The Smart Board & Property Manager Legal Guide: The Triple Blows Of 2024 - Recovering From The Hurricanes Debby, Helene And Milton
Jon Lemole, Esq.:
All right, well good morning. We're going to get started. Thank you everybody for joining us today. It's been a tough last month or month and a half, two months with the triple whammy of Debbie and Helene and Milton. And in our general counsel practice at Tannenbaum, Lemole & Hill, we're certainly keen and attuned to those issues because we've been getting, as you can imagine, a flood of calls from our clients about how to handle these problems.
So today, we're going to talk about some of the issues that you're dealing with in recovering and dealing with the aftermath of the very active hurricane season that we've experienced here in southwest Florida.
My name is Jon Lamole, I'm a partner at Tannenbaum, Lemole & Hill. Our firm is a full service community association firm. We are general counsel to probably around 225 community associations. And a sub area of our practice also includes construction claims, construction defect litigation, repair, major repair and maintenance contract consulting. And so for a variety of reasons, our firm is well positioned to handle the typical needs of a condo association and homeowners association in Florida.
So our agenda today, and if you give me a second, I'll get to the next screen. We're going to talk about five main areas and they will be handled mostly by my colleagues at the firm who I neglected to introduce. So let me do that real quickly. Now with us today is my partner, Alan Tannenbaum, my partner, Cindy Hill, and Associates of our firm, Jim Turffs and Jennifer Hicks.
So we're going to cover emergency powers, so both statutory and otherwise. The next thing we'll cover today is insurance issues. What coverages and deductibles may apply with respect to your claim, not only for hurricane damage but for other types of damage you may experience in your communities. We're going to talk about mitigating damage in your duty and obligations and good practices in relation to mitigating damage while protecting your insurance claim. We will talk about who are the folks that you should reach out to and seek counsel from and or retain to assist you with your claim if you indeed have a claim.
And then probably something that you're all seeing right now, they come out of the woodwork when there's a major storm event in Southwest Florida, and all of a sudden you're getting flooded with roofers and water mitigation contractors and other vendors who all want a piece of your business, your repair business. And so we're going to talk a little bit about vetting these folks and what are some of the things that you should be insuring are in those repair contracts when you are contracting with these folks.
So the first place we're going to start today, and I'm going to turn that over to Jennifer Hicks. And Jennifer is going to talk about the idea of emergency powers. What are some of the things that condo associations and homeowners associations have the authority to do and when they have the authority to do that in regards to emergency situations. So with that, I will pass it over to Jennifer.
Jennifer Hicks, Esq.:
Thanks, Jon. So as you can see, or as Jon stated, there are specific powers listed in both the Condominium Act and the Homeowners Act regarding what boards can do a little bit outside the normal for situations where a state of emergency has been declared. Now that is probably the biggest key of this. If there is no state of emergency, these powers do not apply. And at this point, Helene, we are still under a state of emergency for Helene until November 22nd, and we are under a state of emergency for Milton until December 4th. So your certain requirements for conducting board and committee meetings are suspended. Now that sounds great. However, they did not update the emergency statutes after the newest legislation. So certain requirements like the requirement to attach contracts has not been adjusted and is not addressed. And obviously that's for condos only.
You can cancel certain meetings. You have the right to sign debris removal contracts, you can implement emergency plans, you can mitigate your common area damage. And for condos, Deb, as we were saying to you, you do have the right, an extent of a right to mitigate within the unit. HOAs, regardless if you're a duplex or a townhome, you do not have the right of entry for mitigation. You can shut down certain services and deny access in certain situations. You can levy special assessments, you can borrow money. And there's a limited time to mitigate and conduct these repairs. Now these are not free rides, so if you were one of the lucky ones and you have no damage from these storms, these powers aren't for you. These powers are for those who your buildings or your communities lost power a significant time, you've got significant damage or for the meetings, especially if a lot of your residents are out of town. So if everyone evacuated, this is when you're going to start looking at these. If you were without power for a couple of weeks or you have significant damage, that's when you're going to start looking at these. It's a lot of common sense.
Jon, if you go to the next slide, I think it's the condo statute specifically. So really tiny, it is in the statute, you can find it. The next statute is the HOA statute. The other thing you need to know is a lot of association documents, or at least some were drafted with additional emergency powers in your bylaws. So certainly make sure to take a look at what your own documents say, and we really strongly recommend you get with your counsel, make sure you are acting correctly under these powers that do apply to you. And also, you make an emergency plan so you're not scrambling next time this happens. And I think next is Cindy with the deductibles.
Jon Lemole, Esq.:
Yes. We're going to pass it over to Cindy and Jim and they are going to talk about insurance issues, coverages, coverage issues, and deductible issues. So we'll start with Cindy.
Cindy Hill, Esq.:
Okay. I want to start with, there was a question that was responded to by Jim Turffs in the chat, but it asked about insurable events. Insurable events is really more of a term that's used for condominiums, but the concept is very similar in that whatever provisions you have in your documents regarding maintenance and who's responsible for maintenance, whether it's unit owner or lot owner or the association, can be very different Under insurance. When there's an insurable event such as a hurricane, a flood, a water leak, a fire, the provisions can very much change. And it's statutory for condominiums, it's not statutory for homeowner associations. So we've been getting a lot of questions, particularly from our condominiums. Why is it for instance, that we have to repair a unit owner's air conditioner when that's their problem, not ours. And I'm paraphrasing it's not quite like that, but the answer is because the Condominium Act requires associations to insure air conditioning units.
So some of these provisions aren't necessarily going to line up with what you're used to in your community. Some of them might not even make any sense. So it's very important for these issues that you are getting the right guidance from your insurance agent, your counsel, as needed to understand the different provisions. Your owners are going to be confused as well. They're not going to understand some of these provisions either. So just be ready for that, be ready for the fact that these events are already as stressful. It's already very stressful to prepare for a hurricane, to have it come, to have it make damage, to be without power. It does lead to some owners doing what was discussed before the presentation started, actually telling the association they can't come in their unit, they can't do things. Why aren't they doing things fast enough? Is the flip side of that one. Who's going to pay for all this? What is all of this? There's a lot of stress involved with this. So going back to what Jennifer suggested, having a plan in place for the next event, and let's hope you never have to use it, really is a good way to go.
With that opening, there is a difference between wind coverage and flood coverage. Flood coverage is something that is, it has more FEMA involvement is how I'll put it. We're not going to delve into the details of that, but with flood, you do have some FEMA involvement in a way that for wind coverage associations do not get FEMA cleanup help with that, the way that the rest of the neighborhoods in the community can get. And again, I'm summarizing, there are some exceptions.
What was also discussed briefly before we started was a high percentage for deductible. That's been rather shocking to some associations to find out that their building that's insured for 20 million, let's say, they have to put out a 5% deductible for that value before they get coverage. All I can say about that is it's like insurance for any event you have, car insurance, home insurance, condo insurance, whatever your insurance is, make sure you're sitting down with your agent annually and going over the coverage so that you do not get a shocker, so to speak, that you do understand what you've agreed to. And maybe even prepare for the event that you're going to need these deductibles and this amount of money. Some of the suggestions I've heard for that are to have a line of credit ready. Go ahead and work with your association banker and be prepared to have some cash on hand for these issues.
Alan Tannenbaum, Esq.:
Cindy, I think it's typical, when you have deductibles for wind coverage. It's generally a percentage of the replacement value of the condominium property or a particular building. What I've seen with the flood coverage is deductibles are usually a stated dollar amount. So we have one condo association that has villa buildings and also a couple multifamily buildings. The deductible for the flood coverage is $10,000 per building. And it creates an anomaly in that particular association because these individual villas have a $10,000 deductible, but the entire building and the multifamily building has a total $10,000 deductible for the entire building. So the way the deductible is written in a flood policy versus a wind policy is different.
Cindy Hill, Esq.:
Yeah, no, that's a very good point, Alan. And it also adds to the confusion. I will also say that flood coverage is different from your wind standard property insurance coverage. Some associations don't have flood coverage. If you're on one of the barrier islands, you really should have flood coverage. But if you're three miles inland, maybe you don't have flood coverage. So this is another thing you want to discuss with your insurance agent, as we are getting these historic floods, as we are getting these historic events that are taking place with storms, should you have flood coverage. And understand if you have different buildings on the properties, Alan just described, there could be different coverage, different levels. You really do want to sit down and make a plan. So thank you for that, Alan, because flood coverage is something that it can be very confusing. And I will add that to the extent water has come in, it could be wind-driven water or it could be flood water. These are all conversations to have with your insurance agent. We can't go down quite that path right now, but be informed is really what I'm saying about that.
So even though we're only going to be at C here, if you go to the next slide, Jon, for wind coverage, this is just an example of how the wind coverage works for the insurable events, as I was just discussing as opposed to regular maintenance. Associations, of course have to insure, and this is for condominiums by the way, although the similar concepts do apply to HOA. Association, of course, have to insure the common areas, the hallways, the lobbies, the gym, the recreational areas, the building structures, and again, some of the unit owner responsibilities are included in the association's insurance responsibilities, such as I mentioned earlier, the air conditioning.
A common one is drywall, to the extent drywall inside of a unit. You might think, well, that's the owner's responsibility. Well actually the association has to insure for that. And part of the advantage of that is that drywall is one of the worst places to create mold after a storm. So having the association step in and get that drywall move, start drying it out, start doing what needs to be done for mitigation, really benefits all the unit owners. And that's one of the things that unfortunately some of the angrier and more confused unit owners who are hostile to this process are missing the boat on, getting the integrity of the building solid and getting mold dealt with quickly is very advantageous to the entire building.
