If you live in a condominium or a community with multifamily buildings, it is important for the condominium or property owners’ association, as well as the individual owners of the units, to know who maintains and pays for the annual termite warranty/bond and structure retreatment when the time comes.
For condominiums, the association is always responsible for maintaining termite prevention and treatment. If the community has single family homes, termite warranty/bonds will be needed in any amenity structures that have a wood frame construction.
Generally, there are two types of termite services: a termite bond or a termite control warranty. As with many products, there are different variations of both bonds and warranties. In regard to termites, the U.S. Department of Agriculture and the N.C. Department of Agriculture regulate all exterminators, lawn service companies and other commercial applicators.
Termite bonds and warranties have a specific time period (usually 10 years), although some companies do not have a specific coverage period or expiration date. A termite bond also will indicate a specific amount of repair cost covered due to termite damage, and this may include the cost to re-treat the affected area. A termite control warranty states that if termites are found, the exterminating company will re-treat those areas, but there may not be coverage for building repairs as a result of the termite damage.
Termite treatment of the soil (not the structure) is completed during the original construction of a building or a single-family home. To maintain a termite bond/warranty, the exterminating company will perform an annual inspection of the buildings. It will charge an annual renewal fee for this service to maintain the bond/warranty. The cost of the inspection and renewal fee will be reflected in your association’s annual operating budget and year-end income and expense reports. Many times the inspections are visual and taken from the exterior of the building; however, some exterminating companies require inspection of the units’ interiors, especially if they are built on a concrete slab.
At the end of the bond or warranty period, most exterminating companies require the structures and soil to be retreated. Many times this retreatment is more expensive than the original treatment. While these annual inspections should be included in the association’s annual operating budgets, retreatment of the building will most likely be a reserve component that is funded over the life span of the bond/warranty.
For associations with many units or buildings, the cost of retreatment can be a large expense. Your association’s current exterminating company can provide an estimate of the cost of retreatment, when and if retreatment is required, to allow you to properly place funds in reserves.
It is also important to note that a termite bond/warranty is a type of insurance policy against termite damage; however, as with any insurance policy, you need to be aware of any excluded coverage such as secondary infestation, pre-existing conditions, and ground-to-wood contact.
When a retreatment is required, get competitive bids before contracting an exterminator. Most companies will not assume a warranty or bond from another company due to the expense of re-treating, which means that associations usually will not change exterminating companies during the term of a bond or warranty. However, when buildings need to be retreated, we advise associations to put the project out to bid with state-licensed companies. During the bidding process, it is advantageous for a board to consult with a third-party expert on the topic due to the number of chemicals and bait systems that are currently in use.The cost and quality of the chemicals and bait systems used can vary.
A professional management company will have a good understanding and be able to advise and assist an association through this very important process.
Mike Stonestreet is a 26-year veteran of the professional HOA management industry who has achieved one of the highest education-based designations in the field, that of Professional Community Association Manager (PCAM). Community Association Management Services (CAMS) has been a leading association management company since its inception in 1991. CAMS is a trusted provider of management services for more than 265 associations throughout North Carolina, South Carolina and Georgia. To find out how CAMS can benefit your community, call (910) 256-2021, email [email protected], or visit www.CAMSmgt.com.
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