text:
Condo News print newspaper is published every other Wednesday. It is circulated throughout Palm Beach County, from
Delray to North Palm Beach, and from Singer Island, Palm Beach and
South Palm Beach to Royal Palm Beach, in Condominium, Cooperative
and Home Owner Association Communities. For more information, or to
have the Condo News brought to your community, e-mail us or
write to: P.O. Box 109, West Palm Beach, FL 33409. Tel:(561)
Jeffrey A. Rembaum, Esq.
Rembaum, Esq. is a community association lawyer with the law firm
Kaye Bender Rembaum, in its Palm Beach Gardens office. His
law practice consists of representing condominium, homeowners, and
cooperative associations, developers and unit owners throughout
Florida. He can be reached by email at firstname.lastname@example.com
or by calling 561-241-4462 or toll free: 1-800-974-0680.
Updated 07/11/2016
Community Association News
You Can Use!
Rights of Criminals to
in your Community
who believes that big government does not already intrude too far
into the lives of the citizenry of the United States of America will
be even more disgusted with the U.S. Department of Housing and Urban
Development's ("HUD") General Counsel's April 4, 2016
advisory opinion where HUD most clearly provides felons more rights
than non-felons under the Federal Fair Housing Act (the
"Act"). That's right, the same Federal Agency that has
allowed an ever growing, over-abundance of assistance animals into
your "no-pet" or otherwise restricted pet community has
thrown us another curve ball aimed at further restricting the right
of a community association to determine its newest residents.
the Act prohibits discrimination in the sale, rental, or financing
of residences, and in other housing-related activities, on the basis
of race, color, religion, sex, disability, familial status or
national origin. As recently upheld by the United States Supreme
Court, a claim for a violation of the Act based on "disparate
impact" is permissible. Such a claim occurs where the
application of a seemingly neutral policy or procedure has a
discriminatory effect on a particular group of people on the basis
of race, color, religion, sex, disability, familial status or
national origin.
most recent opinion begins by providing statistics such as "100
million U.S. Adults (1/3 of the population) have a criminal record
of some sort, the prison population of 2.2 million is the largest in
the world, 650,000 individuals are released from prison each year,
and over 95% of those incarcerated will be released at some point.
African Americans and Hispanics are convicted and incarcerated at
rates disproportionate to their share of the general
population." Therefore, HUD reasons that criminal record-based
barriers to housing are likely to have a disproportionate impact on
minority home seekers.
April 4, 2016, HUD issued guidance from its Office of the General
Counsel regarding the application of the Act on the use of criminal
arrests and convictions by housing providers, which includes
community associations, to screen potential purchasers and renters.
This guidance issued by HUD provides, in its conclusion, that:
of widespread racial and ethnic disparities in the U.S. criminal
justice system, criminal history-based restrictions on access to
housing are likely disproportionately to burden African Americans
and Hispanics. While the Act does not prohibit housing providers
from appropriately considering criminal history information when
making housing decisions, arbitrary and overbroad criminal
history-related bans are likely to lack a legally sufficient
justification. Thus, a discriminatory effect resulting from a policy
or practice that denies housing to anyone with a prior arrest or any
kind of criminal conviction cannot be justified, and therefore such
a practice would violate the Fair Housing Act… Selective use of
criminal history as a pretext for unequal treatment of individuals
based on race, national origin, or other protected characteristics
violates the Act.
arriving at this conclusion, HUD discusses the three element
standard by which criminal history-based screening provisions are
Whether the Criminal History Policy or Practice Has a Discriminatory
Effect: Under this element, an aggrieved
person must show that the application of criminal history-based
screening results in a disparate impact on a group of people based
on their race or national origin. Typically, this is shown by the
use of statistical data and is determined on a case-by-case basis.
Whether the Criminal History Policy or Practice is Necessary to
Achieve a Substantial, Legitimate, Non-discriminatory Interest:
A community association is responsible for promoting the health,
safety, and welfare of its members. Most, if not all, board members
would agree that keeping criminals out of their communities is in
furtherance of this responsibility. However, in the event of
challenge, HUD will require that the association present
"reliable evidence that its policy or practice of making
housing decisions based on criminal history actually assists in
protecting resident safety and/or property." As such, HUD will
require an association to prove a negative, meaning an association
will have to somehow show that its community is safer because its
criminal-history based screening has kept the criminals out. How HUD
expects an association to prove this remains a mystery.
Whether There Is a Less Discriminatory Alternative:
In this final element, an aggrieved person must show that the
association's interest (established in the second element) could
be served by a less discriminatory practice, meaning is there a way
the interest can be met by further limiting and qualifying the use
of criminal history information? HUD provides that these qualifying
factors may include, "the facts or circumstances surrounding
the criminal conduct; the age of the individual at the time of the
conduct; evidence that the individual has maintained a good tenant
history before and/or after the conviction or conduct; and evidence
of rehabilitation efforts."
Exemption: A community associateon will
not be liable under the Act for refusing a sale or lease to a person
with a prior conviction for "drug manufacturing or
distribution" regardless of any discriminatory effect it may
create. Why? Because section 807(b)(4) of the Act does not prohibit
conduct taken against a person who has done so. This exemption does
not lend itself to mere "possession" crimes.
Application of HUD's April 4, 2016 Opinion:
When drafting sales and leasing approval rights for an association,
consider including a list of factors that "may" be
considered. The word "shall" should be avoided to provide
better decision making flexibility. As to convictions, to stay on
the safer side of HUD's latest opinion, boards of directors should
only consider disapproving a sale or lease to recent convictions of
only the most egregious crimes, otherwise known as crimes of moral
turpitude, such as a felony involving violence to persons or
property or a felony demonstrating extreme dishonesty. If your
community's governing documents assert an outright ban against
approving a sale or lease for anyone with a criminal history, then
such language should be amended as soon as possible.
HUD does not take into account the personal choices that led to the
person's incarceration will always be a mystery. We do not need
HUD to go out of its way to protect the rights of convicted felons.
What we need are criminal justice laws that make better sense.
for a Confusing Situation
residential condominium associations are required to install a fire
sprinkler system in their condominium building or, in the
alternative, hold a vote for the members to opt out of the
requirement to install the fire sprinkler system? Does the
requirement to install the fire sprinkler system apply to all
residential condominium buildings regardless of height, or does it
refer to only those residential condominium buildings that are
considered "high-rise" buildings? Rarely has there been so
much confusion.
some background. The Florida Fire Prevention Code, as further
discussed in Florida Statute Chapter 633, is based, in large part,
upon the National Fire Protection Association Fire Code (referred to
as "NFPA 1") along with the Life Safety Code (referred to
as "NFPA 101"). Chapter 31, Section 3.5.11 of the Life
Safety Code, as amended by the Florida Fire Prevention Code,
requires all "high-rise" buildings to be protected by an
approved, automatic fire sprinkler system no later than December 31,
2019. The Florida Fire Prevention Code allows an "Engineered
Life Safety System" as an alternative to the fire sprinkler
section of law that is causing confusion is Florida Statute section
718.112 (2)(l). As you read the following provision, ask yourself
whether you believe it applies to all residential condominiums, or
only to "high-rise" buildings. This section of Florida law
provides, in relevant part that, "notwithstanding chapter
633 or of any other code, statute, ordinance, administrative rule,
or regulation, or any interpretation of the foregoing, an
association, residential condominium, or unit owner is not obligated
to retrofit the common elements, association property, or units of a
residential condominium with a fire sprinkler system in a building
that has been certified for occupancy by the applicable governmental
entity if the unit owners have voted to forego such retrofitting by
the affirmative vote of a majority of all voting interests in the
affected condominium. The local authority having jurisdiction may
not require completion of retrofitting with a fire sprinkler system
before January 1, 2020. By December 31, 2016, a residential
condominium association that is not in compliance with the
requirements for a fire sprinkler system and has not voted to forego
retrofitting of such a system must initiate an application for a
building permit for the required installation with the local
government having jurisdiction demonstrating that the association
will become compliant by December 31, 2019." Sadly, and
candidly quite obvious given the number of reader emails I received
on the subject, this section of the Condominium Act does not provide
the necessary clarity to answer this question: Must every
residential condominium either install fire sprinkler systems or
hold a vote of the owners to opt out, or do the fire sprinkler
requirements only apply to condominium associations whose
residential condominium building(s) are considered
"high-rise" buildings?
put, while this section of the Condominium Act does not provide that
it specifically applies only to "high-rise" buildings, the
actual requirements, as set out in the Life Safety Code, more
specifically the NFPA 101 Chapter 31, Section 3.5.11, only requires
the installation of the fire sprinkler system in what is referred to
as "high-rise" buildings. The NFPA 101 defines the term
"high-rise building" as any building where the floor of an
occupiable story is greater than 75 feet above the lowest level of
fire department vehicle access. In other words, without directly
saying so, it appears that Florida Statutes section 718.112 (2)(l)
was designed to function in parity with the relevant provision(s) of
the Florida Fire Prevention Code. When section 718.112(2)(l) is read
together with Chapter 31, Section 3.5.11 of the Life Safety Code, it
is pretty obvious that the fire sprinkler system requirements and
the condominium association opt-out procedures only apply to
"high-rise" buildings.
to the confusion is that earlier versions of section 718 112 (2)(l)
provided, "[f]or purposes of this subsection, the term 'high-rise
building' means a building that is "greater than 75 feet in
height where the building height is measured from the lowest level
of fire department access to the floor of the highest occupiable
story." Later, this text was amended out of the statute.
what is the bottom line? Does a condominium association whose
buildings are not considered "high-rise" buildings have to
install fire sprinkler systems or opt out by taking the necessary
vote prior to December 31, 2016? While it seems clear that the fire
sprinkler provisions do not apply to non -"high-rise"
buildings, any unqualified person's opinion may or may not be a
correct opinion when later judicially challenged. Sometimes even the
clearest points of law become all muddled up in the courtroom.
Imagine a situation where a non-"high-rise" building
experiences a catastrophic fire, and great harm is caused to both
person and property. It would not be at all surprising for any
resulting lawsuit brought by the injured's attorney to include a
claim for breach of fiduciary duty against the association and its
board members for failure to install the fire sprinkler system or to
have taken the requisite vote of the owners to opt out of the
installation requirement. With that in mind, there is only one way
to gain the clarity needed.
"HIGH RISE" CONDOMINIUMS: In
order to have certainty as to whether your non-"high-rise"
condominium is required to install a fire sprinkler system or take
the vote to opt out, an opinion of a quailed professional is needed.
In this instance, it would be miraculously wonderful if the State
Fire Marshall would issue a public statement. Absent that, an
association should make inquiry to the Bureau of Fire Prevention,
Division of State Fire Marshall, or their local Fire Marshall. Your
association's attorney should be able to assist in facilitating
this communication for you.
RISE" CONDOMINIUMS: By December 31,
2016, the "high-rise" condominium that is not in
compliance with the requirements for a fire sprinkler system and
that has not voted to forego retrofitting of such a system must
initiate an application for a building permit for the required
installation with the local government having jurisdiction
demonstrating that the association will become compliant by December
31, 2019. The automatic sprinkler system is not required if the
members voted to opt-out. It is also not required when every
dwelling unit has exterior exit access which can include balconies,
porches, and rooftop decks under certain circumstances. In addition,
the automatic sprinkler system is not required in buildings having
an approved engineered life safety system designed by a professional
engineer that specializes in fire and life safety design. If a board
believes their condominium is exempt for the forgoing reasons, then
it should consult with a qualified fire safety engineer, State Fire
Marshall or other qualified individual to render such opinion.
Final Chapter of the 2016 Legislative Session
started with a loud bang, ended on March 11, without so much as a
2016 legislative session which ended on March 11, started out 60
days earlier with a flurry of activity insofar as Florida's
community associations are concerned. This year's proposed
legislation included such measures as capping estoppel fees, strict
requirements as to when estoppels must be issued and how they were
to be paid for, mandatory websites for condominium associations with
greater than 500 units and homeowners' associations with greater
than 7,500 parcels, requirements for delinquent assessment
agreements that served to only protect the deadbeat owner who failed
to pay their fair share of assessments, new requirements for
director and officer conflicts of interest, requirements for
homeowners' associations to notice all of its committee meetings,
requirements that would have prohibited associations from enforcing
speed limits on association property, new requirements that would
have made it significantly more difficult for homeowners'
associations to regulate leasing of parcels, strict requirements for
the time of day in which a homeowners' association election could
take place, requirements that all future legislative amendments to
Chapter 718 would apply to all condominiums throughout the state,
new certified written inquiry requirements for condominium
associations, prohibitions against a condominium association's
approval of transfer of title unless there was evidence of a
significant security interest, and finally, a massive bill which
would have revamped all of the community association legislation
presently in existence to mirror one another and which would have
required homeowners' associations to come under the jurisdiction
of a Florida agency to be retitled the Division of Florida
Condominiums, Homeowners' Associations, Timeshares, and Mobile
and lobbyists on both sides of the aisle worked to have these
measures passed into law, to temper many of these unreasonable
proposed legislative initiatives, and in many instances, to defeat
these initiatives, too. Yet, during this year's legislative
session it seemed as though many of the aforesaid proposals were
destined to become law. Surprisingly, Florida's legislators, to
the significant benefit of association members everywhere, got
bogged down in other more pressing matters, such as the Governor's
proposed tax cuts, and none of the these community association
initiatives were passed into law.
I'll say it again, NONE OF THESE INITIATIVES WERE PASSED INTO LAW!
possible interest to condominium associations is a new law set out
in House Bill 535 which provides that "the local fire official
can consider low-cost reasonable alternatives" but it is
debatable whether it is applicable to the already existing
requirement that by December 31, 2016, a residential condominium
association that is not in compliance with the requirements for a
fire sprinkler system and that has not voted to forego retrofitting
of such a system must initiate an application for a building permit
for the required fire sprinkler system retrofit installation with
their local government demonstrating that the association will
become compliant by December 31, 2019. Associations should contact
their legal counsel to discuss whether your association is required
to address the fire sprinkler retrofit by December 31, 2016 because
it likely will require a vote of the membership by December 31, 2016
to opt out of the retrofit requirement.
chance to make a difference: As
to the 2017 Legislative Session, it is time to revisit a condominium
association's ability to require hurricane protection and the
process governing such procedures. Please provide me with any
comments you may have regarding the requirements legislating a
condominium association's ability to require hurricane shutters
such as, for example, whether an owner can install different
protection, whether an owner should be forced to pay for new
protection if they already have code compliant protection where the
association opts to install different code compliant protection,
etc. Most especially, if your condominium association installed
hurricane protection throughout the condominium, please provide me
with any comments that you may have as to what would have made the
process a better experience. Please direct all of your comments and
suggestions directly to me at firstname.lastname@example.com.
Law Requires A New Fire Sprinkler System for Your Condominium
law is patently clear. By December 31, 2016, a residential
condominium association that is not in compliance with the
requirements for a fire sprinkler system and that has not voted to
forego retrofitting of such a system must initiate an application
for a building permit for the required fire sprinkler system
retrofit installation with their local government demonstrating that
the association will become compliant by December 31, 2019. So, if
your condominium association does not want to incur this expense,
then the association must act now, before it is too late, by
presenting an option to its members to opt-out of this requirement
by the December 31, 2016 deadline which will be here before you know
718.112(2)(l), Florida Statutes allows an association to vote to
forego the retrofitting of the fire sprinkler system upon the
approval of a majority of the entire membership (not a majority of a
quorum). The vote may be undertaken at a duly-noticed membership
meeting or by the written consent process in lieu of having a
membership meeting. Voting by written consents or written agreements
may be utilized by an association regardless of whether the bylaws
or the declaration specifically permit voting by written consents or
written agreements. On the other hand, if a membership meeting is
held, fourteen (14) day advance written notice must be sent to the
entire membership by mail or hand-delivery. If the vote is
successful, then the vote to forego the retrofit is only considered
effective when the certificate attesting to the vote is recorded in
the public records of the county where the condominium is located.
addition, if the vote to forego the retrofit is approved by the unit
owners, the condominium association must also send written notice to
the entire membership of the outcome within 30 days of the vote.
Further still, the providing of this notice must be evidenced by an
affidavit executed by the person sending the notice and kept with
the condominium association's official records. As the last step
to this process to opt out of the need to retrofit, the condominium
association must also report the results of the vote and recording
of the certificate to the Division of Florida Condominiums,
Timeshares, and Mobile Homes (the "Division").
by December 31, 2016, a majority of the members of the condominium
association do not vote in favor of approving to forego the
retrofit, the association must submit a building permit application
with the applicable local governmental authorities on or before
December 31, 2016 regarding its intent to comply with the applicable
fire and life safety codes. Then, the retrofit of the condominium
must be completed by December 31, 2019. In addition, if a
condominium association undertakes retrofitting of its condominium,
then the condominium association is also statutorily required to
report the per-unit cost of the retrofit work to the Division.
the event a condominium association has previously voted to forego
the retrofit, and now wants to reverse that decision, the membership
has the ability to vote to require the retrofit at a membership
meeting. The affirmative vote of all of the members is needed in
order to require the retrofit. The vote to require the retrofit may
only be called once every three (3) years, and electronic
transmission cannot be used to provide notice of the membership
rendering your decision to retro fit or to not retrofit, ask
yourself whether you would rather live in a condominium building
with up-to-date life safety equipment. Even though it might be a
costly project, in the rare circumstance it is needed, it is worth
more than a billion dollars when your life is at stake. In fact,
some might say that the decision to go ahead with the fire sprinkler
retrofit is priceless.
Fine Legislative Mess Only Problems and No Solutions With House Bill
Florida's legislature is in session, there is never a shortage of
topics to write about. House Bill 1357 ("HB 1357") is no
exception. It is another overreaching piece of legislation that will
only serve to make assessment debts harder to collect and will cause
association assessments to increase in order to comply with its
overreaching and micro-managing requirements. HB 1357 is inartfully
conceived. There is no intent to criticize anyone that participated
with HB 1357, but rather to point out the many problems that will be
created should such an ill-conceived legislative effort be passed
into law.
Required Websites:
Condominium associations with 500 or more units and homeowners'
associations with 7,500 or more parcels must create and maintain a
legislatively required website which mandates stringent, onerous,
and, quite candidly, obnoxious requirements as to what must be
contained and continually updated therein. If a community desires to
spend its assessment revenues in this manner, then that should be a
decision for each individual community and not mandated by the
State. Unnecessary litigation will ensue by every unhappy
association member who believes that their association's website
does not contain the information as required by statute. This
legislation will require associations to engage the service of yet
another professional requiring significant payment for services
rendered. In some instances, it could even require a full-time
dedicated IT/website employee in order to maintain HB 1357's
ongoing posting requirements. If passed into law, it would only be a
matter of time until some other legislature makes these requirements
applicable to each and every community association in the State,
regardless of their size.
to Collection of Past Due Assessments:
Regarding the collection of past due assessments by condominium and
homeowners' associations, the decision of the association to take
legal action to collect unpaid assessments or to use a third-party
to collect unpaid assessments should not be dependent upon whether
the Association has complied with new statutory obligations that
require newly written collection policies that mandate when payment
plans can be considered, their terms, inclusive of a mandated six
month payment plan. The entire scope of the association's
collection regime should be set out in its declaration and not by
way of a separate statutorily required written collection policy.
The ability of a community association to offer a payment plan is
unique as to each request made by an association member. The
association must have complete flexibility in terms of structuring
such payment plans and the factors for consideration of such plans
and should not be subject to stringent requirements as would be
required by this legislation which clearly removes the ability of an
association to have the necessary discretion needed to create
flexible payment plans. In and of itself, this legislation will
impede the ability of an association to readily collect past due
debts and will increase every association's legal fees by
requiring the adoption of yet another collection policy. It will
create significant impediment to the collection of past due
of Interest: Regarding
condominium and homeowners' association director and officer
conflicts of interest, all sorts of new disclosures and procedures
are creating conflicts of interest that may occur when the
association may hire an officer, director or other relative
of a director or officer. The use of the term "relative
of a director or officer" is fully undefined and most
problematic. Does this mean that a board member's wife's fourth
cousin once removed on her grandmother's uncle's side of the
family is included within the scope of the term
"relative"? In terms of the board's ability to remove a
director or officer who violates the conflict of interest
legislation, HB 1357 provides the board the unquestionable and
incontestable ability to remove a sitting board member without any
avenue of redress for that board member to dispute the findings of
the board. This will create an unjust, unfair result. It is only a
matter of time until an a board of directors majority, unhappy with
a fellow board member, makes false accusations against such board
member and removes them using this legislation as a pretext to do
Committee Meetings:
This part of HB 1357 completely revamps the homeowner associations'
need to notice committee meetings. At present, the need to notice
committee meetings is quite different for condominium versus
homeowner associations. In short, all condominium association
committee meetings must be noticed unless there's an exemption in
the bylaws. This is not so for homeowner associations where it is
only necessary to notice committee meetings when final expenditure
of association funds are considered or architectural decisions are
made. This has provided great flexibility to homeowner associations
to operate more efficiently. For example the condominium association
has to notice its bake sale committee meetings, while the homeowners'
association bake sale committee does not similarly need to do so.
This legislation will change this requirement so that homeowners'
association committee meetings of every nature must be noticed,
minutes taken, etc. This is just another example of bad,
ill-conceived legislation likely caused by one or two unique
circumstances rather than looking at the good of the whole.
on the Roadways: There
should be no impediment to an association's ability to create a
safe environment for its members. Rarely is speeding within a
homeowners' association not problematic. Yet, HB 1357 makes it
unlawful for a homeowners' association to enforce and impose
statutorily imposed traffic laws as provided in Chapter 316, Florida
Statutes. The ability of a homeowners' association to take
measures to reduce speeding within the community should not be
prohibited. Oftentimes, community association roads have speed
limits posted below the minimum speed that would otherwise be
allowed by law and therefore, lower than that as would be enforced
by law enforcement. As a result, community associations with speed
limits, such as 15 miles per hour, need the ability to adequately
control speeding on their roadways. This legislative initiative will
cause serious injury and likely death if passed into law… it is
just a matter of time.
Investors' leasing rights should not be paramount to owners'
rights to protect their community from becoming a rental community.
However, the legislature wants to create an unfair regime for
homeowners' associations, as it did for condominium associations
to protect the investors. As to a member's rental of their
property within a homeowners' association, HB 1357 makes effort to
mirror existing condominium association legislation that requires
all rental restrictions to be set out within the declaration of
condominium. What the legislature does not seem to understand is
that community associations are not rental communities but rather
are first and foremost communities for owners to live in.
Therefore, it is extremely important for community associations to
easily amend their community's rental requirements. The fact that
investors choose to gobble up homes in a homeowners' association
is the unique individual decision of the investor, but the investor
does so with the understanding and risk tolerance that the board of
directors or members could later change the rental requirements.
Complete flexibility is needed to protect the lifestyle for those
members who live within the community. In other words, the rights of
the members living in the association's community should be
paramount to offsite investor owners seeking rental income.
1357 requires homeowners' association voting to take place from 7
AM to 7 PM. It is ridiculous. It is also diametrically opposed to
the absentee balloting process.
likely unintended consequence, yet very real occurrence, that will
be created if this legislation is adopted will be significantly
increased assessments for all association members in order to comply
with the requirements of the legislation in terms of hiring
requisite technology personnel to create and administer the
association's statutorily required websites and fees to legal
counsel to create the necessary written collection policies for
collection of assessments. Removing the ability of a community
association to control speeding on its roadways is ill-conceived
and, simply put, reckless.
Unfair Bar to Association Assessment Foreclosures
Call to Action for Florida's Legislature
bizarre results occur from otherwise mundane laws. The arena of a
lender's mortgage foreclosure versus an association's
foreclosure of its assessment lien can certainly be characterized as
one such example. Nothing is worse than a lender who refuses to take
their foreclosure to final judgment and sale, or a litigious
homeowner who knows how to use the legal system to stall the lender's
foreclosure case. In both cases, it is the association that suffers
greatly because, more likely yet than not, the owner is not paying
assessments during the pendency of the lender's foreclosure
action. Because of the owner's failure to pay assessments, the
association should be permitted to foreclose, especially when the
lender's foreclosure case is dragging on and on. Right? Well, not
according to a few recent appellate cases.
a prerequisite to filing a lawsuit over real property, a lis pendens
is recorded in the county's public records, the purpose of which
is to place the public on notice of the pending litigation so that
if the property is sold, the new owner knows that they have acquired
the property subject to the outcome of the pre-existing litigation.
According to section 48.23, Florida Statutes, once the lis pendens
is recorded, any person with an unrecorded interest or lien against
the property, must intervene in the lawsuit within 30 days of the
recording of the lis pendens or else they are time barred from doing
so. This can have a significant chilling effect on an association's
right to otherwise lawfully collect the past due assessments that
accrued against the property through the date the lis pendens was
recorded. Sadly, it gets worse.
problem is not in the appellate court's application of the law,
but rather the problem lies within the law itself. As things stand
today, if a lender forecloses and the association does not bring its
assessment foreclosure case by intervening in the lender's
foreclosure within 30 days of the date of the lender's filing of
its lis pendens, then the association is barred from bringing its
assessment foreclosure lawsuit that includes assessments due up to
the time of the recording of the lender's lis pendens.
that an association must first send its intent to lien and intent to
foreclosure letters to the non-paying owner before it can foreclose.
What if the owner timely paid assessments right up until the
commencement of the lender foreclosure? This means that the
association cannot timely intervene in the lender's foreclosure
because it is statutorily prohibited from filing an assessment
foreclosure until the time periods for both the intent to lien and
intent to foreclose letters have fully run. The real world
consequence of this "mishigas" (legal word for crazy
nonsense) is that the association is left with no legal remedy,
cannot foreclosure and must, at least for the time being, allow the
dead-beat to remain in the association because it is legally
prohibited from foreclosing the association's assessment lien,
unless it did so within 30 days of the lender's recording of its
lis pendens, which the association cannot do unless it sent both the
intent to lien and foreclose letters and waited the statutory
prescribed times by which time the 30 days in which to bring the
association's claim has expired.
U.S. Bank National Association v. Quadomain Condominium
Association Inc., decided in 2012 by Florida's 4th District
Court of Appeals, the Court held that the lower court presiding over
the lender's foreclosure action which created the lis pendens had
exclusive jurisdiction to adjudicate any interest in the subject
property from the date the lis pendens is recorded to the date it
enters final judgment. Therefore, to foreclose the association's
lien, the association was statutorily required to intervene in the
lender's foreclosure case within 30 days of the lender's
recording of the lis pendens and not by way of foreclosing in a
different court. Since the association had foreclosed in a different
court, its previous successful foreclosure was reversed.
January 27, 2015 the 4th DCA, in Jallali v. Knightsbridge Village
HOA, Inc., again ruled against an association who did not move
to intervene in a lender's stalled foreclosure within 30 days of
the lender's recording of its lis pendens and reversed a different
lower court's judgment in favor of the association. That said, in
this case, the association's claims did not accrue for more than
three years after the lis pendens was recorded, so how could the
Association comply with the statutory requirement? Attorney Robert
Kaye adds, "this is an unjust, inequitable result relative to
innocent associations when lenders do not timely complete
is hard to fathom that the legislature intended this strange and
financially devastating consequence, especially when both the
Condominium Association Act and the Homeowners' Association Acts,
Chapters 718 and 720 of the Florida Statutes, respectively, provide
for joint and several liability for the recovery of assessments
against a new owner that were not paid by the predecessor owner. A
simple solution to this complex problem can be found by excluding
association assessment lien foreclosures from the requirements of
section 48.23, Florida Statutes. When
Florida's legislature takes the time to enact this simple cure,
then associations will have the lawful right to once again foreclose
their assessment liens without regard to the lender's stalled
foreclosure action pending against the same property.
Is there a Fungus among Us? Part
2 of 2
of Inspection and Abandoned Units: What You Need to Know
with its warm winters and sandy beaches, is a refuge from the bitter
cold. It is one of our State's best attributes and is so very
welcoming to our Northerly neighbors. But when you combine the heat
with levels of high humidity, unwelcome guests arrive in the form of
mold – some of it toxic, too! The likelihood of mold is even more
so for those units which have been abandoned. With no power being
supplied to the unit, the air conditioning cannot run and thus, the
overall wetness factor can increase dramatically. In this situation,
the condominium association is often left with the burden of
remediating and repairing the damages caused by the mold.
insurance policies differ in kind and scope from insurer to insurer
with regard to whether or not mold damage is a covered peril under
the policy. Without a specific mold rider, the chances are slim that
mold would be a covered peril. Whether mold contamination is covered
under your association's policy will depend on the specific policy
language, the cause or causes of the mold contamination, and the
timelines of notification to the insurance company. Today's mold
policies typically require notice within 14 days of the onset of the
mold, and not 14 days from when the association discovered the mold.
