MortgageOnBlack wrote: ↑Fri Apr 09, 2021 6:39 pm
Hoping someone with more experience on HOAs/Home Owner's Insurance Claims can offer some advice on this...
Back to the original problem of the association asking for a big payment (probably a "special assessment"), this can happen as a result of mismanagement, long legal disputes, or large events. When buying in a (Condo or Homeowners') Association, be very careful if there is ongoing or recent litigation in state or federal courts that involve the Association. That is easy to find, especially for your attorney (or even competent real estate agent) you use when purchasing property.
The title says "HOA demanding" but expensive storm damage suggests a roof, which is likely a condo association, not an HOA.
Condo associations are fine until there are big problems. I know of one example (near Washington DC) where a builder's error caused walls to leak, eventually resulting in expensive repairs and mold damage to remediate. The association sued the builder, but due to technicalities and time frames, the builder eventually skated free and relieved by the court of liability for the poor installation of a wall product. To resolve the defects without recovering costs (plus litigation expenses), each unit received assessments of around $20-30k. Buyers really needed to do their due diligence to figure out what was in progress BEFORE buying, so they could decrease their offer accordingly.
In another landmark example (Denver Area/Aurora, Colorado), a hail storm caused significant damage to condos' roofs. Insurance was available, but the condo association decided to hire a big lawsuit mill out of Florida to inflate the damage estimates and thus the insurance claim value. It later emerged that the condo associations' attorneys were in cahoots with the allegedly impartial public insurance adjuster, whose arrangement with the law firm resulted in his personal benefiting from a high claim value.
You can probably see where this is is going, but the condo association's insurance company realized something was wrong by the inflated claim amounts and started sniffing around after they paid the inflated bill. It turned out that the attorneys lied to the court about the impartiality of the insurance adjuster relationship. Two attorneys and the entire law firm with an advertised slogan of "Just Win, Baby," were sanctioned by the judge but managed to retain their licenses. The condo association was stuck with high costs of litigation AND storm damage recovery, which eventually was passed to condo owners (special assessments). The association had to pay interest at a court mandated rate on the funds returned to the insurance company too.
In these cases, the litigation with the association as plaintiff or defendant was well publicized in court records, and even in media.
These are all good examples why a condo or townhouse owner AND buyer needs to understand what is going on. Litigation is very expensive all around, and any "settlements" need to be known to understand what owners will on the hook for. A condo association or HOA owner is part of the corporation and subject to the liabilities of the condo/homeowner corporation, once the association approves special assessments.
http://johnsonstrategiesllc.com/wp-cont ... Owners.pdf
https://casetext.com/case/auto-owners-i ... ssn-corp-6
https://wtotrial.com/files/38237_vol96_ ... _final.pdf