Dear Community: May I start a discussion and ask a question here. I am an owner of a condo in a building in downtown Manhattan. From this year, the HOA of the building purchased some flood insurance from the private market with low coverage. This results in some consequences: - Many big banks refused the offer loan ( financing or refinancing ) given such flood insurance. I have called many banks,... [more]
Dear Community:
May I start a discussion and ask a question here.
I am an owner of a condo in a building in downtown Manhattan. From this year, the HOA of the building purchased some flood insurance from the private market with low coverage. This results in some consequences:
- Many big banks refused the offer loan ( financing or refinancing ) given such flood insurance. I have called many banks, including Wells Fargo, Chase, BOA, etc.., or smaller ones. After reviewing the documents, they stated that the flood insurance coverage is far from enough ( the big name banks have similar policies ) and hence decline the loan.
- I tried to purchase the flood insurance coverage of my own unit with 250K coverage. Big insurance companies, such as StateFarm or Liberty Mutual don't want to quote as given the HOA's flood insurance policy, it is too expensive for individual to purchase their own. The price is like 10K per year.
- Even offered that I can purchase the flood insurance of my own unit, lenders still decline the loan.
Just some context:
- The decision on flood insurance is made by a "condo board" which doesn't include any residents as members. It is only disclosed to residents after people start to see issues with banks during refinance.
- The is causing significant financial lost for unit owners and huge potential risk for future buyers for this building.
- There is no communication channel on this matter with residents. The email communication has to be approved by "condo board".
Want to ask for opinions here:
- How do we generally deal with insufficient flood insurance provided by HOA? Is this something common?
- Is there any legal procedure we could follow so as to get some consultancy or have this issue sorted?
Thank you.
[less]
Response by George
about 5 years ago
Posts: 1327
Member since: Jul 2017
Yes, it is common for condos to go cheap and demand residents pick up the difference, especially in Miami. Condo insurance esp in flood zones has become much more expensive over the past few years. I would suggest for your unit to check with a high end insurer like Chubb, AIG Private Client, or PURE.
However, the idea that your board has no residents as members is almost certainly wrong. Perhaps what you mean is that the sponsor still controls the board. But even then, if they are still selling units, they will want them financable. The action is for you to get yourself on the Board at the next election.
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Response by 30yrs_RE_20_in_REO
about 5 years ago
Posts: 9880
Member since: Mar 2009
Agree with George: the best chance is a new Condo Board. I hope MCR chimes in with her experience.
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Response by multicityresident
about 5 years ago
Posts: 2432
Member since: Jan 2009
Interesting. Before going full-on new board, I would do some independent research on what options are available to your building that are sufficient for financing purposes and asking the board to explain why it has not gone with any of those.
I say this because I am on the board of a building in another city (SF) where insurers are exiting the market entirely, and the few that remain are pricey indeed. The calculation that the board might have made in your building is that the insurance premium with a legit insurer still in the market may have raised the common charges to the "unsellable" level anyway, and existing owners didn't want to bear the costs and just decided that if the ship goes down, they will go down with it and save themselves the extra maintenance charges in the interim.
Our SF condo building population is very different than our NY coop building population, but both share the head-in-the-sand approach when it comes to refusing to spend a penny today to avoid spending a pound tomorrow. This seems to be a feature of democracy?
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Response by multicityresident
about 5 years ago
Posts: 2432
Member since: Jan 2009
Here is the contact info for an insurance broker who gave our NYC building great information. We cross-checked our existing insurance through him, and he took a fair amount of time educating us on what we had and how good/competitive it is. He said he would have love to been able to provide us with a better option, but at the end of the day, his recommendation was "renew what you have and count yourselves lucky!"
Seth Patel
CEO & President | Prana Risk, LLC
917-438-0984 (direct) | 917-421-9942 (fax)
sp@prana-risk.com | www.prana-risk.com
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Response by multicityresident
about 5 years ago
Posts: 2432
Member since: Jan 2009
But, the collateral issue raised by all above regarding the condo board not having any residents on it probably merits a board turnover in and of itself. I was shocked at the prevalence of the the provision in many governing documents (for both condos and coops) that board members need not be owners or residents. I have only come across one building where the residents are in fact captive to non-resident coop board lawfully and indefinitely, so I know that such can occur, so you'll need a lawyer to examine your particular governing docs and existing board members to see if all is in line and if there is anything you can do about it.