Therefore, it is important that the board of directors carefully
read and understand their association's insurance policy
obligations. Generally, most insurers attempt to exclude coverage
for mold damage associated with long-term leaks, water intrusion
from a construction defect, normal wear and tear, deferred
maintenance, or poor repairs. As such, some insurers may deny a
claim for mold damage arguing that the damage took place over a long
period of time, meaning greater than two weeks, rather than damage
from a sudden and accidental water damage event, meaning a leak that
happened within two weeks.
being the case, Floyd Nichols, Vice President at Insurance Office of
America, recommends that condominium association boards check each
of their condominium units which are abandoned or unoccupied for
extended periods of time on a biweekly basis. This is not only so
the condominium association can timely remediate any mold damage
before the remediation becomes extensive but also in an effort to
avoid the association's insurer's denial of a mold damage claim.
mold might begin to grow in the unit, it will quickly spread to the
common elements. The duty to repair the condominium's common
elements will fall to the association without regard to the owner
who may have caused the problem. This is not to say that the
association might not be able to subrogate its claim against the
owner, but because the Florida legislature removed the requirement
for all unit owners to have force placed insurance, subrogation on
claim could prove quite problematic.
mold typically develops in areas which are likely the condominium
association's responsibility to maintain, repair, and replace (for
example, drywall), the condominium association may use its
irrevocable right of access to a unit, found in section
718.111(5)(a), Florida Statutes, to enter the unit during reasonable
hours to conduct the necessary repair or replacement. Advance notice
should be provided whenever possible.
condominium association has additional rights regarding access to an
abandoned unit under relatively new provisions set out in section
718.111(5)(b), Florida Statutes. Pursuant to this section, a
condominium association can enter an abandoned unit to inspect the
unit and the adjoining common elements, to make repairs as needed,
to turn on the utilities to the unit and to otherwise maintain and
protect the unit and adjoining common elements. A unit is considered
abandoned under the following circumstances: (i) the unit is under
foreclosure and no tenant appears to have lived at the unit for four
consecutive weeks without prior written notice to the condominium
association, or (ii) no tenant appears to have lived at the unit for
two consecutive months without prior written notice to the
condominium association and the condominium association is unable to
contact the owner or determine the owner's whereabouts after
reasonable efforts. Prior to entering an abandoned unit, the
condominium association must send two days' notice of its intent
to enter the unit to the owner at their last known address.
expense incurred by the association in inspecting the unit and the
adjoining common elements, in making needed repairs, in turning on
the utilities to the unit and in otherwise maintaining and
protecting the abandoned unit and adjoining common elements are
chargeable to the owner of the abandoned unit. These expenses are
also assessable against the abandoned unit. What will prove very
interesting is what effect the lender's safe harbor assessment
benefits as set out in section 718.116, Florida Statutes, or other
legal arguments which limit assessment recovery will have on the
condominium association's ability to recover its expenditures. As
a different tact, the condominium association can request that the
court appoint a receiver to lease the abandoned unit. The rent
collected is credited against the monies due to the association and
the receiver.
Is there a Fungus among Us?
1 of 2
What You Need To Know
2016! While the expression "out with the old and in with the
new" comes to mind, remember, too, that this is a great time
for review. Start off the new year by reviewing your association's
insurance policies to better understand the perils that it does, and
does not, cover. Of particular concern to Florida's community
associations, especially condominium associations, is how casualties
stemming from slow leaks and resulting mold are handled. Sadly, I
see coverage denials for this type of damage as commonplace.
a "rider," mold damage is typically excluded from today's
property and casualty insurance policies. While limited coverage may
be available in the form of a "rider," they come with
significant strings attached. Most mold riders provide for a strict
period of time that if missed will forever bar the association's
recovery. More specifically, and according to insurance
agent-broker, Floyd Nichols of the Insurance Office of America,
commercial property insurance will not cover "continuous or
repeated seepage or leakage of water or the presence or condensation
of humidity, moisture, or vapor that occurs over a period of 14 days
or more." It's important to note that notice must be provided
to the insurance company within 14 days of the beginning of the leak
and not within 14 days of its discovery.
to Nichols, "on a regular basis we see claims that occur
because the unit owner has been away from their property for a
period of time that exceeds 14 days. On many occasions we will see a
denial of coverage due to the 14 day provision. Most frequently we
are seeing the issue arise on older properties because, even though
we want to think our buildings will last forever, leaks do occur for
a variety of reasons although the problem can happen in newer
properties as well (think of a leaking ice maker line, a toilet that
continues to run or broken washing machine hoses). What could be
mitigated as a small claim will many times become a claim that can
cost tens of thousands of dollars to repair. Additionally, the
association might very well find itself responsible to mitigate and
repair the problem without regard to who must bear the ultimate
responsiblity for the damages in order to protect other owners in
the building from being exposed to mold, etc." In addition, an
association can be required to effectuate the repair as a
requirement set out in its declaration, too.
recommends to his association clients that the board ask their unit
owners, especially snow birds and those on extended vacations, to
provide for inspection of their units on a regular basis to avoid
the 14 day exclusion. Although the inspection will not guarantee
that the claim will be paid by the carrier, timely inspections will
hopefully eliminate the implementation of this exclusion and
hopefully save all parties much expense in the way of dollars and
association could even develop a regular inspection schedule.
Florida Statutes, section 718.111(5), provides that "the
association has the irrevocable right of access to each unit during
reasonable hours, when necessary for the maintenance, repair, or
replacement of any common elements or of any portion of a unit to be
maintained by the association pursuant to the declaration or as
necessary to prevent damage to the common elements or to a unit.
Condominium associations can even require keys to all units be
provided, but the association has a responsibility to ensure the
keys are properly secured. Whenever possible, an association should
always provide advance notice prior to entering an owner's unit
and always have at least two persons conduct inspections.
a casualty is suffered, Nichols recommends that their insured
associations contact his office immediately. "We believe it is
an agent's responsibility to provide assistance and direction to
them. Most often, they are not used to dealing with these types of
issues and this is the time for the agent to help. We can meet with
the adjusters and contractors on site and have a better
understanding of the claim when it is time to deal with the
insurance company." If you have a specific insurance coverage
question, Floyd Nichols can be reached at 561-721-3771.
Part 2 of this two part series, we will discuss how a condominium
association can inspect abandoned units and obtain possession in
order to lease them and collect rent in accordance with Chapter 718
of the Florida Statutes which governs Florida's condominium
Holiday Symbols versus Religious Symbols
my homeowners' association, we display an oversized, festive,
gloriously secular, snowflake on our entry gates. It is quite
charming and does not denote any type of religious connotation. Does
your association display a secular holiday symbol, too or does it
display a religious symbol? Are Christmas trees, menorahs, Nativity
scenes, or the Kikombe Cha Umoja (The Unity Cup displayed
during Kwanza) secular or religious symbols? How can you tell the
we have some guidance from the United States Supreme Court to help
associations differentiate between secular and religious symbols. In
1989, in County of Allegheny v. American Civil Liberties Union, the
Court held that the determination of whether decorations, including
those used to commemorate holidays (which are or have been religious
in nature), are religious or not, turns on whether viewers would
perceive the decorations to be an endorsement or disapproval of
their individual religious choices. The constitutionality of the
object is judged according to the standard of a reasonable observer.
the Court found that a Christmas tree, by itself, is not a religious
symbol; although Christmas trees once carried religious
connotations, "[t]oday they typify the secular celebration of
Christmas," the Court provided. The Court also noted that
numerous Americans place Christmas trees in their homes without
subscribing to Christian religious beliefs and that Christmas trees
are widely viewed as the preeminent secular symbol of the Christmas
holiday season.
contrast, the Court stated that a menorah is a religious symbol that
serves to commemorate the miracle of the oil as described in the
Talmud. However, the Court continued that the menorah's
significance is not exclusively religious, as it is the primary
visual symbol for a holiday that is both secular and religious. When
placed next to a Christmas tree, the Court found that the overall
effect of the display to recognize Christmas and Chanukah as part of
the same winter holiday season, has attained secular status in our
society. Therefore, we can conclude that a Christmas tree and
menorah, side by side, are of a secular nature.
to the Ten Commandments, in a 1980 case, Stone v. Graham, the
Supreme Court held that the Ten Commandments are undeniably
religious in nature and that no "recitation of a supposed
secular purpose can blind us to that fact." The Court stated
that the Ten Commandments do not confine themselves to secular
matters (such as honoring ones parents or prohibiting murder), but
instead embrace the duties of religious observers.
a member of your community wants to include their religious symbol
in the association's holiday display, remember to consider the
types of symbols already being displayed by the association as
compared to the member's request. Once your community displays a
religious symbol, then there is a good chance your community will
need to allow other requested religious symbols to avoid a claim of
religious discrimination. Use the guidance from the Supreme Court's
cases to differentiate between a secular symbol and a religious
symbol. With that in mind, if an association allows a Christmas tree
and menorah, the board of directors, far more likely than not, would
not have to allow a members request to display a Nativity scene and
Ten Commandments display, too. The rules of kindergarten work best:
treat everyone fairly and treat them as you would want to be
Holidays and Have a Sweet New Year.
Pending House Bills Affecting All of Florida's Community
anticipation of Florida's 2016 legislative session, Representative
John Cortes of Florida's House of Representatives filed three
bills affecting community associations and managers. Omnibus style
House Bill 667 is massive in its scope. Its author begins by fully
repealing Chapter 719 regulating Florida's cooperatives and
Chapter 720 regulating Florida's homeowners' associations and
then amends Chapter 718 to include many of the provisions of the
repealed Florida Statutes, albeit, at times, with many significant
differences. A new term is created, "common interest
community" which refers to all types of residential communities
and makes them subject to the provisions of the significantly
overhauled Chapter 718. This Bill is 441 pages long.
all the changes are too numerous to mention, a few of the major
changes which appear in the first 150 pages include:
Without regard to constitutional protections against impairment of
existing contracts, House Bill 667 makes all future legislative
amendments to Chapter 718, which would regulate all common interest
communities, applicable to your community whether you want it to or
The transfer of homes (referred to as "units") cannot be
restricted unless the transfer is likely to threaten the security of
the residents, association property, and the financial status of the
association or the ability of the association to qualify for
institutional mortgage financing. This diminishes many associations
otherwise existing broad approval rights.
Upon receipt of a certified written inquiry from a member, the
association's obligation is to provide what is defined in this
legislation as a "substantive response." Further, any
substantive response must include, at a minimum, a restatement of
the issue presented by the owner, the board's written response to
the issue, and the board's actions or intended actions in response
to the issue, in addition to all other facts, opinions, requests,
and positions taken that are relevant to the issue. A unit owner who
does not receive a substantive response within 15 days is entitled
to the actual damages or minimum damages for the association's
willful failure to comply with this paragraph. The minimum damages
will be $100 per calendar day for up to 20 business days, beginning
on the 16th business day after receipt of the written request.
while the concept of one chapter of law to govern all types of
residential associations may one day prove worthwhile, in its
present form, House Bill 667 needs work. As yet, this Bill does not
have a Senate sponsor.
Representative Cortes' House Bill 667 seeks to completely revamp
all existing Florida community association legislation, he has also
filed House Bill 653 which attempts to bring the statutes regarding
homeowners' associations closer to those which govern condominiums
and cooperatives (i.e., requiring the use of limited proxies for
votes of the owners and conducting elections in the same manner as
condominium elections). As was attempted during last year's
legislative session, House Bill 653 also seeks to make homeowners'
associations subject to the oversight (and fees) of the, to be
renamed, "Division of Florida Condominiums, Homeowners'
Associations, Timeshares, and Mobile Homes."
regard to community association managers, Representative Cortes'
House Bill 665 creates liability on the part of a community
association manager for damages incurred from offering incorrect
advice. The Regulatory Council of Community Association Managers
name is changed to the "Board of Community Association
Managers" and additional new regulations regarding the
membership and authority of the "Board of Community Association
Managers" have also been amended and added in this Bill. House
Bill 665 revises provisions relating to licensure of community
association managers and community association management firms to
require that a community association manager's license expires on
September 30th of even numbered years requiring renewal every two
Bill 665 also requires community association manager pre-licensure
education consisting of not more than 40 hours of in-person
instruction by a department-approved provider which must cover all
areas of the examination including a new list of 22 fundamental
management skills and knowledge. This is 18 hours more than what is
presently required. The odd part is the sentence structure. If
"not more than 40 hours of in-person instruction" is
required, does that mean the course can be taught in as little as 1
hour (not that it could)?
on these few bills, Florida's 2016 legislative session, which was
expected to be a quiet year as related to community associations,
could turn out to be quite active.
Fund or Not to Fund, That is the Question
the end of 2015 nears, so too does the end of the fiscal year for
many condominium associations throughout Florida. Most condominium
association boards have begun to prepare their association's
annual budget for the upcoming year. Sometimes there is confusion
amongst condominium association boards as to whether or not they
must fully fund reserves as part of the budget adoption process and
the timing as to when it is appropriate to present the opportunity
to waiver or reduce the reserves to the unit owners. In short, the
condominium association's budget, with the reserves fully funded,
must be presented to the unit owners. At that time, alternative
budgets may also be presented that show the effects of waiving or
reducing the reserves, too. At the sole discretion of the board, the
unit owners can be presented the opportunity to waive or reduce the
reserves before or after the board's adoption of the budget.
reserve must be established for roof replacement, building painting,
pavement resurfacing and any other project that has an anticipated
cost of greater than $10,000. Pursuant to section 718.112(2)(f) of
the Florida Statutes and Rule 61B-22.005 of the Florida
Administrative Code, Florida condominium associations must fully
fund reserve accounts for deferred property maintenance and
replacement projects. Only after the budget has been presented to
the owners with fully funded reserves can the board, if it so
desires, present to the unit owners the opportunity to vote to waive
or reduce the reserves.
the discretion of the board, the owners should be presented with the
opportunity to waive or reduce the reserves based on the presented
budget that establishes the reserves as fully funded. Pursuant to
section 718.112(2)(f), Florida Statutes, in order for reserves to be
either waived or reduced by the unit owners, at least a majority of
those unit owners present, in person or by proxy, at the meeting at
which a quorum of the unit owners is attained must approve the
waiver or reduction of reserves. The amount or percentage of the
reserve reduction that is presented for vote is set at the
discretion of the board. Moreover, the vote to waive or reduce
reserves can be with regard to all reserve items or for only select
reserve items. It would not be correct for the board to present the
budget without reserves and then provide the owners the opportunity
to partially or fully fund the reserves. Remember, that the process
requires the board present the budget with reserves fully funded and
then the unit owners can have the opportunity to waive or reduce.
voting by limited proxy is used, the proxy must include the
following disclosure in bold, capital letters and in a font size
larger than any other font used in the limited proxy:
the unit owners do not approve the waiver or reduction of reserves,
the reserves must be fully funded as presented in the budget. If the
unit owners do approve the waiver or reduction of reserves, the
waiver or reduction is only good for the budget year in question. If
the following year the condominium association board would like to
propose waiving or reducing reserves, the opportunity to waive or
reduce reserves must be presented to the unit owners once again.
much is needed for a reserve account will depend on several factors,
including, for example, the estimated remaining useful life of the
asset and its replacement cost. Additionally, the manner in which
the reserve funds are to be maintained will depends on whether the
reserves are keep as separate line-item reserve accounts or as
"pooled" reserves. In any event, the budget adopted by a
condominium association board must first and foremost include fully
funded reserves.
multicondominium association must adopt a separate budget of common
expenses for each condominium the association operates and adopt a
separate budget of common expenses for the association. This can
accomplished as sub-parts of the same master budget.
funds and any interest accruing thereon must remain in the reserve
account or accounts, and may be used only for authorized reserve
expenditures unless their use for other purposes is approved in
advance by a majority vote at a duly called meeting of the
association. The only voting interests that are eligible to vote on
questions that involve waiving or reducing the funding of reserves,
or using existing reserve funds for purposes other than purposes for
which the reserves were intended, are the voting interests of the
units subject to assessment to fund the reserves in question. To
pass any vote regarding waiving, reducing, pooling or using the
reserves for a different purpose requires a majority of a quorum of
the unit owners present, in person or by proxy, at a membership
meeting. In the case of a multicondominium, a majority of a quorum
of the unit owners comprising a particular condominium, in the same
percentage as a quorum of the members is otherwise established,
present, in person or by proxy, at a membership meeting may approve
the waiver or reduction of reserves.
2015 Estoppel Bill is Back and Ready to Hurt Florida's Community
for the abrupt ending of the 2015 legislative session, Florida's
government would already have caused another wrinkle in our free
market economy by passing a law regulating the cost of goods in the
stream of commerce. The worst bill to affect Florida's community
associations is back and could be become law unless you tell your
legislators to "VOTE NO." Florida's House of
Representatives and Senate seek to regulate both the cost and process
of the issuance of the "association estoppel". There are two
bills at play: House Bill 203 and its companion, Senate Bill 722.
"association estoppel" is a legally binding document that sets
out the assessment monies that remain due and owing. There exists
tremendous liability for its issuance. The buyer is only responsible for
the monies set out as due in the estoppel letter. If completed incorrectly
and a lesser amount due is stated, well, too bad. Apparently, lobbyists,
title companies and other real estate professionals have just about
convinced Florida's legislators, albeit falsely, about the great harm
being caused by Florida's community associations, a state wide epidemic
of disastrous consequence stemming from an association's otherwise
lawful right to create a process of issuance and to charge reasonable fee
for providing its estoppel.
atrocious legislation, that is expected to become law (unless you do
something about it), dictates that the estoppel is due within ten business
days of the request, no matter what. And, if it is issued after ten
business days, no matter what the reason – good cause or otherwise –
no fee may be charged! To make matters worse, the request for an estoppel
can arrive via email. Based on a plain reading of these bills, rather than
having to comply with standard procedures to ensure proper delivery of the
request, the person requesting the estoppel can email a board member or
manager at their personal email address to start the ten day clock.
to the House version of the bill, the fee for the estoppel certificate may
not exceed $200.00 if, on the date the certificate is issued, no
delinquent amounts are owed to the association. If an estoppel certificate
is requested on an expedited basis and delivered within three business
days after the request, the association may charge an additional fee of
$100.00. If delinquent amounts are owed to the association for the
applicable unit, an additional fee for the estoppel certificate may not
exceed $200.00. The Senate's companion bill only mentions a reasonable
the past, an estoppel certificate only inured to the benefit of the party
requesting it. Now, according to these bills, after issuance of the
estoppel it is binding on every Tom, Dick or Harry who can be considered a
successor or assign of the person who requested it. That means that Tom,
Dick and Harry gets the benefit of the previously issued estoppel, and
they do not even have to pay for it!
to these bills, an association cannot require the payment of any fees as a
condition for the preparation or delivery of an estoppel. Imagine going to
the grocery store, loading up your friend's car with your groceries to
get them home and not having to pay the store until you eat the food. If
you don't eat the food, then you don't have to pay for the groceries.
But, your friend, whose car delivered the groceries for you must pay in
your stead. This is exactly how the new estoppel legislation works.
one who requests the estoppel has to pay for it when they receive it. In
other words, the person or company who does the work for the association
by preparing the estoppel has no lawful right to get paid at the time of
performing their service. Rather, this decade's worst association
related legislative initiative provides that the fee can only be paid from
the proceeds of the closing. If the closing does not occur, the person who
requested the estoppel has no liability whatsoever. But, the burden for
payment then shifts to the seller. How many months will that take?
is expected that the estoppel legislation will become the law of the land
with an effective date of July 1, 2016. This situation is the perfect
example of a series of laws being adopted to fix a problem that only
exists in the minds of a select few and even then for an extremely short
period of time. Back during the uptick of the prior real estate crisis,
there were a few bad apples who charged way too much for the issuance of
the estoppel. Rather than going after these bad apples, the bad acts of
the very few are being used to create hysteria and to hurt Florida's
community associations to the very real benefit of Florida's realtors
and title companies. It is shameful how easy our legislators are being
deceived to believe that they are fixing a problem that, in reality, doesn't
even exist. Once again, our legislature to the rescue. Ugh!
learn more visit, "smashthehometax.com"
Did You Sign A Non-Compete Agreement?
community association management services to community associations is
highly competitive. Because of this competitiveness and the substantial
financial investment made by a community association management company in
its managers, many community association management companies require
their managers to sign non-compete agreements as a condition of their
employment. Often, once signed, the non-compete agreement is not thought
of again until the manager decides to work for a different community
association management company.
Florida law, non-compete agreements may be enforced by the prior employer
so long as they are reasonable in time, geographical, line of business and
are in place to protect a legitimate business interest of the employer as
defined by section 542.335, Florida Statutes. Typically, non-compete
agreements lasting up to two years in duration and covering geographical
areas where the employer actually conducts business will be considered
enforceable by a court. Further, pursuant to section 542.335(g)1., Florida
Statutes, in determining the enforceability of a non-compete agreement, a
court cannot take into consideration "any individualized economic or
other hardship that might be caused to the person against whom enforcement
is sought."
this express prohibition against considering the hardship created on the
former employee may be losing its sting based upon the unpublished August
27, 2015 opinion of the Eleventh Circuit Court in TransUnion Risk and
Alternative Data Solutions, Inc. v. MacLachlan, No. 15-10985.
the MacLachlan case, the employee, MacLachlan, signed a non-compete
agreement which provided that MacLachlan could not engage in the same or
any similar business for one year. MacLachan was recruited by a rival
company and began employment with this rival company three days after
issuing his resignation to TransUnion Risk and Alternative Data Solutions,
Inc. ("TRADS"). In an effort to enforce the non-compete
agreement, TRADS then filed an action with the court for an injunction to
prohibit MacLachlan from working for its rival company. During litigation,
MacLachlan argued, among other defenses, that TRADS was not entitled to
receive an injunction because the harm of the injunction to MacLachlan
would outweigh any damage to TRADS. On appeal, the Eleventh Circuit Court,
a Federal court with jurisdiction over Alabama, Florida and Georgia, found
in favor of MacLachlan.
doing so, the Eleventh Circuit Court analyzed the construction of section
542.335, Florida Statutes. The Court found that the express prohibition
against considering the hardship which might be caused to the former
employee as set out in section 542.335(g)1., Florida Statutes, was only
with regard to determining whether or not a non-compete agreement is enforceable,
and not with regard to the enforcement of the non-compete
a non-compete agreement is deemed enforceable, the statute then sets out
certain rules for enforcement. Because TRADS was seeking enforcement of
the non-compete agreement and not a determination of whether or not the
non-compete agreement was enforceable, the Court determined that it was
permitted to take the hardship caused to the former
employee into consideration when determining the manner of enforcement of
the non-compete agreement.
the MacLachlan case is not exactly binding on Florida state courts
because it is a Federal court ruling and is an unpublished decision, it
can be used as persuasion in other cases where the non complete agreement
creates a hardship on the prior employee. In other words, if successful,
this means that courts may begin to consider the financial and other
hardships caused to the former employee through strict enforcement of a
non-compete agreement. Whether this case will have significant impact on
managers who sign non-compete agreements that prevent them from seeking
employment with a competitor is something that only time will tell.
$12 Million Hedge:
Warning to Community Associations and Their Managers
can be real consequences if a community association and its manager
overlook areas of the community that are in need of maintenance, as
required either by the community association's own covenants or by the
local code of ordinances. Recently, the failure of a community association
and its management company to properly maintain the association's hedges
led to a $12 million damage award. The story was the subject of an October
8th, Palm Beach Post article by Staff Writer Jane Musgrave.
upon a 2013 verdict by a Palm Beach County jury, a Town of Jupiter
condominium association was found negligent for failing to properly trim
its hedges contributing to the death of a 9 year old boy. As a result, the
boy's parents were awarded $12 million by jurors. As reported, the
hedges located at the entrance to the condominium community were
approximately 56 inches in height. However, the Code of Ordinances for the
Town of Jupiter required that such hedges be no taller than 30 inches in
height. Therefore, the hedges of this condominium association were nearly
twice the height permitted by local code. In addition to the height of the
hedges, a stop sign, which stood 37 inches tall, was nearly four feet
shorter than the height required by the Florida Department of
Transportation. The height of the hedges and the height of the stop sign
together became a "fatal obstruction," the parent's attorney
told jurors during the trial, as report by Ms. Musgraves. As to the fatal
incident, Ms. Musgraves report that:
youth, who was riding bicycles on the sidewalk with his father, Andre
Kovacs, was killed when an elderly condo resident, who couldn't see over
the hedges, plowed into him as she was driving out of the complex on U.S.
1 just south of Indiantown Road in 2011.
the verdict of the trial court finding in favor of the boy's parents was
upheld by Florida's Fourth District Court of Appeal, the jury found that
the condominium association was 30 percent responsible, that the community
association management was 60 percent responsible, and that the driver of
the vehicle which struck the boy was 10 percent responsible for the death
of the boy. While the parents settled with the driver for $100,000, the
limits of the driver's insurance policy, as reported by Ms. Musgraves,
the parents may receive a total of $12.5 million in damages from the
condominium association and its management. Sadly, the death of this young
boy and the devastating financial hit to the condominium association's
owners and the condominium association's manager could have been
the jury found the association's management more responsible for the
accident than the association, itself, this case may be quite troubling
for management companies. Clearly, if the manager suggests action based on
the community's declaration or the local code of ordinances and the
board ignores such advice, a record should be kept by management. In
addition, board members need to understand and recognize their duty to
ensure that their association complies with both its maintenance and
repair obligations set out in the association's declaration and the
local code of ordinances, too.
read Ms. Musgrave's October 7, 2015 Palm Beach Post article,
titled Parents to get $12M verdict in son's 2011 bicycle death in
Jupiter, in its entirety please visit http://bit.ly/1hstP8K.
Your Association Changed Attorneys… Now What?
association has decided to change its legal counsel and transfer all
existing matters to its new lawyer. The management company sends the
request to the prior law firm only to be told that a retaining lien
has been asserted. Until the lien is satisfied, the law firm refuses
to transfer the files. Is that legal? Can the lawyer really do that?
In short, you bet they can. A Florida attorney can enforce their
rights to be paid before transferring the association's files
through asserting a retaining lien, a charging lien or both under
the right circumstances.
retaining lien is a passive lien and rests entirely on the right of
an attorney to retain possession of the association's documents,
money and files as security for payment of the fees and costs earned
by the law firm. A retaining lien covers the balance due for all
legal work done on behalf of the client, regardless of whether the
property is related to the matter for which the money is owed to the
attorney. Further, a retaining lien cannot be impaired by the client
securing the right to inspect and copy the papers or compelling
their production by subpoena.
attorney's retaining lien was the subject of a recent condominium
association case in Florida's Third District Court of Appeal in
the case of Conde & Cohen, P.L. v. Grandview Palace
Condominium Association, Inc., 2015 WL 4637285 (Fla. 3d DCA
2015). In Conde & Cohen, the law firm was retained by the
association over a period of years to represent it in a number of
matters. Following a change in the association's board of
directors, new counsel was retained to represent the association.
Upon learning of this action, the law firm asserted retaining liens
in five lawsuits. Unable to convince the law firm to release its
files in these five cases, the association filed an action against
the law firm seeking injunctive relief and a declaration that the
law firm's retaining liens were invalid and that the association's
new counsel should be allowed to copy the law firm's files.
Court, squashing the order of the trial court which held in favor of
the association, held that an attorney has a right to a retaining
lien on all of the client's property in the attorney's
possession, whether related to only one specific matter, until the
attorney is paid where a valid retaining lien has been asserted. The
attorney asserted it may retain the property subject to the lien
until that attorney has been paid, or, if the client can demonstrate
a pressing need for the property, then they can be required to post
adequate security, such as a bond, for the amount in controversy. In
this case, because the association did not provide any evidence as
to the requisite showing of pressing necessity and did not post
adequate security, the court held that the trial court's order
compelling the law firm to hand over its files was improper.
different type of lien is referred to as a charging lien which
attaches onto any monetary recovery due to the client at the
conclusion of a lawsuit. Unless the client pays what is owed to the
attorney prior to the conclusion of the lawsuit, the attorney will
be entitled to recover such amounts from any monetary recovery
received by the client in the lawsuit. To impose such a charging
lien, the attorney must show the following four requirements:
An express or implied contract between the attorney and the client
(in the case of a community association, this requirement will more
likely than not be satisfied because Florida Statutes requires that
all association contracts for services must be in writing);
An express or implied understanding for payment of the attorney's
fees out of the recovery;
Either an avoidance of payment or a dispute as to the amount of
fees; and
Timely notice.
times a charging lien is asserted in a personal injury case where
the client changes lawyers mid-stream. Because in this type of case,
the attorney's fees are typically only received when the client
receives a settlement or wins at trial, if the client changes
lawyers, the previous lawyer wants to be paid for their efforts. So,
they assert the charging lien. In the context of a community
association, a charging lien could result should the attorney
prevail in one or more assessment collection cases, and they remain
easiest way to avoid a retaining lien and/or charging lien is to be
sure to ask if any legal fees are due as a part of the attorney
transfer process.
Terms in
older your association may be, the more likely it has engaged the
services of a contractor, engineer, architect or other construction
or design professional to perform a maintenance, repair, replacement
or capital improvement project. The process can be very daunting.
Even the smallest of projects can have unexpected and disastrous
consequences, such as the electrician hired to make a small repair
who accidentally started a fire caused by an electrical short. In
any contract review, the lawyer's job is to help the association
plan for the unexpected. Because most contracts will be prepared by
the contractor and then presented to the association for execution,
they will favor the contractor. The association should always rely
on its legal counsel to review the contract and minimally provide an
addendum whose terms are superior to that of the contract prepared
by the contractor. Following are few contract terms that should be
addressed in the addendum if they are not already addressed in the
of Work. The scope of work section of the contract is the core of
the contract itself. It describes the work to be undertaken. It
should be supplemented with specific repair protocols prepared by
the requisite professional. A carefully drafted scope of work can
help the association avoid later disputes.
Orders. In the event a change in the work is needed, such as adding
or deleting aspects of the project or changing the selected
materials, the construction contract should provide a mechanism by
which the association and the contractor can make these changes.
