After damage has occurred, the claims process often takes more time than expected. Unfortunately, while this is not always avoidable, delay in reconstruction can cause further losses in rent and keep people out of their homes for longer than necessary.

Associations have a duty to do what they can to mitigate the damages that has occurred as well as a fiduciary responsibility to make repairs and get tenants and unit owners back into their condominiums as quickly as possible.

After a catastrophe such as a hurricane, wildfire, or earthquake, associations immediately contact local contractors to help make temporary and permanent repairs. Often, the best companies are scooped up early and waiting to make contact can result in delays in the repair process and backorders in materials. Many associations retain companies before their insurance claim has been completed.

Associations should review all contracts they sign and be careful to ensure that the terms are clear and definite. Failing to do so, can result in the contract being found void in court if a dispute arises.

In The Gables I Townhomes, Inc. v. Sunmark Restoration, Inc., 687 So.2d 6 (Fla. 3rd DCA 1996), exactly such a situation arose. In that case, the association had problems in the claims process which resulted in delays in receiving payment for damages resulting from Hurricane Andrew. In order to move the claim along, the association retained Sunmark Restoration to help with the claim and, possibly, perform all necessary repairs.

The Gables signed a proposal/contract with Sunmark Restoration, but the document lacked a price. Instead, the final amount to be paid would be the amount negotiated with the insurance carrier when the claim was closed. The contract stated:

All repairs to be specified per estimate and scope as furnished by the insurance co., or furnished by the company and approved by the insurance co. No changes may be made by either party without written approval by both parties.

After payment was tendered by the carrier, a dispute arose between the association and Sunmark Restoration regarding the scope of the contract. The association argued that the contract only covered Sunmark’s authority to negotiate the scope of the loss with the insurance carrier, while Sunmark Restoration argued that the contract allowed them to negotiate a final settlement and then perform the work. When an impasse was reached, Sunmark Restoration sued the association for breach of contract.

The Third District Court of Appeals found the contract was indefinite and could not be enforced. Because the proposal/contract allowed Sunmark Restoration and a non-party to the contract (the insurance carrier) to determine the price terms, the court found there was no “meeting of the minds” and thus no contract. The court advised that in the absence of a definite price or definite method of determining the price not left solely to Sunmark Restoration’s discretion, the contract was not binding.

Associations should always read contracts carefully and make sure that both parties have a clear understanding of what is contained therein. The repercussions of not doing so can be harsh and could lead to needless litigation that will further delay the repair process.

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Founded in 1985, our law firm continues to be dedicated to representing insurance policyholders throughout the United States. Collectively, our lawyers are licensed to practice in 25 states. In fact, many of Merlin Law Group’s attorneys worked for the insurance industry before joining the firm, so they bring a strong understanding of insurance company practices. Anyone can file a claim, but it takes experience, knowledge, and savvy to achieve a truly successful outcome. As The Policyholder’s Advocate®, Merlin Law Group aims to drive positive change within the insurance sector by obtaining justice for our clients and educating policyholders on how to navigate insurer bad faith tactics.

When we handle property insurance claim disputes, we hire the most experienced and qualified expert witnesses to evaluate your insurance claim and testify on your behalf. In most cases, we can advance the fees for this. Typically, we hire experts such as engineers, contractors, independent roofing consultants and other professionals to perform a thorough assessment on all possible causes of damages. This is a process that provides us with a very detailed and all-inclusive estimate for determining and justifying a proper settlement. Our use of these professional expert witnesses sets us apart from other insurance law firms.

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