concerning issue with current HOA roof situation and insurance coverage

[simple girl]

Hi all,

We have had a single family homeowners insurance plan (HO3) for our townhouse since we purchased in 2016. We were told at the time that homeowners were required to purchase an HO3 policy, as the association's master policy did not cover the roofs and exterior walls.

Recently, however, the association has had to hire a lawyer to deal with a long drawn out warranty claim with the manufacturer who sold the HOA new shingles (new roof installed in 2015). Those shingles have since deteriorated WAY before the end of their useful life and are showing things like extensive granular loss and something about part of the roof melting and sticking to the underside. Due to the melting issue, HAZMAT will be required for proper removal. Please forgive me if I'm using the wrong terms - I do not completely understand the technical aspects.

Suffice it to say the issue was determined to not be due to faulty installation, but rather due to faulty shingles. This manufacturer has had several class action lawsuits (which we are not a part of) for this issue, unfortunately. And, also unfortunately, apparently the manufacturer has a history of dragging out warranty claims for years, like they are doing with us.

So, the lawyer hired is working on our claim with the manufacturer, but he also reviewed our HOA bylaws and made a surprising statement at our last meeting. He stated that with the way our bylaws are written, the HOA is actually responsible for any roof claims and should have a master policy that includes coverage for it. He said as it is now, if we have a roof claim, our individual HO3 policies will ask to see the bylaws, and when they see the language used, they will refuse to honor any roof claims.

Due to this new information from the lawyer, the HOA now plans to obtain a master policy that covers the roof and exterior building. HOWEVER, due to the current condition of the roof, they are unable to obtain insurance coverage. The HOA has been told they will only be eligible for coverage once the new roof is installed (which could be how long Who knows! We are going on 4 years now. Ugh.)

Basically it sounds to me like right now all homeowners are uninsured for the roof no matter what kind of policy they have. If we have a roof claim, there will surely be a hefty special assessment.

So, here I am trying to figure out why I'm paying for an HO3 policy when it sounds like we should have an H06 policy. I'm contemplating contacting our insurance agent to see if we would be able to switch, but at the same time, am nervous that somehow our insurance might drop us altogether.

Would love to hear advice on how you would approach this situation if it were you. Thank you.

 

[Sunset]

No experience with this, so just my thoughts.

I believe shingles come with a manufacturer warranty that covers many years (10 or 20) , of course this wouldn't include installation, but the roof has lasted X years, so some value has been gotten out of it.

A roof for a townhouse, I would expect to cost ~$10K (with 40 yr shingles) for removal and install. The talk of melting and hazmat stuff seems over the top to me, as all shingles melt glue to stick to each other.
I'm pretty sure shingles are a hazmat issue, for disposal, but not really dangerous to people, just don't want them in normal landfill as are a petroleum product. Might be lawyer just trying to inflate the issue.

Possibly you will pay to have roofs redone, but then in a few years, maybe the Assoc will win, and you will get a repayment of some of the cost.

What is the name of the roofing manufacturer ?

 

[pb4uski]

Wow, simple girl has an exceedingly complex problem.

I think that you are probably right. Because the association can't get insurance because of the roofs that if the roofs need to be replaced then the association would have to do a special assessment and continue to pursue a claim with the shingle manfacturer.

I would also be upset with the association's insurance agent and you might have a claim against their errors and ommissions coverage. Just wondering out loud if the association can get an insurance policy that would exclude and claims relating to roofs until the roofs are replaced. I suspect not but it wouldn't hurt to ask.

I wonder if the association might be able to get a loan for the new roof, build the loan payments into your annual association fees and then if/when they receive money from the shingle manufacturer use that money pay down the loan.

The other thing I wonder is if you could apply a self-adhesive membrane over the entire roof, effectively sealing off the nasty stuff between the new membrane and the old membrane or roof sheathing and then put down new shingles over the new membrane.

I know that is is preferred to remove the old roofing down to the roof sheathing but in these unusual facts and circumtances I wonder if that might be a viable alternative.

 

[Gotadimple]

You have some good advice here. It seems you are worried about the roofs and replacing them due the shingle damage. Good thought. The roofs will need to be replaced at some point the question is should it be sooner rather than later.
You are right you should have an HO6 policy because you basically have no coverage for the roof - that's the HOA.
The HOA and the community need to decide which comes first, replacing the roofs to get themselves aligned for the proper insurance coverage. Or waiting forever on both (1) the manufacturer, and (2) the HOA's insurance agent - because they placed a policy inconsistent with your state's insurance laws (errors and omissions).
The third thing the community needs to decide is what impact the current issue with the roofs has on any planned sale of a unit. It could be a stumbling block.

