Many of you may already be receiving notification from your insurance
companies about the new insurance requirements that apply to individual HO-6
condominium policies which become effective January 1, 2009.

Many of the changes are being met with resistance and there is already talk
that the new requirements will be repealed during the 2009 Legislative
Session. That being said, you still need to comply with the law as currently
written.

The three changes garnering the most attention are the requirements to add
the association as a "named additional insured and loss payee" on all
casualty insurance policies issued to unit owners; the requirement for the
HO-6 policy to provide loss assessment coverage of at least $2,000; and the
ability of the association to buy or "force place" missing policies.

A condominium association must now inquire one time per year as to whether
or not its owners have HO-6 policies that comply with the new requirements.
The owners have 30 days from receipt of the association's request to provide
proof of such coverage. If the owners do not provide such proof, the
association MAY but is not required to purchase or "force place" those
missing policies and specially assess the owners who neglected to insure
their units.

From a practical standpoint, many associations have already indicated that
they are not inclined to start purchasing missing policies in this economic
climate only to wind up pursuing those costs in court. Many unit owners are
understandably concerned that purchasing a compliant policy now will result
in any loss payments for any reconstruction costs related to any condominium
property that the unit owner is required to insure (i.e.
cabinetry,applicances, etc.) must be made payable jointly to the owner(s)
AND the condominium association. The owners will then need to obtain the
association's endorsement of that payment which could open the door to
problems in certain communities.

Many insurance agents are grappling with the new language found in Section
718.111(11) of the Condominium Act which does not comport with insurance
industry standards. Unfortunately, it will not be surprising if you and your
neighbors receive conflicting information about these new changes and what
they mean. If you are in doubt about your board's responsibilities
regarding HO-6 policies, please contact your association attorney for an
opinion.

On a separate note, reports have resurfaced about possible health problems
associated with so-called "Chinese drywall". Drywall is a very common
manufactured building material that is used globally for the finish
construction of interior walls and ceilings. Drywall is made from gypsum
plaster, the primary component of which contains sulfur, the element which,
when mixed with moisture, emits the distinctive odor of rotten eggs.

During the construction boom that occurred between 2002 and 2006, drywall
became increasingly expensive, forcing builders and suppliers to look for
alternate sources of the material. Suppliers began importing significant
amounts of drywall from China.

This "Chinese drywall" is believed to be the culprit behind increasing
reports of noxious odors in condominium units and single family homes,
frequent, unexplained headaches and other physical ailments. It is believed
that prolonged exposure to high concentrations of sulfur dioxide or other
compounds in defective drywall may pose significant health risks. One
warning sign that high levels of sulfur are present is the "blackened"
appearance of copper pipes in some air conditioning units since sulfur is a
copper corrosive.

Although health is naturally the first point of concern, monetary damages
may also be incurred if defective drywall must be removed and replaced. If
any of your owners have complaints which may be attributed to defective
drywall, please let me know. CAN is attempting to determine the scope of the
problem before developing a possible plan of action.

Lastly, our next two free Board Member Boot Camps are tentatively scheduled
for late Spring in Lee/Collier and Palm Beach counties. Please contact Drill
Sergeant Diane Schick at 954-315-0372 or via email at dschick@askthefirm.com
if you would like to register. A video clip from our Sunrise Boot Camp is
now posted on the CAN website at www.canfl.com.

Donna D. Berger, Esq.
Executive Director of the Community Advocacy Network (CAN)
Telephone: 954.315.0372
Facsimile: 954.315.0373
Web: www.canfl.com
Email: dberger@canfl.com

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