What do drones, copyrights and mold have in common? According to USI Insurance Services, a national insurance company with over 150 offices throughout the country, these are some of the emerging trends that associations are – or will be — facing in the years to come. They all impact the financial well-being – and the investments – of property owners.
Why? Because they are issues that trigger litigation and insurance coverage which may or not be available.
Let’s analyze each one.
DRONES are flying all over, and according to USI, if this is not currently an issue in your community, it will be. Marvin Nodiff, a community association attorney in St. Louis and a fellow member of the College of Community Associations, has written a number of entertaining fiction books about community living. In Dark Condo, he tells of a property manager who uses drones to inspect the entire property. Unfortunately, the drone took a picture of a unit owner that was embarrassing to her, and she sued the association. Accordingly to Marvin, “community associations should consider this new drone technology to take advantage of its many beneficial applications, such as providing images depicting conditions of roofs and common grounds. Further, associations should protect against potential impacts as drones become more popular for commercial and other uses.”
Safety and privacy are – or should be – the concerns of all communities. Boards of directors should adopt rules regulating, controlling and monitoring who and when a drone can be used. Fines should be spelled out in the rules for any violations. And association boards – and their property managers – should consult their insurance agent to make sure there is adequate coverage should a drone fall and damage property or injure a person..
MOLD has always been a concern, but with the massive rainfalls in recent years, flooding homes has made the problem even worse. According to USI, “damage from mold is specifically excluded in most standard property insurance policies. Such policies provide coverage for damages that are sudden and accidental. They are not designed to cover the cost of cleaning and maintaining a home.”
Accordingly, associations must address their water problems. Cleaning up the mold but not remedying the cause is not acceptable. And even if the mold is in just one unit, does not mean the rest of the association is immune from a subsequent occurance.
It is important to know if mold is caused as a direct result of an insurance covered peril, such as a burst pipe; then insurance should cover it. But in every association master insurance policy, there is a deductible – an amount the association has to pay. Typically, this ranges from $5-20,000, and must be paid every time insurance is involved.
This obviously can be expensive, especially for older buildings. However, state (and DC) law gives guidance as to who is obligated to pay this deductable. For example, under the laws of the District of Columbia and Maryland, if a pipe breaks in a unit, depending on what the association’s Bylaws state, that owner is responsible for paying the associations deductible, regardless of fault. In that case, the owner’s personal insurance policy (called HO-6) should cover that cost. And in both Maryland and the District, the laws mandate that every condominium owner have such a policy.
COPYRIGHT. More and more communities, in order to foster a spirit of friendship and an opportunity to get to know your neighbor, are offering free movies. According to USI, this is a “potential for copyright infringement issues and huge fines.”
The owner of the copyright has the exclusive right to distribute the movie, and if you infringe on the copyright, you may have to pay a fine ranging from $200 to $150,000 for each violation. Additionally, you may have to pay for the copyright owner’s attorney’s fees and court costs. And the copyright is not limited to movies; it also includes music.
The Community Association Institute (CAI), a national organization representing the interests of community associations all over the United States, has developed a guidance document to assist communities on how to deal with copyright issues, particularly music and movie licensing. If your community plans to show a movie – free or otherwise – you must obtain a license from a performance rights organization. And even if a resident rents your clubhouse and hires a disc jockey or a band that plays or broadcasts copyright music, the association is ultimately responsible to make sure all appropriate licenses are obtained.
The CAI publication is available at advocacy.caionline.org/mmlicensing.
Every community association – its board of directors and its property manager – must ensure your insurance is up-to-date and complies with the minimum dollar requirements spelled out in the law and your legal documents. In my experience, I have seen policies that do not comply.
When there are legal questions, the association consults with legal counsel. When there are insurance questions, the association must consult with its insurance agent.