Assessments and Reserves
Costs
Every home on the planet needs maintenance, repairs, upgrades, renovations and improvements over time. No property is immune from this. Every homeowner knows that when a roof needs to be repaired, it’s wisest not to delay….. keeping a reserve fund for these inevitable costs is essential, whether a single family home or an apartment building.
Options
Owners of homes have two options as it relates to funding bigger cost items: either you build up a ‘savings account’ of sorts by adding a bit extra each month into the kitty to create a reserve fund, or you keep in the back of your mind the knowledge and certainty that at some point you will have to fund a bigger expenditure another way. In condo’s and co-ops that is done via an assessment….eg: A $1 million facade repair is split amongst 100 apartment owners so that each pays a percentage of that cost based on the percentage of the building they ‘own’ based on their offering plan or number of shares.
Financing (more…)
Florida lawmakers eye property insurance reforms
Over the past year, state lawmakers have made changes on paper through several attempts to cure Florida’s property insurance crisis. But a homeowner in Florida who opens their annual renewal and sees their premium has increased, or finds out their carrier has suddenly dropped them, may not have noticed anything different.
State Sen. Jim Boyd, R-Bradenton, noted during the first of last year’s special sessions to address insurance that relief from any measures taken by lawmakers wouldn’t be realized for at least another 18 months. That session took place in May 2022.
Since then, two hurricanes hit the state. Lawmakers then held a second special session on insurance in December. Six property insurance companies were declared insolvent last year. Citizens Property Insurance Corp., the state-run “insurer of last resort,” continues to grow with more than 1 million policies.
And now the annual, 60-day regular legislative session is underway. The session is largely where party-line battles are taking center stage, but not insurance. And those homeowners with delayed or unfulfilled property damage claims may find their legal recourses slashed, owing to legislation approved in the special sessions to limit what the insurance industry and lawmakers said was too much litigation over property insurance claims and disputes between homeowners and their insurers.
The story remains the same as it was a year ago: it’s lawyers, contractors and public adjusters versus lawmakers and insurance companies. (more…)
Has Inflation Peaked?
After I published Have Mortgage Rates peaked? last week a reader asked me why I thought the yield on the 10-year Treasury Bill would not continue to increase, so that even if the spread over the 30-year Fixed Rate Mortgage (FRM) narrowed, the FRM rate itself might still increase.
In Are we already in a Recession?, published on June 18, I wrote: “Just as the yield on 10T has more than doubled since pre-COVID while the Fed Funds rate is unchanged, so the Fed Funds rate can increase sharply – the Fed is forecasting it will reach 3.4% this year, also double its pre-COVID level – without necessarily impacting the yield on 10T. That will depend upon the economic outlook. Ironically, perhaps, the more determined the Fed is to drive down inflation – even at the cost of a recession and higher unemployment – the greater the chance that the yield on 10T – and by extension the FRM – will decline – at some point.”
In the last few days, as more economists talked about a recession after the Atlantic Fed updated its Q2 GDP estimate to minus 2.1% (it was 0% when I wrote on June 18), the yield on 10T has dropped sharply, falling to 2.9% from a peak of 3.5% in the middle of May: (more…)
Florida Lawmakers Pass Insurance, Condo Reforms
Property insurance reform
Senate Bill 2D includes a variety of reform measures
Protecting Policyholders from Nonrenewal: Insurers may not refuse to write or renew policies on homes with roofs that are less than 15 years old solely because of the roof’s age.
Roof Solicitations: Requires roofing solicitations to contain consumer-awareness language that the homeowner is responsible for the deductible under the insurance policy, and it is insurance fraud for the contractor to reduce or waive the deductible or file a claim with false or misleading information.
Roof Deductible: Allows insurance companies to offer a policy at a reduced rate to consumers that includes a roof deductible of up to 2% of the insured value or 50% of the roof replacement cost. Roof deductibles will not apply when there is a total loss to the structure, a loss caused by a hurricane, a roof loss resulting from a fallen tree or other hazard, or a loss requiring a repair of less than 50% of the roof.
Assignment of Benefits (AOB) Reform: Eliminates attorney fee awards where policyholder benefits have been assigned to a 3rd party.
Improving Affordability for Policyholders: Authorizes $2 billion for a new Reinsurance to Assist Policyholders (RAP) program to help insurers obtain reimbursement for hurricane losses earlier than they normally would under the Florida CAT Fund. This reinsurance is provided by the state at no cost to the insurer. Insurers that participate in RAP must reduce policyholder premiums.
Home Hardening Grants: Appropriates $150 million to provide hurricane mitigation inspections and matching grants to help Floridians afford home hardening improvements to their homestead single-family residences with an insured value of $500,000 or less. The program provides $2 in grant funds for every $1 provided by the homeowner up to $10,000.
