Condos and Co-ops Not Eligible For Storm Relief

Written by Posted On Wednesday, 18 September 2013 10:58

Thousands of condominiums and housing cooperatives that were damaged when Hurricane Sandy struck the East Coast last year learned - after the fact - that they were not eligible for money grants from the Federal Emergency Management Agency (FEMA). Unlike single family homes which can get both grants and loans, community associations are considered "business associations" and are only entitled to loans. As we all know, loans have to be repaid; grants do not.

Sandy was a category 3 storm, with sustaining winds of 115 miles per hour. It was the most destructive storm in 2012 and considered the second costliest in American history. And although much progress has been made to restore the Jersey coast, thousands of community association homeowners are still basically homeless.

Last month, Congressman Steve Israel (D-NY), along with several other Republican and Democratic Representatives, introduced legislation to correct this matter. "A storm does not discriminate where it hits", said Representative Israel, "and FEMA should not be discriminating what type of homeowners it helps. It seems clear that FEMA's policy is the result of not understanding the role of co-ops and condos in our community," he added.

Representative Israel, in releasing his bill, gave one example from a constituent. Bob Friedrich is President of Glen Oaks Village, the largest cooperative in New York with 10,000 residents. According to Friedrich, "it is unconscionable that FEMA refuses to help the working class community of Glen Oaks Village that sustained more than $250,000 of damage from Hurricane Sandy because we are a co-op. Let me remind FEMA that the mothers, fathers and children of Glen Oaks are not different than the mothers, fathers and children who live in private homes."

The storm impacted the Washington metropolitan area, but fortunately, not to the same extent of the damage and destruction that took place further north. In fact, it caused at least 285 fatalities.

This does not mean, of course, that anyone should be complacent. There are countless condominium and cooperative associations all over the country, and could face the same issues if another storm decides not to bypass us this time.

The bill that was introduced (H.R. 2887) would amend the Robert Stafford Disaster Relief and Emergency Assistance Act. That is the law, first enacted back in 1988, which among other things, created FEMA. According to Representative Israel, when it became clear that neither the Department of Homeland Security or FEMA were willing to unilaterally change their policy toward community associations, he "came to the conclusion that a legislative solution is needed to make the change".

The bill, if enacted, would make it clear that condos and cooperatives are to be considered the same as single family houses. However, instead of the maximum amount of disaster relief that single homeowners can get, the bill would allow the President - and presumably FEMA - to adjust by regulation the cap for those associations.,

The Community Association Institute (CAI), a national association representing homeowners thoughout the country, has endorsed the bill, stating it "is a big step forward for community associations receiving equitable treatment under FEMA disaster guidelines."

However, CAI cautioned that "it does not address all of CAI's areas of concern.... homeowner associations are not included in the bill".

Congressman Israel's bill was referred to the House Committee on Transportation and Infrastructure, whose chairperson is Bill Shuster (R-Pa).

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Benny L Kass

Author of the weekly Housing Counsel column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of KASS LEGAL GROUP, PLLC and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts.

Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues. In addition, he is a life member of the National Conference of Commissioners on Uniform State Laws. In this capacity, he has been involved in the development of almost all of the Commission’s real estate laws, including the Uniform Common Interest Ownership Act which has been adopted in many states.

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