Legislative Update, Part 2

by Michael Gelfand, Esq. / Published June 2014

Editor’s Note: In the May 2014 issue of FLCAJ, readers were presented with part one of the Legislative Update. This month continues with the second part of the Legislative Update. The current legislative session ended on May 3. A bill does not become a law until signed by the Governor and most laws will not go into effect until July 1, 2014.

The following bills, unless stated below, appear to be in line for passage.

Bills of Direct Interest to Florida Community Associations

•HB 425/SB 440 —“Condominiums” would exempt non-residential, or commercial, condominiums from many statutory procedures.

•HB 807/SB 798 — “Residential Properties” would extensively change condo-minium and homeowners association governance. In addition to proposing changes in timeshare regulations, the bill affects homeowners associations by clarifying the associations. Meetings of boards of directors of homeowners associations must be accessible to a physically handicapped person if requested by a handicapped person who is entitled to attend the meeting. If a homeowners association adopts an amendment, the amendment must be provided to the members. Homeowners associations are also provided powers to be exercised in case of an emergency. The bill also revises the Condominium Act, allowing owners facing new leasing restrictions to be grandfathered, clarifying the threshold for access to units including access to abandoned units subject to foreclosures, and allow for the appointment of a receiver. Concerning damage to condominium units, in the absence of an insurable event, the association or unit owner shall be responsible for repair as provided in the declaration or bylaws. A cooling off period is provided for condominium terminations of 180 days after a plan fails to obtain approval. Many changes to the Condominium Act in the last two years are also adopted and incorporated into the Cooperative Act.

For both condominium and homeowners associations, owners may waive confidentiality provisions concerning official records, and outgoing directors and committee members are required to deliver official records they may have retained to the association within five days after election of a new board, and quorum requirements are extended to allow attendance by telephone to be counted as quorum. Special meetings called by members must occur within 60 days of the receipt of a petition.

The Legislature has approved this bill, and it is being prepared to be delivered to the Governor.

•HB 7037/SB 1466 —“Community Managers” revises community association manager authority to undertake certain statutory duties, creating a duty between managers and the association.

Bills of Indirect Interest to Florida Community Associations

•SB 356 —“Regulation of Public Lodging Establishments” seeks to revise the preemption of local ordinances concerning vacation rentals, allowing local governments to enact limitations, which may indirectly allow Florida associations greater power to ensure that properties do not become dormitories or hotels.

•HB 631/SB 172 —“Notaries Public” would require most notary publics to retain a journal identifying documents verified or acknowledged by the notary public, including notary publics employed by condominium and homeowners associations.

•HB 489/SB 1032 —“Subsurface Rights” requiring certain real property sellers, including most developers to disclose subsurface rights in contracts, has been approved and is ready to be sent to the Governor.

•HB 781/SB 834 —“Legal Notices” regulates the electronic posting of legal notices, including publications required for association foreclosure sales. The Legislature has approved this bill and it is being prepared to be delivered to the Governor.

•HB 791/SB 956 —“Coastal Management” amends procedures concerning the coastal construction setback line, the “line in the sand” prevent-ing seaward construction, allowing “minor structures” including certain walkovers, dune restoration, and swimming pools.

•HB7085/SB 1524 —“Security of Confidential Personal Information” requires entities, including Florida condominium and homeowners associations, to protect personally identifiable information, and should there be a breach of the confidentiality, then to provide a report to the State of Florida Department of Legal Affairs, and to dispose of data in a manner that ensures confidentiality. Note that a bill does not become a law until the bill is signed by the Governor. Most Bills once signed do not take effect until July 1, 2014. The firm will be collecting new laws as they are adopted and will post the new laws on www.gelfandarpe.com. As questions arise on what actually becomes law, and what it means, check with your association counsel.

EMPLOYMENT: DISCRIMINATION ON THE BASIS OF PREGNANCY IS PROHIBITED

Associations quite often hire management companies to provide workers for numerous services. What happens if the management company discriminates against the employee? Is discrimination on the basis of pregnancy illegal? Can the association ultimately be liable if a manager unlawfully discriminates?

