Reserve Studies
What is a Reserve Study?
A reserve study is a 30-year plan that identifies a community association’s common elements (like roof, paint, fences, paving, etc.), assesses their current condition, remaining useful life and cost of repair or replacement. The reserve study provides a repair schedule and funding plan so the board can properly manage these assets.
How often should the Reserve Study be updated?
We recommend updating the Reserve Study at least once every 3 years. Many of our clients update annually.
Is a Reserve Study required by Florida law?
Currently there is no Florida laws that requires condominium or homeowners associations to hire a professional to prepare a reserve study. The board of directors is required to present its members with a fully funded reserve budget each year. A reserve study is the most accurate way for a board of directors to meet their fiduciary responsibility to the members.
Insurance Appraisals
How often does a Condominium Association need to update their Insurance Appraisal?
According to Chapter 718.104 Florida Statutes: Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal. The replacement cost must be determined at least once every 36 months.
How often does a Homeowners Association need to update their Insurance Appraisal?
There is no Florida law requiring HOA’s to perform an Insurance Appraisal; however, most Insurance Carriers will require an insurance appraisal or update of a prior appraisal at least every 36 months.
Who is qualified to perform an Insurance Appraisal?
An insurance appraisal can be completed by a variety of qualified insurance professionals, construction professionals and real estate appraisers.
What is the difference between a Real Estate Appraisal and an Insurance Appraisal?
A real-estate appraisal determines market value of the building, land, and site improvements. An insurance appraisal is the cost to reconstruct the building or site improvement at current prices using like kind and quality materials, construction standards, design/layout, and quality of workmanship. Insurance appraisals are not based on market value and do not include the value of the land.
What are insurance exclusions?
Certain items of insured property are either not insured or are specifically excluded from coverage depending on the particular terms of an insurance policy. The most common exclusions are: basement excavation; below grade foundations; underground plumbing, piping and conduits.
We are a condominium association, who is responsible for insuring unit owner air conditioning equipment?
In 2008 the Florida Legislature amended the insurance requirements for condominium associations in the Florida Condominium Act, Chapter 718 of the Florida Statutes. The 2008 amendment states that the association’s property insurance policy must provide coverage for all portions of the condominium property as originally installed or replacements of like kind and quality, in accordance with the original plans and specifications. The statute then goes on to carve out exceptions and require certain items to be insured by the individual unit owners. The items excluded by statute from the association’s insurable responsibility include all personal property within the unit or limited common elements; floor, wall, and ceiling coverings; electrical fixtures; appliances; water heaters; water filters; built-in cabinets and countertops; window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components; and replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit.
The outdoor and indoor air conditioning components are part of the “condominium property as originally installed” and are not on the list of “excluded items” and is therefore the insurable responsibility of the association. This is so even though many declarations define air conditioning equipment as “limited common elements” and require the owner to maintain, repair, and replace these items. That is one of the main sources of confusion. The duty to maintain, repair, or replace is set by the declaration of condominium, while the duty to insure and repair after an “insurable event,” or “casualty” is set by statute.
The outdoor and indoor air conditioning components are part of the “condominium property as originally installed” and are not on the list of “excluded items” and is therefore the insurable responsibility of the association. This is so even though many declarations define air conditioning equipment as “limited common elements” and require the owner to maintain, repair, and replace these items. That is one of the main sources of confusion. The duty to maintain, repair, or replace is set by the declaration of condominium, while the duty to insure and repair after an “insurable event,” or “casualty” is set by statute.
We are a condominium, why is the flood insurance value higher than the hazard insurance value?
The flood insurance value is based on the National Flood Insurance Program (NFIP) policy forms. A condominium association policy is written on the NFIP Residential Condominium Building Association Policy (RCBAP) which provides replacement cost coverage for ALL components of the building including the building's foundation and interior unit finishes. The hazard values do not include the building foundations or interior unit finishes which are the responsibility of each individual owner to insure. It is important to note the maximum coverage available on the RCBAP policy form is $250,000 multiplied by the total number of units. For example: a 10-unit condominium building would have a maximum insurable limit of $2,500,000 (10 x 250k).
Wind Mitigation
How often does a Windstorm Mitigation Affidavit need to be updated?
Windstorm Mitigation Affidavits must be updated every 5 years. The affidavit should also be updated if any material changes are made such as new roofing or new hurricane impact windows.
How long will it take to receive our report?
In most cases the report will be completed no later than 30 days from the day we receive a signed agreement; however, if the client fails to arrange and provide us with attic access the process could take longer.
Why do you need attic access?
The windstorm mitigation affidavit contains several categories for potential discounts. Some of these categories such as roof-to-wall connection, roof deck attachment and SWR will require our inspector to gain attic access to verify and document these features. The affidavit requires photographic evidence to substantiate the discount. If the client fails to provide attic access there may be a loss of potential savings. It is the responsibility of the client and/or manager to facilitate attic access. We will not go "door knocking".