08/22/2020
New Laws and Executive Order Affect Community Associations
This has been an active year for both the Georgia legislature and for the Georgia Governor’s office. Governor Kemp recently signed an executive order on August 15, 2020, renewing and extending nearly all existing restrictions applying to community associations through August 31, 2020, such as restrictions on gatherings and requirements for continued disinfecting and sanitation measures. It’s clear that the Governor’s office understands that we are not out of the woods yet with COVID-19. Many communities have opened and operated community amenities for some time now and will soon be closing pools or other amenities for the season, but it’s helpful to review Section V of Governor Kemp’s executive order, the current Georgia Department of Public Health guidelines for pool operations, and the L&J resources page, where we regularly publish blog posts, documents, and webinars on COVID-19-related topics, which you can find here.
We also have discussed the newly adopted Georgia COVID-19 Pandemic Business Safety Act in several earlier eblasts and L&J Morning BreakTM sessions. This law went into effect on August 5, 2020 and provides community associations helpful protections in operating common areas and amenities. The law provides for specific signage to be placed at entries to common areas, and most communities already have this signage posted at pools and other amenities areas, but the law provides the same protection for all common areas, including building lobbies, garages, parks and other areas. It’s important to continue to post and keep these signs at all common area entry locations.
The Georgia legislature also passed two new bills which will affect community associations. These two bills will become law on January 1, 2021, but it’s important to understand how they will affect communities and plan for the laws now.
SB 442: Required Grandfathering with New Leasing Restrictions for Georgia Property Owners’ Association Act Communities
Under this new law, with limited exception, community associations submitted to the POAA who adopt new community leasing regulations must allow properties being lawfully leased at the amendment adoption time to continue to lease in accordance with the terms of the community declaration that existed prior to that amendment. This grandfathering must be allowed continue as long as that grandfathered lot or unit owner continues to own that lot or unit. The law generally makes an exception for new leasing regulations which prohibit short-term rentals, allowing those new restrictions to apply to all properties in the community.
POAA communities still can adopt new leasing restrictions, but the law prohibits these new leasing restrictions from further restricting leasing rights of a lot or unit that is leased in accordance with the community declaration at the time the amendment is approved. The law does not apply to condominiums, but instead applies to POAA communities who make new leasing restrictions on or after January 1, 2021.
HB 1070: Water Damage at Condominiums – Insurance Policy Disclosures
This new law creates new obligations on condominium associations when there are water damage incidents affecting units at the Condominium. The law requires condominium associations, when request by an owner, to provide the association’s certificate of insurance and insurance information within five business days so that the owner can directly file a claim on the association’s policy for that alleged damage.
This is very problematic for condominium associations, who normally control and manage the filing of insurance claims on the association’s insurance policies. Water coverage continues to be an optional insurance for condominium associations under the Georgia Condominium Act, subject to a particular community’s legal documents, and boards of directors still legally may choose whether to obtain water coverage and, if so, the amount of the applicable deductible on water damage claims. The Georgia Condominium Act also still allows for the association to assess that deductible or hold the affected owner responsible for that deductible, if provided for under the community legal documents.
What the law changed is the condominium association’s ability to manage the filing and handling of the insurance claim when a unit suffers water loss damage. The law appears to allow the affected owner to directly file a claim. In that case, the law may cause associations to lose a valuable right. As an example, out of concern for the impact on future insurance premium costs, many associations may choose to not file an insurance claim when it is clear that the likely damage repair cost is much less than the amount of the deductible on the association’s insurance. Similarly, when an owner’s damage repair costs may be greater than the association’s deductible, but only slightly, many associations opt to simply pay the owner that difference amount, rather than file a claim and risk premium increases. This new law appears to eliminate these options for associations and instead allow owners to directly file claims with the association’s insurance carrier.
It’s not clear yet how association insurance agents and carriers will handle these direct owner claims, but it’s important to have this conversation with your insurance agent. This new law becomes effective January 1, 2021 and affects all condominiums under the Georgia Condominium Act.
If you have questions about these new laws, please reach out to us. Please check out our many blog posts, video webinars and sample COVID-19 signs, waivers and other documents on our website at www.LJLaw.com/resources/. We hope your community is staying safe and healthy.
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