contractor

If you live in a condominium or cooperative association in Florida, it may seem like your building is in a constant state of repair. Roofing. Painting. Concrete restoration. Pool deck. Pool re-marciting or diamond briting. Asphalt. Pavers. Elevators. Windows. The list goes on and on, and the work goes on and on. With the new statutory structural integrity inspections and reports that are now required, the work will only increase. While all these repairs and maintenance are required and good for the building and its residents, choosing the right contractors to perform these jobs are critical in order to ensure the job is done timely, properly, at a reasonable cost, and with proper warranties as applicable.

How does an association find the right contractor? In today’s market, how does the association find any contractor? What are the steps? The pitfalls? Who do we get references from? This article will assist you with these questions.

References can come from many sources. Neighboring buildings. Your manager. The management company. Your other professionals – accountant, insurance agent, attorney. Your engineer. An association should be able to secure at least three or four qualified contractors from these sources. How many bids do you need? By law, when competitive bids are required, the minimum is two. That is all the statute requires – two bids. Not three, like many people think. But I always suggest you solicit at least three bids for any job over $10,000.00, and for major work, like roof replacement, painting, concrete restoration, etc., six or seven bids are not uncommon.

Major work, like roof replacement, painting and waterproofing, concrete restoration, etc., should have a formal bid package prepared by the association’s engineer in conjunction with the association. The bid package will contain detailed specifications that each bidder is required to comply with, resulting in the “apples to apples” bid comparison every association wants to see. How does the association engage an engineer? See the above paragraph.

The formal bid package will include specifications, timetables for the work, payment provisions, payment approval provisions, insurance requirements, warranty information, performance deadlines, penalties for missing performance deadlines, inspection requirements, who pays for permits, and a host of other information. Generally, there is a matrix where each contractor is required to insert their price for that specific portion of the job. Once all the bids are received, the engineer or association can prepare a matrix showing all the contractors and their prices for each portion of the work. This is the beginning, just the beginning, of the contractor vetting process.

Price is not everything. Price is not the only thing. Generally, a contract should not be awarded based on price alone. While price is certainly an important factor, it is not the only factor.

Availability, supervision, reputation, ongoing other jobs, past performance, complaints on file, warranty, and other factors should be considered. If possible, walk another community where the contractor is doing work. Speak to those board members and residents, if possible, regarding the work, the contractor, problem resolution, supervisor availability, etc. All of this information should be factored into a board’s decision when choosing a contractor.

Of course, do not forget the basics, which will be part of the bid package – licenses and insurance. Always verify licenses and insurance. Let me say that again – always verify licenses and insurance. The association should be an additional insured under the contractor’s insurance policy – not just a certificate holder.

While the above bid package and related information is generally just for major projects as noted above, the theories can be applied just as well to a $5,000 pool heater replacement, a $7,500 sidewalk installation or a $15,000 playground installation. Check references. Verify licenses and insurance. Look at warranties.

One of the most important pieces of advice I can give – do not sign any contract before it has been reviewed by your association counsel. AIA contracts are not written to protect an association – they are written to protect the contractor. One page proposals, with a signature line and small print on the back page, are generally a red flag. Not always, but generally. Usually, a more formal contract that protects the association is required.

My second most important pies of advice regarding contracts – never sign a notice of intent without the notice being reviewed by your association counsel. These notices of intent can bind an association to engage in a contract, payments, etc., before a contract is even produced, reviewed or executed.

Living in south Florida, we have six months of hurricane season. Once a storm hits, contractors from all over the country descend upon Florida looking for work. Many of these are legitimate companies here to help. Just as many are not. When dealing with contactors after a storm or other disaster, the best piece of advice is “Do not lower your standards”. Go through the vetting process. Check references. Verify licenses and insurance. Legitimate companies that want to do business in Florida have licenses and insurance in place before a disaster. Watch out for red flags:

  • You need to sign the contract today
  • I can only give you ___% off today.
  • 50% down
  • We can start work immediately – right now
  • Just sign the agreement – all payments will come from your insurance company
  • Any type of pressure tactic

Use your common sense. If a deal is too good to be true, it usually is too good to be true. There are no free lunches. Choose your contactors wisely. Time spent up front doing so will save you thousands, if not tens of thousands of dollars and as much aggravation later.

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

Disputes in Community Associations

Disputes within community associations were originally treated like other civil disputes, requiring litigation when the parties could not agree. The law evolved to now require certain types of “alternate dispute resolutions” for community associations before the parties head to court. Specifically, both the Florida Condominium Act (Chapter 718 of the Florida Statutes) and the Florida Cooperative Act (Chapter 719 of the Florida Statutes) require mandatory arbitration or mediation before the filing of a lawsuit for a number of specific disputes. On the other hand, the Florida Homeowners Association (Chapter 720 of the Florida Statutes) requires a demand for pre-suit mediation prior to the filing of a lawsuit. In making these alternative dispute resolutions mandatory, the Florida legislature explained that its intent was to reduce the crowed court dockets and alleviate the high cost and significant delay often faced by parties in litigation.

But what exactly do arbitration or mediation mean in terms of resolving a dispute? Both are extrajudicial alternatives intended to resolve disputes. Similar to an internal grievance procedure, both are intended to avoid the time-consuming and costly nature of litigation. But unlike an internal procedure, both involve the use of an outside, independent party of the dispute and typically involve the use of legal counsel.

In mediation, the parties to the dispute meet with an independent, trained third party, who seeks to assist the parties in coming to a mutually agreeable solution to the dispute. The mediator does not make a “ruling” or a “decision” but rather attempts to facilitate the parties’ path to a resolution. For example, a mediator may assist both parties in seeing the potential weaknesses in their case, navigate personality conflicts, and remind the parties of the financial reality of litigation if the dispute is not resolved. The negotiated written settlement agreement following mediation is not subject to review by courts. However, if the agreement is breached by one party, typically the other may seek a court order for enforcement of the settlement agreement.

