Minnesota’s premier homeowners association magazine
May/June 2010
Volume 28 • Issue 3
In this Issue: Does Air Quality Make a Difference? Window Washing 101 Battered Property Owners Find Relief on Storm Damage Claims
Making Time for Property Maintenance Tips for Summer
And Much More!
Visit us online at www.cai-mn.com.
r e pa i r s | s i d i n g | w i n d o w s & d o o r s | d e c k s | c o n c r e T e | g U T T e r s | r o o f i n g
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Minnesota Communit y Living
Board of Directors
From the President
By Mark Gittleman | CAI-MN President
It Passed!
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Establishes a clear process for homeowner associations to obtain lender approval for amendments to governing documents when lenders do not respond to a vote related to same. 4. Increases flexibility in holding hearings by permitting committees appointed by boards of directors to hold such hearings in addition to the boards themselves. 5. Authorizes the unit owners other than the declarant The CAI-MN Legislative Affairs Committee and the to convene a turnover meeting if the declarant fails CAI-MN Board of Directors were actively involved in proto do so. viding input into the legislation, and we thank the many volunteers who were part of this process. We would like to 6. Authorizes voting by electronic means in lieu of holding a meeting of unit owners in person under provide a particular thanks to the Minnesota Bar Associacertain terms and conditions. tion Real Property Law Section MCIOA Committee for 7. Permits the subdivision of association owned units their two years of work in developing the amendment. into one or more units or into limited common or common elements. Minnesota is unique nationally in its efforts to renew and 8. Affirms in detail the fiduciary responsibility of update its state legislation on common interest commumembers of boards of directors appointed by the nities, which is based on the Uniform Common Interest declarant on associations and master associations Ownership Act. By going through a periodic renewal to serve the interests of the association rather than and updating cycle, we are able to keep the statutes of declarant interests. common interest communities as relevant, fair, and 9. Requires that even contracts/agreements that are friendly as possible to the contemporary issues facing our executed during the declarant control period but increasingly complicated industry. In the end, this benare exempt from cancellation must still pass a twoefits all stakeholders including homeowner associations, part “bona fide” and “not unconscionable” or they developers, home purchasers, association managers, and may cancelled. other industry service providers. 10. Clarifies and strengthens language outlining declarant responsibility for paying operating expenses There are a number of important changes and obligations and funding replacement reserves during the that stakeholders in the industry should be aware of and declarant control period. prepare to address. I have made my own top ten list of key changes below that impact a wide swath of common The CAI-MN web site includes a link to an executive interest communities. A more detailed list and descripsummary and detailed summary of the amendment tion of all of the changes is available in the summary prepared by Attorney David Eide, who chaired the referenced toward the end of this article. Minnesota Bar Association MCIOA Committee. A link to the Revisor of Statutes “blacklined” text of the law Top Ten Highlights showing changes relative to existing law is also accessible 1. Provides stronger and clearer requirements via web link from the CAI-MN web site. for funding replacement reserves for common I am pleased to report that the amendment to the Minnesota Common Interest Ownership Act (MCIOA) passed both houses of the legislature and has been signed into law by Governor Pawlenty.
2.
elements. The statute maintains the standard of “adequacy” for replacement reserves but requires a formal evaluation of adequacy at least every third year and specific disclosure and reporting requirements of the components of replacement reserves for which reserve funds are set aside. Clarifies/grants board authority where authorized by the declaration to levy special assessments for emergency purposes and for other select uses but requires approval of 51% of the membership if special assessments are to be designated for future, planned capital replacements.
Most sections of the amended statute will become effective August 1, 2010, and there is a section with the Amendment on applicability of provisions that have different implementation dates. For example, key replacement reserve provisions do not become operative until January 1, 2012.
President Mark Gittleman Phone 952.277.2707 mgittleman@gittleman.com President-Elect Holly Johnson, CMCA, AMS, PCAM Liaison to Vision Awards Committee Phone 763.225.6400 hjohnson@developcommunity.com Secretary Jonathan Edin Phone 651.222.2155 jedin@mnconstructiondefects.com Treasurer Michael P. Mullen, CPA Phone 952.928.3011 mike@cpamullen.com Directors Tom Engblom, AMS, CMCA, PCAM Liaison to Golf Tournament Committee Phone 866.800.4656 tengblom@cabanc.com Sarah J. Fjellanger, CIRMS Liaison to Legislative Action Committee Phone 763.746.8278 fjellangers@rjfagencies.com Mark Johnson Liaison to Communications Committee Phone 612.381.9951 mjohnson@associationsonline.com Joel A. Hilgendorf, JD Liaison to Membership Committee Phone 952.746.2167 jhilgendorf@hjlawfirm.com Traci Lehman, CMCA, AMS, PCAM Liaison to Manager Seminar Committee Phone 612.381.8600 tracil@citiesmanagement.com Gene Sullivan Liaison to Education Committee Phone 952.922.2500 gene@ncmgi.com Jim Rezek Phone 763-424-9984 jrezek@cadence.com
Again, thanks to all of the individuals and organizations in our industry who led the charge and provided input on this important statutory update.
Committee Chairs Legislative Action Chair Michael Klemm, Esq. Phone 952.432.3136 KlemmM@SeversonSheldon.com
Annual Meeting Chair Lisa Astelford, CMCA Phone 952.277.2787 lastleford@gittleman.com
Golf Tournament Co-Chair Tosh Tricas, CMCA, AMS, PCAM Phone 888.219.2534 capt.tosh@gmail.com
Communications Chair Steve Hoogenakker Phone 763.213.2410 steve@landscape.pro
Education Committee Chair Gene Sullivan Phone 952.922.2500 gene@ncmgi.com
Golf Tournament Co-Chair Tom Engblom, CMCA, AMS, PCAM Phone 866.800.4656 tengblom@cabanc.com
Nominating Chair Joel A. Hilgendorf, JD Phone 952.746.2167 jhilgendorf@hjlawfirm.com Membership Chair Mike Laukka, CMCA, AMS, PCAM Phone| 952.831.8325 May June 2010 3 ml@laukka.com
CAI-MN Member News CAI-MN Connects You to Peers and Industry Leaders If you have a question about an association-related issue, there are multiple avenues for you to find answers from peers in community leadership. CAI-MN LinkedIn Group – CAI-MN volunteer leader Steve Hoogenakker has begun the new CAI-MN homeowner association management discussion group on LinkedIn. Already the group has several members and we want you to join the discussion on key issues facing homeowner association leaders. Ask Jim – If you are an association board member and you want to connect with another association volunteer leader, Jim Rezek is here to help. Jim serves as the CAI-MN board representative for community association volunteer leaders. You can connect with Jim directly at jrezek@cadence.com. Disclaimer: CAI-MN serves as a forum to connect its members and related constituents in the community association industry. CAI-MN does not endorse or affirm the accuracy of claims or statements made by participants in these or other forums provided by CAI-MN.
