South Coast Property Management

Leap Day: February 29, 2012

2012-02-29T16:59:00.001-08:00

’Leap Day’ is February 29, which is an extra (intercalary)day added during a Leap Year, making the year 366 days long – and not365 days, like a common (normal) year.

Nearly every 4 years is a Leap Year in our modern GregorianCalendar.

Traditions and folklore

Leap Day as a concept has existed for more than 2000 years,and is still associated with age-old traditions, folklore andsuperstition. One of the most popular traditions is that women propose totheir boyfriends.

Brief history of the Leap Day

Leap Years are needed to keep our calendar in alignment withthe Earth's revolutions around the sun. It takes the Earth approximately365.242199 days (a tropical year) to circle once around the Sun. If we didn'tadd a day on February 29 nearly every 4 years, we would lose almost six hoursevery year. After only 100 years, our calendar would be off by approximately 24days!

The ancient Roman Calendar added an extra month everyfew years to maintain the correct seasonal changes.

But Julius Caesar implemented a new calendar – the JulianCalendar – in 45 BCE (Before Common Era) with an extra day added every 4years. At the time, Leap Day was February 24, because February was the lastmonth of the year.

Too many Leap Years

In 1582 Pope Gregory XIII refined the Julian calendar with anew rule that a century year is not a Leap Year unless it is evenly divisibleby 400. This transition to the Gregorian Calendar was observed in somecountries including Italy, Poland, Portugal, and Spain. The transition tooklonger for other countries; Great Britain started using the Gregorian Calendarin 1752 and Lithuania in 1915.

The History of Punxsutawney Phil & Five Facts About Groundhog Day

2012-02-02T11:19:00.000-08:00

Groundhog Day hasn't always featureda little rodent and a horde of media cameras tracking the little critter'smovement every Feb. 2.

It's actually connected to CandlemasDay, when Christian clergy in Europe offered blessings and handed out candlesto use in the dark of winter, according to the National Weather Service.

The observance occurred at themidpoint of the winter solstice and spring equinox. It also included a similartradition to today's Groundhog Day: Clear skies on Candlemas Day meant a longerwinter was ahead.

Later the custom was carried toGermany with the conquest of the Romans. The Germans then added the practicethat if the sun came out on Candlemas Day, a hedgehog would cast a shadow thatpredicted six more weeks of bad weather.

Today, Groundhog Day in the UnitedStates is all about Punxsutawney, Penn., a town located about 90 milesnortheast of Pittsburgh. That stateside tradition dates back to the earliestEuropean settlers of Pennsylvania, some of whom were German and brought theirCandlemas Day traditions to the area in the 1700s.

Because of the large population ofgroundhogs, the settlers used them instead of hedgehogs, according to the PunxsutawneyGroundhog Day Club , which started in 1887.

The legend of Phil, the Punxsutawneygroundhog, was started by a club member who was also the editor of the localpaper. He used his newspaper to proclaim Phil as the only official weatherprocrastinating groundhog, according to the club's website.

One of the earliest references tothe American Groundhog Day can be found in a diary entry of Feb. 4, 1841, inMorgantown, Penn., according to Stormfax Weather Almanac.

"Last Tuesday, the 2nd, wasCandlemas day, the day on which, according to the Germans, the groundhog peepsout of his winter quarters and if he sees his shadow he pops back for anothersix weeks nap, but if the day be cloudy he remains out, as the weather is to bemoderate," wrote storekeeper James Morris.

Hereare five facts you probably didn't know about Groundhog Day:

1. PunxsutawneyPhil has seen his shadow 97times, has not seen it 15 times, and nine years are unaccounted for.

2. The National Climatic Data Center reportedly stated that Phil's prediction's have beencorrect 39 percent of the time. This number is in conflict with Phil's club,which states he's been right 100 percent of the time.

3. Accordingto the funny website groundhog.org,there's a legend that during Prohibition, Phil threatened to impose 60 weeks of winter on thecommunity if he wasn't allowed a drink.

4. Inthe years following the release of Groundhog Day, a 1993 film starring Bill Murray, crowds numbering as highas 30,000 have visited Gobbler's Knob, a tiny hill in Punxsutawney where theceremony takes place.

