Tuesday, February 24, 2015

SUSPENDING REMOTE ENTRY

SUSPENDING REMOTE ENTRY

QUESTION: Can a board deny a delinquent non-disabled owner the ability to remotely open the lobby door from his phone thereby requiring the owner to go downstairs and open the door manually for guests?

ANSWER: Yes, the privilege can be suspended. Remote entry is a privilege not a right. The delinquent owner can still escort guests to his unit--he simply loses the convenience of remote entry (since he is no longer paying for it). Make sure you hold a hearing before suspending privileges.


INSURANCE HAMMER CLAUSE

QUESTION: One of our members filed a bogus lawsuit against the board and our insurance appointed a law firm to defend us. After a year of being put through the ringer by a nutcase plaintiff and his slimy lawyer, our attorney is recommending settlement. We don't want our insurance paying him a dime. We know we can beat this guy in court. Are we in our rights to refuse settlement and demand that the case go to trial? 

ANSWER: You can refuse settlement but first you should find out if your insurance policy has a "hammer clause." If it does, you need to carefully weigh the pros and cons of continued litigation. On the plus side, if you take the case to trial and win you discourage others from filing spurious lawsuits against the association. If you lose, it could cost the association a lot of money and a special assessment.

Economics of Settling
Insurance companies don't look at who's right or wrong--they look at the economics, i.e., the cost of taking a case to trial verses the cost of settling. Not only are trials costly, there is a risk of losing. A loss could burden the insurance company with damage awards and plaintiff's attorneys' fees. to avoid the risk, they like to settle.
Hammer Clause. To ensure that boards cooperate with settlement offers, insurance carriers frequently insert a "hammer clause" in their policies. In the event a board refuses to settle and takes a case to trial and loses, the association, not the insurance company, pays the difference between the rejected settlement offer and (i) any additional legal fees incurred by the carrier, plus (ii) any judgment against the association, plus (iii) any award of legal fees against the association.

Plaintiff Refuses to Settle. Sometimes it's the nutcase plaintiff who refuses to settle. When that happens, insurance continues to pay for defending the association through trial and sometimes beyond (if the nutcase loses and files an appeal).

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