Published May 2020
Florida Community Association Professionals’ (FCAP) training is offered on two levels. Level one consists of courses meeting Florida’s continuing education requirements for CAMs, and level two is the Florida Advanced CAM Studies (FACS) courses. For further information about the more than 50 online continuing education classes available or to pursue the Certified Florida Community Association Manager (CFCAM) designation, please visit www.fcapgroup.com/membership/education-training/.
Congratulations to CFCAM Stephen Donihee!
Stephen J. Donihee has recently received his CFCAM certification, adding to an already-impressive list of accomplishments. Stephen explains, “With approximately 600 people a day moving to Florida, it is apparent that property management is, and will remain, a growth industry here. Any growth industry brings change, usually for the better, and requires one to sharpen his skill set. Despite a diverse background in many disciplines, I looked for an intense program that could augment my background with specific industry knowledge. I loved that most of the knowledge base was written by practitioners: CAMs, lawyers, accountants, and expert vendors that give real-life checklists to follow. The topics were relevant to most aspects of the building envelope requirements and procedures. Education is priceless.”
In 2011 Stephen established SJD Property Investors/Estimating LLC in North Palm Beach. Since moving to Florida, he has become licensed as a contractor, insurance adjuster, CAM, and real estate associate. His services have included risk inspections, adjusting and estimating services for investment in distressed properties, a number of projects after Hurricane Sandy as an independent adjuster, and other real estate services.
Stephen’s professional career began in Canada, his birthplace, as an accountant with Brascan in Calgary, Alberta. From there he became a division controller and was appointed as director of financial services in the San Diego branch, working through a merger, managing reorganizations, and eventually becoming president of Primus Capital Advisors.
His multiple roles provided both experience and valuable education. Stephen explains, “Many of us have been lucky to have great mentors in our lives. I had the privilege of being involved and learning from a few leaders who assembled the largest financial services group in Canada, combining the largest trust company, insurance company, real estate services company, and vehicle leasing company under one umbrella holding company. Working under this leadership has influenced my path in life.”
Stephen relates, “In 1999 I moved to Virginia Beach and purchased a Paul Davis Restoration franchise with my son, and I attained a Class A Virginia contractor’s license. We built the business from scratch and split it into three franchises, later selling the business and moving to Florida.”
While in Virginia, Stephen says he brought about his most rewarding professional accomplishment. “Hurricanes cause devastation to people’s lives, and Isabel was no different,” he relates. “The Virginia Beach area was hit hard with large pine trees, making roads impassable and crushing roofs. The immediate issues we faced were clearing the roads and removing heavy trees from roofs, tarping houses as quickly as possible. Our firm had more than 40 immediate situations to deal with, so, thinking fast, we rented a crane from Alabama and had it delivered to Virginia Beach within 24 hours, resulting in the removal of a mass of heavy trees from roofs within days so they could be protected—thus saving many homes.”
Stephen obtained his CAM license because his experience supports the issues communities face. “Having been a CEO of many for-profit companies needing restructuring, and having a background as an accountant, contractor, insurance adjuster, and risk inspector, I felt my experience might be a fit in assisting boards of directors in running their business. In the restoration business, you are entrusted many times with people’s largest asset, their home, restoring value when damage occurs. One of the greatest responsibilities the BOD has is in maintaining the value of their property.”
In looking at association property management, Stephen says, “One of the biggest challenges facing community association managers is the change happening at the board level. As new tech-savvy boards of directors move in, the challenge to improve and keep abreast with the knowledge of changes in every area is required.
“Also, with changes in technology, new apps are being developed daily, requiring property managers to keep up with the competition or face replacement. Improvements in electronic tools are ever increasing, and the need for managers to have most information with them has changed the role. Now, with smartphones and laptops, managers can have real-time information to share with members of their communities. Managers must find ways to keep up with technology through constant research, belonging to professional associations, and subscribing to leading edge publications.”
As well as keeping up with new areas related to his profession, Stephen enjoys golfing and boating. Congrat-ulations to Stephen Donihee for his dedication and achieve-ment in obtaining his CFCAM certification!
