Condo Media - December 2016 - 28

EVERYTHING

Changes

For purposes of this discussion, we're
focusing on the bylaws and declaration,
which owners must vote to amend, rather than the rules and regulations, which
boards have the authority to amend.
(See related sidebar on page 30.)
How much revision the governing
documents will need depends partly on
their age and partly on "the skill of the
drafters," Henry Goodman, a partner
in Goodman, Shapiro & Lombardi,
LLC, observes. "Some documents are
fine," Goodman says. "Others aren't
fine at all."
As a general rule, the older the
documents, the more updating they
are likely to require. But if the drafters relied heavily on older documents
("Sometimes they are copied word for
word," Gary Daddario, a partner in
Winer & Bennett, LLP, observes), then
relatively new documents may be as
outdated as much older ones.

revisions. "By far the most amendments
I have drafted recently have sought
to shift responsibility for paying the
master policy deductible from the
association to unit owners," Joseph
Carleton, who represents condominium
associations in Maine, reports.
Daddario has noticed the same trend,
and he isn't surprised by it. When
deductibles were $500 or less, no one
worried much about who paid them, he
says. But as condominium associations
have been increasing their deductibles to reduce their premium costs,
deductibles have soared. Deductibles
of $10,000, $20,000, or more aren't
uncommon, Daddario observes. So
many associations are amending their
documents to specify that the owners
filing a claim under the association's
master policy must pay the deductible,
unless the association was responsible
for the loss.

FOCUS ON INSURANCE
When he reviews documents, Goodman
looks first at the insurance provisions.
Some documents specify the types and
amounts of insurance required, but
those requirements may fall short of the
coverage a community needs.
"You need to be sure the method of
valuation specified in the documents
gives you 100 percent full replacement
coverage," Goodman says. He also
recommends adding language making
some coverage mandatory-ordinance
or law (covering the cost of meeting
building code requirements that have
changed since the condominium was
built), earthquake, and flood insurance
top his list. If the bylaws mandate the
coverage, Goodman notes, boards looking for ways to reduce expenses won't
be able to eliminate it.
Insurance deductibles have become
another prime target for document

MANDATING AN HO6
More associations are also requiring
owners to obtain individual HO6 policies to insure their personal belongings
and to cover their share of the association deductible. And most association
attorneys think that's a good idea.
Carl Lisman, a partner in the Vermont law firm Lisman Leckerling, P.C.,
doesn't insert an HO6 requirement
in documents he drafts or amends,
but he does specify that owners will
be responsible for losses related to
their unit, which, he notes, "is a strong
incentive" to obtain the necessary
coverage.
Insurance isn't the only area in
which associations are looking to shift
more liability from the association to
individual owners. Lisman has seen
more communities looking to amend
their documents to shift common area
expenses to owners, too.

"You tell owners that they're responsible for replacing the roof on their
home, or shoveling their own walk or
repairing their own walkway," Lisman
says. "You can't do that in a high rise,"
he agrees. But where you can separate
maintenance obligations, "you reduce
the size of the association's budget,"
and you reduce the risks that the inability of a few owners to pay their
share of expenses will weaken the
association's finances and undermine
its ability to properly maintain the
community.
TARGETS FOR REVISION
Industry attorneys note many other
areas in which changes in governing
documents might be necessary or advisable. The most common:
To comply with changes in local,
state, or federal laws. The recent overhaul of New Hampshire's condominium
statute is an example of a statutory
change that may require sweeping
revisions in the governing documents
of condominiums in that state. Less
dramatic, but no less necessary:
n Declarations and bylaws typically

specify that units can be used only for
single-family occupancy. But some
older documents define families narrowly as individuals related by blood
or marriage, language that could run
afoul of Fair Housing laws prohibiting
discrimination based on sexual orientation. Daddario recommends broad language, "single occupancy as defined by
law," to avoid current problems and to
anticipate the possibility that the statutory definitions may change over time.

n Some associations need to revise

their collection policies to ensure
that the timing of notices and lien

Specifying that owners will be responsible for losses related to their unit
creates "a strong incentive" for them to obtain the necessary coverage.
28

CONDOMEDIA

Condo Media - December 2016

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