On the other hand, in arbitration, an arbitrator enters an order following the parties’ presentation of their cases. The arbitrator essentially sits as the judge and makes the decision. Like mediation, such a decision is often made more quickly and more economically than in litigation. The prevailing party is entitled to their reasonable attorney’s fees as awarded by the arbitrator. If the losing party wants to “appeal” the arbitrator’s decision, it may file what is called a trial de novo. A trial de novo is basically a new trial, and the case is heard by the judge as if the arbitration never occurred. This is so because although the Florida legislature seeks to encourage the resolution of condominium disputes through mediation or arbitration, the Florida Constitution guarantees the right of access to courts to all, including in regard to community association disputes. The arbitration order can be introduced as evidence in the trial, but recent case law decisions had lessened the weight an arbitrator’s final order might carry with a judge. If a trial de novo is not filed within 30 days of the arbitrator’s final order, the order is final, and may be enforced by a court of law.

In addition, the arbitrator may also refer a dispute to mediation at any time if he or she finds that the parties may best be served by mediating the dispute. The parties may also request that the arbitrator refer the case to mediation. Additionally, although the Florida Condominium Act requires mediation or arbitration for certain disputes, a party may file a motion for emergency relief or temporary injunction depending on the facts and circumstances of the particular case. For an injunction, the motion must show a clear legal right to the relief requested, that irreparable harm or injury exists or will result, that no adequate remedy at law exists, and the relief of injunction would not be adverse to the public interest.

The Florida Condominium Act is specific as to which disputes must first be brought to mediation or arbitration. Section 718.1255, Florida Statutes, defines disputes as any disagreement between two or more parties that involves the authority of the board of directors to either 1) require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto, or 2) alter or add to a common area or element. The statute further defines disputes as any disagreement that involves the failure of a governing body, when required either by the Florida Condominium Act or the association documents, to properly conduct elections, give notice of meetings or other actions, properly conduct meetings, or allow inspection of books and records. This means that any of these disputes in a condominium must first go through the arbitration process through the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (the Division). The section also defines issues not subject to mediation or arbitration, such as title disputes and alleged breaches of fiduciary duty.

Sometimes, controversies will include both matters that are eligible and ineligible for mediation or arbitration. In such a case where a petition involves a mix of both, an arbitrator may determine whether the ineligible matters can be properly separated so that the eligible issues may be arbitrated separately. Further, much like litigation, there must be an actual present and bona fide dispute for arbitration. The Division will not accept petitions that present issues that are moot, abstract, or hypothetical.

Although alternative dispute resolutions for community associations are guided by statutory requirements, a community association’s governing documents may also require mediation or arbitration either as a condition precedent to litigation or as the sole dispute resolution process. Due to the complex procedural nature of dispute resolution and the fact-dependent nature of most disputes, the association should seek guidance from counsel on not only the proper method, but also the one that will resolve the dispute most expeditiously and efficiently.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

After the Surfside tragedy, everyone wanted to know how such a tragedy could happen and what steps could be taken to avoid similar incidents in the future. What caused the collapse? Could it have been avoided? Why were repairs not made? Why did local governments allow repairs to drag on? Why were repairs not made in a timely fashion? Unfortunately, none of these questions can be answered quickly, and proper answers will require years of study and analysis.

The above questions, and attempts to enact legislative reform to address some of these questions, were a hot topic for the Florida legislature this year. Several counties and the Florida Bar convened task forces in the aftermath of the Surfside tragedy. Primary among the suggested legislative changes for multifamily buildings were periodic engineering inspections, reserve studies, and reserve funding mandates. While all agreed generally in regard to these reforms, at the end of the day, the Senate and House could not agree on the reserve funding issue and, as a result, nothing passed. Currently Florida law can allow for owners to opt to fund less than required reserves, or no reserves. Most legislative proposals included mandatory reserve funding of one type or another. The sticking point was how quickly to implement such mandatory reserves, without the option of owners being able to waive such requirements. Whether to implement immediately, effective in 2022, or over the next three or five years, to allow a gradual implementation, is ultimately what led to nothing being passed. Rather than compromise, which seems to be a forgotten word in Tallahassee these days, legislators could not, or refused, to come to an agreement for the benefit of all condominium and cooperative residents in Florida.

These issues are certain to be re-examined next year. As such, your association should begin recognizing what is most likely coming down the pike and preparing the association and its residents now. Most likely the days are gone when owners will have an opportunity to fully waive reserves. I anticipate mandatory reserve funding of some type will be implemented. Whatever version is implemented, the result will be an increase in annual maintenance assessments. Depending on what is implemented and your association’s current reserve funding situation, some owners may be looking at a significant increase in your 2024 assessments (as the laws I am discussing would be passed in 2023, and most likely effective for the 2024 association budget).

The association should be anticipating and working on these items now. For example, some sort of reserve study requirement is most likely coming. Budget for one now. Get proposals now. Have the study done now. Once mandated by statute, demand will go up, availability will go down, and of course prices will go up. We are seeing exactly that scenario now in regard to structural engineers and 40/50-year recertifications.

In regard to reserve funding, take a good look at your reserve schedules. Get updated estimates of repair costs. Factor in inflation when projecting 10 and 20 year replacement items such as painting, roofing, etc. Any effort to increase your 2023 reserve balances will help lessen any blow of 2024 mandated reserves. Explain these issues to your residents now. Many associations are understandably involved with 40/50-year recertification requirements and other life-safety related issues. Obviously these issues need to be addressed immediately and on an expedited basis. But associations and their members should keep their eye on long-term remedial requirements as well. More oversight; more required inspections; more required repairs; and more required reserves. All of these are good things for 40–50-year-old buildings in a saltwater environment in Florida.

The outcome of the 2022 legislative session once again underscores the inherent problem when all community association ideas are placed in only one omnibus bill. Until our legislators acknowledge this problem and start using stand-alone bills for important proposals, there is always the risk that needed reforms will not pass.

Contact your legislators, tell them you welcome these types of reforms, but they need to be addressed as needed, not all under one take it or leave it omnibus bill. Work with your association leaders on the above discussed items. Don’t be surprised by increased annual assessments, special assessments, and other upcoming expenses. They are coming. Prepare now.

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

gambling in the clubhouse

While there are certain exceptions, generally, any game of chance is considered gambling. Section 849.08, Florida Statutes, defines gambling as follows:

“Gambling.—Whoever plays or engages in any game at cards, keno, roulette, faro or other game of chance, at any place, by any device whatever, for money or other thing of value, shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.”

The first type of gambling games, which are not subject to criminal penalties, are penny-ante games. Penny-ante games are specified in Section 849.085, Florida Statutes, as “a game or series of games of poker, pinochle, bridge, rummy, canasta, hearts, dominoes, or mah-jongg in which the winnings of any player in a single round, hand, or game do not exceed $10 in value.” Penny-ante games may be played in a dwelling, which is defined to include the common elements or common area of a residential subdivision of which a participant in a penny-ante game is a unit owner.

