What would you do if you found yourself in the eye of a devastating hurricane? This week, our guest and Becker Shareholder, Joseph E. Adams, sits down with Donna DiMaggio Berger and relives this very question when he rode out Hurricane Ian in his home on Fort Myers Beach. In this gripping episode, Joe shares his harrowing experience and provides valuable insights into preparing for and recovering from such catastrophic events.
From the chaos of managing a team of 30 lawyers during the hurricane to navigating the insurance crisis, Joe's story is one of resilience and determination. We dive into the challenges of obtaining insurance coverage, the problem of overcharging for remediation services, and the importance of being part of a larger team in times of personal tragedy. Joe also sheds light on the role of technology in the legal profession and the increasing presence of lawyers in the US.
But how does one embrace life's uncertainties and survive multiple disasters? Joe's incredible experiences, including surviving lightning strikes, a massive car pile-up, and a horseback riding accident remind us all of the importance of being prepared for the unexpected. Join us for this thought-provoking and inspiring episode that will change the way you view the world around you.
Conversation highlights include:
What would you do if you found yourself in the eye of a devastating hurricane? This week, our guest and Becker Shareholder, Joseph E. Adams, sits down with Donna DiMaggio Berger and relives this very question when he rode out Hurricane Ian in his home on Fort Myers Beach. In this gripping episode, Joe shares his harrowing experience and provides valuable insights into preparing for and recovering from such catastrophic events.
From the chaos of managing a team of 30 lawyers during the hurricane to navigating the insurance crisis, Joe's story is one of resilience and determination. We dive into the challenges of obtaining insurance coverage, the problem of overcharging for remediation services, and the importance of being part of a larger team in times of personal tragedy. Joe also sheds light on the role of technology in the legal profession and the increasing presence of lawyers in the US.
But how does one embrace life's uncertainties and survive multiple disasters? Joe's incredible experiences, including surviving lightning strikes, a massive car pile-up, and a horseback riding accident remind us all of the importance of being prepared for the unexpected. Join us for this thought-provoking and inspiring episode that will change the way you view the world around you.
Conversation highlights include:
Hi everyone, i'm attorney Donna DiMaggio Berger, and this is Take It to the Board where we speak Kondo and HOA. As a Category 5 hurricane, Ian was the strongest hurricane to make landfall in Florida since Hurricane Michael in 2018. It peaked as a Category 5 hurricane with sustained winds of 160 mph early on September 28, 2022. While heading towards the west coast of Florida, Ian made landfall just below peak intensity in southwest Florida. Ian caused 161 fatalities 5 in Cuba, 150 in Florida, 5 in North Carolina and 1 in Virginia. Ian caused catastrophic damage, with losses estimated at $113 billion. Much of the damage was due to the 10-15 foot storm surge. The cities of Fort Myers, cape Coral and Naples were particularly hard hit, leaving millions without power in the storm's wake and numerous people forced to take refuge on their roofs. Sanibel Island, fort Myers Beach and Pine Island all bore the brunt of Ian's powerful winds and its accompanying storm surge at landfall, which leveled nearly all standing structures and collapsed the Sanibel Causeway and the Matlachet Bridge to Pine Island. That left people trapped on those islands for several days.
Donna DiMaggio Berger:I'm joined today by my partner, joe Adams, who rode out Hurricane Ian in his home on Fort Myers Beach. Over the last 35 years, joe has provided legal counsel to over 1,000 community associations, primarily in southwest Florida. Joe is a board-certified specialist in condominium and plant development law and has been recognized over the years as one of the best lawyers in America, a legal elite and one of Florida's super lawyers, among other notable honors. Joe has dedicated years of service to the Florida Bar and is a prolific writer, commentator and speaker regarding community association law. He has authored a popular weekly newspaper column on community association law since 1996. And I'm delighted to have him on the podcast today. So, joe, welcome to take it to the board.
Joseph E. Adams:Thank you, Donna. Thank you for having me.
Donna DiMaggio Berger:So, joe, we're taping this episode at the end of May and it's likely going to be released in late June, after Florida's six month hurricane season's underway. You and I have talked, along with our colleagues, for years about what our community associations can do to prepare for and recover from hurricanes. But with Ian, i know you and our West Coast partners gained a whole new perspective of what it means to be in the eye of a storm. I remember seeing pictures of the flooding in your house and your car as the waters were rising and it was unfolding in real time. I mean, i know I was scared watching it from the safety of the East Coast in Fort Lauderdale. I can't imagine what you and your family went through. You know riding it out.
Joseph E. Adams:Yes, it was really a surreal experience, donna. I have lived in Southwest Florida since 1985, so almost 40 years And I've been with Becker for my 37th year, so I have a number of different perspectives on this, from the perspective of citizenry and my personal experience. I think a number of factors came into play. You know, for what it's worth, both Hurricane Charlie and Hurricane Ian may landfall, you know, within miles of where I live as well, and they were both significant storms Charlie in 2004 and Irma in 2017. And I evacuated my home for both of those storms. Hurricane Ian was. What I like to say is you know, charlie plus Irma, times 10. And it was literally biblical. Why didn't I evacuate?
Joseph E. Adams:You know several things. Number one, as you will probably recall, you know everybody watches the spaghetti lines in the weather channel religiously during these, and it was predicted to hit in Tampa. I mean, that was where all of the models had it going And you know, obviously, those models, you know, change. Charlie actually took a hard right term, also was supposed to hit quite a bit further and more, but I don't think anybody really expected it to change as it did, and why it did. I don't know all the meteorological reasons for it. I'm sure they exist, but it took a hard right And then it was clear it was bearing down on Fort Myers And at that point you know we had about 24 to 36 hours And you know you have to kind of put this in the context of you know what are your options, because Southwest Florida has grown exponentially in population over the past couple of decades.