In contrast, owners have to have, in condominiums, what is rather analogous to rental insurance in terms of you need to insure your own furniture, your own possessions, your personal belongings, also the association extent it does have a responsibility for drywall, not for the wallpaper or paint on the drywall, not for floor coverings. So it's very advantageous for unit owners to also have their own insurance for their possessions and their interior. You will see there's a little note here at the bottom that there can be different provisions and documents. If you are a Villa-style condominium, there could be some different provisions. So these are, again, we're hitting the highlights of these issues. They get very complex. I can't emphasize enough, having a conversation with your insurance agent and your general counsel is very important, but we are raising these issues to assist with the better general understanding now that we have been through three storms, unfortunately, in this area is
Alan Tannenbaum, Esq.:
Cindy, we should mention with townhome communities that are under HOA regime, and we've written about this and discussed this, that the insurance industry still hasn't figured out what to do with let's say connected townhomes that are under an HOA regime as far as insurability is concerned. And you still have situations where there's six connected townhomes and you have six different insurance adjusters trying to adjust that claim that covers each of the individual townhomes. So that issue still hasn't been figured out and causes a [inaudible 00:15:35] coverage problem.
Cindy Hill, Esq.:
It's a very good point, Alan, because it does confuse everyone involved in terms of the volunteer board and the owners trying to figure out, well, what applies? And then you get some folks who think maybe the Condominium Act applies because there's... No, if you're an HOA, it's going to be your documents. So Alan's point really raises for HOAs in particular, you need to sit down with your general counsel and your insurance agent and make sure you understand the arrangement for your community.
And with that, I'll turn it over to Jim to discuss flood insurance.
James "Jim" Turffs, Esq.:
And I'm going to speak fairly briefly about flood insurance and that's because flood insurance is optional under the statutes. As where you have mandatory liability coverage, Chapter 718 says that an association may obtain and maintain flood insurance for the common elements. So not all associations carry it. When you do, you're typically going to find coverage through a FEMA-backed flood program. It is the Residential Condominium Building Association Policy. Most insurers who are going to be offering condo flood policies are going to be using that FEMA-backed program, as its policy design.
It's only going to apply to buildings that are at least 75% residential. So mixed use buildings that have a larger commercial sector probably aren't going to get flood coverage under this. And whether that flood coverage is even going to be available for those buildings is going to be a separate and independently addressed the issue, I suggest you're probably not going to find it. But as for flood coverage that's extended to condominiums residential, your policies are usually going to cover, like I said, just the common elements. You're not going to get too deep into elements found within a unit unless it's a common element. So what you'll see from the FEMA-backed program is typically coverage for staircases, water heaters, electrical systems, central air systems, foundation, structural walls, well water tanks and pumps that are responsible for pumping clean water into the building. And there will be some limited contents coverage that might be available. Your common elements have, if you have carpeting installed in the common elements or if you have permanently fixed bookshelves, stuff like that may be covered under a smaller contents portion of your flood coverage. But by and large, the theme there is these are all the common elements that you're going to get. Anything that serves multiple units, that's where you're going to start seeing your flood coverage apply.
Under the FEMA program, your premiums are going to be pretty strictly mandated. There are a couple tiers of premiums that are offered and it's going to depend on the value of your buildings and some inspections, pre-insurance inspections and they'll determine which category your building falls into and you're going to end up with what is basically a preset premium and a coverage limit. The final thing I really want to point out here is that while the statutes don't mandate coverage for flood, your governing documents can always do something a little more. So it's also important to review your governing documents and make sure that when your condominium was first incorporated and your documents drawn up, the developer or subsequent board didn't manually input an obligation to make best efforts, at least, to obtain flood insurance or something along those lines.
So be on the lookout for that. And anytime you're looking at a flood policy, you should be working with a well-qualified adjuster. And again, condo flood insurance is not quite as broad an area as some others. So you need to find somebody who's familiar with that. And of course working with council is going to help you verify what sort of coverages you need, what your obligations are, and they can at least help you review that policy and make sure you understand it. Because again, as has been mentioned twice already, figuring out what percentage deductible you're facing is going to be key in understanding that coverage. And you may not want to bank too heavily on your flood policy. If you have a higher deductible, you may want to start reserving for those things maybe separately or making sure you have a well-funded catch-all reserve item to help deal with unexpected costs that aren't covered by your flood policy.
Jon Lemole, Esq.:
All right, thanks Jim. So even in the best of circumstances, we all know that when you make your insurance claim, it does take some time for your carrier to respond. Certainly they try to respond a lot faster during an emergency situation like with hurricanes, but in a non-hurricane or a non-emergency situation may take a little longer. And the dilemma here is you may have damage or conditions that need to be addressed right away. And so as that claim is progressing through the institutional claims process, Alan's going to talk about what can you do and how you should do it in terms of mitigating damage, while at the same time protecting whatever claim you may have against your, vis-à-vis, your carrier.
Alan Tannenbaum, Esq.:
Yeah, let me first clarify from Jim's comments that a typical flood claim, at least for a condo is going to cover a certain extent of the interior damage within the unit. So your flood insurance claim is not only with common element, but if water comes through into a unit that damage at least a portion of the damage is also going to be picked up under a flood insurance claim. If a homeowners association has flood insurance, it's an interesting issue and I'd like to hear some of the insurance experts about how much within an HOA that interior damage is going to be picked up by the flood insurance program. And I think even in an HOA under those circumstances that it would.
So the issue about mitigation of damages, it's twofold. Number one, you want to get the problems under control, you want to get people back into their units, you want to mitigate against mold and damage, but you also want to protect that insurance claim. And we've been dealing with first party insurance lawyers about the challenges in getting a flood insurance claim adjusted. There's very particular requirements about the type of documentation that these adjusters are, for the carriers are looking for, what has to be in the invoicing in order for a particular invoice to be paid, like both invoicing is rejected, there has to be specific line items and amounts as to each portion of the invoicing.
They will pay certain standard amounts for let's say cabin tree and so forth that's damaged but not an accelerated amount. So there are standard amounts that have to be done. And what is occurring, we've seen it already in groups that we represent, is somebody's getting in there to do the dry out repairs, sometimes that the behest of a particular owner. The owner thinks well the flood insurance coverage is going to correct it or is going to pay for it. And what they've actually done is undertaking work and undertaking repairs that are actually not going to be compensated as a result of the quality or the type of work that's been done. So most of the first party insurance lawyers have advised us that they would prefer that the dry out and repair procedure that's going to affect individual unit owners if they anticipate getting coverage under it, should actually be undertaken and directed by the association through contractors at the association retains. We have advised owners under those circumstances that if you do it on your own, we can't guarantee that those costs are going to be compensated.
So our advice generally for interior damage, that's a result of flood. And it would apply to wind also that the association actually undertake the step of doing the dry out on repairs. And that's a source of contention because especially in rental types units, owners want to get in there and get their units rented as quickly as possible, but it's really causing problem for the flood claim.
Under the flood insurance program, there is an initial payment that you can get that pertains to dry out and temporary repairs, but again, the documentation has got to be an appropriate condition in order for the flood insurance property to acknowledge it. So we were actually dealing before we started the program with the issue of uncooperative owners. So somebody indicated that there was a situation that they have an ongoing situation where there was a roof failure as a result of the storms. Water got into the top floor unit, maybe a unit below that, and the top floor unit owner was not allowing the association access to do any mitigation. And the concern was the potential for mold, certainly other water damage that occurred to the unit.
And the issue was what power does the association have to, number one, make access, and number two, control the work that's being done in the unit. And under the Emergency Powers Act that we talked about before, there is a state of emergency partly in Florida, which gives the association the right of access in order to undertake those repairs. Now, you can go to court and try to get a temporary injunction if you can get service on that honor, but the Condominium Act has a specific statutory section that allows associations to make access into condominium unit in order to undertake repairs. And if you combine the powers that exist under the Emergency Powers Act, with the existing provision of the Condominium Act, it is likely the time to be very proactive about entering into a unit, with notice to the owner, and maybe taking a videographer with you so that there's witnesses to what has occurred and go in and protect the property. And we've had circumstances where we've had a locksmith go in and actually make entry into the unit. Sometimes law enforcement has to be notified in case there's an alarm that's connected with that unit that in order to protect the property that there's access being made into it.
Communication is a key to try to let owners know exactly what the plan of action is, to ask them for patience. The purpose of a condominium and homeowner association we've talked about this is really for the long-term interests of the property. And somebody's having a panic and it's understandable that they can't rent their unit or their unit's not livable. They're going to have a heightened sense of concern. But the association has got to operate prudently for the long-term interest of all the owners. But it's a challenge. People are under a lot of stress, there's a lot of disinformation, and so dealing with these folks is difficult. But again, you don't want to destroy your ability to make collection on the claim. And adjusters are looking for opportunities to either mitigate or deny a claim. And owners acting on their own is a particular reason why that may occur, so.
And one of the things we haven't discussed is whenever a statute or a document creative power, it also comes with the responsibility. So I could see an owner when there's not an effort to properly mitigate coming in and saying, well, you had the power under this Emergency Powers act and the association didn't undertake it and therefore created a duty. The same argument that we've made with a hot water heater in a condo unit is water's overflowing. And you have a board who says, well, we want to wait until we can contact the owner and meanwhile, three days of water damage may be occurring. And we often advise those groups that since the legislature gave you the power to make access to the unit in order to undertake repairs, it also creates a duty to utilize the power that you have in an appropriate fashion. So along with power comes obligation. And that should be considered.
Go on the next section, Jon.