CAM to CAM
Insurance Essentials, Part Two
Marcy L. Kravit, CMCA, AMS, PCAM, CFCAM
Florida Community Association Professionals (FCAP) Education and Training Coordinator
AKAM On-Site Managing Director
Editor’s Note: This is part two of three on insurance essentials. Part one can be read at fcapgroup.com/flcaj/flcaj-articles/fcap-community-april-2020/.
Florida State Statutes 718.111(11) for condominiums states the following:
(11) INSURANCE.—In order to protect the safety, health, and welfare of the people of the State of Florida and to ensure consistency in the provision of insurance coverage to condominiums and their unit owners, this subsection applies to every residential condominium in the state, regardless of the date of its declaration of condominium. It is the intent of the Legislature to encourage lower or stable insurance premiums for associations described in this subsection.
- Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal. The replacement cost must be determined at least once every 36 months.
- An association or group of associations may provide adequate property insurance through a self-insurance fund that complies with the requirements of ss. 624.460-624.488.
- The association may also provide adequate property insurance coverage for a group of at least three communities created and operating under this chapter, chapter 719, chapter 720, or chapter 721 by obtaining and maintaining for such communities insurance coverage sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. A policy or program providing such coverage may not be issued or renewed after July 1, 2008, unless it has been reviewed and approved by the Office of Insurance Regulation. The review and approval must include approval of the policy and related forms pursuant to ss. 627.410 and 627.411, approval of the rates pursuant to s. 627.062, a determination that the loss model approved by the commission was accurately and appropriately applied to the insured structures to determine the 250-year probable maximum loss, and a determination that complete and accurate disclosure of all material provisions is provided to condominium unit owners before execution of the agreement by a condominium association.
- When determining the adequate amount of property insurance coverage, the association may consider deductibles as determined by this subsection.
- If an association is a developer-controlled association, the association shall exercise its best efforts to obtain and maintain insurance as described in paragraph (a). Failure to obtain and maintain adequate property insurance during any period of developer control constitutes a breach of fiduciary responsibility by the developer-appointed members of the board of directors of the association, unless the members can show that despite such failure, they have made their best efforts to maintain the required coverage.
- Policies may include deductibles as determined by the board.
- The deductibles must be consistent with industry standards and prevailing practice for communities of similar size and age and having similar construction and facilities in the locale where the condominium property is situated.
- The deductibles may be based upon available funds, including reserve accounts, or predetermined assessment authority at the time the insurance is obtained.
- The board shall establish the amount of deductibles based upon the level of available funds and predetermined assessment authority at a meeting of the board in the manner set forth in s. 718.112(2)(e).
- An association controlled by unit owners operating as a residential condominium shall use its best efforts to obtain and maintain adequate property insurance to protect the association, the association property, the common elements, and the condominium property that must be insured by the association pursuant to this subsection.
- The declaration of condominium as originally recorded, or as amended pursuant to procedures provided therein, may provide that condominium property consisting of freestanding buildings comprised of no more than one building in or on such unit need not be insured by the association if the declaration requires the unit owner to obtain adequate insurance for the condominium property. An association may also obtain and maintain liability insurance for directors and officers, insurance for the benefit of association employees, and flood insurance for common elements, association property, and units.
- Every property insurance policy issued or renewed on or after January 1, 2009, for the purpose of protecting the condominium must provide primary coverage for:
- All portions of the condominium property as originally installed or replacement of like kind and quality, in accordance with the original plans and specifications.
- All alterations or additions made to the condominium property or association property pursuant to s. 718.113(2).
- The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon are the responsibility of the unit owner.
- A condominium unit owner policy must conform to the requirements of s. 627.714.
- All reconstruction work after a property loss must be undertaken by the association except as otherwise authorized in this section. A unit owner may undertake reconstruction work on portions of the unit with the prior written consent of the board of administration. However, such work may be conditioned upon the approval of the repair methods, the qualifications of the proposed contractor, or the contract that is used for that purpose. A unit owner must obtain all required governmental permits and approvals before commencing reconstruction.
- Unit owners are responsible for the cost of reconstruction of any portions of the condominium property for which the unit owner is required to carry property insurance, or for which the unit owner is responsible under paragraph (j), and the cost of any such reconstruction work undertaken by the association is chargeable to the unit owner and enforceable as an assessment and may be collected in the manner provided for the collection of assessments pursuant to s. 718.116.