IMO it's better to try and show you will be replacing roofs as soon as possible and pursuing reimbursement than to sit and wait for magic to happen.

Yes that means a Special Assessment. You can do this on a cash basis: determine the amount due by each homeowner and payable to the Association over a short period (like a year). The homeowners decide if they have cash available to pay or arrange for a second mortgage on their unit to cover the cost of the assessment.

While the HOA is responsible for repairing/replacing roofs it doesn't have ANY ownership of roofs, the members own a percentage of the complex. So, 10 units in the complex, each homeowner owns 10% of everything - not just the roof over their unit.

 

[engineernerd]

Yes, what is the name of the roofing manufacturer, and what is the product?

Has the HOA gotten any estimates/quotes for replacing the roof, and if so, does it seem horribly expensive or only fairly typical? There are horribly expensive hazmat requirements and not-so-expensive ones, so the word by itself doesn't tell you that much.

In your shoes I would be very curious to get a second opinion (from a different lawyer and/or an independent claims adjuster) about whether your HO3 insurer could really avoid paying if the policy as stated covers the roof and the HOA's policy excludes it.

EDIT: I would not drop my existing HO3 policy until absolutely sure it was safe to do so.

 

[Kings over Queens]

I haven't read your HOA agreement, but if the lawyer says that you need "walls in" coverage, your HO-3 isn't going to provide any coverage for roof claims. Yes, the carrier will ask for and review the buy-laws before paying a claim in any type of planned community.

Seems to me that the HOA board has an obligation to repair or replace the roof ASAP to reduce the exposure to weather related claims, and pursue the lawsuit as a separate matter. In my view they are potentially exposing themselves to claims as Directors and Officers for sitting tight until the claim against the roofing manufacturer is resolved.

 

[simple girl]

No experience with this, so just my thoughts.

I believe shingles come with a manufacturer warranty that covers many years (10 or 20) , of course this wouldn't include installation, but the roof has lasted X years, so some value has been gotten out of it.

A roof for a townhouse, I would expect to cost ~$10K (with 40 yr shingles) for removal and install. The talk of melting and hazmat stuff seems over the top to me, as all shingles melt glue to stick to each other.
I'm pretty sure shingles are a hazmat issue, for disposal, but not really dangerous to people, just don't want them in normal landfill as are a petroleum product. Might be lawyer just trying to inflate the issue.

Possibly you will pay to have roofs redone, but then in a few years, maybe the Assoc will win, and you will get a repayment of some of the cost.

What is the name of the roofing manufacturer ?

Thank you for your input.

Tamko.

 

[simple girl]

I would also be upset with the association's insurance agent and you might have a claim against their errors and ommissions coverage. Just wondering out loud if the association can get an insurance policy that would exclude and claims relating to roofs until the roofs are replaced. I suspect not but it wouldn't hurt to ask.

Can you explain what you mean by we may have a claim against their errors and ommissions coverage? Do you mean that since the insurance agent let the association go without an insurance policy that covers the roof that they may now be liable for their error?

BTW we do currently have an association master policy that covers the grounds, pool, fences, liability for board members, etc. FYI I haven't reviewed it in detail but I know it does not cover the roofs of individual units.

 

[simple girl]

Yes, what is the name of the roofing manufacturer, and what is the product?

Has the HOA gotten any estimates/quotes for replacing the roof, and if so, does it seem horribly expensive or only fairly typical? There are horribly expensive hazmat requirements and not-so-expensive ones, so the word by itself doesn't tell you that much.

In your shoes I would be very curious to get a second opinion (from a different lawyer and/or an independent claims adjuster) about whether your HO3 insurer could really avoid paying if the policy as stated covers the roof and the HOA's policy excludes it.

EDIT: I would not drop my existing HO3 policy until absolutely sure it was safe to do so.

The roofing manufacturer is Tamko.

I do not know the name of the specific product, but I have requested the HOA manager send me that information, as well as a copy of the warranty, and a copy of the 3 quotes they recently received to remove the old roof and install the new one.

Appreciate the advice about not giving up our HO3 policy until I know for sure it is safe to do so. That is what my gut is telling me to do. Are you suggesting I hire my own private lawyer to look at our covenants and give their opinion? Any insight as to how to find and select an independent claims adjuster if I went that route instead?