Jon Lemole, Esq.:
Yeah, so next section. I think Alan's covering this as well, and I talked about it at the very beginning, our opening remarks and typically during these types of emergency situations, all of a sudden you managers and board members are getting besieged by various people who want to help you with your situation. So Alan's going to talk about the folks that are really essential to dealing and recovering from a major storm event or events like we've had.
Alan Tannenbaum, Esq.:
So what has already happened, it's pretty typical of storms, is typical storm storm occurs and somebody shows up at your property and they have their brochure and they're a mitigation company or a contractor and they're going to come in and take care of your problem. And we've seen some of the contracts, there's a two-edged sword. It's great to have people coming in offering their services if they're capable of doing the work. It's important to get in there very quickly and do the dry out. So it's very attractive to give consideration to these folks who come around.
But part of your need is again, you want to protect that insurance claim. And there may be things that these contractors are doing, by way of not adequately documenting, charging for things that are not going to be reimbursed under the policy that are going to negatively impact the claim process and that has to be considered.
Now, it used to be before they were outlawed is these contractors would provide what's called an assignment of benefits where they would actually be the ones who'd be making claim against your insurance policy. And if there was litigation that had to be filed, it would actually be filed in the name of one of those contractors under the assignment. Those are now outlawed in Florida. But some of these contractors have figured out alternative means. And you may be confronted with something called a direction to pay. And this is a document that let's say an association is asked to sign, doesn't assign the benefit, but it tells your insurance company that if they do issue payment under the policy that it either has to be by joint check or directly to the contractor, gives the contractor substantial leverage to control the actions of your insurance companies. And the insurance companies we've noticed really like those because if the association gets into a dispute with the contractor, until that's resolved, the insurance company is sitting on the claim money. So we've advised groups be very wary of signing a document called a direction to pay because it has a lot of the detriments that were typically there under assignment of benefits, so be careful.
Jon Lemole, Esq.:
Alan, another thing that we've seen recently, you and I talked a little bit about it the other day, is the in connection with direction to pay or maybe even separate from direction to pay. We see these vendors putting into the contracts, these language in regards to the association being a trustee of insurance benefits and holding benefits in any payments in trust, which is similarly concerning because that creates a very different duty on the association in regards to some fiduciary obligations that also makes it much harder to deal with those payments if there are maybe perhaps multiple places where the payment may need to be directed. So that's another thing to take a look at or be wary of and if you see it and get legal counsel on.
Alan Tannenbaum, Esq.:
Thanks, Jon. The next section I want to talk about public adjusters. So the legislature pretty frankly attempted to destroy the public adjusting industry through the adoption of this public adjuster statute. And we've attached it, I'm not going to get into detail, but it restricts the amount of fees that they can be paid very substantially. There's a lot of provisions about what they are allowed to say or what they're not allowed to say to the insurers, how those negotiations need to go. There's disclaimers that they need to put in their contracts. And frankly, it looks like it was an attempt to put a lot of public adjusters out of business.
But what are the interesting aspects of it? Because you still can hire a public adjuster, but they have to file a very strict provisions of the statute. And you could read the statute in detail, but one of the interesting aspects of the public adjuster statute is how it affects these remediation contractors who get in there. We've seen contracts where some of these remediation contractors say, we'll not only build the claim, but we'll negotiate with your carrier and basically do what a public adjuster does. And some of these contracts that we've seen, the first line of their general condition says we're not a public adjuster, but they are acting as a public adjuster. And the legislature in the statute 626.854, indicated that what a public adjuster is anyone who directly or indirectly prepares to please or files an insurance claim for an insured regardless of how that person describes or presents his or her services or aids an insured or third-party claimant in negotiating for or affecting the settlement of a claim or claims for loss or damage covered by an insurance contract. Again, regardless of how that person describes or presents his or her services.
So if you have somebody showing up at your property and they're saying, "Look, we're going to bring engineers in, we're going to bring contractors in and we're going to submit this all to an insurance company and we're going to meet with the adjuster and basically do everything that a public adjuster would do," but they say, "We're not a public adjuster," this statute is still going to apply to them with pretty substantial penalties for somebody who acts in that position. So be very careful that you're getting this contract that somebody says and they say, "Well maybe we'll bring it to public adjuster or a lawyer afterwards," and that's going to cause some complications. So Jon, if you can go back to the previous slide.
All right, so let's talk about first-party insurance lawyers. A first-party insurance lawyer obviously is from an analysis of the policy, you have a lawyer who's discerning what policy provisions require. There are also going to be masters of the FEMA rules and the statutes that apply. We have a bias on major claims to getting a first-party insurance lawyer there sooner than later. Sometimes with public adjusters what they do is they carry the claim as far as possible. And then if what the insurance company's willing to provide is not adequate, then they'll bring in a first-party insurance lawyer. But by that time, potentially the proper documentation hasn't been done or there's statements that have been made that create a policy defense. So our recommendation is usually on a major claim, is to get a first-party insurance lawyer in there quickly.
Now, let's talk about competition. So there's literally millions of claims that the carriers and FEMA are being confronted with, not only obviously in Florida but in North Carolina and Georgia and Tennessee. So there's a tremendous competition that's going to be going on for the next year or more on the adjustment of these claims. And based upon our experience, if an adjuster or an underwriter for an insurance company is looking at a multitude of claims that need adjustment in our view, they're very likely to give the priority attention to the claims that are being pursued by a first-party insurance lawyer. Maybe secondly, a public adjuster and maybe third client's attempting to pursue claims on their own. So in our experience that as far as getting attention to your claim, as far as getting the claim in the right form, for major claims, in our view, our bias is usually a first-party insurance lawyer is going to be in the best position to maximize the claim and at the same time get the claim processed as expeditiously as possible because that carrier or FEMA understands that well this is a lawyer has the potential of litigating under this policy. And given, again, priority attention to that.
So that's our bias. So the public adjusters, again have been handcuffed severely by statute and the remediation repair contractors who in our view are doing public adjusting in adopting 626.854, they're also very severely restricted. So what a first party insurance lawyer will do is they will bring in the engineers, the contractors, to work with them in order to not only assist in getting your buildings and your units back together, but while that's going on, assured that the policy defenses are not going to be portrayed inappropriately to the carrier.
Now one of the issues that we face, we have buildings that have both wind and flood claims. Again, the wind and the flood have to be approached in a different fashion. Sometimes you have to differentiate again, which is flood damage versus which is wind damage. And again, I think a first party insurance lawyer looking at both policies, discerning whether to characterize some damages flood versus wind they're going to be in a better position with the different policies in order to differentiate and make that example. Jon, with this section if you want to get on talk about repair contracts.
Alan Tannenbaum, Esq.:
Yeah, well obviously drafted by the insurance industry to go after a substantial trade nemesis.
Jon Lemole, Esq.:
Yeah. For sure.
Alan Tannenbaum, Esq.:
They didn't outlaw public adjusting, but they made it a very difficult industry or profession to remain in and still try to make a living.
Jon Lemole, Esq.:
All right, well, at some point you're going to have a repair project and you're going to engage a contractor and sign a contract to do that. In my practice, I deal with reviewing a lot of those contracts for our clients and I always encourage our clients to take those contracts and have either our firm, or have us review it if they're not a client of ours and we're not general counsel to them, but we have an opportunity to speak to folks like you, we always say, "Go back to your general counsel and let them look at these contracts before you sign them."
Here's what I know. At some point there is a repair project, it may go south, hopefully you're not one of the ones that it happens to, but it does happen. And the first question that I always ask when a condo or HOA comes to me and says, "Hey, we were doing this re-roofing project, we're having all these problems with the contractor," whether it's payment issues or defective work issues. And I look at the contract and it's a bare-bones proposal that was signed by the condo or HOA association, it was never reviewed by counsel. And I sometimes have to bring some bad news to the client and say, "Well, we're a little bit limited in how we can deal with this."
Contracts can be 20 pages, contracts can be one page, there's no one size fits all. There's no right or there's no wrong. But there are some essential terms that you always should be looking for to be included in these contracts. And if you're not sure whether those terms are there and you as the association are adequately protected under that contract. And the best advice I can give you is have your attorney, your general counsel, and if you don't have general counsel, seek out an attorney who is well-versed in consulting associations on major maintenance and repair projects. Have them take a look at that contract and ensure that you have some of these key things in there. And vendors are usually willing to negotiate those terms. So I wouldn't be afraid that by asking questions and seeking to negotiate that the vendors are going to say, "Oh, sorry, no, our contract is our contract." They want your business. And so they're usually willing to discuss the terms of the contract.
First and foremost, you want to make sure that whoever you're hiring to do this work has adequate insurance coverage. And different types of insurance coverage are required. And how much of those coverages is adequate is always up for debate. But you want to ensure and you want to see proof that the vendor, the contractor has adequate liability coverage, that they have workers' compensation coverage, that they have automobile policies that are covering the automobiles that they're going to be in and out of your community. What is the right amount of coverage? Especially on the liability side, is going to depend upon the size of your project. But it's very important that you ensure that there is insurance coverage in the first place.
And then there are ways that you can perhaps negotiate first-party coverage or additional insured coverage for your association under that policy or under that contractor's policies. It's not the easiest thing to do. And a lot of associations are under a misapprehension that as long as I have a certificate of insurance that names my association or that indicates that my association is an additional insured that I have that coverage. Insurance agents and brokers hand those things out all the time. That doesn't necessarily mean that the policy terms itself allow that benefit to be conferred without a specific endorsement to that effect. And so if you think you have additional insured coverage under a contractor's policy, you may not. So that's again why you ought to get legal advice to determine can you get it, how you should get it and take the steps necessary to ensure that you get it.