5. Though groundhogs typically live only six to eightyears, Groundhog Day lore suggests that Phil drinks a magic elixir every summer, whichgives him seven more years of life.

California Appeals Court Rules on Solar Panel Systems

2012-01-31T15:07:00.000-08:00

A new case from the Court of Appealsprovides some guidance on architectural review of solar energy systems.

Facts. A homeowner in the Tesoro del ValleMaster Homeowners Association installed solar panels on a slope adjacent to hisproperty without HOA approval. For aesthetic reasons and because of slopestructure restrictions, the HOA wanted the panels on the owner's roof. Theowner refused and the association sued.

Aesthetic Considerations. Thehomeowner argued that "aesthetic considerations" were an improperpart of the review process and violated Civil Code §714. The courtdisagreed. It ruled that "an evaluation of a proposed solar energysystem--just as any other proposed improvement--would involve consideration ofaesthetics."

Cost Considerations. Experttestimony by the association showed that the cost of installing the solarpanels on the owner's roof was actually cheaper than installing them on theslope. Based on the testimony, the court ruled that the HOA's guidelines werenot unduly burdensome and, therefore, reasonable.

Duty to Redesign. Theowner then argued that once the architectural committee disapproved hisoriginal application, it had a duty to redesign his solar energy system to meettheir guidelines. Again the court disagreed. The court found that the lawimposed no such burden on associations. Per statute, the only obligation by thecommittee was to inform the owner of the basis for its denial of hisapplication. The court ruled that "the burden is on the homeowner tosubmit an application that is complete and sufficient to generate[architectural committee] approval." (Tesoro del Valle v. Griffen).

RECOMMENDATION: Thecourt's ruling does not give associations license to deny any and allapplications for solar energy systems. It does, however, demonstrate that if anassociation's architectural guidelines are reasonable, they are enforceable. Ifboards are unsure about their guidelines, they should have an architect andlegal counsel review them.

Thanks to Adrian Adams of the law firm Adams& Kessler for providing this information.

Christmas Facts & Fallacies

2011-12-19T10:53:00.000-08:00

Christmas is just around the corner and we thought this would be a great time to share some thoughts about Christmas.

1. What’s up with mistletoe? Mistletoe, the only plant to rival roses for inspiringkisses, was originally used by Druid priests 200 years before the birth ofChrist in their winter celebrations. They revered the plant since it had noroots yet remained green during the cold months of winter.

The ancient Celtics believed mistletoe to have magicalhealing powers and used it as an antidote for poison, infertility, and to wardoff evil spirits. The plant was also seen as a symbol of peace, and it is saidthat among Romans, enemies who met under mistletoe would lay down their weaponsand embrace.

Scandinavians associated the plant with Frigga, their goddess of love, and itmay be from this that we derive the custom of kissing under the mistletoe.Those who kissed under the mistletoe had the promise of happiness and good luckin the following year.

So mistletoe is more related to wintertime, than Christmas, but its use ishighly encouraged!.

2. The stable truth. The biblical story about the birth of Christ doesnot actually mention a stable. It does mention a manger which often leadspeople to think the baby Jesus was born in a barn. In reality, Jesus wasprobably born in a cave or according to archaeology experts; Jesus was probablyborn in the house of relatives, but outside of the normal living and guestquarters. Quite a humble beginning.

3. Who were The Three Kings? Sorry to totally mess up your nativityscene (mine, too!) but there is no actual mention of “kings” in the biblicalaccount of Christ’s birth. The Bible does say that wise men, also called“magi”, (but not Kings) visited Jesus. And it never says there were three ofthem. The word used for “magi” is plural, there were more than one, but peopleassume there were three because of the three gifts—gold, frankincense, andmyrhh. Bottom line, they were not kings and there may not have been three ofthem!

4. Is Christmas really Jesus’ birthday? Although it is possible, it isvery unlikely that Jesus was born on December 25th. No one knows for sure theexact date of Christ's birth. The date chosen to celebrate it may be related tothe Roman Saturnalia festival that lasted from the 17th -23rd of December.December 25th was chosen somewhere during the 4th century AD by the heads ofthe church. People were already used to gathering, so why not celebrate thebirth of Christ?