Change order provisions should minimally require that a change order
be in writing, approved and agreed to by the association and the
contractor and specify the effect the change order will have on
completion of the work. It should also provide for any additional
fees that will be charged as a result.
Contact. The contract should provide for a specific individual to
act as liaison between the association and the contractor.
Any payment provisions should include "retainage" which
allows the association to withhold a percentage of the monies due to
the contractor from each payment until satisfactory completion of
the work including the punch list. On the one hand, the contractor
deserves to get paid, on the other hand the contractor needs to be
sufficiently motivated to come back at the end of then job to
compete the punch list. Five to ten percent is a reasonable
of Commencement Process. To protect the association from paying
twice for the same work, a Notice of Commencement must be completed
and recorded so that those contributing services or supplies for the
work must first give notice to the association. Before a
construction or remodeling project may begin, the association must
require the contractor to assist it with completing the Notice of
Commencement process. Only by doing this can the association protect
itself from subcontractors and suppliers who claim they have not
been paid. The Notice of Commencement must be recorded with the
county clerk of court and posted at the job site in the form of a
certified copy. Prior to filing a lien, a lienor who does not have a
direct contract with the association, must serve the association
with a Notice to Owner before commencing, or within forty five (45)
days of commencing, the furnishing of services or materials. A lien
cannot be enforced unless the lienor has served the Notice to Owner.
In order to prevent the filing of a lien against your property and
to prevent having to pay twice for the same work, before making any
payment (partial or full), the association must be sure to receive a
Partial or Full Release of Lien from whomever and for whatever the
payment is being made.
Imagine if your construction contract provided for a full indemnity
for any damage and injury whatsoever that the contractor or anyone
employed or contracted by the contractor caused – This has to be
too good to be true… It is! Pursuant to section 725.06, Florida
Statutes, any construction contract where the contractor promises to
indemnify or hold harmless the association for liability for damages
to persons or property caused in whole or in part by any act,
omission or default of the contractor arising from the contract or
its performance is void and unenforceable UNLESS the contract
provides a specific monetary limitation (often not less than $1
million per occurrence) on the indemnification which must bear a
reasonable commercial relationship to the contract. You should also
be aware that disputes over the enforceability of the
indemnification clause do not include prevailing party attorney fees
unless the indemnification provisions also specifically provide
that, in the event of a dispute concerning the applicability of the
indemnification, the prevailing party must indemnify the other for
its attorneys' fees, costs and expenses in enforcing the right to
be indemnified.
While most construction contracts provide that an association may
terminate the contract for cause by providing the contractor with
reasonable notice and the opportunity to cure, the association
should strive for a without cause termination provision. A without
cause termination may require the association to pay the contractor
liquidated damages, which is an amount the parties agree upon during
the formation of the contract for the contractor to collect as
compensation. Minimally, the contractor will want to be paid through
the date of termination.
the Board Put that Contract in Writing?
Bet It Should
speaking a contract that cannot be per-formed within one year, must
be in writing. The opposite is true, too. So, if the contract can be
performed within one year, then it does not necessarily have to be
in writing. In other words, it can be an oral contract. But, if the
other party does not perform their obligations, then you'll likely
need the courts to help sort the mess out. You can guess what
happens next. One party says they had a contract and the other party
denies it. It sure would have been simpler if the parties took a few
minutes to sign a contract. Let's say, for example, a few board
members decide to buy lottery tickets and split the winnings. Then,
as fate would have it, they win, but two weeks prior they disagreed
with each other over an association matter, are at each other's
throats, and the holder of the winning tickets refuses to share the
proceeds. "Preposterous", you say? Not so fast.
recently, the Supreme Court of Florida in the case of Browning v.
Poirier, Case No. SC13-2416 (Fla. May 28, 2015), reviewed a very
similar fact pattern. Browning and Poirier lived together as a
couple between 1991 and 2009. In 1993, the couple orally agreed that
they would split the winnings of any lottery tickets purchased by
either of them while they remained in a relationship. In 2007,
Poirier purchased the winning ticket and received $1 million dollars
less taxes. Despite their agreement, Poirier refused to give
Browning half of the proceeds. Browning in turn sued for breach of
an oral contract and unjust enrichment, seeking his half of Poirier's
winnings. Poirier defended the claims by arguing that the agreement
could not be enforced against her because it did not comply with the
statute of frauds. Because the contract could have been completed
within one year at the time the agreement was made, the Supreme
Court of Florida decided in Browning's favor and held that the
oral agreement between Browning and Poirier fell outside the
"Statute of Frauds" providing that unenforceable oral
contracts are only those which cannot be performed within one year.
way of summary, the Statute of Frauds, as set out in section 725.01,
Florida Statutes, requires that, in addition to other types of
agreements, contracts which cannot be performed within one year from
the making of the contract must be in writing and signed by
the party against whom the contract is being enforced. Thus, in
Browning v. Poirier, the Court held that an oral agreement to share
equally in the proceeds of any lottery winnings, which could have
been terminated by either party at any time, was not required to be
in writing in accordance with the "Statute of Frauds"
where the agreement could have been performed within one year.
while this case is seemingly unrelated to community associations,
condominium, cooperative and homeowners association are subject to
their own version of the Statute of Frauds as set out in sections
718.3026, 719.3026 and 720.3055, Florida Statutes, respectively.
Similar to the Statute of Frauds analyzed by the Supreme Court of
Florida, these laws provide that all contracts described in these
statutory sections and any contract that is not to be fully
performed within one year after the contract is made for the
purchase, lease or renting of materials or equipment to be used by
the association in accomplishing its purposes must be in
writing. In addition, these laws require that all contracts for the
provision of services must be in writing, regardless of whether or
not the contract could be performed within one year.
too, that in addition to the written agreement requirement as set
out in sections 718.3026, 719.3026 and 720.3055, Florida Statutes,
these statutory sections also require that an association obtain
competitive bids for contracts for the purchase, lease or renting of
materials or equipment, or for the provision of services, which
require payment by the association that exceeds, in total, a certain
percent of the total annual budget of the association, including
reserves. For condominium and cooperative associations, the percent
of the total annual budget at which competitive bids must be
obtained is five percent. For homeowners associations, the percent
of the total annual budget at which competitive bids must be
obtained is ten percent. While an association is required to obtain
competitive bids in these instances, the association is in no way
required to accept the lowest bid and may select the winning bid
using its reasonable business judgment.
on the interpretation by the Supreme Court of Florida of the Statute
of Frauds as set out in section 725.01, Florida Statutes, a
community association's board of directors should be ever mindful
of the oral promises they make.
and Suspending Use Rights
to the New Legislation Effective July 1, 2015"
July 1, 2015, new provisions which clarify the procedures for fining
and use right suspensions for non-monetary violations became
effective. The term "non-monetary violations" refers to
such things as failing to pressure clean roofs and driveways, to
remove dead trees, to bring in the garbage cans and to pick up after
your pet, etc., and obviously excludes delinquent monetary
new provisions were put into place to clarify the manner in which an
association's board of directors and its fining and suspensions
committee coexist. Prior to these provisions, there were some who
were unsure as to whether the fining and suspensions committee would
first meet and then the board of directors would levy the fine, or
if the board of directors would first meet, determine the amount of
the fine, and then the fining committee would meet to provide the
offending owner with the opportunity to be heard. Now, it is
patently clear. The board must take action first.
to these recent amendments to Chapters 718, 719 and 720 of the
Florida Statutes, regarding condominiums, cooperatives and
homeowners' associations, respectively, an association's board
of directors must first levy the fine or enact a use
right suspension for a non-monetary violation at a properly noticed
board meeting. After, the person who is to be fined or suspended
must then be provided with at least fourteen days' notice and an
opportunity for a hearing before the fining and suspensions
committee. If the fining and suspensions committee does not exactly
agree with the board, then the fine or use right suspension may not
be enacted.
that in mind, the role of the fining and suspensions committee is
strictly limited to determining whether to confirm or reject the
fine or use right suspension levied by the board of directors.
The committee cannot make any changes whatsoever to the fine or use
right suspension enacted by the board as any such change would
constitute a rejection of the fine or use right suspension levied by
the board.
a matter of practicality, if the fining and suspensions committee
rejects the fine or use right suspension, the board could start its
decision making process anew or the fining and suspensions committee
could make a recommendation to the board as to what it would
approve. In either event, it begins the fining and use right
suspension process anew. This means that the offending member should
also be provided another fourteen days' notice and opportunity to
appear in front of the fining and suspensions committee before the
recommended fine or use right suspension becomes effective.
and cooperative associations can only file a lawsuit seeking a money
judgment in order to collect unpaid fines. While homeowners'
associations can also similarly seek a money judgment, if the
homeowners' association's declaration provides for fines
exceeding a total of $1,000.00 and also allow a fine to become a
lien, then the homeowners' association may use the foreclosure
process to collect an unpaid fine. In all cases, in any action to
recover a fine, the prevailing party is entitled to recover their
reasonable attorneys' fees and costs from the non-prevailing
party, as determined by the court.
apply to the owner and, if applicable, to any tenant, licensee or
invitee of the owner. Use right suspensions apply to the property's
occupant, licensee or invitee, which includes tenants, and still
applies even if the violation that resulted in the suspension arose
from less than all of the multiple properties owned by a member.
Also, the terms of the association's declaration likely provides
that the owner is ultimately responsible for the acts of their
tenants, guests and invitees.
condominium and cooperative associations, the fining and suspensions
committee is comprised of unit owners who are neither board members
nor persons residing in a board member's household. For homeowners'
associations, the fining and suspensions committee is comprised of
at least three members who are not officers, directors or employees
of the association, or the spouse, parent, child, brother or sister
of an officer, director or employee.
Legislative Update
Florida's 2015 Legislative Session ended earlier than expected
when the House of Representatives abruptly adjourned prior to the
scheduled end of the Session, some new legislation affecting
community associations was passed and subsequently signed into law
by the Governor and became, for the most part, effective July 1,
2015. Following is a brief summary of these new laws.
voting is now available for condominium, cooperative and homeowners'
associations. Under these new provisions, an association, through
resolution of the board, may conduct its elections and any other
owner votes through an online voting system.
The advanced written consent of the owner is required in order to
participate in online voting.
The association is required to provide:
a method to authenticate the owner's identity to the online voting
a method to confirm, at least 14 days before the voting deadline,
that the owner's electronic device can successfully communicate
with the online voting system;
for condominium and cooperative elections of the board, a method to
transmit an electronic ballot that ensures the secrecy and integrity
of each ballot; and
for homeowners' association elections of the board, a method that
is consistent with the homeowners' association's election
procedures as set out in its bylaws.
The online voting system must be able to authenticate the owner's
identity and the validity of each electronic vote to ensure that the
vote is not altered in transit.
A receipt for the vote received through the online voting system
must be provided to the owner.
For board member elections, the electronic voting system must be
able to permanently separate any authentication or identifying
information from the electronic election ballot so that it is
impossible to tie an election ballot to a specific owner.
The voting system must also be able to store and keep electronic
votes accessible for recount, inspection and review purposes.
In order to use this voting procedure, the board of directors must
adopt a resolution containing specific requirements, including
notices to the owners of the option, requirement of their consent
and opportunity to opt out. If the resolution is to be considered at
a board meeting, written notice of that meeting must be mailed,
delivered or electronically transmitted to the owners and posted at
the property.
Once an owner consents to online voting, the consent is valid until
the owner opts out.
is provided to condominium, cooperative and homeowners'
associations regarding the order of the proceedings that are
necessary for imposing a fine or use right suspension for
non-monetary violations. First, the board must levy the fine or use
right suspension, and then the offending owner must be provided at
least 14 days' notice of the fining/suspension committee's
meeting where it will hold a hearing to approve or disapprove the
fine or use right suspension for non-monetary violations levied by
the board. If the committee does not agree with the fine/suspension,
then it cannot be imposed against the offending owner.
legislation also clarifies that the role of the committee is only
to confirm or reject the fine or use right suspension (non-monetary)
levied by the board. This means that if the committee wishes to
impose a fine of a different amount, it is powerless to do so.
Rather, the modification of the fine would have to be done at a
properly noticed board meeting first.
to cooperative associations, the qualifications for those who serve
on the fining committee must be "other owners who are neither
board members nor persons residing in the board member's
the Condominium Act and Homeowners' Association Act were amended
to clarify that:
the "monetary obligations" that qualify for suspension of
use rights include a fee, fine or other monetary obligation;
when the voting rights of an owner are suspended, the total number
of eligible units is reduced for the purpose of calculating the
necessary percentage to pass a proposal;
any authorized suspension applies not only to the member, but also
to the tenants, guests or invitees, and even if the delinquency or
failure that resulted in the suspension arose from less than all of
the multiple units or lots owned by a member. This means that if an
owner owns three units and is delinquent more than 90 days on one of
the units, the voting rights on all three units may be suspended.
to condominium, cooperative and homeowners' associations, a
complete copy, facsimile transmission or other reliable reproduction
of the original proxy may be used instead of requiring the original
proxy. This change appears to formally legalize a process already in
existence by many associations and applies to all not-for-profit
corporations, which includes condominium, cooperative and homeowners'
to condominiums, if there is no insurable casualty event that caused
the damage, the maintenance provisions of the governing documents
are to be used to provide for the determination of responsibility
for the repairs caused by events other than casualty.
to condominiums, relative to the "catch-all" provision of
what is identified as the Official Records of a condominium
association, open to inspection to owners or their authorized
representatives, has been modified to add the word
"written" regarding such records.
is no longer required to have the authority in the association's
bylaws to use electronic mail (e-mail) for association notices. As a
result, all meeting notices, including for condominium, homeowners'
and cooperative board and committee meetings, may be provided by
e-mail. However, the requirement that owners provide their advanced
written consent to receive such notices by e-mail, remain. So, the
owners must still opt-in to receive electronic notices.
to condominiums, statutory provisions regarding the annual budget
have been revised to clarify that minimally, the items listed in
section 718.504(21), Florida Statutes, must be included in a
proposed budget. Although no substantive provisions were made, the
provisions addressing reserves have been split into two parts, with
subsection (a) addressing the reserves in general, and subsection
(b) addressing reserves before the turnover of control of the
association by the developer to the non-developer owners. Subsection
(b) further clarifies the ability of the developer to vote its units
to waive reserves.
to condominium and cooperative associations, a legislative fix was
provided in response to St. Croix Lane Trust v. St. Croix at
Pelican March Condominium Association, Inc., 144 So.3d 639 (Fla.
2d DCA 2014) regarding the application of accord and satisfaction to
a restrictive endorsement placed on an assessment payment. These
sections have been revised to clarify that the application of
payments made on a delinquent account are to be applied in the
manner specified within the Florida Statutes, notwithstanding any
purported "accord and satisfaction" or settlement
agreement claimed by the payer by delivery of the payment. These
provisions also state that they are intended to clarify existing
law, which makes the application of the change retroactive.
Noticeably lacking is a similar amendment to the Homeowners'
Association Act.
legislation applies to the condominium bulk assignee or bulk
purchaser of units, and extends the period of time for qualification
from July 1, 2016 to July 1, 2018. In plain English, this means an
investor can acquire seven or more condominium units without concern
of acquiring the predecessor developer's liability for such things
as construction defects and other obligations.
rules and regulations of the homeowners' associations are now
included within the definition of the "governing
new statute appropriately names Chapter 720, Florida Statutes, as
the "Homeowners' Association Act."
new section 83.561, Florida Statutes, has been added, entitled
"termination of rental agreement upon foreclosure." This
new Statute creates certain rights and entitlements in tenants
following the foreclosure sale.
tenant is allowed to remain in possession of the premises for a 30
day period following the date that the purchaser at the foreclosure
sale delivers the 30-day notice of termination. The Statute also
provides a form of suggested language that the 30-day notice should
include. A writ of possession may only be applied for after the
expiration of the 30-day period.
New Service Animal Laws
Nail without a Hammer
it comes to service dogs and assistance animals, people often
confuse the Federal American with Disabilities Act (ADA) with the
Federal Fair Housing Act (FHA). The ADA laws apply only to
commercial (non-residential) settings. They apply to specifically
trained service dogs (and the very occasional miniature horse). The
ADA laws specifically exclude emotional support animals of any kind.
On the other hand, the FHA laws apply to residential communities and
apply to pretty much all domestic animals, including dogs, cats, pot
belly pigs, etc. The FHA laws allow a person living in a residential
community access to both specifically trained and untrained animals
and, importantly, include the sub-category of the much beloved
emotional support animal, especially when they might be otherwise
prohibited by the community's governing documents. While the ADA
uses the term "disability" and the FHA uses the term
"handicap", these two terms are, for all intents and
purposes, interchangeable.
is missing from both the FHA and the ADA are penalties to prevent
against fraudulent misuse of both acts. In trying to create
conformity with FHA and the ADA protections and greater protection
against fraud, the Florida Legislature has brought the definition of
an "individual with a disability" as set out in Chapter
413, Florida Statutes, into conformity with both the definitions for
the terms "disability" and "handicap" as set out
in the ADA and FHA, respectively. Florida's newest legislation
also defines the term "service animal" similar to the ADA
legislation to mean an animal that is trained to do work, or perform
tasks, for an individual with a disability and clarifies that the
crime- deterrent effect of an animal's presence and the provision
of emotional support, well-being, comfort, or companionship do not
constitute work or tasks for purposes of this definition. But, a
service animal does include a dog (or miniature horse) trained to
assist mentally and emotionally disabled individuals with such tasks
as helping an individual with a psychiatric or neurological
disability by preventing or interrupting impulsive or destructive
behaviors, reminding an individual with mental illness to take
prescribed medications or calming an individual with posttraumatic
stress disorder during an anxiety attack. The important distinction
is the dog's training.
is important for community associations to remember that, although
this new State law exists, community associations must ensure that
they do not run afoul of the Federal Fair Housing Act by requiring
that an "assistance animal" be a dog or be specifically
trained to assist with the disability. If so, then FHA penalties
will apply.
413, Florida Statutes, also provides that a disabled person is
entitled to rent, lease or purchase any housing accommodations
offered for rent, lease or purchase in this state as any other
member of the general public would be entitled and is entitled to
full and equal access to all housing accommodations and cannot be
required to pay an extra fee for the service animal, which is in
conformity with its Federal counterparts, the ADA and the FHA.
has really gotten people talking is that this new law makes it a
second degree misdemeanor offense for a person to knowingly and
willfully misrepresent herself or himself, through conduct or verbal
or written notice, as using a service animal, being qualified to use
a service animal or as a trainer of a service animal. Those who are
found to have done so may serve up to 60 days imprisonment or pay a
fine of $500.00 and must perform 30 hours of community service for
an organization that serves individuals with disabilities or for
another organization selected by the court to be completed in not
more than six months. So, what does all this mean? It means that
while there is a penalty for misrepresentation where it concerns a
trained service dog or miniature horse, there is still no penalty
ascribed for the one major area where the most abuse occurs, that of
the qualification to own an emotional support animal! In summary:
As to residential settings inclusive of Florida's community
associations, if the dog is specifically trained to assist its owner
with a handicap or disability, then the FHA and the laws set out in
Florida's Chapter 413 apply. Fraudulent penalties apply.
If an animal is not trained and otherwise qualifies as an emotional
support comfort animal, then only the FHA applies. No fraudulent
penalties apply.
As to non-residential settings, if the animal is a dog or miniature
horse and is specially trained, then the ADA and Florida's Chapter
413 apply. Fraudulent penalties apply.
all that in mind, I'm still waiting to see a miniature horse
riding in the elevator of a commercial condominium who is specially
trained to alert its owner to take his or her medications. One day,
I fully expect the elevator doors to open and a miniature version of
Mr. Ed to look up and say, "Hello Willllllbur."
Provision Regarding Fining and Use Right Suspensions
to recent amendments to the procedures for fining and use right
suspensions for non-monetary violations, which amendments became
effective on July 1, 2015, there was a gap in the Florida Statutes
regarding the manner in which a community association's board of
directors and its fining and suspensions committee coexisted,
meaning there was no clear guidance with regard to whether the
fining committee would first meet and then the board would levy the
fine or if the board would first meet, determine the amount of the
fine and then the fining committee would meet to provide the
offending owner his opportunity to appear. That said, it was clear
that if the fining committee did not agree with the fine, then the
board could not authorize its levy against the offending owner.
Well, now there is great clarity as to the procedural requirements.
to the recent amendments to Chapters 718, 719 and 720 of the Florida
Statutes, regarding condominiums, cooperatives and homeowners'
associations, respectively, the association's board of directors
must first levy the fine or use right suspension for non-monetary
violations at a properly noticed board meeting. After the board of
directors has levied the fine or use right suspension for
non-monetary violations, the person who is to be fined or suspended
must be provided with at least fourteen (14) days' notice and an
opportunity for a hearing before a fining and suspensions committee.
The fining and suspensions committee must be comprised of other
owners who are neither board members, nor persons residing in a
board member's household. The role of the fining and suspensions
committee is limited to determining whether to confirm or reject the
fine or use right suspension for non-monetary violations levied by
the board of directors.
the fining and suspensions committee does not approve the fine or
use right suspension for non-monetary violations EXACTLY as levied
by the board of directors, the fine or use right suspension for
non-monetary violations cannot be imposed. If the fining and
suspensions committee does approve the fine or use right suspension
for non-monetary violations, which must be done by a majority vote,
the association must then provide the person to be fined or
suspended with written notice of the fine or use right suspension by
mail or hand delivery.
the association may suspend the right to use the common areas,
common elements, common facilities and association property,
generally a use right suspension, whether for monetary or
non-monetary violations, does not apply to that portion of common
areas, common elements, common facilities and association property
used to provide access or utility services to the owner's
specific regard to homeowners' associations, prior to the recent
amendments to the fining and use right suspensions for non-monetary
violations provisions, a suspension of use rights could not impair
the right of an owner or tenant to have vehicular and pedestrian
ingress to and egress from their property, including, but not
limited to, the right to park. However, as of July 1, 2015, this
language has been revised to provide that a use right suspension may
not prohibit an owner or tenant from having vehicular
and pedestrian ingress to and egress from their property, including,
but not limited to, the right to park.
change from "impair" to "prohibit" in the
Homeowners' Association Act is significant in that the 2015
statute suggests that a homeowners' association can impair
vehicular and pedestrian ingress to and egress from the owner's or
tenant's property so long as such impairment does not prohibit
such access. For example purposes only, in gated communities, this
new language lawfully allows a homeowners' association to force
the owner or tenant to use the guest lane, instead of the resident's
lane, at the community's entrance gate.
condominiums and cooperatives, a use right suspension does not apply
to limited common elements intended to be used only by that unit,
parking spaces, or elevators. Additionally, as of July 1, 2015 for
condominium associations only, a use right suspension applies to a
unit owner who owns multiple units even if the delinquency or
violation that resulted in the use right suspension arose from less
than all of the multiple units owned by that owner. This means that
if an owner, who owns three units, has his use rights suspended due
to a continued delinquency associated as to only one of the units,
then, nevertheless, the suspension would apply to all of the units
and not just the unit associated with the delinquency.
the Condominium Terminator; Rembaum's Association Roundup's
First Ever Award of Excellence
Saturday, June 20, 2015, Palm Beach Post staff-writer, Tony
Doris, reported that condominium owners in Century Village's
"Sheffield O" condominium are under the very real threat
of a condominium termination from an investor who is continually
purchasing units in the condominium. Century Village is a 600
building, 55 and older (better) community. Century Village
was developed in the 1970s by H. Irwin Levy, a real life condominium
superhero. Not only did he develop the community that combines
affordable home ownership and community based activities for
seniors, but 40 years later, he is ready to don a red cape and be a
superhero by defending those seniors who chose to purchase units in
his community and cannot afford the battle that may need to be
fought to continue to live there.
moving to the Sunshine State and purchasing what you hope is your
last home in an affordable community geared for seniors. Then,
imagine being told your home is being sold against your will and you'll
receive only the present fair market value of your home, likely
leaving you in debt to your mortgage company. How can such a thing
happen you ask? Florida's legislation regarding termination of
condominium, section 718.117, Florida Statutes, –that's how.
condominium termination legislation was primarily enacted to deal
with several problems which include destruction due to casualty and
circumstances which may create "economic waste, areas of
disrepair, or obsolescence of a condominium property for its
intended use and thereby lower property tax values." Nowhere in
the legislation does it address terminating the condominium for the
benefit of a private investor. But, like any other piece of
legislation, there are always unintended consequences. And, such an
unintended consequence is why owners in the Sheffield O Condominium
are justifiably worried.
that it takes to terminate a Florida condominium is 80% of the
owners to vote in favor of a plan of termination and not more than
10% of the owners to formally object to it. This process is referred
to as an "optional termination."
the present version of the condominium termination legislation there
is no requirement for the owners to be made, at least minimally,
financially whole. So, the condominium termination plan could be put
into effect and an owner could be forced to move out and still be on
the hook for thousands of dollars still owed to their lender. One
small silver lining is that, effective July 1, 2015, if the
condominium is terminated under the optional termination process,
all mortgages for those who homesteaded their home must be fully
satisfied. While that won't solve every problem, such as securing
a new home for those forced out and coming up with a new down
payment, at least the unfortunate owners being forced out against
their will who are homesteaded in Florida will not end up upside
down to their lender while having to find a new home. But there is
no such benefit if the owner has not homesteaded their home.
to the Palm Beach Post, the investor, "a Palm Beach
Gardens resident who owns 15 of the 24 units in Sheffield O and has
an interest in two more, wrote to the remaining owners in the
Sheffield O Condominium that he plans to dissolve its condominium
association and force them to sell to him at the price the Palm
Beach County Property Appraiser puts on the units." H. Irwin
Levy was quoted as saying, "We're going to take on this man,
have a letter written to him, and whether he backs off..., we'll
see what happens but we'll take on the cost so these people aren't
penalized for trying to protect their interests."
prevent problems, such as what may occur to the owners in the
Sheffield O Condominium, the condominium termination legislation
needs further amending to provide clear authority to the court to
deny the optional termination when it's clear that the termination
is being undertaken to inure to the benefit of a private investor to
extreme detriment of existing owners, unless the investor undertakes
financial responsibility to secure new housing equal to or better
than the terminated condominium plus moving costs for the powerless
minority opposing the termination. In addition, the same benefits
should be available to those who have homesteaded their property as
to those who have not done so.
is a real brain teaser to consider: Recently, the Fourth District
Court of Appeal in Pudlit 2 Joint Venture, LLP v. Westwood
Gardens Homeowners Association, Inc., Case No. 4D14-1385 (Fla.
4th DCA May 27, 2015), held that the safe harbor legislation
(section 720.3085, Florida Statutes) adopted in 2008, which was
before a borrower entered into its mortgage and before a third party
investor acquired the property, did not take priority over the
language set out in the homeowners' association's declaration,
which provided that neither the lender nor a third party purchaser
who acquires the property as a result of the foreclosure has any
assessment liability for past due assessments. So, reasoning by
analogy, given that condominiums are purely creatures of the
legislature, meaning that without Chapter 718, no condominium would
exist, how can the condominium termination legislation, which is
relatively recent legislation, disturb the rights of condominium
unit owners by terminating the condominium in a way not foreseen by
the purchaser upon acquiring the unit and certainly not foreseen
when the condominium was created? This is the point Levy was making
when he was quoted by Tony Doris as saying "[the
investor] certainly can't change people's rights to their homes
now, it should be self-evident why H. Irwin Levy is deserving of
Rembaum's Association Roundup's very first Award of Excellence.
Not only did he develop the Century Village community over 40 years
ago, but, more importantly, he is standing by its residents some 40
years later to try to prevent what he sees as an extreme injustice
and apparently willing to fund it, too.
to Tony Doris for writing the story that appeared in the June 20,
2015 edition of the Palm Beach Post; kudos to the editors who
not only published this story, but put it on the first page; and
most of all kudos to H. Irwin Levy for standing up for and standing
with the owners of Sheffield O.
Safe Harbor Statute Is Not So Safe After All
May 27, 2015, Florida's Fourth District Court of Appeal entered
its whirlwind decision in Pudlit 2 Joint Venture, LLP v. Westwood
Gardens Homeowners Association, Inc., Case No. 4D14-1385 (Fla.
4th DCA May 27, 2015). This case rocks the boat in what was
considered the "safe harbor," referring to the limitation
of a first mortgagee's liability for assessments which result from
the first mortgagee obtaining title as a result of its mortgage
foreclosure action or by deed in lieu of foreclosure as set out in
section 720.3085, Florida Statutes (the "Safe Harbor
if not all, homeowners' associations throughout Florida take the
position that the Safe Harbor Statute takes priority over any
conflicting terms set out in the association's declaration.
However, at odds with this notion is that the declaration is a
contract between the members of an association and the association
itself. The substantive law in effect at the time a contract is made
is a part of the contract as if it were written therein.
