Richard White: There are different methods to determine replacement value

Q. What affect does replacement valuation have on insurance premiums and other types of appraisals? We have zero business experience and limited insurance experience. Our board has discussed obtaining a second appraisal to see if we can lower the replacement valuation in hopes of lowering our premium. Where can we get more information?

— J.K.

Miami

A. There are different methods to determine value. One is market value — the price the property should sell in a reasonable market with reasonable buyer and seller conditions. Replacement cost or replacement valuation is the price or cost it will take to rebuild in the same spot, same size and same quality of construction, at today’s costs. There are also other methods by which an insurance company may calculate the amount it will pay you for a loss. Payment based on the replacement cost is usually the most favorable figure for the consumer because it compensates the consumer for the actual cost of replacing property in event of a catastrophic loss. I caution not to under evaluate the replacement value because at a time of loss you do not want to come up short of dollars to rebuild. There is an old saying that insurance is a small loss today to prevent a large and crippling cost in the future. To better understand the question, talk to the appraiser and the insurance agent.

Q. I live in a large HOA. In opposing the statute stating “If a modification is not disallowed by deed restrictions, then the board cannot deny the modification.” We would like to change our documents to say if it is not allowed in the documents, then it cannot be modified. Is there an agency in Tallahassee that I can contact to see if this is legal?

— H.H.

Tampa

A. The section you are referring to is FS 720.3035. The state has no agency to provide information on such changes. What I would suggest is that the board create a guidebook for allowable architectural changes (an ARC Policy) and an architectural review committee (ARC) appointed to review all changes. If an owner would like to make a change to the exterior of their home, they would submit an architectural change form to the committee. Then the committee would review the submission and if it is in the architectural change guide, the committee would have the approval rights. If it was not in the policy, then the request would be forwarded to the board for approval or denial. A workable ARC Policy will take time and effort to create, but in the long run will be a workable tool. Here are two examples of the details that need to be in the policy book: Painting of homes must be the colors found at the ABC Paint Store-numbers 24, 224, 314, or 678 and trim colors 63, 73, or 112. In other words you supply a list of colors and where the paint can be obtained. Maybe you may be able to establish a discount with the paint store for the members when they purchase their paint. It would not require the owner to buy the paint at that store but they would need to obtain a sample of the paint color and have it matched at a store of their choosing. The second example is to allow owners to place a statue of some type in their yard. You could describe the type allowed or disallowed and limited to number of statues. Maybe you do not want water fountains or erotic statues. You can limit the size such as it must not have a base more than 18 by 18 inches and no higher than 24 inches from the ground measurement. You may want to limit the colors in such a statue. Maybe natural colors or muted colors not bright colors. The ARC Guide creation is the first step. Create a committee to write such a guideline. Circulate a draft copy to the members and ask for their recommendation. The board would approve the policy, appoint members to the ARC, and provide each member with a copy. As with any policy, it can be modified in the future if the need occurs.

Q. We have lived in an HOA community for five years. When we purchased our home the driveway was expanded with a gravel extension to park a second car. There were several such extensions by other neighbors. The board has now decided not to allow such driveways and require that we remove the extra parking. How effective can the enforcement be if no action has been taken by anyone for over five years? They have also threatened us and others with legal action which would require us to pay legal fees.

—M.K.

Clearwater

A. I cannot tell you how a judge would rule. There are four defenses that could be used: selective enforcement, waiver, estoppel and Laches. More than likely the best defense would be the claim that the board had neglected to enforce the rules in past years, and thereby, time has provided owners a reasonable right to assume the change was not a rule violation. In other words, the board has slept on their rights and duties, thus laches. I would check your closing papers to see if there is any reference to the extra parking, such as a survey. This could help to prove that it has existed for years. This would help prove a waiver or estoppel. While I am unable to answer your question, I would recommend that you contact an attorney and ask him/her about these defenses. As I said, it would be a judge that would answer if the board has a right to enforce the rule.

Q. We held a mortgage on a condominium unit and foreclosed on the unit when the purchaser did not pay the mortgage. We requested pay-off amounts for the unit. We were shocked when we received the pay-off going back 12 months delinquent fees, plus attorney fees accounting for a substantial amount. Are we responsible for all these fees and legal costs?

— P.P.

Homestead

A. If you had been a first mortgage financial institution, most of the fees would have been eliminated. I cannot provide the legal answer you want as that must be provided by an attorney or judge. As a private mortgage holder, you are more than likely responsible as your lien would have been second in line to the association. You should read the association documents about liens and payment obligations. Not all foreclosures eliminate other claims.

Richard White is a licensed community association manager in Florida. Questions should be mailed to him at 6039 Cypress Gardens Blvd. # 201, Winter Haven, Fl. 33884-4415; e-mail CAMquestion@cfl.rr.com. To be considered, questions and comments should include the author’s name and city. Questions should be about association operations, not legal matters.

© 2010 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Discuss
  • Print

Comments » 0

Be the first to post a comment!

Share your thoughts

Comments are the sole responsibility of the person posting them. You agree not to post comments that are off topic, defamatory, obscene, abusive, threatening or an invasion of privacy. Violators may be banned. Click here for our full user agreement.

Comments can be shared on Facebook and Yahoo!. Add both options by connecting your profiles.

Features