But even if you can't, you do still want to make sure that the vendor, the contractor has adequate insurance. Third-party insurance coverage that would be a source of revenue and a source of funds if you have a disputed claim against them. Worst thing in the world is to sue a contractor that has no coverage and no assets, doesn't get you very far.
The second thing that you want to be very careful about in your repair contracts is the specifications. What is the contractor doing? And I've seen very, very, very, very broad general description of the project. And you really want to drill down on this to determine what is the work being performed, what are the products going to be used? Because that's important, because some products manufacturers have terrific warranties, especially in the roofing industry and some may be not so good. And so you want to make sure that you know what products, what systems are going to be applied to your project, how it's going to be done. Specifications around mobilization, what space needs, are they going to need parking requirements? When are they going to do the work? Where are they going to store their equipment? How are they going to protect the equipment? These are all things that you don't want to necessarily just leave to chance and leave to the contractor to determine without some specific contract provisions governing that.
Performance criteria. This is very important. When you have a contract in Florida, it is very hard if you have to bring a claim against that contractor to allege negligence. Oftentimes courts will bind you to a claim relating to breach of contract. And if your contract doesn't contain the standards of care and the performance criteria that the contractor is supposed to use, things such as performing the work in a workman-like manner, complying with all industry standards, complying with the Florida building code, complying with OSHA regulations, complying with manufacturer's installation specifications. If you don't have those things specified, then you may have difficulty establishing that the contractor breached some performance standard in the contract and you may not be able to allege just general negligence. So it is very important that your contract specified that. Lien protection.
Alan Tannenbaum, Esq.:
And my recommendation, the other provisions that this is, we obviously give an hour-long course on this alone. So we have a couple of questions we need to answer. So why don't you just quickly point out the last four elements that you were going to talk about and we'll maybe get onto those questions.
Jon Lemole, Esq.:
Sure.
Adequate measures for lien protection so that you don't face liens, especially by subcontractors and suppliers. And this is not an easy thing to deal with. So you want to make sure that you have that protection. You want to make sure you have a balanced draw schedule because that's what keeps the contractor interested in your project and not the 10 other projects that they have. You want to make sure that you've clarified what your warranty rights are and what guarantees will be provided, both warrantied by the contractor and the provision of manufacturer's warranties. And then dispute resolution. You want to make sure that you have a dispute resolution clause that avoids arbitration and has a preference for litigation. And circuit court is always our recommendation as well as the opportunity to recover attorney's fees.
So always seek guidance from legal counsel when you're presented with these contracts and make sure that you're getting the protection that you need. So that is the end of the scripted portion of our presentation. We're going to go to the chat and try to answer some of these questions with a few minutes that we have left. So I have not been monitoring the chat, so Alan, Jen, Jim, Cindy, if you are seeing stuff in there, go ahead and chime in.
Alan Tannenbaum, Esq.:
Well, one question, and we've always seen this in groups we represent, is what happens when we go into unit to do remediation, you find out the owner has made modifications that were allowed or were not approved? We've seen situations where they have wiring, let's say to a ceiling fan that was not done according to the electrical code. Certainly if those things are found, if part of the work is, and FEMA will pay for if the electrical system was damaged in a unit, FEMA should compensate for that. Certainly when the electrician comes in gets a permit, they should correct those things. And if the owner does a protest say, "Look, you violated the electrical code when you did this improvement, so we're not going to certainly put that back into the position that it was in." Owner improvements are a little bit more difficult. So I mean there's a lot of challenge with that, but certainly I wouldn't emphasize that. But any corrective steps that you're making should take into account correcting things, especially that were a danger to the community. You have issues too about floor coverings and wall coverings. FEMA will pay for part of that, but that has to be closely discerned. Appliances if they were damaged in the flood, maybe. If they weren't, not. So a lot of issues to be determined. Anybody else have a particular question that you wanted to attack before we completed?
Jon Lemole, Esq.:
Yeah, there's a question. It says, "How does a condo association guarantee that a contractor COI, certificate of insurance, stating condo as additional insured actually has that provision in the contractor insurance policy?" The best way to handle that and the best way to ensure that you have that status is to demand, as part of the contract terms, to require that the contractor secure an endorsement from the carrier and show you a copy of that endorsement from the carrier, granting that status. Simply getting the certificate with that reflected on there is not sufficient evidence that you have that status because a policy or a lot of carriers in their policies require that before that can be conferred, the carrier itself has to issue a specific endorsement to that effect. And so we always recommend that the contracts require that that endorsement be obtained. And that's the best way to ensure that you have that status.
Alan Tannenbaum, Esq.:
All right, we can go on for a few minutes. Even though we've passed the noon hour. Somebody had a question about an AC unit that toppled on the roof. This would appear to be a condominium where the repair and maintenance of the AC condensers remains with the individual owners. And yes, I think it would be typically appropriate for the owner to make their own payment in order to get their unit back in operation. And when the wind settlement comes in, then for the repayment to be made. So I think that's appropriate. I don't know if Cindy answered that any differently.
Cindy Hill, Esq.:
I just advise to get with general counsel as to the circumstances, because it is ultimately the association's responsibility. So working with owners is something that they should be getting some guidance to make sure they're not missing any of the key elements that need to be communicated.
Alan Tannenbaum, Esq.:
There was a question. Whether outside of the flood insurance program, does FEMA offer any financial assistance to, in this case, a condominium association or a homeowners' association? The conventional wisdom is condo and HOAs are not in a position to make application for FEMA assistance outside of flood insurance. But I don't know if anecdotally that there's associations have made or requested gotten some compensation, but the program's not set up to pay HOA or condo association under FEMA programs outside of the flood insurance program.
Cindy Hill, Esq.:
That's correct. But some associations have used the small business loans that are available. We had a number of associations that did that after Ian, a couple of years ago. So that's one possibility. And those are very low interest loans.
Alan Tannenbaum, Esq.:
Okay. The question about the board meeting at special session without normal notice. Yes, it would provide that as long as you attempt to give some notice to the owners, which is still required. The signing of contracts is problematic because as we stated earlier, the Emergency Powers Act was created before the legislature recently acted to require that contracts be appended to an agenda item before they're approved.
Cindy Hill, Esq.:
For condominiums.
Alan Tannenbaum, Esq.:
Yeah, for condominiums. And so there's conflict there. I mean, what some groups have done is that they've, in an emergency situation, they've gone ahead and entered into the contracts and then maybe posted them after the fact. But again, the statute didn't allow for that. But emergencies do call for some extraordinary measures at times. So we've had groups that have signed contracts that were necessary before they were able to put it on an agenda.
Cindy Hill, Esq.:
Well, if they're going to ratify it, they should certainly put the contract on the agenda when they have that board meeting to ratify it.
Alan Tannenbaum, Esq.:
Cindy, there was a question about use of reserve funds. And I heard you give a response that borrowing from reserves from funds generally would not be allowed unless there was an owner vote. I don't know if they're accepting [inaudible 01:00:20].
Cindy Hill, Esq.:
That's going to be for condominiums. HOA reserves are really document driven, so there may be some provisions in a particular HOA's documents that allow them to do that. But for condominiums, even the emergency powers do not allow borrowing from reserves without an owner vote.
James "Jim" Turffs, Esq.:
And I'd also jump in there to say that you can have a catch all reserves. And so there may be a line item reserve, or if you're using a pulling method, there may be some allocation for general reserves that aren't allocated for a specific purpose. And again, depending on how that's all set up, that might be an option as well. So yeah, I can't really answer that question super specifically, but there are options.
Alan Tannenbaum, Esq.:
Yeah, I've seen a couple of people in the chat have raised questions about contractors that have come in and some of the issues that they're facing. One of the problems with the contractors, what it says usually in their documentation is they're entitled to full payment whether your insurance carrier pays or not.
And if they're creating costs and expenses that are above market or they're doing more work than it's necessary. I mean, we've seen contractors that come in and eight days after putting in dry out equipment, the equipment's still operating in a unit when it's been dried out since day three. And then you're going to get hit with a bill for eight days of dry out and the insurance company's going to pay for the three, and you're still going to be on the line for the difference. So got to be very discerning careful with those contracts.
And the one more, I think Cindy you answered about the budgets and other kind of deadlines, you want to just speak to that in general.
Cindy Hill, Esq.:
Budgets and deadlines. Which one are you talking about?
Alan Tannenbaum, Esq.:
It said, "Our 2025 budget was prepared. We have deadlines to get the package to owners."
Cindy Hill, Esq.:
Okay, that one. Yeah. Yeah. There are emergency powers that allow you to delay meetings in the section that Jennifer discussed at the opening of the presentation. So for instance, if you know that, or right around a storm, we can all present what might go out in the mail will be lost. If for instance, mailboxes are down, you're going to have some reasons to delay your meetings and delay your mailings. But again, these are going to be fact-driven situations that you should get with general counsel to ensure that you're complying. But yes, those options are available. The emergency powers are meant to assist with issues just like that because particularly the Condominium Act is normally a strict act that requires you to act exactly as it dictates. So you do have some flexibility potentially.
Alan Tannenbaum, Esq.:
Now, of course, the one thing that they didn't indicate because the Emergency Powers Act was adopted before the new statutory reserve and structural inspection requirements, there's nothing that says any of those deadlines can be delayed as a result of an emergency, unfortunately. So still face that.
Jon, I think at juncture we're going to close. It's 12:08. Thanks everybody for attending. You can send us questions offline if we didn't get to any of your questions and hopefully we provided you some valuable information today. Thanks everybody.
