Corporate Investors and their Impact on Community Associations and the Role of Insurance Brokers
A team of colleagues from the Distinguished Community Associations Team recently attended the 2023 CAI Annual Law Seminar, with a standout session “Hot Topics in Community Association Law: The Invasion of Real Estate Investment” on Thursday, January 12. The panel, featuring Darren Bevan from Baydaline & Jacobsen in Sacramento and Scott D. Weiss from Ortale, Kelley, Herbert and Crawford in Nashville, discussed the trend of corporate real estate investment and its effects on Community Associations, offering valuable insights on how to tackle these challenges.
As corporate real estate investment of residential homes continues to surge, it challenges Community Associations and their insurance brokers. But with the right solutions, brokers have the power to mitigate the impact and support their clients in navigating these uncertain waters.
Read on to find out how insurance brokers can empower their clients and protect their assets in the face of a changing real estate landscape.
According to the National Multifamily Housing Council, institutional investors (which include corporations and other large entities) owned about 10% of all rental properties in the US in 2019.
Community Associations are typically made up of homeowners who live in a specific development or neighborhood and are responsible for maintaining common areas, enforcing rules and regulations, and managing the community’s finances.
One of the main problems Community Associations have with corporate-owned homes is that they often struggle to maintain the properties to the same standards as owner-occupied homes. Corporate-owned properties may not have the same level of care and attention regarding exterior maintenance, repairs, and landscaping. This negligence can lead to a decline in the overall appearance and value of the community, which can negatively impact the residents’ property values and quality of life.
Another issue that Community Associations may face is increased restriction violations from corporate-owned properties. Corporate investors may not be as familiar with the community’s rules and regulations and may not take the necessary steps to ensure that their tenants comply. An increase in rule-breaking can lead to complaints from other residents and potential legal issues for the community.
What Can Insurance Brokers Do?
As an insurance broker working with Community Associations, you can offer your clients specific insurance solutions from Distinguished Programs to help them navigate the challenges caused by corporate investors buying up homes.
One solution you can provide is our Community Associations Package Insurance. This coverage is designed by community association insurance veterans and provides property and general liability coverage tailored to community associations’ unique needs.
Community Associations may be held liable for any damages caused by tenants of corporate-owned properties. As a result, umbrella liability insurance can provide additional liability coverage to protect the community association and the corporate investors against potential legal issues that may arise due to restriction violations. Our Express Community Associations Umbrella has competitively priced limits up to $10 million. This coverage can be submitted, quoted and bound on our online portal, delivering outstanding value and protection for your clients.
Community Association boards may be held liable for the actions of their board members, and Directors and Officers (D&O) insurance can protect the board members in case of legal action. Offer your clients Distinguished’s Directors & Officers Insurance. This coverage is specifically designed to safeguard volunteer association directors and officers and includes access to a Legal Concierge service, which proactively protects them.
Finally, you can provide Crime Insurance Coverage to your clients. This coverage protects the association from employee fraud, forgery, theft and more. And you can submit, quote, and bind it via our online portal, making it easy, fast, and efficient.
To provide valuable services to their clients, brokers must stay informed and understand the unique risks of corporate-owned properties.
The trend of corporate investors buying residential homes can create new challenges for Community Associations, particularly regarding property maintenance and restriction violations. Insurance brokers who understand these challenges and can offer solutions will be well-positioned to support their clients and succeed in this new landscape.
About Distinguished Programs
Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with expertise in Real Estate, Fine Art & Collectibles, Environmental, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its specialty areas for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation from 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.
View a full list of our programs and submit business with Distinguished.