Associations take the position that the Safe Harbor Statute is a
procedural law and therefore controlling over any provisions to the
contrary set out in the declaration, especially to mortgages entered
after July 1, 2008 which was when the present Safe Harbor Statute
became law. Lenders and third party bidders who acquire property as
a result of the lender's mortgage foreclosure take the position
that the Safe Harbor Statute is substantive, and therefore, to apply
the Safe Harbor Statute to a declaration that provides otherwise is
an impairment of contract prohibited by the Constitution itself.
this case, which will no doubt muddy third partly assessment
liability quite a bit, Pudlit 2 Joint Venture, LLP ("Pudlit")
purchased two properties at foreclosure sales that were located
within communities maintained by Westwood Gardens Homeowners
Association, Inc. ("Westwood Gardens HOA"). As a result,
Westwood Gardens HOA then demanded that Pudlit pay all assessments,
including all assessments which came due before Pudlit acquired
title to the properties. Pudlit paid the assessment arrearage
amounts demanded, however it did so "under protest and with
full reservation of all rights and remedies." After which,
Pudlit sued Westwood Gardens HOA seeking recovery of the monies
paid, asserting breach of contract, referring to Westwood Gardens
HOA's declaration of covenants which is in and of itself a
contract between the owners and the association, and for declaratory
relief. In the end, the Court ruled in favor of Pudlit and, in so
doing, held that the terms of Westwood Gardens HOA's declaration
controlled over the Safe Harbor Statute.
Pudlit not clearly and overtly established that it paid the
assessment arrearage under protest and with a full reservation of
rights, then it very well may have not been in a position to file
its lawsuit. This is because when a person, the payor, freely pays
an alleged debt due, without a reservation of rights of any kind and
later files a lawsuit seeking a recovery of its monies from the
payee, the payee can defend the case by arguing that the payor
voluntarily paid the debt freely and voluntarily and thus waived any
later right of protest. (We will have to see how these competing
arguments resolve themselves in future court battles.)
relevance to the Pudlit case, Westwood Gardens HOA's
declaration of covenants provided that:
personal obligation for delinquent assessments shall not pass to [an
owner's] successors in title unless expressly assumed by them.
or transfer of any Lot which is subject to a mortgage as herein
described, pursuant to a decree of foreclosure thereof, shall
extinguish the lien of such assessments as to payments thereof which
become due prior to such sale or transfer."
language is in conflict with the Safe Harbor Statute, which provides
that a first mortgagee's liability for assessments which accrued
prior to the first mortgagee obtaining title as a result of its
foreclosure action or by deed in lieu of foreclosure is limited to
one percent of the original mortgage debt or twelve months
assessments which accrued prior to the first mortgagee obtaining
title. The Safe Harbor Statute, additionally provides that all other
successors in interest are jointly and severally liable for all past
due assessments, with exception for assessments charged during an
association's ownership of the property.
a constitutional principal which prohibits the impairment of
contracts, the Court held that the Safe Harbor Statute, could not
impair (meaning, override) the provisions of Westwood Gardens HOA's
declaration of covenants, unless the plain language of the statute
requires such application or the declaration of covenants contains
"Kaufman" language, which has the effect of making
amendments to the Florida Statutes automatically applicable to an
association's declaration of covenants as the Florida Statutes are
"amended from time to time." The Court further held that
the provisions of Westwood Gardens HOA's declaration of covenants
expressly created rights for third party purchasers who are
"intended third party beneficiaries" to such provisions
which rights cannot be impaired pursuant to the same constitutional
the Pudlit case is with regard to a third party's liability
for assessments which accrued prior to the third party obtaining
title at a foreclosure sale, this decision will impact the manner in
which assessments due on a property are analyzed in the "safe
harbor" context. Pudlit essentially provides that,
unless the statute provides for automatic application or unless the
declaration contains "Kaufman" language, the terms of the
declaration will prevail over the provisions of the statute.
with many declarations which have not been amended since their
creation by the community's developer, declarations may provide
for a wipe out of all assessments that accrued prior to the first
mortgagee obtaining title as a result of its foreclosure action or
by deed in lieu of foreclosure. The Pudlit case further
emphasizes the importance of reviewing and updating your association's
declaration to ensure that it provides for necessary and available
protections for the association and its members which includes the
importance of including "Kaufman" language.
your association's declaration does not contain language similar
to the following sentence, then the board should consider further
discussing this important matter with the association's legal
Declaration is subject to Chapter 720, Florida Statutes, as it is
amended from time to time.
Unlicensed Practice of Law:
It Is, What It Isn't and What it Might Be
May 14, 2015, the Supreme Court of Florida issued an Advisory
Opinion regarding which activities of community association managers
are and are not considered the "Unlicensed Practice of
Law" (UPL). The Advisory Opinion is No. SC13-889. In the
Advisory Opinion, the State's highest Court adopted the position
of the Florida Bar's Standing Committee on UPL which in part i)
reaffirmed the Court's 1996 advisory opinion of Florida Bar re
Advisory Opinion-Activities of Community Association Managers, 681
So.2d 1119 (Fla. 1996), ii) expanded on certain activities that are
considered UPL, iii) explained that certain activities may or may
not be UPL depending on the circumstances, and iv) may have created
some confusion which will be cleared up for the readers of this
article. By way of background, Court's adoption of the Advisory
Opinion has the same force and effect of an order issued by the
Court, and readers should take note that the Florida Legislature
enacted laws in 2014 pertaining to this very subject that in a few
instances are contrary to the Court's adoption of the Advisory
Opinion. To clear up the potential confusion, know this – the
Court's May 14, 2015 adoption of the Florida Bar's Standing
Committee Advisory Opinion on UPL trumps the 2014 legislation.
legislation adopted on July 1, 2014 to section 468.431, Florida
Statutes provided additional activities that a community association
manager may perform. Of relevance to the Court's adoption of the
Advisory Opinion, section 468.431(2), Florida Statutes, provides
that a community association manager may determine the number of
days required for statutory notices and may calculate the votes
required for a quorum or to approve a proposition or amendment.
While such activities may be within the community association
manager's ability to perform, the Advisory Opinion provides that
these activities may constitute the unlicensed practice of law
depending on the specific factual circumstances.
the changes to section 468.431(2), Florida Statutes, also adopted on
July 1, 2014, provides that a community association manager may
negotiate monetary or performance terms of a contract subject to
approval by an association and may complete forms related to the
management of a community association that have been created by
statute or state agency, which includes release of lien, pre-lien
notice and pre-foreclosure notice forms. However, because the
Supreme Court of Florida has now ruled that the drafting a claim of
lien and satisfaction of lien form and that the preparation, review,
drafting and/or substantial involvement in the preparation/execution
of contracts (construction contracts, management contracts, cable
television contracts, etc.) constitute the unlicensed practice of
law when performed by a community association manager, the related
activities as provided by section 468.431(2), Florida Statutes
adopted, are greatly abridged and are abrogated by the Court's
adoption of the Advisory Opinion.
following activities when performed by a community association
manager are NOT considered UPL and may be properly
conducted by a community association manager:
Completion of the change of registered agent or office for
corporations form and the annual corporation report form as provided
by the Secretary of State,
Drafting certificates of assessments,
Drafting first and second notices of the date of an election,
Drafting ballots,
Drafting written notices of annual or board meetings,
Drafting annual meeting or board meeting agendas,
Drafting affidavits of mailing, and
Drafting a pre-arbitration demand letter required by section
718.1255, Florida Statutes.
the other hand, the following activities are
considered UPL when performed by a community association manager (or
other non-lawyer):
Completing a frequently asked questions and answers sheet (DBPR Form
Drafting a claim of lien, satisfaction of lien and notice of
commencement form,
Determining the timing, method and form of giving notice of
Determining the vote necessary for certain actions which would
entail interpretation of certain statutes and rules,
Answering a community association's questions about the
application of law to a matter being considered or advising a
community association that a course of action may not be authorized
by law, rule or the association's governing documents,
Drafting amendments to the association's governing documents,
Preparing, reviewing, drafting and/or substantial involvement in the
preparation/execution of contracts, including construction
contracts, management contracts, cable television contracts, etc.,
Any activity which requires statutory or case law analysis to reach
a legal conclusion.
activities that may or may not be considered UPL and
fall into a gray area depending on the specific factual
circumstances are:
Modification of limited proxy forms created by the state or drafting
a limited proxy form – Modifying the limited proxy form to
include the name of the association or to certain "yes" or
"no" voting questions would not be considered the
unlicensed practice of law; however, modifications which are more
than ministerial in nature require the assistance of an attorney
(i.e.: drafting questions which requires discretion in the phrasing
or involves the interpretation of statute or legal documents).
Drafting documents required to exercise the community association's
right of approval or right of first refusal on the sale or lease of
a property – A community association manager may prepare these
documents but cannot advise the association as to the legal
consequences of taking a certain course of action, which can only be
performed by an attorney.
Determining the number of days to provide statutory notice
– If this requires the interpretation of statutes, administrative
rules, an association's governing documents or the rules of civil
procedure, then it must be done by an attorney; otherwise, it may be
performed by a community association manager.
Determining the affirmative votes needed to pass a proposition or
amendment or the owners' votes needed to establish a quorum
– If this requires the interpretation and application of statutes
and an association's governing documents, then it must be done by
an attorney; otherwise, it may be performed by a community
association manager.
Identifying, through review of title instruments, the owners to
receive pre-lien letters – The community association manager
may make a list of all records owners, however, the community
association manager cannot then use the list to determine who needs
to receive a pre-lien letter.
of Florida's 2015 Legislative Session: Waiting to Become Law,
Unless Vetoed
the right thing happens for the wrong reasons. This is one of those
times. Much of our prior discussion regarding Florida's 2015
Legislative Session was centered on the overtly draconian Estoppel
Bill (House Bill 611 together with its companion, Senate Bill 736)
and the financial harm it would have caused to community
associations throughout Florida if passed into law. While the
Estoppel Bill showed all signs of becoming law, because Florida's
House of Representatives walked out of the 2015 legislative session
several days early due to a disagreement with the Senate over
Medicare and the State's overall budget, the Estoppel Bill never
made it to the House Floor for final vote meaning that the rumored
two million dollars of lobbying efforts expended by the title and
real estate lobbies was a huge, colossal waste of money. Candidly,
it serves them right for failing to meaningfully cooperate with
Florida's community associations which overwhelmingly opposed the
Estoppel Bill, albeit to no avail.
us turn our attention to those bills as related to community
associations which have survived the 2015 Legislative Session and
are on their way to the desk of Governor Rick Scott to become law or
vetoed, although a veto is considered by most to be unlikely.
Bill 748 and House Bill 791, an Omnibus Bill:
These bills provide various amendments which affect condominium,
homeowners' and cooperative associations. These bills address the
following changes:
Provides that a copy, facsimile or other reliable reproduction of a
proxy is valid for the purposes of the proxy. (This makes sense, but
strange in that this was already quite obvious.)
Revises the "catchall" provision of what constitutes the
official records for condominium and cooperative associations to
include only written records of the association, as already provided
for homeowners' associations.
Removes the requirement that electronic notice be authorized by the
bylaws in order to use e-mail rather than U.S. Mail for official
notice purposes.
Allows associations to implement online voting through a board
resolution. (This should prove to be very interesting.)
Clarifies that partial payments may be applied to outstanding
amounts due. (This makes sense, but strange in that this was already
quite obvious.)
Clarifies that the role of the fining committee is to confirm or
reject the fine levied by the board.
Clarifies that if voting rights are suspended, the voting interest
allocated to the unit is subtracted from the total number of voting
interests. (This makes sense, but strange in that this was already
quite obvious.)
Applies the suspension of voting rights or the right to use common
elements to member and tenants and guests, regardless of number of
units owned by the member.
Extends the "Distressed Condominium Act" until July 1,
2018. (This is good for Florida's economy in that it encourages
"white knight" investors to invest in fractured
condominium projects by shielding them from liability caused by
their predecessor.)
Titles Chapter 720, Florida Statutes, the "Homeowners'
Association Act."
Adds a homeowners' association's "rules and
regulations" to the term "governing documents."
Clarifies that the failure to timely provide notice of recording an
amendment in a homeowners' association does not affect the
validity or enforceability of the amendment.
Bill 643 and Senate Bill 1172, The Condominium Termination Bill:
House Bill 643 and its companion, Senate Bill 1172, address
condominium termination and change the voting requirements and
procedures for optional termination of a condominium. These bills
provide that optional termination cannot be used until five years
after the recording of a declaration of condominium, unless there is
no objection to the plan of termination. Additionally, a bulk owner
who owns at least 80 percent of the units must ensure that each
first mortgage is fully satisfied when a condominium is terminated.
In addition, all unit owners, other than the bulk buyer, must be
compensated for 100 percent of the fair market value of their unit.
However, if an original unit owner, who purchased their unit from
the developer, together with additional conditions, votes against
the termination plan, the bulk owner must promise to pay them no
less than the same amount they purchased their unit.
Bill 71 and Senate Bill 414, The Service
Animal Bill: These bills, among other things, provide that a person
who knowingly and fraudulently represents himself or herself through
conduct or verbal or written notice as requiring the need for a
service animal or as being the trainer of a service animal is guilty
of a misdemeanor in the second degree, punishable in the same manner
as other second degree misdemeanors, and requiring the performance
of 30 hours of community service for an organization which serves
disabled individuals to be completed within six months. It is
important to note that that these bills do not address
"assistance animals" governed by the Fair Housing Act. In
order to trigger the Americans with Disabilities Act (ADA) in a
residential association, the association must have a nexus to the
public. For example if a homeowners' association rents out its
clubhouses to the public for weddings, etc., then that association
would be subject to ADA requirements as far as its clubhouse is
concerned. The overwhelming majority of Florida's community
associations are subject only to the Fair Housing Act, and not the
ADA. Sadly, there is no companion bill that would make such
fraudulent activity unlawful as applied to fraudulent
"assistance animal" requests… yet.
Now or Forever Hold Your Peace ~ An Association's Right to Surplus
Foreclosure Proceeds
today's real estate market continues to strengthen and the economy
continues to grow, lenders are foreclosing against delinquent
borrowers with more and more haste. Bargain hunters continue to
monitor foreclosure sales, often bidding an amount greater than the
amount of the foreclosure deficiency. This result leads to surplus
funds. For example, a delinquent borrower defaults on their mortgage
owing a remaining $300,000 on their home whose market value is closer
to $500,000. The lender forecloses. At the foreclosure sale, the
highest bid is $400,000, leaving a $100,000 potential profit for the
highest bidder when they ultimately sell the property. As a result of
the foreclosure sale, the foreclosing lender first receives its
deficiency, in this case $300,000 dollars, and the remaining $100,000
dollars is placed into the Registry of the Court as "surplus
funds." If no one claims the surplus funds within 60 days, then
the defaulting borrower can claim the overage, meaning that, as
applied to this example, the defaulting homeowner could receive a
$100,000 windfall.
to Chapter 45, Florida Statutes, "[t]here is established a
rebuttable legal presumption that the owner of record on the date of
the filing of a lis pendens is the person entitled to surplus funds
after payment of subordinate lienholders who have timely filed a
claim." A lis pendens is recorded in the county's public
records by the foreclosing lender. Once recorded, it means that should
anyone else take title to the property, it is subject to the outcome
of the present foreclosure litigation.
pursuant to Chapter 45, Florida Statutes, "[i]f any person other
than the owner of record claims an interest in the proceeds during the
60-day period or if the owner of record files a claim for the surplus
but acknowledges that one or more other persons may be entitled to
part or all of the surplus, the court shall set an evidentiary hearing
to determine entitlement to the surplus."
what happens if a junior lienholder, who would otherwise be entitled
to the surplus foreclosure proceeds, files their claim for the surplus
after the expiration of 60 days? In the recent Fourth District Court
of Appeal case, Saulnier v. Bank of America, N.A., decided March 25,
2015, a junior lienholder made their claim past the 60 day period. The
trial count found in favor of the junior lienholder based on a theory
of excusable neglect, but the appellate court reversed the trial court's
judgment in favor of the homeowners.
junior lienholder argued, amongst other things, that its untimely
claim for the surplus proceeds should be excused because it did not
receive a copy of the final judgment or certificate of disbursements
and that that the homeowners' claim did not acknowledge the
subordinate lienholder's claim to the surplus. However, these
arguments were found to be without merit by the appellate court.
Rather, the statutory 60-day window to claim the surplus funds was
strictly construed by the appellate court.
reversing the trial court's decision, the appellate court stated,
"[w]hile we recognize the subordinate lienholder's argument
before the [trial] court that the homeowners 'should not be
permitted an inequitable windfall simply because [the subordinate
lienholder] missed the 60-day deadline by a few weeks,' we agree
with the homeowners that 'equity follows the law and cannot be used
to eliminate its established rules.'" This statement from the
appellate court means that when the statutory law clearly addresses an
issue, the courts are not free to apply principles of equity to right
an otherwise unjust situation. Simply put, the statutory law provides
for a 60-day window for a junior lienholder to make a claim for the
surplus funds. If the junior lienholder misses that deadline, then it
has no right to claim the surplus funds.
applied to Florida's community associations, once the association
records its assessment lien in the county's public records, it has
perfected its lien rights. This means that the association's lien
relates back to the date of the recording of the association's
declaration! While the association's lien remains subordinate to the
lender's mortgage, it is ahead of almost every other lien. But, if
the association does not timely record its motion for surplus funds
within the 60-day window then, it too will miss out on any surplus
proceeds and the excuse that the association was not aware of the
foreclosure sale and resulting surplus carries no merit whatsoever.
So, if you snooze, you lose.
Declaration Leads To Financial Disaster
Let This Happen in Your Community
are charged with the duty to operate, maintain, repair and replace
the common areas of the community. The question that often plagues
the minds of members of a board of directors is, who is going to pay
for that? The association? The owners? Which owners? An insurance
carrier? Whose insurance carrier? Is it even the association's
responsibility to repair or replace? More often than not, the answer
depends on a very similar question and which is typically answered
in the community's declaration of covenants – who is responsible
to maintain, repair or replace the item in need of maintenance,
repair or replacement? The answer may also depend on who created the
need for the repair. For example, in the event repairs are needed in
the recreation room because a member's child attempted to do a
skateboarding trick and instead put a hole in the wall, the
association is likely responsible to conduct the repair, but the
owner is likely responsible to reimburse the association for the
cost of the repair. The answers to these types of questions rely
heavily upon what is contained in your association's governing
documents and will have an important impact on the amount of
assessments the owners will have to pay. These types of questions,
along with the right answers, would have been very helpful to the
parties in the March 6, 2015 Second District Court of Appeals case
of Fern v. Eagles' Reserve Homeowners'
Association, Inc.
Fern, Ms. Fern, an owner of a newer townhouse, who was sued
by her homeowners' association for failure to pay special
assessments for repairs made to the community's older townhouses,
challenged the association's levy of such special assessments.
When the townhouse community was developed, the first townhouses
were poorly constructed and required extensive reconstruction.
However, the newer townhouses were properly built and required few
or no repairs. The association conducted the reconstruction of the
older townhouses and minor repairs to the newer townhouses and
levied a special assessment against all of the owners for all of the
repairs notwithstanding the language of the association's
declaration which provided that the association was responsible for
the maintenance, repair and replacement of the "exterior of the
Dwelling Unit."
examining this phrase, it's important to note a fundamental
difference between owning a condominium unit versus owning a home in
a homeowners' association, even if it is a townhome as did Ms.
Fern. Typically, in a homeowners' association, the owner of a
townhome, or perhaps all of the owners whose townhomes comprise a
singular townhome building, are responsible for the exterior walls.
So, even if the association is required to effectuate the repairs,
only the owner of the repaired home pays for the repairs to that
home. This is further evidenced by section 720.308, Florida
Statutes, which allows different levels of assessments assessed
against different owners based on the level of services provided by
the association.
trial, Fern asserted that the special assessments were improper
expenditures of the association and were therefore unenforceable.
Other owners who felt the same had previously sued the association
in the case of Klak v. Eagles' Reserve Homeowners'
Association, Inc., 862 So.2d 947 (Fla. 2nd DCA, 2004). In Klak,
the Court held that the association's obligation to repair the
townhouses, and therefore its authority to assess the owners for
such repairs, was limited to only the exterior surfaces of the
exterior walls of the townhouses. This interpretation was based
on language in the association's declaration which provided that
the association was responsible for the maintenance, repair and
replacement of the "exterior of the Dwelling Unit" and is
much narrower than what the association had hoped or believed.
Hoping and wishing could be some very dangerous tools to employ in
interpreting a declaration of covenants.
Court provided that the owners should be assessed for their share of
the expenses to repair the building exteriors but that the
association would need to seek payment or reimbursement for the
remaining expenses from the individually benefited owners and return
money to those owners who paid more than their fair share of the
the meantime, because of the terrible condition of the older
townhouses, the association was ordered by the trial court to
continue conducting the repairs. Due to the various lawsuits the
association was facing as a result of this special assessment, many
years passed, and the association filed for Chapter 11 bankruptcy.
The bankruptcy plan permitted the Association to continue its
collection efforts but did not address Ms. Fern's asserted defense
of whether the special assessments against her were actually
unenforceable. The case against Ms. Fern was ultimately sent back to
the trial court because of her asserted defense of whether the
special assessments were actually enforceable was required to be
determined by the trial court. What happened next? Well, it's too
soon to know. In reviewing the judicial decision, and to add another
level of both complexity and absurdity, it does appear that while
this case was pending in the appellate court, Ms. Fern actually lost
her home as a result of the association's foreclosure.
case provides great insight into the importance of properly
interpreting the maintenance, repair and replacement provisions set
out in the declaration and the assessment authority that goes with
it. While the questions may sound simple, the answers often require
in depth analysis of your association's governing documents and
the application of Florida case law to reach the right conclusion.
and Engineer Liability: How to Better Protect Your Association
Your Association is Planning a Maintenance, Repair or Restoration
Project, You Better Read This First!
some point in time, every association is faced with a major
maintenance and repair undertaking, whether it be concrete
restoration, elevator refurbishment, new roofs or a similar
monumental task, which requires the association to place their
trust, and a large sum of their money, in the hands of contractors,
engineers and architects.
bid process begins, and all of the prospective contractors,
engineers and architects tout their skills and expertise in the
hopes that the association selects them for the work at hand. More
and more, despite the professional's desire to win the job, the
professional contractor does not want to take on the liability for
their own work. This is evidenced by broad waivers of liability,
disclaimer of warranties and terribly one-sided indemnity provisions
that are set out in the contractor's contract that is given to the
association for review.
a community association attorney who regularly reviews contracts for
community associations, I have seen enough of these broad waivers
and disclaimers of liability and one-sided indemnity provisions to
last a lifetime. One such example of an attempt to limit liability
recognition of the relative risks, rewards and benefits of the
project to both the Client and the Contractor, the risks have been
allocated so that the Client agrees that, to the fullest extent
permitted by law, the Contractor's liability to the Client, for
any and all injuries, claims, losses, expenses, damages or claims
expenses arising out of this Agreement, from any cause or causes,
shall not exceed $20,000.00 or the amount of the Contractor's
fee, whichever is greater. Such causes include, but are not
limited to, the Contractor's negligence, errors, omissions,
strict liability or breach of contract.
recognition of the relative risks, rewards and benefits of the
project to both the Client and the Contractor, the risks have been
allocated so that the Client agrees that, to the fullest extent
permitted by law, the Contractor's liability to the Client, for
any and all injuries, claims, losses, expenses, damages or claims
expenses arising out of this Agreement, from any cause or causes,
shall not exceed $20,000.00 or the amount of the Contractor's
fee, whichever is greater. Such causes include, but are not
limited to, the Contractor's negligence, errors, omissions,
strict liability or breach of contract.
association is hiring the contractor, engineer and architect because
of their professional expertise, yet the professional is, in
essence, saying "I'm great, but I'm not responsible to the
association if a make any errors." This is absolutely absurd
and an abhorrent practice. Sure there need to be a relative balance
so that the professional is not sued by the client association for
such matters beyond the control of the professional but to call
yourself a professional and run from your own liability is
insulting, at best.
on the scope of the association's maintenance, restoration or
repair project, this limit on the contractor's liability could be
egregious. To put this language in a real-world context, let me
provide you with an example of the application of this provision to
a hypothetical scenario. An association undertakes a concrete
restoration project for its entire building which is going to cost
the association about $500,000.00. The professional makes a mistake
in the waterproofing of the envelope of the building, exposing the
building to water intrusion. Months after the project has been
completed, residents begin to complain about the smell of the
building. Tests are conducted and, sure enough, the condominium is
riddled with mold which the association is responsible to repair to
the tune of $250,000.00. The association's insurance carrier is,
no doubt, fighting them for coverage, and meanwhile the association
is stuck with the bill. So, the association turns to the
professional who did the work for answers. Pursuant to the language
above, the contractor is only liable to the association for
$20,000.00, or the contractor's fee, whichever is greater. So the
association has to come up with difference! Even though the
contractor was clearly at fault, the contractor cannot be held
liable for its own negligence, errors, omissions, strict liability
or breach of contract above the limits as set out in the contract.
like this could be devastating to an association! While the details
of the maintenance project itself, such as the time of the project
and the materials used, are important, it is also important for the
association to properly protect itself and its members in the event
something goes wrong, which happens more often than I prefer.
Contractor prepared agreements tend to be a minefield for
associations because there are many liability related provisions
which must be considered and re-drafted in order to protect the
protecting the association, and its members and residents, is of the
utmost importance, it is also important to consider the potential
liability of the contractor because, realistically, no deals would
be made if the association was fully protected, while the contractor
is left completely exposed. There is a balance between protections
for the association and protections for the contractor that must be
struck in order for associations and contractors to have a mutually
beneficial relationship. Finding that balance is easier said than
done in many cases, but is entirely possible.
simplest way to plan for your association's maintenance, repair
and restoration project, and avoid such pitfalls, is for the
association to provide the requisite professional with the
association's own draft contract as a part of the bidding process.
In that way you can hopefully avoid wasting countless hours in
selecting the right professional only to have the deal fall apart
because they refuse to stand behind their own work.
reputable professional, be it a contractor, engineer, or architect,
should stand behind their work. If they won't, then find one who
2015 Legislative Session
Estoppel Certificates
Devil is in the Details
2015 Legislative Session began on March 3, 2015, and several bills
regarding community asso-ciations were filed. An already paired set of
such bills, House Bill 611 and its companion, Senate Bill 736, are
creating great controversy among Florida's community associations.
Both bills propose significant changes to the laws regarding the
issuance of estoppel certificates by community associations. To
accomplish this, patently drastic and overtly draconian amendments are
proposed to section 718.116, section 719.108 and section 720.30851,
Florida Statutes, regarding condominium associations, cooperatives and
homeowners associations, respectively.
brief explanation of the term "estoppel certificate" is in
order. An estoppel certificate is a certificate issued by a community
association (or its manager or attorney), which provides the monies
owed to the association as of a particular date, minimally including
due and owing assessments, late fees and interest charges, by a
current or prior owner. A prospective purchaser may then rely on the
estoppel certificate, until its expiration date. Simply put, an
estoppel certificate "estops" the association from asserting
a greater amount due than what is provided by its estoppel
Bill 611 and Senate Bill 736 propose very strict maximum estoppel
certificate fees that may be charged. The legislation mandates that
the fee for an estoppel cannot, under ordinary circumstances, exceed
$100.00, plus $50.00 for a rush and plus another $50.00 if issued by
an agent of the association or its attorney. So, these lowered fees
will be made up for elsewhere. Likely it will be in higher management
and legal fees passed on to the association which are then paid by
each member in pro-rata share. No one other than the buyer and seller
should share in these costs.
is comical, in a tragic fashion, just how much attention is being paid
to this issue in this year's legislative session. Realtors typically
earn a whopping 6% commission when the property sells. It doesn't
matter how long the property was on the market, the efforts expended
by the realtor, or even the ultimate price of the property. Be it a
$100,000.00 or $10,000,000.00 sale, the realtor's commission is
customarily 6%. The closing agents earn their fees, the appraiser
charges their fees as does the surveyor, the lender and everyone else
associated with the sales process. So, in the infinite wisdom of our
Florida Legislature, they have decided to make the
"association" the bad guy in this process by focusing on
the, more often than not, insignificant estoppel fee.
Bill 611 and Senate Bill 736 will also shorten the amount of time
community associations have to respond to requests for estoppel
certificates from 15 days to 10 days. If a community association fails
to provide an estoppel certificate within the 10 day period, House
Bill 611 and Senate Bill 736 provide that the community association
will have effectively waived any claim for any amounts due and owing
that should have been shown on the estoppel certificate. Furthermore,
there is no mechanism provided in the proposed legislation which
provides for an extended timeframe within which to respond should the
estoppel certificate request be referred to an attorney or in the
event an issue arises during the preparation of an estoppel
certificate. At times, due to complications that are understood best
by those who issue countless estoppel certificates, 15 days is barely
sufficient time to issue an estoppel certificate. Under some
circumstances, a 10 day window to do so is laughable. Who suffers as a
result of the unissued estoppel? Every single member in your
association, but for its newest owner, because it is the existing
members who have to make up the financial shortfall.
the amount due as reflected in the estoppel certificate is the maximum
amount a community association is allowed to collect, the legislation
also provides that it is the maximum amount due from anyone who relies
in good faith on the estoppel certificate including successors and
assigns. This provision which provides for a chain of never ending
assignability is just plain wrong! An estoppel certificate should only
inure to the benefit of the requesting party. If someone else wants
one, they too should have to pay for it. Otherwise, it is no different
than going to the grocery store demanding a free gallon of milk,
because your neighbor bought one yesterday.
estoppel certificates, under the new laws if made effective, must be
effective for thirty (30) days from the date the estoppel certificate
is received by the requesting party, which date must be provided on
the estoppel certificate. There is no great justification to require
the estoppel certificate remain valid for an entire 30 days.