Joseph E. Adams:So there's a lot of people here have never been through a storm And you know a lot of people get, you know, very nervous rightfully so in this case and even panicky. So you know, getting out on the roads is no guarantee that you're going to be safe. The roads get clogged up And if you don't know where it's going to hit, i mean I had friends in Sarasota during Charlie. They vacated Sarasota, went to Orlando, charlie missed Sarasota and hit their hotel in Orlando. So we just made a decision to kind of, you know, hunker down. And you know, to be honest, i mean category four approaching five hurricane is bad. But you know most of the newer homes, including mine, are, you know, designed to withstand that hurricane glass and you know, well built home. And I really wasn't, you know I won't say I wasn't worried about it, but I didn't really fear for my life safety.
Donna DiMaggio Berger:Well, I wanted to ask you about that, Joe, about your home. So I'm assuming impact glass generator, perhaps well stocked up into your house for party. I know you have a lot of provisions in your house. So roof, newer roof. I mean you felt that you had a pretty sturdy place to to write out the storm.
Joseph E. Adams:And what we didn't really anticipate was the storm surge. You know, they've always said that's a thing And I remember after Hurricane Irma they say, well, this, there's going to be storm surge. The particular area where I live on Fort Myers Beach they had these maps they're particularly going to get 20 feet of storm surge. Okay, that's like catastrophic. And we have three inches of water in my street.
Joseph E. Adams:So I think to some degree it was kind of the chicken little thing, because you know, you hear this, you hear this and you say, okay, you know they're trying to sell commercials on the weather channel or covering themselves or whatever. And you know, sure enough, you know the wind started coming and we knew it was coming. And all of a sudden I looked out in my yard and I live on a canal and the water was over the seawall and that happens at high tides and whatever. And then the water's in my swimming pool And then the water's three inches up the sliding glass door at the first level of my house And it was coming, you know, really fast. And between about 8am and 10am it crashed into about seven feet in my house.
Donna DiMaggio Berger:Seven feet.
Joseph E. Adams:In my house. Yeah, i mean the water outside was up. You know, we had doors and windows that kind of kept some of it out. So we were like in a fish aquarium to some degree And we, you know, we came to the upper floor.
Donna DiMaggio Berger:But you have a three story house, right Yeah?
Joseph E. Adams:And to mention the deaths, and you know, when I first moved to Florida I lived in what they call a Michigan home. Michigan Homes was a builder in Southwest Florida that did big depth sub development tracks and they were all block and stucco, eight foot ceilings. You know very well built homes circa the 1970s And you know there's a lot of those still around. I mean they're very well built homes and in fact my next door neighbor had one. I took some pictures while this was coming and he fortunately evacuated his home But the water basically reached the ceiling of his home So it was over eight feet in his water in his home.
Joseph E. Adams:And you mentioned the deaths. I believe in Fort Myers Beach, at least Lee County, where I live, it was about 65 deaths And I know a couple of people who died And in almost every case it was from drowning And in almost every one of those cases it was water in ground level homes, right, and it's almost like a horror movie on TV where you're, you know, just watching the water rise in the tank while the you know evil guy is laughing. But you know that's literally what happened. They drowned in their homes because the water pushed to the ceiling. A lot of people went up into their their attics. There's hatches. If the water rises above that, then you're stuck.
Donna DiMaggio Berger:Well, you're trapped right, because there's no. Well, yeah, i mean Some people.
Joseph E. Adams:He acts as up in their attic. So I mean, it was, it was, it was horrific, it was, it was literally horrific. I, you know, recall we didn't have power for a month but the you know, we stayed here. They brought the National Guard in. We were under a I don't know what you call it, a quarantine or whatever. Nobody could come in or out. There were guys literally standing there with machine guns and you know army stations set up And then when the remediation company started coming in, they had to be in after daylight, now, before dark, and the lines to get out here were like two and a half three hours to get in. So you have a guy that have to sit in traffic three hours to get to your house, then wouldn't get there on a noon because he couldn't get there And then he had to leave by like three or four o'clock because he had to sit three hours getting out to be in and out before dark. You know I saw army helicopters going over with body bags. It was literally like something from, you know, from a horror movie. If you, i know you've been, you know, to this area.
Joseph E. Adams:The Sanibel causeway was just rebuilt maybe 15 years ago. I mean, it's a very, you know, impressive sturdy looking structure And you know this storm collapsed it. You know the wind was bad. I mean, you know Charlie was kind of like a buzz saw. It was very compact, it had very intense winds in the middle, like 200 mile an hour. Tornadoes were spinning off in the, you know, in the in the circle off the eye. It was very small and it moved very fast. It was like a buzz saw. This storm just came and sat here for 12 hours. I mean it literally. The wind was probably 150 miles an hour from probably seven in the morning till seven at night And first it came from one direction, then as it turned it went the other direction.
Joseph E. Adams:And you know, even my home, which is, you know, built in 04, was, you know, built according to then top of the line hurricane standards. I mean it got beat up. I mean a lot of my windows got deflected. My roof has to be replaced. You know it was certainly not, like you know, wood frame structure, but yeah, it was. It was one for the ages. I hope Both of my kids live in what I would call the Michigan homes along the Colusa Hatchee River And the biggest fear I had is my son and his wife live right on the river in a canal and they have a literally a Michigan home with the eight for sealings. And what happened was the water, you know, basically empty out of Tampa Bay. It came all up in Estero Bay, where I am, to probably 10 feet and Sanibel 1012 feet, and then it washed out. And what happened in Hurricane Donna in 2000, i think it was in 1962, if I recall, the whole Calusa Hatchey River emptied out onto both sides And they were saying that was going to happen here.
Donna DiMaggio Berger:Did you lose cell service at all?
