Summer School: Legal Corner

Course: 9628125

1 HOUR in ELE

The following article, along with additional online content, has been approved for one hour of continuing education by the DBPR. All of our readers are welcome to apply for one CEU hour at no cost, and FCAP members have access to all five CEU hours. In order to appropriate the hours, read the articles and then go to www.fcapschools.com/ceu and click on the appropriate course number to complete the process.

Protect Your Association From Remodeling-Related Claims

By Ben Solomon, Esq. / Published July 2016

Many owners in communities and condominiums choose to renovate their homes, and such remodeling jobs can range from changing flooring to updating fixtures, redoing kitchens, or adding finishes. High-rise buildings also face similar issues as owners decide to renovate their units, replace windows and doors, or consolidate units into larger living spaces. 

In light of such changes, associations need to be proactive in protecting their communities and buildings from noise, damage, inconvenience to owners, and potential claims relating to the work performed. One of the best ways to do this is for associations to adopt a formal architectural modification process for each owner to follow prior to commencing any construction projects. This typically includes creating a modification application that addresses things like required security deposits, application fees, evidence of insurance (with the association named as an additional insured), and the approval of architectural plans.

In fact, some associations require that owners seeking approval pay a fee for the association to have an outside architect or engineer review the proposed plans on the association’s behalf to confirm that they are acceptable. Associations should also seek indemnity in favor of the association for any issues that may arise as a result of the owners’ construction. For example, if an owner is installing flooring throughout the unit and this creates some sort of liability (e.g., a leak into the neighbor’s unit) or a defect is identified, it is not uncommon for such owner (or the affected neighboring owner) to then attempt to pursue the association for liability relating to the same. However, if the owner is required to sign an indemnity for any issues relating to their construction work in advance, then the association is much better protected from potential liability relating to such claims.

Additionally, a formal application process can help identify and avoid allowing owners to use unlicensed or uninsured vendors who may then cause damage to the unit and/or common elements of the building or destroy common areas, including underground pipes or utility lines, without the ability to pay for such issues. Also, requiring owners and their contractors to acknowledge in writing that they have read, understand, and agree to abide by all of the terms and conditions of the association’s covenants, restrictions, and rules and regulations is a good way to make sure owners and contractors are on notice of how they are required to work, including hours of operation, clean-up procedures, and security protocols. Having such written rules in place can also help avoid inconvenience and damage to other owners’ and association property. Owners wishing to remodel or complete units are almost always willing to enter into agreements upfront, but if the association skips this important step, the same owners frequently come back and file claims against associations who fail to properly protect themselves.

Ben Solomon, Esq., is with Association Law Group (ALG) at (305) 938-6922, www.algpl.com.

What Does the 2016 Sprinkler Opt-Out Vote Deadline Mean for Your Community Association?

By Donna DiMaggio Berger, Esq. / Published July 2016

Volunteer community association boards are tasked with many responsibilities, not the least of which is the need to ensure that the common areas and, in the case of a multifamily building, the structure is safe, defect-free, and compliant with all building and life safety codes.

Many Florida communities have received different messages over the years pertaining to engineered life safety systems as well as full sprinkler systems, depending on their location and their local fire marshal’s interpretation of fire protection standards and their stance on the statutory opt-out vote.

Along with the rest of the states in our Union, Florida adopted minimum fire protection standards by incorporating the National Fire Protection Association (NFPA) standards into Chapter 633 of the Florida Statutes. There are two standards for fire sprinkler retrofitting: one for high rises and another for buildings up to four stories in height. The Statute clearly requires high-rise buildings (which are defined as buildings at least 75 feet in height above the lowest point of fire department entry) to retrofit with a sprinkler system unless an opt-out vote has been taken and an opt out approved by the members. There is no corresponding general state-wide fire sprinkler retrofitting requirement for buildings lower than 75 feet in height. However, buildings up to four stories in height are required to comply with standards set by the local fire marshal. For example, if a local fire marshal determines that a threat to life safety or property exists, the fire marshal may impose more stringent standards, which could include requiring fire sprinklers or an Engineered Life Safety System in low- or mid-rise buildings.

Both Chapters 718 and 719 of the Florida Statutes, which apply to condominiums and cooperatives, respectively, allow associations to opt out of any requirement to retrofit the common elements, association property, or units of a residential condominium or residential cooperative with a fire sprinkler system based upon Chapter 633 of the Florida Statutes, or “any other code, statute, ordinance, administrative rule, or regulation, or any interpretation of the foregoing” through a membership vote. As such, a low- to mid-rise building could use the statutory opt-out provisions to opt out of a sprinkler retrofit required by a local authority pursuant to a code, ordinance, administrative rule, or regulation.

