Cohousing-L Mailing List: Paying for catastrophic damage from termites.

[David Clements and Evan Richardson (evdavwes]

At Westwood Cohousing,  we are considering adding to our Declaration an 
entitlement to relief from the Association for damage caused by termites.   




Our current Declaration does not mention termites.   Our understanding from our 
research and legal advice is that, in general,  Homeowners Associations do not 
cover losses to Owners from termite damage.  The exception would be those where 
the Declaration explicitly allows for this. 




We are making this change prompted by the experience of one of our members,  
who discovered termite damage which ultimately cost $60,000 to resolve.   We 
learned from our lawyer that the Association has no responsibility to cover 
this damage,  as our Declaration is currently written.   The situation is 
complicated by the fact that a design flaw in the original construction,  not 
noticed for 25 years,  contributed to the problem and resulted in the termite 
treatment company refusing to honor the $1,000,000 bond that we assumed would 
cover such damage.   (We have rectified the design flaw as it applied to other 
houses. )




We are looking at an amendment which would authorize the Board to reimburse a 
limited amount (up to about $10,000) to Owners who have been similarly affected 
by termite damage not covered by the bond.




I have not heard of any other HOAs that reimburse for termite damage in this 
way.  I would love to hear about the experiences of other cohousing 
communities. 




It seems to me that termite damage is usually treated as a  "catastrophic 
event" similar to flooding or fire.   There is no expectation that an HOA will 
reimburse for damages due to flooding.   The HOA might purchase flood insurance 
on behalf of owners,  but that would not create a liability for the HOA.    And 
the HOA may (as in our community) pay for fire insurance for the individual 
houses,  but there is an expectation (explicit in our Bylaws) that if the 
amount of insurance is insufficient to rebuild the houses,  any additional 
amount needed would have to come from the homeowner.  Good reason to make sure 
the insurance covers the replacement cost of the Houses.   




I'd appreciate any thoughts or reactions.   




David Clements