The Sharper Focus - News for Association Members

September 2015 Resident Newsletter

Thank you for reading the first of what will be a quarterly newsletter to all homeowners in Associations managed by Sharper Management! The goal of this newsletter is to touch on general industry news and helpful topics that may help you better understand how Community Associations work.

Every Association is different in their type, size, scope and how things are organized and established via the Governing Documents. There are, however, a number of universal topics. We hope you will find this newsletter a valuable source of information!

Understanding Insurance in a Homeowners Association

Understanding insurance in a multi-unit dwelling/Association can be daunting. What does the Association's master policy cover? What does my personal insurance policy cover (usually referred to as an "HO6" policy)? Which policy kicks in for a particular loss?

Unfortunately, there are a number of variables that makes it impossible to give a universal answer to these questions. Here are some important concepts to understand.

Coverage - In general, the most important thing to do is read your Governing Documents (typically the Declarations) and try to understand what the Association is responsible for insuring. Does it say the Association will insure wall coverings, floor coverings, cabinets, fixtures, etc.? These are some common terms used to state it is an "all in" type of a policy. Another important distinction is whether the Association will or will not insure "betterments and improvements" or is it "original specs." If none of these items are listed, it may be stated or implied that the policy is a "walls out" policy and nothing on the interior of the unit is covered.

You should discuss with your personal insurance agent what the Documents state on insurance coverage. One of the first questions your agent should ask when writing your policy is to review the Governing Documents. It can also be helpful to call the Association's agent and verify what, in fact, the Association has for scope of coverage. Even better, tell your agent they should contact the Association's agent and "cross the T's and dot the I's"

Remember, the role of your HO6 policy is three-fold. 1.) at a bare minimum, to insure construction of the unit (sometimes known as "real property") up to the Association's deductible. 2.) to insure components of the property outside of what the Association's master policy covers. 3.) to insure your personal items/property. In short, understand the Association's insurance coverage and bridge all gaps with your HO6 policy. *** The amount of coverage to carry on an HO6 policy is completely subjective and up to you, as the owner. Again, at a bare minimum, you want to carry coverage up to the Association deductible on construction already covered under the master policy.

Loss Assessment - Another important aspect of insurance when living in an Association is "Loss Assessment Coverage." Again, read your Governing Documents. Some Association's legally require homeowners to carry this type of policy. Loss Assessment Coverage provides protection to the owner should the Association have a loss that exceeds the coverage limits of the master policy, or should/when the Association assess the owner for their share of the master policy deductible. Loss Assessment Coverage would help the homeowner with such an assessment. The amount to carry is very subjective and up to you and your agent to determine - but at a minimum, it should be equivalent to the master policy deductible.

Deductible - Which brings us to the last important component of Association insurance - deductible. It is very important to know what the Association's master policy deductible is. And to stay on top of it from year to year, as it can change. In most cases, the master policy will not kick in coverage unless a Loss exceeds the deductible. Your HO6 would pay if it is under the deductible. If the Loss does, in fact, exceed the deductible, you/your HO6 would be responsible for the amount up to the deductible.

For example - you live in a condo building and the master policy is an "all in" policy with a $10,000 deductible. There is a $15,000 water loss in your unit. Your HO6 policy covers the first $10,000 - while the Association's policy covers the remaining $5,000.

To Recap - read your Governing Docs to understand the Association's insurance scope. Talk in depth with your agent and the Association's agent, if needed, to develop an HO6 policy that bridges all coverage gaps and requirements. Consider carrying, if you are not already required to, Loss Assessment Coverage. And finally, stay on top of your Association's policy each years as it renews to make necessary adjustments to your HO6 policy.

Types of Association Meetings

As always, each Association will vary according to the Governing Documents. There are three common types of Association meetings. It is important to understand the differences and functions they serve.

Board Meetings - the most common type of meeting that many are familiar with. This is the regular business meeting of the elected Board of Directors. While they may be open to homeowners (especially if you are governed by MCIOA), it is important to understand that the purpose of these meetings is for business to be conducted among the Board of Directors, as they were elected to do. Each Association, of course, has their own policies and practices for homeowner engagement.

Annual Meetings - the second most common type of meeting. Most Associations are required to hold an "Annual Meeting of the Members." The purpose of the Annual Meeting, however, is usually very straightforward - to conduct business that requires approval by the members of the Association. Nine out of ten times that means electing members to the Board of Directors and approving the Minutes of the previous year's Annual Meeting. That's it. It is very common for homeowners to feel like an Annual Meeting is the forum to bring up issues or ideas. It is not. The reason why is that, according to most Governing Documents, voting on anything not included on the Agenda and/or Notice distributed prior to the meeting is invalid. Items brought before the membership for a vote must specified and given X-number of days advanced notice (the "Annual Meeting Notice").

Special Meetings - these are relatively uncommon. The reason a Special Meeting of the Members may be called is to vote on a unique or special initiative of the Association. Perhaps it is to approve a Special Assessment. Maybe it is called to amend the Governing Documents. Or the purpose may be to remove or install a new Board member(s). There are a number of reasons. Each Association has requirements for the role and Notice required for a Special Meeting. And similar to Annual Meetings, usually items brought before the membership for a vote must be specified on the Agenda and/or Notice of said Special Meeting.

Resale Disclosures

Are you selling your unit? You will reach a point in the process where you will need to order a "Resale Disclosure Package." This typically happens when you have a Purchase Agreement in place with a potential buyer. The potential buyer has a legal right to review the Association's Governing Documents, financial information, disclosure certificates, dues current information, etc. They have a 10-day period to do this. It is the seller's responsibility to obtain and provide this Resale Disclosure Package to the potential buyer. Contact Sharper Management when you have reached that point in your selling process and we will help facilitate getting you the disclosure information you will need.

Sharper Maintenance

Did you know that Sharper has a maintenance team available to service any of your home repair/remodel needs? Our team of highly skilled and General Contractor licensed techs are ready to tackle any project including plumbing, light electrical, drywall, heating/cooling equipment, painting or any type of general "handyman" job.

Contact Matt Froehlich with questions or to schedule. (952) 224-4777 or matt@sharpermanagement.com

Your Association Website

Did you know your Association has a website through Sharper Management? As a homeowner, you can access account information, pay your dues, submit maintenance requests, view the Governing Documents, stay on top of community news and more. It is a helpful tool for you and your community association! www.sharpermanagement.com

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