5. Who is Santa Claus? Yes, Virginia, there really was a Santa Claus!The origin of Santa Claus began in the 4th century with the real SaintNicholas, a Bishop in present day Turkey. By all accounts St. Nicholas was agenerous and devoted Christ follower. He was particularly devoted to children.His kindness and reputation for generosity gave rise to much folklore that hasspread and increased across cultures and through the years.

6. What about Jesus? Who was he? Did he really exist or was he amythological character? There can be no doubt that Jesus actually existed andthat he walked the earth. Sources outside of the Bible clearly confirm this. Wemay not have all the facts and cast of characters of our nativity scenescompletely accurate, but we can rest assured that Jesus Christ was born, thathis birth has been celebrated for two thousand years, and that he is the reasonfor the season.

Merry Christmas!

Don't Let a Washer Hose Ruin Your Holiday

2011-12-12T16:06:00.000-08:00

Washingmachine hoses are one of the most neglected but potentially damagingmaintenance items in a home. Because they are out of sight, they are forgottenand give little warning of impending disaster.

Notchecking your washing machine hoses is like not checking your oil. Nothing seems to be wrong until that moment when you life seems to flash infront of you... as well as the floating dresser... and the sofa table... andthe dog... all magically cascading out the front door on a burst-hosetsunami!! If you can't remember how old your washer is, or if you thinkits age is in the double-figures, its time to replace those hoses!!

Choosinga replacement hose... it's not so easy!

Beforewe go further, let's briefly talk about your replacement hose choices. Thereare two basic types of hoses available in hardware stores... reinforcedrubber and stainless-steel reinforced.

Reinforcedrubber hoses aresimilar to hoses used by your parents (and maybe your grandparents). Though the earlier types were plain solid rubber, modern hoses are reinforcedwith a braided rayon or polyester mesh to increase bursting strength. Ifyou choose this type of hose, be sure the label says "reinforced" oryou may be getting a low-quality hose product.

Thenewer kid on the block is the stainless steel braided hose, oftencalled "burst-proof" or "burst resistant". Theconstruction is a very flexible plastic hose encased in a twisted, flexiblemesh of stainless steel wire. One brand is the FluidmasterNO-BURST® hose. This type of hose is more durable to physicaldamage (cutting and twisting) than rubber hoses and generally carry longerguarantees... but do not necessarily last longer!

Despitetheir name, burst-proof hoses can fail... with the samewater-logged consequences as rubber hoses. According to Wade Pearson ofState Farm Insurance, "There are many factors involved in why a hosewould leak or burst; such as age of the hose, (our research indicates manytimes hoses sit in a warehouse for years before they are eventually sent to aretailer) water chemical content that may cause deterioration inside the hoseand eventual failure, (many of the metal braided hoses have rubber interiorswhich are also subject to deterioration) and of course, manufacturing defectsare also responsible for many failures."

"Regardlessof the type of hose that a homeowner uses, our recommendation is to check themfrequently and replace them every 3-5 years as part of a proactive maintenanceplan." (Note that State Farm Insurance does not endorse, recommend orwarranty any brand of washing machine hose.)

Watchout for common installation errors!

Whatconfounds any statistics on hose failure is installation error, which candrastically shorten the life of a hose. Regardless of the type of hoseyou choose, sharp kinks or bends in the hose can weaken it or the seal at theconnectors. To prevent pressure on the hose and connectors, allow atleast 3"-4" between the back of the washing machine and thewall. And don't skimp on the length... purchase hoses longer than youneed to allow for a little slack!

Ifyou have a tight installation such as an shallow laundry closet, there arehoses available that have right-angle connectors. These allow the washingmachine to be placed closer to the wall without putting extra stress on thehose. You may have to special order them or order them online if your hardwarestore doesn't stock them.

So,to summarize...

(1)With a lack of hard statistical information on failure rates, I can't make adefinitive recommendation. Stainless steel hoses appear to have the edge,but they are not foolproof. For example, State Farm Insuranceleans towards the braided hoses, but does not wholeheartedly recommendthem: "Hoses with external steel braided wire may be more costly(approx. $10) than rubber hoses (approx. $5) but have a lower failurerate."

