HOA

I have just found out through Freedom of Information Act, that our HOA received insurance settlement for Hurricane Ike, in 2009 and did not notify most homeowners. The funds , over $150K were distributed to a group of 8 homeowners out of 130 without them notifying any other homeowners except those 8.  I have asked for bank statemnets for months covering receipt and distribution of insurance funds. What remidies are available and what can the rest 122 homeowners do to rectify the situation?

BTW none of the 122 homeowners were asked if that had hurricane damages and from the group of 8 , 3 were board members who got lofty settlements.

Would really appreciate your input on this.

If what you write is true then you (and the other homeowners) will need to hire a lawyer and sue the HOA boardmembers and other individuals for misappropriation of HOA funds.

Unfortunately, I think you are not understanding something and you'll need to clarify it before taking action.

Insurance companies don't pay out $150,000 without there being enough damage to justify it. And that damage would have been to common elements covered by the association property insurance and would have had nothing to do with damage to individual homes.

And look around you. Did the hurricane damage to the common elements remain unrepaired?

Are you sure that individual homeowners received checks made out to them or did the HOA pay contractors for the repairs?

Did the individual homeowners (122) who had hurricane damage have damage to their own homes or to common elements?

You've got a lot to figure out before you go running off to a lawyer.

Thank you for your reply. There are some facts that are undeniable. As a multiple-owner , I was never approached by the Board, to see if I had dmages to my units, nor did anybldy I know. Just this fact alone, according to a CPA who specializes in HOA, was insurance fraud. Another fact is that the receipients of that money were Board members and close assocites who vote for them regularly, including the Board president who received the lion's share of the money. A rental unit that I own and was in the path of hurricane was left undamaged, but a Board member living 10 feet away who didn't even have a broken glass, received a check for $10,000 for internal damages and not common elements. Mine and other unit by that Board , who pretty much lived in the center of us, were never even notified of insurance distribution. Don't you think this fact alone in an undidvided interest is a violation of Texas unsuarnace laws and Property codes? A homeowner who I know and actually did file for damges was never informed of an insurance distribution and never received a dime. But we will be hiring an attorney to look into it and to see exactly what are rights are before filing a lawsuit.

Before I make any more comments please define "units"?

Condos in multi story buildings?

Townhomes?

Individual single family dwellings?

Something else?

John Bahran:

BTW none of the 122 homeowners were asked if that had hurricane damages

Why would you expect the HOA to ask you if you had damage to your personal unit?  If you own it and had damage it would be your responsibility to contact your insurance company to file a claim.  Can you explain your reasoning?

So I guess if you are a member of the Board and know this information can get the biggest share and let your friends who didn't even have as much as a broken window get $10,000 checks. I guess according to your reasoning only 8 units belonging to people who knew this information and accidentally were Board members or close associates could get the money and the rest 122 people who probably had damages or didn't know they could get money from insurance didn't need to know about it either.

They are condos in multi story buildings.

Do you have any idea what the claim covered?  Who filed it, individual or HOA?  Was there damage to the common area that required repairs or to individual units?  If common area, HOA should have filed the claim.  If individual unit, the owner should have filed the claim.  Explain and/or provide details as your post is extremely vague.

John Bahran:

the rest 122 people who probably had damages

There is no "probably" in a claim.  Either there was covered damage or not.  Are the condos individually owned and insured?

I really hope you are reading my post carefully. I said the 122 homeowners didn't file damages because they didn't know about it. So yes they "probably" had damges but didn't know if it would meet the deductible, or they "probably" had damages but didn't even know they could file becuae many are foreign-born or just don't know that we had disaster coverage. If we were notified there was insuarnce money coming , we could have notifed each other or even read and if we didn't understand that we could have asked others to help us in undersatnding, but we were not given the chance. In all their newsletters for the last 2 years, there was not one word about insurance settlement. Doesn't that sound odd if not downright insurance fraud , that money about 1/6 of our annual budget is being distributed, and not one word about it anywhere? We had to get that through Freedom of Information Act. Doesn't that sound strange that only 8 homeowners with special ties and positions got that money? Regarding your questions, we just got about 1000 pages worth of documents we didn't know existed. We are trying to find the best way to find out what happened. None of us are attorneys or CPAs. The condos are individually owned but insured as a whole , covering 4 buildings.

