Your Words May Come Back to Bite You!

The 2021 Legislative Session

By Michael J. Gelfand, Esq. / Published June 2021

     Editor’s Note: The legislative session convened on March 2, 2021, and adjourned on April 30, 2021. By the time you read this article, bills will have either been tabled or approved and will be awaiting Governor DeSantis’ signature.

It is still too early to determine which community association bills will be adopted by the Florida Legislature and, of course, which may be vetoed by the Governor. Though we are a month into the 2021 legislative session, significant new proposals are making their way into bills, and provisions that were “must haves” are still dropping into the abyss.

Since we are a month away from the end of session and recognize that nearly everything occurs in the last days of a session, it is way too early for anyone to hold their breath. We intend to report after adjournment when there will be something concrete to touch and see, as opposed to today’s soft conjecture.

     For those who view the legislative session as akin to a day or season at the horse races, many proposals are still in the running from last year, including swapping out condominium mediation for arbitration, limiting certain insurance claims, and adding criminal penalties for failing to provide records. New proposals seek to limit the authority of homeowners associations to regulate rentals, require longer notice time before lien and foreclosure actions by a condominium association, and require budgets be adopted no less than 30 days before the end of a fiscal year.

     Clarifications include how the Florida Not for Profit Corporation Act interacts with the Condominium Act and the Homeowners Association Act, defining what type of monetary obligation disqualifies a director from office. Preemption of town and county rental restrictions and home-based business limits may push associations to strengthen their restrictions. A notable result of the pandemic is changes to association emergency powers.

     A potentially explosive idea is investing reserves in the stock market and other devices. Another is requiring homeowners association director recall efforts to be approved by homesteaded owners [those living onsite].

     The first bill the Governor signed into law is 2021-1, dealing with civil liability for COVID related claims. Most claims appear to be forbidden, including many that would have named community associations; however, the devil is in the details. Gross negligence or intentional conduct are exceptions, as well as failing to comply with authoritative or controlling government-issued health standards or guidance. As the State is not mandating protections, it is questioned whether political guidance will provide protections.

Loose Lips Sink Ships and Sales—Beware of Statements To Purchasers!

     It is common for purchasers to make inquiries about the status of property to an association. What happens if an association officer or manager tells a prospective purchaser not to worry about something? Can this create harm for the association?

     Recently, a Florida appellate court ruled that a Florida condominium might have to suffer the losses because of a manager and president’s comments regarding delinquent assessments. The facts in SVI Trust v. Williams Walk Condominium Association, Inc., 46 Fla. L. Weekly D 470 (Fla. 1st DCA, February 26, 2021), indicate that SVI purchased a condominium unit at a foreclosure sale. Because SVI failed to pay assessments owed both before and after the foreclosure sale, the association placed a lien on the property and then sued to foreclose the lien.

     SVI claimed that the association was barred from collecting assessments owed before the date of the foreclosure sale because both the association’s manager and president said that SVI would not be responsible for assessments that accrued before the sale. SVI asserted that it relied on these representations in making its decision to purchase the property.

     The association contested SVI’s version of events, even submitting an affidavit stating that neither the manager nor the president made any such statements. The trial court entered final judgment of foreclosure for the association and found that $33,054 in assessments, late fees, and interest was owed to the association.

     The Florida appellate court agreed with SVI and reversed the final judgment of foreclosure. The court explained that the “long-standing estoppel doctrine” is as follows:

(1) Words and admissions, or conduct, acts, and acquiescence, or all combined, causing another person to believe in the existence of a certain state of things. (2) In which the person so speaking, admitting, acting, and acquiescing did so willfully, culpably, or negligently. (3) By which such other person is or may be induced to act so as to change his own previous position injuriously.

     Here, SVI maintained it relied on statements made before it purchased the property which were not found in the association’s governing documents. As the court stated, “there is a clear conflict in evidence over whether the association is estopped from seeking in foreclosure the pre-purchase assessments, fees, and costs based on purported representations made by the association’s manager and president.”

     The clear lesson to be taken from this case is to not make any statements to prospective purchasers as to what is owed to the association outside of required assessment certificates. Why? Because if you do, those statements may come back to bite you!

Why Demand Letters Must Be Specific to Recover Amounts Owed

     To collect delinquent assessments, Florida community associations must first send out demand letters before liening and foreclosing. What happens when the demand letter does not strictly comply with statutory requirements? The association may find itself out of luck, even if just for pennies, creating liability for attorney’s fees.

     A Florida appellate court recently addressed the issue of whether a demand letter to recover transportation costs complied with the statutory requirements. Though in an insurance context, the ruling could easily apply to Florida community associations.

     In Rivera v State Farm Mutual Automobile Insurance Co., 46 Fla. L. Weekly D 447 (Fla. 3rd DCA, February 24, 2021), Rivera had an automobile policy with personal injury protection benefits up to $10,000. Following an automobile accident, Rivera sent a demand letter which requested reimbursement for twelve travel dates and stated Rivera traveled an average of six miles for each date but did not provide the amount Rivera incurred on each date. The demand sought 61 cents per mile. The insurer paid a total of $32.70 at 56.5 cents per mile.

     Because the insurer paid Rivera 56.5 cents per mile and not 61 cents, Rivera sued the insurer to recover the $2.59, plus more importantly, his attorney’s fees for having to sue the insurer. The trial court granted summary judgment for the insurer, finding that the pre-suit demand letter for transportation costs failed to comply with §627.736(10), Fla. Stat. (2014), because the letter failed to “state with specificity or include an itemized statement specifying each exact amount, date of treatment, service or accommodation, and the type of benefits claimed to be due.”

     The Florida appellate court agreed with the decision of the county court. The appellate court pointed out that §627.736(10) provides that a demand letter include the following:

       3. [T]he name of any medical provider who rendered to an insured the treatment services, accommodations, or supplies that form the basis of such claim; and an itemized statement specifying each exact amount, the date of treatment, service, or accommodation, and the type of benefit claimed to be due.

     If the insured is required to file suit due to late payment, the insurer is required to pay the insured’s attorney’s fees.

     The appellate court held that the demand letter was deficient because it included inaccurate and inconsistent information. It failed to include an itemized statement specifying the exact amount of requested reimbursement for each trip, the dates of treatment, the amount due and owed, or the addresses to which Rivera allegedly traveled for each trip to incur his mileage costs.

     This decision is important for all associations because it shows the need for statutory letters to be specific in order to comply with the statutory requirements. In collecting delinquent assessments, the Condominium Act and Homeowners Association Act require that demand letters contain certain information. As in this recent decision, if the demand letters do not strictly comply with the statutes, an association may find itself not only unable to recover its attorney’s fees but also unable to collect delinquent assessments. To avoid these pitfalls, contact your association counsel regarding collections. 

Michael J. Gelfand, Esq.

Senior Partner, 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.