Jon Lemole, Esq.:
All right, well good morning. We're going to get started. Thank you everybody for joining us today. It's been a tough last month or month and a half, two months with the triple whammy of Debbie and Helene and Milton. And in our general counsel practice at Tannenbaum, Lemole & Hill, we're certainly keen and attuned to those issues because we've been getting, as you can imagine, a flood of calls from our clients about how to handle these problems.
So today, we're going to talk about some of the issues that you're dealing with in recovering and dealing with the aftermath of the very active hurricane season that we've experienced here in southwest Florida.
My name is Jon Lamole, I'm a partner at Tannenbaum, Lemole & Hill. Our firm is a full service community association firm. We are general counsel to probably around 225 community associations. And a sub area of our practice also includes construction claims, construction defect litigation, repair, major repair and maintenance contract consulting. And so for a variety of reasons, our firm is well positioned to handle the typical needs of a condo association and homeowners association in Florida.
So our agenda today, and if you give me a second, I'll get to the next screen. We're going to talk about five main areas and they will be handled mostly by my colleagues at the firm who I neglected to introduce. So let me do that real quickly. Now with us today is my partner, Alan Tannenbaum, my partner, Cindy Hill, and Associates of our firm, Jim Turffs and Jennifer Hicks.
So we're going to cover emergency powers, so both statutory and otherwise. The next thing we'll cover today is insurance issues. What coverages and deductibles may apply with respect to your claim, not only for hurricane damage but for other types of damage you may experience in your communities. We're going to talk about mitigating damage in your duty and obligations and good practices in relation to mitigating damage while protecting your insurance claim. We will talk about who are the folks that you should reach out to and seek counsel from and or retain to assist you with your claim if you indeed have a claim.
And then probably something that you're all seeing right now, they come out of the woodwork when there's a major storm event in Southwest Florida, and all of a sudden you're getting flooded with roofers and water mitigation contractors and other vendors who all want a piece of your business, your repair business. And so we're going to talk a little bit about vetting these folks and what are some of the things that you should be insuring are in those repair contracts when you are contracting with these folks.
So the first place we're going to start today, and I'm going to turn that over to Jennifer Hicks. And Jennifer is going to talk about the idea of emergency powers. What are some of the things that condo associations and homeowners associations have the authority to do and when they have the authority to do that in regards to emergency situations. So with that, I will pass it over to Jennifer.
Jennifer Hicks, Esq.:
Thanks, Jon. So as you can see, or as Jon stated, there are specific powers listed in both the Condominium Act and the Homeowners Act regarding what boards can do a little bit outside the normal for situations where a state of emergency has been declared. Now that is probably the biggest key of this. If there is no state of emergency, these powers do not apply. And at this point, Helene, we are still under a state of emergency for Helene until November 22nd, and we are under a state of emergency for Milton until December 4th. So your certain requirements for conducting board and committee meetings are suspended. Now that sounds great. However, they did not update the emergency statutes after the newest legislation. So certain requirements like the requirement to attach contracts has not been adjusted and is not addressed. And obviously that's for condos only.
You can cancel certain meetings. You have the right to sign debris removal contracts, you can implement emergency plans, you can mitigate your common area damage. And for condos, Deb, as we were saying to you, you do have the right, an extent of a right to mitigate within the unit. HOAs, regardless if you're a duplex or a townhome, you do not have the right of entry for mitigation. You can shut down certain services and deny access in certain situations. You can levy special assessments, you can borrow money. And there's a limited time to mitigate and conduct these repairs. Now these are not free rides, so if you were one of the lucky ones and you have no damage from these storms, these powers aren't for you. These powers are for those who your buildings or your communities lost power a significant time, you've got significant damage or for the meetings, especially if a lot of your residents are out of town. So if everyone evacuated, this is when you're going to start looking at these. If you were without power for a couple of weeks or you have significant damage, that's when you're going to start looking at these. It's a lot of common sense.
Jon, if you go to the next slide, I think it's the condo statute specifically. So really tiny, it is in the statute, you can find it. The next statute is the HOA statute. The other thing you need to know is a lot of association documents, or at least some were drafted with additional emergency powers in your bylaws. So certainly make sure to take a look at what your own documents say, and we really strongly recommend you get with your counsel, make sure you are acting correctly under these powers that do apply to you. And also, you make an emergency plan so you're not scrambling next time this happens. And I think next is Cindy with the deductibles.
Jon Lemole, Esq.:
Yes. We're going to pass it over to Cindy and Jim and they are going to talk about insurance issues, coverages, coverage issues, and deductible issues. So we'll start with Cindy.
Cindy Hill, Esq.:
Okay. I want to start with, there was a question that was responded to by Jim Turffs in the chat, but it asked about insurable events. Insurable events is really more of a term that's used for condominiums, but the concept is very similar in that whatever provisions you have in your documents regarding maintenance and who's responsible for maintenance, whether it's unit owner or lot owner or the association, can be very different Under insurance. When there's an insurable event such as a hurricane, a flood, a water leak, a fire, the provisions can very much change. And it's statutory for condominiums, it's not statutory for homeowner associations. So we've been getting a lot of questions, particularly from our condominiums. Why is it for instance, that we have to repair a unit owner's air conditioner when that's their problem, not ours. And I'm paraphrasing it's not quite like that, but the answer is because the Condominium Act requires associations to insure air conditioning units.
So some of these provisions aren't necessarily going to line up with what you're used to in your community. Some of them might not even make any sense. So it's very important for these issues that you are getting the right guidance from your insurance agent, your counsel, as needed to understand the different provisions. Your owners are going to be confused as well. They're not going to understand some of these provisions either. So just be ready for that, be ready for the fact that these events are already as stressful. It's already very stressful to prepare for a hurricane, to have it come, to have it make damage, to be without power. It does lead to some owners doing what was discussed before the presentation started, actually telling the association they can't come in their unit, they can't do things. Why aren't they doing things fast enough? Is the flip side of that one. Who's going to pay for all this? What is all of this? There's a lot of stress involved with this. So going back to what Jennifer suggested, having a plan in place for the next event, and let's hope you never have to use it, really is a good way to go.
With that opening, there is a difference between wind coverage and flood coverage. Flood coverage is something that is, it has more FEMA involvement is how I'll put it. We're not going to delve into the details of that, but with flood, you do have some FEMA involvement in a way that for wind coverage associations do not get FEMA cleanup help with that, the way that the rest of the neighborhoods in the community can get. And again, I'm summarizing, there are some exceptions.
What was also discussed briefly before we started was a high percentage for deductible. That's been rather shocking to some associations to find out that their building that's insured for 20 million, let's say, they have to put out a 5% deductible for that value before they get coverage. All I can say about that is it's like insurance for any event you have, car insurance, home insurance, condo insurance, whatever your insurance is, make sure you're sitting down with your agent annually and going over the coverage so that you do not get a shocker, so to speak, that you do understand what you've agreed to. And maybe even prepare for the event that you're going to need these deductibles and this amount of money. Some of the suggestions I've heard for that are to have a line of credit ready. Go ahead and work with your association banker and be prepared to have some cash on hand for these issues.
Alan Tannenbaum, Esq.:
Cindy, I think it's typical, when you have deductibles for wind coverage. It's generally a percentage of the replacement value of the condominium property or a particular building. What I've seen with the flood coverage is deductibles are usually a stated dollar amount. So we have one condo association that has villa buildings and also a couple multifamily buildings. The deductible for the flood coverage is $10,000 per building. And it creates an anomaly in that particular association because these individual villas have a $10,000 deductible, but the entire building and the multifamily building has a total $10,000 deductible for the entire building. So the way the deductible is written in a flood policy versus a wind policy is different.
Cindy Hill, Esq.:
Yeah, no, that's a very good point, Alan. And it also adds to the confusion. I will also say that flood coverage is different from your wind standard property insurance coverage. Some associations don't have flood coverage. If you're on one of the barrier islands, you really should have flood coverage. But if you're three miles inland, maybe you don't have flood coverage. So this is another thing you want to discuss with your insurance agent, as we are getting these historic floods, as we are getting these historic events that are taking place with storms, should you have flood coverage. And understand if you have different buildings on the properties, Alan just described, there could be different coverage, different levels. You really do want to sit down and make a plan. So thank you for that, Alan, because flood coverage is something that it can be very confusing. And I will add that to the extent water has come in, it could be wind-driven water or it could be flood water. These are all conversations to have with your insurance agent. We can't go down quite that path right now, but be informed is really what I'm saying about that.
So even though we're only going to be at C here, if you go to the next slide, Jon, for wind coverage, this is just an example of how the wind coverage works for the insurable events, as I was just discussing as opposed to regular maintenance. Associations, of course have to insure, and this is for condominiums by the way, although the similar concepts do apply to HOA. Association, of course, have to insure the common areas, the hallways, the lobbies, the gym, the recreational areas, the building structures, and again, some of the unit owner responsibilities are included in the association's insurance responsibilities, such as I mentioned earlier, the air conditioning.
A common one is drywall, to the extent drywall inside of a unit. You might think, well, that's the owner's responsibility. Well actually the association has to insure for that. And part of the advantage of that is that drywall is one of the worst places to create mold after a storm. So having the association step in and get that drywall move, start drying it out, start doing what needs to be done for mitigation, really benefits all the unit owners. And that's one of the things that unfortunately some of the angrier and more confused unit owners who are hostile to this process are missing the boat on, getting the integrity of the building solid and getting mold dealt with quickly is very advantageous to the entire building.