Joseph E. Adams:We had nothing And my son had decided to stay in his home and then he was going to leave. But the water was like a river And I was just sitting here thinking the water is going to rise in his home up to eight feet And he and my daughter, along my newly born grandson, are going to drown in there, and I mean it was horrific And I could not establish contact with him until about noon the next day. So I mean, you know, you worry about kids more than yourself, and it was a catastrophe. It was an absolute catastrophe.
Donna DiMaggio Berger:Joe that it sounds it's horrible, as you're describing. Let me ask you it doesn't sound, from what you're describing, as if there's any safe way to stay in a home if you know there's going to be storm surge. Correct, because I mean unless you plan to sit on your own.
Joseph E. Adams:I'm certainly not an expert in that issue. I'm not sure what the safer alternatives were. I mean I don't know. I assume the hurricane shelters are elevated above storm surge level. I mean I wouldn't really want anybody listening to this to take, you know, my advice. I'm dumb off. You said, and leave. This was what they call a 500 year storm, which actually was explained to me by one of my clients who is a Oxford educated scientist in meteorology And he said that doesn't mean that it only happens once every 500 years. It means that there's a one in 500 chance that it will happen any given year. So I mean those aren't really great odds, but yeah, i mean it. You know it can happen. And particularly along the coast, both the Atlantic and the Gulf side get their share of nasty.
Donna DiMaggio Berger:You want to give a shout out to the people who helped. I know you mentioned it just a few minutes ago that in the immediate aftermath there were people who came in and tried to help the people trapped. Who came to help?
Joseph E. Adams:Initially it was the government. I mean it was literally a unsafe, disaster zone. I mean we had the army, the Coast Guard and the National Guard and the Sheriff's Department were really the only people that were permitted to move around those areas. There was some looting none in my neighborhood that I know of, but I know there was quite a bit on Fort Myers Beach And they took a very aggressive posture towards that. I saw you loot. we shoot signs everywhere And you know, for a couple of days it was just that There's numerous organizations. You know then come in. The Red Cross was very helpful, much, much around you out there And several other groups. I mean I don't know. I was out in my yard, you know, just shoveling up muck And you know, every two hours some guy would combine with a pickup truck with its bed full of ice, with Gatorades and waters in it, or sandwiches or things.
Joseph E. Adams:I mean people are good. I mean, i don't know what organizations they're all with, but yeah, they came to help And you know it's really interesting. You know I saw this after other storms There's literally a industry of storm chasers who basically are sitting somewhere in Texas or Louisiana or wherever they are, and they're on call And once they find out where these big storms hit, i mean they come in by literally by the truckload. So you saw, you know a lot of that. The electric companies do it where they help each other. Then there's all these private companies they're just Marshall people and you know show up and you know offer to do remediation services and things like that.
Joseph E. Adams:Now that's where things get a little hairy, because you know, one of the major issues that we're dealing with at this phase of the hurricane are, you know, condos primarily, who feel like they were, you know, ripped off or taken advantage of with the remediation bills. Because you know a lot of them will come in and say, well, we'll only take what you insure. You know what your insurance is, you know, and you're desperate And you know you're looking at, you know literally something like somebody threw a bomb in there And you know the natural inclination is yeah, that sounds good. But I've seen one bill for remediation, over $10 million. They're all millions 1.7, 2.4, 3.6,.
Joseph E. Adams:You know, in Sanibel, for example, they had to come out by boat, they had to bring generators. So it's not like they didn't do anything. But excuse me, when you look at the numbers and say, well, where did this number come from? That's where you know it gets, you know, interesting. You know we saw one where we said we're not going to pay you till we get, you know, a time of materials chart And they had extension cords that you like 50-foot extension cord you could buy at Home Depot for $30. You know they rented them for $60 a day for five months.
Joseph E. Adams:So yeah, I was like buying an aspirin in the hospital. I guess You should probably, you know, just get your own. And then the problem, of course, is what you say. You know you said they're only going to charge us what. You know our insurance limits are Well insurance, you need to rebuild it, not just remediate it. And if you've got $6 million in insurance and you burn four of it on remediation, you're not going to be able to rebuild your place. So you know it has been. You know really, you know a privilege for me to, you know, be here to help my clients. You know, when they ask to, you know, try to anticipate, you know these, these issues for them and try to protect and help them, Because you know there's a lot of good people here to help. There's bad people here that try to take advantage.
Donna DiMaggio Berger:I'm sitting here thinking, you know again, it's one thing when you're not dealing with your own personal tragedy, you know trying to rebuild your home, dealing with your family members who've been impacted. But I said in the intro, you've represented more than a thousand communities in Southwest Florida. Many of them suffered significant damage. How did you juggle that Everything? you talked about the assignment of benefits contracts. we've talked for years with our clients telling them hey, make sure you don't throw out the normal vetting process. You take the steps you need to take to mitigate further damage, to make the building waterproof and watertight. But you know, certainly you want to make sure that you're still taking the steps to make sure you're doing business with a reputable contractor. How did you juggle all that?
Joseph E. Adams:And this applies to our other partners in the area who are also dealing with this- Well, you know, one of the benefits of being with a large firm like Becker is that you know we have a deep bench And in today's world unlike you know 20 years ago where that person's you know hat was being hung really doesn't mean very much at all. You know, keep in mind, with our clients, none of them were there. They all you know their properties were wrecked. They you know most of them fled to their other homes or hotels or friends or you know whatever.
Joseph E. Adams:First thing that we did was we put together you know what I dubbed the Eon Triage Group And we had about 30 lawyers And you know, literally for a month all I did was play traffic cop, which was to see every inquiry that came in, found somebody in the group that you know was available to handle that and then just kind of rode their butt and made sure it got handled. And you know, everybody stepped up. I mean our clients all got, you know, very immediate and you know, becker service. And that was really an eye-opener for me, because sometimes you think, you know, is it better to just kind of do your own thing and be your own guy or is it part of the bigger? you know, smaller cog and a bigger wheel. If I was a salt practitioner and you know, as you mentioned, having to deal with all my own personal issues, including not having any electricity, any cell phone service or home, i mean, what would I? I couldn't have done it, and so we're very fortunate in that regard.
