Condo Q&A: Also: How does assignment of benefits (AOB) work? And what happens if a director serving on a condo board is delinquent paying assessments owed to the association? Can they still serve on the board?
STUART, Fla. – Question: I recently had water leak into my home and the dry out company wanted me to sign a document assigning my insurance benefits to it. I declined, but can you explain what an assignment of benefits agreement is? – R.S., Vero Beach
Answer: When a person assigns property insurance benefits to a company they are allowing the company to “step into the shoes” of the policy holder/homeowner. This allows the company to negotiate the amount of the insurance claim and even sue the insurance company. Typically, the assignment of benefits contract allows the company to retain all the insurance proceeds as payment for its services. This type of agreement over the years has created a cottage industry for lawyers and contractors to sue insurance companies. However, after several attempts by the Legislature to reign in this problem, a law was passed as of July 1, 2019.
Florida Statute 627.7152 and 627.7152 now requires an assignment of benefits contract to provide that it may be cancelled by the assignor within 14 days of execution; at least 30 days after the date work is to commence pursuant to the agreement if work has not been substantially performed by assignee/contractor; or at least 30 days after execution of agreement if the agreement contains no start date and substantial work has not been performed.
It also requires pre-suit negotiation between assignee/contractor and insurer and provides for prevailing party attorney fees for both parties in any litigation. The assignee/contractor must also keep and provide detailed records supporting cost of work/claim. It requires insurers to inspect property after demand is made or waive its right to attorney fees; and it allows insurers to provide a policy that does not allow assignment of benefits if the insurer also offers a policy that does allow assignment of benefits. The restricted policy must provide the same coverage at a lower cost than the unrestricted policy.
It is expected that the use of assignment of benefits contracts will become much less common.
Question: What happens if a Director on the Board is delinquent in the payment of assessments owed to the association? Can they still serve on the board? – B.L., Port St. Lucie
Answer: Both the Condominium Act and the Homeowners Association Act provide that if a director becomes more than 90 days delinquent in the payment of any monetary amount owed to the association, he or she is automatically removed from the board. Thereafter, the remaining board members can vote to fill the vacancy and there is no obligation to reappoint the removed director even if he or she pays the money owed.
Note that the law applies to any “monetary amount” so it is not just applicable to past due assessments.
Question: Has the law changed on the fire sprinkler retrofit requirement for high rise condominiums? – J.M., Fort Pierce
Answer: Yes. Section 718.112 of the Condominium Act was amended as of July 1, 2019. It was clarified that a high-rise condominium building is a building where the highest occupiable level is greater than 75 feet measured from the lowest level of fire department access. High rise condominiums must comply with fire sprinkler retrofit and Emergency Life Safety System (ELSS) requirements of the Fire Code by Jan. 1, 2024. The compliance date used to be Dec. 31, 2019, but it has now been extended.
Additionally, the ability to opt out of the fire sprinkler retro fit requirement which expired on Dec. 31, 2016, has now been reopened. So, a high-rise condominium may still avoid having to meet the requirements for fire sprinkler retrofitting if a majority of the total voting interests vote to “opt out” before Jan.1, 2024.
NOTE: The new law still does not allow an Association to opt out of complying with ELSS requirements which may themselves still require fire sprinklers depending on the design of the building.
Richard D. DeBoest II, Esq., is co-founder and shareholder of the Law firm Goede, Adamczyk, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross, PLLC., respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning and business law.
© 2019 Journal Media Group, Richard D. DeBoest II