Your Single Source for Construction Defect Questions and Answers. Our Construction Defect Practice Group provides litigation services and counsel to community associations with construction defect issues, including water intrusion, stucco defects, leaking windows, ground heaving issues, and other construction-related problems. Since there are strict time limitations that apply to all construction defect claims, it is important to understand your rights and take action quickly. Contact Robert Keena today for your free initial consultation at jkeena@hjlawfirm.com or 952-746-2113.
10400 Viking Drive, Suite 500, Eden Prairie, MN 55344 P 952-941-4005 • www.hjlawfirm.com
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Minnesota Communit y Living
Calendar
Index
2010 May
features
May 26, 2010, 6:00-7:45 p.m. Sheraton Bloomington Hotel Free – homeowner, $30 manager/business partners, $15 manager/business partner bringing one homeowner, free – manager/ business partner bringing two or more homeowners
6 Spring is Here: Ice Dams &
Homeowners Training Track: Insurance & Risk Management
departments
Carpenter Ants
By Rainbow Pest Experts
7 Does Air Quality Make a Difference?
By Joni Stulac
9 Window Washing 101
By New
Exteriors by SMA
June
CAI-MN Annual Meeting and Vision Awards
June 16, 2010, 5:00-8:30 p.m. Metropolitan Ballroom $45 member early, $55 member regular, $65 nonmember
July
2010 CAI-MN Golf Tournament
July 14, 2010, 11:00 a.m.-8:00 p.m. Stone Ridge Golf Club $160 golf (includes lunch and dinner), $35 lunch only, $45 dinner only
Register online at www.cai-mn.com For more information regarding an event, call Taryn Ayres at 651.265.7856 or visit the CAI-MN Web site. Online registration is available at www. cai-mn.com.
10 Is Your HOA Ready for the New Demographic?
By Tony Poetz
11 MCIOA Amendments in a Nutshell
By Michael D. Klemm
12 Leaky Bath Fans
By Mark Petersen
13 LEADERSHIP and THE BOARD
By Steve Hoogenakker
16 Safeguarding Your Property from Water Damage
By Joni Stulac
19 Largest Homeowners Association in State Becomes Professionally Managed By Jonathan Association
the
23 Battered Property Owners Find
Relief on Storm Damage Claims By Christopher Parrington
3
President’s Message
4
By Mark Gittleman
Member News
Thank You 2010 Annual Partners Platinum Gassen Management Gates General Contractors, Inc. Gittleman Management Hellmuth & Johnson New Exteriors by SMA, Inc. Gold BEI Exterior Maintenance Community Association Banc Silver Allstar Construction Management American Building Contractors Carlson & Associates Complete Building Solutions, LLC Hammargren & Meyer, P.A. Johnson and Lindberg Levin & Edin Omega Management Bronze BNC National Bank Homeowner Association Website – HOA WEB Michael P. Mullen, CPA, PLLC RJF Agencies Schoenfelder Painting
[ ADS Index ] of Advertisers Ace Chem Dry.................................................... 4 Alpine Asphalt................................................. 12 Allstar Construction Management................. 18 American Building Contractors, Inc............... 18 American Family Insurance............................. 21 Asphalt Contractors, Inc.................................. 13 Association Dues Assurance Corporation..... 23 BEI Exterior Maintenance................................. 2 Building Restoration Corporation.................. 18 CA Banc/CondoCerts........................................ 8 Carlson & Associates, Ltd............................... 12 Complete Building Solutions . ......................... 21
Final Coat Painting.......................................... 12 Gates General Contractors, Inc. . .................. 20 Gassen Companies.......................................... 24 Gittleman Management.................................. 15 Goetz Landscape Incorporated...................... 19 Hammargren & Meyer, P.A. . .......................... 11 Hellmuth & Johnson, PLLC......................... 4, 21 HOA WEB......................................................... 12 Johnson & Lindberg, P.A................................. 14 Lake Restoration Inc. ...................................... 21 Levin & Edin..................................................... 18 Minnesota Exteriors Inc................................... 14
Minnesota Roadways Co. .............................. 19 New Exteriors by SMA, Inc............................. 22 Omega Management, Inc............................... 17 Plehal Blacktopping........................................ 21 Renewal by Andersen...................................... 21 Reserve Advisors.............................................. 17 Reserve Data Analysis, Inc................................ 6 Rick’s Roofing & Siding Inc.............................. 17 RJF Agencies................................................... 10 Russo Consulting Inc. ...........................................14 The Inspectors of Election.............................. 23 Thomsen & Nybeck........................................... 8
Published by Community Associations Institute — Minnesota Chapter, copyright 2010. All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Minnesota Community Living or CAI–Minnesota Chapter. The information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting, or other professional services by the CAI–Minnesota Chapter, or by Minnesota Community Living, or its authors. Articles, letters to the editor, and advertising may be sent to Chapter Staff Editor Jane Duntley at janeyd@cai-mn.com, or at CAI–Minnesota Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.
May | June 2010
5
Spring is Here: Ice Dams & Carpenter Ants
By Rainbow Pest Experts
W
hat do Ice Dams & Carpenter Ants have in common?