(2) Regular inspection may be the key to minimizing your risk. Look for ruston the connectors, unusual bulges in rubber hoses (especially near theconnectors) or unraveling and bulging is stainless steel hoses. Ofcourse, if there is any leaking whatsoever replace the hose immediately!

The Wind & Rain Is Coming! Dealing With Tree Emergencies

2011-11-03T13:29:00.000-07:00

As we enter theSanta Ana wind season and the rainy season, dealing with tree emergencies takeson added importance. Here are some important tips from Earthwise Arborists onwhat to do if you have a tree emergency. Take immediate action if...

A broken branch or top is lodged in a tree.
A tree is dead.
A branch is dead and of sufficient size to cause injury (this will vary with height and size of branch).
A tree is leaning with recent root exposure, soil movement, or soil mounding near the base of the tree.
More than half of the roots under the tree’s crown have been cut or crushed. These trees are dangerous because they do not have adequate structural support from the root system.
Advanced decay is present in the root flares or “buttress” roots.
A tree leans excessively.
A large branch is out of proportion with the rest of the crown.
Advanced decay is associated with cracks, weak branch unions, or other defects.
A branch of sufficient size to cause injury is decayed.
The thickness of sound wood is less than 1" for every 6" of diameter at any point on the stem.
A crack extends deeply into, or completely through the stem.
Two or more cracks occur in the same general area of the stem.
A crack is in contact with another defect.
A branch of sufficient size to cause injury is cracked.

Thanks to Jim Hartnett of Earthwisefor providing these important tips. If you have tree needs you can contact themat Earthwise Arborists,711 S. Fee Ana Placentia, CA 92870-6706; (714)986-2400 office; (714)321-2126cell; jimh@hunterlandscape.net www.earthwisearborists.net

Say Good-bye to Actions Without a Meeting

2011-09-28T12:03:00.000-07:00

Governor Brown Signs SB 563;

By David Swedelson, Condo lawyer and HOA attorney; SeniorPartner SwedelsonGottlieb

Despite significant industry opposition, the Governor hassigned into law amendments to the Davis Stirling Act and specifically CivilCode Section 1363.05, also known as the Common Interest Development OpenMeeting Act. Here is the story of how this new law came to be:

As most of you know, the Act was amended with the additionof this code section requiring that board meetings at California communityassociations be open to members except for certain specified executive sessionmeetings when those meetings should be kept confidential or emergency meetingswhen the required notice to owners is not possible.

Civil Code Section 1363.05, The Common Interest DevelopmentOpen Meeting Act states:

“(b) Any member of the association may attend meetings ofthe Board of the association, except when the board adjourns to executivesession to consider litigation, matters relating to the formation of contractswith third parties, member discipline, personnel matters, or to meet with amember upon the member’s request, regarding the members payment of assessmentsas specified in Section 1367 or 1367.1. The Board shall meet in executivesession, if requested by a member who may be subject to a fine, penalty, orother form of discipline, and the member shall be entitled to attend theexecutive session." … and … “(j) As used in this section, “meeting”includes any congregation of a majority of the members of the board at the sametime and place to hear, discuss, or deliberate upon any item of businessscheduled to be heard by the board, except those matters that may be discussedin executive session. "

However, as most California community associations arecorporations, the California Corporations Code applies and addresses this issuein part and states:

"7211. (b) An action required or permitted to be takenby the board may be taken without a meeting, if all members of the board shallindividually or collectively consent in writing to that action. The writtenconsent or consents shall be filed with the minutes of the proceedings of theboard. The action by written consent shall have the same force and effect as aunanimous vote of the directors. For purposes of this subdivision only, “allmembers of the board” does  notinclude an “interested director” as defined in Section 5233, insofar as it ismade applicable pursuant to Section 7238.”

This is where the term "Action Without A Meeting"comes from.