The Supreme Court of Florida recently held in Delva v. The Continental Group, Inc., No. SC12-2315 (Fla., April 17, 2014), that the Florida Civil Rights Act (FCRA), §760.10(1)(a) Fla. Stat. (2011) prohibits employment discrimination on the basis of pregnancy. The facts of the case indicate that Delva was a front desk manager. Delva alleged that her employer, a management company, took adverse actions against her due to her pregnancy, in violation of the FCRA. It is noted that the lawsuit was initially dismissed so there has not been a trial, and no determination by a court as to whether there actually was discrimination or wrongful conduct.

In addressing the legal issue, does the law apply to the allegation, the Florida Supreme Court pointed out that the FCRA does not specifically include the word “pregnancy.” Nonetheless, the Court adopted the reasoning of the Supreme Court of Massachusetts:

[T]he initial inquiry necessarily involves determining whether distinctions based on pregnancy are sex-linked classifications. Pregnancy is a condition unique to women, and the ability to become pregnant is a primary characteristic of the female sex. Thus any classification which relies on pregnancy as the determinative criterion is a distinction based on sex.

Directing that the trial court should proceed, allowing all of the parties to present evidence, the Florida Supreme Court stated that the FCRA “makes clear that discrimination based on pregnancy, a natural condition unique to females and a primary characteristic of the female sex, is subsumed within the prohibition in the FCRA against sex discrimination in employment practices.” This decision is very important to all associations, which employ more than 15 employees, or which contract with a management company, which employs more than 15 employees. An increasing number of management company contracts contain hold harmless and/or indemnification provisions for all matters arising out of management. The question may become whether that type of management contract provision would require the association to indemnify or hold harmless the manager for damages flowing from alleged discriminatory conduct, as well as expenses to defend the claim. If you have questions concerning your management contract, contact your association’s counsel.

MORTGAGE FORECLOSURES: BANK GETS TWO BITES AT THE APPLE

The speed, or actually the lack thereof, with which banks move mortgage foreclosures to completion is often a frustration to associations. In an attempt to remedy this problem, an association may decide to initiate its own foreclosure action. Unfortunately, a mortgage often clouds the title when the association becomes the owner of the property. Can the mortgage be cancelled if a bank tried once, but failed to complete an earlier foreclosure action?

In one more nail in the coffin for associations trying to put mortgage foreclosures behind them, a Florida appellate court concluded that a foreclosure action for default payments occurring after the order of dismissal in a first foreclosure action is not barred by the statute of limitations. In U.S. Bank National Association v. Bartram, No. 5D12-3823 (Fla. 5th DCA, April 25, 2014), the facts indicate that the bank acquired a mortgage in 2005. The owners divorced and the ex-husband bought out the ex-wife and gave her a mortgage.

In 2006, the bank filed a foreclosure action. In 2011, the trial court dismissed the action because the bank failed to appear at a case management conference. Meanwhile, the ex-wife filed her own action to foreclose her mortgage, naming both the bank and the ex-husband owner. The owner filed a cross-claim against the bank seeking to quiet title to the property claiming the statute of limitations barred the action. The trial court agreed with the ex-husband and released the bank’s lien on the property, cancelling the note and mortgage.

The Florida appellate court examining the statute of limitations reversed the decision of the trial court. “[A] default occurring after a failed foreclosure attempt creates a new cause of action for statute of limitations purposes, even where acceleration had been triggered and the first case was dismissed on its merits,” the court stated. “Therefore, we conclude that a foreclosure action for default in payments occurring after the order of dismissal in the first action is not barred by the statute of limitations…provided the subsequent foreclosure action on the subsequent defaults is brought within the limitations period.”

In other words, it appears that even where five years elapses after a court dismisses the bank’s mortgage foreclosure, the bank will be allowed to foreclose on payments, which come due within five years before the bank files another foreclosure action.