Peter and Janelle Bohnel lost $30,000 of equity in their Otsego home over their HOA insurance claim. They returned to the home on Feb. 24, 2025, to get some of their belongings before it is sold. Photo by Glen Stubbe/Minnesota Reformer.
Susheel Kesireddy was among the first people to move into a brand-new townhome community in Inver Grove Heights eight years ago.
He figured his homeowners association’s insurance would cover any needed repairs to the outside of his home, while his personal insurance covered the inside.
So he was stunned when he received a $16,116 bill from his HOA in January for a roof replacement due to hail damage.
The HOA’s insurance policy was, in fact, covering the replacement, according to the letter Kesireddy received from the property manager. But the damage to the roofs was valued at around $1.7 million — far less than policy’s deductible of $2.6 million — so the owners of the 104 homes in the community would have to cover the bill.
Some homeowners have insurance to cover their bills in these situations, under a policy called “loss assessment coverage.” But many residents are not covered, Kesireddy said; the Reformer interviewed two residents of the Blackstone Ponds neighborhood who say they have little or no loss assessment coverage. They asked not to be named for fear of retaliation by the HOA.
If they can’t pay, they’re likely to face late fees, liens and even foreclosure.
Kesireddy and homeowners across the state are confronting massive and unexpected bills due to severe weather, a collapsing homeowners insurance market, questionable HOA board decision-making, and apparent conflicts of interest between contractors and property managers.
Kesireddy and his neighbors are also alarmed because the HOA board hired Gassen Construction and Maintenance to replace the roof, which is owned by the same company as their property manager, Gassen Property Management.
“The HOA board…was not thinking in the favor of the residents, but thinking regarding the management company,” Kesireddy said.
The cost of replacing all of the roofs in the neighborhood — $1.7 million — wasn’t determined by a competitive bidding process, which could theoretically lower the cost.
Critics of homeowners’ associations say the boards are often filled by volunteers who defer to the advice of property managers, which promise to provide the expertise and man hours that HOA boards lack. HOA board members across the state describe the position as thankless; board seats often go unfilled, and homeowners rarely show up to meetings.
Now state lawmakers want to intervene. Bipartisan legislation would require property managers and HOA board members to disclose conflicts of interest, create new transparency requirements and ensure homeowners can contest an HOA fine.
In response to questions from the Reformer, Gassen Company CEO Ben Lampron said the firm takes direction from HOA boards when it comes to submitting insurance claims.
The company also regularly reminds homeowners to get loss assessment coverage, Lampron said.
“Gassen works very hard to make sure homeowners know how much insurance they need,” Lampron said.
A pattern of self-dealing
The Reformer identified at least four communities managed by Gassen that faced big bills for exterior work covered by insurance, and where Gassen Construction and Maintenance was selected for the job.
The Reformer previously reported on one of those instances, in which Otsego townhome owners paid more than $18,000 each to replace their roofs. When some homeowners couldn’t pay the bill, they were slapped with late fees, attorneys’ bills and liens — resulting in at least one foreclosure.
The Insurance Federation of Minnesota has asked the attorney general to investigate the incident.
Peter and Janelle Bohnel were living out-of-state while their son stayed in their Otsego townhome.
As soon as the family received the letter notifying them of the upcoming $18,600 charge, they submitted the claim to their personal homeowners’ insurance. But there was an issue with their insurance — their house was erroneously categorized as a single-family home, not a townhome — and as Peter went back and forth with his insurance carrier, the late fees racked up.
Then the HOA placed a lien on the home, and the couple received a foreclosure notice.
A real estate firm stepped in, promising to help them sell the house to pay off the mortgage and the liens — and maybe even recoup some of the Bohnel’s equity, Peter said.
That didn’t happen. The home sat on the market for a couple of months; eventually, the real estate firm said it would buy the house off of the Bohnels for a price that would pay off the mortgage and liens. As part of the deal, the HOA board agreed to reduce the liens on the house.
The Bohnels lost the house and all of their equity.
“That was our retirement,” Janelle said.
At a townhome community in Big Lake, residents were charged $22,760 each in September 2024 to replace their roofs, siding and gutters due to damage from a summer hail storm.
The storm did $1.5 million in damage to the community, according to the insurance adjuster. The HOA’s insurance policy has a deductible of around $1.2 million.
One woman who owns a townhome in the neighborhood, and who asked not to be identified for fear of retaliation, received the letter informing her of the bill on Sept. 19, according to a copy provided to the Reformer.
The payment was due around six weeks later, on Nov. 1.
She had $10,000 in loss assessment coverage as part of her personal home insurance policy; she took out a personal loan from her retirement account to cover the remaining $12,760.
The HOA also changed property management companies that fall; Sharper Management took over as the new management company on Oct. 1.
In all of the cases, the HOA’s insurance carrier found that there was damage to the buildings, necessitating the repairs. But the stories illustrate how homeowners, often unknowingly, cede control over important decisions when they purchase a home in an HOA.
