Infrastructure Safety and Related Timeshare Association Governance

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ARDA-ROC

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Advisories

ROC BULLETIN

In light of the recent tragic collapse of Champlain Towers South condominium in Surfside, Florida, the American Resort Development Association Resort Owners’ Coalition (ARDA-ROC) recommends that timeshare boards of directors and timeshare management companies consider the following concerning infrastructure safety and related timeshare association governance:

  • Associations should schedule regular reserve studies and inspections by a licensed engineer, including inspections of building infrastructure.
  • Associations should adequately fund reserves for important infrastructure and critical condominium components so repairs and replacements will not cause an immediate financial problem when needed.
  • Associations should act promptly and timely to make structural and other important repairs.
  • If identified repairs are extensive and costly such that they would, in the exercise of the board’s business judgment, constitute a hardship for the timeshare owners, then the board should consider alternative financing arrangements (such as a loan to the association or a special assessment paid over time).
  • Boards and management companies should be aware that insurance costs may increase and certain policies may become more difficult to obtain in light of the Surfside tragedy. Parties should consider proactively developing a plan to address this possibility. 
  • Boards should review their directors and officers liability policy to understand available coverage in the event that they are personally sued for alleged wrongful acts.
  • Association counsel should be consulted to refresh the board of directors on the scope and proper exercise of their duties, the applicable standard of care imposed on directors and officers, and the statutory liabilities imposed on, and the protections available to, directors and officers.

ARDA-ROC anticipates that several states will be looking to legislate in this area in 2022. We will be actively monitoring those matters to ensure that the rights of timeshare owners are safeguarded.

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