There has been a debate as to whether this section of theCorporations Code applies to California condominium, planned development and/orstock cooperative community associations, as it seems to conflict with thelanguage, if not the spirit, of the Open Meeting Act. Well, the Legislature hasended that debate, and Actions Without A Meeting are no longer allowed.

The new amendments to the open meeting act eliminate actionswithout a meeting, clarify what and how emergency meetings can be conducted,and address notices of executive session meetings and meetings held via email,among other things. As if a volunteer board of directors' job was not difficultenough, the California legislature’s abolishing actions without a meeting justmade their jobs a bit more difficult by eliminating the ability of a board totake some actions without a meeting, as well as the additional requirement of atwo day notice for executive session meetings and the new added requirementthat if a board meets telephonically, at least one Board member must be at themeeting location so that the association’s members can attend and listen inperson to the board’s deliberations and decisions.

ByDavid Swedelson, Condo lawyer and HOA attorney; Senior Partner Swedelson Gottliebwww.sghoalaw.com David Swedelson can bereached by email for comments at dcs@sghoalaw.comSouth Coast would like to thank Mr. Swedelson for providing this information.

Has Your Turf Seen Better Days?

2011-09-20T11:44:00.000-07:00

Considerthe Benefits of Topdressing, Aeration and Overseeding

If your lawn is looking a little worse for wear this fall, you're not alone.From increased foot traffic to insect pests to hot, dry weather, the summer seasoncan be tough on turf. If you're noticing thinning turf or bare areas throughoutyour lawn, fall is the perfect time to address these problems.

Getting Your Lawn Back on Track

The best repair option depends on the specific needs and condition of yourlawn. Some tried-and-true renovation methods include:

Topdressingwith Compost, Topsoil or Planter's Mix:

Topdressing builds up the quality of the soil and helps promote a strongerroot system in your turf by buffering the turf crowns from environmental conditionsthat can cause additional stress. This green service offers many benefits. Forexample, once a layer of topdressing is added, sandy soil will be able toretain moisture better, making the lawn more resistant to drought.

Aeration:

All lawns need to be aerated from time to time. Plugs of soil are pulled upfrom your lawn to create more room for air, water and fertilizer to reach theroots. This results in expansion of the root system for thicker, healthiergrass. Aeration can also help to break up harmful thatch layers.

Aeration with Overseeding:

Following up aeration with overseeding is a great way to thicken up a thinlawn or add a hardier, more drought-resistant grass variety to your property.The new grass plants will have an easier time growing in the holes left byaeration.

Remember that all lawns, regardless of their condition, can benefit from renovation practices from time to time.

South Coast would like to thank Flora Terra Landscape Management for the information in this article. If you are interested in how they can help to improve your landscape needs give them a call at 800-455-0304.

What Should You Do If You Come Home To A Flooded House?

2011-08-09T16:41:00.000-07:00

HomeEmergency Tips

What you can do until help arrives?

Dorothy Bisaha of Servpro of Tustin

Water Damage

You come home from vacation, the store, seeing a movie orany of a thousand reasons you’ve been away from your house and you discover youhome has been flooded with water. What do I do? After any water damagesituation, your primary focus should be safety first:

Is it safe to stay in the house?
Electrical and "slip andfall" hazards are some of the most prevalent concerns.
Only do activities that are safe foryou to perform.
Wet materials can be VERY heavy. Becareful!

Do Remove excess water by mopping and blotting.
Do Wipe excess water from wood furniture after removal of lamps and tabletop items.
Do Remove and prop wet upholstery and cushions.
Do Place aluminum foil or wood blocks between furniture legs and wet carpeting
Do Turn air conditioning on for maximum drying in summer.
Do Remove colored rugs from wet carpeting.
Do Remove art objects to a safe, dry place.
Do Gather loose items from floors.

Don't leave wet fabrics in place. Hang furs and leather goods.
Don't leave books, magazines or other colored items on wet carpet or floors.
Don't use your household vacuum to remove water.
Don't use television or other household appliances.
Don't turn on ceiling fixtures if ceiling is wet, and keep out of rooms where ceilings are sagging.

Thanksto Dorothy Bisaha of Servpro of Tustin for these important water emergencytips. For more information on how Servpro can assist you contact Dorothy at 714-480-1340or on the web at www.servprotustin.com

Does Your Association Carry Workers' Compensation Insurance?

