The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: kenmoremmm on May 21, 2020, 11:57:39 PM
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we own a rental property in a condo bldg with about 30 units.
recently, the insurance company that insures the building notified the HOA that the railings on the balconies are non-code compliant and that insurance would be dropped later this year if the railings were not corrected. the building is old (i'm not sure of exact age, but at least 60 years). railings are horizontal with 6" spacing between members and too low (36", not 42"). current code needs vertical rails, 42" high, and 4" max clear.
does an insurance company have the ability to deny coverage for something that seems like it could be grandfathered in? i mean, knob and tube isn't code compliant anymore, nor is asbestos, or lead paint, but these exist in millions of structures that are insured across the country.
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The insurance company only cares about what claims it might receive, and if someone fell off a balcony because the railings were too short, the owner could be sued for liability, which is likely part of the insurance policy. Asbestos and lead paint would be hard to prove as a claim, but knob and tube can cause a fire which can be traced to it's source and cost the company money. Knob and tube homes are not insurable where I live.
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Your HOA will likely then decide to have all railings replaced with a new standard railing. I can't imagine that this would cost a ton. If your HOA is well-funded, then there may not be any additional cost. However, if your HOA fees are very minimal and the HOA has no rainy-day fund, you'll be assessed a special HOA fee for the cost of the new railing.
There's nothing about being grandfathered in, the insurance company is saying that they won't renew the contract. So they'll honor the insurance through the current term.
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1. I can't believe they got away with it this long.
2. Do you really have so little regard for the safety of others, particularly small children (and LBH, drunk partiers) that you don't want to see these corrections made?
3. Replacing all railings everywhere in your complex should be in the Reserve Budget. Haul out your copy (you have one, right?) and look for the line item. If it's even halfway decent, it should be there.
4. Penny wise - if doing this work saves a single accident and ensuing lawsuit, you're miles ahead fiscally and karmic-ly.
5. Why are you even asking this question? You should be pressuring supporting the HOA to get this work done asap.
6. Insurance companies can cancel anyone, anywhere, any time, with or without a legitimate reason. #askmehowiknow. This time, the reason seems totally legit.