra Communities, Inc.
It’s tough to be a volunteer HOA board member in Colorado these days. Just last night, I was watching a PBS show called “The Trouble with HOAs”, and depending on who was being interviewed, the board was doing too much or caring too little. It’s no wonder that sometimes boards are accused of overstepping their duties and authorities, as most volunteers wish to be helpful and they may not know where to draw a line.
Here are some ways to avoid overstepping or abusing your power if you are a board member:
Reasonable Policies and Rules: It’s important to have a working knowledge of your governing documents, and to have any new policies, rules, or handbook reviewed by the association’s attorney to ensure they don’t conflict with your governing documents, statutes, or case law. It’s also prudent to take a step back when drafting anything new to ask whether the new policy or rule serves the entire community, builds community, or is geared towards solving one person or one group’s behavior that isn’t the majority? Also ask if the new rule or policy positively maintains or increases property values. Those are useful benchmarks to compare against when contemplating adding or removing anything in regards to the governing documents.
Selective Enforcement: The Golden Rule cannot be emphasized enough: treat others as you wish to be treated. There is a secondary Golden Rule for associations: treat everyone the same, or as close to the same as possible (as there will always be an exception to a rule). There is nothing inherently fair or equitable about living in an association. At the same time, consistent enforcement of reasonable rules and policies helps a community feel that their experience within the community is reasonable, fair, and equitable.
Conflicts of Interest: Associations in Colorado should have a Conflict of Interest Policy in effect. It is important for board members to be familiar with the document and to take it seriously. If there is even a whiff of a Board member making money via their inside knowledge of the Association, such as an upcoming foreclosure, can quickly destroy a community. Just don’t do it.
Misappropriation of Amenities: Unfortunately, there are not perks to the many hours of service required of board members. They should not have “first dibs” for reserving a clubhouse or pool, the best storage unit, or parking spot when it becomes available, etc. Actions such as these undermine the trust of the neighbors in the board, as these actions are self-serving over the fiduciary requirement to put the needs of the organization before one’s own interests.
Hold Regular Meetings with Posted Minutes: The healthiest communities share some basic traits: service on the board is not monopolized by a select few, and transparency. Having regularly scheduled board meetings with the minutes posted to a website or portal (with controlled access to it, of course), go a long way towards non-board members having organized access to the business of their community. This facilitates trust and for those who might be concerned about whether the board is conducting business appropriately, actions speak louder than words. A consistent practice of meetings and minutes is, to quote Martha Stewart, “a good thing”.
Emergency Management:Another way that Boards unknowingly overstep is when something goes wrong. At 2am, nobody wants to be the person telling their neighbor that dealing with the gushing water is not the association’s responsibility. A great way to proactively be ready for these unfortunate situations is to have the association’s attorney draft what is called a Maintenance & Insurance Chart. To create the document, the association’s attorney pours over the various sections of your governing documents, mostly the Declaration of Covenants, to define what the association must maintain, repair, or replace, and what is the responsibility of unit owners. This chart is beloved by insurance adjusters and it facilitates an easier claim for both owners and the associations. Not knowing where an association’s responsibility begins and ends can lead to board members getting into unit repairs and costing the association needlessly. It’s also important to keep in mind that whoever makes the call to a restoration company is effectively the one hiring them, so if you don’t have what is affectionately called an “M&I Chart”, be careful about making the calls yourself if you are a volunteer board member. It’s easier for the association, or the association’s insurance, to pick up all or part of a bill related to an emergency after the fact, versus an owner refusing to pay a bill because they did not technically hire the vendor.
At the end of the day, it’s important for board members to be familiar with their governing documents, and to have good expert partners to help guide you through the ever-changing world of leading the multimillion dollar corporation that is your Association. Your circle of care is key to your success, and this includes your management team, your insurance agent, your tax accountant, and your attorney.
Elizabeth Caswell Dyer is the CEO and founder of Sopra Communities, Inc., which is a local company dedicated to providing community management services in the Denver Central Business District and surrounding neighborhoods since 2010.
By Colorado Legislative Action Committee
The 2023 Colorado legislative session is fast approaching, and the CAI Colorado Legislative Action Committee (LAC) team is already preparing to ensure that we are working with our membership to protect the interests of community associations in our state. To that end, the LAC has engaged a new lobbying team. Taylor Hickerson with Policy Matters Colorado will be our primary point of contact. She and her team have already hit the ground running.