Essentially, the inability of the parties to timely close their deal
is being held against the association. At times, budgets are amended
and special assessments levied. If either is done after the estoppel
certificate is issued, then that person may not have to pay their fair
share. The longer period of time the estoppel remains valid, the
greater the potential harm to the association.
the tens of thousands of association members in Florida who can be
financially hurt by this legislation, it amazes me how silent this
block of voters often remains. If you want good laws benefiting your
association then let your legislators know that the terms of this
proposed legislation are unacceptable.
You Think Your Community Has Enforceable Landscape Standards, After
Reading This, You Might Think Again!
ever there was a need to appeal a decision, the Florida Fifth
District Court of Appeal's February 6, 2015 deci-sion in Bendo
v. Silver Woods Community Association, Inc., Etc. might be it.
After reading the following architectural provision of the Silver
Woods Community Association's Declaration of Covenants, the 5th
DCA held that the Association did not have the power to approve or
deny an owner's non-structural landscaping plan, which, in this
case was denied because the landscaping plan did not include a grass
lawn. At issue was the following section of Silver Woods
1. Approval of ARC. No building, fence, wall or other
structure shall be commenced, erected or maintained upon the
Property, nor shall any exterior addition to or change or alteration
therein be made, unless it is in compliance with the
zoning code of Orange County, Florida, and other applicable
regulations and until the plans and specifications showing the
nature, kind, shape, height, materials, and location of the same
shall have been submitted to and approved in writing as to
harmony of external design and location in relation to
surrounding structures and topography by the Board of Directors of
the Association, or by the Architectural Review Committee
(ARC)." [Bold in the original; underline added.]
the trial court held that the Association had the power to approve
or deny the "soft" landscaping portions of Bendo's
landscaping plans, the 5th DCA did not. The facts of this case are
pretty straightforward. The installation of a new septic drain field
in Bendo's front yard destroyed the existing landscaping. Bendo's
new landscape plans did not include any grass. Rather, he included a
new retaining wall, vegetation and mulch. After the Association
approved the wall, Bendo submitted additional plans for the
"soft" landscaping which failed to include grass. So, the
Association rejected the landscape plan and litigation ensued. As
reported in the 5th DCA's decision, "[t]he trial court
concluded that the 'plain' language of the covenant requires…
approval and ordered [Bendo] to submit a new plan for approval in
accordance with [the Association's] directives." Bendo
challenged this conclusion, contending that the applicable provision
is, at the very least, ambiguous, and the 5th DCA agreed with him.
there is a long line of precedent that stands for the notion that
ambiguous covenants must be construed in favor of the land owner.
But, is Section 1 (above) ambiguous? While it is pretty clear that
Section 1 is not at all ambiguous and that the plain meaning of the
sentence should be applied, the 5th DCA did not ask me and rather
chose to deeply examine, and quite possibly misinterpret, the
sentence structure. WARNING: As a result of reading this article,
flashbacks and nightmares of your elementary school English grammar
class may result (as happened to me while writing it). But, I
decision in this case turns on how the reader applies the word
"therein," underlined above. The 5th DCA explained that
the subject of the sentence is the phrase "building, fence,
wall or other structure." Therefore, the 5th DCA reasoned the
word "therein" applies to this phrase and not the word
"Property" (referring to the owner's lot). The 5th DCA
found that the word "Property" was merely a reference to
the land upon which the "building, fence, wall or other
structure" could be erected or maintained. Therefore, the 5th
DCA reasoned that the Association's power to approve and deny an
owner's landscaping plans only pertained to the structural aspects
of a landscape design and not the non-structural aspects of a
landscape design. As I recall from prior grammar lessons, the
modifying phrase inserted after a series of subjects applies to the
last in the series, not the former subjects.
put, there are five, not four, subjects in the relevant section of
the Silver Woods Declaration at issue. The subjects of the sentence
are "building, fence, wall or other structure" and the
term "Property." The phrase "nor shall any exterior
addition to or change or alteration therein be made" at the
very least applies to the last subject mentioned,
"Property," and likely applies to the entire series
because the "building, fence, wall or other structure" are
included as a part of the "Property." Having participated
in the drafting of countless declarations, to apply the term
"therein" to only the "building, fence, wall or other
structure" is to fully misinterpret the Association's
otherwise clear ability to approve or deny an owner's requested
landscaping improvements.
because a contrary argument was made, it doesn't mean that the
phrase is ambiguous, or does it? School is dismissed.
to Be an Ineffective Board Member
Know It's Time to Resign When…
a lawyer whose practice concentrates almost exclusively on the
representation of community associations throughout the State of
Florida, I thought I had seen it all. These days, it is becoming
harder and harder to surprise me with stories about association
living. But, every now and then, admittedly, I find myself shocked.
Sadly, today's column will describe one such event.
living" – the term denotes living on top of one another,
literally. It is the great social experiment of the Twentieth
Century. Pragmatically, condominium living makes all the sense in
the world. Instead of one person enjoying the beautiful ocean view
in a single family home, the condominium allows sometimes hundreds
of families to enjoy that same ocean view, albeit stacked on top of
one another like sardines.
condominium building is a complex building of various degrees. It
can cost tens, if not hundreds of millions of dollars to construct.
In many ways it could be compared to a cruise ship complete with
HVAC systems, boilers, restaurants, elevators, swimming pools, and
in South Florida, the building must weather ocean conditions and
storms. Like any ship, the condominium needs a good crew. We call
the condominium's crew, the ever revered board of directors. It is
a thankless and time consuming job. Everyone is an expert at what
the board members should have done. The association member should be
ever grateful to their board members for stepping up to the plate
and giving themselves so selflessly.
you yourself have served on the board, then you really can't
imagine the countless hours and aggravation you will sometimes
experience. In the utopian association, members serve on the board
because they truly care and want to help maintain what is no doubt a
fabulous way of living. In the not so utopian association, members
want to serve on the board for a whole host of other reasons such as
ego, Napoleonic syndrome and power trips. It is to those board
members that today's column is directed.
members have a fiduciary duty to their association to exercise their
reasonable business judgment. Over the past couple of weeks several
regular readers of Rembaum's Association Roundup have shared an
exchange between themselves and their association's president. The
entire association is experiencing a troubling issue with a
commercial neighbor. The association members are looking to their
board president for information, guidance, support and peace of mind
in knowing that their elected "captain" is guiding the
ship through the turbulent waters. As you read the verbatim dialogue
below between the members and the president, you should know that
the association members live out of town most of the year and are a
respected doctor and clergyman. Both are well published in their
field and have national reputations.
to the President: "I recently sent an email to you and a follow
up when I did not hear back. Could you let me know if you received
them? I would be happy to meet with you directly regarding the
ongoing issue if you prefer."
to the Owner(s): "If you want an update go to the board
meetings like everyone else… or read the minutes of the meeting…
That is what they are for… My job is not to respond on an
individual basis to unit owners who make up stories of selling their
apartment and are too lazy to attend board meetings!"
looked at the minutes from the past year and not seeing much about
the issue, the owners write back to the president.
to the President: "I am not sure what to make of your recent
email to me except to attempt to impune my character and avoid the
issue about which we have previously communicated. Perhaps you are
not aware that I reside in New York and work full time as, frankly,
a nationally recognized physician… As the problem continued
unresolved, as you know, we became stressed and frustrated to the
point of considering a sale, of which we informed you. We indicated
this to you in earnest… If you would take a moment to re-read your
email to me and reflect on whether it went, let us say, overboard, I
would appreciate your response."
to the Owner(s): "I REALLY DON'T CARE WHAT YOU DO OR ARE…
to the President: "Are you confusing me with someone else? I
own the unit with my spouse of many years and we have never had a
to the Owners: "I DO NOT TAKE EMAILS FROM RESIDENTS… ALL
this president is reacting… to what, we may never know. Why does
this president feel the need to yell (evidenced by the all caps in
the emails) at these members asking for information? Why won't he
take the time to be responsive to the members' simple request for
a status update? Why does a president not take emails from members?
Why is this president so rude and callous? Maybe this president will
do the ship a favor and disembark at the port!
Board Members Owe a Duty of Care and Loyalty to their Association?
community association is a corporation, in many ways similar to any
other corporation, be it a for-profit or not-for-profit company. In
exercising decisions, for the most part, the community association's
board members must adhere to the "business judgment rule."
As I like to explain it, this means that the board member's
decisions might be right or might be wrong. However, the ultimate
question is, "did the board member act reasonably?" In
other words, did the board member exercise his or her discretionary
decisions in a reasonable manner? It should be obvious that, in
making such decisions, the director must owe some type of duty to
the association, too.
a recent case, McCoy v. Durden, decided on December 31, 2014,
the Florida's First District Court of Appeal had occasion to
answer this question, albeit in a slightly different context than
that of a community association. Nevertheless, in a generic sense,
the First DCA examined the duty of care and loyalty owed by a
director to his or her corporation that they serve and provided some
interesting historical context, too.
First DCA in McCoy quickly pointed out that Florida courts
have long since recognized that corporate officers and directors owe
both a duty of loyalty and a duty of care to the corporation that
they serve. As early as 1907, in a case styled, Jacksonville
Cigar Co. v. Dozier, the Florida Supreme Court recognized that,
under the Florida common law, a director is in a fiduciary
relationship with the corporation. In 1932, in Orlando Orange
Groves Co. v. Hale, the Florida Supreme Court described the
relationship between a corporation and its directors and officers.
The Florida Supreme Court explained in the Orlando Orange Groves
Co. case that "[t]hey are required to act in the utmost
good faith, and in accepting the office they impliedly undertake to
give to the enterprise the benefit of their best care and judgment,
and to exercise the powers conferred solely in the interest of the
in 1980, in Snead v. U.S. Trucking Corp, the First DCA
explained that "[a] director's… acts are subject to be
tested by the rules governing the relation of a trustee to his
cestui que trust... He is bound to act with fidelity, the utmost
good faith, and with his private and personal interests subordinated
to his trust duty whenever the two come in conflict." By way of
explanation (and because I had to look it up, too) a "cestui
que" is the person for whom a benefit exists, and a "cestui
que trust" is a person for whose benefit a trust is
Florida's common law, the Florida Supreme Court has defined the
concept of fiduciary duties broadly reflecting its historical origin
in equity. In other words, even if a legal duty was not codified in
the statutory law, a common law duty exists, too. In 1927 in Quinn
v. Phipps, a case involving allegations that a real estate
broker had violated his fiduciary duty, the Florida Supreme Court
explained the basis of the duty: "The term 'fiduciary or
confidential relation,' is a very broad one. It has been said that
it exists, and that relief is granted, in all cases in which
influence has been acquired and abused – in which confidence has
been reposed and betrayed. The origin of the confidence is
immaterial. The rule embraces both technical fiduciary relations and
those informal relations which exist wherever one man trusts in and
relies upon another … Stripped of all embellishing verbiage, it
may be confidently asserted that every instance in which a
confidential or fiduciary relation in fact is shown to exist will be
interpreted as such. The relation and duties involved need not
be legal; they may be moral, social, domestic or personal.
If a relation of trust and confidence exists between the parties…
that is sufficient as a predicate for relief." (Emphasis
does a director of a community association owe his or her
association a duty of care and loyalty? You bet they do! Now that we
have established that a board member owes a duty of care and
loyalty, what exactly are they? It is a fiduciary duty to act in the
best interests of the association by acting with loyalty, honesty,
and in good faith. Put simply, a director owes a duty to exercise
good business judgment and to use ordinary care and prudence in the
operation of the association. A director should perform his or her
actions in good faith and in the best interest of the association,
exercising the care an ordinary person would use under similar
circumstances. A director's decisions are typically protected
under the "business judgment rule" unless they breach one
of these duties. So, if you are a board member, remember the duty of
care and loyalty that you owe to the association you serve.
of Limitations in Foreclosure Action:
is Everything
is everything – in love, in life and in lawsuits. Unlike timing in
love and in life, timing in lawsuits is governed by certain laws
including those referred to as the statute of limitations.
Determining when the statute of limitations' clock begins to tick
can be tricky. For example, and as further discussed in today's
article, in Florida, a lender has five years from the date of
default to foreclose on its mortgage and note. If the lender fails
to file a foreclosure action within five years of the date of
default upon which its lawsuit is based, the lender is barred from
filing the foreclosure action.
was the issue before the Third District Court of Appeal in the very
recent case of Snow v. Wells Fargo Bank, N.A., decided on January
14, 2015. In this case, on May 25, 2007, the Snows executed a
mortgage note with Wells Fargo for property located in Miami,
Florida. Pursuant to the terms of the mortgage, Wells Fargo had the
option to accelerate the debt in the event of a default.
to accelerating the remainder of the debt upon default, Wells Fargo
was required to provide the Snows with notice specifying the
default, providing an opportunity for the Snows to cure the default
within thirty days of the notice and informing the Snows that the
failure to cure the default may result in acceleration of the
mortgage debt. Upon the Snows' default on October 1, 2007, Wells
Fargo sent a notice to the Snows on December 6, 2007 which provided
the Snows with thirty-five days to cure the default by paying off
the amount of the default. However, the Snows failed to cure the
default within the thirty-five day period (by January 10, 2008). It's
important to note that Wells Fargo's notice did not provide notice
that the remainder of the note would be accelerated if the default
was not cured.
on March 12, 2008, Wells Fargo filed a foreclosure action against
the Snows. However, on June 28, 2011, Wells Fargo voluntarily
dismissed their lawsuit against the Snows, without prejudice. The
term "without prejudice" in a judgment of dismissal
ordinarily indicates the absence of a decision on the merits and
leaves the parties free to litigate the matter in a subsequent
action, as though the dismissed action had never existed.
March 5, 2013, Wells Fargo filed its second foreclosure action
against the Snows. The Snows argued that the second foreclosure
action was barred by the five-year statute of limitations because
the limitations period began to run on January 10, 2008 (the date by
which the Snows were required to cure the default). Therefore, the
Snows asserted the statute of limitations expired on January 10,
2013, three months prior to the filing date of the second
foreclosure action.
Fargo argued that the date the statute of limitations began to run
was not January 10, 2008, but rather March 12, 2008, the date the
first foreclosure complaint was filed. Therefore, Wells Fargo
asserted the five-year limitations period had not yet expired when
Wells Fargo filed the second foreclosure lawsuit on March 5, 2013.
The trial court agreed with Wells Fargo and determined that the
second foreclosure action was filed prior to the expiration of the
statute of limitations.
appeal, the Third District Court of Appeal affirmed the trial court's
decision and held that the second foreclosure lawsuit was timely
filed. In its discussion, the Court noted the difference in the
calculation of the statute of limitations with regard to mortgage
notes with an automatic acceleration clause and those with an
optional acceleration clause.
an acceleration clause is automatic, the entire indebtedness becomes
due immediately upon default, and the five-year statute of
limitations begins to run without notice. When an acceleration
clause is optional, the lender must exercise this option and give
notice to the borrower of the election, making the entire
indebtedness due. It is when the lender exercises the acceleration
option and notifies the borrower of its exercise that the five-year
statute of limitations begins to run.
this case, the statute of limitations began to run on March 12,
2008, when Wells Fargo filed its first foreclosure action. The Court
found that the December 6, 2007 notice of default from Wells Fargo
was not Wells Fargo's exercise of its option to accelerate the
mortgage note because the notice did not provide that the full
amount of the indebtedness was immediately due nor did it demand
payment of the full amount of indebtedness. Wells Fargo did not make
such a demand for the full amount due (i.e., the accelerated amount)
until it filed its first foreclosure complaint on March 12, 2008.
Therefore, the Court determined that the statute of limitations
would have expired on March 12, 2013, a week after the second
foreclosure action was filed. Timing is everything.
Sells HOA's Common Areas
this December 3, 2014 case, Bethany Trace Homeowners Association, Inc.
v. Whispering Lakes I LLC and Waterman-Pinnacle, Inc., the association's
subsequent developer, Waterman-Pinnacle, sold lands designated in the
Bethany Trace HOA's declaration as common areas. As a result, when
the Bethany Trace HOA found out, it sued Waterman-Pinnacle to get its
common areas back.
1990, Leigh Corporation started building out the Bethany Trace HOA. As
a part of the initial development, Leigh Corporation drafted and
recorded Bethany Trace HOA's declaration. In the declaration, the
common areas were identified as "those tracts, easements or areas
of land shown on any recorded subdivision plat of the property which
are intended to be devoted to the general common use and enjoyment of
the Owners in the Property," and included certain designated
items such as "fences surrounding the property, a maintenance
area, a conservation area, an entranceway along with all of the
improvements located thereon." There was one small problem,
however. The plat was never recorded. (Does this mean that the common
areas were never actually created?)
years later, Leigh Corporation sold its rights and obligations under
the Bethany Trace HOA declaration to Waterman-Pinnacle, the subsequent
developer. In the assignment, Waterman-Pinnacle agreed to convey the
common areas to Bethany Trace HOA "for no further consideration
and free and clear of any liens or encumbrances." Nevertheless,
Waterman-Pinnacle sold the lands designated as common areas to another
developer which bulldozed them in anticipation of building additional
homes. When Bethany Trace HOA learned of this, it sued to get its
common areas back.
summary, Waterman-Pinnacle argued that, because the plat was never
recorded, the common areas identified in the declaration weren't
actually common areas and, therefore, the property could be sold.
Bethany Trace HOA argued that the lack of a recorded plat did not
affect its interest in the identified common areas as the common areas
were identified by name and included metes and bounds legal
descriptions in the declaration itself. Interestingly, the trial court
agreed with Waterman-Pinnacle's arguments. As a result, Bethany
Trace HOA appealed.
an appellate court reviews a trial court's interpretation of a
contract, the style of its review is referred to as "de
novo." This means that, because the interpretation of a contract
is a question of law, the appellate court is free to reach a different
interpretation than that of the trial court.
appellate court found that the language of the Bethany Trace HOA, when
taken in the entirety, provided that Bethany Trace HOA has ownership
rights in its common areas. The appellate court further found that the
interpretation adopted by the trial court resulted "in portions
of the declaration being meaningless" in that the trial court
ignored certain portions of the declaration that provided Bethany
Trace HOA would own and maintain certain identified common areas. The
appellate court held that Bethany Trace HOA's interpretation of the
provisions of the declaration was reasonable and gave meaning to all
of the provisions in its declaration. The case was then remanded
(returned) back to the trial court for further proceedings consistent
with the ruling of the appellate court.
the trial court proceedings take place Bethany Trace HOA will no doubt
ask the trial court to order that its common areas be formally
returned and to award it applicable financial damages.
moral of this case is simple. At its core, an association's
declaration is a contract between the association and its members.
When interpreting a contract, one sentence or phrase, when read in a
vacuum, cannot be used in favor of one party when doing so is contrary
to the remainder of the contract when read in its entirety.
Be Careful What You Sign
you read that contract and fully understand your obligations before
signing it? Almost every day, we are faced with new terms and
conditions for the mobile app we can't live without. Most people do
not take the time to read every word before we hit "I agree"
to those new terms and conditions. While the impact of these terms and
conditions may not be felt on a daily basis, upon your acceptance, you
are bound by these newer terms and conditions as if you read and
understood them. While there are certain instances where the terms of
a contract cannot be enforced, such as when a contract is
unconscionable, when the terms of a contract are clear and
unambiguous, the plain language of the contract will be enforced
accordingly. This was the subject of a December 5, 2014 opinion of the
Fifth District Court of Appeal of Florida in Thyssenkrupp Elevator
Corp. v. Hampton Manor at Deerwood, LLC.
this very recent case, Thyssenkrupp and Hampton Manor had entered into
an elevator maintenance contract for a term of five years.
Thyssenkrupp provided the services for the entire five-year term. At
the end of the five-year term, the contract automatically renewed for
an additional five years and continued to automatically renew for
additional five year terms thereafter, which is when the trouble
the second five year renewal period, Hampton Manor failed to pay for
work performed by Thyssenkrupp in the amount of $1,157.14. The
contract provided that upon failure to pay an overdue invoice,
Thyssenkrupp could either: 1) suspend all service until all amounts
due had been paid in full or 2) declare all sums for the unexpired
term of the contract due immediately and terminate the contract.
Thyssenkrupp selected option two and filed a lawsuit against Hampton
Manor for the unpaid invoices and for all sums due for the unexpired
term of the contract.
summary judgment, Thyssenkrupp provided the elevator maintenance
contract, the unpaid invoices and an affidavit of its corporate
representative who testified as to all the amounts due and owing to
Thyssenkrupp from Hampton Manor totaling $30,259.71, which included
the remaining amount due for the unexpired term. Harbor Manor argued
that Thyssenkrupp's corporate representative's affidavit did not
comply with Florida Rules of Civil Procedure 1.510(e), which requires
that affidavits must (i) be made on personal knowledge, (ii) set forth
facts as would be admissible in evidence and (iii) affirmatively show
that the affiant (the person providing the testimony) is competent to
testify to the matters provided in the affidavit.
trial court disagreed with Hampton Manor, finding that Thyssenkrupp's
corporate representative's affidavit complied with Rule 1.510(e),
and ruled in favor of Thyssenkrupp. However, the trial court only
awarded Thyssenkrupp $1,157.14, the amount of the outstanding invoices
and did not award damages for the unexpired term of the contract in
the amount of $29,102.57. Disappointed with the result, Thyssenkrupp
appealed the trial court's award. The Fifth District Court of Appeal
of Florida found that the clear and unambiguous language of the
elevator maintenance contract entitled Thyssenkrupp to recover the
monthly fee for the remaining term of the contract upon Hampton Manor's
the terms of a contract are clear and unambiguous, a court has no
right to give it a meaning other than what is expressed. Quoting a
Florida Supreme Court case, the Court provided that "[t]o hold
otherwise would be to do violence to the most fundamental principle of
Thyssenkrupp and Hampton Manor had contractually agreed that
Thyssenkrupp could cancel the contract and accelerate the remaining
term in the event Hampton Manor failed to pay an outstanding invoice,
Thyssenkrupp was entitled to damages for the unpaid invoices in the
amount of $1,157.14 and damages for Hampton Manor's breach in the
amount of $29,102.57.
moral of this story is to make sure that, as an association board
member, you read and understand every term of a contract before
casting your vote in favor of that contract. To do otherwise can cause
significant monetary damages.
to Derive Income from Vacant and Abandoned Units
long, long time ago, in a land far, but not too far, away, England,
there were two distinct court systems – the court of law, the
Court of the King's Bench, which followed the letter of the law,
and the Court of Chancery, which was a court of equity and had the
ability to do what was fair and equal. Although these two courts
have had a sordid past, they continue to exist today in our very own
court system; however, now the same judge may hear both legal and
equitable claims. In general, when the law provides a remedy, the
principles of equity cannot be employed by the court.
core principle in the court of law is inclusio unius est exclusio
alterius. It means that the inclusion of one thing is the exclusion
of another, meaning that if the law says you can have apples, you
can't have oranges. While this is a general statutory
interpretation principal, the Supreme Court of Florida held in the
case of Granada Lakes Villas Condominium Association, Inc. v.
Metro-Dade Investments Company that the enumerated instances in
which a court could appoint a receiver for a condominium association
as provided for by Florida Statutes did not limit the court's
power to appoint a receiver but actually expanded upon the court's
inherent equitable powers to do so, which turned out to be pretty
good for Florida's community associations.
Granada Lakes Villas, the developer, Metro-Dade Investments Company,
and the community's master association, sued the condominium
association, Granada Lakes Villas Condominium Association, Inc., for
the its failure to pay the developer and the master association
their share of the related expenses after collecting the fees and
assessments from the condominium's unit owners. As a result of the
condominium association's failure to pay, it was argued by the
developer and the master association that they were unable to pay
for utilities and maintenance expenses for the common areas, which
resulted in ongoing health nuisances on the property.
trial, the developer filed an emergency motion for the appointment
of a receiver over the condominium association in order to
facilitate the collection of the fees and assessments from the unit
owners and to perform a proper accounting. Although the trial court
had determined that a receivership would be helpful to the court,
the trial court held that it had no power under Chapter 718, Florida
Statutes, to appoint a receiver because Chapter 718, Florida
Statutes, enumerates certain instances when the court may appoint a
receiver, including failure of the association to elect enough
directors to establish a quorum, failure of the association to act
after a natural disaster and the need to liquidate and close a
non-profit corporation as found in Chapter 617, Florida Statutes,
which governs non-profit corporations. The trial court reasoned that
because the statute itemized only these few grounds for appointment
of a receiver, the court could not appoint a receiver unless one of
these grounds was applicable.
on appeal, the Second District Court of Appeals reversed and
remanded the case back to the trial court, concluding that the court's
power in these circumstances was "inherent in a court of
equity, not a statutorily created right." The Second District
also found that the enumerated instances in Chapter 718 and Chapter
617, Florida Statutes, do not "restrict a trial court's
broad, equitable authority to appoint a receiver; rather, the
statutes merely cite to specific instances when a receiver may be
Supreme Court of Florida, which took jurisdiction because of a
conflicting ruling in a 2009 case in the Third District Court of
Appeals, agreed with the Second District's findings. The Supreme
Court of Florida provides that the fact that the Florida Statutes
lists certain grounds for the appointment of a receiver does not
mean that appointment of a receiver is unavailable unless one of
those grounds is applicable. The Supreme Court noted that the
receivership remedy is available in equity – typically in cases of
fraud, self-dealing, waste or destruction or loss of property –
even without statutory authority, and that the principles of equity
would authorize the court to appoint a receiver under a broader
range of circumstances other than those specified by Florida
Statutes. The Supreme Court also provided that "nothing in the
statutory language of these sections expressly prohibits or even
implies that these enumerated circumstances are the only instances
in which a court may appoint a receiver in cases involving a
non-profit condominium association."
associations rely on these cases to seek appointment of a court
appointed receiver in an effort to derive rental income over
otherwise vacant and abandoned units where, but for the appointment
of a receiver, the units would continue to be a drain on the
association's financial resources.
Stripping, a Dirty Phrase
Bank of America, N.A. v. Caulkett, the United States Supreme Court
granted certiorari, and thus has agreed, to address whether the
Bankruptcy Code permits a Chapter 7 debtor to "strip off,"
or void, a junior mortgage lien in its entirety when the outstanding
debt owed to a senior lienholder exceeds the current value of the
collateral, an issue on which the Courts of Appeal are divided.
Your association is owed thousands of dollars from a delinquent
member who has not paid their mortgage either. The lender, being
"on the ball," begins to foreclose its mortgage. At some
point, the board authorized an association assessment lien to be
recorded against the property, too. Six to nine months later, the
lender's lawsuit is almost over. Then, without warning, the
association is placed on notice that the debtor filed a Chapter 7
bankruptcy in Federal court. By operation of law, the lawsuit grinds
to a screeching halt much like a racecar slamming into a concrete
further action can be taken until either the bankruptcy is
discharged (the case is over) or the lender receives the express
permission from the bankruptcy court to continue foreclosing the
property in exchange for an agreement that the lender only seeks to
acquire the delinquent member's property and will not seek monies
due and owing on the mortgage. Meanwhile, the association still has
its assessment lien recorded against the property, meaning that
there is still a chance the association can receive the monies it is
still owed, especially if a third party purchaser acquires the
property. Right? Well, not if during the bankruptcy the debtor
"strips" the association's assessment lien; a process
referred to as "lien stripping."
stripping occurs when the court grants a request to wipe out all
liens that are inferior to a superior lien. In the association's
case, it means that if the bankruptcy court were to allow lien
stripping, the association would have no chance whatsoever of
recovery of back assessments due and owing which, without going out
on a limb, is extremely unfair to the association. Not all
bankruptcy courts permit lien stripping. Some do, and some don't.
In such cases, where Federal Circuit Courts acting in their capacity
as appellate courts disagree with one another, the United States
Supreme Court has the right to examine the differing lower appellate
court decisions; a process referred to "certiorari."
the Supreme Court held that Section 506(d) of the Bankruptcy Code,
which provides that a lien is not valid to the extent that it
secures a claim against the debtor that is not an "allowed
secured claim," does not allow a Chapter 7 debtor to
"strip down" a mortgage lien to the current value of the
collateral. This will become VERY important for reasons explained
the other hand, the Eleventh Circuit (with jurisdiction over the
Middle District of Alabama, Northern District of Alabama, Southern
District of Alabama, Middle District of Florida, Northern District
of Florida, Southern District of Florida, Middle District of
Georgia, Northern District of Georgia and Southern District of
Georgia) held that a Chapter 7 debtor may "strip off" a
valid junior lien on the debtor's house when the debt owed to a
senior lienholder exceeds the house's current value, relying on
controlling precedent that the Eleventh Circuit believed
distinguishes its decisions from the Supreme Court's rationale.
Similarly, in other cases, the bankruptcy court, in unpublished
decisions, entered orders voiding wholly unsecured second priority
liens on residential property owned by the Chapter 7 debtors which,
in unpublished orders, the district court has affirmed.
its petitions for certiorari to the Supreme Court, a junior
lienholder argued that the Eleventh Circuit's position is
irreconcilable with the Supreme Court's decision that the
Bankruptcy Code does not allow a Chapter 7 debtor to "strip
down" a mortgage lien. The petition asserted that, because the
junior lienholder had valid claims for the money loaned to the
debtors, the Bankruptcy Code provided no basis for the debtors to
"strip off" the subject liens. Furthermore, the petition
continued, the fact that a mortgage is underwater matters only to
the treatment of the creditor's claim as "secured" or
"unsecured" and has no effect on the treatment of the
creditor's lien under Section 506(d) of the Bankruptcy Code.
the United States Supreme Court will explain that lien stripping is
not permitted, keeping association liens alive after bankruptcy
proceedings and thereby providing the association a better chance of
collecting past due assessments!