While penny-ante games are not subject to criminal penalties, the $10 restriction is very limiting and many games of chance, such as poker, exceed this amount. Poker games exceeding this amount would be considered illegal gambling.

In addition to penny-ante games, Bingo games are also not subject to criminal penalties. Pursuant to Section 849.0931(4), Florida Statutes, Bingo is defined as:

“Bingo game” means and refers to the activity, commonly known as “bingo,” in which participants pay a sum of money for the use of one or more bingo cards. When the game commences, numbers are drawn by chance, one by one, and announced. The players cover or mark those numbers on the bingo cards which they have purchased until a player receives a given order of numbers in sequence that has been preannounced for that particular game. This player calls out “bingo” and is declared the winner of a predetermined prize. More than one game may be played upon a bingo card, and numbers called for one game may be used for a succeeding game or games.

While not specifically addressed in Chapter 720 or Chapter 719, the Condominium Statute, Section 718.114, Florida Statutes, provides: “[a] condominium association may conduct bingo games as provided in s. 849.0931.” That being said, Section 849.031, Florida Statutes, recognizes the right of a homeowners’ association, cooperative association and a condominium association to have bingo games on the common areas. Although permitted, there are several limitations on having a bingo game in a community. Just a few of the limitations under this statute include the following:

  1. The jackpot shall not exceed the value of $250 in actual money or its equivalent;
  2. The organization conducting the bingo cannot have bingo games exceeding two days per week;
  3. No more than three (3) jackpots on any one day of play; and
  4. No one under 18 is allowed to play.

There are also specific requirements for the bingo cards and the objects/balls marked by letters and numbers.

Based upon the foregoing, most games of chance are considered illegal gambling and should not be permitted on an association’s common areas. If an association wishes to proceed with allowing penny ante games or bingo games on the common area, it should first consult its attorney to verify that it is complying with the requirements of Section 849.085 and Section 849.0931 of the Florida Statutes.

 

Elizabeth A. Lanham-Patrie

Shareholder, Becker
Ft. Lauderdale | bio

 

unoccupied condominium unit

In condominium associations throughout the state, it is common for there to be seasonal unit owners who leave their units unoccupied during portions of the year. For associations faced with periodically unoccupied units in multifamily condominium buildings, there are distinct legal issues worth considering in advance of problems arising.

Florida’s Condominium Act (the “Act”) does not require absentee unit owners to have their unoccupied units periodically inspected for damage or deterioration. To overcome the absence of a statutory requirement, associations may adopt amendments to their declaration of condominium so that such inspection requirements are enacted to avoid problems originating in unoccupied units going undetected and/or unreported for long periods. Additionally, while the Act authorizes associations to “operate” association-installed hurricane protections to guard against damage to the condominium property, it does not require such protection to be installed. Therefore, it may be prudent to require all unit owners, including but not limited to absentee owners, to install such protection. To incentivize compliance, Section 718.111(11)(j), Florida Statutes provides that the responsibility for damages not paid for by insurance proceeds is shifted from the association to unit owners when such damages result from the unit owners’ failure to comply with the association’s declaration or rules.

The Act provides associations with an irrevocable right of access to enter units when necessary to undertake maintenance of common elements, and as necessary to prevent damage to common elements or to a unit. Associations should ensure that their documents or rules require a working key to all exterior doors and/or that contact information for local persons caring for unoccupied units be provided to the association. It is not recommended for an association to wait until an emergency arises before first contemplating how it will gain access to unoccupied units.

Fortunately, this subject is one that most association law practitioners have addressed in one manner or another. Condominium associations that find themselves concerned about unoccupied units are encouraged to discuss this with legal counsel so that a strategy for dealing with such units may be developed.

 

Joseph Arena

Senior Attorney, Becker
Ft. Lauderdale | bio

 

The short answer: there is no express prohibition against this, but it’s complicated and not recommended for either the association or the lawyer. There are several ethical issues that arise due to the lawyer’s duties to the entity as its counsel, fiduciary duties to the entity as a director, and the lawyer’s personal self interest in both roles.

A board member who is also an attorney can be a great asset for a community association board, as she may have the attention to detail, certain knowledge, and communication skills that are useful to serving on the community’s board. Many attorneys do sit on the boards of their communities and are of great service to their communities. However, this does not substitute the need for independent legal advice from an attorney who specializes and is experienced in community association law.

If a lawyer serves as both director and counsel, the lawyer must be extremely careful in examining which hat—lawyer or director—she is wearing during all communications as she navigates between the two roles. This also needs to be clearly communicated to her fellow board members. For example, an attorney-client relationship may unintentionally arise when the entity reasonably believes that the lawyer-director is acting as its counsel in providing legal advice. Or when acting as counsel, she must take every reasonable step to ensure that the board understands that she is representing only the association itself and that she does not represent any of its individual board members, officers, employees, or anyone else.

Even with careful navigation between the two roles, there are a number of issues that may arise. The first, as briefly touched upon, is that conflicts of interest may arise. A lawyer-director who is personally affected by the legal advice she is giving to the board undermines her capacity to provide objective advice.

The second is in determining the scope of the lawyer’s representation. Generally, a client determines the objectives or goals of the representation, and the lawyer must abide by the client’s decisions. Meanwhile, the lawyer typically determines the means, such as the technical and legal tactical issues, to reach those objectives. However, the lawyer should consult with the client as to the means, as required. For the lawyer-director, this may cause some issues. For example, when wearing the “lawyer hat,” she must abide by the decisions of the entity regarding the objectives, even if as a director, she disagrees. She must also use her best judgment in determining whether to follow certain instructions as to the means of representation. This may put her at odds with her fellow board directors, who may urge her otherwise. On the other hand, the lawyer-director cannot retire her best judgment when putting on her “director hat” especially where she may disagree with the board’s instructions as to the means of representation.

Third, certain courts have held that a lawyer-director is held to a higher standard of care than a non-lawyer-director. When she is wearing her “counsel hat,” she is required to provide competent representation. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation. This may put the attorney in an unintended position where board members are simultaneously shielded from certain liability. The lawyer-director must remind her fellow board members when she is wearing her “director hat” and not providing legal advice, otherwise she will be held to the level of competence required of lawyers. This is especially true if the lawyer does not specialize in community association law, which reinforces the point that community associations should hire independent counsel specializing in community association law even if a lawyer sits on their board.