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Response by multicityresident
about 5 years ago
Posts: 2432
Member since: Jan 2009
minor correction: the building I came across where the residents are captive to non-resident board was a condo, not a coop, but it could easily happen in a coop as well. That is why I have been recommending that George and some of his cronies take over one of the myriad declining coops that sit on high ground in NYC.
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Response by 30yrs_RE_20_in_REO
about 5 years ago
Posts: 9880
Member since: Mar 2009
Just to play Devil's Advocate I have some personal experience with Coop Boards where all the members were residents who were far worse than non-resident Boards I've worked with (but I do agree that investor owners are prone to certain proclivities which aren't necessarily conducive to amicable co-existance with owner occupants).
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Response by multicityresident
about 5 years ago
Posts: 2432
Member since: Jan 2009
@30yrs - I agree it could cut either way. I believe non-resident stewards could be forces for good (per my value system) in many buildings. Very fact-specific/value-specific. No “right” or “wrong.”
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Response by 30yrs_RE_20_in_REO
about 5 years ago
Posts: 9880
Member since: Mar 2009
Getting back to the OP:
What percentage of the units are owner occupied?
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Response by 30yrs_RE_20_in_REO
about 5 years ago
Posts: 9880
Member since: Mar 2009
PS for anyone who is thinking of purchasing in new buildings like Brooklyn Point, 1 Manhattan Sq, etc and thinking "what's the big deal about owner occupancy"?
Yes, it is common for condos to go cheap and demand residents pick up the difference, especially in Miami. Condo insurance esp in flood zones has become much more expensive over the past few years. I would suggest for your unit to check with a high end insurer like Chubb, AIG Private Client, or PURE.
However, the idea that your board has no residents as members is almost certainly wrong. Perhaps what you mean is that the sponsor still controls the board. But even then, if they are still selling units, they will want them financable. The action is for you to get yourself on the Board at the next election.
Agree with George: the best chance is a new Condo Board. I hope MCR chimes in with her experience.
Interesting. Before going full-on new board, I would do some independent research on what options are available to your building that are sufficient for financing purposes and asking the board to explain why it has not gone with any of those.
I say this because I am on the board of a building in another city (SF) where insurers are exiting the market entirely, and the few that remain are pricey indeed. The calculation that the board might have made in your building is that the insurance premium with a legit insurer still in the market may have raised the common charges to the "unsellable" level anyway, and existing owners didn't want to bear the costs and just decided that if the ship goes down, they will go down with it and save themselves the extra maintenance charges in the interim.
Our SF condo building population is very different than our NY coop building population, but both share the head-in-the-sand approach when it comes to refusing to spend a penny today to avoid spending a pound tomorrow. This seems to be a feature of democracy?
Here is the contact info for an insurance broker who gave our NYC building great information. We cross-checked our existing insurance through him, and he took a fair amount of time educating us on what we had and how good/competitive it is. He said he would have love to been able to provide us with a better option, but at the end of the day, his recommendation was "renew what you have and count yourselves lucky!"
Seth Patel
CEO & President | Prana Risk, LLC
917-438-0984 (direct) | 917-421-9942 (fax)
sp@prana-risk.com | www.prana-risk.com
But, the collateral issue raised by all above regarding the condo board not having any residents on it probably merits a board turnover in and of itself. I was shocked at the prevalence of the the provision in many governing documents (for both condos and coops) that board members need not be owners or residents. I have only come across one building where the residents are in fact captive to non-resident coop board lawfully and indefinitely, so I know that such can occur, so you'll need a lawyer to examine your particular governing docs and existing board members to see if all is in line and if there is anything you can do about it.
minor correction: the building I came across where the residents are captive to non-resident board was a condo, not a coop, but it could easily happen in a coop as well. That is why I have been recommending that George and some of his cronies take over one of the myriad declining coops that sit on high ground in NYC.
Just to play Devil's Advocate I have some personal experience with Coop Boards where all the members were residents who were far worse than non-resident Boards I've worked with (but I do agree that investor owners are prone to certain proclivities which aren't necessarily conducive to amicable co-existance with owner occupants).
@30yrs - I agree it could cut either way. I believe non-resident stewards could be forces for good (per my value system) in many buildings. Very fact-specific/value-specific. No “right” or “wrong.”
Getting back to the OP:
What percentage of the units are owner occupied?
PS for anyone who is thinking of purchasing in new buildings like Brooklyn Point, 1 Manhattan Sq, etc and thinking "what's the big deal about owner occupancy"?