Expenditures Requiring Owner Approval, Don't
too long ago, Briny Beezes, Inc., a cooperative association (the
"Association") sought a declaratory statement from the
Division of Florida Condominiums, Timeshares, and Mobile Homes (the
"Division") as to whether the Association's Board of
Directors (the "Board") could use its more than adequate
reserve funds to repair a seawall to prevent flooding where the
Association's Bylaws required a majority of the membership vote to
approve any expenditure greater than $30,000.00. At the heart of the
Association's request was its engineer's opinion that the
expenditure was necessary for maintenance to the seawall to prevent
further flooding. The orders of the Division do not have
precedential value similar to district court of appeal cases, but
rather its orders are specific to the parties involved in the
arbitration petition. While the petitioner in this case is a
cooperative, the Division's resulting May 31, 2013 Order remains
both useful and instructive to condominiums, and due to the Order's
logic and common sense approach, perhaps also to homeowners'
arbitrator noted that the Florida Statutes regarding cooperative
associations and condominium associations provide that the
Association has the power to make and collect assessments and to
maintain, repair and replace the common areas. (The author notes
that so do homeowners associations.) The arbitrator looked to a
bankruptcy case, In re Colony Beach and Tennis Club Association,
Inc., where the court held that that, "in fulfilling the duty
to maintain the common elements, the board may assess members for
common expenses without a vote of the unit members." It was
noted that the Board's statutory duty and authority to maintain
the common elements trumps any provisions in the Association's
governing documents requiring member approval for expenditures that
are necessary for maintenance. Then the arbitrator looked to state
court cases.
Tiffany Plaza Condominium Association v. Spencer, a 1982 Second
District Court of Appeals case, the Court held that, "the board
had the authority to authorize the construction of a rock revetment
necessary to protect the common elements without the consent of unit
owners." In Ralph v. Envoy Point Condominium Association, Inc.,
another Second District Court of Appeals case, the Court stated,
"[s]imply because necessary work for maintenance may also
constitute alterations or improvements does not nullify a
condominium board's authority and duty to maintain a condominium
common elements." The arbitrator also noted that, as recognized
in Ralph, "even if expenditures result in alterations or
improvements to the common elements, it is within the board's
authority to authorize those expenditures without member approval
when they are necessary to protect the common elements."
Finally, the arbitrator referred to guidance from A. N. Inc. v.
Seaplace Association, Inc., a 1998 Division Arbitration Order that
held, "expenditures which are reasonably necessary for
maintenance do not require a vote of the members."
arbitrator wisely pointed out that "if the contemplated
upgrades to the seawall constitute a material alteration to the
common elements that go beyond the necessary repair to protect
the common elements, the board's decision is open to challenge
an arbitration or court where the question of fact as to the extent
of the changes may be determined."
TIP: Prior to relying on these cases, if your association requires
membership approval before spending thousands on necessary repairs,
the board should at least explain the situation to the members at a
properly noticed membership meeting and try to obtain the membership
vote in favor of the repairs. If the membership does not approve the
expenditure, then the board should consult with the association's
attorney to plan the proper course of action. Under no circumstances
should the board decide, on its own, to circumvent the requirements
of the association's governing documents.
Association's Right to Access Your Unit: What You Need to Know
you know that, according to section 718.111(5)(a), Florida Statutes,
your condominium association has "the irrevocable right of
access to each unit during reasonable hours, when necessary for the
maintenance, repair, or replacement of any common elements or of any
portion of a unit to be maintained by the association pursuant to
the declaration or as necessary to prevent damage to the common
elements or to a unit?"
Small v. Devon Condominium B Association, Inc. (a 4th DCA case),
Small, suffering from a breathing disorder, discontinued her
condominium association's optional pest control services in 2005.
In 2009, the association demanded to access the unit to perform pest
control services. Small refused. The association filed a petition
for condominium arbitration seeking access to her unit. A default
judgment was entered in favor of the association which provided it
with monthly access to her unit to perform pest control services.
However, a condominium arbitration order is not final and binding
until 30 days have passed from the date of the arbitrator's order.
this 30 day period, the losing party can appeal to the circuit court
for a trial "de novo", (which essentially means holding a
new trial) and that is exactly what Small did. In response, the
condominium association counterclaimed against her for injunctive
relief, breach of contract and for a request to uphold the
arbitrator's award.
the proceedings, the association argued that it had the irrevocable
right to enter all units for necessary maintenance. In response,
Small presented testimony from her physician who provided that
"it would be deleterious to her health to be exposed to any
chemicals." Small also questioned whether the association's
demands were "reasonable and necessary". Small's
arguments failed. The trial court's order provided that, amongst
other things, the association would have access to the unit on the
third Monday of every month to perform pest control services.
appealed the trial court's decision. In response, the association
moved for contempt when she prevented the association from
performing pest control services until she could have someone
inspect the spray to be used. She continued to refuse access to her
unit because her expert found that the spray was harmful to her
breathing condition and that there was no evidence of insects. The
Court then found Small in contempt of court. Thereafter, when Small
was still not compliant, the association sought an enforcement order
against her, which was decided in the association's favor. By this
time there was both an order of contempt and enforcement against
appealed the enforcement order, but not the court's contempt order
issued against her. She argued that an issue of material fact
existed as to whether the association's demands were reasonable
and necessary. The association argued that its actions were
necessary and reasonable to prevent a pest infestation that may
spread to the condominium's common elements. The Court explained
that for access to a unit, the association's actions must be (1)
within the association's authority and (2) reasonable. Further, a
mere "claim" of necessity is not sufficient.
Court reversed the trial court's enforcement order. However, the
Court affirmed the contempt order because Small failed to appeal it,
thereby waiving any challenge on the merits of the contempt order.
Furthermore, the Court explained that "a contempt order may
stand even if it is based on an erroneously entered order."
to Small, it would have been interesting to see if her situation
would have turned out differently had she made a request for a
reasonable accommodation to her association's pest control policy
under the Federal Fair Housing Act.
those readers who are members of a homeowners' association, you
can breathe a sigh of relief (pun intended). Unlike condominium
associations, homeowners' associations do not have a statutory
right to access an owner's lot. However, a homeowners'
association's declaration of covenants may grant the association a
right to access an owner's lot, but not the home, in emergency
circumstances or for purposes of undertaking an owner's
maintenance obligations on the lot in the event the owner fails to
properly maintain his or her lot.
Power Corrupts Absolutely!
the revamping of the condominium termination procedures began in 2003
due to known problems in Florida's termination procedures or whether
the revamping occurred in 2007 as a result of several prior horrific
storm seasons which led to distressed, fractured and unsustainable
condominium projects throughout the State of Florida, the obvious fact
is that, in 2007, the Florida legislature completely revamped the
condominium termination process in an effort to simplify the
termination process. But, is the cure even worse than the disease?
to July 1, 2007, to terminate the condominium, a condominium
association needed to obtain the approval of 100% of both the
condominium unit owners and mortgage lienholders, unless otherwise
provided in the declaration of condominium. In the off chance that
such a vote was obtained, the condominium property became owned by the
unit owners as "tenants in common" which would then require
the filing of an "equitable partition" lawsuit – a lengthy
process – so the condominium property could be sold and the proceeds
distributed. At risk of pointing out the obvious, one sole disgruntled
owner could prevent a justifiable and necessary termination
necessitated by extreme damage to the condominium incurred as a result
of casualty.
the 2007 amendment, the new condominium termination procedures provide
that the affirmative vote of only 80% of the unit owners, unless
otherwise provided in the declaration of condominium, is needed to
approve, what Chapter 718, Florida Statutes calls, a "plan of
termination", so long as not more than 10% of the unit owners
vote to object the "plan of termination". In this new
termination regime, mortgage lienholders consent is not needed and
thus irrelevant. According to attorney Martin A. Schwartz, "there
is a lack of clarity in the statute on whether a mortgagee has to
receive the full amount of its mortgage or only the value of the
underwater unit. Lenders have generally accepted less than their
principal amount since they are receiving the full current value of
their collateral." This could lead to continued liability for the
borrower to satisfy the shortfall.
these relaxed procedural hurdles to condominium termination have
helped numerous real estate projects get back on their feet in one
manner or another, a disturbing trend has arisen in which developers
are using these termination provisions as a means of taking over
condominiums and forcing unit owners out of their homes to turn these
fledgling condominiums into rental properties, or to perhaps build
newer, more dense condominium projects. After the condominium bubble
burst and the condominium recession in Florida grew, investors, like
sharks sensing blood in the water, sensed opportunities to purchase
condominium units at incredibly low prices, sometimes purchasing the
majority or all of the units in a condominium project, otherwise known
as a "bulk purchase". Having purchased a majority, if not
all, of the units in a condominium, the developer, or "bulk
buyer", then had control over the condominium association. An
owner of more than 50% of the units can legitimately control the board
of directors and thus control the condominium association, too.
control of the condominium association, the bulk buyer could commence
the termination of the condominium. In this new termination process,
governed by section 718.117, Florida Statutes, a termination trustee
– typically, the condominium association itself – records a
"plan of termination" which meets the requirements of
Chapter 718, Florida Statutes. Once the "plan of
termination" is recorded, title to all of the units automatically
transfers to the termination trustee, and all liens automatically
transfer to the sale proceeds. The "plan of termination"
typically grants the termination trustee the power to sell the
condominium property, including all of the units, at fair market value
as determined by an independent appraisal, which amount can be below
the amount borrowed by the owner.
proceeds of the sale then get distributed in the following manner: (1)
to the termination trustee for its reasonable fees and costs; (2) to
any lienholders of liens recorded prior to the declaration of
condominium; (3) to any purchase money lienholders, (aka, lenders- but
the amount of their share could be less than the amount borrowed by
individual owners); (4) to any lienholders of liens entered into by
the condominium association which have been consented to by the
unanimous consent of unit owners; (5) to any creditors of the
condominium association; and finally (6) to the unit owners as set out
in the "plan of termination".
trend of condominium take over and termination which, in today's
market, is likely the conversion of condominiums into rental
properties, has the practical and real world possibility of forcing
unit owners to sell their homes at depressed prices, likely for less
than what is owed to their lenders, leaving them without a home, with
the remaining debt on their mortgage liens, and with no money for a
down payment on a new home. Can you think of worse situation?
is a very unfortunate turn of events to what was created as a panacea
to save otherwise defunct properties. In fixing the problem, the
Legislature could at least ensure that no condominium owner will be
left owing money to their lender as a result of their condominium's
termination when the termination is the result of a bulk buyer
acquiring control as compared against a termination necessitated by a
casualty event.
amendments to the condominium termination provisions of section
718.117, Florida Statutes, failed during the 2014 Florida Legislative
Session, change must be made to avoid, or at the very least, curb, the
incidences of abuse of its procedures. Will Floridians be harmed
before the Legislature acts?
Your Home?
Blame Me If You Don't Read This
your association has ever considered filing an eviction lawsuit
against a unit owner's tenant, then you need to know about a
recent Third District Court of Appeal case, Shteyn vs. Grandview
Palace Condominium Association, decided September 24, 2014. This
case is so fresh that the ink isn't dry yet. In fact, the decision
is not final until the 30 day period in which either party may
decide to appeal further has lapsed. It is unlikely, but remotely
possible. So, let's take a deeper look.
Shteyn, the association sought i) to "evict" the tenants,
ii) to "eject" the tenants and iii) an injunction
(meaning, to force through court order) to prohibit the tenants from
violating the association's rules and regulations. An "ejectment"
action is a lawsuit brought by the property owner to remove a party
who is unlawfully occupying the property. It differs from an
"eviction" in that an eviction requires a landlord-tenant
relationship whereas an ejectment does not. For example, if the
occupant claims they are not paying rent, then an eviction action
may not be the right cause of action. By including both claims for
eviction and ejectment, the plaintiff-association covered all of its
the association filed its lawsuit, the tenants moved out. As a
result, the claims for eviction and ejectment were rendered moot.
The tenants also argued that the association's cause of action for
injunctive relief should be rendered moot, too. Typically, in order
for an association to maintain standing against an owner or tenant,
that individual must still maintain their relationship as a resident
within the association. Because the tenants moved out, that
relationship no longer existed, and thus, the tenants argued they
were no longer subject to the court's jurisdiction in so far as
the association's claim for injunctive relief was concerned. The
Court disagreed.
Court looked to section 718.303 (1)(b)(e), Florida Statutes (2013),
which provides, in part, that "[a]ctions for… injunctive
relief… may be brought by the association against… [a] unit
owner… [a]ny tenant leasing the unit, and any other invitee
occupying a unit." However, the prior tenants admitted that at
the time the lawsuit was brought, they were occupying the unit.
Therefore, the Court found that the circuit court had subject matter
jurisdiction at the time the association filed its lawsuit and that
the fact that the tenants moved out after the lawsuit was filed in
no way divested the circuit court of its jurisdiction. The Court,
quoting another case, provided that "a defendant cannot
automatically moot a case simply by ending its unlawful conduct once
sued." In addition to seeking an injunction to enjoin the
tenants from violating the association's rules and regulations,
the association also sought an injunction to permanently enjoin the
tenants from ever again residing at the condominium. Therefore, the
Court determined that the circuit court continued to have subject
matter jurisdiction to decide the association's claim for
injunctive relief.
too that ultimately, when an association prevails in a lawsuit
against an owner's tenant, so long as the unit owner was included
as a party defendant in the litigation, the unit owner-landlord will
ultimately be responsible for the association's prevailing party
attorney's fees incurred in the lawsuit against the owner's
tenant. With that in mind, a well-educated owner will always
intercede and resolve their association's concerns with the owner's
tenant because it is far less expensive to handle the matter then
than it is to be sued as a co-defendant along with the tenant and be
responsible for all of the association's fees and costs. It is
like going out to dinner, not eating and then being fully
responsible to pay for everybody else's meal! It is a no-win
Support Animals
Let Your Association Step In It!
those funny Seinfeld episodes when Jerry's father, Mort, served on
the board of directors of that fictitious and loony community, Del
Boca Vista, that was supposedly in Boca Raton, Florida? Well,
apparently, in Miami there is condominium named Del Vista Towers.
While there is no relation between the two, we will soon know if Del
Vista Towers earns the reputation of that fictional association with a
similar name. Reporter Samantha Joseph, in the August 1, 2014 edition
of the Daily Business Review, reported that Miami's Del Vista Towers
is being sued by one of its unit owners for failing to permit an
owner, who suffers from post-traumatic stress disorder ("PTSD")
and severe depression, to have his assistance animal in accordance
with the Fair Housing Act ("FHA") - a pit bull.
a motion for summary judgment hearing, Del Vista Towers argued that a
Miami-Dade ordinance prohibits pit bulls; therefore, the condominium
association did not have to grant the owner's request. According to
reporter Joseph, and to the contrary of the association's arguments,
Judge Jose Martinez agreed with the owner's position that the U.S.
Department of Housing and Urban Development allows reasonable
accommodation without regard to breed, that emotional support animals
do not require any training and that if the county ordinance were
enforced, it would violate the FHA by permitting a discriminatory
housing practice in that by denying the owner's request to keep his
pit bull, he is not afforded an equal opportunity to use and enjoy his
dwelling. The Judge's rulings appear consistent with prior FHA
decisions. While there is no such thing as a sure thing in any court
case, it will be quite a surprise if the owner does not ultimately
prevail in this one.
considering the delicate nature of requests for emotional support
animals there is a minefield of mistakes that community associations
can trip over. Some of these mistakes were recently made by Bhogaita
v. Altamonte Heights Condominium Association, Inc., Case No.
13-12625; 13-13914 (11th Cir., August 27, 2014) in which a judgment
against the association, in favor of the unit owner, was upheld by the
U.S. Court of Appeals for the Eleventh Circuit. In this case, the unit
owner, who suffers from PTSD that developed as a result of a sexual
assault which occurred during the unit owner's military service,
purchased a dog, "Kane," whose weight exceeded the
association's 25-pound pet weight restriction. Two years after
acquiring the dog, the association demanded the dog's removal due to
the weight violation. In response, the unit owner provided two letters
from his treating psychiatrist which provided that, due to mental
illness, the unit owner had limitations regarding social interaction
and coping with stress and anxiety and that an emotional support
animal would help the unit owner cope with the disability.
response to the doctor's letters, the association made its first
mistake, some might say, the association really stepped in it (pun
intended) by requesting detailed information regarding the unit owner's
disability and the dog's training – the association requested
additional information when the minimum threshold to establish
entitlement to an emotional support animal had already been reached by
the unit owner. The Court found that such threshold had been met by
the letters from the unit owner's psychiatrist because they (i)
described the nature and cause of the unit owner's PTSD diagnosis,
(ii) provided that the unit owner was substantially impaired in the
major life activity of working and (iii) explained that the dog
alleviated the unit owner's disability related symptoms.
Additionally, although not discussed by the Court, it is worthy to
note that the FHA, unlike the Americans with Disabilities Act, does
NOT require specific training for emotional support animals or
service-type animals.
despite having met the minimum threshold, the unit owner responded to
the association's request for additional information by providing a
third letter from the psychiatrist and a personal response answering
each of the association's questions in turn. In this response, the
psychiatrist and the unit owner described the unit owner's PTSD and
how it affects major life activities. In addition, the unit owner
mentioned a physical disability related to multiple knee surgeries and
knee injuries suffered during his military service.
obtaining this response and learning of the newly claimed physical
disability, the association made its second and third mistakes (twice
and in addition to committing the first mistake again!) by requesting
very detailed information regarding the unit owner's disabilities
and demanding that if the unit owner failed to respond by a certain
deadline, he had to remove the dog!
Court provided that, although the association is empowered to conduct
a "meaningful review" of the unit owner's request for a
reasonable accommodation, "[t]he failure to make a timely
determination after meaningful review amounts to constructive denial
of a requested accommodation." The Court also provided that a
"meaningful review" is for the association to gather
"information necessary to apprise [the board of directors] of the
disability and the desired need for an accommodation" and that
requesting information outside what is minimally required by the FHA
is beyond the scope of a "meaningful review."
that any information sought must be relevant to the request and must
be within the scope of a "meaningful review" and that, once
the association has the information to satisfy the minimum
requirements of the FHA, the association should approve the requested
accommodation within a timely manner. It is important to note that an
evaluation of a request for a reasonable accommodation under the FHA
is a highly fact-specific analysis and must be reviewed on a
case-by-case basis. Community associations should seek the assistance
of their legal counsel when in receipt of such a request.
that Sign Out of Here!
neighbor's front yard sign supporting their favorite political
candidate may be upsetting. But that alone is not a reason to spray
paint over it, yell obscenities every time you see your neighbor
leaving to go to work or for the association's board or directors
to demand the sign's removal.
begs the question, "Can a homeowners' association or
condominium association prohibit the display of political yard
signs?" In short, "yes, it likely can." The reason
the word "likely" is used is due to the fact that, as yet,
there are no Florida cases that directly answer this inquiry.
However, given other existing cases, a well-crafted and properly
adopted rule prohibiting such signs is likely lawful and
examining an association's "no sign" rule, let us first
address the argument heard during every presidential, state and
local election seasons, "This is America! The First Amendment
protects the right of all homeowners to display political signs on
their property." RIGHT? WRONG! The right to freedom of speech
as provided by the First Amendment is not an absolute right and,
moreover, the First Amendment concepts of freedom of speech and
freedom of expression apply only to governmental settings. As such,
the First Amendment acts as both a shield and a sword to prevent the
government from stifling your free speech rights.
community association is not an extension of our government. Though
homeowners' associations and condominium associations do provide a
system of governance, they are not governmental entities and have no
nexus to local or federal government. In 1987, the Florida Supreme
Court held, in Quail Creek POA v. Hunter, that neither a homeowners'
association's recordation of its covenants in the public records,
nor the enforcement of its covenants in state court, created a
sufficient nexus to evidence "state action" such that the
First and Fourteenth Amendment would apply. Thus, any homeowner
would be hard-pressed to argue otherwise. Admittedly, there are
occasions when the Florida Supreme Court applies other rights set
out in our Federal Constitution, but not in this instance.
have long since held that owners give up certain liberties when
living within a community association. In 2002, the Florida Supreme
Court held, in Woodside Village v. Jahren, that certain individual
rights must be compromised when you choose to live in a condominium.
With this in mind, any sign prohibition should be artfully drafted
to help ensure enforceability and must be equally enforced. There is
no margin for error. The dispositive court cases regarding rule
enforceability make clear that a sign restriction must be
"clear and unambiguous" to be enforceable against each
owner. Remember, a declaration of covenants is a contract between an
association and an owner. A basic principal of contract
interpretation is that ambiguous terms are held against the drafting
party. This means that in the event the rule is even slightly
confusing, then the homeowner will likely receive the benefit of the
doubt. Also, any covenant or rule must be applied fairly to avoid
selective enforcement rebuttals.
rules prohibiting signs must be artfully drafted was a point made
very clear to the homeowners' association in Shields v. Andros
Isle Property Owners Association, Inc. in which the Fourth District
Court of Appeal of Florida decided in favor of the homeowner who
displayed a sign in her car window despite the association's sign
prohibition. The association's rules prohibited the display of
signs "on any lot", except a "for sale" sign of
a certain size, and prohibited signs on a vehicle. The Court, using
the definition of a "lot" in the association's
declaration, interpreted these rules to mean that no sign, except a
"for sale" sign, may be on the land or on the exterior of
a vehicle. However, there was no prohibition for signs displayed
from within a vehicle.
consideration of the above, a homeowners' association could, more
likely than not, enforce its "no sign" policy which
includes prohibiting political signs. Also, as a general rule,
courts favor covenants adopted by the membership over rules adopted
by the board of directors; meaning, a "no sign" rule
approved by the membership serves to increase the association's
chances of prevailing should the rule be challenged.
legal challenge, a court might also be more inclined to uphold a
"no sign" rule that does not include an absolute
prohibition, but rather, that regulates the length of time the sign
can be displayed, its size, where it can displayed and when it must
be removed. Before demanding that an owner remove their political
sign, the board should review its community association's sign
rules. If the rule at issue is not patently clear, then it is likely
time to consider amendment before enforcement. Consider also,
election season is short. By the time a lawsuit for an injunction to
enforce the "no sign" rule is fully resolved, it might be
time to consider the next electoral candidate!
Out For These Dangerous and Very Costly Words
does your association do when an owner sends the association their
assessment payment for less than full amount due? Say the owner owes
$1,000.00, and only sends in $100.00 and on their check writes
"paid in full." Do you deposit the check and bill the
owner for the difference? If you answered yes, then you are likely
in the majority. But, given Florida's Second District Court of
Appeal, August 8, 2014, opinion in St. Croix Lane Trust (the
"St. Croix Trust") & M.L. Shapiro, Trustee (the
"St. Croix Trustee") v. St. Croix at Pelican Marsh
Condominium Association, Inc. (the "Association"), you
might seriously reconsider depositing that check in favor of sending
it back to the owner and demanding full payment, instead. The answer
will depend on whether the owner disputed the amount due.
this case, the St. Croix Trust acquired its unit as a result of a
foreclosure. Upon talking title, the Association demanded $38,586.11
as the assessments that remained due and owing. The St. Croix
Trustee disputed the assessment amount and argued to the Association
that it only owed $840.00. The St. Croix Trustee then sent its check
in the amount of $840.00 to the Association and in so doing, wrote a
restrictive endorsement on their check, "paid in full."
While the Association continued to seek the difference from the St.
Croix Trustee, the attorney handling this collection matter for the
Association deposited the $840.00 check. The Court held that the St.
Croix Trust did not owe the balance due because the restrictive
endorsement written on its check combined with the Association's
lawyer's act of depositing the check was a de facto acceptance of
the St. Croix Trust's $840.00, a process in legal terms referred
to as an "accord and satisfaction."
"accord and satisfaction" is discussed in section 673.111,
Florida Statutes, more commonly known as the "Condominium
Act." This section provides, in relevant part, that:
If a person against whom a claim is asserted proves that that person
in good faith tendered an instrument to the claimant as full
satisfaction of the claim, that the amount of the claim was
unliquidated or subject to a bona fide dispute, and that the
claimant obtained payment of the instrument, the following
subsections apply.
claim is discharged if the person against whom the claim is asserted
proves that the instrument or an accompanying written communication
contained a conspicuous statement to the effect that the instrument
was tendered as full satisfaction of the claim."
there are a few exceptions to subsection (2), above, the Court found
that none of them applied to this situation. The Court also held
that none of the stated exceptions to the application of subsection
(2) applied and thus, "[i]f the Association did not wish to
accept the $840 check in full settlement of its claims in accordance
with the [St. Croix] Trust's tender, then it should have returned
the check instead of negotiating [depositing] it."
an astute reader of this column, you are already aware that that
section 718.116(3) of the Condominium Act (as well as a similar
provision set out in the Chapter 720, also known as the
"Homeowners' Association Act") provides, in relevant
part, that:
Any payment received by an association must be applied first to any
interest accrued by the association, then to any administrative late
fee, then to any costs and reasonable attorney's fees incurred in
collection, and then to the delinquent assessment. The
foregoing is applicable notwithstanding any restrictive endorsement,
designation, or instruction placed on or accompanying a
payment." [emphasis added]
Court looked to the legislative history and staff analysis of the
legislation and found that it meant that, even if a check contained
a restrictive endorsement which provided some other formula for the
application of a payment, that nevertheless the monies were to be
applied first to the accumulated interest, followed by late fees,
attorney's fees and costs and then to the delinquent assessment.
In the Court's opinion, the staff analyses confirmed that the
pertinent language was added to invalidate restrictive endorsements
that provide a formula for the application of payments other than as
set forth in the statute. The Court found "nothing in the staff
analyses suggesting that the amendment was intended to make section
673.3111 [the accord and satisfaction statute, above] inapplicable
to condominium associations or that the amendment would otherwise
alter Florida law concerning accord and satisfaction solely for the
benefit of condominium associations."
key to understanding this outcome is that the St. Croix Trustee, an
association member, had first disputed the assessment amount due,
and then sent in the St. Croix Trust's $840.00 check that
contained the restrictive endorsement, "paid in full"
which was deposited by the Association (or in this case, its
attorney). With this in mind:
If the debt is disputed and less than the full amount due is
provided with the written endorsement "paid in full," do
not deposit the check. Instead, send it back to the debtor and
demand that the full amount past due be remitted.
If there is no dispute and less then the full amount due is sent in
by the debtor and the check provided by the debtor contains written
endorsement "paid in full," then if the association
deposits the check, it can argue that there was no "accord and
satisfaction." However, it may not be worth the risk, which
leaves us with the safest alternative set out in No. 3 below.
Any time the association receives a check containing the written
endorsement "paid in full," then, unless the check
actually represents the full amount due, do not deposit it but
rather send it back and demand the debtor resubmit their check, this
time in full.
this newest wrinkle to association assessment collections, the
Florida legislature should come to the aid of associations and
clarify that if a debtor writes "paid in full" on their
check, it is fully and unequivocally meaningless.
Florida Legislature: Less is Not Always Best
Changes to the Commercial Condominium Regime
several new laws went into effect that only affect commercial
condominiums. While only a few of these changes make sense, most do
not and illustrate the significant misunderstanding of the need to
protect all condominium unit owners without regard to whether the
condominium is residential or commercial.
before you get too excited, this article only addresses changes to
COMMERCIAL, and NOT residential condominium associations.
our Florida legislators have determined that unit owners of
commercial condominiums are not entitled to the same protections as
owners of residential condominiums shall forever remain a mystery.
If you own a unit in a commercial condominium, you need to be aware
of these important changes. There is no longer any protection for an
owner of a minority of units in a commercial condominium,
WHATSOEVER! In other words, there is no equality – whoever owns
the most units or the most square footage is "King of the
Condo", FOREVER AND EVER AND EVER AND EVER AND EVER!!!
changes affecting only commercial condominium
associations include:
Board members can serve for unlimited terms.
If there is more than one owner of the commercial condominium unit
then all of the owners can serve on the board at the same time
thereby completely obliterating fair representation on the board.
Board members do not have to sign a "loyalty oath" that
they have read the condominium documents and will discharge their
fiduciary duties in a responsible manner. In effect, this means the
controlling owners/board members can do what is best for them,
personally, and not what is best for the condominium association.
The election requirements for running and voting for the board as
set out in Chapter 718, Florida Statutes (the "Condominium
Act"), are no longer applicable to commercial condominiums.
Voting by "general proxy" is permitted for all matters,
even elections of the board. A "general proxy" allows the
proxy holder to vote however he or she sees fit on ANY matter that
may be undertaken, while a "limited proxy" lists the
issues that a proxy holder may cast a vote for on behalf of a voting
interest and instructs the proxy holder on how to vote on those
issues. Until this new law went into effect, even owners of
commercial condominiums had to vote by limited proxy. Now that this
requirement has been removed for commercial condominiums, once a
commercial unit owner appoints their proxy, that person can cast the
vote of their choosing on any and every matter under consideration.