Donna DiMaggio Berger:Are any of your clients, your condo clients, considering termination at this point after Eon?
Joseph E. Adams:A few. We're not at that stage yet. Here is what the biggest issue is going to become Under the local regulations in every jurisdiction in elite county I think we have six or seven municipalities in the county. They have build-back regulations which are required by FEMA, the Federal Emergency Management Agency, and the reason they're required is that if you don't follow FEMA regulations then your county does not qualify or your municipality does not qualify for federal flood insurance or they raise the rates substantially. So basically every one of these, these municipalities, have to comply in their build-back regulation with FEMA guidelines so people can get flood insurance or affordable flood insurance.
Joseph E. Adams:The basic rule is that if you have more than 50% of the building's value in damage, you have to build it back to new flood elevation. So virtually take Santa Belen, fort Myers Beach Virtually every condo is built at beach level. We need to all build 70s, 80s, 90s And the first floor unit, which is a desirable unit. You basically step out onto the beach And the NGVD there, as it's called, the Geo Vertical Datum Line or whatever. But the height above sea level you know it's three, four feet when you're on the beach And the current flood elevation depends on where you go is anywhere between 12 and 16 feet now. So if over 50% of the value of your building is going to have to be spent to build it back, you have to build it back at flood elevation, which means the first floor now needs to go from three feet above sea level to 12 or 16 feet above sea level.
Donna DiMaggio Berger:Let me stop you there. That's a good thing because we had two University of Miami professors on. They say it's going to be six feet of sea level rise by 2050.
Joseph E. Adams:Maybe, But you know the question is how do you raise up the first floor living unit of a nine-story building?
Donna DiMaggio Berger:You can't. You have to knock the building up.
Joseph E. Adams:So you have to tear it down, you have to terminate. Then is the highest and best used building. Back in other building You get into issues of title, even if you can rebuild. Well, i used to own airspace that started at 3 feet above sea level and ended at 11 feet above sea level. So now you want to put me at between 12 feet and 8 and 20 feet for my fee ownership, but the guy on the third floor owns that already. So I mean it's really kind of mind boggling. And the question is, you know, beachfront property but there's a coastal construction setback line that may impact future buildability on it. So these issues are relatively mind-numbing. You just got to take them one at a time, one step at a time.
Joseph E. Adams:The overwhelming bias, if you want to use that word, or a desired result for my clients, is rebuilding And you know we've had very good cooperation from all the local municipalities, primarily the city of Sanibel, the town of Fort Myers Beach and unincorporated Lee County, which are the three, you know, kind of hardest hit municipalities. You know, in dealing with that particular aspect of it, the problem is the insurance companies are sitting on their money. I mean it's kind of reached, you know, crisis level in my opinion. I haven't sat down and counted them, but I'm going to guess in our office we have somewhere on the order of between a 75, maybe 100, maybe 65. But you know, pushing 100 clients with insurance claims in excess of $5 million, quite a few.
Donna DiMaggio Berger:Five million each.
Joseph E. Adams:Yeah, we have 20 or 30 with claims of 20 to 30 million each. We have a couple of clients with claims over 50 million. So I mean, these are huge clients And the system is overstressed to begin with. I mean you think about, you know, $100 billion loss And these companies still have to pay. When you know, some guys in Ohio's house burns down. They still got to deal with that, but they've got all of this to you know to deal with And they subcontract everything adjusters, inspectors, you know, et cetera.
Joseph E. Adams:And you know I can tell you, i mean it's eight months after the storm, to my knowledge, we do not have one client. Nor have I heard of any other association, no matter who represents them, with substantial damage, having settled their claim Or even being close to it. You know, you get into this kind of vortex of well, yes, we want to rebuild, but we don't know how much money we're going to get. We may have to spend $8 million. Well, we'll put in a claim for $8 million. Or if you only get three, what do we do then? You know, i kind of look at these storms and phases And I think we've kind of reached what I call phase three.
Joseph E. Adams:You know, phase one is just basically emergency response and remediation. All the remediators are there. They got the guys there, they're doing the work, everybody's happy. Wow, this looks great, you know. Phase two is the remediation bills come in and people say, oh snap, look at this. And they also start dealing with the reality of, you know, reconstruction. You know a lot of people in my opinion make the mistake that to be the first one done is, you know means you're doing the best. You know haste makes waste. I've told clients that and the enormity of this loss. In my opinion, most condos are going to be a two year build back. Really bad ones are probably going to be three blocks And you know, we're almost. We'll be at a year in four months And I still have a significant number of clients in Sanibel don't have electricity yet.
Donna DiMaggio Berger:And let's talk about that. So another at least several months to well over a year to build back in the interim. They're going to need to renew their insurance coverage. So let's talk about how difficult it's going to be for them to get decent coverage, you know, at a premium they can afford.
Joseph E. Adams:So it's basically the worst insurance crisis ever And this was not caused by Ian, although Ian may have been the straw that broke the camel's back. This has been building up for a long time. Number one the property insurers hate Florida condos because of water leaks. I mean they, you know you pay a you know $90,000 policy and then they end up paying $120,000 on these. What they see is these BS hot water heater leak cases. And you know they collected, you know they paid more than they collected the premium. Nothing catastrophic, but you know they add up and you've got this kind of cottage industry of these certain HO6 carriers filing subrogation claims and all of that. So you know this nickel and dime stuff you know basically eats up their premium. So why do it? I mean you're writing a huge risk for free.
Joseph E. Adams:So the water leak thing has, you know a lot of these are, you know, $50,000, $60,000 cases. You know your ice maker breaks upstairs, you're away and you know, with Disney World for the weekend, by the time you get back I've got, you know, 4,000 gallons of water, my ceiling collapses. You know there's mold, blah, blah. You know the story. I mean it's a $60,000, $70,000 deal and it's no fault insurance. So you know the master property policy has to pay for a lot of that and you know high rises have these constantly. So that's been a longstanding issue that they've had with this market.
