I live in a condominium building that is currently controlled by the developer, although they do appear to be doing what is best for owners.
Several unit owners would like to make changes to the building, ranging from painting the walls a different color to hiring a more expensive cleaning service. They propose that these changes will result in a “small” special assessment for all unit owners.
A lot of “small” changes will obviously result in larger maintenance fees. What is the Florida law regarding the imposition of a number of small special assessments without a unit owner vote?
The Condominium Act does not provide any guidance with respect to the board’s authority to pass a special assessment, other than to specify that notice of any meeting at which non-emergency special assessments will be considered must be mailed and posted at least 14 days in advance; and the notice must state that assessments will be considered and state the estimated cost and purposes of the assessment. You need to look at the governing documents to determine whether the board has the authority to pass special assessments, and whether there are any restrictions on such authority. Most frequently, I see governing documents that give condominium boards broad authority to pass special assessments as needed when the regular assessments are insufficient to cover the association’s expenses. Sometimes, there are dollar limits on such assessments without membership approval; or other times there may be limitations on the purpose of the assessment without approval (for example, assessments for repairs and maintenance are allowed, but assessments for capital improvements require a membership vote). There’s just no way to know without reading your declaration and bylaws.
There is a provision in Section 718.112, Fla. Stat., stating that “if the developer controls the board, assessments shall not exceed 115 percent of assessments for the prior fiscal year unless approved by a majority of all voting interests.” This provision seems to refer to general budgeted assessments, but it’s conceivable that it might be interpreted to relate to additional special assessments, as well—and so this is something for the board to discuss with the association’s attorney.
Our manager in my condominium requires all contractors working in the building to provide a “certificate of liability insurance naming the association as additional insured and referencing the unit owner and unit number in the description” – no matter how small the project. Insurance companies charge the contractor from $150 to $300 for providing this service and the cost is passed on to the unit owner. It is my position that this is an unnecessary, punitive and arbitrary requirement for small projects. It places an unnecessary financial burden on the homeowner. It discriminates against the independent service providers. In addition, contractors who work frequently in the building for small repairs (i.e. plumbers, etc.), are allowed to provide this additional certificate one time to cover all of their contracts in the building.
Contractors carry their own liability insurance and unit owners carry homeowners’ policies. Of what value is a third liability coverage?
Is this an appropriate policy for a condominium? It is not specified in our documents or our rules and regulations – but it’s merely a policy instituted by management, and as far as I know without board approval.
First, what you’ve described is effectively a rule, and so I do think it should be formalized by a board vote. And, because it’s arguably a rule regarding unit use, my recommendation would be to pass the rule at a meeting noticed by mail 14 days in advance (as is required by the Condominium Act.)
It’s important to understand what being named as an “additional insured” means to an association, because I think most people misunderstand the impact of having such a certificate. The Association does not need to be an additional insured on a contractor’s insurance policy if it wants to file a claim against the contractor’s insurance because the contractor damages the building. It has that right simply because the contractor carries the liability insurance in the first place. Instead, from my discussions with insurance professionals, the two primary benefits are that being named as an additional insured may allow the association to invoke the contractor’s defense coverage in the event that the association is sued due to the contractor’s actions (which, frankly, happens all the time); and it ensures that the association will be notified if the contractor cancels its insurance coverage. Those are legitimate benefits, and they may very well be important to the association. Your point about small projects is certainly well taken, but keep in mind that even small projects can cause big damages to the building (a plumber screwing up a $300 repair can easily cause tens of thousands in damage to a property.)
I do think a rule requiring that all contractors working in the building to name the association as an additional insured on their liability policies would be valid and reasonable; but also, it would need to be properly promulgated if the association wants it to survive a court challenge.
Ryan Poliakoff, a partner at Backer Aboud Poliakoff & Foelster, LLP, is a Board Certified Specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff, pioneer of the community association legal industry, tireless advocate, and author of treatises, books and hundreds of articles. Ryan Poliakoff and Gary Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living. Email your questions to email@example.com. Please be sure to include your location.