In contrast, owners have to have, in condominiums, what is rather analogous to rental insurance in terms of you need to insure your own furniture, your own possessions, your personal belongings, also the association extent it does have a responsibility for drywall, not for the wallpaper or paint on the drywall, not for floor coverings. So it's very advantageous for unit owners to also have their own insurance for their possessions and their interior. You will see there's a little note here at the bottom that there can be different provisions and documents. If you are a Villa-style condominium, there could be some different provisions. So these are, again, we're hitting the highlights of these issues. They get very complex. I can't emphasize enough, having a conversation with your insurance agent and your general counsel is very important, but we are raising these issues to assist with the better general understanding now that we have been through three storms, unfortunately, in this area is
Alan Tannenbaum, Esq.:
Cindy, we should mention with townhome communities that are under HOA regime, and we've written about this and discussed this, that the insurance industry still hasn't figured out what to do with let's say connected townhomes that are under an HOA regime as far as insurability is concerned. And you still have situations where there's six connected townhomes and you have six different insurance adjusters trying to adjust that claim that covers each of the individual townhomes. So that issue still hasn't been figured out and causes a [inaudible 00:15:35] coverage problem.
Cindy Hill, Esq.:
It's a very good point, Alan, because it does confuse everyone involved in terms of the volunteer board and the owners trying to figure out, well, what applies? And then you get some folks who think maybe the Condominium Act applies because there's... No, if you're an HOA, it's going to be your documents. So Alan's point really raises for HOAs in particular, you need to sit down with your general counsel and your insurance agent and make sure you understand the arrangement for your community.
And with that, I'll turn it over to Jim to discuss flood insurance.
James "Jim" Turffs, Esq.:
And I'm going to speak fairly briefly about flood insurance and that's because flood insurance is optional under the statutes. As where you have mandatory liability coverage, Chapter 718 says that an association may obtain and maintain flood insurance for the common elements. So not all associations carry it. When you do, you're typically going to find coverage through a FEMA-backed flood program. It is the Residential Condominium Building Association Policy. Most insurers who are going to be offering condo flood policies are going to be using that FEMA-backed program, as its policy design.
It's only going to apply to buildings that are at least 75% residential. So mixed use buildings that have a larger commercial sector probably aren't going to get flood coverage under this. And whether that flood coverage is even going to be available for those buildings is going to be a separate and independently addressed the issue, I suggest you're probably not going to find it. But as for flood coverage that's extended to condominiums residential, your policies are usually going to cover, like I said, just the common elements. You're not going to get too deep into elements found within a unit unless it's a common element. So what you'll see from the FEMA-backed program is typically coverage for staircases, water heaters, electrical systems, central air systems, foundation, structural walls, well water tanks and pumps that are responsible for pumping clean water into the building. And there will be some limited contents coverage that might be available. Your common elements have, if you have carpeting installed in the common elements or if you have permanently fixed bookshelves, stuff like that may be covered under a smaller contents portion of your flood coverage. But by and large, the theme there is these are all the common elements that you're going to get. Anything that serves multiple units, that's where you're going to start seeing your flood coverage apply.
Under the FEMA program, your premiums are going to be pretty strictly mandated. There are a couple tiers of premiums that are offered and it's going to depend on the value of your buildings and some inspections, pre-insurance inspections and they'll determine which category your building falls into and you're going to end up with what is basically a preset premium and a coverage limit. The final thing I really want to point out here is that while the statutes don't mandate coverage for flood, your governing documents can always do something a little more. So it's also important to review your governing documents and make sure that when your condominium was first incorporated and your documents drawn up, the developer or subsequent board didn't manually input an obligation to make best efforts, at least, to obtain flood insurance or something along those lines.
So be on the lookout for that. And anytime you're looking at a flood policy, you should be working with a well-qualified adjuster. And again, condo flood insurance is not quite as broad an area as some others. So you need to find somebody who's familiar with that. And of course working with council is going to help you verify what sort of coverages you need, what your obligations are, and they can at least help you review that policy and make sure you understand it. Because again, as has been mentioned twice already, figuring out what percentage deductible you're facing is going to be key in understanding that coverage. And you may not want to bank too heavily on your flood policy. If you have a higher deductible, you may want to start reserving for those things maybe separately or making sure you have a well-funded catch-all reserve item to help deal with unexpected costs that aren't covered by your flood policy.
Jon Lemole, Esq.:
All right, thanks Jim. So even in the best of circumstances, we all know that when you make your insurance claim, it does take some time for your carrier to respond. Certainly they try to respond a lot faster during an emergency situation like with hurricanes, but in a non-hurricane or a non-emergency situation may take a little longer. And the dilemma here is you may have damage or conditions that need to be addressed right away. And so as that claim is progressing through the institutional claims process, Alan's going to talk about what can you do and how you should do it in terms of mitigating damage, while at the same time protecting whatever claim you may have against your, vis-à-vis, your carrier.
Alan Tannenbaum, Esq.:
Yeah, let me first clarify from Jim's comments that a typical flood claim, at least for a condo is going to cover a certain extent of the interior damage within the unit. So your flood insurance claim is not only with common element, but if water comes through into a unit that damage at least a portion of the damage is also going to be picked up under a flood insurance claim. If a homeowners association has flood insurance, it's an interesting issue and I'd like to hear some of the insurance experts about how much within an HOA that interior damage is going to be picked up by the flood insurance program. And I think even in an HOA under those circumstances that it would.
So the issue about mitigation of damages, it's twofold. Number one, you want to get the problems under control, you want to get people back into their units, you want to mitigate against mold and damage, but you also want to protect that insurance claim. And we've been dealing with first party insurance lawyers about the challenges in getting a flood insurance claim adjusted. There's very particular requirements about the type of documentation that these adjusters are, for the carriers are looking for, what has to be in the invoicing in order for a particular invoice to be paid, like both invoicing is rejected, there has to be specific line items and amounts as to each portion of the invoicing.
They will pay certain standard amounts for let's say cabin tree and so forth that's damaged but not an accelerated amount. So there are standard amounts that have to be done. And what is occurring, we've seen it already in groups that we represent, is somebody's getting in there to do the dry out repairs, sometimes that the behest of a particular owner. The owner thinks well the flood insurance coverage is going to correct it or is going to pay for it. And what they've actually done is undertaking work and undertaking repairs that are actually not going to be compensated as a result of the quality or the type of work that's been done. So most of the first party insurance lawyers have advised us that they would prefer that the dry out and repair procedure that's going to affect individual unit owners if they anticipate getting coverage under it, should actually be undertaken and directed by the association through contractors at the association retains. We have advised owners under those circumstances that if you do it on your own, we can't guarantee that those costs are going to be compensated.
So our advice generally for interior damage, that's a result of flood. And it would apply to wind also that the association actually undertake the step of doing the dry out on repairs. And that's a source of contention because especially in rental types units, owners want to get in there and get their units rented as quickly as possible, but it's really causing problem for the flood claim.
Under the flood insurance program, there is an initial payment that you can get that pertains to dry out and temporary repairs, but again, the documentation has got to be an appropriate condition in order for the flood insurance property to acknowledge it. So we were actually dealing before we started the program with the issue of uncooperative owners. So somebody indicated that there was a situation that they have an ongoing situation where there was a roof failure as a result of the storms. Water got into the top floor unit, maybe a unit below that, and the top floor unit owner was not allowing the association access to do any mitigation. And the concern was the potential for mold, certainly other water damage that occurred to the unit.
And the issue was what power does the association have to, number one, make access, and number two, control the work that's being done in the unit. And under the Emergency Powers Act that we talked about before, there is a state of emergency partly in Florida, which gives the association the right of access in order to undertake those repairs. Now, you can go to court and try to get a temporary injunction if you can get service on that honor, but the Condominium Act has a specific statutory section that allows associations to make access into condominium unit in order to undertake repairs. And if you combine the powers that exist under the Emergency Powers Act, with the existing provision of the Condominium Act, it is likely the time to be very proactive about entering into a unit, with notice to the owner, and maybe taking a videographer with you so that there's witnesses to what has occurred and go in and protect the property. And we've had circumstances where we've had a locksmith go in and actually make entry into the unit. Sometimes law enforcement has to be notified in case there's an alarm that's connected with that unit that in order to protect the property that there's access being made into it.
Communication is a key to try to let owners know exactly what the plan of action is, to ask them for patience. The purpose of a condominium and homeowner association we've talked about this is really for the long-term interests of the property. And somebody's having a panic and it's understandable that they can't rent their unit or their unit's not livable. They're going to have a heightened sense of concern. But the association has got to operate prudently for the long-term interest of all the owners. But it's a challenge. People are under a lot of stress, there's a lot of disinformation, and so dealing with these folks is difficult. But again, you don't want to destroy your ability to make collection on the claim. And adjusters are looking for opportunities to either mitigate or deny a claim. And owners acting on their own is a particular reason why that may occur, so.
And one of the things we haven't discussed is whenever a statute or a document creative power, it also comes with the responsibility. So I could see an owner when there's not an effort to properly mitigate coming in and saying, well, you had the power under this Emergency Powers act and the association didn't undertake it and therefore created a duty. The same argument that we've made with a hot water heater in a condo unit is water's overflowing. And you have a board who says, well, we want to wait until we can contact the owner and meanwhile, three days of water damage may be occurring. And we often advise those groups that since the legislature gave you the power to make access to the unit in order to undertake repairs, it also creates a duty to utilize the power that you have in an appropriate fashion. So along with power comes obligation. And that should be considered.
Go on the next section, Jon.