Joseph E. Adams:Secondly and this is well above my pay grade, but my friends who are smarter than me and do this tell me that there's kind of a crisis in what they call the reinsurance market. When you buy insurance for $30 million from State Farm, you know State Farm doesn't take $30 million out of its account. If there is a loss They reinsure through, like Zurich and Lloyds, alondon, and you know the Middle East and all these huge, you know these huge reinsurers, and the reinsurers have what are called rape tariffs that are regulated by the state. So there's got to be, you know, the right formula for that to be attractive to them. So my understanding is that that whole thing has not been conducive to the reinsurers wanting to write in Florida because they're buying the big risk, they're buying the catastrophe stuff.
Joseph E. Adams:Third, we have Surfside. That was another biblical event A hundred people dead, billion dollar claim and basically every insurance company within you know a mile of the place got sued. So you know. So you take all of those things and add them up and then throw Ian on top of that. It is going to get worse. From what you know I have been told by my friends in the business, you know there was some hope that the legislature who session ended earlier this month would do something. You know they did.
Donna DiMaggio Berger:They seem to think that you know all of the problems you just laid out were not mentioned. What was laid out, other than the H06 and the subrogation claims that it's terrible attorneys that are suing, and that's right, what they've?
Joseph E. Adams:done is made it. The only thing they really did was made it harder for policy holders to make claims under their policies. Now are there bus stop, you know, bench advertising lawyers that are in this? Yes, of course you know they're in all of that, but I think that this will help the insurance companies increase their profits. In my prediction, it will have zero impact on their willingness to write or their rates. You know, i think it's impacted by much larger things, you know. To wit, this law was passed and signed and I just had a client call today. They can't get any insurance. They went to 28 carriers and nobody will write them And the only policy they were able to get was with their current carrier. I'm dealing with one right now.
Joseph E. Adams:I think is a typical story that we'll be seeing. I have a client it's a beachfront high rise, i guess, maybe 10 stories something And their assured value is $25 million for wind And they had $25 million worth of insurance state law required for replacement costs That's how adequate insurance is defined less a reasonable deductible. So their policy expired in April, i guess, and their broker a large national broker, you know the name went to 28 companies. Nobody would write them except their incumbent carrier And their incumbent carrier would only give them insurance for $5 million. Now it's a $20 million exposure And with a $2 million deductible.
Joseph E. Adams:So basically, on a $20 million exposure, the only insurance this client could get was $5 million with a $2 million deductible. So $3 million. So the building is basically insured for 1, seventh of its value. That doesn't meet the statute, but the board has used its best efforts. More sickening yet is the policy they had last year for the $25 million with a 5% deductible. The premium was $100,000 plus or minus for that. This new policy they have for $3 million is $300,000. So they are paying three times the amount for 1, 12th of the coverage, and they went to 28 insurance companies.
Donna DiMaggio Berger:So what do you say when they say as I'm getting these calls, i'm fielding these calls every week Is we want to self-insure? And then we're going to go to everybody, especially in the smaller communities? I had one, it was 28 units. Everybody agrees, just the nightmare you laid out. We're paying quadruple for inadequate coverage, we want to go there, we're going to self-insure. What do you say to a client who says that, yeah, i mean, i told them self-insurance is not a thing, because you're not self-insuring, you're going there, you're not getting insurance and you're violating the statute.
Joseph E. Adams:If you want self-insurance, there's a procedure in the statute where you basically have to go through an OIR Office of Insurance Regulation approval process. This was written after the last insurance crisis by I don't know. Berkshire Hathaway or one of the big boys were going to try to roll out a product. Nobody could And I've never heard of it being done, and I'm around this, like you are, every day, all day. It's not a thing. And so if the association can get insurance, in my opinion it has to buy it. I would never sit on a board where they did not have, or the association did not have, whatever insurance the law the market allows them to get, regardless of the cost To me, even if 100% of the owners agree, well, that may have stopped them, but what about the guy that buys tomorrow?
Joseph E. Adams:Or what about mortgage companies? Or what about disclosure obligations? when you go to sell your unit, do I have to tell you that you're buying an asset that's uninsured? I mean, look, it's a terrible situation, but when there is insurance available, going bare only makes it worse. Now, if a client can't get insurance, the law doesn't require you to do the impossible. I mean, in the example I gave, they went to one of the largest agent brokers in the world and they went to 28 carriers from around the world and they couldn't get it. So what else can you do? Nothing. You've got to tell your owner So they may be in default to their mortgages, which require them to have insurance. So I mean, i really think what's going to happen or at least I hope what's going to happen is that this will start becoming enough of a concern that the right people get a hold of the right legislators and that it be addressed.
Donna DiMaggio Berger:I can't believe our legislature is focusing on many things other than this.
Joseph E. Adams:Well, I think it's timing Because it really we're kind of, i said, at the tip of the sphere, i mean because I'm in probably the most fertile market for this to be a problem because we have the most damage. I think the remedy is going to have to lie through citizens, which, you'll recall, back in the 2000s they came up. They called it the JuA, the Joint Underwriting Association. That all started kind of because of the same stuff, because after Andrew and all of that and then after the 0405 hurricanes, insurers get spooked. So there was a state-sponsored insurance program called the JuA, the Joint Underwriting Association, which eventually morphed into citizens.
Joseph E. Adams:The problem with citizens is twofold. Number one by statute. If your condominium allows rentals of less than 30 days, more than eight times a year, and over half the units are rented on a transient basis, you're ineligible statutorily for citizens. So in this region you know Sport, myers and Beach and Sanibel a lot of these are transient rental condos. They do weekly rentals and they are not compliant with citizens. They're not eligible.