You may or may not know that carpenter ants prefer to build their nests in wood that has been damaged by water. That being said, this winter many of our homes had an abundance of snow on them. For many, that snow turned into ice dams that backed up and melted under shingles and in some cases even ran down into walls. Unfortunately, that creates the ideal habitat for carpenter ants. Carpenter ants do not eat wood, as they are unable to digest cellulose like termites can. They use their strong mandibles (jaws) to chew the wood in order to make space to expand the size of their colony. A mature carpenter ant colony has an average of 15,000-20,000 members (this includes all of their nest sites). Some colonies have been reported to reach as many as 100,000 members. Satellite nests may be located up to 300 feet away from the primary nest site. Carpenter ants can go undetected for a long
period of time in a home because they are nocturnal (only active at night). Carpenter ants are classified as omnivorous, which means they’ll eat just about anything. Their favorite food is honeydew, which is emitted by aphids that feed on the leaves of plants and trees. What to look for that would indicate you have carpenter ants nesting on your home: • Black ant(s) inside the kitchen, bathrooms, and/or laundry area • Ants with wings on them • You notice sawdust in an unusual area • You hear a “chewing” noise behind the wall There are a number of things that you can do to minimize the chance of having a carpenter ant infestation, including: • Repair roof leaks, plumbing leaks • Replace, if possible, any wet damaged wood. • Keep soil and mulch from making contact with wood siding (the greater the distance, the better). • Seal your home’s foundation of cracks or holes, especially around wires and pipes, with a silicone sealant. • Keep tree branches and vegetation from touching the siding or the roof of the home. • Store all firewood away from the home and elevated off the ground. It is ideal to replace wood that has been damaged by water, but in some cases it may be too costly to tear into those areas where the wood is located. There is good news. Products can be applied to the exterior of your home or business to protect it for an entire season with just one treatment.
Interior attic water damage caused by an ice dam. Frass is an indication of wood chewing carpenter ants. 6
Minnesota Communit y Living
Thawing and freezing causes ice dams to form, leading to water damage to interior framing, sheathing, insulation and drywall of a home. This creates an ideal environment for structure damaging pests such as carpenter ants.
Does Air Quality Make a Difference? by
W
hat a relief – it’s warm outside!!! With warmth comes opening our windows and airing out our homes and then…. closing everything up again and the air conditioning. I wanted to pass onto you some information on air quality, what we all experience in our homes/buildings throughout the year, and how to make your space as healthy as it can be. Sick Building Syndrome Healthier Air Saves You Money
In the 1970s, sick building syndrome became apparent as groups of people displayed similar symptoms after having spent extended periods of time in buildings with poor air quality. Good judgment and immediate attention can correct the situation and also save you money in the event of litigation. People most at risk include: • Infants and children • Pregnant women • Elderly • People with compromised respiratory symptoms or asthma/allergies • People with weakened immune systems While different types of molds are found naturally in the environment, excessive amounts found inside buildings are undesirable; some people can become ill. Experts disagree about the more controversial details of mold, but they all agree that if you have excessive mold inside a building, it needs to be remediated. Clean Air in the Home/Building • Children in homes with high levels of mold show persistent, cold-like symptoms – 300% more than those in clean environments. • Every year about 40 pounds of dust is generated per 1,500 square feet in the average size home. • Roughly 80% of the particles you see floating in your home are dead human skin. Causes of Indoor Air Pollution • Asbestos building products when no longer intact • Biological contaminants such as mold, dust, mites, viruses and pet dander • Carbon Monoxide • Formaldehyde found in pressure-treated wood • Lead (pre-1978 house paint)
• Nitrogen dioxide • Particulates found in dust, pollen, cleaning sprays and poorly ventilated areas
• Tobacco smoke • Volatile organic compounds including
household cleaning products, pesticides and aerosol propellants.
Proper Maintenance Saves Money • Estimates made by the World Health Organization say that poor indoor air quality costs $60 billion in employee sick leave and lost production. • Part of your responsibility to the tenants who live, work, and play in your buildings includes proper maintenance and prompt response to any situation that could cause illness or health concerns. Cleaner Air Means a Healthier Home Improve the Air Quality of Your Home When addressing air quality, inspecting the ductwork should be your first order of business. Dirty ducts can work to circulate odors and contaminants like mold and irritating dust throughout the home. Benefits of cleaning ducts and HVAC: • Lowers indoor air pollution • Reduces pet dander • Eliminates offensive odors • Restores peak operating conditions • Prolongs the life of your system The Truth About Mold From the Ordinary... Fungi and mold naturally occur in our environment. In fact, over 100,000 kinds of fungi have been identified. Fungi produce some wonderful results. Yeast is a type of fungi used in preparing breads, baked goods and other food products, including some alcoholic beverages. The unique flavor of blue cheese is a result of mold. An edible mushroom is simply a type of fungi and lifesaving penicillin is a product of mold. To the unhealthy Intrusion of water into your home or building is an out of the ordinary event. This could result from water intrusion, long-standing leaks, or from poor humidity control. A water damage situation offers opportunities for mold
Joni Stulac,Servpro of Brooklyn Park/Champlin
spores that are normally present on surfaces to grow and multiply, since moisture and humidity levels are typically higher in such structures. • Mold spores are everywhere in our environment and can enter homes/buildings easily. Most types of mold grow quickly if they have a water source, an organic food source and temperatures between 60 and 86 Fahrenheit. • An Institute of Medicine study found excessive dampness indoors is a public health problem by encouraging growth of molds, dust mites and other organisms. Control Moisture and Reduce Mold • Correct any water leaks or standing water • Remove standing water under cooling coils or air handling units. • Properly maintain humidifiers, if used. • Replace wet or visibly moldy insulation material. • Replace washing machine hoses with steel mesh lines. • Move large objects away from the walls to provide good air circulation. • Use exhaust fans in bathrooms, kitchens and laundry rooms. It is imperative that if you experience water intrusion that it be remediated within the first 24-48 hours. If you have experienced an ongoing moisture problem in the home or building, it is important to be alert to the following factors: • The presence of visible mold • Strong musty odors which may indicate mold is present • Any evidence of past moisture problems that might indicate previous mold growth • Excessive humidity. These conditions may require the expertise of a qualified indoor air quality/environmental professional to inspect the building for mold growth. Indoor Air Quality/Environmental professionals evaluate the quality of the air inside a structure. Some specialize and are skilled in testing building for the presence of molds. Using various testing devices, these professionals collect air and surface samples to compare the indoor mold spore count to the outdoor environment. Have a wonderful, healthy summer! May | June 2010
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Minnesota Communit y Living
Window Washing 101 By New Exteriors by SMA Production Department
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indows. They’re always somewhere on an association’s to-do list, and they’re usually a big to-do. Homeowners complain about old, drafty windows, and installing new ones is the logistical equivalent of a root canal. However, there’s one straightforward thing you can do to prolong the life of your windows, improve the health of your residents and bring a smile to both visitors and homeowners: Have your windows professionally washed. Cleaning windows removes damaging grit, lets in natural light and makes a building sparkle to passers by (and potential buyers). Where to Start Most window washing companies provide free estimates and a pretty accurate idea of how long the job will take. Ask them to visit the property and submit a written estimate. They’ll likely break it down according to window size — sliding glass doors are bigger than normal panes so they’re going to cost a bit more. Because HOA units tend to be the same from one to the next in the same compound, you can probably get an estimate on one then multiply by the number of units. As far as completion time, take your personal window washing time and divide by about 50…these crews are fast. Seriously though, companies can get the time down to a science with a little leeway depending on the ladder setups, surrounding obstacles and building structure. On the average, one side of a normal sized pane should take about 90 seconds from dry to dry…including going up and down the ladder. Really. References are important because you don’t want your windows scratched, and you can learn about most companies through rate sites like Angie’s List and Service Magic. Cost From company to company, the cost doesn’t drastically vary, but the ones that perform research, upgrade equipment and focus on keeping talented employees are going to cost a little more. As with everything else in your HOA, you get what you pay for.
