New England Condominium February 2020
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February 2020       NEWENGLANDCONDO.COM  Removing a Condo Owner  Points of law on this subject are consistent from state to state,   with only slight variations. The important distinctions relate to   who is being removed; the actual owner of a unit, or that owner’s   tenant.  In both cases laws are consistent on the most basic mat-  ters, with slightly differing approaches and nuances in some states’   statutes.  175+ EXHIBITORS, SEMINARS,   FREE ADVICE & NETWORKING  NEW ENGLAND’S BIGGEST & BEST    CONDO, HOA & APT EXPO!  SEAPORT WORLD TRADE CENTER — TUESDAY, MARCH 31, 10–3:30    FREE REGISTRATION: NE-EXPO.COM  205 Lexington Avenue, NY, NY 10016 • CHANGE SERVICE REQUESTED  continued on page 14   THE CONDO, HOA & CO-OP RESOURCE  CONDOMINIUM  NEW ENGLAND  One of the unique aspects of life in a co-  op or condo is that a building or HOA is in   many ways a microcosm of the larger world   outside. It can suffer from the same faction-  alism and partisan bickering as any political   entity, only on a much smaller, more inti-  mate—and therefore potentially more dam-  aging—scale. Conflict and divisions in co-op   and condo communities can and often do   bleed into the community’s administration:   the manager and board of directors. Even a   seemingly minor conflict can upend a resi-  dential community if it’s not dealt with dip-  lomatically—so boards and managers must   be prepared to step up, step in, and do their   part to defuse such issues before they turn   into something worse.    Board Obligations  Michael Davidson is the president of   BoardCoach.com, a Manhattan-based com-  pany  that  specializes  in  nonprofit  board   development and management support,   including coaching. Davidson explains that   board members of nonprofit entities (includ-  ing co-ops and HOAs) have three main du-  ties to which they must adhere: “The duty   of care, the duty of loyalty, and the duty of   obedience.”    With regard to the first, the duty of care,   “Board members must basically understand   what’s  going  on  in  terms  of  the  building,”   Davidson says, adding that their primary re-  sponsibility is to make sure the property is   well and effectively managed.  The second duty, the duty of loyalty, “Re-  If a rental tenant defaults, persists in violating rules, or breaks the law, they can be   evicted from their unit. It can certainly be a drawn-out, acrimonious process, but it’s more   or less routine. While much more rare – and more complicated – it’s also possible to termi-  nate a co-op shareholder’s proprietary lease and compel him or her to vacate the building   for compelling financial or administrative reasons.   By contrast, removing a condo owner from a building or association and effectively   wiping out his or her equity position as a member of the community is extremely difficult,   and subject to very narrow legal interpretation. For example, while theoretically a co-op   shareholder could be evicted from residency for non-monetary defaults, the same is virtu-  ally impossible in a condominium. Condos are pure real estate, not shares in a cooperative   corporate entity.  As a matter of fact, from a legal standpoint, the word ‘eviction’ cannot   be used in reference to removing a condo owner (though it can be applied to removing a   rental subtenant in a condominium unit—a point we will return to later.) The closest we   can come to a legally recognizable term for this type of action in a condo association is   removal.  Insurance is cyclical; there are hard mar-  kets and soft markets, and insurance com-  panies typically make money in two ways:   underwriting profit, and investment income.   When the market is soft, insurance companies   are looking for market share, so they lower   their premiums and relax their underwriting   guidelines, which allows them to write more   business. New carriers or programs enter the   marketplace and charge lower premiums to   gain market share, which reduces premiums   further. Insurance companies can afford to   charge lower premiums, as they typically are   making a nice bang for their buck via invest-  ments.   In a hard market, it is the opposite. When   the market is hard, insurance companies are   not making money by investments, and losses   start adding up. This makes them unprofit-  able at the premiums they are charging, so to   become profitable, they raise premiums. They   also tighten their guidelines to try and write   only preferred risks, which limits the number   of companies the “average” association can get   a quote from. Sometimes they add exclusions   to restrict coverage. To make matters worse,   some carriers or programs simply stop writ-  ing insurance during this time, so there are   fewer options for community associations.   Hard Times  We are currently in a full-blown hard   market, one of the worst I have seen in my   25 years of being in the insurance industry.   What is contributing to this?  In the property arena, natural disasters   such as hailstorms in the South and Midwest,   wildfires in California, various hurricanes,   flood and water issues in a number of states   have resulted in billions of dollars in losses for   insurance companies. Because of this, they   are purchasing more reinsurance – which is   insurance that insurance companies buy. So if   Condominium    Owner Evictions   Handling a Tough Legal Situation   BY A J SIDRANSKY  Managing Conflict  When Boards and Residents    Take Sides  BY A J SIDRANSKY  Parsing the   Insurance Market  Understanding What the   Current Cycle Means to You  BY ED MACKOUL  continued on page 15   continued on page 17 


































































































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