Gassen Construction and Maintenance general manager Tony Christopherson said after a storm, GCM inspects properties managed by Gassen for damage, then advises the HOA board on whether a more thorough inspection is needed. If the HOA board approves a more in-depth inspection, GCM conducts it, then makes a recommendation to the board on whether to file an insurance claim.
Lampron, the Gassen CEO, said if HOA boards don’t address storm damage, they could be denied insurance coverage in the future.
Some homeowners interviewed by the Reformer said GCM and Gassen have a conflict of interest, and that GCM has a financial interest in advising an HOA board to pursue an insurance claim.
Many wondered why there was no bidding process to lower the cost of the repairs, particularly when the cost of the repairs is close to, or less than, the deductible.
The price of the repairs is usually negotiated between the HOA’s insurance carrier and a public adjuster, whose job is to represent the person, HOA board, or company that is insured and make sure they receive a fair payout. Public adjusters are paid based on a percentage of the insurance settlement, creating an incentive to drive up the valuation of the work to be done.
In the case of Blackstone Ponds, where Kesireddy lives, GCM hired a public adjuster to try to get the insurance company to cover damaged buildings that were not covered in the insurance carrier’s initial decision, Lampron said.
But because the community’s insurance deductible was far higher than the cost to replace the roofs, a bigger estimate was no help to homeowners. In fact, the higher the value went, the higher the bills for the homeowners.
Lampron argued that a competitive bidding process wouldn’t lower the price of the work.
“The only way to save homeowners’ money is for them to have the proper levels of loss assessment coverage,” Lampron said.
Gassen advises HOA boards to select a contractor they trust, said Christopherson, the Gassen Construction and Maintenance general manager.
“They often select GCM in part because of their relationship and trust with Gassen, and in part because they know if we don’t do the job well, we will have to deal with it later,” Christopherson said.
Worsening insurance options leave homeowners on the hook
Homeowners and their HOAs have faced rising insurance costs in recent years, driven by increased frequency of damaging weather events.
Insurance premiums for homeowners’ associations — the master policies that are supposed to cover damage to shared property, including roofs — nearly doubled between 2022 and 2024, according to a survey of HOA board leaders.
Between 2019 and 2023, insurance carriers lost money every year on homeowners’ insurance. (In 2024, they made a profit.)
After years of losses, insurance carriers are opting to pull out of the home insurance market, particularly when it comes to covering HOAs, leading to less competition and thus higher prices — or massive deductibles that render the policy almost worthless.
“What we see in a lot of these commercial entities is they’re taking on larger and larger deductibles to be able to bring down the cost of their premium,” said Aaron Cocking, president of the Insurance Federation of Minnesota.
According to loss assessment letters viewed by the Reformer, the deductibles are often so high that widespread damage — like that caused by a hail storm — is less than the deductible, or barely over it, meaning the insurance carrier pays out very little.
Homeowners are instead on the hook for the repairs.
Some homeowners believed they had loss assessment coverage in their homeowners’ insurance policy, only to later find out that they had a default policy, only covering $500 or $1,000.
“Unfortunately, even when a homeowner obtains loss assessment coverage, many policies are hard to interpret, and may give the impression that they cover more than they do,” Lampron said.
Nowhere to go
When residents believe their homeowners’ association or property management company haven’t acted in their financial interest, they face few options.
Kesireddy, reeling from the huge assessment and tight deadline, filed a complaint to the Office of the Attorney General, hoping for some kind of relief.
A staff member from the office responded a couple of weeks later, and attached a series of handouts about condominium and townhome associations.
The attorney general’s office doesn’t provide legal counsel to individuals. Kesireddy could hire a private lawyer at his own expense, the staffer wrote.
“It is possible, however, that the costs incurred by the board while defending a lawsuit initiated by its members may be assessed to the members,” the letter warned.
HOA boards managed by Gassen have a history of charging residents legal fees when they ask questions about loss assessments.
“The attorney general has no teeth — we don’t have any law whatsoever for them to step in and help these people,” said Rep. Shane Mekeland, R-Clear Lake, in a Feb. 14 House housing committee meeting. Mekeland was a member of a working group that studied homeowners’ associations in Minnesota and made recommendations to the Legislature for reforms.
Homeowners say they are slapped with attorney’s fees when they try to contact the board members via Gassen with questions about insurance claims and bills.
“Gassen is responsible for responding to inquiries from homeowners, but if a homeowner becomes disrespectful or threatens legal action, the community’s lawyer takes over communications with that homeowner. The HOA is responsible for paying the lawyer’s bill, and the Board of Directors can then assess those legal fees back to the homeowner,” Lampron said.
Legislation that would transform Minnesota HOA laws will receive a hearing in the Senate housing committee Thursday afternoon.
Gassen sent an email to HOA board members Monday urging them to call their lawmakers and oppose the bills.