Joseph E. Adams:I also have a lot of clients in Naples that don't allow short-term rentals. They have a 30-day minimum. The problem they're having is that citizens apparently has a guideline and I find this interesting. Their guidelines are not a matter of public record, although I thought they were a public company. They're only given to their agents and their agents are told they're proprietary. So I've never seen them and I've been told you can't get them. I mean, maybe I do a Freedom of Information Act search or something.
Joseph E. Adams:But basically the position that citizens is taking on damaged property is that you have to show that it's reasonably likely that it will be back pretty much the way it was before the storm within 90 days, or they're not going to write you. Well, most of my clients, like I said, are looking at you know a year plus. So you know citizens is, you know, rejecting that. So in the example I gave you earlier about the client paying three times more for 12% of the coverage, they actually don't allow short-term rentals. They would be citizens eligible on their rental policy. But citizens said you know you got too much damage, we're not ensuring it. So you know if the government won't insure it, you know who the hell will I mean. So I think that is where the legislature really needs to be educated and may even need to call a special session. This is going to go from bad to worse.
Donna DiMaggio Berger:Citizens has a third problem. It's a branding problem. So I asked you about going there. You know, not only am I getting this in stereo, because I get it with the clients, my parents, who are elderly and single family homeowners out in west in Florida, had a conversation with them. Their home is free and clear. My dad just decided he's not paying the windstorm coverage too much, and so we got him a quote through citizens And my mom says, no, citizens is bad. Well, what's bad about it? It's a brand, it's a perception. No, it's bad. So I'm dealing with the, you know the pushback on an asset that's probably a 700,000 dollar asset, and somebody look, they have my parents have the ability to say we're just not going to pay for it And we're going to cross our fingers and hope we don't get a tornado or a hit. But in a multi-family building, don't have that same culture.
Joseph E. Adams:I wouldn't go spending your inheritance yet then if I were you, I'm going to pay it, joe, to protect my inheritance.
Joseph E. Adams:Well, you know, that's you know, whatever I mean that you would not believe what I pay for my house and insurance. And because my home is elevated, i mean I had, i had about $250,000 worth of flood damage and I got 40,000 in coverage And that's all I'm going to get. I mean, look, i took the risk, but wind damage, you know I also had a lot of wind damage. You know you live in Florida. You know you've got to understand your risks and ensure what you can, and it ain't cheap.
Donna DiMaggio Berger:Did all your clients have flood coverage?
Joseph E. Adams:Yes, i don't know of any that didn't. And you know, flood has been very good to deal with. I guess they're spending the government's money. So what's the difference? right? But yeah, i mean, the flood has actually been, you know, kind of a savior in some of these, because the policies are capped by law at 250,000 a unit. But if you have a 10 story building with 10 units of floor you know that's 100 units you've got 25 million in flood damage. Well, only the first floor is really getting damaged by flood and all the electrical systems. Maybe the second floor and some of the Santa Bel condos were.
Donna DiMaggio Berger:the waves were rolling in at 15 feet, but the higher you're building, the more money you get, because it's per unit, and then there's plenty of flood money, you know, to fix it.
Joseph E. Adams:So that's actually been a positive thing in. You know, in some respects The problem with flood is it doesn't cover a lot of exterior things. It doesn't cover swimming pools, fences, docks, you know that kind of thing, landscape. So yes, i mean I would say all of my clients that I've been dealing with have flood insurance and they're all pretty damn glad they do.
Donna DiMaggio Berger:So you've been a community association attorney for more than four decades. You've been involved in a lot of policy groups dedicated to the industry. I know it's hard to like, like, condense it to one suggestion, but what's the one thing you wish boards would do that they rarely do?
Joseph E. Adams:Get professional advice judiciously. You know I'm sure you do I have a lot of clients that they're calling me over. You know kind of fighting with people over things that are personality things, and you know I mean that's part of it but that's kind of a waste. Look, we all like to save money and we don't like to, you know, make ourselves consultant for or buy things where we don't really get something.
Joseph E. Adams:I mean if I spend you know five thousand dollars, i would like to have you know a new, you know whatever, you know a nice wristwatch or you name it. But where I found clients make the biggest errors and I'm seeing this a lot right now is not getting proper professional advice in advance And before you know people think that's self-serving. You're a lawyer, you want to call you. I'm not really talking. I'm not talking about legal advice as much as talking about technical advice. You know, clients do not seem to be willing or educated enough to write word or aware of the need to have engineers involved in the preservation of the superstructure of these assets. I mean, even if you are, most of our board members aren't engineers, they're not lawyers, they're not accountants, but even if they are, they're not specialized in these areas. So there's nothing wrong with having, say, a retired lawyer on the board Good, you haven't educated clients, but you don't have a substitute for somebody that does this for a living. Same with engineers.
Joseph E. Adams:People say, oh, i was in construction in Ohio for 40 years. I know enough. Well, you know God built roads. Good, i'm sure he was great at it. He made a lot of money at it. But what does he know about. Concrete is falling And you know I see so many clients. You know they're spending two and a half million dollars on new roofs. So well, where's the engineering specs? Well, we just have the contractor brought them up. Well, you know, if you go to the farmer and buy a load of manure, you're going to get a load of manure and don't complain when you find out later it's manure. And when you go to a contractor they have no duty to you. I mean, they have a caveat emptor, let the buyer beware. Well, they're selling So.
Joseph E. Adams:I would say the biggest mistake I see with clients is in substantial property maintenance transactions And I would certainly consider anything six figures or higher to be substantial. I'm not having the appropriate qualified engineer. You know, advise them that what they should be getting and that they're getting what they pay for. You know, we have a whole group of construction lawyers who work like dogs, and if most of our clients did that, we wouldn't need them, because you know that's one of the biggest causes.