A fourth issue concerns confidential information. As the entity’s lawyer, the lawyer is required to maintain certain information confidential and privileged. As a board member, the director will have to make certain disclosures. Again, this would require careful switching of hats to determine where legal advice is protected by the attorney-client privilege and when business-related advice is not. The line is not clear and outside the scope of this article.

Given the complexities and importance of the statutory requirements impacting Florida community associations, it is strongly recommended that associations seek independent legal counsel who will best serve the needs of the community.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

board meeting

For this article, I thought I would jump around and discuss various items regarding board members, board meetings and a few association operational issues that keep popping up as questions and issues.

Board member certification.

Let’s start with the board member certification requirement, which applies to condominiums, homeowner associations and cooperative association board members.

  • Within 90 days after being elected or appointed to the board, the board member must certify in writing to the secretary that he or she has read and understands the governing documents and will faithfully discharge his or her fiduciary responsibility. 
  • In lieu of this certification, a board member may submit certification of satisfactory completion of the education curriculum administered by a division-approved condominium educational provider taken within one (1) year before or 90 days after being elected or appointed.
  • The certification is valid for as long as the board member continuously serves on the board  
  • Associations must maintain the certificates for five years after the election.  In a condominium association, the association must maintain the certificates for five years after the election or for the duration of the board member’s term, whichever is longer. 
  • Failure to either certify in writing to the secretary or submit certification of satisfactory completion of the education curriculum means that the director is suspended from service on the board until he or she complies. 
  • The board may temporarily fill the vacancy during the period of suspension. 
  • Any vacancy created based on a director being suspended may be filled according to law until the end of the period of the suspension or the end of the director’s term of office, whichever occurs first.
  • Once the director complies with the certification requirements, he or she is back on the board, and the replacement director is no longer on the board.

Basic Board Meeting Questions

Do members have the right to speak at board meetings?

Yes, on agenda items.

Do non-members, such as tenants or guests, have the right to speak at, or even attend, board meetings?

Unless the right is specifically in your governing documents, no.  However, the association must apply this uniformly, and sometimes that is not a simple as it sounds.  For example, if only one spouse is on the deed, that spouse is the “member”.  The other spouse is technically not a “member,” unless your documents specifically provide otherwise.  In such a scenario, the member spouse may be allowed to attend and speak, while the non-member spouse may not.  If the association does not allow non-members to participate in meetings, that would include spouses who are not on the deed.

Can the association promulgate rules on owners’ participation at board meetings?

Yes, and I strongly encourage them to do so.  Rules can cover such things as how long a member may speak on agenda items, how many times a member may speak on one item, directions regarding audio and video recordings so as to not disturb or disrupt the conduct of the meeting, etc. 

Can a member discuss items at a board meeting that are not on the agenda?

Without the board’s permission, generally no.  Some board have what is referred to as good and welfare, open forum, etc., where members are given the opportunity to address items that are not on the agenda with the board.  If the board has such open forums, it is important that all board members be present to give legitimacy to such interactions. 

Can the board remove a board member from the board?

No.  Only the membership can remove a board member from the board.  The board can remove a board member from an officer position at any time at a duly noticed meeting where the item is on the agenda.  Board members can always reapportion board officer positions at a duly noticed meeting where the item is on the agenda.  There may be an exception if your association members vote directly for the officers of the association, but that is extremely rare.  In the vast majority of cases, the board members vote for the board officers. 

Basic Reserve Questions

Are condominium and cooperative reserves required to be fully funded?

Yes, unless the membership has properly waived funding of reserves.

Can required reserves be partially waived?  For example, can the membership vote to only fund 25 percent, or 50 percent, of the required reserves?  

Yes.

Can the board use reserve funds for other than intended purposes?  For example, if there is only $50,000 in the roof reserve, the roof needs to be replaced now, and the cost of the roof replacement is $100,000, can the board borrow $50,000 from other reserve items to pay for the roof repairs?

If your reserves are set up utilizing the straight-line reserve method, absolutely not.  Only the members can vote to use reserves for other than intended purposes, which must occur at a duly noticed meeting where the item is on the agenda.  If your reserves are set up under the pooled method, while you still have individual categories and allocations, all funds in the pool can be used to pay for any reserve item.  Pooled reserves can be complicated so an association should confer with its accountant before setting up pooled reserves.

Can the board borrow from the reserves to pay for unanticipated operating expenses or operating deficits?

Absolutely not.  This would fall under the same scenario as above, where the reserves are being utilized for other than intended purposes. 

Is the association required to give members the option to waive reserves?

No.  Whether or not members are given the option to waive reserves is up to the board.  

Can the board convert regular (straight-line) reserves into a pooled reserve?

No. Existing straight-line reserves can only be converted into pooled reserves upon a vote of the membership.  The board can decide on its own to begin pooling reserves moving forward; in that case, the existing straight-line reserves remain in their straight-line configuration, while future reserves would go into the pool.  Generally, when a board is converting to pooled reserves, the membership will vote on whether or not to convert the existing reserves to pooled reserves so there is only one type of reserves.

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

Florida wildlife

As Floridians, we are familiar with various types of wildlife surrounding our neighborhoods. It’s not uncommon to spot feral cats and ducks while walking the dog, or large iguanas out on the golf course. And let’s not forget about the numerous alligators, as well as coyote and black bear sightings. As new communities develop and expand into natural habitats throughout the state, interactions between residents and wildlife are increasingly common. Most of the time, these interactions are not problematic, but dangerous incidents can, and do, occur. The tragic alligator attack of the two-year old child at Disney World comes to mind, as well as the alligator attack of the University of Florida student. In a recent case, a mobile home park resident brought a wrongful death suit against the mobile home park after her husband was bit by fire ants while walking their dog in the park and died a couple of days later. This leads to the question; can an association be held responsible if someone is injured due to wildlife on its property?

As we know, an association is responsible for the operation and maintenance of the common areas. Additionally, landowners have certain duties to keep their properties in safe condition. If a resident or visitor is injured on property as a result of the association’s negligence, the association can be held liable. Generally, premises liability is based on the negligence of a property owner or occupant in allowing invitees or licensees to enter an area on the property, without warning, where the owner or occupant could foresee that such persons could be injured by a dangerous condition on the property that is unknown to the invitee and cannot be discovered through due care. However, does this extend to wildlife on or entering the association property?