One of the main priorities with the upcoming legislative session is to propose a cleanup bill for HB22-1137, the Homeowners' Association Board Accountability And Transparency bill. As you know, HB22-1137 added numerous burdens to community associations regarding collections, foreclosures, and covenant enforcement. We hope to beneficially modify certain sections of the bill that do more harm than good to Colorado communities and the owners within them and to have the legislature clarify other portions of the bill that passed with vague and confusing language.
We're looking for sponsors in the Senate and the House that would support working with the LAC to move toward the priorities we've heard from you, our members — the voices who matter the most. This includes, but is not limited to, the following: removing or modifying the certified mail requirements; addressing the necessity of posting notices; removing the distinction between public safety/health violations and those that are not deemed as such; and addressing the maximum cap on fines at $500 in a manner that is logical, practical, and equitable.
We expect the cleanup bill to need a significant amount of support from our membership. We will need managers and homeowner leaders at the ready to testify about the impacts that HB22-1137 has had on their communities. These impacts may include increased expenses, owner complaints, and process issues. We also will need testimony about how the proposed changes will impact communities while still providing protections for owners.
The LAC also is engaging with a coalition of aligned organizations and stakeholders to build support for these and other initiatives while advocating for healthy, responsible communities. We anticipate that having additional support and a unified voice will substantially increase the likelihood of success on issues of vital importance for the future of Colorado communities.
As the legislative session ramps up, we will continue to provide updates to our membership. Make sure to follow along on our Facebook page (www.facebook.com/CAICLAC) for ongoing updates throughout the session and particularly, after we have results from the November 8, 2022 election this week. As always, feel free to contact Danaly Howe, the LAC chair, at any time with any questions. She can be reached at email@example.com or 970-484-0101 x101.
By David Bradley, FRONTSTEPS
Public websites are a mainstay for community associations. Yet just because websites are common does not mean they are effective. This article examines some of the ways a community website can deliver value for an association and shares tips for unlocking that value otherwise known as the return on investment (ROI)
HOA boards often receive an enormous volume of mail from their residents, frequently about the same topics. How do I submit a work order? Where are the minutes from the last board meeting? When does the pool open for the season? It can be a challenge to keep up with the volume, and yet any delays in responding can cause frustration by residents who feel ‘ignored’ or not like a priority.
Some of this information can and should be posted directly to the community’s website, for easy, anytime access. More sensitive information may be reserved for the secure resident portal. Yet even that secure information can be mentioned on the public website with instructions for signing into the portal to see it if desired.
According to a recent study, 8 in 10 community association managers (CAMs) reported that the volume of homeowner questions increased in 2022 Those CAMs also shared that homeowner communications are the most time-consuming part of their job. A well designed, easy to find, and informational website can take a significant amount of that burden off the board members and CAMs
Most associations have a method of paying assessments online and this is often the fastest and most convenient payment option available. However, the online payment method must be readily available for it to get used. One shortcut is to put the online payments link in a prominent place on your public website. Another important tip is to offer multiple means of completing an online payment. Some residents will prefer to pay a one-time assessment and will want the minimum steps to complete that task. Others prefer to schedule recurring payments, so they no longer have to worry about a check arriving on time. In most cases that can be done through their secure homeowner portal or mobile app, and instructions for accessing both should be readily available from your public website.
Which brings us to the final, and perhaps most important, function of a public website. The website plays an important role covering the most common questions and giving a range of visitors (vendors, guests, potential future owners, etc.) basic information to help them plan a trip or provide a service to the community. It is also a common jumping off point for residents, particularly new residents just getting things set up, such as their approach to paying assessments.
However, just as important is recognizing what a website should not do for your community. A website is not well equipped to serve as the primary communication vehicle between the board and homeowners, particularly for time-sensitive matters such as common area repairs, weather closures, and community events. It is generally not an appropriate place for storing and sharing sensitive community documents,. Those tasks, and others like them, are tailor-made for a homeowner portal and mobile app. Your website should not seem like a substitute for a secure online portal because residents who stay at the surface might be caught off guard by road closures, miss out on neighborhood barbeques, and otherwise feel left out from the advantages of community living.
Instead, the two experiences complement one another, with the public website serving as an entry point for anyone related to the community and the portal a deeper, richer experience for the residents living there day to day.
Websites can deliver significant benefits. Getting the most value from yours starts by understanding the most important roles that website should play, as well as by recognizing their limits.
David Bradley oversees the product strategy for FRONTSTEPS’ widely used HOA management suite, including FRONTSTEPS Caliber, Community, Payments, and Dwelling. FRONTSTEPS is the most complete, connected, and homeowner-friendly software on the market, running everything from a community’s front gates to its back office in one cloud. Learn more at frontsteps.com.
