No to flood insurance and yes to club membership?

Q. We own a unit in a small condominium. Until recently, we have had flood insurance although we are not in a flood zone. Now a new owner is pushing for it, and the board is caving in. Are they legally required to have flood insurance if most owners do not want to pay the extra expense through our dues? – Shelley

A: Flood insurance is one of the most important investments for any homeowner to make in insuring their continued ability to keep the home. Due to the way that the insurance industry is structured, other types of insurance, such as the standard hazard policy that every homeowner should have, specifically exclude what flood insurance covers. Flood insurance is often government subsidized, making it very affordable. It is a mistake for any property owner who lives in or near a flood zone to not have this coverage.

The law requires your condo’s leadership to use its best effort to fully insure itself, the condo’s common areas and property for its full insurable value. Some boards will try to evade this relatively small expense by pointing out that the law does not specify what types of insurance must be maintained or that they are not in a flood zone. However, recent instances of rising water have shown us that flood insurance indeed is necessary. Other boards content themselves that concerned owners will insure their own units, but that coverage will not help when the common areas are damaged or destroyed.

To put it simply, it is potentially negligent for a board not to use its best efforts to fully insure the condo, including getting flood insurance. If a board purposefully does not do this, perhaps to save money, members are potentially exposing themselves to liability.

It is important for every board to try to keep the budget reasonable and save their neighbors from unnecessary expense. But this is not the place to cut corners.

Q. Our homeowner association recently passed an amendment to our community requiring everyone who buys a resale in our community to join the golf and country club. It is costly to do so, and I am having a problem selling my home. Can the association do this? – David

A: This is an area of law where there is no clear answer to give you. You live in a homeowner association property which is different than a condominium, and most of the law in this area concerns condominiums.

Several years ago, many associations changed their rules to limit the ability of owners to rent out their properties. The courts decided that condos could not do this and ruled that adding such restrictions was prohibited.

In response, the Florida Legislature overrode the ruling by changing the law to allow condos to restrict renting the property from new owners, but not current ones. This “grandfather clause” pertained only to condos and not to homeowner association communities.

With many community golf clubs struggling, associations are looking for ways to help fund them. Some are changing their rules to require all owners to join the club. Others seek to soften the blow by using a grandfather clause and only require membership when the property sells.

However, some of these clubs require a sizable initial buy-in for as much as $100,000. This has the effect of reducing the value of the property by limiting the number of potential buyers who can afford such a large deposit.

With no “hard” law addressing this, we are left to see what will happen.

Many lawyers I speak to feel that this is not allowed for the same reasons that the original condo rental case prohibited rental restrictions – that it changed the essential character of the community. Others view the change as one that merely requires a 75 percent approval from the owners, similar to converting, for example, a tennis court to a parking lot.

Existing case law offers little guidance. While this issue has been litigated before, the cases ended in confidential settlements before the law was clarified by the courts.

Gary M. Singer is a boardcertified real estate lawyer in South Florida. To ask him a question, visit SunSentinel.com/askpro.