If you add the right of the general proxy holder to the new board
member rights, you can begin to understand the dangers. Most unit
owners end up appointing a board member to act as their proxy. Given
the board will now be fully controlled by the owners who own the
largest or the most units, commercial condominium unit owners who do
not understand these new UBER-dangers, will soon find themselves
completely and utterly powerless to stop the board from doing what
is best for their own individual interests.
The hurricane shutter, impact glass and other hurricane protection
provisions set out in the Condominium Act no longer apply to
commercial condominiums. Does the legislature really believe that
commercial condominiums are immune from dangers of hurricanes? Oh
The build-out of what is referred to as a "phased condominium
project" occurs in phases, just as the title suggests. Until
now, once the phase plan is established, early purchasers are
protected from drastic development changes that could negatively
affect their property value and assessment liability. As to
commercial condominiums, these protections are now completely
obliterated. The unsuspecting commercial condominium purchaser will,
no doubt, bear the brunt of this new legislation.
is, however, one change that does make sense.
It is clarified that the Division of Florida Condominiums,
Timeshares, and Mobile Homes, which has jurisdiction over certain
disputes in residential condominiums, has no jurisdiction whatsoever
over similar disputes in a commercial condominium.
it is a commonly accepted legal principal that the purchaser of
commercial property purchases such commercial property at their own
risk and, for all practical purposes, has little recourse against
the seller for nondisclosure, these recent changes to the commercial
condominium regime are reckless and extremely dangerous. In the end,
if you purchase a commercial condominium, DANGER WILL ROBINSON,
Deeper Look into New Legislation Affecting Condominium, Homeowners'
and Cooperative Associations
Insurance, E-mail Communications,
& Emergency Powers
718.111(11) of the Condominium Act regarding insurance, has once again
been revised. Subsection (j) now provides that, in the absence
of an insurable event, any repairs that are required will be made by
the association or the unit owner, in accordance with the declaration
or bylaws. This law clears up some confusion that was created by a few
prior court cases which generally held that whoever had the duty to
insure (the association as compared to the unit owner) also had the
duty to effectuate the repair, regardless of the provisions in the
declaration. Now we know to look to the declaration or bylaws to make
such determinations. However, this new law does not clarify whether a
casualty for which coverage is denied is considered an "insurable
event" (Oh Brother!).
great number of questions are being mulled as to board member to board
member e-mail communications. Section 718.112 of the Condominium Act
now authorizes board members to use e-mail as a means of
communication, however, this new law also clarifies that board members
may not cast their vote on an association matter via e-mail. (Sorry
HOA board members, this only applies to condominium associations, for
now.) So, just what can be discussed? On one end of the spectrum,
clearly, setting the board's agenda items for its next meeting would
seem appropriate. On the other end of the spectrum, voting via e-mail
is a "no-no" and violates the new legislation. What about
everything in between? For example, can the board discuss the
condition of the swimming pool and the need to acquire bids for
consideration at the next board meeting? Can the board discuss via
e-mail the need for a new gate? A parking garage repair? A raise for
the manager? Just what can be discussed in these e-mail
communications? Well, try to look at it this way. When communicating
via e-mail, do not communicate any differently than if you were on the
street, eye to eye with your fellow board member. In that way, you are
bound to stay in the safe zone.
can already publish in their community directory the address and phone
number provided by a member for their official association meeting
notices and the like. New legislation was passed that also permits all
condominium, cooperative and homeowners' associations to publish all
of their members' telephone numbers in the community directory, but
any owner can opt-out in writing and not have their numbers listed.
Additionally, subject to the affirmative written consent of an owner
to opt-in, such owner can consent in writing to the disclosure of
other additional contact information by the association (for example,
e-mail addresses).
Association Boards have been provided clear emergency powers similar
to those previously provided to Condominium Association Boards. In the
event of a state of emergency, a HOA board may:
conduct board and membership meetings after notice of the meetings is
provided in as practicable a manner as possible;
cancel and reschedule an association meeting;
designating assistant officers, who are not directors, to step into
the shoes of an officer in the event an officer is incapacitated or
relocate the principal office of the association;
enter into agreements with counties and municipalities to assist with
debris removal;
implement a disaster plan before or immediately following the state of
emergency event is declared, which may include turning or shutting off
elevators, electricity, water, sewer, security systems or air
based upon advice of emergency management officials or upon advice of
licensed professionals retained by the board, determine any portion of
the property unavailable for entry or occupancy;
mitigate further damage, including taking action to contract for the
removal of debris and to prevent or mitigate the spread of mold,
regardless of which party is responsible by the governing documents or
law to insure, or remove fixtures and personal property.
levy special assessments without a vote of the owners;
borrow money and pledge association assets as collateral without a
vote of the owners.
159 New Laws
That Did Not Go Up in Smoke — A Quick Look at Medical Marijuana
… No Smoke, No Foul
addition to the numerous changes to Chapters 718, 719, and 720 of
the Florida Statutes, more commonly known as the Condominium Act,
the Cooperative Act, and the Homeowners' Association Act,
respectively, many other laws went into effect today, too. A few of
the changes as reported in the July 1st edition of the Miami Herald
include Florida's $77 billion dollar budget which went into
It would appear that if a Floridian threatens to use a gun, or
fires a warning shot, such actions might avoid criminal
prosecution. The new law signed by Governor Rick Scott was brought
about after a Jacksonville woman was initially sentenced to 20
years in prison after firing a shot near her estranged husband.
She had unsuccessfully argued Florida's "stand your ground
defense" to a judge who rejected her claim. As a result, she
was sentenced under Florida's "10-20-Life" law, which
requires mandatory sentences for using a gun. This new law
provides that Florida's "10-20-Life" rule may not
apply in instances of threatened use of force when the victim
threatens to use a gun, or fires a warning shot.
Tax collectors' offices can handle concealed-weapon license
Electronic cigarette sales to minors are prohibited.
Insurance companies may not deny coverage or increase your rates
because you own a gun.
The "Florida GI Bill" provides for university tuition
waivers for veterans.
School districts will need to establish a system for parents to
contest the selection of certain textbooks and classroom
There is an increase in penalties for drivers who leave the scene
of serious accidents.
There are changes to the Sunshine Laws which remove certain items
from public access, including personal information of people
involved in animal research and certain personal contact
information that you might find in vehicle crash reports.
The budget also includes additional funds to deal with water
pollution and additional funding for child welfare programs.
It would appear that if a Floridian threatens to use a gun, or
fires a warning shot, such actions might avoid criminal
prosecution. The new law signed by Governor Rick Scott was brought
about after a Jacksonville woman was initially sentenced to 20
years in prison after firing a shot near her estranged husband.
She had unsuccessfully argued Florida's "stand your ground
defense" to a judge who rejected her claim. As a result, she
was sentenced under Florida's "10-20-Life" law, which
requires mandatory sentences for using a gun. This new law
provides that Florida's "10-20-Life" rule may not
apply in instances of threatened use of force when the victim
threatens to use a gun, or fires a warning shot.
Tax collectors' offices can handle concealed-weapon license
Electronic cigarette sales to minors are prohibited.
Insurance companies may not deny coverage or increase your rates
because you own a gun.
The "Florida GI Bill" provides for university tuition
waivers for veterans.
School districts will need to establish a system for parents to
contest the selection of certain textbooks and classroom
There is an increase in penalties for drivers who leave the scene
of serious accidents.
There are changes to the Sunshine Laws which remove certain items
from public access, including personal information of people
involved in animal research and certain personal contact
information that you might find in vehicle crash reports.
The budget also includes additional funds to deal with water
pollution and additional funding for child welfare programs.
* * * * * *
all the chatter about medical marijuana taking place in the state, I
was recently asked whether a condominium association that has
lawfully adopted a no-smoking policy must allow a resident to smoke
their medicinally prescribed marijuana (assuming it's not illegal
at some time in the near future). In examining the Fair Housing Act,
if the resident has a disability that affects a major life function
recognized by federal, state or local law, and the medical marijuana
is prescribed to help alleviate the disability, you might think that
in order to provide the resident equal opportunity to use and enjoy
the unit, a reasonable accommodation must be granted. Think again,
because at the present time, marijuana remains a "controlled
substance" under federal law. Therefore, the protections
provided by the Fair Housing Act do NOT apply to medical marijuana
even more interesting question is whether Florida, if it does adopt
laws allowing use of medical marijuana, will sue the federal
government for interference with state law. In the meantime, should
medical marijuana become legal, an easy solution to the no-smoking
dilemma may well rest on the patient's ability ingest their
medication without having to smoke, such as using vaporization,
consuming medical marijuana in food, teas and tinctures… No smoke,
no foul.
Legislative Results
a continuing series
year about this time I am asked, "How does this year's
legislation affect our cooperative? Jeff, you wrote about
condominium and homeowners' associations' legislation, what
about us cooperatives?" You asked for it, you got it!
Directories. A cooperative association may
publish a directory providing ALL of the telephone numbers
associated with an owner in addition to an owner's name and
address. An owner can also provide their written consent to the
disclosure of other contact information which is otherwise not
supposed to be disclosed by the cooperative.
of Records and Property by Outgoing Board and Committee Members.
Within five days after the new board and committee members are
elected or appointed, all prior board and committee members are now
under a statutory obligation to return all official records and
property of the cooperative in their possession, or control, to the
incoming board and committee members. Those outgoing board and
committee members who willfully and knowingly fail to return such
records and property are subject to penalties imposed by the
Division of Florida Condominiums, Timeshares, and Mobile Homes.
Reporting. Within 90 days following the
end of the fiscal year, unless otherwise provided in the bylaws, the
cooperative must prepare and complete, or have prepared and
completed, a financial report for the preceding fiscal year. The
financial report, or a notice that the financial report is available
at no cost upon request, must then be provided to the owners within
120 days following the end of the fiscal year, unless otherwise
provided in the bylaws. A majority of the members present at a
membership meeting can vote to waive the financial reporting
requirement for a fiscal year but cannot do so for more than three
consecutive years and can vote to raise the level of financial
reporting. Financial reports are to be prepared in the following
An association in a community of fewer than 50 units, regardless of
the association's annual revenues, shall prepare a report of cash
receipts and expenditures, unless the declaration or other recorded
governing documents provide otherwise.
An association with total annual revenues of less than $150,000
shall prepare a report of cash receipts and expenditures.
An association with total annual revenues between $150,000 and
$299,999 shall prepare a compiled financial statement.
An association with total annual revenues between $300,000 and
$499,999 shall prepare a reviewed financial statement.
An association with total annual revenues of $500,000 or more shall
prepare an audited financial statement.
Member Eligibility and Suspension. A
member who has pending charges for felony theft or embezzlement
involving the association's funds or property may not be appointed
or elected to a position as a director or officer. A member who has
been convicted of any felony in any state or who has been convicted
of any offense in another state which would be considered a felony
if committed in Florida is not eligible for board membership unless
their rights have been restored for at least 5 years as of the date
the member seeks election to the board. A member who has been
suspended or removed by the Division of Florida Condominiums,
Timeshares, and Mobile Homes or who is delinquent in the payment of
any monetary obligation due to the association is not eligible to be
a candidate for board membership and may not be listed on the
director or officer charged with felony theft or embezzlement
involving the association's funds or property is suspended from
office; the vacancy of which is filled by the board until the end of
the suspension or the end of the term, whichever occurs first.
However, if the charges are resolved without a finding of guilt or
without acceptance of a plea of guilty or nolo contendere, the
director or officer shall be reinstated for the remainder of the
term. The validity of an action by the board is not affected if it
is later determined that a board member is ineligible for board
membership because the board member was convicted of a felony.
Powers. A cooperative can perform several
actions in the event of a "state of emergency", unless
specifically prohibited by the association's recorded governing
documents. Among others, such actions of the board include the
following: (i) designating assistant officers, who are not
directors, which will step into the shoes of an officer in the event
the officer is incapacitated or unavailable; (ii) conducting,
canceling or rescheduling association meetings and providing notice
of such meetings in as practicable a manner as possible as the board
deems appropriate under the circumstances; (iii) mitigating further
damage, which may include the removal of debris and the removal of
wet drywall, cabinets and fixtures; (iv) implementing a disaster
plan before or immediately following the "state of
emergency" event; (v) requiring the evacuation of the
cooperative property; and (vi) contracting, on behalf of the owner
and at the owner's expense, for items or services which the owner
is responsible. Additionally, based upon the advice of emergency
management officials or licensed professionals hired by the board,
the board may determine if the property or any portion of the
property is unavailable for entry or occupancy or if the property or
any portion of the property can be safely inhabited or occupied.
board may, without a vote of the members, levy special assessments
and borrow money, using the association's assets as collateral, to
fund repairs and to carry out the association's business in the
event the operating funds are not enough.
of these emergency powers are only available to the board for a
period of time that is reasonably necessary to mitigate further
damage and make repairs and to protect the health, safety and
welfare of the association and the residents of its community.
2014 Legislative Results,
continuing series
Bill 807's Effect on Homeowners' Associations
this article we'll review House Bill 807's (HB 807) effect on
Florida Homeowners' Associations (HOA). As mentioned when we
discussed HB 807's effect on condominiums, on May 2, 2014, HB 807
was approved by both the Florida's House of Representatives and
Senate. However, HB 807 is not yet law. In order for HB 807 to become
effective law, Governor Rick Scott can either sign HB 807 into law or
take no action at all thus allowing HB 807 to become law on July 1,
2014, HB 807's effective date. That said, Governor Scott does have
the ability to veto HB 807 if he so chooses. Among other changes
affecting residential properties, HB 807 makes some notable changes
and additions to Chapter 720, Florida Statutes, (a/k/a the
"Homeowners' Association Act"). This article will give you
a sneak peek into four notable changes if HB 807 is adopted into law.
Handicap Accessible Meeting Locations.
HB 807 requires that HOA board meetings and membership meetings be
held at a location accessible to physically handicapped persons IF it
is requested by a physically handicapped person who has a lawful right
to attend the meeting.
new language may likely be a reaction to the decision made in a Dade
City, Pasco County, Florida case regarding a wheelchair bound man's
desire to attend his homeowners' association meetings. According to
Laura Kinsler, as she reported for the Pasco Tribune and the Tampa
Tribune on March 25, 2014, John Whitt, a wheelchair-bound member of
the homeowners' association, wanted to attend board meetings but was
prevented access because the board insisted on holding its meetings on
an unfinished lakefront lot that was not wheelchair accessible.
to the article, the wheelchair bound member accused his association of
violating the Fair Housing Act (FHA) and also for not having meetings
that were open to all members as required by Chapter 720, Florida
Statutes. The case was ultimately dismissed, as reported by Ms.
Kinsler, when a newly assigned judge "ruled that 'there is no
legal basis to support the plaintiffs' contention that the open
meeting provision of [the law] requires wheelchair accessibility'
since private community associations are not subject to the federal
Americans [w]ith Disabilit[ies] Act [(ADA)]." Notably, the ADA
applies to areas of public accommodation, while the FHA applies to
housing providers, which includes residential community associations.
the FHA was not discussed which, at least in this author's opinion,
would require that a reasonable accommodation be granted to the
wheelchair bound member so that he could attend the HOA's meetings.
Nevertheless, despite the perplexing outcome to this case, HB 807
provides a legislative remedy to the ruling in this case.
Emergency Powers. HB 807 creates
section 720.316, which is a brand new section to the Homeowners'
Association Act. It provides for "emergency powers". Under
this new section, a HOA can perform several actions in the event of a
"state of emergency", unless such acts are specifically
prohibited by the association's recorded governing documents. Such
actions of the board include the following: (i) designating assistant
officers, who are not directors, which will step into the shoes of an
officer in the event the officer is incapacitated or unavailable; (ii)
conducting, canceling or rescheduling association meetings and
providing notice of such meetings in as practicable a manner as
possible as the board deems appropriate under the circumstances; (iii)
mitigating further damage, which may include the removal of debris and
the removal of wet drywall, cabinets and fixtures; and (iv)
implementing a disaster plan before or immediately following the
"state of emergency" event. Additionally, based upon the
advice of emergency management officials or licensed professionals
hired by the board, the board may determine if the property or any
portion of the property is unavailable for entry or occupancy or if
the property or any portion of the property can be safely inhabited or
the exercise of these emergency powers, the board may, without a vote
of the members, levy special assessments and borrow money, using the
association's assets as collateral, to fund repairs and to carry out
the association's business in the event the operating funds are not
emergency powers are only available to the board for a period of time
that is reasonably necessary to mitigate further damage and make
repairs to protect the health, safety and welfare of the association
and the residents of the community.
Member Directories. Currently,
section 720.303(5)(c)5, Florida Statutes, provides that a HOA can
prepare and provide its members with a directory containing the name,
address and telephone number of each owner. HB 807 amends this section
to allow a HOA to publish ALL of the telephone numbers associated with
each owner. In addition, an owner can provide their written consent to
the disclosure of other contact information which is otherwise not
supposed to be disclosed by the homeowners' association.
Amendment Mailings. HB 807 provides
that, if the association mailed a copy of a proposed amendment to the
members prior to the membership vote to approve the proposed amendment
and the proposed amendment was unchanged from the time of mailing all
the way to the vote of the members, then the association only has to
notify the members that the proposed amendment was adopted and that a
copy of the amendment is available, upon written request to the
association, at no charge to the member. The notice to the members
must also provide the official record book and page number of the
recorded amendment. In addition, it can be electronically transmitted
to those members who have consented to receiving their association
notices electronically.
Season is Almost Here ... Is Your Association Prepared?
1st marked the beginning of the 2014 hurricane season, and is only
days away. Weather forecasters from Colorado State University predict
a below average hurricane season. They anticipate that nine tropical
storms will form but that only three will develop into hurricanes,
"it only takes one landfall event near you to make this an active
season", says meteorologists Philip Klotzbach of Colorado State
University's Tropical Meteorology Project. So, is your association
prepared for this hurricane season?
is important that association's board of directors ensure that the
association's insurance policies are in place and that the board
understands the association's coverages and deductibles. It is
important that the board of directors of a condominium association
understand that, pursuant to section 718.111(11) of the Condominium
Act, they must use their "best efforts" to obtain and
maintain adequate insurance to protect the association, the
condominium property and the common elements.
though a hurricane may pass in a matter of hours, the effect of a
hurricane can last for days, weeks or even months depending on the
strength of the hurricane and the damage it leaves in its wake. After
a storm has passed it is important that the board members survey the
damage caused by the storm. Some great tools for the association's
board, after a hurricane, are walkie-talkies, a disposable camera, a
notepad and a pen or a pencil to take notes (remember, we used to use
these things before our smart phones! No Power = No smart phones,
too!). These tools will help board members keep in contact with one
another after a storm and will help the board document any damage to
the condominium property for insurance purposes.
you haven't done so already, the association should adopt a written
hurricane plan. On a related note, the association should create and
distribute to its board members a list of trusted vendors, including
the contact information for each vendor. This can really come in handy
in the event damages are sustained. Such vendors may include, to name
just a few, restoration specialists, landscapers, plumbers,
electricians, insurance contacts, including the association's
insurance agent's contact information. Additionally, board members
should know how to locate electrical meters, fire system panels, water
shutoffs and any other relevant property features are located and how
to operate such features.
to section 718.111(5), Florida Statutes, a condominium association has
"the irrevocable right of access to each unit during reasonable
hours, when necessary for the maintenance, repair, or replacement of
any common elements or of any portion of a unit to be maintained by
the association pursuant to the declaration or as necessary to prevent
damage to the common elements or to a unit or units." Access to
units is of particular importance in the event of a storm. Condominium
associations should ensure that it has keys to access each unit. All
associations should ensure they have accurate contact information for
each of its owners.
are several simple things an association can do to help prevent damage
to the property in the event of a tropical storm or hurricane. Trees,
although beautiful, can cause a great amount of damage in a storm.
Associations should make sure that the palms and other trees located
on the condominium property are properly trimmed in advance of
hurricane season. Anything that can fly around should be stowed away,
such as roof tiles and patio furniture. Associations should also adopt
rules and regulations which provide for what unit owners must do in
the event of a tropical storm or hurricane, such as hurricane shutter
use. With regard to an association's official records, hard copy
records, such as insurance binders, member contact information, bank
account information, etc., can be stored in water tight containers and
should be backed up on an external hard drive and with a cloud-based
data storage service.
is important that the board members remain in contact with each other
in the event of a tropical storm or hurricane and, above all, to keep
an open line of communication with its unit owners. Unit owners should
be informed of the status of the property and the actions the board of
directors is taking to repair or replace any damaged condominium
property. Hurricane events are stressful. Communication is key!
Sneak Peak Into The 2014 Legislative Results
May 2, 2014, House Bill 807 (HB 807), was ap-proved by both the
Florida's House of Representatives and Senate. It now awaits the
signature of Governor Rick Scott to make it effective law or, if he
does nothing at all, it will still become law. That said, Governor
Scott does have the ability to veto HB 807 if he so chooses. Among
other changes affecting residential properties, HB 807 makes some
notable changes and additions to Chapter 718, Florida Statutes, more
commonly known as the "Condominium Act." This article will
give you a sneak peek into five notable changes.
Right to Enter an Abandoned Unit.
HB 807 amends section 718.111(5), Florida Statutes, regarding a
condominium association's right to access an abandoned unit. Under
these new provisions, a condominium association can enter an abandoned
unit to inspect the unit and the adjoining common elements, to make
repairs as needed, to turn on the utilities to the unit and to
otherwise maintain and protect the unit and adjoining common elements.
unit is considered abandoned under the following circumstances: i) the
unit is under foreclosure and no tenant appears to have lived at the
unit for four consecutive weeks without prior written notice to the
condominium association, or ii) no tenant appears to have lived at the
unit for two consecutive months without prior written notice to the
condominium association and the condominium association is unable to
contact the owner or determine the owner's whereabouts after
reasonable efforts. Prior to entering an abandoned unit, the
condominium association must send two days notice of its intent to
enter the unit to the owner at their last known address.
costs associated with the abandoned unit are chargeable to the owner
and, no doubt of interest to many readers, such costs are assessable
against the unit. Additionally, the condominium association can
request that the court appoint a receiver to lease the abandoned unit.
The rent collected is credited against the monies due to the
association and receiver.
Unit Owner Directories.
Currently, section 718.111(12)(c)5, Florida Statutes, provides that a
condominium association can prepare and provide its members with a
directory containing the name, address and telephone number of the
unit owners. HB 807 amends this section to allow a condominium to
publish ALL of the telephone numbers associated with unit owners. In
addition, unit owners can provide their written consent to the
disclosure of other contact information which is otherwise not
supposed to be disclosed by the condominium association.
Return of Records and Property by Outgoing Board and Committee Members.
HB 807 adds a new subsection "(f)" to the official records
requirements located in section 718.111(12), Florida Statutes. This
new subsection imposes a statutory obligation on outgoing board and
committee members to return all official records and property of the
condominium association in their possession, or control, to the
incoming board and committee members within five days after the new
board and committee members are elected or appointed. Those outgoing
board and committee members who willfully and knowingly fail to return
such records and property are subject to penalties imposed by the
Division of Florida Condominiums, Timeshares, and Mobile Homes.
is noticeably absent from this new provision is the application of
this statutory obligation on outgoing officers, too. While in the
overwhelming majority of condominium associations the officers are
comprised of board members, it is certainly possible for the board to
select officers who are not board members, unless otherwise prohibited
in the governing documents. This means that officers who are not board
members would be free from this particular statutory obligation and
civil penalty.
Board Member E-mail Communication, Attendance and Voting.
A new provision is added by HB 807 to section 718.112(2)(c), Florida
Statutes, which provides that board members may use e-mail to
communicate to one another but cannot use e-mail to cast a vote on
condominium association matters. However, while the board members are
provided the right to communicate via e-mail, there is no mention in
the legislation whether the board majority or only the board minority
may do so.
yes finally, board members can appear and vote at board meetings not
only via speakerphone, but now by video conference or similar
real-time electronic or video communication so long as a speaker is
used so that everyone can hear the "electronically
appearing" board member. While likely apparent, a board member's
electronic appearance is counted towards establishment of a quorum,
Assessment Liability as Applied to a Condominium Association.
HB 807 further defines the term
"previous owner" in section 718.116(1)(a), Florida Statutes,
as it relates to a unit owner's liability for the unpaid assessments
of the previous owner and provides for how such liability is applied
when the condominium association was a prior owner of the unit.
new language is likely a reaction to the decisions of the Third
District Court of Appeal in Aventura Management, LLC v. Spiaggia
Ocean Condominium Association, Inc., Case No. 3D13-1437 (Fla. 3d
DCA March 5, 2014) and Park West Professional Center Condominium. v.
Londono, 38 Fla. L. Weekly D2510 (Fla. 3d DCA November 27, 2013). In
both cases, the Court held that a unit owner is only liable for the
unpaid assessments of the immediate-prior unit owner, and according to
the Spiagga court case, if the prior owner was the association, then,
by way of an oversimplification, the debt merged into the ownership as
a result of the association taking title to the unit and, therefore,
since you can't owe money to yourself, the assessment debt re-sets
to zero. In any event, thanks to HB 807, condominium associations have
some new clarity in this regard. As amended by HB 807, section
718.116(1)(a), Florida Statutes, would additionally provide, in
pertinent part, that:
purposes of this paragraph the term 'previous owner' does not
include an association that acquires title to a delinquent property
through foreclosure or by deed in lieu. A present unit owner's
liability for unpaid assessments is limited to unpaid assessments that
accrued before the association acquired title to the delinquent
property through foreclosure or by deed in lieu."
new language added to section 718.116(1)(a), Florida Statutes, if and
when it becomes effective, removes a condominium association from the
classification of being a "previous owner," which means that
a unit owner is not jointly and severally liable to the condominium
association for the unpaid assessments that came due while the
condominium association owned the unit. However, unlike the holdings
of the Court cases previously mentioned, a unit owner would be jointly
and severally liable for the unpaid assessments of other former owners
pursuant to these new provisions.
tuned for future legislative updates including HB 807's effect on
homeowner associations.
vetoed, HB 807 becomes law on July 1, 2014.
Liability: A Buoy to Third Party Purchasers and Foreclosing Lenders
in the "Safe Harbor"
January 3, 2014, in U.S. v. Forest Hill Gardens East Condominium
Association, Inc., the United States Federal District Court for
Florida's Southern District held that the provision of the
condominium association's declaration, which provided that a
foreclosing lender had no liability to the association to pay its
share of common expenses or assessments pertaining to the foreclosed
unit which became due prior to the foreclosing lender's acquisition
of title, trumped the provisions of section 718.116(1)(b), Florida
Statutes, commonly referred to as the "safe harbor"
provision, which would have entitled the association to the receipt of
the lesser of one percent of the initial mortgage or 12 months back
assessments. Because this case is being used as the basis for
avoidance of lender assessment liability upon taking title as a result
of the lender's mortgage foreclosure, it is important that every
community association manager and community association board member
understand why the Court reached this very distinguishable conclusion.
at least 1992, every foreclosing lender of a condominium unit has been
responsible to pay the "safe harbor" amount. What makes this
situation so very different that the Court held the lender had no
liability but to pay assessments as they came due AFTER taking title?
The Forest Hill Gardens East Declaration of Condominium (the
"Declaration") contained some very unique and extremely
uncommon language. The provision at issue provided that "the
present provisions of the Condominium Act… are incorporated…"
into the Declaration and that "the provisions of this Declaration…
shall be paramount to the Condominium Act..." Of great importance
to understanding the Court's logic is that, in this case, the
Declaration was recorded in 1980, long before the version of section
718.116, Florida Statutes, at issue was amended by the Florida
legislature in 1991.
first confirming that your association's declaration does not
contain a similar provision, the next time a foreclosing lender argues
that they do not have to pay the "safe harbor" in reliance
on the Forest Hill Gardens East case, you know better.
a related but different note, the Forest Hill Gardens East case
clarifies that interest, late fees, collection costs and attorney's
fees are not to be added to the "safe harbor" amounts when
otherwise due because, the Court reasoned, these expenses are neither
common expenses nor regular periodic assessments.
other recent cases discuss a third party purchaser's liability to a
condominium association in the context where (1) the condominium
association first foreclosed a unit assessment lien and, as a result,
ended up owning the unit, and then (2) the lender foreclosed its
unpaid mortgage which wiped out the association's ownership interest
in the unit and then (3) as a result of the lender's foreclosure, a
third party ended up being the winning bidder at the lender's
foreclosure auction and took ownership of the foreclosed unit.
the Third District Court of Appeal in Park West Professional Center
Condominium Association, Inc. v. Londono, decided November 27, 2013,
and the Fourth District Court of Appeal in Aventura Management v.
Spiagga Ocean Condominium Association, Inc., decided on March 3, 2014,
held that the joint and several liability of the new owner for past
assessments only related back to the prior owner, that being the
association. Neither association could look to the prior owners'
assessment deficiencies and collect it from the winning third party
bidder of the lender's foreclosure sale. Thus, these cases are being
used to assert that the third party purchaser of a lender foreclosure
does not have to pay bask assessments that were accrued as a result of
the delinquencies of all other owners of the unit, but only for those
of the immediate prior owner.
pursuant to section 718.116(1)(a), Florida Statutes, each owner is
jointly and severally liable to the association for the back
assessments that remain unpaid, a plain reading of these cases would
suggest the new owner is only liable for the unpaid assessments of the
immediate prior owner. Technically, this is true, but it is crucial to
understand that the unpaid assessments of each owner become the next
owner's responsibility. But, in these two cases, it was the
association itself that was the immediate prior owner. Thus, carrying
the unpaid balances of the other prior owners forward the association
as the immediate prior owner and then to the third party purchaser who
acquired the unit as a result of the lender's foreclosure sale,
meaning that the new owner does indeed have no liability for the prior
unpaid assessments. The reason why is not fully explained in either
case. Simply put, because the association took title to the units, the
debts of all prior owners of that unit were wiped clean as of the day
the association took title. In other words, the debt merged into the
ownership of the unit. Because, in both cases, the associations were
the immediate prior owner of the units, the prior assessment debts
were all carried forward to the association and, for all intents and
purposes, were wiped out since you can't owe money to yourself.
the next time a third party purchaser tries to argue that they are
only responsible to pay the back assessments of the immediate prior
owner, you will know that only applies if the immediate prior owner
was the association. If it was anyone else, you might say, after
confirming with your association's lawyer, PAY UP, PAL!