By Damien Bielli, Vial Fotheringham, LLP
Audio and Video Security Systems within Associations
It is estimated that most people are caught on camera at least 70 times every day. This may include your homeowners’ association (“HOA”) or your neighbor’s home security cameras. Can owners within an association install cameras? What should an HOA consider before installing cameras?
Association Camera Systems
Generally, there is no requirement that an HOA install security cameras on the common area as an HOA is not the ultimate guarantor of safety for a community. HOAs must, however, exercise ordinary care if they do decide to install audio or video surveillance equipment.
If a community’s governing documents do not require the HOA to provide security, the HOA, by installing cameras, may be creating a duty to the members or implying a guarantee of safety where none otherwise exist. While security measures are a good idea in principle, an HOA must be careful not to unintentionally increase its liability for third party criminal acts by creating an expectation of security through the installation of cameras.
If the Association does wish to install cameras with audio and/or video capabilities, then the intent of this equipment must be made explicitly clear to the membership. If it is not the intent of the Association to provide security, then it should be communicated plainly to residents that it is not providing that service. This should be done by way of written policies setting out the limited purpose of the surveillance equipment, as well as posting signs around the community that the equipment is not monitored for security purposes. This is necessary so residents and guests do not believe security is enhanced by the use of cameras. This, however, is not a guarantee that the HOA will be insulated from liability should an incident occur.
HOAs must also be cognizant of local and state laws regarding audio and visual recording. Colorado privacy laws prohibit anyone from visually recording another without consent in situations where the person has a reasonable expectation of privacy. Areas that create an expectation of privacy such as bathrooms, locker rooms, and conference rooms should not have audio/visual surveillance equipment. Colorado is a one-party consent state which means someone can record their own conversations without telling others. However, it is illegal to record a private conversation to which the person recording is not a participant. If audio and video equipment is located in public areas there is generally an exception to this rule. You should seek legal advice prior to the placement of audio and video recording devices in your community.
Resident Camera Installation
Residents who wish to install audio/video surveillance equipment will be subject to the community’s governing documents. This is especially true in condominium and townhome communities where exterior maintenance obligations usually rest with the HOA and a general prohibition to exterior modification is found. In these communities, clear rules should be enacted on the location, size, and placement of these devices, if permitted. The same is true for single family communities. HOAs must look to the authority granted within the governing documents for regulation of size, placement and location of these devices. Once again, clear rules and regulation should be adopted governing the exterior placement of security cameras, if permitted. As always, if the Board has any questions, they should contact legal counsel.
As a partner in Vial Fotheringham LLP, Damien has unique background in Homeowners’ Association Law, trial advocacy, insurance defense, professional liability, coverage disputes, labor law, employment law, construction, commercial litigation, and contracts.
By Carol Shenk, Sagewater
As pipes begin to fail in condo and co-op communities, water damage and related hazards can become more frequent and severe. And as incidences increase, so do community association insurance costs and risk.
For example, to recoup the costs of repair, community associations and their community managers will file insurance claims and eventually see their premiums go up. They can even lose coverage altogether if they don’t move early to implement proper remedies.
If the pipes in your community are failing, you can reduce annual insurance bills and save money in other ways by moving early to replace your piping system.
A Leak Is More Than a Leak
Consider this all-to-common scenario:
A unit owner sees paint bubbling and water running down the wall from her bathroom ceiling. Maintenance discovers a pinhole leak behind the bathroom sink in the unit above that’s been slowly misting water into the wall cavity. They shut off water to the building and hire a plumber, drywaller, and painter to replace the damaged pipe, repair the walls in both units, and replace the upstairs sink.
What does this all add up to?
Clearly, a leak is more than what you might expect.
The Ongoing Challenges of Aging Pipe
Unfortunately, the story doesn’t end here. In this scenario, the leak has occurred in an older building, which means it’s just one of many. On average, piping systems usually start failing at around 30 years old1 and often need to be replaced within the next 20 years—sometimes sooner.
As the number of incidents and damages to unit owners’ personal property multiply, the board decides to file for eligible losses in addition to pulling from maintenance and reserve budgets. After repeated claims, the insurance company informs the community that it will face increased premiums and deductibles when the policy renews.
The board discusses its options, one of which is to replace the piping system. The board obtains a rough estimate and decides a re-pipe is too expensive; it chooses to pay the increased insurance costs.
The board’s decision might mean:
And It Continues
Less than two years after the board decides to delay pipe replacement, “it” happens: The worst-case scenario. A massive leak from a larger diameter pipe floods an elevator shaft. Repairs cost the community more than $200,000, the elevator is down for almost two months, and the insurance company notifies the board that they will lose their coverage when their policy term runs out.