- A multi-condominium association may elect, by a majority vote of the collective members of the condominiums operated by the association, to operate the condominiums as a single condominium for purposes of insurance matters, including, but not limited to, the purchase of the property insurance required by this section and the apportionment of deductibles and damages in excess of coverage. The election to aggregate the treatment of insurance premiums, deductibles, and excess damages constitutes an amendment to the declaration of all condominiums operated by the association, and the costs of insurance must be stated in the association budget. The amendments must be recorded as required by s. 718.110.
- The association shall maintain insurance or fidelity bonding of all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any such bonding.
- The association may amend the declaration of condominium without regard to any requirement for approval by mortgagees of amendments affecting insurance requirements for the purpose of conforming the declaration of condominium to the coverage requirements of this subsection.
- Any portion of the condominium property that must be insured by the association against property loss pursuant to paragraph (f) which is damaged by an insurable event shall be reconstructed, repaired, or replaced as necessary by the association as a common expense. In the absence of an insurable event, the association or the unit owners shall be responsible for the reconstruction, repair, or replacement as determined by the maintenance provisions of the declaration or bylaws. All property insurance deductibles and other damages in excess of property insurance coverage under the property insurance policies maintained by the association are a common expense of the condominium, except that:
- A unit owner is responsible for the costs of repair or replacement of any portion of the condominium property not paid by insurance proceeds if such damage is caused by intentional conduct, negligence, or failure to comply with the terms of the declaration or the rules of the association by a unit owner, the members of his or her family, unit occupants, tenants, guests, or invitees, without compromise of the subrogation rights of the insurer.
- The provisions of subparagraph 1. regarding the financial responsibility of a unit owner for the costs of repairing or replacing other portions of the condominium property also apply to the costs of repair or replacement of personal property of other unit owners or the association, as well as other property, whether real or personal, which the unit owners are required to insure.
- To the extent the cost of repair or reconstruction for which the unit owner is responsible under this paragraph is reimbursed to the association by insurance proceeds, and the association has collected the cost of such repair or reconstruction from the unit owner, the association shall reimburse the unit owner without the waiver of any rights of subrogation.
- The association is not obligated to pay for reconstruction or repairs of property losses as a common expense if the property losses were known or should have been known to a unit owner and were not reported to the association until after the insurance claim of the association for that property was settled or resolved with finality, or denied because it was untimely filed.
- An association may, upon the approval of a majority of the total voting interests in the association, opt out of the provisions of paragraph (j) for the allocation of repair or reconstruction expenses and allocate repair or reconstruction expenses in the manner provided in the declaration as originally recorded or as amended. Such vote may be approved by the voting interests of the association without regard to any mortgagee consent requirements.
- In a multi-condominium association that has not consolidated its financial operations under subsection (6), any condominium operated by the association may opt out of the provisions of paragraph(j) with the approval of a majority of the total voting interests in that condominium. Such vote may be approved by the voting interests without regard to any mortgagee consent requirements.
- Any association or condominium voting to opt out of the guidelines for repair or reconstruction expenses as described in paragraph (j) must record a notice setting forth the date of the opt-out vote and the page of the official records book on which the declaration is recorded. The decision to opt out is effective upon the date of recording of the notice in the public records by the association. An association that has voted to opt out of paragraph (j) may reverse that decision by the same vote required in paragraphs (k) and (l) and notice thereof shall be recorded in the official records.
- The association is not obligated to pay for any reconstruction or repair expenses due to property loss to any improvements installed by a current or former owner of the unit or by the developer if the improvement benefits only the unit for which it was installed and is not part of the standard improvements installed by the developer on all units as part of original construction, whether or not such improvement is located within the unit. This paragraph does not relieve any party of its obligations regarding recovery due under any insurance implemented specifically for such improvements.
Because You Asked
By Betsy Barbieux, CAM, CFCAM, CMCA
It’s been awhile! Thanks for your support and information regarding some challenging topics. I have a few owners at my condominium who repeatedly break the rental rules. The board has decided to assign a fine to the owners who violate the rules. I have not been a part of this fine system before and have no knowledge of how to handle it. Can you give me a step-by-step guideline on how to form a fining committee and how to assign the fine to these owners? Any assistance given will be greatly appreciated.
