Get Learning!

CA Day 2024 Trade Show and Education Expo is THIS Saturday, March 16th. Do you know what classes you're attending? Save time and choose in advance. Do you have questions on due process hearings? Are you a manager or volunteer board member struggling with difficult board members? Do you have questions on all the recent legal updates happening in our industry? Don’t worry. SEVA-CAI has you covered!

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Education Opportunities at CA Day 2024

Get learning!

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Last Chance to Register for CA Day 2024!

SEVA-CAI CA Day is Coming!

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7 Best Practices for Choosing a Snow and Ice Management Partner

How to choose wisely and protect your property during storm season

1. It's Never Too Early

Don't wait. Whether you're looking to engage a snow and ice management provider or switching from one provider to another, give yourself at least three months to:

  • Properly vet providers.

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Year in Review: Why Was My Master Insurance Policy Cancelled?



As we begin the year, community managers, board members and insurance brokers are still taking deep breaths to recover from the fast and furious insurance market we had in 2023. Many Community Managers had to incorporate major rate increases in their 2024 budgets. Most board members had a hard time approving these increases with very limited time and options. The participation of insurance brokers in board meetings and town hall meetings became critical in helping to control and mitigate this insurance crisis.
 
Key factors in 2023
 
  1. Reinsurance: By the same manner that community associations buy insurance to protect their buildings, insurance companies also need to buy insurance to be able to pay for claims. Most carriers enter into reinsurance renewal agreements twice a year, January 1st and July 1st. In addition to rate increases, these agreements have also resulted in new underwriting guidelines and capacity restrictions in the last four years. This means that for reinsurers to back up insurance companies, a very limited amount of coverage will be available subject to very specific criteria (age of building, type of construction, building limit, loss ratio, etc.)  You could say that reinsurers dictate the rules of the game and insurance companies have to enforce those rules to maintain their reinsurance agreements. The insurance brokers’ role is to keep board members and community managers informed about how the rules of the game are changing so they can budget properly. In 2023, the biggest challenge was that reinsurers deployed less capacity and imposed stricter rules, sometimes impossible to meet especially for aging communities.
 
  1. Billion Dollar Natural Disasters: In the insurance world we refer to this as CAT exposure, which is catastrophic losses such as hurricanes, wildfires, and floods. Unfortunately, there has been an increase in the frequency and severity of these events, especially in California and Florida, in the last 5 years. According to the State of the Market report published by Amwins in October of this year, 2023 marks the 16th consecutive year with insured U.S. severe convective storm losses topping $10 billion dollars. “Through the end of September 2023, there have been 24 confirmed weather or climate disaster events in the US with losses exceeding $1 billion. This puts the U.S. on pace to exceed any prior annual record number of billion-dollar disaster events.” Even though community associations in the DC metro area are not directly exposed to these disasters, they are directly impacted financially because their coverage comes from the same insurance pool.
 
  1. Rising Property Values: The increased cost of construction, the supply crisis, and labor shortages were still a major factor in 2023 from an insurance perspective because of the need to adjust building valuations based on the current cost to repair or rebuild in today’s dollars. Another factor is the insurance requirements from an association’s governing documents and from Fannie Mae, buildings need to be insured at 100% replacement cost, and this is non-negotiable.
 
A few years ago, insurance companies were renewing policies for the same valuation for consecutive years and were only applying a rate increase. However, this year there has been a substantial increase in rates as well as adjusted valuations. This is not to be confused with market value. Many communities are seeing valuation increases between 10% to 25% or even higher if these values have not been adjusted periodically. These adjustments are strongly enforced especially by insurance companies that are writing coverage enhancements such us Extended Replacement Cost of 150%, 200% or Guaranteed Replacement Cost. When a board refuses to accept the proposed increase in the replacement cost of a building, the underwriter will most likely apply a coinsurance penalty which will result in a reduction of premium. However, the community will immediately disqualify from new Fannie Mae insurance requirements as coinsurance provisions are not accepted.
 
What to expect in 2024?
 
While supplies remain limited and the cost to repair or rebuild increases, the need to increase property values will continue to increase. The fact that higher values are needed while lower capacity has been deployed is exacerbating the current market conditions.  
 
As a result, some insurance companies have decided to exit the market and the remaining carriers have been obligated to tighten their underwriting guidelines. There has been a significant increase in the number of cancellations or non-renewals issued by insurance companies. Underwriters are now scrutinizing the Construction, Occupancy, Protection and Exposure of every single property they renew. In the insurance industry we refer to this as the COPE.
 
I highly encourage board members and Community Managers to become familiar with their association’s COPE to be able to anticipate any potential cancellations and budget for renewal increases. An association that is cancelled by their insurance company will most likely need to take coverage from the non-admitted market. This change will easily generate a premium increase between 100% to 450% with deductibles that range between $50,000 to $250,000.
 