 

[braumeister]

Strange things happen. I once owned a condo in Virginia, and the roof was covered in the HOA master policy. No problem, right?
Not so fast. An inspection revealed that the firewalls in the attics between units (just under the roof) didn't conform to code, and they all had to be replaced. Of course, it wasn't possible to do that without replacing the roofs at the same time. Insurers said that wasn't their concern since it wasn't a failure of the roof, so the HOA had to pay for everything. It was a very hefty special assessment on the homeowners.

 

[Kings over Queens]

Can you explain what you mean by we may have a claim against their errors and ommissions coverage? Do you mean that since the insurance agent let the association go without an insurance policy that covers the roof that they may now be liable for their error?

BTW we do currently have an association master policy that covers the grounds, pool, fences, liability for board members, etc. FYI I haven't reviewed it in detail but I know it does not cover the roofs of individual units.

There is no claim to be made against the broker. Had there been damage to the roof from a windstorm, as an example, and you learned then that there was no coverage in place, the broker could have been exposed to that loss and involved their E&O carrier. That isn't the case here. The damage, as it were, isn't from something that would typically be covered by the policy. As you mentioned, the shingles failed due to manufacture defect and replacement due to that defect isn't covered by your master policy, nor would it be covered by the brokers E&O.

 

[pb4uski]

Can you explain what you mean by we may have a claim against their errors and ommissions coverage? Do you mean that since the insurance agent let the association go without an insurance policy that covers the roof that they may now be liable for their error?

BTW we do currently have an association master policy that covers the grounds, pool, fences, liability for board members, etc. FYI I haven't reviewed it in detail but I know it does not cover the roofs of individual units.

From what you wrote it sounds like the association's insurance agent made an error by either not reading the declarations or misinterpreting the declarations and selling the association a policy that does not cover the roofs when the association is responsibe for the roofs.

In other words, if the association had a roof issue and in the course of resolving it found out that they we responsible for the roofs and were uninsured, they might have a cause of action against the insurance agent for not selling them the right insurance.

That said, it is also sad that nobody on the Board knew but I'll concede that often the declarations are very confusingly worded.

 

[pb4uski]

There is no claim to be made against the broker. Had there been damage to the roof from a windstorm, as an example, and you learned then that there was no coverage in place, the broker could have been exposed to that loss and involved their E&O carrier. That isn't the case here. The damage, as it were, isn't from something that would typically be covered by the policy. As you mentioned, the shingles failed due to manufacture defect and replacement due to that defect isn't covered by your master policy, nor would it be covered by the brokers E&O.

I think that is right. Since even if the agent/broker had provided insurance that had the correct coverage, it wouldn't be relevant in this case because the problem with the roofs isn't an insured event. No matter what though, after all is done I woudl fire the agent/broker for incompetence.

 

[engineernerd]

The roofing manufacturer is Tamko.

I do not know the name of the specific product, but I have requested the HOA manager send me that information, as well as a copy of the warranty, and a copy of the 3 quotes they recently received to remove the old roof and install the new one.

Appreciate the advice about not giving up our HO3 policy until I know for sure it is safe to do so. That is what my gut is telling me to do. Are you suggesting I hire my own private lawyer to look at our covenants and give their opinion? Any insight as to how to find and select an independent claims adjuster if I went that route instead?

Thanks for that info. We have Tamko shingles on our house in Arizona but they seem to be holding up OK so far. Hopefully different product or different batch!

I'm not sure it's worth hiring a lawyer or adjuster unless the premiums you could save are high enough to justify it. If you do consult someone they need to see your HO3 policy first and foremost. You could also try reading your policy's fine print to see what it says about the circumstances under which they can deny a claim.

 

[Kings over Queens]

No matter what though, after all is done I woudl fire the agent/broker for incompetence.

It's something to consider. Reading the bylaws is very basic when writing condo's and it seems like a lot of miscommunication took place here. The OP stated that Ho-3's were required by owners and I assume that it was the board who said that. At the same time, assuming their was financing in place, the bank would have investigated to make sure coverage was in place to secure their loan.

The whole thing is screwy from that standpoint.

 

[pb4uski]

Agreed, definitely a screwed up situation. My guess is that someone screwed up somewhere and the misinformation cascaded from there. Also, surprised that it wasn't questioned by anyone along the way until now.

I'm wondering if the HO-3's might have been because the agent/broker told the Board that they were not responsible for the roofs and that the owner's were and the Board relayed that erroneous result to the owners which caused them to all buy HO-3s.