When it comes to wild animals in their natural habitat, generally, the property owner (or association in this case) does not have the obligation to warn or protect others from wild animal attacks, unless the animal has been reduced to possession, or the animal is not indigenous to the locality but has been introduced onto the premises. For example, in the case of the University of Florida student mentioned above, the court discussed that alligators are indigenous to Florida. The University, in this case, did not create the dangerous condition, but rather the alligators moved from their natural habitat of Paynes Prairie State Park to the adjoining recreational lake on campus.

Nevertheless, where the association is aware or reasonably should have known of a particular wildlife issue and makes no efforts to reduce the attractants to the community, a court may find the association liable in the event of injury. Associations in areas prone to wildlife visits may consider adopting certain rules and regulations to reduce attractants of wildlife, such as trash procedures that reduce the likelihood that wildlife wanders into the community looking for food.

The association may also consider erecting signs by entrances or areas where wildlife may be encountered, warning residents and visitors to avoid contact. Although year-round occupants may be familiar with their community’s wildlife, guests and temporary workers, such as contractors, may not. The court examining the University of Florida incident focused on the number of signs posted by the recreational lake warning visitors to avoid swimming and warning of the possible presence of alligators. The court concluded that the proximate cause of the injury was that the swimmer ignored clear warning signs. The court did not conclude that the University would have been negligent had there been no warning signs, however, this case shows that the court took into account the due diligence of the University in its analysis.

In the case of the fire ants mentioned above, the court also took note of the due diligence of the mobile home park. For example, the court noted that the park had an exterminator spray insecticide every other month in order to kill ants and staff would treat visible ant mounds. However, the court ultimately concluded that the mobile home park was not liable because they did not bring the fire ants on the property, nor did they harbor, introduce, or reduce the fire ants to possession, but did take action to treat manifestations of ants.

It is noteworthy that courts seem to specifically distinguish where wildlife is found in “artificial structures” or places where they are not normally found, as opposed to their natural habitat, which could extend to artificial structures on association property. Again, liability does require that the landowner know or should know of the unreasonable risk of harm posed by an animal on its premises, and if the landowner cannot expect others to realize the danger or guard against it.

Because each community is different, the association should consult with legal counsel to determine if certain precautions concerning wildlife are warranted for the community. Placing signs or including provisions in the association’s documents prohibiting feeding or interacting with wildlife may be prudent for associations seeing an uptick of wildlife entering or near the property.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

The previous boards failed to enforce the parking restrictions in the community, and now parking has become a nightmare. The new board would like to remedy the solution, but can the board begin to enforce a restriction that has not been enforced in the past?

Generally, the association may lose its right to enforce a restriction if it does so inconsistently, unevenly, or arbitrarily. This is known as “selective enforcement,” and when selective enforcement is shown, the association may be estopped from enforcing a given restriction.

However, all is not lost. A previously unenforced restriction may be “revived” with notice from the board that it will enforce the restriction going forward. Essentially, the board draws a line in the sand, which lets owners know that from this point forward, the board will actively and evenly enforce the restriction in question. The process for reviving a provision comes from the case of Chattel Shipping and Investment, Inc. v. Brickell Place Condominium Association, Inc., 481 So.2d 29 (Fla. 3rd DCA 1985). In Chattel Shipping, the association’s declaration of condominium prohibited unit owners from enclosing their balconies without prior approval from the board. Multiple owners, nevertheless, enclosed their balconies without the requisite approval. The board, prompted by a letter from the city that the enclosures violated the city’s zoning ordinance, informed the owners that it would enforce the restriction and prohibit future balcony constructions. After this announcement, one unit owner, Chattel Shipping and Investment, Inc., enclosed its balcony. When the association secured a mandatory injunction requiring the removal of the balcony enclosure, the unit owner sought a reversal on the ground that the association had failed to require the dismantling of the other existing enclosures and thus was unequally and arbitrarily enforcing the restriction.

The Court rejected the owner’s argument, holding that the association could adopt and implement a uniform policy under which a building restriction will be enforced only prospectively without the enforcement of the same being deemed selective and arbitrary. Thus, the Chattel Shipping case stands for the proposition that an association can revive the enforcement of a restriction despite previous non-enforcement by notifying the members of the board’s intent to prospectively enforce the restrictions.

The purpose of properly notifying owners of prospective enforcement is to dispel the arguments and even appearance of unequal and selective enforcement that may be raised by owners. To prove selective enforcement, an owner needs to show that there are instances of similar violations of which the board had notice, but has refused to act. The Florida Administrative Code provides that the owner shall indicate the unit(s) to which each example pertains, the unit owner(s), how long the violation has existed, and shall indicate whether the board knew of the existence of the violation(s).

In drawing this line in the sand, the restriction is “reset.” This works well for temporary violations, such as a parking restriction, but what about violations with more permanent consequences, such as pet violations?

If the previous boards have turned a blind eye to house cats or has not enforced the one-dog policy and now a number of owners have pets in violation of this restriction, the board cannot reasonably expect that following the date of a resolution all owners with pets in violation will move or get rid of their pets.

In that case, in addition to a Chattel Shipping resolution, the board may also determine that it’s best to adopt a “grandfather clause” as part of the restriction. “Grandfathering” allows owners or residents who are already doing something to continue doing so, even if they would be in violation of the new (or newly enforced) restriction. Over time, there will be fewer and fewer exceptions to the restriction as grandfathered owners move away or pass away. And eventually, the restrictions will apply to all owners and residents of the community, as subsequent purchasers in the community will be buying the units under constructive notice of the community’s restrictions.

In adopting the restriction and providing for grandfather status, the language should be drafted carefully with the guidance of association counsel. The association should request that owners who seek to be grandfathered provide a written request to the association by a certain deadline. The deadline allows the association to clearly determine whether a violation existed prior to or after the passage of restriction in the event of a challenge. With a written request, the association can also evaluate each request and have a written record of which owners and/or what (i.e., which vehicle, which pet, etc.) has been granted grandfather status. For example, if the association seeks to restrict oversized vehicles or pickup trucks, the association will request that those owners who currently have oversized vehicles or pickup trucks register their current vehicle, including details such as the model, make, color, and year. This specific vehicle will be granted grandfather status, which means that if the owner exchanges his pickup truck for a different or newer truck, his new vehicle will not be grandfathered in and if the new vehicle is oversized, he will be in violation of the new restriction.

