They don't look broken, but did Hurricane Ian damage condo's windows enough to file claim?

Live in a home governed by a condominium, co-op or homeowner's association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.

Question: Our condominium board signed a contract with some lawyers who promised to sue our insurance company after Hurricane Ian. The claim that was submitted (prepared by the attorneys’ engineer and signed by our treasurer) alleges, among other lies, that thousands of windows were damaged, when actually none was damaged. The claim is in the millions of dollars because we do have significant roofing damage.

We are apprehensive about this massive fraud. What resources do we have, and what are the potential liabilities? Signed, J.K.

Dear J.K.,

Of course, insurance fraud is a major issue and concern. It’s a crime, and there are big prison terms for a fraud as large as you describe.

While I haven’t seen claims like this due to Hurricane Ian, in our area there were many similar claims after Hurricane Irma. Insurance specialists would approach many of the condominiums in the hurricane zone and enter into agreements with them, where they paid to have an engineering firm come in and evaluate the structural soundness of the windows and sliding doors post-storm, and opine on whether they were damaged by the wind (even if they were not visibly broken).

In every situation I saw, the engineer’s conclusion was that the windows were damaged and the entirely of the building needed to have their windows replaced. This was in a half-dozen or more condominiums in different areas and with different types of windows. Insurance claims were submitted based on those reports, and some were successful, some not. I would imagine, if the insurance companies thought they were flatly fraudulent, they would have rejected them all and fought them in court — there’s a ton of money that was paid out.

I’m not an engineer and I can’t possibly say whether these windows were actually damaged or not. If a licensed engineer says they saw signs of structural integrity issues, I’m not able to question them — and I assume your board members are in the same position. But, if people are knowingly defrauding insurance companies with these claims, that’s a felony and a major issue.

Criminal fraud requires that the action was intentional. Whether there is risk to the directors depends a lot on how they got into the project.

Did the lawyers reach out and say, “Hi, we’ve been investigating condominiums and our engineers are finding that many windows were damaged by Hurricane Ian — would you like them to evaluate your windows to see if you might have a valid insurance claim?” It would be hard to argue that the director going along with the attorney’s recommendation would constitute criminal fraud.

But instead, what if the attorneys reached out to the board and said, “Hey, we know there’s nothing wrong with your windows, but we have this plan where an engineer (who is a friend of ours) will say that all your windows are shot, and we’ll put in an insurance claim and see what we can get for you. Want to give it a go?” That to me sounds a lot more like a scheme to defraud an insurance company.

I very seriously doubt that was what occurred — all the situations I’ve seen were more similar to the former description, and the boards simply trusted the engineering recommendations and allowed an insurance claim to be filed on their behalf.

Again, I’m not an engineer — for all I know the science is sound and there really is an issue with nearly every window in every condominium in South Florida. But I can also tell you that, with the claims I saw, I did not see any where the engineer concluded the windows were undamaged.

The bigger risk, to me, is that once you have taken a public position that every one of your windows was damaged, I think you must fix them. You can’t file a claim saying they were damaged and need replacement, and then just leave them intact. It gives your insurance company a justification to reject a future claim, and that could be catastrophic.

So, for the communities that file claims like this and recover sufficient funds to actually replace all of their windows and sliders, that’s great, and good for the safety of the building (windows are an element of the structural integrity reserve study, after all).

But what about the communities that get nothing? I had a few of those, and they must then make the difficult decision of whether to go ahead and replace all of their windows and sliders, despite having to assess their owners millions of dollars to do so. That, to me, is the biggest issue. If you do not recover for the windows, you are going to have to decide whether to replace them anyway — and the owners could be forced to make a major financial investment that might not have been needed.

Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of "New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living." Email your questions to condocolumn@gmail.com. Please be sure to include your location.

This article originally appeared on Palm Beach Post: The price of condo claiming window damage from hurricane may be steep