SNOW BUDGET SHORTFALLS, DAMN ICE DAMS AND INSURANCE CLAIMS

SNOW BUDGET SHORTFALLS, DAMN ICE DAMS AND INSURANCE CLAIMS

Many condominium associations in Massachusetts, New Hampshire and Rhode Island have major shortfalls due to the winter of 2015. Even condominiums without areas to plow incurred snow costs to shovel roofs and/or deal with ice dams.So, let’s assume, that your snow budget shortfall is $50,000.00. What options does a condominium association have to pay the contractors? Here are the options:1. Snow Loans to Condominium Associations. In the last week or so, several banks have decided to offer snow shortfall loans to condominium associations. Some of the lenders offering this product are as follows:Brookline BankRockland Trust CompanyAvidia BankNorth Shore BankFor bank contact information [click here].While discussions still are ongoing with lenders, they are taking loan applications now. Some of the lenders will take a second lien position if there is already a first, the loans will be short term (8 to 12 months) as the idea is to have them paid off prior to next year’s snow season. Some of the lenders would like to make the process quick so a snow contractor may be paid off.2. Borrow From ReservesSome condominium associations will borrow from their reserve funds to fund the snow removal shortfall. Condominium associations doing this should check first with their CPA and should also devise a plan to replenish the reserves. FHA approval companies do warn that FHA might have questions as to why reserves decreased so condominium associations might have to simply write a letter explaining to FHA the severity and costs for snow removal this winter and the plan to replenish the reserve fund.3. Special AssessmentsSome condominium associations might simply assess unit owners now. The downside to this approach is it requires unit owners to pay now which some may not be able to afford, and some lenders on units want to know if there are special assessments and an explanation of why there is one.IT’S ALL IN A NAMEWhether a condominium association borrows, pays from reserves or special assesses, note that special assessments in Massachusetts do not give priority to condominium associations over first mortgage holders for special assessments pursuant to our limited priority lien statute. So if you borrow, replenish the reserves or even do an assessment payable over one to three months, it is crucial that boards in their assessment letters and on their ledgers refer to the amounts owed as SUPPLEMENT MONTHLY CONDOMINIUM FEES and NOT special assessments.ICE DAM INSURANCE ISSUESIn the next few weeks, or less, the ice dams are going to thaw. The concern is going to be damage to units or water in basements. If some water has damaged units, condominium associations should notify their master carrier immediately and unit owners should do the same. While the risk of doing so is that there could be additional damage and the possibility of multiple deductibles (note that winter storms now have names) and some insurers may treat each claim as a separate catastrophe and therefore assess multiple deductibles. The concern is that if water infiltrates a unit, it must be addressed and mitigated quickly. If you wait for a few days, mold is likely to develop and insurance policies either limit mold property damage to $15,000.00 per insurance policy year and typically exclude any coverage for liability or directors and officers liability claims. Note also on deductibles that some policies have a per unit deductible.We suggest notifying insurers immediately and at some time discuss with them bringing in a restoration company such as ServiceMaster by Gilmore (Contact Maria Benway at 800-783-0552) or ARS Restoration Specialists (Contact Jess Riehl at 877-461-1111) as soon as possible.Condominium associations should adopt insurance resolutions for the deductible to clarify that unit owners will be allocated the master insurance policy deductible which may be insured under coverage A of their Homeowner’s policy.PERMANENT ICE DAM FIXESOnce the winter is over, condominium boards and managers should look at the permanent fixes so this issue does not happen again. Such permanent fixes suggested are:1. Remove shingles and install an ice and water shield under shingles. The condominium requires it be 3 feet from gutters but consider 6 - 9 feet and we have heard problems even with 9 feet;2. Increase ventilation in attic;3. Increase insulation in attic;4. Install deicing cables in gutters and perhaps downspouts. We are told that there are some that go on automatically and some that give an indicator light signal that they are on.Before proceeding, consult with your architect or engineer to decide what they think is appropriate for a permanent solution.THIS AND THATIf you have not already dealt with the snow and ice dams on roofs, here are a few tips:1. Consult with your architect, engineer or roofer before taking any action;2. Check to see whether snow raking from roofs or breaking up ice voids your roof warranty;3. Flat roofs have a greater chance of collapsing and therefore consider removing the snow but only after consulting with your expert and after checking into voiding roof warranties;4. Make sure contractor is adequately insured;5. Make sure your contractors tie off for safety;6. Use a reputable contractor – while we do not endorse any particular company, we have heard that clients have had good luck with Andrew Keach Enterprises (Telephone: 508-400-7811 or Andykeach@gmail.com) and in addition to ice and snow removal and ice dam break up, he also does snow and ice steaming which architects say is a safe way to remove snow and ice. Also, KCI (1-844-KCI-PAVE and info@kcipaving.com – ask for Nathan) we are told has done a good job.7. Remove icicles and heavy snow from entries and natural gas meters. Shovel a path to your gas meter, clean off your meter but do not use a shovel or kick or strike your gas meter. Also clear snow and ice from and around vents enclosing your heating equipment vents.For more information on ice dams, read our article Ice Dam Primer [click here].OTHER RESOURCESIn addition to our article “Ice Dam Primer” prepared by Mark Einhorn and Patrick Brady, here are other articles that might be helpful:• Travelers – “Tips for Removing Ice Dams” [click here]• Travelers – “Roof Snow Removal Tips” [click here]• Joel Meskin, Esquire – McGowan Insurance “Filing a Successful Insurance Claim” [click here]• Article “Ice Dams – Several Quick Fixes But Only One Cure” [click here]• Boston Globe Article, 2/28/15 – “Snow Anxiety, Hitting Home for Many” [click here]• RSL – “Can We Use Reserve Funds to Offset Excessive Costs from the Winter” [click here]• Patrick Brady – Excerpt from Sunday Cape Cod Times recapping Architects advise re: Ice Dams [click here]• Columbia Gas of Massachusetts - "Serious Snow and Ice Safety Risks for Natural Gas Meters" [click here]To attend MEEB's free workshop on Ice Dams [click here].Contact Stephen Marcus at smarcus@meeb.com or 781-843-5000 if you have any questions or comments or wish to discuss further.