Condo dwellers smacked with skyrocketing insurance premiums

Live in a home governed by a condominium, co-op or homeowner's association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.

Due to holiday scheduling, the following column is a re-run from June 2022.

Question: Recently I received a notice from my condominium association that there is a $500,000 shortfall in the budget related to our insurance premiums. Starting next month all unit owners will be charged a certain percentage to cover this shortfall. To me this seems not quite right, since we all have paid association dues monthly as expected--how can they now come back to us to charge us more than they were charging us to begin with? Am I wrong on this? It seems like a scam to me. Signed, R.B.

Dear R.B.,Due to a number of market factors, including the Surfside tragedy (the collapse of Champlain Towers South), many insurers have left the Florida market, and the cost of insurance has gone up dramatically. Many of our clients have reported premium increases of hundreds of thousands of dollars.

So, if your insurance renews in the summer, what you described is not at all surprising (I have heard multiple reports of similar increases). The association has a statutory obligation to carry insurance, and they have to pay for that premium increase somehow-- the only solution is to raise your assessments.

This can be accomplished in one of two ways. Either the board can amend the annual budget and collect increased assessments for the rest of the year (which is what it sounds like is happening in your case), or the board can pass a special assessment to collect sufficient funds to cover the shortfall.

You can certainly request to review insurance-related association records, including the cost of the prior policy and quotes and correspondence from the insurance company. This will allow you to confirm the validity of the increase. With that said, there is nothing in your question that is particularly surprising to me, and I have no reason to believe this assessment increase is a "scam."

I will note that some condominium governing documents contain limitations on the board's authority to increase the budget or pass special assessments without membership approval, so that's worth considering.

However, it's unclear what would happen when one of these restrictions conflicts with the statutory obligation to carry insurance. Would an affected association be required to gut the rest of its budget to pay for the increased cost of insurance? Would they stop maintaining the landscaping, or fire the cleaning crew?

The association has an obligation to maintain the property, too! Hopefully the membership will be supportive of the board and respect that the board has no option but to secure appropriate insurance, despite the staggering increase in cost.

Question: My question relates to the length of time that a director can serve as a board member. Is there a condominium law restricting the number of years that a member can participate? Our board president has been on the board for over 15 years and he has served as the president for the past 10 years. As he ensures the other board members are his friends, he runs the association as his own business and owners have very little say. He approaches owners and tells them whom to vote for, thus we can't get new members on the board. The management company he picked has made many questionable decisions under his direction.

Our condominium association will be electing new board members in November. What can the unsatisfied owners do to make a change for the better? Signed, K.C.

Dear K.C.,

In your question, you say that "owners have very little say." In fact, owners have the ultimate say -- owners choose the board members. You say that this president has ensured that the entire board is made up of his friends by telling the owners whom to vote for.

Of course, he can't really force the owners to vote for anyone; and so to the extent that they are voting as he requests, they are actively supporting the way he and the board operate the association. Likewise with the management company -- while you describe them as having made "many questionable decisions," ultimately those are board decisions, as they were either directed by or accepted by the board (or, the board is knowingly allowing the president to make all of their decisions for them).

You, unfortunately, appear to be in a minority in your building. Unless the board is violating your governing documents or state law, you find yourself in a position where you simply disagree with the business decisions made by the board.

So, your only recourse is to make your case to your neighbors and hope to convince enough of them to replace the board with new members who share your view of how the association should be operated.

Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. 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 condocolumn@gmail.com. Please be sure to include your location.

This article originally appeared on Palm Beach Post: Insurance premiums skyrocket. Condo owner asks what now?