A property insurance trade group is asking Minnesota Attorney General Keith Ellison to investigate allegations from residents against an Otsego homeowners association, its property manager and a construction company affiliate in a current one reformer Story.
The homeowners of Villas at Pheasant Ridge were charged more than $18,000 each to replace their roofs, leading to at least one foreclosure.
In Minnesota, homeowners’ associations can file liens against residents’ homes if they fail to pay dues or special assessments, such as roof replacements.
Pheasant Ridge homeowners are particularly concerned that the HOA board assigned roofing work to a contractor who is an affiliate of their property manager.
The reformer The story, writes Aaron Cocking, CEO of the Insurance Federation of Minnesota, “contains serious allegations that we believe require further review and scrutiny.”
The article detailed that some residents did not believe roof replacement was necessary after a storm in July 2023 and that the HOA board and property management company Gassen had already discussed roof replacement before the storm.
“Even more troubling is the allegation, if true, that its board had been in discussions about filing an insurance claim weeks before the storm and the HOA board president had signed a copy of the construction contract seven days before the alleged storm,” Cocking writes.
The HOA ultimately hired an Alley subsidiary to complete the roof replacement without obtaining relevant, competitive bids.
Cocking – who writes that he does not represent any particular insurance company – called the agreement with the alley construction company “alarming.”
“Without a tender process, there is at least a conflict of interest. At worst, it’s a pathway to price gouging and insurance fraud,” Cocking adds.
Alleys from Eden Prairie, which predates the reformer Article published did not respond to an email or phone message Thursday.
Brian Evans, a spokesman for Ellison, said the attorney general’s office is reviewing the insurance association’s letter and will respond. At the same time, he will present the concerns to the bipartisan legislative task force that is studying HOA law and proposing possible reforms. “Attorney General Ellison’s office takes allegations of illegal conduct very seriously,” he said.
Minnesota’s homeowners insurance industry has been hit hard lately, losing money in six of the last seven years, according to a report by a New York Times report this year. The Just Report cites an increase in extreme weather events. As a result, policyholders recorded rapid increases in premiums.
But the industry also blames the spread of fraud. The FBI says Insurance fraud amounts to at least $40 billion per year and costs the average American family between $400 and $700 per year.
The reformer Story also highlighted the gaps in government oversight of homeowners associations and property management companies and the financial pressure that HOAs can place on homeowners.
Affected residents say they have little recourse if they believe their homeowners association or property manager is making bad decisions.
If homeowner on Villas at Pheasant Ridge asked questions about roof replacement, these questions were eventually referred to lawyers and residents were billed for legal fees. A resident’s HOA bill included $2,000 in legal fees for attorneys to answer his questions.
If you believe your homeowners association or property manager has engaged in questionable practices, please contact the reporter Madison McVan.