As a starting point, one side of a standard (3’ x 4’) pane of glass will run about $3.00. Inside/ Outside combined is around $5 with sliding doors and large picture windows one or two dollars more. Excessive laddering, rappelling and difficult terrain like steep slopes may be extra but they’ll be shown in the bid. Screens are sometimes included, sometimes around fifty cents each.
“
•
The proper treatment of tempered glass is crucial. “Tempered” means the glass has been “baked” in high heat for added endurance. Joe Ruegsegger from the Squeegee Squad tells how this can lead to window scratching. “If the factory has a quality issue and does not properly maintain its glass washer, when the glass enters the furnace it can become fused with glass debris that should not be there. When a pro or anyone washes the glass, those pieces of debris can become dislodged and drag across the glass causing fine scratches.” Sliding doors, large windows, bathroom windows and any glass close to the floor is tempered. “Most window washers are not aware of the issue and may not know how to take proper care when cleaning tempered glass,” explains Joe. There’s more information on avoiding scratched glass at squeegeesquad.com.
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New windows are sealed with silicone adhesive. It’s going to be on the edge of the glass and your window installation company will not be doing the cleaning. At New Exteriors by SMA, we focus on window installations. We know where our expertise lies, so we leave the washing to the pros. Either have the installer sub the cleaning to a pro or save money and call the washer yourself.
“[Make sure the company] takes steps to communicate expectations, facilitates good communication and follows through to make sure everyone has had their expectations met.” Joe Ruegsegger, Squeegee Squad
”
A common HOA practice is to pay for the exterior out the association’s account and let each resident decide on their respective interiors. Most window washing companies will offer incentive pricing for the HOA portion as well as each resident’s interior if there are enough. Important Aspects • Not that you need to be told this, but make sure the company is properly insured. Watching commission-based washers moving up and down forty-foot ladders is both fascinating and horrific. They’re agile and well-trained, but gravity is indiscriminate. •
Ask about other services they perform. Window washers have trucks, ladders and labor which they put to good use. High light bulbs, chandelier cleaning, holiday lights, pressure washing and snow removal can usually be found in their brochure.
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Windows can absolutely be washed in the winter. They add a little methanol to the cleaning solution to make their own version of non-freezing windshield wash. Voila — clean windows in January.
You’ve already got enough to manage — like roofing, landscaping and the complaints about Mrs. Smith’s curry cooking infiltrating the common area. Comparatively, getting the windows washed is pretty straightforward. Joe summed it up by saying, “[Make sure the company] takes steps to communicate expectations, facilitates good communication and follows through to make sure everyone has had their expectations met.” Some references, multiple bids and a written description of the work from the window washers will bring a smile to your current residents and the future tenants and residents driving by.
May | June 2010
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Is Your HOA Ready for the New Demographic? By Tony Poetz, Spectrum Home Services
T
We’ve been here. We’ll be here.
Long-term dedication to your association.
here is currently a demographic that comprises 24% of the U.S. population and will grow by 40% over the next five years. That’s 75 million people expected to increase to 105 million by 2015.
The group isn’t teens or an immigration influx – we’re talking about seniors aged 55 and older. The baby boomer generation is peaking in population and, according to an October 2009 study conducted by Met Life, 90% of those surveyed want to avoid assisted living and its $150/day expense (average in Minnesota). They want to live as independently as possible and with the amount of maintenance required to stay in a private residence the near future is almost certainly going to see seniors moving to condominiums in droves. Are homeowner associations ready for this? They can be.
“ ” “This technology can help give family members a level of assurance.” Nathan Pearson,The Good Samaritan Society
Changing an entire HOA or apartment complex over to near-assisted living can be incredibly expensive with stair lifts, elevators and monitoring systems. Your HOA doesn’t have to install all of those things or even suggest adjustments in all of the units. By making a few common sense adaptations to just a percentage of available units, your HOA can be prepared for the next wave. 1) Walk in your demo’s shoes. As we get older, we don’t lift our feet as high when we walk. We also utilize walkers and wheelchairs. Innocuous thresholds, cords, loose rugs and high-shag carpeting become a nuisance. Raised concrete and uneven ground around the building are just as bothersome. Falls are the number one cause of accidents in the home but can be greatly alleviated with a few adjustments. 2) Keep items reachable. Slide-out racks installed in cupboards will save someone a sore back by making that buried frying pan more easily accessible. Installing towel racks right next to the shower can eliminate a slippery step. 3) Make safety a priority in the bathroom. Speaking of slippery steps, safety bars and treads in the shower are a no-brainer. Wall mounted fold-up chairs, regulated temperature faucets and walk-in tubs are other helpful additions for someone with limited mobility. 4) Install a mini emergency kiosk. A properly outfitted end-table in an accessible spot can save crucial minutes in the event of an emergency. Add a phone with large fire, medical and family speed dial buttons. Post a list of emergency contacts right next to the first-aid kit you’re attaching to the side of the end-table. The #2 and #3 home injuries are burns and cuts, respectively, so account for those in the first-aid kit. This addition is a HUGE benefit for family members’ peace of mind. 5) Create smooth transitions. Ramps and raised counters that account for wheelchairs will make a buyer’s decision for them. No access means no new association member. New Demographic continued on page 14 10
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MCIOA Amendments in a Nutshell by
T
Michael D. Klemm, Esq., Severson, Sheldon, Dougherty & Molenda, P.A.
his article provides a brief summary of significant amendments to the Minnesota Common Interest Ownership Act (“MCIOA”), Minnesota Statutes Chapter 515B, that apply to existing common interest communities (“CIC’s”) that are subject to MCIOA. The amendments will take effect on August 1, 2010, except as otherwise noted.