Finding a new carrier with affordable rates will be nearly impossible since insurance carriers won’t issue a new policy without seeing loss run sheets that reveal the leak history. In fact, it’s not uncommon for deductibles to rise to $25,000 per unit or even $50,000 per unit when there’s a history of repeated leaks.
Worse still, the board must now raise condo fees even higher than if they had proceeded to replace the piping earlier.
How to Avoid High Insurance Costs for Pipe Problems
What can you do to avoid these issues? Get proactive.
Consider our example above, where the re-pipe project was estimated to cost $2 million. The community would have paid ~$14,000 per month to pay off a loan that was financed over 15 years at a little over 3% annual interest. That means $168,000 per year, which is far less than the $200,000 it cost for the one leak that ruined the elevator. In addition, the re-pipe would have netted further savings from reduced insurance rates and deductibles, and lower maintenance costs and water bills.
The Benefits of Proactive Pipe Replacement Are Clear
The calculations above don’t even factor in the full benefits that come with a new piping system like a new plumbing warranty, improvements to building functionality and life safety, and code upgrades. You’ll also avoid liability issues that can arise when you defer maintenance. Plus, you’ll enjoy happier residents, fewer maintenance calls, and less stress.
Aging pipes are inevitable, but severe condo fee increases, and insurance risk don’t have to be. Stay proactive with your building’s piping systems. You’ll realize significant monetary savings, a safer, happier community, and overall peace of mind.
Estimated Useful Life Tables:
Carol Shenk heads up SageWater’s Regional Account Executive team building SageWater’s brand from the ground up. You will find her at local trade shows, networking with members from various multi-family industry associations and educating clients on the value of a re-pipe.
By Clint Larson, 303TECH
We all have tendencies and preferences. It may be a favorite restaurant, sports team, or financial institution. Did you ever think those preferences can be used against you?
We are part of a highly connected society. From our smart phones, computers, emails, and websites, we can communicate with almost anyone, at any time, from almost anywhere.
Bad Actors use this highly connected society against us, in every way. Instead of scaring you into submission, or being the doomsday predictor, lets take a different approach. We hear on a regular basis about someone’s account being hacked or compromised. There are studies, statistics and stories that can scare even the most hardened person you know. We have fallen victim to this or know someone that has. From a simple email account compromise to business identity theft, from losing a few emails to losing millions of dollars. We all know the dangers and there is no way to stop it. So how can we recognize it before it becomes a problem? With the simple curiosity of a child.
Most of you were a child once, or have had, or know a small child and the wonder they have with the world around them. It does not matter if they are watching a caterpillar crawl up a branch or watching a campfire in the woods. These small children are amazed and fascinated by the world they are a part of.
We too need this same curiosity when dealing with the digital world we are a part of. We need to learn that the fire is hot and will burn before we burn ourselves or others. We need to be able to identify what is real and what is not.
When my children were younger, I would ask them to help with the chores around the house. If it was something that I had never asked them to do before, they would sometimes ask me “Why.” With a simple question they were getting clarification and gaining a greater understanding of what was really needed. We need to have this same curiosity and understanding, especially in the digital world of today.
Bad Actors can change the caller ID shown on your phone, they can send millions of text messages about package deliveries or charges to your bank account. They can call you about some issue that needs your immediate attention. They can create emails and websites to look like the real thing.
These bad actors know where you bank, what websites you shop at, and even what shipping companies deliver you packages. So how do you know what is real and what is not? With the simple curiosity of a child and asking one simple question, Why?
These Bad Actors are utilizing your human response of fight or flight to get you to respond to the text, click the link, open the attachment, or call them on the phone. They have the ability to compromise legitimate business’s email accounts and then just sit and wait. You may be interacting with the real person, then the next email is from the Bad Actor. Still coming from the real person’s email account, but now they are asking to change banking information or need a copy of sensitive information. Ask yourself the all-important question, Why?
When an email comes in from anyone and they are asking you to do something, take a moment and ask yourself, “Why?”
Fear, misinformation, and timing are what the Bad Actors are attempting to exploit. The fear of punishments, fines, and even getting law enforcement involved, are all tactics used against us.
We can all remember 3 questions to ask about emails.
You don’t need to get burned to know that the fire is hot. A simple “Why” can save you and those around you from being subjected to the Bad Actors wanting to hurt you.
Clint Larson, Managing Partner, 303TECH, Serving management companies, communities, and boards for more than 20 years. Clint@303tech.com www.303tech.com
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