By Deborah Goonan, Independent American Communities
For many home buyers looking for a place to vacation or retire, Florida is at the top of the list. Condominiums are popular because buyers are sold on the notion of a carefree lifestyle, often with resort amenities. Waterfront condos are attractive to affluent buyers looking for great views and luxurious surroundings.
Some buyers do not want the hustle and bustle of Miami or Tampa, so they look for options in smaller coastal cities such as Ormond Beach. Ormond Beach is a small town just to the north of world famous Daytona Beach, on the Altantic coastline. In addition to Atlantic Ocean beaches, Ormond Beach has an intracoastal waterway – Halifax River – that is popular for boating and fishing, yet still providing easy access to the ocean.
Ormond Heritage is a highly visible luxury condominium that overlooks the intracoastal waterway. Built in 1995, it has 156 units situated in 3 buildings, with an underground parking garage. It boasts a private courtyard with a pool, and several gathering rooms suitable for social and catering activities.
But last fall, Hurricane Matthew hit Ormond Heritage hard. According to a recent report, the condo’s iconic tile roof was ripped to shreds, allowing water to pour inside.
The association is insured, but their insurance company has been unwilling to accept their claim. Instead, Ariel Insurance of Atlanta has been conducting invasive testing, removing interior drywall in several units to reveal toxic mold.
Eight months after Hurricane Matthew toxic mold discovered at the Ormond Heritage condos
Ormond Beach Observer, May 19,2017
by: Jacque Estes Community Editor
This story will be updated as more information becomes available
The Ormond Heritage’s claim to fame has always been that it sits on the land where the Ormond Hotel, built by John Anderson at 1 John Anderson Drive, once stood.
The 156-unit condominium was damaged during Hurricane Matthew nearly eight months ago and the board association still hasn’t been able to get their insurance agency, Ariel out of Atlanta, to start covering the damage.
“They have requested everything from board meeting notes for the past five years to maintenance records,” said Board President Dr. Frank Farmer. “Since Hurricane Matthew, we have been struggling with the insurance company to even recognize that we have a claim.”
Farmer said there is a 30-page chronological documentation of the past eight-month process.
“We have had multiple meetings, seven meetings in four days. People are in denial. They think it’s safe for the mold to be in the walls.” DR. FRANK FARMER, President of the board of the Ormond Heritage
During one inspection by an agent from Ariel, the presence of a black and green substance was discovered in a wall. Samples were taken and sent off to a laboratory certified by the State of Florida. The mold was identified as stachybotrys, which is extremely toxic and dangerous to humans.
The units in the condominium were tested during a four-day period and, according to Farmer, every floor has some areas that have been affected.
Farmer and his wife Peggy have temporarily moved out of the Ormond Heritage for their medical well-being and are encouraging other residents to do the same. Farmer has expertise on the subject as a physician and former surgeon general for the State of Florida.
“We have had multiple meetings, seven meetings in four days,” Farmer said. “People are in denial. They think it’s safe for the mold to be in the walls.”
The mold is dangerous for anyone, and specifically for those with respiratory issues and weakened immune systems.
The tiled roof of the eight-floor condominium was shredded during the hurricane and is expected to cost $5 million to $7 million to replace, work that cannot be done until the insurance claim is accepted. There is a patchwork of blue tarp covering sections, but the soaked walls combined with the Florida heat is providing a breeding ground for mold.
So now that residents face a serious health risk, they will have to move out of their condos. No one knows when, or if, Ariel will pay millions to the association, so that they can finally begin to repair the roof and rebuild.
One or more special assessments likely loom on the horizon.
Most insurance policies exclude clean up of mold as a covered expense. So it would not be a surprise if we learn, at a later date, that Ormond Heritage owners have to bear the full cost of getting rid of the toxic mold and repairing related damages.
Of course, there will likely be a legal dispute with the insurance company. After all, if Ariel had not been delaying for months to make a determination on the claim, there would have been less opportunity for water damage and growth of mold to occur in the wall cavities.
On the other hand, Ariel could argue that Ormond Heritage condo association should have taken steps to mitigate damages – they could have fixed the roof first, and settled the insurance claim later. But that assumes the association has $5 – $7 million sitting in a reserve account. They may not have that kind of money set aside for hurricane damage, assuming that their insurance policy would pay.
It is a true nightmare.
Board President Frank Farmer is facing the wrath of condo owners, even though he and the board may not be to blame for the insurance company debacle. Chances are, owners are in shock, and their anger is directed at the condo board, whether justified or not.
According to the website, Ormond Heritage is currently managed by Fred Gholson.
Not the first problem with water leaks
Looking into Ormond Heritage a little closer, it turns out the condominium has had a history of construction defects and other issues.
In this 2007 feature article from the Florida Community Association Journal, on page 4, the reader sees that there has been a history of water leaking into the underground parking area, and problems with planters sitting above the parking garage. (Not exactly a surprise, given the high water table, and a site adjacent to the intracoastal.) The condo association sued the developer at the time, and settled out of court.
On page 5, the former manager of Ormond Heritage notes problems with contractors for the 6 elevators and fire alarm systems. Those contractors reportedly used obsolete materials and parts to make repairs. Back in 2007, replacement parts were no longer available.
Because of all these factors, it is no surprise that Ormond Heritage has a surplus lines insurer (also known as E&S insurer) – from a Bahamian company, Ariel, based in Atlanta. Surplus insurance is a policy of last resort, the kind of policy consumers purchase only if state licensed insurers are unwilling to underwrite a policy, due to extreme risk.
And although Florida law allows E&S Insurers to do business in the Sunshine State, these companies are virtually unregulated. So there is no guarantee that a surplus line insurer will remain solvent following a natural disaster resulting in many simultaneous insurance claims.
Unfortunately for Ormond Heritage owners, they are now facing the disaster after the disaster. Navigating rough waters to repair their condominium may prove more frightening than evacuating and surviving Hurricane Matthew.
Information from CDC about Stachybotrys