 

[mn54]

check your policy for special assessment coverage. i have an HO6 policy with special assessment coverage of $20,000.

 

[Texas Proud]

Wow... screwed up for sure...

I agree with the posts that as of now it really does not matter where the roof insurance is located as there has been no event for insurance to pay...

BUT, if it were me and the roof is in bad shape and needs replacing I would get it done NOW... you could then determine who really should be insuring it and make policy decisions correctly...

IMO this also helps with the claim from the shingle company... it was so bad that we could not wait for a determination and we limited our damages by replacing it right away... and now our damages are crystal clear as we have paid them...

 

[simple girl]

check your policy for special assessment coverage. i have an HO6 policy with special assessment coverage of $20,000.

I already did, it is only $1K on our current HO3 policy. I have sent a follow-up question to our agent to find out if it can be increased. Thanks!

 

[simple girl]

BUT, if it were me and the roof is in bad shape and needs replacing I would get it done NOW... you could then determine who really should be insuring it and make policy decisions correctly...

IMO this also helps with the claim from the shingle company... it was so bad that we could not wait for a determination and we limited our damages by replacing it right away... and now our damages are crystal clear as we have paid them...

Oh I agree with you 100%. We certainly have damage from last year (Hurricane Milton) - many units lost a bunch of shingles and currently have temporary repairs (not us, thankfully). A few units apparently had leaks and had to have repairs done (yes, we checked our attic and keep checking after storms).

Unfortunately, I think the board has been delaying because they know people will freak out over a special assessment. I'm going to have to work on trying to convince people (good luck to me) that we should just repair it now and try to recoup money later.

It sounds like you had a similar issue but it was a single family home. Have you recouped your costs yet via a warranty claim, and if so, how long did it take?

 

[pb4uski]

While I loved the lock and leave/no maintenance aspect of our Florida condo, I don't miss the politics of a bunch of cheap and short sided owners who made a lot of noise when stuff like this came up.

We had one owner loudly state that he objected to being assessed for roof reserves because he would be below the grass by the time the roof needed to be replaced. Too bad. A lot of ignorant owners out there. I was on the Board 2 years and was Treasurer the year we did replace our roofs and did some modest special assessments that we had given them years of warning of. Was glad to be off the Board. Huge time suck.

 

[YellowSubmarine]

Perhaps, give a call to a third party insurer, one that has no agent or underwriting affiliation with current policy. Feel it out with them, pick their brains as well.

 

[Texas Proud]

It sounds like you had a similar issue but it was a single family home. Have you recouped your costs yet via a warranty claim, and if so, how long did it take?

Nope... I did have a claim with hail and found out that my replacement cost policy excluded shingles over 10 years old.. got only 25% of replacement costs... but the shingles performed as they were supposed to... I paid up to get even better shingles...

What happened to the roofs that were damaged and repaired? I would think that the individual policies would have covered those and if there were a problem it would have surfaced then... did nobody make a claim? Did all claims get paid? This should answer one of the questions that you have.

 

[Koolau]

Lots of Catch 22 situations when it comes to HOAs and insurance. Our pipes leaked into the apartment below. Our By Laws say "we pay." So approached insurance company and they said only if we were negligent would THEY pay. Just old pipes so we had to pay. They gotcha coming or going.

 

[simple girl]

While I loved the lock and leave/no maintenance aspect of our Florida condo, I don't miss the politics of a bunch of cheap and short sided owners who made a lot of noise when stuff like this came up.

We had one owner loudly state that he objected to being assessed for roof reserves because he would be below the grass by the time the roof needed to be replaced. Too bad. A lot of ignorant owners out there. I was on the Board 2 years and was Treasurer the year we did replace our roofs and did some modest special assessments that we had given them years of warning of. Was glad to be off the Board. Huge time suck.

Have to say I am starting to feel the same way, in light of these issues. It's such a shame because otherwise we absolutely love living here.

If I'm understanding our covenants correctly (that's a big IF - the language is confusing), it looks like we need 50% of owners to approve a special assessment. That sure does sound like a tough hurdle to get over.

I have been contemplating getting on the board since we have such huge issues going on and it would allow me to have improved understanding and control (maybe! ugh!)...but...I've read various experiences here, and it doesn't sound like something I want to sign up for. Plus, I have to say that beyond the workload and stress of it, I'm concerned about the liability - especially in light of our roof issue and the HOA not carrying the proper insurance.