The vote required to opt out is a majority of all voting interests in the association, and the vote must be taken and completed by December 31, 2016. In addition to the vote, the Statute requires that a certificate attesting to the vote be recorded in the public records of the county in which your building is located and notice of the results of the opt-out vote be mailed to all members within 30 days of the vote. Finally, the Division of Florida Condominiums requires that you report the membership vote to opt out and the recording of the required certificate to the Division. The Statute specifically requires that an association complete the vote by December 31, 2016, but also provides that the vote is not effective until a certificate is recorded in the public records. It would therefore be best to take the vote well in advance of the deadline so that you can complete the rest of the process before the deadline. If your association does not successfully complete the opt-out vote and other procedural requirements in a timely manner, you are required to start the permit application process and complete the retrofitting process by the end of 2019.

Regardless of whether you manage a cooperative or a condominium and regardless of your building’s height, here are some takeaways for you and your board to consider:

• If your association operates a high rise and you do not wish to be required to retrofit for fire sprinklers, you must take and complete an opt-out vote before December 31, 2016.

• If your association operates a high rise and you took a vote to opt    out of retrofitting for fire sprinklers before July 1, 2010, you should discuss with your association attorney the pros and cons of taking a second opt-out vote due to a change in the law that    became effective on the above date that allowed you to opt out of sprinklers in your common areas in addition to sprinklers inside your units. If you voted to opt out of sprinklers before July 1, 2010, some local Fire Marshals may interpret that vote taken prior to the change in law to mean your opt-out vote does not apply to the installation of sprinklers in your common areas.

 For this reason, you need to immediately discuss your rights with your association attorney if you took your opt-out vote prior to July 1, 2010.

• Some local codes in Florida may have been changed (or will be changed) to impose retrofitting requirements on    buildings lower than high rises. If your association operates a low- or mid-rise building and you wish to avoid any current or future requirement to retrofit for fire sprinklers that may exist in your local jurisdiction, you should ask your association attorney to research the local codes so that your board can consider whether or not to take an opt-out vote prior to the December 31, 2016, deadline to avoid any such requirements in your local ordinances.

• If you previously attempted to secure an opt-out vote from your members and did not achieve the required approval from at least a majority of your total voting interests, you may make as many attempts as necessary prior to the deadline.

As the December 31, 2016, sprinkler opt-out deadline approaches, it is increasingly important that your board make a timely and fully informed decision about whether or not to seek an opt-out vote from your members. Fire safety is a matter of serious concern; while retrofitting can be a costly undertaking, the decision to take an opt-out vote should not be made without due consideration of life safety issues, the age and condition of your building, and consultation with your insurance professionals and your association attorney to ensure the integrity of the voting and notification processes.

Donna DiMaggio Berger, Esq., is with Becker & Poliakoff at (954) 987-7550,www.bplegal.com.

Key Considerations for CAMS Involving Vendor Contracts

By Lisa A. Lerner / Published July 2016

Community association managers are often charged by the board of directors for the properties they manage to assist with the vetting and finalizing of vendor contracts. More often than not, the community associations may wish to finalize and enter into such contracts without first consulting with qualified legal counsel to have them conduct all of the necessary due diligence.

There are a number of essential considerations for CAMs involving the vital elements that should be in place with every contract. It begins with ensuring that the vendor’s true legal name is reflected in the contract. In the event of litigation, the responsible party must be properly identified.

The vendor must also maintain the proper levels of workers’ compensation and general liability insurance. And, it is also imperative to ensure that those who are working on the project are properly licensed to perform the work. Indemnity clauses should also be used to help protect an association from liability arising from claims and damages in connection with the performance of the work.

Contracts should always include detailed specifications of the materials and services being provided by the vendor. If it is a construction contract, it is recommended to have a licensed engineer or architect prepare plans and specifications for incorporation in the contract. All contracts should also specify a beginning date and completion date as well as any liquidated damages for late completion.

The terms of labor and material warranties should always be clear in any contract, and they should include the warranty’s timespan and covered items. Warranty provisions can help an association determine who is liable should a material require repair or be defective. For roof leaks, for example, a roofing contractor’s warranty should specify the period of time in which the leak would be covered as well as the covered causes for the leak.

Generally, an association can terminate a contract if the vendor materially breaches the contract, which can be very difficult to prove.  In order to enable an association to terminate a contract without cause, it is necessary to include a clause permitting it.

In case of litigation, Florida law will typically stipulate which attorney fees may be recoverable. It is recommended for associations to include language that permits them to recover not only attorney’s fees and costs but also that of expert witnesses, should the association prevail in litigation.

By working with qualified legal counsel on these and other key components of vendor contracts, CAMs can help to ensure that the contracts which they help to finalize for board approval are as effective as possible for their association.

Lisa A. Lerner is with Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A. at (305) 442-3334, www.srhl-law.com.