Association is responsible for paying flood insurance

Q: I purchased a townhome in Henderson in September of 2004. I had been living there for 3½ years and then decided to buy it. I received a notice in December that my townhome is in a flood zone, and the lender is requiring I purchase flood insurance. I found out from a city of Henderson's engineer that the property has been in a flood plain for years.

When I approached my homeowners association, board members said it was my responsibility to cover the insurance.

Why wasn't this in the policy all along? Our covenants, conditions and restrictions are very clear about the association 100 percent covering any building that is in a designated flood hazard area.

My board is are trying to say that Nevada Revised Statutes 116.31152, states it is not obligated to do so. However, our management company and our main insurance company feels the law refers to the governing documents of the association and how they were written.

There are also board members who feel that if the association does provide the flood insurance, the two buildings in the zone would have to be assessed for the insurance company.

I simply do not understand this. All of these buildings are a part of the association. The nine units that are affected pay HOA fees and pay for other damages to common areas.

We had a fire and all of us had to pay higher fees because of it. Why is that different? Plus, we don't own the outer portion of the buildings. It is considered common area. I can see us as individuals making sure that we cover the inner portion, but the outer shell?

This just doesn't seem right. Every homeowner would benefit if these two buildings were covered by flood insurance for keeping up common area and maintaining the value of the property.

I tried talking to our ombudsmen and he was of little use. Another owner and I might file a grievance with the state's Real Estate Division but I have heard from others that this is of little help and costly. I can't afford a lawyer.

I was also told by the state's Real Estate Division that because it has been past five years, I can't go after the real estate agent, previous owner or the title company for not disclosing this information when I purchased the property.

I have tried to get quotes from insurance companies and they are worse than the mortgage company.

If the mortgage company decides to insist that I pay for the entire building, I might as well just tell them to take the house. I have paid on time for 7½ years.

The management company of the association is trying to find out how these two buildings can be removed from the "A" zone, which requires insurance, to the "X" zone, which is a low-risk area and does not need insurance.

However, this could take time and might not be possible. I have lived in this unit for almost 13 years as a renter and an owner and have never had any problem with flooding even when we had some terrible storms and other areas were flooded. It is ridiculous! Apparently, the Federal Emergency Management Agency has been changing maps and they don't seem to make that much sense.

I realize you are not a lawyer and I am sorry to trouble you. I just wonder if you have run into any similar circumstances. I feel helpless. If this insurance becomes so high I can't afford it, they could take my home and I have been reliable and I have good credit.

A: When you purchased the home, the seller (assuming that it is not a lender as lenders are exempt) should have disclosed the fact that your home is located in a flood zone.

You would need to contact an attorney to see if the statute of limitation has expired per the sellers' real property disclosure act, as the omission of this fact would be considered a material omission. You may be entitled to monetary compensation.

As to your association, NRS 116.31152 has absolutely nothing to do with this matter.

Your covenants, Article VI, entitled, "Insurance" Subsection D, absolutely requires your association to maintain flood insurance. The words, "shall maintain a policy of flood insurance" are quite explicit.

In addition, Article IV, entitled, "Purpose of Assessments," under Section 2, states that one of the purposes of assessments are for the "establishment and maintenance of insurance coverage" and then refers to Article VI, the insurance section. Finally under Section 6, "Uniform rate of Assessment" requires the association to have one rate of assessment for each unit.

Here are some suggestions. First, contact the insurance company that insures the association and confirm whether or not the association has flood insurance coverage. Assuming that the association does not have flood insurance, inform the insurance company that you plan to file a lawsuit against the association's current insurance policy for failure to have such a coverage as required by the covenants.

Second, contact the Insurance Division of the State of Nevada and find out if it has any enforcement powers over the association for failure to obtain the required flood insurance.

Third, file a formal complaint against the association for failure to comply with its governing documents with the Nevada Real Estate Division. Now, the Division cannot make the association obtain the insurance, but it could apply other sanctions against the board and individual board members.

Fourth, if your mortgage company purchases flood insurance and adds that cost to your monthly mortgage payment, then file a small claims action against the association for reimbursement of that cost.

I do not believe the insurance company can require you to assume the flood cost for the entire building, only your unit, but you would have to review your mortgage agreement.

Fifth, send a demand letter to the association, to the board of directors and to the management company informing the board that it has a legal obligation to obtain the flood insurance.

In addition, in this letter inform the association that you will hold the association liable for any costs incurred by the mortgage company as to the payment of the flood insurance, any legal expenses and the complete restoration of your unit and compensation for any loss of personal property that could be damaged by any floods to the building and your unit.

In that letter state the association's covenants require a uniform rate of assessment, and that you do not believe that the association has the right to have a special assessment against your unit or the other units in the two buildings.

Sixth, organize the other owners so that you have a stronger position as to the board.

As to the association trying to remove your community from the flood zone, this is a costly and time-consuming project that may or may not happen for years. The association cannot rely on an instant solution by the government to remove the buildings from the flood zone.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, email support@hlrealty.com.