Subdivision, Combination or Conversion of Units Owned by Association. Minn. Stat. §§ 515B.2-112 and 515B.2-113 are amended to give an association the unilateral right to subdivide, combine or convert units owned exclusively by the association, by the method described in the statute, if the declaration so provides.
Vacation of Public Land. The MCIOA amendments create a new section, Minn. Stat. § 515B.11105, to address ownership and related issues that arise in connection with the vacation of a street, alley, or other public land adjacent to a CIC.
Mortgagee Consent. Minn. Stat. § 515B.2118 is amended to provide that if a secured party does not object in writing to a proposed amendment to the declaration, bylaws, or articles of incorporation within 60 days after receiving notice and a copy of the proposed amendment by certified mail, postage prepaid and return receipt requested, then the amendment is deemed approved, unless the amendment affects the priority of the secured party’s security interest or its ability to foreclose its security interest.
Common Element Licenses. Minn. Stat. § 515B.2-109 is amended to provide that a declaration may authorize a declarant to grant exclusive licenses to unit owners for the use of common element garage stalls, storage lockers or similar common element spaces. The amendment also addresses license requirements, payments, transfer restrictions and record keeping. Expansion of Flexible CIC. Minn. Stat. § 515B.2-111 is amended to provide that any document adding additional real estate to a flexible CIC must be captioned “Supplemental Declaration” and must contain the declarant’s current good faith estimate of the total number of units that may be created within any remaining additional real estate, as well as the other information currently required by the statute.
SMART & DECISIVE The Best Value in Construction Law for Community Associations
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Hearings by Committee. Minn. Stat. § 515B.3102(a)(11) is amended to authorize a committee appointed by the board to conduct hearings regarding alleged violations of the declaration, bylaws, and rules and regulations, subject to the provisions of the declaration and bylaws. Enforcement by Officers and Directors Appointed by Declarant. Minn. Stat. § 515B.3103(a) is amended to provide that officers and directors appointed by the declarant must comply with the declaration, bylaws, articles of incorporation, and MCIOA and enforce the same against all unit owners, including the declarant and its affiliates, in a uniform and fair manner. The same standards of conduct apply to officers and directors of master associations. Turnover Meetings. Minn. Stat. § 515B.3103(d) is amended to provide that if the board fails or refuses to timely call a meeting to elect non-declarant directors, then the unit owners other than a declarant and its affiliates may call the meeting. Annual Reports. Minn. Stat. § 515B.3106(c)(2) is amended to provide that the annual report must include a statement of the association’s total replacement reserves, the components of the CIC for which the reserves are set aside, and any allocations for particular components.
Quorums. Minn. Stat. § 515B.3-109 is amended to provide that a master developer or declarant or their affiliates shall be deemed to be present for purposes of establishing a quorum at a meeting called to elect non-declarant directors, regardless of their failure to attend the meeting. Electronic Voting. Minn. Stat. § 515B.3110(c) is amended to authorize electronic voting, if authorized by the statute under which the association was created and not prohibited by the governing documents. Electronic voting may be used in combination with mailed ballots, but electronic voting may not be used in combination with a vote taken at a meeting of unit owners. Replacement Reserves. Minn. Stat. § 515B.3114 is amended effective January 1, 2012, to require an association to include in its annual budgets, for fiscal years commencing on or after January 1, 2012, replacement reserves projected by the board to be adequate, together with past and future contributions, to fund the replacement of those components of the CIC which the association is obligated to replace due to ordinary wear and tear or obsolescence. The projections must be based on the estimated remaining useful life of each component, but replacement reserves need not be segregated for specific components. Unless the declaration provides otherwise, replacement reserves are not required for (i) components with a remaining useful life of more than 30 years, (ii) limited common elements, if their replacement cost will be assessed against the units to which they are assigned, (iii) certain other components that an association plans to fund by other assessments, subject to statutory requirements, or (iv) non-residential CIC’s. The association may not borrow from replacement reserves or comingle them with operating funds, but may pledge replacement reserves as security for a loan. Declarant’s Duty to Assign Warranties. Minn. Stat. § 515B.3-120 is amended to provide that a declarant shall not be obligated to assign any third-party warranty to the association, if assignment is prohibited or prevents the declarant from enforcing the warranty. Accounting Controls. Minn. Stat. § 515B.3121 is amended to provide that votes by a declarant or its affiliates do not count toward the MCIOA Amendments continued on page 14 May | June 2010
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Leaky Bath Fans by
T
his winter we encountered several customers who had problems with water dripping from their bath fans. While leaks like these could be caused by an improperly installed roof vent, it has been our experience that water that shows up in and around bath fans is most frequently caused by condensation. This condensation usually occurs in bath fans that are infrequently used or run for too short a duration.
when a fan is run for a short period of time, the warm air that is being expelled condenses on the interior of the cold duct. If a fan is repeatedly used for short durations during a particularly long stretch of cold weather, condensation will continue to build up in the form of frost. When the weather eventually warms up, the inside of the duct warms up as well, and the built up frost comes dripping back down into the house.
Bath fans are vented one of two ways, either out the side of the building or through the roof. The ones that are vented out the side of the building are typically not a concern. It’s the ones that are vented through the roof that can cause trouble. The problem occurs when warm, moist air from the living space travels through a cold duct that is located in the attic space.
Condensation can even occur in a bath fan duct if the fan is never used. Just because a fan isn’t running doesn’t mean that air isn’t flowing through it. Most living spaces maintain a positive air pressure. This means that inside air is constantly trying to escape to the outside. There is a damper in most bath fans that allows air to flow in only one direction— out. This damper keeps the wind and water from being blown back into the building but does not prevent air from flowing out. It is likely that enough inside air could escape out through the fan to create frost on the inside of a cold duct.
