For West Des Moines condo owners, fire was only the beginning of their troubles
They fled the fire a year ago in the middle of the night with kids, dogs and plastic bags that held a few belongings. One elderly woman in a wheelchair had to be hoisted out of her condo from the patio. Nearly all of the 20 residents in the building were relocated to hotels, then forced to move again, while they waited to return home.
In December, thieves broke the locks on the boarded-up building in West Des Moines, stealing beds, furniture, and even a car that residents were forced to leave behind.
All that was traumatic enough.
But the worst part, residents at Stoneridge Condominiums say, has been stewing in limbo over the past year with their condo association and its hired independent loss adjuster, Tremaine Enterprises Inc. of Colorado, at loggerheads with Farm Bureau Financial Services and another insurance company over how much it will cost to restore the building and make it livable again.
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“If this had happened to their families, things would be different,” scoffed Linda Defenbaugh, a 22-year resident who had been forced to move four times after the fire. “They've gotta quit bickering and start working for us.”
The story at Stoneridge is a cautionary tale for those who run and belong to homeowners associations. While hiring an independent adjuster after a fire or similar calamity might secure a better insurance settlement, one negative is that negotiations can quickly turn adversarial and litigious.
Residents say Stoneridge's HOA board got some money to start making repairs in March, but Tremaine has argued the association will need more ― as much as $3.4 million. The amount would exceed Stoneridge's almost $2.8 million policy limit, and Tremaine, under its contract with the HOA board, will get 10% of the payout.
In August, the impasse forced alternative dispute resolution per the HOA's insurance policy. Two independent experts representing the opposing interests are being brought in to appraise the damages anew.
In the meantime, little remediation or repair work has been done on Building 2 at 1100 50th Street. The drywall in the three units damaged most by the fire has been ripped out. Seventeen of the 20 units suffered primarily smoke damage, several residents said.
And though they are being forced to live elsewhere, the residents still are required to pay condo fees and taxes on units they can’t use. If they wanted to sell, they say, no one would want to buy a place that is uninhabitable.
Owners often at mercy of HOAs
More than half of Americans live in shared-living communities. But the laws and rules surrounding those communities can be very different. Townhome residents own the inside and outside of their properties. But condo owners only own the inside of their homes. The outside, the property it sits on, the lawn and shared spaces are owned by the Homeowner’s Association that runs the community.
When things go wrong in condo communities, how HOAs handle crises can have a tremendous impact on members. The impasse at Stoneridge, for example, is frighteningly similar to what happened in 2019 after a fire at Plumwood Terrace Condominiums in Urbandale.
Post-fire construction led to structural issues that tied up the HOA in legal battles for years. Some residents died while waiting to move back in.
Such disputes also underscore the lack of legal protection for members of HOAs. While homeownership brings its own perils, those who buy a condo and become members of HOAs often fail to read the covenants and bylaws ahead of time. Many learn too late they have little say in decisions that greatly affect their investments and financial stability.
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Under current state law, those who disagree with decisions made by majority owners in homeowner associations have no option but to sue in civil court, an expensive proposition that few undertake.
Iowa’s code relating to condominiums, 499B, sets out what owners are supposed to do if a building is damaged or destroyed and will not be rebuilt. But it doesn’t address what residents should do if they are displaced by a disaster for a long time and can’t move back in.
When an individual condo unit is damaged, maintenance and other common expenses covered by dues do not typically go away. Insurance often covers the costs of rent for affected residents for up to a year.
At Stoneridge, fire victims say money for their alternative housing is running out while they await new estimates for repairs. With those estimates expected to take months, completion of repairs may not happen until 2025.
Some of the owners believe the independent adjuster hired within a day of the fire, Tremaine, only caused more problems by delaying the restoration work. Tremaine, they say, will push for a higher payout because the company stands to make more money under its contract with the HOA.
Others worry all of Stoneridge’s owners ultimately will be saddled with a special assessment to cover additional costs if the settlement is too low.
Two sides around $1 million apart
According to a letter Rob Brown of Farm Bureau wrote this summer to Tremaine, Western Agriculture Insurance Co. and its remediation company estimated the building could be fixed for $1.83 million. But Tremaine said restoring the building could run in excess of the association's $2.8 million coverage limit, up to $3.4 million.
“It should be noted that if (the insurance company) were to agree to the Tremaine… repair recommendation, the policyholders and unit owners of Stoneridge Condos will be required to cover over $600,000 in out-of-pocket expenses which includes unnecessary tear out of materials," the letter said.
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“You state that delays caused by our refusal to accept your repair estimate have or will cause significant financial stress for those unit owners. However, you have not addressed how your estimate being more than $600,000 over the policy limit will not cause an even greater financial burden.”
Tremaine did not respond to a phone call seeking comment. Nor did Sean O’Brien, an attorney for Farm Bureau and Western Agricultural; Matt Wendall, the claims consultant for Farm Bureau, or Carol Swanson, president of Stoneridge’s condo association.
The condo board’s attorney, Charles Whitmack, sent Watchdog a message saying the board “is working diligently with the insurance companies, insurance adjustor, fire inspector, property manager, and contractors to remediate the property and get the owners' back in their homes.”
But that’s of little relief to residents.
Ana Poole, a resident who purchased a unit just a month before the fire last November, has no faith a resolution will be reached anytime soon. Her unit is one of 17 that suffered primarily smoke damage.
“They have had the money since last March for the repairs but the board went with a property adjuster trying to get more money than needed," Poole said. "The board didn't let the owners vote to use the qualified Farm Bureau vendor. My insurance adjuster said I should have been back in my home within six months.”
Poole filed her own civil lawsuit asking that the complex be placed in receivership so a judge can ensure a fair agreement is reached. In the meantime, she said, she's struggling financially.
“Thank goodness I have a job,” she said. “I couldn’t even sell my place if I wanted to.”
She and other residents have alleged the condo board did not follow state law with regard to providing residents advance notice of meetings and upcoming decisions. They understand the dispute is about money and that members will differ. But they say they should have had a vote in the board's decisions.
For some residents, time running out
In late October, the homeowners association filed a petition in Polk County District Court seeking an umpire for the dispute. A hearing isn’t scheduled until Jan. 5.
Residents said they complained to the attorney general, but they were told the matter had to be resolved in district court. (Watchdog also tried to reach out this week the Consumer Protection Division of Iowa’s Attorney General, Brenna Bird, but her office did not respond.)
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In the meantime, folks like Doug Drees wait. Drees' father, who is 81, was forced to buy a new townhome this month because he can't wait the dispute out any longer.
An attorney, Drees has had to step in and advocate for a resolution on his father's behalf.
"He's late in life. It doesn't make any sense for him to be caught up in this uncertainty," Drees said.
Lee Rood's Reader's Watchdog column helps Iowans get answers and accountability from public officials, the justice system, businesses and nonprofits. Reach her at lrood@registermedia.com, at 515-284-8549, on Twitter at @leerood or on Facebook at Facebook.com/readerswatchdog.
This article originally appeared on Des Moines Register: A year after fire, West Des Moines condo owners still in limbo