2011-07-26T12:44:00.000-07:00

Luis Gonzalez was a member of a painting crew when, inSeptember 2005, he was injured working on a three-story condominium associationcalled “3515-17-19 Sacramento Street Homeowners Association” in San FranciscoCalifornia. The HOA contracted with Bruce Parsley to paint the exterior of thebuilding. The Covenants, Conditions and Restrictions (CC&Rs) of the HOAmandated that the HOA “shall acquire and maintain”… [w}orker’s compensationinsurance to the extent necessary to comply with any applicable law.” However,when the HOA negotiated the painting contract with Parsley, he lied and saidthat he maintained both general liability insurance and workers’ compensationinsurance. He also provided bogus documentation of non-existent insurance. TheHOA relied on these false representations and “assumed” that since Parsley wasinsured he must also be licensed.

Luis Gonzales was suspended in a bosun’s chair and workingnear the top of the building’s interior light well when the chair’s riggingsnapped and dropped him approximately 20 feet to the bottom of the shaft. Hesuffered serious injuries to both shoulders and numerous fractured bones.Parsley, the employer, was cited by Cal-OSHA for workplace safety violations.

Luis Gonzalez applied to the Workers’ Compensation AppealsBoard since Parsley had no insurance. As determined by the Heiman case, thehiring of an unlicensed contractor who is injured, or whose employee isinjured, while performing work for a HOA, creates an environment in whichdifferent employment relationships may arise with respect to "employerliability for workers' compensation or tort damages." (Heiman v. Workers'Comp. Appeals Bd. (2007) 149 Cal.App.4th 724, 734 (Heiman).) In the seminalopinion, State Compensation Ins. Fund v. Workers' Comp. Appeals Bd. (1985) 40Cal.3d 5 (State Fund), the Supreme Court concluded that a homeowner who hiredan unlicensed contractor, who was injured when he fell from a scaffold, wasrequired to assume the status of "employer" for workers' compensationliability because section 2750.5 requires an independent contractor be licensedas a matter of law.

"Any person performing any function or activity forwhich a [contractor's] license is required . . . shall hold a validcontractor's license as a condition of having independent contractorstatus." (Fernandez v. Lawson (2003) 31 Cal.4th 31, 40 (conc. opn. ofBrown, J.).) It is well established that the language of the statute"creates a rebuttable presumption affecting the burden of proof that aworker performing services for which a contractor's license is required, or whois performing such services for a person who is required to obtain such alicense, is an employee rather than an independent contractor."

Themoral of this story: Even if an independent contractor liesto you about the existence of a contractor’s license or workers’ compensationcoverage, it doesn’t rule out the possibility that the common interestdevelopment could be found to be in an employee/employer relationship at thetime of loss. A minimum audit payroll “no payroll” workers’ compensation policy,in the name of the common interest development, acts as an effective safety netagainst these sorts of claims. Workers’ compensation “no payroll” policies arereadily available in California for minimum premiums as low as $528 to $606 peryear*.

*Workers’ compensation policies are subject to annual auditand premiums may exceed the quoted minimum premiums if uninsured or unlicensedcontractors are reported at the conclusion of the policy period.

Thanks to Timothy Cline of Timothy Cline Insurance Agency for this important article on Workers Compensation Insurance. For more insurance help contact Mr. Cline at 800-966-9566 on on the web at www.timothycline.com

2011-07-12T12:14:00.000-07:00

South Coast would like to thank Jon Crain, Marketing Director for Armstrong/Robitaille/Riegle Insurance agency for contributing the article below:

INSURANCETO VALUE

WHAT IS ITAND WHY IS IT SO IMPORTANT?

During thepast few years, our office has had the distinct privilege ofreviewing hundreds of insurance portfolios for different typesof risks; mostly commercial and residential associations. Theseopportunities have allowed us to provide competitive bids andthe privilege of ordering coverage. During the course of ourreviews we have sometimes been surprised at how many master propertiespolicies have blanket insurance values which are underinsured; the valuesonly reflecting a fraction of what it would take to replace the propertyin the event there was a "total loss."