John Bahran:

I said the 122 homeowners didn't file damages because they didn't know about it.

Either you have damages or you don't.  For instance, if the front window on your unit was broken out by the wind during the storm, why would you need someone else to tell you?  If your roof was damaged and you had water damage, would you need someone to tell you?  Did any of the 122 "others" have any kind of damage or not?  If so, were those damages repaired by the HOA?  If the repairs were done by the HOA, what's the problem?

If an owner had damage and didn't report it, would you think that the HOA was somehow responsible for repairs that was undocumented?

If you and the other 121 unit owners believe something isn't right, why not call out the HOA directors and see if they can explain it.

John Bahran:

Doesn't that sound strange that only 8 homeowners with special ties and positions got that money?

You haven't expressly explained how these 8 individuals have benefited. 

I did read your post carefully and now I hope you read mine carefully.

First, my background. 35 years in the insurance industry the last 9 of which were as a property claim rep. My territory included the gulf states. I was already retired when Ike struck but prior to my retirement I handled claims for the 2004 and 2005 hurricanes including Katrina. Hundreds of claims had to do with either condo association policies or unitowner policies and I often pondered weak and weary over many a quaint and curious volume of CC&Rs.

Allow me to educate you a bit on things you might not be aware of.

1 - The CC&Rs define what is a "common element" and what is a "unit." Read the CC&Rs and find those definitions. It is your legal obligation to read and understand the CC&Rs because that is your contract with the HOA and that contract is enforceable in court. Nobody is obligated to tell you what's in them.

2 - Your unitowner's policy (HO-6) covers damage to your "unit." The association property insurance covers damage to the "common elements." If you owned rental condos you would have had an individual policy covering fire, wind, hail, etc and liability. The association property insurance requirements are addressed in the CC&Rs. Since it is your obligation to read and understand the CC&Rs, the HOA has no obligation to tell you about the HOA's property insurance. It's all in there for you to read.

3 - When the hurricane hit, was your "unit" damaged and/or was there any damage to "common elements" associated with your unit? You won't be able to answer that question until you've read the CC&Rs and understand the difference between "unit" and "common elements."

4 - If your "unit" was damaged (within the definition of "unit" you would have had to file a claim with your own insurance company.

5 - If the "common elements" associated with your "unit" were damaged you would have had to report that damage to the HOA WHEN IT HAPPENED. Nobody was obligated to hunt you down and ask you if you had damage. The CC&Rs address not only the HOA insurance but also address the HOA's obligation to repair damage to "common elements." It's all in CC&Rs.

Now, let's examine your comments:

John Bahran:

I said the 122 homeowners didn't file damages because they didn't know about it.

Have you questioned each and every one of those 122 homeowners to find out what they did or didn't do about their damage?

John Bahran:

So yes they "probably" had damges but didn't know if it would meet the deductible

That's no excuse for not reporting "common element" damage to the HOA.

John Bahran:

they "probably" had damages but didn't even know they could file becuae many are foreign-born

Also no excuse. US law charges you with knowledge or constructive knowledge of the terms and conditions of your contracts regardless of where you were born. Constructive knowledge means that you are out of luck if you didn't read it or didn't bother hunting down a copy when you bought the place.

John Bahran:

just don't know that we had disaster coverage

Again, it's in the CC&Rs.

John Bahran:

If we were notified there was insuarnce money coming , we could have notifed each other

Again, nobody's obligated to notify you because the insurance information is in the CC&Rs. And, frankly, anybody who made a claim under their unitowner policy would very likely been told by their own claim rep that any items of "common elements" that were claimed were not covered by their policy.

John Bahran:

even read and if we didn't understand that we could have asked others to help us in undersatnding, but we were not given the chance

Again, it was entirely up to the unitowners to get themselves the CC&Rs when they bought the place and familiarize themselves with its contents.

John Bahran:

In all their newsletters for the last 2 years, there was not one word about insurance settlement. Doesn't that sound odd if not downright insurance fraud , that money about 1/6 of our annual budget is being distributed, and not one word about it anywhere?