Strange Encounter Between the Fair Housing Act and the Marketable
Record Titles to Real Property Act
a recent Dade City case, a Pasco County judge ruled that a homeowners
association (HOA), which had specially assessed its members for
mounting legal fees regarding a costly dispute over wheelchair access
to its meetings, has no authority to assess homeowners for its legal
bills because the HOA's covenants had expired likely due to the
Marketable Record Titles to Real Property Act (MRTA). According to
Laura Kinsler as she reported for the Pasco Tribune and the Tampa
Tribune, John Whitt, a wheelchair-bound member for the homeowners'
association wanted to attend board meetings but was prevented access
because the board insisted on holding its meetings on an unfinished
lakefront lot that was not wheelchair accessible.
to the article, the wheelchair bound member accused his association of
violating the Fair Housing Act (FHA) and also for not having meetings
that were open to all members as required by Chapter 720, Florida
Statutes. Early in the case, it seemed the member would rue the day.
He had won the often hard to obtain and revered temporary emergency
injunction, which in this case, required the association to meet for
the entire year in wheelchair accessible locations. However, as fate
would have it, the case was reassigned. Ms. Kinsler reported that the
case was dismissed when the new judge "ruled that 'there is no
legal basis to support the plaintiffs' contention that the open
meeting provision of [the law] requires wheelchair accessibility'
since private community associations are not subject to the federal
Americans [w]ith Disabilit[ies] Act [(ADA)]."
outcome is perplexing because while the ADA and the FHA are similar in
application, they apply to two very different situations. The ADA
applies to areas of public accommodation, while the FHA applies to
housing providers, which includes residential community associations.
Occasionally however, the ADA will apply to a residential community
association where there is a "public use" at play, such as
when an association rents its clubhouse for weddings. The reason the
case is perplexing is because, as reported, the plaintiff sued under
the FHA, but oddly, the trial court issued its ruling citing the ADA.
If this is the case, then we may not have heard the last of this case
yet. But, WAIT! It gets better still.
the pendency of the case, the association's legal bills, according
to the article, reached "upwards of $70,000." After the
association levied its third special assessment, several other
association members sued the association asserting that the deed
restrictions had expired. Ostensibly, while the article does not
specifically explain why, it was likely the effect of MRTA which, by
way of an over-simplified explanation, abolishes restrictions recorded
against real property not sooner than 30 years after their initial
recordation, subject only to certain exceptions. Under Florida law, a
HOA is permitted, by board action alone, to take certain measures
prior to the expiration of the 30 years to preserve the community's
declaration of covenants and restrictions. If that does not occur,
then it is required that a majority of those members affected vote in
favor of revitalizing the community's declaration of covenants and
restrictions. If not, then the covenants no longer have any
enforceability, including the right of the HOA to levy assessments.
HOA board member should be aware that according to a 2013, 4th
District Court of Appeal decision, Southfield's of Palm Beach
Polo and Country Club, et. al. v. McCullough, the court held that
HOA board members can have personal liability for allowing their
covenants to expire, though the extent of their personal liability was
not discussed. In another case, a lawyer was found to have liability
where the lawyer failed to advise their HOA client of an impending 30
year MRTA deadline. As an aside, condominium association board members
can let out a big sigh of relief because the nasty effects caused by
the application of MRTA do not apply to condominium associations.
a related note, Senate Bill 1450 was recently introduced which would
require all HOAs to have meetings in locations that are accessible to
physically handicapped persons. On an unrelated note, some good news
to report: that nasty pending 2014 legislative bill that would have
required a door tax to be paid by every HOA member in the state,
similar to the $4.00 per condominium owner tax, died a deserving death
a few days ago!
Animals: A Not So Happily Ever After
many times have you heard the old axiom, "ignorance of the law
is no excuse?" Well, it's never more true than in the Fair
Housing Act (FHA) reasonable accommodation request for an
"emotional support animal" arena.
a 2012 Fourth District Court of Appeal case, Sun Harbor Homeowners'
Association, Inc. v. Bonura, the homeowners' association brought
an action against a homeowner for violation of it's no dog policy.
As could be expected, the homeowner counterclaimed asserting that
his live-in fiancée was entitled to the use of an "emotional
therapy dog" (referred to by HUD as an "assistance
animal/emotional support animal").
the association demanded removal of Bonura's fiancée's dog due
to the association's no dog policy. In response, Bonura demanded
an accommodation and informed the association that the dog was a
"registered service dog" needed to assist his fiancée
with her disability. Bonura did not provide any specificity as to
the nature of the disability, but however, provided a
"Registered Service Dog Certificate" purchased from an
online vendor. In response, the association advised him, in writing,
that he needed to have his request for accommodation placed on the
association's agenda for the next board meeting at which he would
need to:
demonstrate that a resident suffers from a medical disability or
handicap, unless the disability or handicap was visible, and
indicating that any written information provided by the resident
would not be copied or shared and would be returned after viewing;
demonstrate how the service animal [sic] can or will reasonably
accommodate the disability;
demonstrate that the service animal [sic] has special skills or
training to accommodate the handicap; and
demonstrate how the special skills and in training of the service
animal [sic] and will set it apart from an ordinary pet."
make a long story short, the Court ruled in favor of the
association, and in so doing noted that Bonura never requested to be
placed on the association's agenda and that Bonura did not provide
the necessary information for the association to conduct a
meaningful review of the request for the accommodation.
this case had been recently filed and had Bonura minimally alleged
that the need for the assistance animal was related to his fiancée's
emotional disability, the outcome would likely have been drastically
different. Here is why: On April 25, 2013 the U.S. Department of
Housing and Urban Development (HUD), issued a Fair Housing Equal
Opportunity Notice, FHEO – 2013–01 ("FHEO Notice") and
provided significant clarity as to Americans with Disabilities Act
(ADA) "service animals" as compared against FHA
"assistance animals" (and it's subset classification of
"emotional support animals"). First and foremost, the ADA
applies to places of public accommodation. The FHA applies to
housing providers, such as community associations. There can be some
interplay between the ADA and the FHA such as a community
association that allows it's clubhouse to be rented out to the
general public. The term "service animals" only refers to
dogs (or miniature horses) and applies to the ADA, which as of this
recent FHEO Notice, specifically excludes "emotional support
animals." In short, the practical application of excluding
"emotional support animals" from the definition of
"service animal," means that a public facility does not
need to permit "emotional support animals." In any event,
FHA "emotional support animals" do not require any
specific training or certification whatsoever. Therefore, by asking
whether the fiancée's animal had special skills or training to
accommodate the disability and how the special skills and training
which set the animal apart from an ordinary pet would likely have
cost the association thousands, if not hundreds of thousands of
dollars, in penalties.
to the FHEO Notice, after a housing provider receives a request for
an assistance animal, the housing provider must consider: 1) does
the person seeking to use and live with the animal have a
disability, i.e., a physical or mental impairment that substantially
limits one or more major life activities? and 2) does the person
making the request have a disability-related need for an assistance
animal? In other words does the animal work, provide assistance,
perform tasks or services for the benefit of the person with the
disability or provide emotional support that alleviates one or more
of the identified symptoms or effects of the persons existing
breed, size and weight limitations may not be applied to an
assistance animal. While an association may require a pet deposit,
the association may not require deposits for assistance animals.
Furthermore, again according to the FHEO Notice, the assistance
animal is allowed in all areas of the premises where persons are
normally allowed to go, unless doing so would impose an undue
financial and administrative burden or would fundamentally alter the
nature of the housing provider's (the association's) services.
remember that if the assistance animal in question poses a direct
threat of harm to others or would cause substantial damage to the
property of others, based on objective evidence and not mere
speculation or fear, then that specific animal may be prohibited.
until you read Florida House Bill 849, which is gaining traction in
the legislature. Rather than use the FHA and ADA definitions, this
legislation confuses the term "service animal" to also
include "assistance animals" with the exception of an
"emotional support animal" that, at least in this bill,
stands on its own.
Animals and the FHA- A New Case To Consider
March 13, 2014, the United States District Court for the Southern
District of Florida entered its 33 page Omnibus Order in Sabal Palm
Condominiums of Pine Island Ridge Association, Inc. v. Fisher, et
al. The term "Omnibus" was used in the title of this order
to reflect the myriad of issues addressed by the Court. The Sabal
Palm opinion addresses a disabled owner's request for an
assistance animal trained to alleviate problems caused by the owner's
multiple sclerosis. In this case, Fisher's (the unit owner)
request for an assistance animal was related to an observable
disability where copious information was provided to Sabal Palm at
its request to substantiate the need for the assistance animal.
Rather than grant the reasonable accommodation, Sabal Palm sued
Fisher for declaratory judgment to have the trial court determine
whether Sabal Palm was required to grant the reasonable
accommodation and to decide the extent of the medical records that
it was entitled to receive. In response, Fisher counterclaimed
against Sabal Palm alleging discrimination and also sued the
president in his PERSONAL capacity. Thereafter, motions to dismiss
were served. Attention is now turned to the instructional value of
this resulting Omnibus Order.
and foremost, the Court recognized that when it comes to emotional
support assistance animal requests there is plenty of abuse being
suffered by housing providers. The Court even sites to a report
"prepared for a Senate Informational Hearing on the subject of
fake service [sic, assistance] dogs" and acknowledges that this
is a growing problem. The Court even went so far as to state that
"there is some reason to be skeptical of requests to keep a dog
as an accommodation for a disability in certain cases, particularly
cases where the dog assists the disabled person by rendering
emotional support." However, Sabal Palm treated Fisher with
unjustifiable skepticism when it decided to file the lawsuit for
declaratory judgment against her. By that time, the Court seems to
have concluded, that Sabal Palm should have granted the request for
the accommodation based on all of the information in Sabal Palm's
to be learned from this case include:
A board member can be sued in their personal capacity for a
violation under the Fair Housing Act ("FHA") where the
board member acted recklessly, in bad faith, or with wanton and
willful disregard to human rights. (So, while the Court allowed
Fisher's cause of action against the president, in his personal
capacity, it is not yet known whether the president will be found
liable. Rather, the Court merely perfected the cause of action and
in so doing, did not dismiss the claim.)
In examining these types of discrimination cases, the Court referred
to another seminal case, Oberbrook, where that court looked at three
factors to analyze: i) the extent of housing providers delay and
obstruction of the request by the filing of a lawsuit by the housing
provider, ii) the state of the law at the time the lawsuit was
filed, and iii) whether the housing provider's delay in granting
the accommodation request had the effect of depriving the disabled
person their requested accommodation.
In response to a request for a reasonable accommodation, a housing
provider may request reliable disability-related information that i)
is necessary to verify the person meets the FHA's definition of
disability, ii) describes the need for the accommodation, and iii)
shows the relationship between the person's disability and the
need for the requested accommodation.
When the disability is readily apparent, the housing provider may
not request additional information about the requestor's
disability. When the disability is not obvious, the housing provider
may request more information limited to precisely what is not
A request for a reasonable accommodation can be constructively
denied based on delay in rendering the decision.
Punitive damages are available under the FHA for a "refusal to
accommodate" claim if a court finds that a discriminatory
housing practice has occurred or is about to occur.
the Sabal Palm case, it was found that Sabal Palm had more than
enough information to conclude that Fisher was entitled to the
requested accommodation. Yet, Sabal Palm requested even more
information. The Court also found that the FHA's Joint Statements
(where the interpretation of the FHA of both the Department of
Housing and Urban Development and the Department of Justice can be
found) did not support Sabal Palm's decision to sue for a
declaratory judgment. Likely, this was due to the fact that the
Court believed Fisher had more than met her burden to substantiate
her disability and her need for the assistance animal.
Introduction to the 2014 Community Association Legislation
year's legislative session begins on March 4, 2014 and ends on May
31, 2014. If you think all of the "bills" are drafted
during the 60 day legislative session, think again. January 24, 2014
was the deadline for submitting requests for drafts of general
bills, including requests for companion bills, and February 28, 2014
at 5:00 P.M. was the deadline for approving final drafts of general
bills, including companion bills. After the conclusion of the
legislative session, the Governor can veto the bill, do nothing
(which allows the bill to become law on its effective date), or sign
the bill into law (in which case the bill may spring into law, or
will later become law on its effective date, as set out in the
bill). If the bill was vetoed by the Governor, then a two-thirds
vote in both the Florida Senate and House is required to override
it. This year's legislative session looks to be moderately busy
with many proposed community association bills.
Bill 798 (SB 798) includes many changes to existing law. Leasing
amendments to a condominium declaration would not apply to those who
vote against the amendment, but, obviously, would apply to those who
vote in favor of it, and in contrast to today's legislation, would
be applicable to those who do not cast a vote at all. A condominium
association would be granted the authority to enter the unit to
inspect abandoned units and make certain repairs and even to turn on
power to the unit to run the a/c to prevent mold. Provisions are
included for the appointment of a receiver to collect rent.
SB 798 provides that "a [condominium board] member may use
e-mail as a means of communication but may not cast a vote on an
association matter via e-mail." Likely, this provision was
created with the best of intent, but hopefully will be deleted or
tweaked to make better sense. At present, board members cannot vote
by e-mail, but sometimes in a true post-casualty emergency, e-mail
may be the viable means of communication for some board members. It
is also patently obvious that everyone, even board members, may use
e-mail to communicate. The question is whether such communication by
the board majority constitutes a board meeting. Of course, SB 798
does not grapple with that important and very relevant issue. It's
early in the session, so let us all hope this provision gets
eliminated, or edited, to be of greater value. On the brighter side,
SB 798 also allows board members to vote via video conferencing
rather than just on a speakerphone, as presently exists.
is added to foreclosure legislation affecting condominium,
cooperative and homeowner associations to provide that a subsequent
owner is jointly and severally liable with the previous owner for
not only unpaid assessments, but also interest, late fees,
reasonable costs and attorney fees incurred by the association
incident to the collection process. Further clarification is
provided to make clear that, in the event the association owned the
unit, the subsequent owner may still have liability for the period
prior to the association's ownership.
board members are required to relinquish all association records
within 5 days. If not, civil penalties may be incurred. The deadline
for financial reporting is increased form 60 days from the
conclusion of the fiscal year, to 90 days along with an additional
30 days to provide the report to the owners.
and homeowner associations are granted new emergency powers and many
of the bill's legislative amendments to Chapter 718, Florida
Statutes, the "Condominium Act", would also apply to
Chapter 719, Florida Statutes, the "Cooperative Act."
Bill 425 (HB 425) makes numerous clarifications to the Condominium
Act to clarify many of its provisions apply to residential
condominiums only. Obviously, the sponsor of HB 425 is asserting
that the scheme for protections and safeguards of unit owners in
residential condominiums is not necessary for unit owners of both
commercial and condo-hotel ventures. Rather than carve out the parts
of the Condominium Act that do not apply, the state would be far
better served by a new chapter of laws to govern non-residential
Bill 7037 (HB 7037) addresses community association managers and
would, in essence, allow managers to do many activities which are,
by today's standards, considered the practice of law. The type of
activities that would not constitute the "unlicensed practice
of law" would include, to name a few, calculating the number of
votes to adopt an amendment (sometimes, a very complicated task
requiring legal interpretation), negotiating contracts regardless of
the type of contract, preparing pre-arbitration demands and
preparing liens. Ultimately, given the overly broad provision of HB
7037, it could be interpreted to mean the manager is lawfully able
to perform all tasks to ensure compliance with the community's
governing documents.
Sure Can Be A Burden!
years ago, the Fourth District Court of Appeals held that when a
unit owner who was accused of failing to abide by the association's
covenants challenged the association by asserting that the
association failed to follow its own covenants (which later formed
the basis of the association's lawsuit against the owner), the
association had the burden to prove to the court that it had, in
fact, complied with the requirements set out in its own declaration.
Interestingly, the unit owner was not required to prove anything.
Rather, all that the unit owner had to do was allege that the
association failed to comply with its own declaration in the unit
owner's affirmative defenses, set out in the unit owner's
"answer" to the association's "complaint."
this lawsuit, McKenna v. Camino Real Village Association, Inc., 877
So. 2d 900 (Fla. 4th DCA 2004), the association filed a foreclosure
action against a unit owner for unpaid assessments. Prior to filing
the lawsuit, the association accelerated the remaining assessments
due for the budget year. As an affirmative defense, the unit owner
alleged that the association failed to comply with its own
declaration by failing to provide prior notice to him, as required
by the association's declaration, that the association had
accelerated the remaining assessments for the budget year. As a
result of the association's summary judgment motion, the trial
court nevertheless granted its verdict in favor of the association.
upon the unit owner's appellate challenge, the Fourth District
Court of Appeals reversed the trial court's decision. The
appellate court held that, once the unit owner filed the affirmative
defense asserting the association failed to comply with its own
declaration, the association then had the burden to prove that it
complied with the requirements of its own declaration. As a result,
the case was remanded back to the trial court for additional
recently, in July 2013, the Fourth District Court of Appeals
re-visited the issue concerning an association's burden of proof.
In Boyle v. Hernando Beach South Property Owners Association, Inc.,
Case No. 5D12-2993, the homeowners' association filed a lawsuit
against a member alleging that the member failed to maintain his lot
"in a neat, clean and orderly condition" as required by
its declaration of covenants, by failing to properly landscape his
lot and trim his trees. At summary judgment, the trial court granted
an injunction in favor of the association that required the member
to comply with the association's covenants. The member appealed.
judgment motions are ingrained in the rules governing civil
procedure. Its purpose is to promote "judicial economy."
In matters where there are no material facts in dispute, the party
filing such a motion argues that they are entitled to judgment in
their favor as a matter of law. Remember, a jury determines the
facts, and the court applies the law.
reviewing the trial court record, the appellate court noted that the
affidavits provided by the association which, like the complaint,
alleged the member failed to maintain his lot "in a neat, clean
and orderly condition," failed to demonstrate how the
member's landscaping and trees were not properly maintained. In
other words, the association failed to present evidence to the trial
court to prove the member had actually failed to maintain his lot
"in a neat, clean and orderly condition." Therefore, the
appellate court reversed the trial court's injunction and remanded
(meaning sent it back) the case back to the trial court for further
proceedings. It is important to recognize that, while the homeowner
may have won a small battle, the actual war is still to be fought…
at trial. While the association can learn from the appellate court's
decision by ensuring it submits the, up until now, lacking evidence
as a part of its case in chief during trial. However, if, prior to
filing the lawsuit, the association never clearly explained to the
member how his landscaping and trees were not in compliance,
then it's likely the association is up the proverbial creek
without a paddle and without a life-preserver, too.
a Tree, Help the Environment and Start Saving Money Today!
associations are held hostage to rising prices. When prices go up,
assessment increases soon follow. The recent postal stamp increases
are no exception. The size of your association and amount of
mailings during the year can really take a toll on the budget. Why
not give your association a quick financial boost by sending
electronic notices rather than paying for all those stamps?
Electronic notices can be used for all sorts of official notices;
however, there are a few prohibitions. In Chapter 718, governing
condominium associations, and Chapter 719, governing cooperative
associations, the word "electronic", including variations
such as "electronically", appears 24 times, while in
Chapter 720, only 17 times.
the Condominium and Cooperative Acts specifically authorize,
legalize and legitimize bylaw provisions that provide for giving
notice by electronic transmission whether as originally recorded or
even by later amendment. The term "electronic
transmission" can refer to a facsimile and, just as easily, to
an e-mail or any other transmission that, well, simply put,
transmits to the intended recipient electronically. (How is that for
circular logic?) With that in mind, the clever, cost-conscious
association should start to gather its members' e-mail addresses
and consents for the association's use of e-mail for meeting
can be utilized for notice of membership meetings, board meetings
and even committee meetings. It can be used for election notices,
too. In order for an association to notice by e-mail, the
association's bylaws must provide for providing meeting notices
electronically and each member must specifically consent, in
advance. Take a look at your association's bylaws to see if your
association is already authorized to start gathering its members'
consents to receive e-mail notices. If it is not already there, then
talk to your association's lawyer about amending the bylaws to
include this simple cost saving solution and protection against
rising postal costs.
homeowner and cooperative associations are responsible to maintain
the e-mail addresses and facsimile numbers of unit owners consenting
to receive notice by electronic transmission.
e-mail addresses and facsimile numbers of the association's
members are not accessible to the association's other members if
the member whose e-mail address or facsimile address did not consent
to receive notice by electronic transmission. The association would
be advised to obtain such consent in writing.
Condominium, Homeowner and Cooperative Association Acts provide that
an association may print and distribute to parcel owners a directory
containing the name, parcel address and telephone number of each
parcel owner and that any owner can exclude his or her telephone
number from the directory by so requesting, in writing, to the
association. Oddly, e-mail addresses are not mentioned which can be
remedied through a bylaw amendment that specifically provides that
the directory can include e-mail addresses of those members who
consent to receive their association notices electronically unless
advised, in writing, by the owner, to the contrary.
the bright side, the association is not liable for an inadvertent
disclosure of the e-mail address or facsimile number for receiving
electronic transmission of notices.
facsimile nor e-mail can be used as a method of giving notice of a
recall meeting. In addition, electronic notices cannot be used by
condominium associations that previously voted to forego
retrofitting, when the unit owners next consider the issue.
start your savings, check your association's bylaws for the
required authorization and start gathering those e-mail addresses.
It's good for the environment, too!
Call to Action ... The Latest Wrinkle in Lender Assessment Liability
you live in either Monroe, Miami-Dade, Broward, Palm Beach, Martin,
St. Lucie, Indian River, Okeechobee or Highlands county, then you
will want to know about the January 3, 2014 decision entered by the
United States District Court for the Southern District of Florida
(the "Court"). For that matter, if you live in an
association somewhere in the great State of Florida, then you still
need to know about this case: United States v. Forest Hill Condo
Association and Forest Hill Property Owners' Association, where
the the Court examined the financial obligation of a foreclosing
first mortgagee to a condominium association and homeowners'
association (the "POA") when the unit owner not only
defaulted on their mortgage but also failed to pay assessments. The
dispute came about when after taking title as a result of the lender's
foreclosure, the U.S. Department of Housing and Urban Development
("HUD"), as a successor and assignee to the foreclosing
lender, requested an estoppel from both of the associations
associations claimed the HUD was liable for all unpaid assessments,
together with other fees and charges, including attorney's fees,
levied against the unit in the twelve-month period prior to
foreclosure. HUD, on the other hand, contended it was entitled to
the protection of a statutorily-created "safe harbor"
which limits its liability. It actually fared better, at least as to
how much it owed the condominium association for back assessments.
Court examined whether interest, late fees, collection costs and
attorney's fees were properly included in both associations'
estoppels. The Court concluded that the answer was "no".
The Court reasoned that since assessments are common expenses shared
amongst all of the owners and that since the interest, late fees,
collection costs and attorney's fees are assessments levied
against an individual as opposed to all of the owners, such
individual assessments are not collectable under the "safe
harbor" laws.
HUD was found liable to the POA for back assessments, astoundingly,
and to the extreme detriment of the condominium association, the
Court took an unexpected left turn when it held that HUD had no
liability to the condominium association for any of the past due
unpaid assessments that accrued prior to taking title. In reaching
this decision, the Court also looked to the condominium association's
declaration and noted that its clear provisions provided that a
foreclosing lender had no assessment liability whatsoever, as
compared against the legislative requirements set out in section
718.116, Florida Statutes, referred to as the "safe
harbor." The term "safe harbor" refers to the
foreclosing lender's liability to the association for back
assessments where the lender, as the prior first mortgagee, is
responsible to pay the association the lesser of 12 months' back
assessments or one percent of the initial mortgage. The Court also
noted that the condominium's declaration made it clear that, where
permitted, the provisions of the declaration were paramount to the
provisions of Chapter 718, Florida Statutes, commonly referred to as
the Condominium Act.
the Court did not discuss was that the initial safe harbor statute
contained in the Condominium Act provided that it applied to first
mortgages recorded after April 1, 1992. While this language was
later removed, it was clear that the safe harbor provisions applied
if the owner's mortgage was entered into after this date. These
safe harbor provisions create a procedural regime where lenders can
estimate their financial liability in the event of foreclosure
which, at least as to this condominium association, some might
argue, the court completely ignored!
will be interesting to see whether other courts follow along and
apply this case's holding. With regard to this decision's
precedential value, based on a legal doctrine called "stare
decisis", the decision of the Southern District Court in this
case is merely persuasive authority, meaning that other courts do
not have to follow the decision of this case but may take it into
consideration. With the exception of the U.S. Supreme Court, no
state court is bound by a federal court's determination regarding
state law. In fact, federal courts must follow state courts when
analyzing state laws as state courts are the bodies charged with
interpreting and applying state laws.
latest case should be a call to action for all community association
board members to contact their legislators and insist that they
clarify the safe harbor provisions in this year's legislation so
that the safe harbor laws apply to all lenders!
and E-Mail Addresses
is entitled to the e-mail addresses of your association's members?
Are e-mails sent between board members part of an association's
official records? What about e-mails sent by a board member to the
the e-mail addresses of unit owners who have either consented to
receive notice by e-mail or have consented in writing to the
disclosure of their e-mail addresses are subject to review during an
official record inspection. Section 718.111(12), Florida Statutes,
provides, with regard to unit owner e-mail addresses, that "[t]he
association shall also maintain the electronic mailing addresses…
of unit owners consenting to receive notice by electronic
transmission. The electronic mailing addresses… are not accessible
to unit owners if consent to receive notice by electronic
transmission is not provided in accordance with [this
subsection]." This topic was discussed in Cohen v. Harbour
House (Bal Harbour) Condominium Association, Inc., Arb. Case No.
2012-02-3139 (Summary Final Order / Lang / June 29, 2012).
the Cohen case, a unit owner requested a list of all of the
e-mail addresses of the members, however did not receive such a
list. The unit owner alleged that she was improperly denied the
e-mail addresses. However, it was discovered that the association
did not have consent from any members to use their e-mail for the
purposes of receiving official notices nor did the association have
written consent to disclose the protected information from any
member. Therefore, the arbitrator held that "[b]ecause, under
the statute, no unit owner has submitted his or her email address
for notice requirements or consented in writing to disclosure of his
or her email address, the [a]ssociation did not improperly deny
access by [the unit owner] to its list of email addresses."
today's instant world, e-mail allows us to express our thoughts at
anytime, anywhere. It is so convenient that it is unavoidable for
board members to use it to discuss association business. As the
official records of condominium, homeowner and cooperative
associations are subject to inspection with limited exception, the
question often asked is whether e-mails, including e-mails between
board members and between one or more board members and the
association's manager, constitute part of the association's
official records that are subject to inspection by the members.
categories of records, while still constituting a part of the
official records, are not subject to a member's inspection
request. For example, attorney-client privileged correspondence,
medical records, information obtained by an association in
connection with the approval of the lease, sale or other transfer of
a unit and social security numbers, just to name a few, are not
subject to a member's inspection request but still constitute a
part of the association's official records.
March 6 2002, the then Chief Assistant General Counsel of the
Department of Business and Professional Regulation ("DBPR")
issued an opinion which provided that "[c]ondominium owners do
have the right to inspect e-mail correspondences between the board
of directors and the property manager as long as the correspondence
is related to the operation of the association and does not fall
within the… statutorily protected exceptions… [The DBPR does not
have] regulations expressly requiring archiving e-mails, but… if
the e-mail correspondence relates to the operation of the
association property, it is required to be maintained by the
association, whether on paper or electronically, under chapter 718,
Florida Statutes."
Humphrey v. Carriage Park Condominium Association, Inc., Arb.
Case No. 2008-04-0230 (Final Order / Campbell / March 30, 2009), an
arbitrator of the Division of Florida Condominiums, Timeshares, and
Mobile Homes held that "…e-mails… existing… on the
personal computers of individual directors… are not official
records of the association… Even if directors communicate among
themselves by e-mail strings or chains, about the operation of the
association, the status of the electronic communication on their
personal computer would not change. Similarly, an e-mail to an
individual director or to all directors as a group, addressed only
to their personal computers, is not written communication to the
association." The arbitrator reasoned that "[t]his must be
so because there is no obligation to turn on [the] personal computer
with any regularity, or to open and read emails before deleting
stated, if one was to rely on the guidance cited herein, e-mails
solely between board members, even a board majority, are not part of
the official records, e-mails between the board and the manager are
part of the official records and unit owner e-mail addresses are
only subject to inspection where a unit owner has either consented
to receive notice by e-mail or has consented in writing to the
disclosure of his/her e-mail address. That having been said, it is
in my opinion that e-mail communications that involve a board
majority are still subject to the board meeting notice requirements
already required by Chapter 718, Florida Statutes, more commonly
known as the "Condominium Act."
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