Jon Lemole, Esq.:
Yeah, so next section. I think Alan's covering this as well, and I talked about it at the very beginning, our opening remarks and typically during these types of emergency situations, all of a sudden you managers and board members are getting besieged by various people who want to help you with your situation. So Alan's going to talk about the folks that are really essential to dealing and recovering from a major storm event or events like we've had.
Alan Tannenbaum, Esq.:
So what has already happened, it's pretty typical of storms, is typical storm storm occurs and somebody shows up at your property and they have their brochure and they're a mitigation company or a contractor and they're going to come in and take care of your problem. And we've seen some of the contracts, there's a two-edged sword. It's great to have people coming in offering their services if they're capable of doing the work. It's important to get in there very quickly and do the dry out. So it's very attractive to give consideration to these folks who come around.
But part of your need is again, you want to protect that insurance claim. And there may be things that these contractors are doing, by way of not adequately documenting, charging for things that are not going to be reimbursed under the policy that are going to negatively impact the claim process and that has to be considered.
Now, it used to be before they were outlawed is these contractors would provide what's called an assignment of benefits where they would actually be the ones who'd be making claim against your insurance policy. And if there was litigation that had to be filed, it would actually be filed in the name of one of those contractors under the assignment. Those are now outlawed in Florida. But some of these contractors have figured out alternative means. And you may be confronted with something called a direction to pay. And this is a document that let's say an association is asked to sign, doesn't assign the benefit, but it tells your insurance company that if they do issue payment under the policy that it either has to be by joint check or directly to the contractor, gives the contractor substantial leverage to control the actions of your insurance companies. And the insurance companies we've noticed really like those because if the association gets into a dispute with the contractor, until that's resolved, the insurance company is sitting on the claim money. So we've advised groups be very wary of signing a document called a direction to pay because it has a lot of the detriments that were typically there under assignment of benefits, so be careful.
Jon Lemole, Esq.:
Alan, another thing that we've seen recently, you and I talked a little bit about it the other day, is the in connection with direction to pay or maybe even separate from direction to pay. We see these vendors putting into the contracts, these language in regards to the association being a trustee of insurance benefits and holding benefits in any payments in trust, which is similarly concerning because that creates a very different duty on the association in regards to some fiduciary obligations that also makes it much harder to deal with those payments if there are maybe perhaps multiple places where the payment may need to be directed. So that's another thing to take a look at or be wary of and if you see it and get legal counsel on.
Alan Tannenbaum, Esq.:
Thanks, Jon. The next section I want to talk about public adjusters. So the legislature pretty frankly attempted to destroy the public adjusting industry through the adoption of this public adjuster statute. And we've attached it, I'm not going to get into detail, but it restricts the amount of fees that they can be paid very substantially. There's a lot of provisions about what they are allowed to say or what they're not allowed to say to the insurers, how those negotiations need to go. There's disclaimers that they need to put in their contracts. And frankly, it looks like it was an attempt to put a lot of public adjusters out of business.
But what are the interesting aspects of it? Because you still can hire a public adjuster, but they have to file a very strict provisions of the statute. And you could read the statute in detail, but one of the interesting aspects of the public adjuster statute is how it affects these remediation contractors who get in there. We've seen contracts where some of these remediation contractors say, we'll not only build the claim, but we'll negotiate with your carrier and basically do what a public adjuster does. And some of these contracts that we've seen, the first line of their general condition says we're not a public adjuster, but they are acting as a public adjuster. And the legislature in the statute 626.854, indicated that what a public adjuster is anyone who directly or indirectly prepares to please or files an insurance claim for an insured regardless of how that person describes or presents his or her services or aids an insured or third-party claimant in negotiating for or affecting the settlement of a claim or claims for loss or damage covered by an insurance contract. Again, regardless of how that person describes or presents his or her services.
So if you have somebody showing up at your property and they're saying, "Look, we're going to bring engineers in, we're going to bring contractors in and we're going to submit this all to an insurance company and we're going to meet with the adjuster and basically do everything that a public adjuster would do," but they say, "We're not a public adjuster," this statute is still going to apply to them with pretty substantial penalties for somebody who acts in that position. So be very careful that you're getting this contract that somebody says and they say, "Well maybe we'll bring it to public adjuster or a lawyer afterwards," and that's going to cause some complications. So Jon, if you can go back to the previous slide.
All right, so let's talk about first-party insurance lawyers. A first-party insurance lawyer obviously is from an analysis of the policy, you have a lawyer who's discerning what policy provisions require. There are also going to be masters of the FEMA rules and the statutes that apply. We have a bias on major claims to getting a first-party insurance lawyer there sooner than later. Sometimes with public adjusters what they do is they carry the claim as far as possible. And then if what the insurance company's willing to provide is not adequate, then they'll bring in a first-party insurance lawyer. But by that time, potentially the proper documentation hasn't been done or there's statements that have been made that create a policy defense. So our recommendation is usually on a major claim, is to get a first-party insurance lawyer in there quickly.
Now, let's talk about competition. So there's literally millions of claims that the carriers and FEMA are being confronted with, not only obviously in Florida but in North Carolina and Georgia and Tennessee. So there's a tremendous competition that's going to be going on for the next year or more on the adjustment of these claims. And based upon our experience, if an adjuster or an underwriter for an insurance company is looking at a multitude of claims that need adjustment in our view, they're very likely to give the priority attention to the claims that are being pursued by a first-party insurance lawyer. Maybe secondly, a public adjuster and maybe third client's attempting to pursue claims on their own. So in our experience that as far as getting attention to your claim, as far as getting the claim in the right form, for major claims, in our view, our bias is usually a first-party insurance lawyer is going to be in the best position to maximize the claim and at the same time get the claim processed as expeditiously as possible because that carrier or FEMA understands that well this is a lawyer has the potential of litigating under this policy. And given, again, priority attention to that.
So that's our bias. So the public adjusters, again have been handcuffed severely by statute and the remediation repair contractors who in our view are doing public adjusting in adopting 626.854, they're also very severely restricted. So what a first party insurance lawyer will do is they will bring in the engineers, the contractors, to work with them in order to not only assist in getting your buildings and your units back together, but while that's going on, assured that the policy defenses are not going to be portrayed inappropriately to the carrier.
Now one of the issues that we face, we have buildings that have both wind and flood claims. Again, the wind and the flood have to be approached in a different fashion. Sometimes you have to differentiate again, which is flood damage versus which is wind damage. And again, I think a first party insurance lawyer looking at both policies, discerning whether to characterize some damages flood versus wind they're going to be in a better position with the different policies in order to differentiate and make that example. Jon, with this section if you want to get on talk about repair contracts.
Alan Tannenbaum, Esq.:
Yeah, well obviously drafted by the insurance industry to go after a substantial trade nemesis.
Jon Lemole, Esq.:
Yeah. For sure.
Alan Tannenbaum, Esq.:
They didn't outlaw public adjusting, but they made it a very difficult industry or profession to remain in and still try to make a living.
Jon Lemole, Esq.:
All right, well, at some point you're going to have a repair project and you're going to engage a contractor and sign a contract to do that. In my practice, I deal with reviewing a lot of those contracts for our clients and I always encourage our clients to take those contracts and have either our firm, or have us review it if they're not a client of ours and we're not general counsel to them, but we have an opportunity to speak to folks like you, we always say, "Go back to your general counsel and let them look at these contracts before you sign them."
Here's what I know. At some point there is a repair project, it may go south, hopefully you're not one of the ones that it happens to, but it does happen. And the first question that I always ask when a condo or HOA comes to me and says, "Hey, we were doing this re-roofing project, we're having all these problems with the contractor," whether it's payment issues or defective work issues. And I look at the contract and it's a bare-bones proposal that was signed by the condo or HOA association, it was never reviewed by counsel. And I sometimes have to bring some bad news to the client and say, "Well, we're a little bit limited in how we can deal with this."
Contracts can be 20 pages, contracts can be one page, there's no one size fits all. There's no right or there's no wrong. But there are some essential terms that you always should be looking for to be included in these contracts. And if you're not sure whether those terms are there and you as the association are adequately protected under that contract. And the best advice I can give you is have your attorney, your general counsel, and if you don't have general counsel, seek out an attorney who is well-versed in consulting associations on major maintenance and repair projects. Have them take a look at that contract and ensure that you have some of these key things in there. And vendors are usually willing to negotiate those terms. So I wouldn't be afraid that by asking questions and seeking to negotiate that the vendors are going to say, "Oh, sorry, no, our contract is our contract." They want your business. And so they're usually willing to discuss the terms of the contract.
First and foremost, you want to make sure that whoever you're hiring to do this work has adequate insurance coverage. And different types of insurance coverage are required. And how much of those coverages is adequate is always up for debate. But you want to ensure and you want to see proof that the vendor, the contractor has adequate liability coverage, that they have workers' compensation coverage, that they have automobile policies that are covering the automobiles that they're going to be in and out of your community. What is the right amount of coverage? Especially on the liability side, is going to depend upon the size of your project. But it's very important that you ensure that there is insurance coverage in the first place.
And then there are ways that you can perhaps negotiate first-party coverage or additional insured coverage for your association under that policy or under that contractor's policies. It's not the easiest thing to do. And a lot of associations are under a misapprehension that as long as I have a certificate of insurance that names my association or that indicates that my association is an additional insured that I have that coverage. Insurance agents and brokers hand those things out all the time. That doesn't necessarily mean that the policy terms itself allow that benefit to be conferred without a specific endorsement to that effect. And so if you think you have additional insured coverage under a contractor's policy, you may not. So that's again why you ought to get legal advice to determine can you get it, how you should get it and take the steps necessary to ensure that you get it.