There are times when grandfathering owners or a Chattel Shipping resolution may not be appropriate. For example, if a new restriction to balcony enclosures is adopted by the association due to a need to protect the structural integrity of the building, the prior right to place items on the balcony will need to yield to the overriding safety considerations of the new rule. In such a case, the board should obtain documentation of the overriding safety concerns, such as from an engineer’s report, before requiring owners to change structures that were previously allowed. Another example is if certain items are no longer code compliant, even if the equipment would ordinarily be entitled to grandfather status, the equipment should be brought up to code, if possible, or removed if rendered inoperable.

If your association is facing an enforcement problem, association counsel can assist in reviving a restriction.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

Attention to detail. A simple phrase that’s not always so simple to comply with, especially in a community association context.

There are several technical provisions in the statutes governing community associations that must be complied with. Chapters 607, 617, 718, 719, and 720, Florida Statutes have numerous requirements that associations must adhere to. A few examples include meeting notice requirements, board member eligibility requirements, record inspections, and others. Associations must be cognizant of changes to the statutes regarding such requirements, some of which pertain to regular or recurring events.

As associations go through the process of annual and election meeting notices, budget meeting notices, etc., one cannot just blindly use the previous year’s notice as a template for the current year’s notice. Associations must review any changes in the statutes to ensure this year’s notices are still in compliance. Having your association attorney prepare, or at least review, all such notices before they are sent out will help ensure the association is in compliance with the most recently enacted statutes.

For example, Section 718.112(2)(d)(2.), Florida Statutes, previously provided that a person who is delinquent in the payment of any monetary obligation due to the association, is not eligible to be a candidate for board membership and may not be listed on the ballot. That provision was changed in 2021 to now provide that a person who is delinquent in the payment of any assessment due to the association, is not eligible to be a candidate for board membership and may not be listed on the ballot. A small but significant difference. If your election meeting notice includes any information about candidate eligibility, blindly copying the previous year’s notice would have the association sending out inaccurate information regarding board member eligibility. Attention to detail.

Another example pertains to a condominium unit owner’s suspension of voting rights due to a delinquency. Section 718.303(5), Florida Statutes, previously provided an association may suspend the voting rights of a unit or member due to nonpayment of any fee, fine, or other monetary obligation due to the association which is more than 90-days delinquent. That provision was changed in 2017 and now provides that an association may suspend the voting rights of a unit owner or member because of nonpayment of any fee, fine, or other monetary obligation due to the association which is more than $1,000 and more than 90-days delinquent. While this change went into effect a few years ago, unfortunately I still run across associations attempting to suspend voting rights of owners who are more than 90-days delinquent, but such delinquency is not more than $1,000. Again, attention to detail.

Another area where attention to detail is necessary is the preparation of limited proxies. When voting on a waiver of reserves in a condominium, Section 718.112(2)(f)(4), Florida Statutes, provides that proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than those for which the reserves were intended must contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: “WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.” When reviewing limited proxies prepared by associations for such votes, very frequently I notice that while the disclaimer language is in capitalized, bold letters, it is not in a font size larger than any other used on the face of the proxy ballot. Attention to detail.

Posting of meeting notices is required by the statutes. Forty-eight (48) hours’ notice for a regular board meeting; fourteen (14) days for some board meetings; 60-days for election meetings, etc. Only mailing, or emailing notices is not sufficient. Some meeting notices require an association to execute a proof of meeting notice (usually an affidavit signed by an association board member or manager). While these notice requirements may seem trivial, especially since the notices are mailed and/or emailed to owners, they are required by statute. Failure to properly post such notices may result in any action taken at said meeting being void. Failure to maintain proof of meeting notices when required may have the same effect, if any action taken at said meeting is challenged. Attention to detail.

In regard to homeowner associations, Section 720.306, Florida Statutes, previously provided that official notices were to be sent to the address on the property appraiser’s website. That provision was changed to provide that official notices once again are to be sent to the mailing address in the official records of the association under section 720.303(4), Florida Statutes. Attention to detail.

There have been technical changes in how associations must notify owners of delinquent assessments before the owner can be sent to the attorney for collections. These are technical requirements that should be discussed with your association attorney. Blindly following previous practices in regard to such collection notices and actions will result in delays and owner defenses to association collection actions. Attention to detail.

In regard to budgets, remember that budgets mailed to association members must contain the period of the budget year (for example, Jan 1, 2022 – Dec 31, 2022). I have seen many associations go through the arduous process of preparing and adopting a budget, only to have such budget challenged by a member because it did not contain the actual budget period, even though there was enough information on the budget to know what period it was for. Attention to detail.

While some of the above matters may seem minimal in regard to their impact on the association or its members, the Florida Department of Business and Professional Regulation, Division of Condominiums, Timeshares and Mobile Homes (“Division”) has recently changed its approach in regard to association education versus fining. In the past, a first violation of one of the above provisions, or another what would appear to be “minor” violation, was generally resolved by the issuance of a warning letter from the Division, recounting the violation, the remedial measures, and a warning to the association that future similar violations could result in a fine. Those “warning” days appear to be over, as the Division has adopted a much more stringent enforcement posture, which usually results in a fine to the association, even for a first violation of a seemingly minor provision. Fines range from $10 to $30 per unit, with a maximum fine of $5,000. I have seen recent cases where the Division initially sought to impose the maximum $5,000 fine for an initial, minor violation (minor in accordance with Rule 61B-21, Florida Administrative Code.)

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

Condominiums generally consist of the following two components: 1) the units that are subject to exclusive ownership by one or more persons, and 2) the common elements, which are any areas not included within the unit boundaries. Unit owners, in addition to the exclusive ownership of their units, also own an undivided share in the common elements. Commonly, the association is responsible for the maintenance, repair, and replacement of the common elements at common expense, while the unit owners are each responsible for their individual units at their own expense.

What about those areas of the condominium property that are used only by one owner or a group of owners but lie outside the boundaries of the units, such as a parking space or balcony? These may be a subset of common elements known as limited common elements, if so designated by the declaration of condominium.

