Townhome owners in the Dutch Knolls neighborhood of Rogers, Minnesota, are facing a $16,400 bill from their homeowners’ association (HOA) for new roofs—a mere two years after a previous complete roof replacement. The unexpected bills, arriving in mid-November with a December 15th deadline, surprised residents whose roofs were considered practically new. Many were unaware the HOA had filed an insurance claim, and some homeowners insist their roofs show no damage. While some homeowners’ insurance will cover the costs, others lack the proper coverage or sufficient funds.
Tensions flared at a recent meeting between homeowners, HOA board members, and the property management company, Sharper Management. Residents expressed outrage over the lack of communication and questioned the decision to file a claim for seemingly undamaged roofs. Following the contentious meeting, the payment deadline was extended to January 31st.
Sharper Management’s CEO, Dan Cunningham, defended the HOA’s actions, stating that they were obligated by fiduciary duty to proceed with the insurance claim once damage was confirmed by the insurance company’s inspection. He attributed the lack of homeowner awareness to low attendance at HOA meetings. Cunningham questioned the motivation of the insurance company, stating “Does anyone think the insurance company wants to pay out a claim?”
This situation underscores the financial burden HOAs can impose on residents, many of whom are unaware of the HOA’s authority until it’s too late to challenge their decisions. Failure to pay HOA assessments can lead to liens and even foreclosure.
Recognizing the growing concerns, the Minnesota Legislature formed a working group this year to investigate the impact of HOAs and common interest communities (CICs). The group, comprised of homeowners, property management companies, legal experts, and lawmakers, aims to recommend reforms. Despite potential budget constraints, there’s bipartisan support for curbing HOA powers, with State Rep. Walter Hudson stating, “HOAs must be brought to heel.”
A December 5th listening session highlighted the frustrations of numerous homeowners, including those from Dutch Knolls. State Rep. Kristin Bahner summarized the sentiment, stating, “What we have done is create another quasi unit of government with very little accountability, lacking in transparency, lacking in checks and balances and very little recourse.”
While some HOA board members acknowledged the difficulties of recruiting new members due to the significant responsibilities, Cunningham revealed that the Dutch Knolls board is receiving threats due to the insurance claim.
A letter to homeowners explained that a July 13th wind and hail storm caused damage to all buildings, prompting the insurance claim. The total cost for roof replacement is estimated at $1,593,329, with a community deductible of $1,576,712, resulting in a $16,424 assessment per homeowner. The insurance company will only pay $16,617.
Numerous residents hired independent contractors who found no hail damage, contradicting the HOA’s assertion of widespread damage. Eric Skarnes, an insurance broker, clarified that HO-6 insurance, while often mandated by mortgage companies, frequently provides inadequate coverage. He suggested that homeowners should proactively obtain appropriate HO-6 coverage, which can be surprisingly affordable.
Several Dutch Knolls residents illustrate the consequences of insufficient insurance coverage. Caitlyn Dahlgren faces a $5,000 deductible, while Natalie Croaker’s coverage only covers $1,000 of the $16,400 assessment. Others experienced claim denials despite the HOA’s assertion of damage to all roofs. This highlights the potential for homeowners to bear the full cost due to claim denials or insurance misunderstandings.
The Dutch Knolls situation reflects the broader instability in the Minnesota property insurance market, characterized by rising premiums and departing insurers due to severe weather losses. This, combined with rising property taxes, is making homeownership increasingly unaffordable.
The Dutch Knolls community has faced similar issues before, with a previous roof replacement in 2022 causing a $3,592 assessment per homeowner. Even then, some residents, like Bridget Newman, noted a lack of visible damage.
The Dec. 10th meeting between residents and the HOA was abruptly ended by an attorney representing the HOA after residents voiced their frustrations over a lack of transparency and communication. Subsequently, residents met outside to discuss their options, including potential legal action against the HOA, seeking payment extensions, or attempting to replace the HOA board and property management company. The roof replacement work is scheduled for spring.