But even if you can't, you do still want to make sure that the vendor, the contractor has adequate insurance. Third-party insurance coverage that would be a source of revenue and a source of funds if you have a disputed claim against them. Worst thing in the world is to sue a contractor that has no coverage and no assets, doesn't get you very far.
The second thing that you want to be very careful about in your repair contracts is the specifications. What is the contractor doing? And I've seen very, very, very, very broad general description of the project. And you really want to drill down on this to determine what is the work being performed, what are the products going to be used? Because that's important, because some products manufacturers have terrific warranties, especially in the roofing industry and some may be not so good. And so you want to make sure that you know what products, what systems are going to be applied to your project, how it's going to be done. Specifications around mobilization, what space needs, are they going to need parking requirements? When are they going to do the work? Where are they going to store their equipment? How are they going to protect the equipment? These are all things that you don't want to necessarily just leave to chance and leave to the contractor to determine without some specific contract provisions governing that.
Performance criteria. This is very important. When you have a contract in Florida, it is very hard if you have to bring a claim against that contractor to allege negligence. Oftentimes courts will bind you to a claim relating to breach of contract. And if your contract doesn't contain the standards of care and the performance criteria that the contractor is supposed to use, things such as performing the work in a workman-like manner, complying with all industry standards, complying with the Florida building code, complying with OSHA regulations, complying with manufacturer's installation specifications. If you don't have those things specified, then you may have difficulty establishing that the contractor breached some performance standard in the contract and you may not be able to allege just general negligence. So it is very important that your contract specified that. Lien protection.
Alan Tannenbaum, Esq.:
And my recommendation, the other provisions that this is, we obviously give an hour-long course on this alone. So we have a couple of questions we need to answer. So why don't you just quickly point out the last four elements that you were going to talk about and we'll maybe get onto those questions.
Jon Lemole, Esq.:
Sure.
Adequate measures for lien protection so that you don't face liens, especially by subcontractors and suppliers. And this is not an easy thing to deal with. So you want to make sure that you have that protection. You want to make sure you have a balanced draw schedule because that's what keeps the contractor interested in your project and not the 10 other projects that they have. You want to make sure that you've clarified what your warranty rights are and what guarantees will be provided, both warrantied by the contractor and the provision of manufacturer's warranties. And then dispute resolution. You want to make sure that you have a dispute resolution clause that avoids arbitration and has a preference for litigation. And circuit court is always our recommendation as well as the opportunity to recover attorney's fees.
So always seek guidance from legal counsel when you're presented with these contracts and make sure that you're getting the protection that you need. So that is the end of the scripted portion of our presentation. We're going to go to the chat and try to answer some of these questions with a few minutes that we have left. So I have not been monitoring the chat, so Alan, Jen, Jim, Cindy, if you are seeing stuff in there, go ahead and chime in.
Alan Tannenbaum, Esq.:
Well, one question, and we've always seen this in groups we represent, is what happens when we go into unit to do remediation, you find out the owner has made modifications that were allowed or were not approved? We've seen situations where they have wiring, let's say to a ceiling fan that was not done according to the electrical code. Certainly if those things are found, if part of the work is, and FEMA will pay for if the electrical system was damaged in a unit, FEMA should compensate for that. Certainly when the electrician comes in gets a permit, they should correct those things. And if the owner does a protest say, "Look, you violated the electrical code when you did this improvement, so we're not going to certainly put that back into the position that it was in." Owner improvements are a little bit more difficult. So I mean there's a lot of challenge with that, but certainly I wouldn't emphasize that. But any corrective steps that you're making should take into account correcting things, especially that were a danger to the community. You have issues too about floor coverings and wall coverings. FEMA will pay for part of that, but that has to be closely discerned. Appliances if they were damaged in the flood, maybe. If they weren't, not. So a lot of issues to be determined. Anybody else have a particular question that you wanted to attack before we completed?
Jon Lemole, Esq.:
Yeah, there's a question. It says, "How does a condo association guarantee that a contractor COI, certificate of insurance, stating condo as additional insured actually has that provision in the contractor insurance policy?" The best way to handle that and the best way to ensure that you have that status is to demand, as part of the contract terms, to require that the contractor secure an endorsement from the carrier and show you a copy of that endorsement from the carrier, granting that status. Simply getting the certificate with that reflected on there is not sufficient evidence that you have that status because a policy or a lot of carriers in their policies require that before that can be conferred, the carrier itself has to issue a specific endorsement to that effect. And so we always recommend that the contracts require that that endorsement be obtained. And that's the best way to ensure that you have that status.
Alan Tannenbaum, Esq.:
All right, we can go on for a few minutes. Even though we've passed the noon hour. Somebody had a question about an AC unit that toppled on the roof. This would appear to be a condominium where the repair and maintenance of the AC condensers remains with the individual owners. And yes, I think it would be typically appropriate for the owner to make their own payment in order to get their unit back in operation. And when the wind settlement comes in, then for the repayment to be made. So I think that's appropriate. I don't know if Cindy answered that any differently.
Cindy Hill, Esq.:
I just advise to get with general counsel as to the circumstances, because it is ultimately the association's responsibility. So working with owners is something that they should be getting some guidance to make sure they're not missing any of the key elements that need to be communicated.
Alan Tannenbaum, Esq.:
There was a question. Whether outside of the flood insurance program, does FEMA offer any financial assistance to, in this case, a condominium association or a homeowners' association? The conventional wisdom is condo and HOAs are not in a position to make application for FEMA assistance outside of flood insurance. But I don't know if anecdotally that there's associations have made or requested gotten some compensation, but the program's not set up to pay HOA or condo association under FEMA programs outside of the flood insurance program.
Cindy Hill, Esq.:
That's correct. But some associations have used the small business loans that are available. We had a number of associations that did that after Ian, a couple of years ago. So that's one possibility. And those are very low interest loans.
Alan Tannenbaum, Esq.:
Okay. The question about the board meeting at special session without normal notice. Yes, it would provide that as long as you attempt to give some notice to the owners, which is still required. The signing of contracts is problematic because as we stated earlier, the Emergency Powers Act was created before the legislature recently acted to require that contracts be appended to an agenda item before they're approved.
Cindy Hill, Esq.:
For condominiums.
Alan Tannenbaum, Esq.:
Yeah, for condominiums. And so there's conflict there. I mean, what some groups have done is that they've, in an emergency situation, they've gone ahead and entered into the contracts and then maybe posted them after the fact. But again, the statute didn't allow for that. But emergencies do call for some extraordinary measures at times. So we've had groups that have signed contracts that were necessary before they were able to put it on an agenda.
Cindy Hill, Esq.:
Well, if they're going to ratify it, they should certainly put the contract on the agenda when they have that board meeting to ratify it.
Alan Tannenbaum, Esq.:
Cindy, there was a question about use of reserve funds. And I heard you give a response that borrowing from reserves from funds generally would not be allowed unless there was an owner vote. I don't know if they're accepting [inaudible 01:00:20].
Cindy Hill, Esq.:
That's going to be for condominiums. HOA reserves are really document driven, so there may be some provisions in a particular HOA's documents that allow them to do that. But for condominiums, even the emergency powers do not allow borrowing from reserves without an owner vote.
James "Jim" Turffs, Esq.:
And I'd also jump in there to say that you can have a catch all reserves. And so there may be a line item reserve, or if you're using a pulling method, there may be some allocation for general reserves that aren't allocated for a specific purpose. And again, depending on how that's all set up, that might be an option as well. So yeah, I can't really answer that question super specifically, but there are options.
Alan Tannenbaum, Esq.:
Yeah, I've seen a couple of people in the chat have raised questions about contractors that have come in and some of the issues that they're facing. One of the problems with the contractors, what it says usually in their documentation is they're entitled to full payment whether your insurance carrier pays or not.
And if they're creating costs and expenses that are above market or they're doing more work than it's necessary. I mean, we've seen contractors that come in and eight days after putting in dry out equipment, the equipment's still operating in a unit when it's been dried out since day three. And then you're going to get hit with a bill for eight days of dry out and the insurance company's going to pay for the three, and you're still going to be on the line for the difference. So got to be very discerning careful with those contracts.
And the one more, I think Cindy you answered about the budgets and other kind of deadlines, you want to just speak to that in general.
Cindy Hill, Esq.:
Budgets and deadlines. Which one are you talking about?
Alan Tannenbaum, Esq.:
It said, "Our 2025 budget was prepared. We have deadlines to get the package to owners."
Cindy Hill, Esq.:
Okay, that one. Yeah. Yeah. There are emergency powers that allow you to delay meetings in the section that Jennifer discussed at the opening of the presentation. So for instance, if you know that, or right around a storm, we can all present what might go out in the mail will be lost. If for instance, mailboxes are down, you're going to have some reasons to delay your meetings and delay your mailings. But again, these are going to be fact-driven situations that you should get with general counsel to ensure that you're complying. But yes, those options are available. The emergency powers are meant to assist with issues just like that because particularly the Condominium Act is normally a strict act that requires you to act exactly as it dictates. So you do have some flexibility potentially.
Alan Tannenbaum, Esq.:
Now, of course, the one thing that they didn't indicate because the Emergency Powers Act was adopted before the new statutory reserve and structural inspection requirements, there's nothing that says any of those deadlines can be delayed as a result of an emergency, unfortunately. So still face that.
Jon, I think at juncture we're going to close. It's 12:08. Thanks everybody for attending. You can send us questions offline if we didn't get to any of your questions and hopefully we provided you some valuable information today. Thanks everybody.
Jon Lemole, Esq.:
Thank you.
