How to Protect Your Investment
Make certain that the Association has proper insurance coverage prior to Hurricane season to prevent shortfalls.
a) Problems tend to arise after hurricanes cause damage to property and there is a deficiency with regard to the amount covered by insurance. To avoid liability, Associations should hire an insurance appraiser to come to the site annually just prior to hurricane season to determine whether or not the premises are adequately covered, or if the present insurance plan needs to be updated.  In addition, make sure the Board understands the policy's coverage and its exclusions.
Make sure the property is structurally sound before a storm so that it does not fail.
a) Associations should retain an engineer or consultant to survey the structures, roofs, windows, doors, landscaping and other areas to determine whether additional steps should be taken to preserve the structural integrity of each.  In an effort to prevent the denial of claims after a storm causes damage, contact your insurance carrier to inquire into what engineering company or consultant they recommend to do the job. This is a great way an Association can act efficiently to mitigate damages.
Enact contingency or emergency plans with regard to the property and residents of the community.
a) These plans should include an in-depth review of the Association documents to ensure that there are appropriate procedures in place to protect Association property by deploying hurricane protection.
Determine the Association's policy for dealing with a surplus of money after receiving insurance proceeds for damages caused by a storm.
a) Contact your General Counsel to review the Association documents to ensure that you have the proper distribution method(s) for surplus.
Make sure that the Association reserves are appropriately funded.
a) The Florida Condominium Act §718.112 (f)(2) requires an Association to include a reserve schedule within part of the annual budget.  According to the Act, reserve accounts shall include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000.
b) To comply with these appropriated terms of the Act, Associations must establish an emergency account, or at the very least an emergency line of credit to provide funding for necessary repairs in the aftermath of the storm.  By planning and establishing an emergency account years before the funds are ever necessary for use, the Association is proactively avoiding a financial crisis by keeping finances from becoming an issue in the future.
c) There are a number of ways for an Association to build its reserve account.  In a good economy, reserve accounts are much easier to accumulate because the Association is receiving a greater percentage of its monthly dues than in a poor economy, and thus there is a larger pool of cash to distribute.  Today, it is best to take small amounts of money and let the account expand over time.
Ensure contractors are available post storm and have contact information available for owners.
a) In preparing for a hurricane, it is a common mistake for Associations to overlook or forget to line up contractors before the storm actually hits, and unfortunately, contractors can be difficult to find after the storm.  By negotiating contracts with repair contractors in advance, the work can begin immediately after the storm while others look frantically for repairmen.  In addition, Associations benefit by establishing a lower price for the repairs and supplies before the storm causes actual damage and contractors realize what customers are willing to pay for their services.
Duplicate Association documents and keep them in an appropriate place to avoid destruction or loss.
a) The Association documents serve as the backbone for all the rules, regulations, and policies of the community.  If these documents are lost after a storm and an influx of lawsuits ensue, the Association would have no basis to defend itself from potential liability.  Thus, it is best to keep the original documents in a safe place and reproduce plenty of duplicates.
The Association needs to understand what their deductibles are under their insurance policies and must account for that amount in their reserve accounts.
a) After storms cause damage to buildings, Associations become liable because property management companies are not explaining to the Board that they need to pay their own deductibles.  In many cases, a contractor and an Association will enter into a contract to make repairs within a community after a storm.  After the recoverable depreciated costs, the contractors overhead and profit, and the deductible is taken out, there is a net payment that the Associations are unaware they owe and they have no money to pay because they have not accounted for such a cost.  Thus, it is vital that Associations are aware of all the different types of insurance they have and hence all the different deductibles.
Avoid entering into poorly drafted contracts by allowing General Counsel to review contracts prepared by engineers and/or contractors for post-hurricane damage.
a) After hurricanes, Florida Associations enter into contracts worth millions of dollars for repair services and goods.  The problem is, the Association often fails to seek legal assistance in assuring that the contracts do not contain terms unfavorable to the Association.  Most of the contracts, or proposals, do nothing to protect the interest of the Association but often times favor the contractor in terms of warranties, dispute resolution, and liquidated damages.  To avoid these situations, make sure these contracts are often validated by the Association's General Counsel before executing them.
Compare estimate prices from contractors and engineers.
a) Both before and after storms, it is often the approach of service contractors to highball Associations in an effort to make as much money as possible.  Unfortunately, Associations frequently fail to negotiate or even seek estimate from other companies before entering into an agreement.  To ensure that your Association gets the best quality service for its money, take the time to compare estimates and seek out the contactor or engineer who puts out the best quality work at a reasonable price.  Furthermore, Associations should look to their documents or alter their rules to include a requirement for taking a minimum amount of quotes or bids on a project before entering into a contract.  Not only will this requirement further chances at getting the best possible deal for top quality service but it also will protect Associations from breach of fiduciary duty action.