Hurricane Michael and Florida Residential Associations

On October 10, 2018, Hurricane Michael and its 155 mph winds changed life forever in Northwest Florida. Residents of Bay County and Gulf County suffered the worst, with catastrophic damage as a result of the extreme winds and storm surge. Many of these residents live in condominium and homeowner associations, which suffered damage along with the rest of the area. In the aftermath of Hurricane Michael, these associations have several important matters to consider. Some key information and questions are as follows:

  • Florida Statutes provide condominium association boards with Emergency Powers which include:
    • Power to conduct or cancel association meetings with notice given as is practicable.
    • Power to contract with contractors to mitigate further damage without an owners’. vote, including services within condominium units on behalf of unit owners.
    • Power to borrow money without membership approval to fund emergency repairs.
    • Power to levy a special assessment with an owners’ vote.
  • Insurance proceeds and special assessments may lead to total revenues exceeding higher financial statement thresholds. This may have implications on budget amounts for compilation, review and audit services.
  • If insurance proceeds and special assessment cash amounts are held in separate, newly-created bank accounts, the accounts should be subject to the same controls as your standard bank accounts. These amounts should not be under the control of one single person such as the board president.
  • If the association utilized pooled reserves, the use of those reserves is limited to components included in the reserve pool.
  • The association should be prepared to use its insurance deductible reserve if one is established. Florida Statutes do provide that insurance deductibles may be funded by available cash funds including appropriate reserve funds.
  • Some additional best practices to consider:
    • Obtain advice from legal counsel and CPAs when making major decisions
    • Begin vetting contractors immediately for potential bidding purposes since time is of the essence. Additionally, be sure to use licensed contractors and be cautious of scammers.
    • Review recent association financial statements with your CRI professional to determine the availability of funds for insurance deductible funding purposes,
    • File your insurance claim with the assistance of your attorney, CPA, and/or insurance professional.
    • Be wary of cost-plus contracts and have legal counsel review all major construction contracts for propriety.
2018-12-05T15:50:46+00:00November 14th, 2018|DISASTER RECOVERY|