Even though the ductwork in the attic should be wrapped in insulation, eventually an unused duct will assume the temperature of the surrounding air. So on those very cold days, the inside of a duct will be very cold, and
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We recommend running bath fans for extended periods during cold weather. If the fan is run for a longer duration (at least 15 minutes), the warm interior air has a chance to raise the temperature of the inside of the duct, thus avoiding condensation. If only a small amount of frost has built up, the warm air will dry it up before it has a chance to drip back down. Inexpensive switches can be installed that let the fan run for a predetermined length of time. And if you’re at all like me, someone who would have no shot whatsoever to remember to regularly turn on a bath fan in a bathroom that is rarely used, there are 7-day programmable timers out there that might come in handy. Mark Petersen, Access Builders Corporation accessbuilderscorporation.com
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LEADERSHIP and THE BOARD: A Story for Board Members and Company Owners by
T
here comes a point in time in every leader’s time when he or she is tired of spearheading every initiative and dragging and cajoling the other members to help. At that point, they look to take their board or company to another level, either to create more energy, creativity or create more balance in their life, or possibly all of the above. When they find themselves in this situation, they must become a leader working “on” the business of managing a board instead of “in” it. The first rule of a great board leader is that the team can never be completely dependent upon any one individual. One of the more common mistakes made is that the president of the board fails to let go of certain activities and therefore stunts the growth of the team as a whole. The next important point to remember is that as a leader, part of their job is to build a team of decisionmakers. This can only be done by observing, directing and training them to be inter-dependent with each other. There are 3 stages of dependency; 1. Dependent: Unable to make decisions or to sustain a high level of accomplishments without prodding or constant oversight. It takes at least one additional competent individual to monitor this person. Using fuzzy math this equation would look like (1+1)= 1. 2. Independent: Able to successfully perform complete projects required by the board in their entirety without over-
Steve Hoogenakker, Concierge Landscape Environments
sight. Independents will often take over the entire task even if it was handed out to a subcommittee of 4 people. Independents like to think of themselves as the highest order of individual as I used to believe. Independents don’t require someone to watch over them, but they don’t add people to the process either. Fuzzy math might be 1=1, or a really good independent might be able to perform the work of 3 people or 1=3. 3. Inter-dependent: This individual can complete the project on their own but seek out ideas and input from others. They have good communication skills and are somewhat empathetic (not sympathetic). When a project is given to an interdependent person, they PULL people into the project, creating synergy and energy. Because their very nature is to look at each issue as it affects all members, the fuzzy math might look like 1+4=30, with 1 being the interdependent person, 4 being the input and ideas brought in by other people, and 30 being the number of residents who are on board because the group nailed the mission and tapped into the energy of the association. In the Garth Brooks song, “Standing Outside the Fire,” people want to be “cool” and “strong” and face the problems alone, but the real answer is to be strong, but just “weak” enough to let others in and help create the future. We call them cool Those hearts that have no scars to show The ones that never do let go And risk it the tables being turned We call them strong Those who can face this world alone Who seem to get by on their own Those who will never take the fall
We call them weak Who are unable to resist The slightest chance (that) might exist And for that forsake it all They’re so hell bent on giving, walking a wire Convinced it’s not living if you stand outside the fire. So what’s the plan? As a leader you are responsible for the focus of your board and the needs of all residents. The clearer the vision of the leader, the more people will follow. When building your team, as the chief, you must lead by example. Each board must have a Visionary and a Manager. A single person should not hold these positions. In many cases, one person tries to fill both roles. This is the classic case of a workaholic. This is the type of person who puts in 60 or 70 hours a week and has no balance in their life. You must let go of this attitude if you wish to achieve success in building a strong team and surround yourself with supporters. Surround yourself with people whom you can trust and whom you know will get the job done. You must engage yourself with people who will follow your lead. You are the quarterback of your team, and as such, you must have people around you (like Michael Oher in “The Blind Side”) who will protect you and block for you. Make sure that your association’s environment is enjoyable and satisfying. If this is not a satisfying, gratifying and enjoyable place, how can you expect your board to flourish? With this in mind, make sure you avoid the temptation of micromanaging. While delegating is a critical part of your role as the Manager or Visionary, keeping too close an eye on your board makes them feel untrusted and hesitant. Let them know you expect them to make some mistakes, but that you trust them to excel at their work without you hounding them or watching their every move. You’ll be grateful for a board member who isn’t afraid to use his or her own initiative, and get some balance back in life while accomplishing more than ever before May | June 2010
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New Demographic continued from page 10
MCIOA Amendments continued from page 11
6) Monitoring systems bring peace of mind. Some companies coordinate the installation of home monitoring systems. Humidity sensors installed in a bathroom tell whether or not your loved one is regularly bathing. A sensor in the kitchen can tell if a burner has been left on. The information is sent to an electronic data manager that can be fully monitored online. Alerts can be automatically sent to pagers and cell phones. Nathan Pearson of The Good Samaritan Society explains, “A family member may worry that a loved one isn’t getting enough rest or eating properly, and this technology can help give family members a level of assurance that their loved ones are receiving the assistance that they need.”
30% approval required to waive annual review of the association’s financial statements.
With a large aging population about to engage the HOA market, it may be wise to consider these options sooner rather than later. The sooner you can announce that your HOA is “retirement-ready,” the sooner a family can start including you in their preparatory research. A few adjustments and your HOA or apartment complex can appeal to major demographic, increase your occupancy capacity and make someone’s life a lot easier.
Resale Disclosure Certificate. Minn. Stat. § 515B.4-107 is amended to require the seller to provide the buyer with copies of the master declaration, articles of incorporation, bylaws and rules and regulations, if the CIC is subject to a master declaration. The Resale Disclosure Certificate form is amended to require the disclosure of additional information regarding common elements, reserves and warranties. If a unit owner who acquired title to the2/4/07 unit johnson_2.5x4.5_bleed.pdf
through foreclosure asks the association to provide a resale disclosure certificate, the unit owner must inform the association whether the unit owner is a declarant; if the unit owner is a declarant, then the unit owner must give the buyer a declarant’s disclosure statement, not a resale disclosure certificate.
Disclosure Statement for Conversion CIC. Minn. Stat. § 515B.4-105 is amended to list detailed information that must be included in the opinion of a professional architect or engineer regarding the condition of a building that was occupied before the creation of the CIC.
