NC homeowners: many unanswered questions about HOA insurance claims

By Deborah Goonan, Independent American Communities


Do you have a clear understanding of how your homeowners, condominium, or cooperative association is spending the money collected from you and your neighboring homeowners?

For many homeowners, the answer to that question is a definitive NO.

For example, according to a Fox 46 (WJZY) report from Charlotte, homeowners in Prosperity Village Townhomes Association are trying to understand why their association is deep in debt. They want to better understand why their HOA recently tried to obtain member approval to collect nearly $3,000 per unit owner, to pay for a $438,000 contract to replace all the roof shingles in the 30-building community.

Homes in the 19-year-old community have recently sold in the range of $125,000-$140,000. For owners of these relatively small, modestly priced properties, $3,000 seems rather expensive for a single townhouse roof.

So a group of owners started asking questions. They requested documentation of the necessity of a total replacement of the roof, and how the board and/or contractors arrived at a price of more than $438,000.

An expert hired by the homeowners says the roofs should last another five years, with some minor repairs. The hail damage, he says, should be covered by the association’s insurance policy.

But…despite presenting their contradictory expert information, homeowners say they have not yet seen the financial documentation they have requested from their HOA board or current management company, Henderson Properties.


Homeowner wants answers to accusations of H.O.A. mishandling funds

By: David Sentendrey
POSTED: MAR 05 2018 09:56PM EST
UPDATED: MAR 07 2018 12:21AM EST

CHARLOTTE, NC (FOX 46 WJZY) – People across the Carolinas pay thousands of dollars each year to their homeowners’ associations.

These homeowners trust their money is being spent wisely, but questions are swirling in one Charlotte neighborhood and they’re asking FOX 46 Charlotte’s David Sentendrey to get answers.

At Prosperity Village, the homeowner’s association has a board of directors which makes financial decisions and handles neighborhood operations. The board is elected and consists of people living in the neighborhood. There’s also a management group which is hired by the board to assist with day-to-day operations.

People living in Prosperity Village have a lot of questions concerning a possible mismanagement of funds — and they don’t know who is to blame.

Every homeowner knows roof repairs can be expensive, but in this particular neighborhood off of Jessica Place people are worried that repairing their roofs is just an excuse for their H.O.A. board to take their money.

“No answers from either the HOA or the Board. Zero,” said one Prosperity Village resident.

Now, a small group is organizing to fight what they call major issues with their H.O.A. board.

“A little over $438,000 just for roofing,” homeowner Alice Davidson said.

Read more (video):

What about that insurance claim?

Homeowners express concern over the status of a reported $55,000 insurance payment made by State Farm Fire and Casualty Company to Prosperity Village Townhome Association in 2011, when the association was managed by CAI-AACM certified Cedar Management Group.


Taking a look at the public record, Prosperity Village HOA engaged in litigation over the settlement of their insurance claim. The record shows that State Farm paid the HOA $73,720 in November 2011, related to an insurance claim involving hailstorm damage.

At the time, State Farm and the Association’s contractor agreed that the storm damage was limited to the need for replacing some portions of the roof, noting other damages unrelated to the hailstorm. Those other damages were not covered by insurance.

Then in May 2012, the association hired a Public Adjuster, Matt Latham, who claimed that State Farm had a duty to pay more than $1.4 million for a total replacement all roofs in Prosperity Village Townhomes HOA.

State Farm reopened the claim and engaged in further examination of the damages to the roofing system of the association. But their experts found no extensive damages caused by the hailstorm. Instead, they documented “significant construction and installation propblems” with the 10-13 year old roofs.

When State Farm denied the HOA’s claim of payment of further damages, Prosperity Village sued the insurance company in 2013 for unfair and deceptive trade practices.

However, a judge ruled against the HOA’s claims when Latham was unable to adequately document his claims with regard to State Farm’s obligation to pay for a $1.4 million total roof replacement.


Similar circumstances involving the public adjuster

Latham was involved in a similar case in the state of Indiana in 2013. In that litigation, Autumn Glen HOA sued Travelers Insurance Company, seeking nearly $2.1 million for a complete roof replacement, after the insurance company agreed to pay $73,000, less a $5,000 deductible, for limited damage sustained in a hailstorm.

Travelers argued that Latham was an unqualified expert witness, and, as in the case involving Prosperity Village HOA, a Judge also ruled in favor of the insurance company.


New HOA management

According to the Fox report, Prosperity Village has been managed by Henderson Properties for the past year. Henderson maintains a web portal for the community, where all information is secured behind a password protected firewall.

As is common in a management transition, homeowners and their new management company are having difficulty piecing together financial records and official documentation that was managed by a previous company.

Although it appears some roof repairs are necessary, and a full replacement will be needed within a few years, homeowners have the right to know the full history of roof maintenance and repairs, as well as any alleged defects that will need to be corrected in the near future.

And they have a right to question the whether the cost to repair or replace their roof is reasonable, given the association’s history with regard to roof damage and insurance litigation.




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