I am on the fine appeals committee where I live. Here are the steps we follow:
- The board adopted written violation policy (how many letters, warnings, drop dead date for compliance).
- Drop dead date passes.
- Owner violation issue is placed on next board meeting agenda (by now there has likely been more than 10 days passed for compliance).
- At $100 a day for 10 days, the fine per violation is now $1,000 and/or suspension of common areas use.
- At a regularly posted board meeting, the agenda item of the non-compliant owner is discussed and a fine and/or suspension is imposed.
- Owner is given at least a 14-day invitation to appeal the fine/suspension issued by the board.
- The fine/appeals committee must be three owners not related to any board member.
- The sole role of the fine/appeals committee is to affirm or reject the fine or suspension.
- If the fine/appeals committee agrees by majority vote, the fine/suspension is imposed.
- If it is a fine, the owner has five days to pay.
Jackie, before you start step number one, if you don’t have step number seven, a fine/appeals committee in place that is willing to meet after the board gives a 14-day invitation to the non-compliant owner, you can’t fine or suspend the use rights of the amenities.
Should board meetings be taped so the minutes are accurate? Also, our bylaws state that the board secretary takes the minutes, but instead the manager takes them. Is this a problem? What if the minutes are incorrect and posted on our website?
Any or all duties of the board of directors MAY be delegated to the CAM. Taking the minutes and all other record-keeping duties are usually the tasks we take over from the secretary! We usually take the financial responsibilities from the treasurer, too.
Minutes are NOT a transcription of what was said, discussions, or owners’ comments. Minutes only record minimal details. As an example:
The board discussed the installation of the water shut- off valves to the second-floor units and owners’ comments were heard. On a motion made by Jim and seconded by Sue, the following was unanimously adopted:
RESOLVED, that the contract, copy attached, with XYZ Plumbing for $25,000 for the installation of 12 shut-off valves, is hereby approved; and the president is authorized to sign the contract.
Seldom would there be a need to include discussions and never owners’ comments. Just note that “owners’ comments were heard.”
So with that said, if you do record the meeting for whatever reason, I am told the audio is NOT to be kept as an official record.
If the minutes are incorrect, the board can correct them at the next board meeting when they vote to approve them. If they’ve already been approved and are still incorrect, the board can correct them at the next board meeting!
We have a meeting with a reserve specialist, and it’s important we understand the statutory requirements prior to going into this meeting. The reserve specialist is stating that interest and inflation cannot be included in the analysis due to recent interpretations of the Florida Administrative Code by the Division of Condominiums, Timeshares, and Mobile Homes. Upon looking up Rule 61B-22.005(3)(b), I don’t see where that would prohibit the reserve analyst from using interest and inflation in the analysis. Can you shine some light on this? We were informed that associations have been cited for non-compliance due to this issue, and we cannot locate any of this information about the citations.
If you are asking about a reserve study being required by law, it is not. Having a reserve study is a best business practice but is not required by statute. As far as taking into account interest and inflation, it seems to be permitted. So, I don’t know how the Division could cite an association. Rule 61B-22.005(3)(b) says, in part, “The projected annual cash inflows may include estimated earnings from investment of principal.”
There was a director who was elected last year for a two-year term. He hardly ever attended any of our meetings and has never been certified. Can we replace him for the duration of his current term and what might that process be? Or, do we have to recall him?
I don’t think you need a recall procedure. The board should announce at a board meeting (post notice and agenda item appointment of board member) that because “Joe” has not been certified, he is suspended from the board. The board can then appoint someone to fill his seat for the remainder of his term until he complies with certification.
720.3033 Officers and directors.—
- Within 90 days after being elected or appointed to the board, each director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of covenants, articles of incorporation, bylaws, and current written rules and policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. Within 90 days after being elected or appointed to the board, in lieu of such written certification, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved education provider within 1 year before or 90 days after the date of election or appointment.
- The written certification or educational certificate is valid for the uninterrupted tenure of the director on the board. A director who does not timely file the written certification or educational certificate shall be suspended from the board until he or she complies with the requirement. The board may temporarily fill the vacancy during the period of suspension.
- The association shall retain each director’s written certification or educational certificate for inspection by the members for 5 years after the director’s election. However, the failure to have the written certification or educational certificate on file does not affect the validity of any board action.