Notice to Prospective Tenant Regarding Intent to Convert Property to CIC. Minn. Stat. § 515B.4-111 is amended to provide that a tenant does not have the rights described in Minn. Stat. § 515B.4-111 or under any municipal ordinance if the tenant received a sufficient written notice of intent to convert the property to a CIC before signing a lease or lease renewal and before occupying the space, and less than two years before the CIC was created.
Declarant’s Liability for Failure to Deliver Disclosure Statement. Minn. Stat. § 515B.4106(d) is amended to increase the declarant’s liability to a purchaser for failure to deliver a disclosure statement that substantially complies with MCIOA from $1,000 to $5,000, in addition to any damages or other amounts recoverable by the purchaser.
This article does not cover all of the MCIOA amendments that may affect existing CICs, nor does it address amendments that will apply only to CICs created on or after August 1, 2010. The information in this article is general information and does not constitute legal advice regarding action to be taken in any particular case, which may vary depending on the facts, applicable statutes, governing documents and other variables. 8:33:09 PM
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Safeguarding Your Property from Water Damage – What to Do Until Help Arrives by
I
t is recommended to take a proactive approach to property maintenance in order to safeguard from potential water damage risks.
The exterior of the property is an ideal place to start. The roof is exposed to the harshest extremes and should be properly inspected and maintained. Inspect for loose, missing or deteriorated shingles, and take appropriate action. Gutters should be thoroughly cleaned and inspected. Windows and shutters should also be inspected and any necessary repairs made to prevent water intrusion or damage from high winds.
Moving to the interior, large appliances with water connections should be checked regularly for leaks, especially washing machines. Hot water heaters should be inspected for signs of wear and replaced when necessary. Plumbing and fixtures should be properly maintained, and any signs of escaping moisture should be addressed as quickly as possible. Water damages are always unwelcome visitors. Regardless of the invading water’s source, be it a leaky roof, malfunctioning home appliance or even a plumbing failure the threat to a property is very real. Water damages require prompt
Joni Stulac, Servpro of Brooklyn Park / Champlin
mitigation to prevent further damage, and just as important to eliminate the risk of costly mold and structural problems in the future. In as little as 24 – 48 hours visible mold growth may appear within a structure. Fueled by excess moisture that may have soaked into the walls or seeped beneath the flooring, mold will begin to feed off structural components such as drywall and woods. What was once a small, water damage has now become an expensive mold remediation situation. Below are some tips on what to do and not to do until your restoration professional arrives:
Water Damage From Clean Water DO
• Shut off source of water if possible or contact a qualified party • • • • • • • • •
to stop the water source. Turn off circuit breakers for wet areas of the building, when access to power distribution panel is safe from electrical shock Remove as much excess water as possible by mopping and blotting. Wipe excess water from wood furniture after removing lamps and tabletop items. Remove and prop up wet upholstery cushions for even drying. Place aluminum foil or wood blocks between furniture legs and wet carpeting. Remove to a safe, dry place any paintings, art objects, computers, documents and other materials that are valuable or sensitive to moisture. Use wooden clothespins to keep furniture skirting off of damp floors. Hang draperies with coated hangers to avoid contact with wet carpeting or floors. Hang furs and leather goods to dry separately at room temperature.
DON’T
• Enter rooms with standing water where electrical shock hazards may exist.
• Enter affected areas if electrical outlets, switches, circuit break• • • • •
ers or electrical equipment are exposed to water. Always avoid electrical shock hazards. Leave books, newspapers, magazines or other colored items on wet carpets or floors to cause staining. Leave Oriental rugs or other colored rugs on wet wall-to-wall carpets to cause staining. Use your household vacuum cleaner to remove water, possibly causing electrical shock or damage to the vacuum cleaner. Use TV’s or other appliances while standing on wet carpets or floors, especially not on wet concrete floors. Turn on ceiling fixtures if ceiling is wet or enter rooms where ceilings are sagging from retained water.
Water Damage From Contaminated Water DO
DON’T
• Avoid all contact with sewage and items contaminated by sewage. • Spread contaminated water by walking unnecessarily on dam• Wash your hands thoroughly after contact with contaminated aged or wet areas. items. • Turn on HVAC system if there is a possibility of spreading contaminated air.
• Use household fans to dry the structure and spread contaminants. • Use products for personal hygiene and cleanliness if exposed to the contaminated areas.
Harmful Waste DO
DON’T
• Stay out of affected areas. • Attempt cleanup of any kind. • Call emergency service personnel if the situation is life-threatening. • Touch or handle items that might be contaminated with • Treat all bodily fluids as if they are contaminated. bodily fluids. 16
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4/16/10 12:35:38 PM
Largest Homeowners Association in the State Becomes Professionally Managed
J
onathan in Chaska is a homeowners community which stretches across 2,200 acres, 23 neighborhoods, and includes approximately 8,000 of the city’s residents. As the largest HOA in Minnesota, Jonathan has 20 miles of paved trails and 100 acres of common space with 19 tot lots, 34 neighborhood entrance monument areas, 40 sheltered mail stations and bus stops, community vegetable gardens, several historic landmarks including two old German family farm houses (each circa 1900), and a popular winter “sliding hill” recreation area. Jonathan also owns and maintains the Lake Grace beach area and pavilion. “The decision to hire a professional property management company a couple of years ago was crucial to our Association’s future,” says Jonathan President Nate Bostrom. “Now the Board can spend more of its time and efforts focusing on innovation, visioning and leading this, the largest homeowners association in Minnesota.” Jonathan provides a wide array of property maintenance services and solutions: landscaping/ pond maintenance, snow removal, grounds keeping, irrigation, shelter maintenance, trails/trees maintenance, maintenance supplies and repairs, contracted labor, and refuse removal. By offering as many “in-house” services as possible – as opposed to contracting out to vendors – Jonathan delivers substantial annual savings to its homeowners. Also, all of its tools, equipment, and motorized maintenance vehicles are owned outright. This gives the Association powerful leverage for holding down annual maintenance costs for the thousands of Chaska residents who live in Jonathan neighborhoods.