Joseph E. Adams:And I'm seeing this in Ian, because you know everybody's in a hurry to be the first. Oh, my gosh, the next door neighbors have their drywall in and we don't. We must be bad, we must be stupid. Well, you know, whatever fastest isn't always the best. So, you know, if I had, one thing that I would encourage clients to do better is to be thoughtful about, when you're doing something, who knows more about it than you do And who could help you discharge your fiduciary duty and protect you from liability. And if it's building stuff, it's an engineer. If it's lost stuff, it's a lawyer. If it's, you know, accounting stuff, it's an accountant, you know. The other thing is, you know I feel that and I've seen this for four decades, i mean boards put a lot of pressure on their managers to practice in these disciplines that they're not qualified for go license and every manager will tell you that they don't want to be doing this, They don't need the liability, They don't claim to have the knowledge.
Joseph E. Adams:Of course they know something about law, They know something about accounting, They know something about engineering. They have to, As part of their job is to work with all of these disciplines. You know, I have a few clients that you know they'll come to me with a problem and say Our manager advised us we should do this. What was wrong? And I'll talk to the manager in a lot of you, like you know what's up here.
Joseph E. Adams:Well, you know, they kind of made me at the meeting and I said you should talk to the lawyer and I didn't want to spend the money. So yeah, i mean, you know it's really important to kind of stay in your lane And the board members lane is to, you know, set the policy with the input of the people that you need input from.
Donna DiMaggio Berger:I agree wholeheartedly with everything you said and I would say for me, I'd like boards to push back against the we've always done it this way mindset, particularly in communities that are 40, 50, 60 years old. It's a different landscape today, Everything we've been talking about. You mentioned surf side. You know there was a time not so long ago that when somebody was renovating, completely gutting their unit, The only thing most boards would consider is is the contractor licensed and insured? That was it. Not looking at the plans, not looking if there was going to be any drilling into the slab and a use of x-ray technology, things like that. So when I come across boards and it's always hey, we've always done it this way. Well, the legal landscape has changed. The liability landscape has changed, Insurance certainly has changed. So in my opinion, I think they need to have more of a growth mindset than a fixed mindset.
Joseph E. Adams:It's going to get worse. I read something I believe it's true I would swear to it that there were more lawyers admitted to practice in the last 30 years in the United States than collectively existed in the 200 year history of the country prior to that.
Donna DiMaggio Berger:And look, i mean.
Joseph E. Adams:I'm getting. I get demand letters every day from you know this used to be a small town. I knew every lawyer and. I kind of knew they're the good bad ugly about them and they did about me.
Donna DiMaggio Berger:I get these hands like who the heck is this?
Joseph E. Adams:Look it up, and you know, somebody's been admitted for six months and they're out ready to take you to court, and so the society is, i think, becoming more litigious. I think you've got to be more self-protective. I think the insurance companies are shrinking what they're willing to cover because of some of the reasons we've. You know, we've discussed And yeah, i mean I think it's really, you know, surprising to me how you know people from the older generation, and I count myself among that. Today's my 64th birthday, by the way.
Donna DiMaggio Berger:Oh, happy birthday. Today's your actual birthday, happy birthday 64.
Joseph E. Adams:I'll be ready for Medicare next year.
Donna DiMaggio Berger:I think the Beatles wrote a song, yeah.
Joseph E. Adams:But what I've really seen and certainly taken some satisfaction out is most of my clients are older than me, retirees and the way they've embraced technology, zoom and you know all of those things. I don't know if the pandemic just forced us to have to, you know, accept it. But you know people, you know people really like it and are taking advantage of electronic online voting, a remote participation, and you know I used to, you know I used to meet with I probably used to have 10 or 12 meetings in my office a week. I probably have 15 or 20 a year now. I mean, i still have 10 or 12 week, but they're all by Zoom. That's what the clients want. We're just as happy to, you know, get their you know kitchen table with their cup of coffee in their gym shorts. Then you know why not?
Donna DiMaggio Berger:I mean, I'm not in the office.
Joseph E. Adams:So yeah, so yeah, things are changing And, i think you know, for the better. You know, the technology has really made the operation of associations easier, but you know it doesn't take the personalities out of personality. I mean one thing that I've seen you know the West Coast has always kind of been looked at, as you know, ohio, on the Gulf, midwesterners don't really get to work. You get to work up about anything. But you know, i think you see it on Facebook and you know, on the news. I mean people. You know people seem to be getting a little nastier these days. Things get a little more polarized. People, you know, sometimes approach problems by attacking The person they see is disagreeing or being contrary to their interests. When you're dealing with volunteer board members who already are putting in time and that's the first interaction they have with you, that's not going to turn out, i mean. So I guess we'll always have jobs.
Donna DiMaggio Berger:You said you were embracing. You liked the embracing of technology by the older generation. Do you fear that you and I and our colleagues are going to ever be replaced by chat, gbt or other forms of artificial intelligence?
Joseph E. Adams:No, because this is not an easy area to practice law in.
Joseph E. Adams:It can't be a one-trick pony and do this kind of work.
Joseph E. Adams:Because, first of all, you know, while people kind of you know, you see all the you know the Karen jokes in the Saturday Night Live skits and all that and that's part of it, i can laugh at that.
Joseph E. Adams:But it's actually a relatively complex area of practice because you have to have more than passive knowledge of several fields of law, including real estate, including corporate law, including, you know, tort, personal liability, personal injury law and administrative law, employment law. I mean, you know in your average day you'll deal with every one of those issues and clients don't want to hear well, i've got to research it and get back to you. So you take that and then you take, you know, one of the most lengthy and complex sets of statutes in 718 and 719 and 720 and all the administrative rules are probably 150, 200 pages put together and all the details in them And you know, and then you know 60 years worth of case law interpreting all that stuff. I mean that is a fairly formidable set of laws to have to be, you know, a master of kind of off the top of your head.
