[Liability Insurance] RPPTL Section, Insurance & Surety Committee - Request for Review of the Condo Committee's Glitch Bill

[Meyer, Michael]

Folks,

I hope everyone had a happy and healthy Father's Day weekend.  Please find attached a "Glitch Bill" from the Condo Committee that seeks to fix multiple technical glitches in Chapters Section 718 and Section 720 that have come into existence as those Sections have been revised over the past several years.  They've asked the Insurance & Surety Committee to take a look at it for comment on the parts that relate to insurance and/or surety.

Based on a quick review, it appears that there are only two sections of this Bill that would be of concern to our Committee (from an insurance/surety perspective only): the amendments to Section and Section 718.202.  The White Paper summaries of those changes are provided at the bottom of this email, and the whole White Paper is attached.  Also attached is a copy of the proposed Glitch Bill.  For everyone's quick reference, the modifications to Section 718.111 can be found in Section 4, on pages 6-14(NOTE: sub part (11) starts on page 8), of the Glitch Bill, and the modifications to Section 718.202 can be found in Section 8, on pages 31-33, of the Glitch Bill.

The Condo Committee would like our final responses by this Friday, so please send me whatever questions, comments, or general feedback you might have on the proposed Glitch Bill by the close of business on Wednesday, June 24, 2020, so we have time to review, discuss and respond if appropriate.  Luckily, it appears that these relevant Sections of the proposed Glitch Bill aren't lengthy (relative to the rest of the Bill).

Thank you, everyone, for taking a quick look.  And please email me directly with your feedback (please do not copy all).  I hope everyone has a great week!

Section 718.111(11) - page 4 of 7 of the White Paper - Part IV I.
"I.           Section 718.111(11) is amended in (c)3 to remove the specific requirement of how insurance deductibles are determined and allow associations freedom to set insurance deductibles; (f)2 is amended to clarify the association only insures alterations and improvements made by the association; (g)2 is amended to clarify owners are responsible for the cost of reconstruction of property for which there is an exclusion under the master insurance policy and that owners are responsible for repair and reconstruction of property they are required to insure; (j)4 is amended to delete the superfluous term "with finality"; (n) is amended to clarify associations are not obligated to repair, replace or reconstruct improvements made by an owner solely for the benefit of that unit."

Section 718.202 - page 5 of 7 of the White Paper - Part IV R.
"R.          Section 718.202 is amended in (1) to clarify the Division of Condominiums can only accept alterative assurances on residential condominiums.  (1) is also amended to allow for developers in nonresidential condominiums to provide a surety bond or irrevocable letter of credit in an amount equal to the aggregate of all payments up to 10% of the sale price; (3) is amended to allow for deposits to be used by the developer for actual costs, which include permit fees, impact fees, costs for architects, engineers and surveyors but does not include attorneys' fees, marketing fees, loan fees, costs or interest."

See also, Page 2 of 7 of White Paper:
"Section 718.202(1) and (3) are amended to allow for developers to use alternative assurances, such as a irrevocable letter of credit, for deposits in non-residential condominiums and allows developers to use deposits in residential condominiums for hard costs such as permit, impact and utility fees and specifically restricts deposits from being used for attorneys' fees, sales commissions and loan fees."


Best regards,

Michael

Michael G. Meyer, Esq.
Legal Counsel/Sr. Project Manager
AECOM Hunt
8523 W. Sunset Blvd.
2nd Floor
West Hollywood, CA 90069
Business: (512) 417-5914
Cell: (813) 924-2983

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