Most, if not all, insurance carriers have access to acomputerized appraisal system known as Marshall & Swift,Boeckh . This appraisal system is nationally recognized andconsidered the leader in building valuations. This system allowscarriers and agents us to provide a fairly accurate estimate of thereplacement value for a condominium association based upon factors such asthe location of the risk, age, physical characteristics, etc.

There is certain criteria carriers use to determinethe per square foot replacement cost. Some of these arethe year built, number of stories, location, construction type andmore. Using this criteria, most carriers fall within a range of$120 to $160 per square foot for the cost torebuild. Unfortunately, what we have been periodically finding issurprising. For example, we have seen several associations wherethe property limit is only insuring the association for a very low $70 to$90 per square foot. A good percentage of these are withpolicies that have been in force with the same carrier and agent for 5 ormore years and the property coverage limits have not been reviewed oradjusted accordingly.

Why is this of importance?

First, if there is a major conflagration and the Associationis underinsured, there may be an uncovered loss ora partially covered loss which could result in a special assessmentcharged to the unit owners. This could create the possibilityof a lawsuit from the unit owners against their own Board of Directors forfailure to maintain or procure adequate insurance. Many Directors andOfficers liability policies used to exclude "failure to maintain orprocure adequate insurance." You can contact your currentagent to see if the current D&O policy includes this coverage.

Second, almost all CC&R's specifically require theAssociation to provide insurance for all the Association "commonarea" property for the “100% Full Value Replacement Costwithout deduction for depreciation or co-insurance”. This isnot an elective but rather a requirement of the Board to maintain suchcoverage’s as mandated by the CC&R's. Remember ourTip of the Week from a few years ago that covered the words “shall" vs."may" when reading CC&R's.

In addition, most CC&R's for condominiums/townhomes alsohave a lender section requiring the Association to provide proper replacementvalue in the policies maintained or to meet the lenderrequirements. Failing to do so, could cause a specialassessment as referenced above, which could lead to a unit owner defaulton their mortgage due to the size of the special assessment. This createsan additional potential liability against the Board from the lenders of thoseunits affected alleging the Board "failed to adequatelyprocure/maintain adequate insurance.”

One quick way to check to see if there is proper insuranceto value is to take the current square footage of the habitation units andapply that to $120.00 per square foot. In the case of theparking/garages square footage, use at least $60.00 per squarefoot. If there is a substantial difference in the value you arrive atversus that which the Association is currently carrying, chances are theAssociation is underinsured. To obtain information on a unit’ssquare footage, year built and much more we recommend you utilize the websitesmany real estate professional use which are www.zillow.com, www.redfin.com and www.trulia.com to mention a few.

There is one other coverage issue to review,the 125% extender endorsement, which many of you may beaware of. There are different versions of this “extender” endorsementoffered by carriers. What is important to note that even with thisextender it is very important that the property limit be insured to actualreplacement cost value. It is not correct to submitinaccurate square footage which reduces the insured value and then relyupon the 125% extender to fill in the gap to the actual insuredvalue. For example, if the square footage calculates to aproperty replacement value of $40 million then with the 125% extenderendorsement the insured would have up to $50 million in the event it was everneeded. This is what is important, “if it is everneeded.” These extenders usually have a clause that state in orderfor it to be valid the property must be insured to the 100% replacementcost value. Anything less than the actual replacement costcould potentially put this extender endorsement at risk to providecoverage.

Please note that on all proposals completed byArmstrong/Robitaille/Riegle Business and Insurance Solutions we use the abovewebsites and other resources to confirm year built, square footage, etc. andthen we run the Marshall & Swift, Boeckh report to arrive at theproperty limit required. If you have any Association wherein you'dlike this performed (even Associations we currently do not insure), pleasecontact us.

In this very competitive insurance market, it is notexpensive to insure to value, but it can be very expensive for allthe reasons mentioned above to fail to do so.

Jon Crain

Marketing

Armstrong/Robitaille/Riegle

Business and Insurance Solutions

jcrain@ar-ins.com

Direct: 949-373-8426

Fax: 949-487-6150