The Florida Condominium Act defines limited common elements as those common elements that are reserved for the use of a certain unit or group of units, as specified in the declaration of the condominium. This definition indicates that the limited common elements are a subset of the common elements. See Gary A. Poliakoff, Law of Condominium Operations §4:65 (“[A]lthough all limited common elements are common elements, not all common elements are limited.”). Unlike the common elements, the limited common elements are restricted to the use of one or a few unit owners. The right to use limited common elements is appurtenant to one unit or group of units, meaning that the right to use the limited common elements is tied directly to that unit or units’ ownership. Common examples include parking spaces, storage units, balconies, or patios. There are also less obvious elements external to the unit boundaries, but serving exclusively one unit owner or group of owners, such as plumbing lines or air-conditioning units, that may be limited common elements. The key component in making the determination as to whether something is a limited common element stems from the Condominium Act definition, which provides that the designation of these common elements as “limited” common elements is entirely dependent on the language of the declaration.

If the limited common elements are a subset of the common elements, does this mean the association is responsible for their maintenance, replacement, and repair? Sometimes, but not always.

The Florida Condominium Act states that the association is responsible for maintaining the common elements, which includes the limited common elements. This is logical, if all limited common elements are common elements, it follows that the association is responsible for the maintenance, repair, and replacement thereof at common expense. If the declaration is silent, maintenance of the limited common elements is an association responsibility, as a “common expense,” meaning all owners share the cost. This may sometimes seem unfair or surprising to condominium unit owners in that they are paying for the maintenance, repair, and replacement of condominium property that they are not permitted to use, such as the neighbor’s balcony. The law allows the declaration to delegate maintenance responsibility for limited common elements to the benefiting owner(s), or to the association but at the expense of the benefitting owner(s).

The Florida Condominium Act provides that the declaration can require that the limited common elements be maintained by the individual unit owners who benefit from the exclusive use of the limited common elements. Again, declaration language is key to this responsibility allocation. The maintenance responsibility delegation to the unit owners can also be accompanied by a provision that this maintenance is at the expense of the benefitting owners, rather than at common expense. Even if the association does maintain the limited common elements, it may be able to allocate the costs of the maintenance to those owners entitled to use the limited common elements in question. Again, the declaration needs to provide that the costs of the maintenance is the responsibility of the unit to which the limited common element is assigned. In such a case, the association can perform the required maintenance or repairs and charge the owner or owners who benefit from the use of these limited common elements.

Importantly, even if the maintenance and costs for the limited common elements are designated by the declaration as the responsibility of the unit owner, the board, nevertheless, has the right to enter and access a limited common element for necessary repairs in an emergency or after reasonable notice, in the same manner it can access a unit.

The designation of common elements as limited common elements can also be significant in determining the board’s authority to regulate or reassign these areas. For example, if parking spaces or storage units are limited common elements pursuant to the declaration, the board would not have the right to reassign the spaces or units without the permission of the owners who have exclusive rights to use the same. On the other hand, if those parking spaces or storage units are not designated as “limited” common elements by the declaration, the board may have the right to reassign the same.

Associations with ambiguous or vague documents can run into issues when it comes to distinguishing exactly who is responsible for what and determining the board’s authority over certain areas of the condominium. In the event that the declaration is unclear, it is important to discuss options with association counsel. The Condominium Act strictly limits the way an association can spend its money, which means it is important that the association understand what it is responsible for and what it is not responsible for before inappropriately spending association funds. If the association seeks to have the unit owner or group of owners who benefit from a certain common element to be responsible for the maintenance, repair, and replacement of the same, the declaration needs to both designate the area as a limited common element and allocate the responsibility to the benefitting owners. If the association prefers to handle the maintenance of certain limited common elements, but at the benefitting unit owner’s expense rather than common expense, it is also important for the declaration to provide that the association’s maintenance of the limited common elements charged to the owner(s) is secured by a lien in the same manner as the common expense assessment lien. It is best to obtain an opinion from association counsel as to the delegation of responsibilities before undertaking major repairs where the declaration is unclear or ambiguous. Association counsel can also work with the board to amend the declaration to better meet the needs of the association based on the design of the condominium property.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale |bio

 

As most condominium association boards and managers are aware by now, Section 718.112(2)(k), Florida Statutes, of the Condominium Act, was most recently amended to require a condominium’s bylaws to include a provision for alternative dispute resolution as provided in Section 718.1255, Florida Statutes. The alternative dispute resolution process outlined in Section 718.1255, Florida Statutes, was also amended, effective July 1, 2021, to allow for arbitration or mediation of certain condominium disputes. Previously, prior to filing a lawsuit in state court, condominium associations and unit owners were required to petition the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (“Division”) to conduct an arbitration hearing when there was a disagreement or “dispute” between the association and unit owner regarding the following:

  • The authority of the board of directors, under the Condominium Act or the association documents, to:
    • Require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto; or
    • Alter or add to a common area or element.
  • The failure of the Association to:
    • Properly conduct elections.
    • Give adequate notice of meetings or other actions.
    • Properly conduct meetings.
    • Allow inspection of books and records
  • A plan to terminate the condominium, per Section 718.117, Florida Statutes.

(Note that disputes regarding the following are NOT subject to the statutory alternative dispute resolution process outlined in Section 718.1255, Florida Statutes: title to any unit or common element; the interpretation or enforcement of any warranty; the levy of a fee or assessment, or the collection of an assessment; the eviction or other removal of a tenant from a unit; alleged breaches of fiduciary duty by one or more directors; or claims for damages to a unit based upon the alleged failure of the association to maintain the common elements or condominium property.)

Section 718.1255(5), Florida Statutes, now allows the condominium association or unit owner to choose between the Division’s arbitration hearing process or the presuit meditation process with which homeowner associations are required to comply per Section 720.311, Florida Statutes, of the Homeowners Association Act. (Condominium election and recall disputes are not eligible for mediation and are required to be arbitrated by the division or filed in a court of competent jurisdiction.) It is important for condominium boards to consider a number of factors when choosing whether to pursue presuit arbitration or mediation of a particular dispute. Below are guidelines for an association to consider and discuss with its attorney when considering its enforcement and alternative dispute resolution options:

1. Language of the Governing Documents

As always, the first place for an association to start when considering its enforcement and alternative dispute resolution options is the association’s governing documents (which collectively refers to an association’s declaration, articles of incorporation, bylaws, and rules and regulations). Some association declarations or bylaws may contain a specific notice and alternative dispute resolution procedure with which the association is required to comply prior to initiating a lawsuit against an owner. For example, the declaration may contain a clause that expressly states that the association “shall” submit certain disputes to arbitration, in which case, the association must arbitrate the dispute or amend the provision to remove the requirement. The association’s attorney may also conduct an analysis of the association’s governing documents to determine if there is certain language within the documents which automatically incorporates into the association’s governing documents future changes to the Condominium Act (“Kaufman language”).