So far there is no evidence of any insurance fraud nor is there any evidence of statutory violations that you previously alluded to. "Odd" is not necessarily illegal.

John Bahran:

Doesn't that sound strange that only 8 homeowners with special ties and positions got that money?

Do you really KNOW that those 8 homeowners "got" the money from the HOA insurance?

As I explained earlier, $150,000 worth of damage to "common elements" would have had to have been repaired and lot's of money paid to contractor's. It's also quite likely that the insurance company would have paid a depreciated amount to the HOA and held back the balance until the repairs were completed and then only paid the balance when presented with paid contractors' invoices. I find it difficult to imagine that there would have been money left over to make individual payments to selected homeowners.

That alone suggests that you might be jumping to conclusions based on erroneous assumptions.

I'm not saying that it didn't happen I'm just postulating why it might not have been able to happen in the way you allege and I'm suggesting that there are a lot of things you still need to find out before you have grounds for a lawsuit.

Well, the comments about not reading carefully was not directed at you. You've helped me in the past and have always been very helpful.You are one of the reasons I post here, hoping you see it and help me out.If I hit on the wrong "reply" I do apologize.

I'lll try to answer your questions as much as best as I can. Please remembeer that I am not an attorney, nor an insurance professional . Yes, they did receive checks directly from the insurance and not for common elements but for things insuide like couch, blinds, carpeting etc. Odd may not be illegal , but like many other cases in law it just adds to suspicion. It really is suspicious that in 2 years only people who were pervy to this information had hurricane damages, one living 10 feet away from my unit to the tune of $10,000. As checking regularly on my  unit I know that other unit did not have any damage and that includes the whole section.Only that condo which is located pretty much in the middle got a $10,000 check. You also have to know that the Board with proxies and eliminating the names of other candidates from their annual letter has been successful in keeping everybody off the Board. It has always been the good 'ol' boys Board. This also adds to the suspicion.One unit owner who I personally know and was not associated with the Board did file for insurance claim and got Zero.The Board member living about 150 feet away from him with no damages to the common elements and only inside (like couch , carpeting and etc. ) got a check for $38,000. I did discuss that with a CPA who specializes in HOA stuff. He told me , just the fact that they applied to the HOA insurance ,and distributed that without notifyng ALL the homeowners constitutes fraud. He said he has seen plenty of examples in his career, where HOA people get the money and since they are in power, just pocket that themselves. I have posted about HOA before and I have had some people getting so jittery about it as if I have attacked their livelihood. I do appreciate your always non-objective comments. I agree with the CPA and think there is insurance fraud. However, I will go very cautiously and will get evidence, which would also include getting an attorney to help preserve my rights.I was just here trying to get people's opinion.Thanks aagin.

I still don't think you have read my answer very carefully. The HOA got a check directly from the insurance company and distributed that to those 8 homeowners. I said I didn't have damages but people could have had it and didn't file becuase they thought they didn't meet the deductible, or didn't know they could get it repaired.

Not too many people are knowledgable about insurance matters. The other 121 hoemowners don't know because they were not notified at all. I got this information  1 1/2year later when I though something was wrong through Freedom of Information Act and am about to share that with the other 121. I will do that after my attornet ascertains there was a fraud comiitted.Don't you think they should have been notified to file for insurance if they had any damages? Isn't that a job for a good HOA or people who can't wait to get their hands on this money and just distribute that amongst themselves? If you think the former then you are not living in the real world. I talked to a CPA who is a HOA specialist and he told me its common fraud by HOAs in conjuction with mangment companies and they just hope that the regular homeowner doesn't have the money or resources to investigate that. I tried to get some non-biased opinion and add to my knowledge and go after the Board.  This is why ther e are plenty of problems with HOAs and there should be a regulatory commission at some level, city, state or federal. These HOA directors are accounatble to no one.As regular people who get immense power like foreclosing on homeowners or imposing $200/day fine on little things like flying a US flag can dictate whatever they want and also distribute money from insurance any way they can to whever they want.They feel they are above the law. Don't be surprised at things like insuarnce fraud. We live in the real world.

John Bahran:

Yes, they did receive checks directly from the insurance and not for common elements but for things insuide like couch, blinds, carpeting etc.