Joseph E. Adams:Then you have to explain that to people who might be the retired CEO of Target or you know a retired, you know blue collar worker, or everywhere in between.
Donna DiMaggio Berger:You take all your clients like you can.
Joseph E. Adams:So it's not easy And I don't see a robot doing it. you know to me, if you don't have good people skills, you're not going to be able to be successful in this. And I'm not saying that in a self-gradulatory way, like I'm the greatest guy in the world, but you've got to be able to communicate with people at a level that they are comfortable with. And sometimes you have to be able to be a chameleon, because at a level that one person may be comfortable with, another may not. You've got to be able to perceive that and adjust to that.
Joseph E. Adams:I mean, i have clients who are retired lawyers and I know when I talk to them they're going to want me to cite cases and stuff like that. Most of my clients. if I cite a case, they're going to start looking at their watch and saying why are we here? It is a difficult and to me the most frustrating part of it is because it isn't like becoming Microsoft's lawyer. It's easy to find a condo association that will hire you. You know what I mean. I mean just tell them you're cheaper than everybody else and someone will hire you. So it's relatively easy to get into the field at some level to say that's what you do And there's nothing wrong with that.
Joseph E. Adams:but I have noticed that there is some starting from the perception this isn't easy, this is hard, and starting with that perception, i've seen some efforts to commoditize it and kind of dumb it down. I actually go a different way when I go shopping so my blood pressure doesn't go up. but there is a billboard for some law firm that's not from around here that says condo and HOA law discount. We charge up to 70% off. We do doctory rights for $2,000.
Donna DiMaggio Berger:That's in your market. There's a billboard that says that.
Joseph E. Adams:Yes, I'll send you a picture of it, but I don't drive by there, my blood pressure goes to the level where my doctor would get upset, but so yeah, so I mean it's really to me. It's kind of a disservice to what lawyering I mean. Lawyering is a noble profession. It gets maligned because a lot of people do things that deserve that to happen. But to do it right, you gotta be smart, you gotta be ethical and you gotta work hard and you gotta care about your clients. And if you do all those things, you're gonna be a good lawyer and you deserve to be compensated for it well, compensated for it. So I think that one of the things that may discourage some people is there's there's some tendency to say, well, this is kind of what JV lawyers do, because it's not real law because there are schlucks who do it.
Joseph E. Adams:I mean, i'm sorry to say, but I think if you look at the people that have really made a name for themselves in this field the Michael Gelfands, the Bill Sklar's of the world these are top notch lawyers and would be considered that in any field.
Joseph E. Adams:And it's really important to me in my last years of practice according to my financial planner, i can retire on I'm 94, should try to do that. I have had the privilege of mentoring quite a few lawyers in my career and some of them are very good lawyers who will have and will continue to make a mark. So yeah, i mean, like I said, it is a difficult field because I bring in new lawyers and you bring them into litigation or something. I go to a document production, sit there with 10 boxes for 20 hours. Anybody can do that. I mean you got to know what you're doing, but you can hit the ground running In this field. I mean it takes probably two years to just basically learn the basic laws where you can sit there in a room and be confident that you're giving the right answer.
Joseph E. Adams:So a lot of people don't have the patience for that.
Donna DiMaggio Berger:I was gonna say tenacity, you have to stick with it.
Joseph E. Adams:If you stick with it long enough And you've got to support a firm, that doesn't demand, like you're billing a lot of money immediately because you're not gonna be able to do that. I mean that's one of the great things about this firm is when we have somebody that wants to do this is their career. We support them through their formative years and make them strong lawyers And this area of law will provide a really stable economic opportunity for anybody that wants to practice in it and do it the right way. It never is boring, that I'll say for sure. But I mean I started out my career dual litigation.
Joseph E. Adams:I started as a public defender. I tried murder cases. I mean I just hated that because it was just always fighting And at the end of the day the consequences were disastrous for somebody And the same with big stakes litigation. I mean I see myself as a problem solver. I mean that's what I do all day is help people solve problems, because most people wanna work together to solve their problems And if you can find a way to help them get there, that's satisfying And it's also something that is a sought after skill.
Joseph E. Adams:I mean people like that And I'm doing a lot of that now with these hurricanes And there's millions of dollars and people have very significant investments and they're all worried and upset and be able to kind of be a voice of calm and say I know the law, i helped write the law. This is how the law works. This is what your board's gonna face, and it may not be fast, it may not be pretty, it may cost you something, but at least they get, and to me that's very satisfying to be able to do that. So I've been very fortunate.
Donna DiMaggio Berger:Listen, you have created a career in this industry that's worthy of note, worthy of all the honors and worthy of emulating. I do wanna thank you for joining us And I wanna end on one note. This episode was about surviving a disastrous hurricane Hurricane, ian, but you've also been hit by lightning twice, joe. You've been hit by lightning twice and now survived one of the most catastrophic hurricanes. What is your secret?
Joseph E. Adams:Well, my wife says I have nine lives and I might be on the eighth one. I don't know if you go to my Facebook or read my story with Hank the horse. I actually took tumble off a cliff while elk hunting in the Teton mountains near Jackson Hole in 2017. My horse fell over and we went down a very long cliff together and I ended up getting a concussion and my horse almost rolled over me and hit me in the head.
Donna DiMaggio Berger:So that was probably actually my nearest death experience. This is from a man who's been hit by lightning twice.
Joseph E. Adams:I've also had two pulmonary embolisms and I was in a 20 car pile up on I-75. So I think if you add those up I'm still at seven. So I got a couple left.
Donna DiMaggio Berger:I wanna know your secret and I also don't wanna hang out with you. Thanks for being here.
Joseph E. Adams:All right, take care guys. Yup, bye, bye.
Donna DiMaggio Berger:Thank you for joining us today. Don't forget to follow and rate us on your favorite podcast platform, or visit TicketToTheBoardcom for more ways to connect.