Review Potential Violation Areas

By Michael Gelfand, Esq. / Published November 2018

S

tate Seeks To Penalize Condominium Associations

     In a rare and stunning reversal, the State of Florida Division of Condominiums, Timeshares, and Mobile Homes announced “penalty guidelines” for many matters, beginning with a minimum penalty of $1,000. Certain “minor violations” repeated after a “notice of non-compliance” result in a minimum penalty of $500 up to $2,500!

     How can you find out about it? Unfortunately, you cannot find the proposed rule on the Division’s internet home page, nor pages for Statutes and Rules, Education, FAQs, or Forms and Publications. One must leave and visit the Florida Department of State’s webpage, access the Florida Administrative Code & Florida Administrative Register, and then search for the rules being changed. The Notice of Proposed Rule can be found at www.flrules.org/Gateway/View_notice.asp?id=20627067.

     The State’s proposal drastically shifts the Division’s focus from that of the last two governors-Bush and Crist. Those governors recognized that the Division should concentrate on the education of associations and their directors and owners. There was a general recognition that citizen expectations for enforcement, including penalties, could not be satiated, even after pumping millions more dollars into enforcement. Further, focusing on enforcement would discourage competent persons from volunteering to serve as directors.

     The administration’s basis for proposing rule changes is “to address amendments made to Chapter 718, F.S.” in 2017. It is noted that the amendments to the Condominium Act last year did not mandate a shift from education to fining.

     You may ask what constitutes a minor violation for which a repeated incident results in a minimum $500 fine. This includes not disclosing the beginning and ending dates of a proposed budget period. This means if the date at the top of the proposed budget is not present, a seemingly frequent oversight, an association will find itself a target of the Division. Penalties beginning at $1,000 and more may apply for failing to charge interest on past due assessments, allowing an ineligible person to run for director, co-mingling association funds with non-association funds, counting improperly cast ballots, and failing to include required documents on the association’s website, among a listing that extends more than seven pages long.

     Obviously, condominium associations will want to ensure that inadvertent oversight does not become the basis for a fine. Seemingly minor issues now can become very expensive even if there is no harm to any unit owner. Proverbial “dotting the i’s and crossing the t’s” becomes more important. Directors and officers will want to be more careful because owners may blame them for the imposition of fines.

     Condominium association officers and directors are urged to review the potential violation areas as well as their general operations to help ensure that their operations are in compliance.

Altering Common Property: Is Owner Approval Required?

     Can a board of directors unilaterally change a community’s common elements without first obtaining owner approval? Does the materiality or extent of the alteration make a difference? It may depend on what the community’s declaration says!

     Recently, in a decision that can impact Florida homeowners and cooperative associations as well as condominium associations, a Florida appellate court ruled that a board of directors of a condominium association can alter the flooring in the condominium’s lobby without the approval of the unit owners. The facts in Lenzi v. The Regency Tower Association, Inc., 43 Fla. L. Weekly D 1397 (Fla. 4th DCA, June 20, 2018), indicate that the directors voted to alter the common element flooring from Carrara marble to ceramic tile. A unit owner who disagreed with the decision to make changes in the lobby of the building first filed a petition for State of Florida Condominium arbitration to overturn the decision of the board.

     The condominium’s declaration stated that the association had the power to make “such alterations or improvements to the common property” with just the approval of the board. The unit owner asserted that the marble to tile swap was a material alteration and because the declaration did not contain the term “material alteration,” Section 718.113(2)(a), Fla. Stat. (2016), of the Condominium Act applied and required a 75-percent unit owner vote.

     The arbitrator ruled that the declaration’s wording of the directors’ authority to approve “such alterations or improvements” was broad and included material alterations. Apparently, not satisfied, the unit owner then filed a lawsuit against the association. The trial court granted judgment for the association, and the owner appealed.

     For the third time, the association won when the Florida appellate court affirmed the decision of the trial court. The court began its analysis by explaining that terms in a declaration should, when clear, first be given their “plain and unambiguous meaning” as understood by the “man-on-the-street.” In so doing, the court concluded that the word “alterations” refers to all alterations and not only non-material alterations. “If our choice in dealing with a word used in a condominium declaration is to choose between the legal parlance amongst real estate lawyers versus the generally understood definition of the term, we stand with the latter.”

     This case shows that words matter. The decision reinforces the value of common sense, a good dictionary, and the legal presumptions created by use of a general unambiguous term!

Flooding of a Home: Is the Association Liable?

     Now that South Florida is in its rainy season, it is a good time to ask, what happens when an owner’s property is flooded? Can a Florida association be held liable for damage to the home? Or, can a Florida association be forced to take action to prevent damage?

     Recently, a Florida appellate court addressed the issue of flooding of an owner’s property and determined that the association was required to properly manage the community’s surface water management system. In Coconut Key Homeowner’s Association, Inc. v. Gonzalez, 43 Fla. L. Weekly D 1045 (Fla. 4th DCA, May 9, 2018), a property owner sued the association for failure to properly manage the surface water management system, which caused her property to flood when it rained, leading to damage to her home. The owner sought an injunction to stop the flooding and monetary damages.

     The jury found that the association breached its governing documents by failing to maintain and operate the surface water management system on the owner’s property, but that the breach did not cause the damage to the home. Thus, the jury did not award any monetary damages. Nevertheless, on the issue of who had to repair, the jury found that the association violated its governing documents. Thus, the trial court granted the owner’s motion for a mandatory injunction and denied the owner’s motion for attorney’s fees.

     The Florida appellate court affirmed the decision of the trial court to issue an injunction against the association but reversed the denial of attorney’s fees. First, the court explained that the association violated its governing documents for failing to properly maintain the surface water management system on the owner’s property. Second, the owner proved irreparable harm when witnesses testified the flooding problem could only be resolved if the association fixed the swales and drainage system near the owner’s property. Third, only an injunction requiring the association to comply with its governing documents would prevent future harm to the owner. Fourth, because the association had to take action, the association would have to pay at least some of the owner’s attorney’s fees.

     A lesson to be taken from this case is that many Florida associations have a duty to properly maintain their community’s surface water management system to prevent flooding problems. While an association may not be in a position to guarantee no flooding, by failing to take reasonable proactive measures, such as inspections and fixing swales and drainage, a Florida association may find itself the subject of a court ordered injunction, potential damage, and hefty legal fees.

Michael J. Gelfand, Esq.

Senior Partner of Gelfand & Arpe, P.A.

Michael J. Gelfand, Esq., the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar Board-Certified lawyer in Condominium and Planned Development Law and in Real Estate Law, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is a past Chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at ga@gelfandarpe.com or (561) 655-6224.