While each insurance company has its own guidelines, below are the most typical factors that are currently triggering cancellations: 
 
 

Construction

Occupancy



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Virginia Community Associations and the Corporate Transparency Act: New Federal Reporting Requirements Effective January 1, 2024

Effective January 1, 2024, most Virginia community associations will be required to comply with the federal Corporate Transparency Act (“CTA”) and its regulations, unless a community association fits within one of the narrow exemptions to the Act. 

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ACT NOW: Community Association Corporate Transparency Act Exemption

CAI is calling on members and advocates to learn more information about a federal law that has a sweeping impact on most community associations incorporated in the U.S. We need your help to educate Congress about the unintended consequences of this law and urge them to delay implementation and exempt community associations from the requirements.

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A Manager's Perspective on New Year's Resolutions for Boards of Directors

With the start of a new year, now is the perfect time for managers to guide and assist their Boards with making sure 2024 is a successful year and full of accomplishments.  The question is, what steps can be taken to bring this to fruition?

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Happy New Year CAI!

We are so honored that you've joined us in 2023 for the launch of our blog, The Anchor.

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Making Your List and Checking It Twice: Holiday Party Checklist for Virginia Community Associations

Tis the season for community association holiday and year-end parties.  With such festive and fun-filled events, come certain responsibilities and measures community association should consider. Below is a list of suggested items that should be reviewed prior to an association-sanctioned or association-hosted holiday party. 

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How to Reach a Quorum Through Proxies

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Annual and special meetings require homeowner votes for new board members, assessment increases, capital improvement projects, and amendments to the association’s governing documents. The goal is to reach a quorum—a minimum number of members who must be present for business to be validly transacted.

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SEVA-CAI Board of Directors Election

You are hereby invited to attend the 2023 Annual Meeting of the Southeastern Virginia Chapter CAI to be held immediately in advance of the Holiday Social on Friday, December 1, 2023 at The Sheraton Virginia Beach, 3501 Atlantic Avenue, Virginia Beach VA 23451 at 2:00pm. The social is a ticketed event and advanced reservations are required. You will also have an opportunity to meet the SEVACAI Committee Chairpersons and the 2023-2024 Board of Directors. Space is limited, so make your reservation today at www.sevacai.org.

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CAI Releases New Reserve Study Standards for Community Associations

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Community associations should incorporate preventive maintenance and structural inspections into their reserve studies—the important budget planning tools that identify the components a community association is responsible for maintaining or replacing, indicate the status of the reserve fund, and provide a stable and equitable funding plan to offset anticipated future major common area expenditures. The recommendations are part of new Reserve Study Standards released by Community Associations Institute (CAI)the leading international authority on community association governance, management, and education.

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Member Spotlight: Michaela Audet

How long have you been affiliated with the SEVA Chapter?
On a committee since 2019, affiliated as a member since 2016.

In what capacity are you involved with community associations?
I am an association manager for United Property Associates.

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Deborah Casey Appointed to CIC Board

On Friday, September 29, Governor Glenn Youngkin announced several key administration and board appointments. Deborah Casey, Principal and Vice Chair at Woods Rogers Vandeventer Black, was appointed to Virginia’s Common Interest Community Board.

The Common Interest Community Board regulates common interest community managers, as well as certain employees of licensed management firms. The Board’s authority also includes condominium and time-share program registrations, and extends to transactions occurring within Virginia, even if the property involved is located outside the Commonwealth. Property owners’, condominium unit owners’, and proprietary lessees’ (cooperative) associations are required to register and file annual reports with the Board.

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Fannie Mae and Freddie Mac: New Lender Requirements Take Effect

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In July, Fannie Mae and Freddie Mac released updates to project eligibility standards for condominiums and housing cooperatives.

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Social Media Platforms for Associations

There are many different social media platforms that may be utilized by community associations; Facebook, Twitter and Instagram to name a few. Before jumping in, take some time to consult legal counsel, and develop a strategy. Know the good, the bad and yes, even the ugly!

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Are You Providing the Proper Insurance for Your Directors & Officers?

Some insurance carriers refer to Directors and Officers (D&O) Liability as miscellaneous liability.  Take my word, it is not a coverage that should be considered miscellaneous.  There is a world of difference between D&O coverage offered to you as an endorsement on your master policy and proper D&O coverage specifically written as a stand-alone policy.  

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Resale Disclosure Act and Virginia Community Associations

Effective July 1, 2023,  the various resale provisions in the Virginia Property Owners’ Association Act, Condominium Act, and Cooperative Act have been removed and consolidated into a new single act known as the Resale Disclosure Act, which is located in Chapter 23.1 of Title 55.1 of the Virginia Code.  The new Resale Disclosure Act groups resale provisions together for Virginia property owners’ associations, condominium associations, and cooperatives, and collectively refers to them as “resale certificates.”

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Tips to Take Charge of Your HOA's Budget Planning Process

Your association’s budget impacts the financial and physical health of the community and residents’ property values. The budget is the first, crucial step to restoring aged, once-beautiful communities to their former glory, and it determines the enjoyment residents will derive from their community.

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