OK. Then I am willing to bet that they received checks from their own unitowners insurance policy and not from the association's policy because the association's policy on "common elements" would not have covered any of those items.

If you check the CC&Rs you are likely to find that things like blinds and carpeting are defined as part of the "unit" and would thus be excluded from the association policy. And couches and any other furniture or personal property would definitely only be covered as part of the unitowners policy. It's likely that fixtures, fans, lights, built-in cabinets, tubs, sinks, and tile are also defined as "unit" and would only be covered by the unitowners policy. I have occasionally come across CC&Rs that define drywall and paint as part of the "unit."

John Bahran:

Odd may not be illegal , but like many other cases in law it just adds to suspicion. It really is suspicious that in 2 years only people who were pervy to this information had hurricane damages, one living 10 feet away from my unit to the tune of $10,000.

After reading my last paragraph you should be aware by now that your neighbor very likely got that $10,000 from his own unitowners policy. Ask him.

John Bahran:

You also have to know that the Board with proxies and eliminating the names of other candidates from their annual letter has been successful in keeping everybody off the Board. It has always been the good 'ol' boys Board. This also adds to the suspicion

That has absolutely nothing to do with the insurance issues that we are discussing. It's a whole different issue that can be remedied by the homeowners banding together, voting out the old board and voting in a new board. If you can't get enough of the homeowners together to do that, then the existing board stays put.

John Bahran:

One unit owner who I personally know and was not associated with the Board did file for insurance claim and got Zero.

File what insurance claim? For what specific damage? Did he file with his unitowners policy? Did an adjuster come out? Did he get a letter from his insurance company? Did he get a letter from the board. My contention is that you really don't know what this person did or why he got the results that he got.

John Bahran:

The Board member living about 150 feet away from him with no damages to the common elements and only inside (like couch , carpeting and etc. ) got a check for $38,000.

Again, I'm willing to bet that he didn't get that money from the association's policy because there would have only been coverage for that stuff on his unitowners policy. Which means he got if from his own insurance company.

John Bahran:

I did discuss that with a CPA who specializes in HOA stuff. He told me , just the fact that they applied to the HOA insurance ,and distributed that without notifyng ALL the homeowners constitutes fraud. He said he has seen plenty of examples in his career, where HOA people get the money and since they are in power, just pocket that themselves

The CPA is wrong. I'll guarantee you that he knows nothing about the insurance coverages or processes and he's given you responses to a scenario that you appear to be completely wrong about in the first place.

If you told your doctor that you had a brain tumor and he told you what the treatment was, what good would that response be if you really had lung cancer and didn't know it.

John Bahran:

I agree with the CPA and think there is insurance fraud.

I'm not convinced of that yet and I wouldn't go accusing anybody of that until you've examined what really happened with all the insurance claims.

In those 1000 pages look for the association insurance company's repair cost worksheets. Those will tell you where the damage to the "common elements" were, the extent of the damage, the estimated repair cost, the depreciation holdback, the deductible, and the payment. Then look for contractor's estimates, repair contracts and invoices.

By the way, you mentioned that you own a couple of "units."

Please indulge me by answering the following questions?

Where do you live? What state are the "units" located in? Were they damaged? How? And specifically what was damaged? Did you have your own insurance on your "units"? Did you make any claim to your own insurance company? Were you paid by your own insurance company? Was there any damage to the exterior walls and roof of your building? Did that damage get repaired?

Please don't bet on that as you would lose the bet. There was one check issued by one insurance company which it says specifically its from our HOA policy. Then there was a page that described how that check was distributed and it shows only 8 homeowners.

As I said mine was not damaged but the unit 10 feet away from me claims damage for $10,000 thats why I am surprised. Another homeowner fuiled and received nothing , but the Board member living 150 feet away got $38,000.

Now please tell me:  Did they all have the same insurance company and that company lumped it together and then the Board happened to distribute it to themselves and their friends and it was all for inside stuff? I live in the real world as I am a real estate investor . These things do not surpirse me and neither did the CPA. To put an end to my wandering I will be hiring the CPA and an attorney before filing charges.Thank you for your time.