Condominium safety reform
Florida lawmakers also addressed condominium reform by passing Senate Bill 4D. This bill provides an overhaul of the high-rise inspection law, requires more frequent recertification of safety standards and mandates that condo boards build up reserves so they can make needed repairs. Changes in the bill include:
Creates a statewide “milestone inspection” requirement for condominiums and cooperative buildings that are three stories or higher 30 years after initial occupancy, and 25 years after initial occupancy for buildings located within three miles of the coast.
Requires inspections every 10 years after a building’s initial “phase 1” inspection.
Requires an additional, more intensive inspection, or a “phase 2” inspection, if a building’s initial inspection reveals substantial structural deterioration.
Beginning in 2024, condo associations are required to conduct a structural integrity reserve study at least every ten years and prevents needed reserves from being waived.
Click here for fuller details.
Comment
Difficulty in finding homeowners’ insurance – and large rate increases when a policy has been renewed – have plagued the Florida market. One of the biggest issues has been roofs which are 15 years or more old – that has been a cause for non-renewal for many, so this new legislation should make things easier.
I shall investigate what is covered by the Home Hardening Grants and report further.
Florida Housing Market in 5 pictures
Why are Mortgage rates so high?
Florida Regulator: Insurers Can Offer Roof Deductibles
Naples First Quarter Housing Market Summary
Expansion Plans for Fort Myers Airport
Bonita Springs First Quarter Market Summary
St James City First Quarter Market Summary
Fort Myers Beach First Quarter Market Summary
Naples Park First Quarter Market Summary
Estero First Quarter Market Summary
- Andrew Oliver, M.B.E., M.B.A.
Real Estate Advisor
Andrew.Oliver@Compass.com
www.TheFeinsGroup.com
www.OliverReportsFL.com
m: 617.834.8205
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800 Laurel Oak Drive, Suite 400, Naples, FL 34108
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Licensed in Massachusetts
www.OliverReportsMA.com
Florida Regulator: Insurers Can Offer Roof Deductibles
TALLAHASSEE, Fla. – Florida has had a rash of insurance claims alleging damaged roofs covered under their homeowner’s property insurance policy, and the 2022 Florida Legislature considered a fix that would have charged homeowners a deductible if their roof needed replacement following a covered event. However, the bill, SB 1728, passed the Senate but failed in the House.
While the Florida Legislature may return to Tallahassee for a special session to discuss the state’s property insurance challenges, it’s generally not expected to do so before November after a new House Speaker takes over.
On Wednesday, however, the Florida Office of Insurance Regulation (OIR) announced that it would allow insurers to offer roof-replacement deductibles as an option in their policies. (more…)
Property Insurance Costs Too Much? 7 Ways to Reduce It
When is the lowest-cost insurer not the lowest-cost insurer? When another company actually charges less because you bundled or installed security or did something else.
NEW YORK – The price of homeowners’ insurance is on the rise, and many owners may be looking for ways to reduce their high premiums. While discounts can vary greatly based on location, size, and age of the house, some credits may be available that could reduce some homeowners’ premiums by as much as thousands of dollars per year, The Wall Street Journal reports.
The average premium for a homeowner’s insurance policy increased 3.1% to $1,249 in 2018, the latest year for which data is available. Luxury homes tend to be much more costly to insure than standard homes since they’re larger and have more decorative features within.
Here are some ways homeowners may be able to save on their homeowners’ insurance costs:
Bundles: Look into bundling a policy – insuring a home, car or boat all with the same firm. Some homeowners report a 12% reduction in their premiums by doing this. (more…)
Is Your Home (and Home Insurance) Ready for Extreme Weather?
Hurricanes. Heat waves. Earthquakes. Tornadoes. Today’s headlines are awash in extreme weather, and whether you blame climate change or just plain bad luck, the simple truth is that the damage from these disasters is impossible to ignore.
Realtor.com® teamed up with HarrisX to conduct a poll of 3,026 adults on their extreme weather concerns and homeowners insurance know-how—and the results suggest that many Americans may be more vulnerable than we think.
Here are some of the key highlights: (more…)
Want to Sell Your Home as Quickly as Possible? Here’s How to Be Proactive About Making That Happen
Image by mynemesis2011 from Pixabay
If you’re anticipating putting your home on the market soon and want to sell it as quickly as possible, you’re probably thinking that the best way to accomplish this is to accept a major drop in price. Although it’s true that price points can affect how quickly a property sells, you don’t have to dip much, if anything, below market value to facilitate a fast sale as long as you live in an area with a moderately healthy real estate market. Following are five proactive ways you can help your upcoming home sale go quickly. (more…)