The tools, equipment and maintenance vehicles are currently being stored in the Lake Grace pavilion, which was designed as a recreational facility among the beach front amenities of Lake Grace. However, for most of the past decade this original intent has been thwarted by the extended “temporary” solution of storing maintenance resources in this building – and homeowner discontent has been increasing. The Lake Grace pavilion is a two mile round trip from the Association headquarters. Access, via pick-up truck, is accomplished by driving on a paved recreational biking/hiking trail. Special care must be taken by maintenance staff on each round trip as there are often multiple groups of school children, homeowners, and other Chaska residents using this trail in the recreational manner for which it was intended. In April 2009 the Jonathan Board included an equipment storage assessment on its list of strategic priorities. The exhaustive research produced a compilation of 32 data points across 6 different management categories (staff efficiency factors, environmental considerations, aesthetic concerns, staff and asset security advantages, a needs analysis, and a cost-benefit evaluation) which was presented to the Jonathan Board at its October 2009 meeting. In the opinion of Board member Maria Awes, the information compiled and provided by the property manager was “extremely impressive, very thorough and complete. It gave us all the data we needed, including a complete inventory and status of all our tools and equipment.” Board members voted unanimously to move forward and construct an equipment storage facility at the Association headquarters, as was recommend by the property manager.
by
Jonathan Association
Even though a project of this size will require substantial “up front” financial commitment, the Board believes it’s in the best long-term interest of all its homeowners to have an equipment storage facility in a central location and physically near to the staff offices. The decision is projected to produce an annual average savings in staff time, salary costs and fuel charges equal to the purchasing power (based upon current contract rates) of dozens of additional boulevard trees throughout all 23 Jonathan neighborhoods. “Our professional property management company came through for us in a big way,” said Board member Jim Battenberg. “They provided us with a ‘big picture’ focus and it made our decision as a Board an easy one to make.” The City of Chaska – via its Heritage Preservation Commission, Planning Commission, and the City Council – has since approved Jonathan’s request for a conditional use permit for the building of an equipment storage facility. The start of construction is planned for later this spring and summer. “One of the most important assignments of an association Board is to maintain and improve all of the physical amenities and facilities,” says Bostrom. “This includes preparing recommendations and appropriate budgets based upon our known current and perceived future needs. As a group of volunteer directors, the Jonathan Board has come to rely heavily upon the experience and professional expertise of our property management company in serving our homeowners.”
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The Easiest Maintenance Decision You Can Make. Associations face numerous maintenance decisions. However, when it comes to maintaining your association’s legal affairs, look no further than Hellmuth & Johnson. Hundreds of associations and property managers look to us as the definitive source for legal expertise, education and counsel. As one of the first firms in Minnesota to focus on this specialized area of law, we know the many challenges of running and managing an effective home owners association. For attorneys who know associations, call us or visit our web site www.mncommunityassociation.com.
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Battered Property Owners Find Relief on Storm Damage Claims by
A
homeowner association is much like any other business, with one main distinction — its primary (and often sole) asset is the property owned by the individual homeowners. Associations will go to great lengths to protect this asset, including the purchase of insurance to protect against any unforeseen damage. Wind and hail damage insurance is one of the most commonly purchased types of insurance for associations. Until recently, associations assumed that the insurance they purchased would allow them to repair or replace storm damage to their property. Around 2008, however, insurance companies began to ignore their contractual obligations and either refused pay to repair or replace storm damage to property — or even worse, refused to participate in a contractually-provided for appraisal process to determine the amount of loss that resulted from a storm. In March 2010, however, the Minnesota Court of Appeals issued a ruling in favor of Minnesota homeowner associations, making it clear that insurance companies better begin complying with the terms of their own insurance policies.
We make every vote count!
In March 2010, the Minnesota courts were asked to consider the scope of authority of an appraisal panel appointed to determine the amount of loss caused by a storm, pursuant to the terms of a homeowner association’s policy of insurance. In that case, known a Insurance Corp. v. Twin Homes of French Ridge Homeowners Association, 2010 WL 607409 (Minn. Ct. App. Feb. 23, 2010), an appraisal panel was appointed to determine the amount of loss caused by a hail and wind storm in May 2007. Pursuant to the insurance policy, the appraisal panel concluded that the roofs of Twin Homes of French Ridge Homeowners Association’s (“Twin Homes”) property suffered significant hail damage that warranted a repair or replacement pursuant to (“THE INSURER”) insurance policy. Given that the existing shingles on Twin Homes’ roofs were no longer available through their manufacturer, the appraisal panel concluded that a full roof replacement was warranted to repair or replace the storm damage. As a result, the appraisal panel issued an award in an amount sufficient to allow Twin Homes to replace their entire roofs, including shingles that were not damaged by the storm. Despite the insurance policy, the insurer refused to honor the appraisal award and challenged it in district court, alleging that the appraisal panel exceeded the scope of its authority by awarding a full roof replacement when portions of the roof were not damaged by hail. The district court confirmed the appraisal award, stating that pursuant to the insurer’s insurance policy, which mirrors the mandatory insurance policy language set forth in Minnesota Statutes Section 65A.26 and is commonly found in many other policies, the appraisal panel was authorized to determine the amount of loss caused by a wind and hail storm, but also the method of repairing or replacing the loss. According to the court of appeals, the appraisal panel did not
Christopher Parrington, Esq.
exceed the scope of its authority by awarding a full roof replacement under the policy even though only a portion of the shingles on the roof were actually damaged by wind or hail, because the appraisal panel believed the only way to repair or replace the damaged property was by awarding a full roof replacement. From 2008 until this ruling, most insurance companies refused to pay for roof replacements unless the entire roof was damaged. Weather forecasters are predicting large storms this spring and summer. If true, many home owners could be entitled to receive a new roof rather than patching their existing roofs, depending on the circumstances that may exist. For homeowner associations, this could mean the difference between temporary patchwork that will eventually require a full roof replacement paid through assessments of individual home owners, and a full roof replacement paid for by the insurer following a storm. The existence of new roofs could also increase home values, giving selling homeowners a competitive edge in the current real estate market. The Minnesota courts have clearly indicated that home owners and homeowners associations have certain rights pursuant to Minnesota law and insurance policies, and going forward, insurance companies will be required to honor and respect those rights, especially where wind and hail storm damage is involved. Many insurance companies will try to avoid this ruling; therefore, it is important that home owners and homeowners associations are fully aware of their rights under insurance policies and Minnesota law. Christopher P. Parrington, a shareholder with Skjold n Barthel has appeared before the Minnesota Court of Appeals in this case and a number of important commercial contract cases. For more information, Parrington can be reached at 612.746.2560 or cparrington@skjold-barthel.com.
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