Legal Expert Discusses Skyrocketing Condo Insurance, New Boarding Laws

I play

HOAs: Yes or No?

Despite the pandemic and huge unemployment numbers, the US housing market is still booming. If you’re in the market for a new home, one thing to consider is whether you want one that’s part of a homeowner’s association or HOA.

I’m watching

Do you live in a home managed by a condominium, cooperative, or homeowner’s association? Have questions about what they can and can’t do? Ryan Poliakoff, a Boca Raton attorney and author, has answers.

Beginning this year, a new federal law will require volunteer board members to provide significant information to the federal government. On January 1, 2024, the Treasury Department began accepting beneficial owner reports under the Corporate Transparency Act (CTA). The CTA was enacted in 2021 to address corporate fraud; including tax fraud, money laundering and the financing of criminal enterprises.

Affected businesses (which include most public associations) must submit information about any person who has an ownership interest or control over the company. This will include corporate officers, but realistically includes all directors.

No later than the end of the year, your community association will be required to submit a beneficial ownership report, which will include information such as directors’ names, birthdays, home addresses and identification such as a driver’s license, state ID or passport. All persons with significant control over the corporation must be listed on this report.

More ▼: A resident drives around a property in an unmarked car, with a camera, looking for HOA rules

It is currently unclear whether this will include property managers – a difficult question that lawyers for community associations and management companies will have to assess. Willful reporting of violations carries significant civil and criminal penalties.

Anytime there is a change in control group or information regarding any of the “beneficial owners,” the corporation will have 30 days to correct or add to the report. For example, every time there is an election, this information will need to be updated. Or, every time a board member moves their primary residence or gets a new ID, the association will need to update the report as well.

Clearly, the law is not intended to apply to corporate entities such as condominiums, HOAs, and cooperatives. Charities are exempt from the law – but public associations, although not for-profit corporations, are still subject to its requirements.

While various trade groups are trying to either get clarification on community association registration requirements or lobby for changes to the law, there’s no way to predict whether any amendments or clarifications (if any) will occur before the Jan. 1 filing 2025 deadline.

So until something changes, all community associations should plan to file a beneficial ownership report before the end of the year.

A question: I currently live in an apartment that has seen two major increases in our insurance rates, without a breakdown of our coverage. I wonder if I can ask for a breakdown of the coverage so I can determine where the extra costs are coming from.

As a layman, can I contact insurance companies and get quotes? I am licensed in property and casualty insurance as well as life and medical insurance. I

in the last 6 months the HOA claims we have had a 185% increase in our insurance alone and the average increase in the Florida HOA market statewide is only 35% on average. This seems like a serious discrepancy and I’m looking to see what I can do. Signed, DP

Dear DP,

Your insurance policies, now and for the past seven years, are all records subject to inspection. You can ask to view and copy them and get all the coverage information you need. You can also ask to check the correspondence between the insurance agent and the property manager.

My clients have had gigantic insurance increases. While I take your word for the statewide average increase, I don’t know if I have a single client who only got a 35% increase. I have quite a few that have gone up 100% or more.

Remember, condominium and HOA insurance is nothing like home insurance (although those rates have gone up quite a bit as well). There are only a few insurers willing to write HOA policies in the state, and there simply isn’t much comparison shopping that can be done.

You say you are a licensed agent, but then ask if you can contact insurance companies as a layperson. I’m not sure how this would work, but you also shouldn’t pose as a representative of your HOA, licensed or otherwise. Most insurance companies will only speak to the registered agent for a particular community; or at least someone who represents that they are authorized to shop for insurance on behalf of the HOA.

You are playing with fire to call and state that you have the authority to solicit bids on behalf of your HOA. Instead, I suggest you compare policies first and then prepare an analysis for the board, breaking down the coverage and how you think they can save. You may choose to reduce coverage in ways the board doesn’t support – and that’s just a matter of policy, not something they’re doing wrong.

Ryan Poliakoff, partner at Poliakoff Backer, LLP, is a certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Polyakov. Ryan Poliakoff and Gary Poliakoff are co-authors of New Neighborhoods – The User’s Guide to Condominium, Co-op, and Apartment Buildings. Email your questions to [email protected]. Please remember to include your location.

Leave a Comment

Your email address will not be published. Required fields are marked *