2. Timing

The Division arbitration hearing process is similar to the hearing process followed in state court. When a party files a petition to initiate arbitration with the Division, an arbitrator is appointed to act as a “judge” between the parties who are responsible for filing motions and presenting evidence and testimony in support of their position. If required, the arbitrator may conduct a mini-trial or evidentiary hearing during which the parties may produce and present evidence and cross-examine witnesses. In light of the foregoing, the arbitration process can sometimes last a few to several months (if not a year or two) before there is a final opinion issued by the arbitrator. Even after the arbitrator issues a “final” opinion, Section 718.1255(4)(k), Florida Statutes, allows the parties to file a complaint for “trial de novo” in state court within thirty (30) of the arbitrator’s final decision. In which case, the parties would essentially have to “re-litigate” the dispute from the beginning before the state court judge.

The presuit mediation process outlined in Section 720.311, Florida Statutes, requires the association send a statutory offer to participate in mediation to the alleged violator. If the individual does not respond within twenty (20) days from the date of the letter, or if the individual does not agree to mediate, the Association can proceed with filing a lawsuit against the individual in state court, without any additional notice to the individual. Additionally, persons who fail or refuse to participate in the entire mediation process may not recover attorney’s fees and costs in subsequent litigation relating to the dispute, even if he or she is ultimately the prevailing party in the lawsuit.

On balance, the presuit mediation process may be quicker than the arbitration process in resolving the underlying dispute (if the individual agrees to mediate) or obtaining a final resolution of the dispute in state court. (Note that Section 718.1255(4)(c), Florida Statutes, does allow a party to file a Motion to Stay the arbitration if the Association is requesting emergency relief.)

3. Cost and Attorney’s Fees

Because the arbitration process is similar in time and, in some cases, effort to the state court hearing process, the Association can expect to incur costs, including but not limited to petition filing fee ($50), administrative or management company costs, mailing and copying costs, etc., and attorney’s fees; even if the individual does not aggressively fight or defend against the Association’s petition. On the other hand, if the Association chooses to offer presuit mediation, and the other party agrees, the Association will still incur administrative and management fees but the other party must also specifically agree to pay or prepay one-half of the mediator’s fee. Additionally, the attorney time/expense associated with preparing and attending a one or two-day mediation are generally less than the attorney time/expense time associated with the entire arbitration process.

With regard to attorney’s fees, Section 718.1255(4)(k), Florida Statutes, provides that the prevailing party in the arbitration shall be awarded the costs of the arbitration and the “reasonable attorney fees” in an amount determined by the arbitrator. It is important to note, however, that in any arbitration, the Association’s success as the “prevailing party” is not guaranteed and thus, the Association can be subject to paying its attorney fees and the other side’s attorney fees if the arbitrator issues an opinion against the association. Additionally, even if the association is ultimately determined to be the “prevailing party,” it is responsible for paying its attorney fees and costs up front and throughout the duration of the arbitration. Not to mention, there is no guarantee that the arbitrator will award the Association the entire amount of its costs and fees nor that the individual is financially capable of paying the Association’s award of attorneys’ fees and costs (ie: “judgment proof”).

Without a doubt, the presuit mediation process is generally cheaper than the presuit arbitration process with regard to both actual costs and attorney fees. Because the parties are encouraged to come to the table to discuss the dispute with the assistance of a neutral mediator, it is more likely that a resolution can be reached more quickly (and calmly) than if the parties first address the issues and their positions in an adversarial type of hearing (as is the case with arbitration or litigation in state court). Additionally, during the privileged and confidential mediation process, the Association is able to assess the strength of its claim and that of the other side’s prior to deciding whether it wants to pursue full blown litigation on the issue in state court. Lastly, and importantly, even if the other side does not agree to mediate or the mediation results in an impasse between the parties, the Association is not at risk of paying the other party’s attorney’s fees, as is the case if the Association is not the prevailing party in the arbitration proceeding.

4. Nature of the Dispute

As already outlined above, not every dispute is subject to the presuit mediation or arbitration process outlined in s. 718.1255(4)(k), Florida Statutes, so it is important for the association to review each dispute or potential claim with the association’s attorney as well as the association’s insurance carrier (as applicable). If the dispute is one that involves a topic or issue that involves or affects a number of owners, the Association may consider the arbitration process in order to obtain a “final” opinion from the arbitrator which might be applicable to other owners (ie: enforceability of the Association’s rules regarding official records and written inquiries). If, however, the issue is one that concerns only one owner or is highly fact-specific, the confidential, presuit mediation process may be advisable.

The latest changes to Section 718.1255, Florida Statutes, reflect the legislature’s continuing commitment to helping condominium associations and unit owners resolve disagreements in the most cost-effective and timely manner. Be sure to review your association’s current alternative dispute resolution process and procedures with association counsel today to ensure it is up-to-date and effectual in resolving the condominium’s disputes.

 

Shayla J. Mount

Attorney at Law, Becker
Orlando | bio

 

This past year has brought out divisiveness and discord at all levels of governance, including community associations. Although emotions always seem to run particularly high, community associations have been filled with neighbors with differing values, preferences, and opinions as to how the association should be run and maintained. Even pre-COVID, association governance could become intensely personal. The board makes tough decisions that impact members’ property values, enjoyment of the property, and quality of life. This makes communicating in a civil manner a requirement of living in a community association, especially in associations with shared amenities and with members residing in close proximity to one another.

When communications disintegrate and a lack of civility becomes the standard in a community, emotions, interruptions, and personal attacks can overshadow fundamental business and operational decisions. These meetings and communications are unproductive and can leave all involved with a distaste for the community or board members, which may lead to good directors no longer wanting to remain on the board or cause good staff to leave. This also takes time and resources away from the necessary operation of the community to resolve interpersonal conflicts between members, directors, and/or staff. Maintaining civility in association communications, both spoken and written, can go a long way in solving practical problems and resolving disputes. This includes emails and social media, which have made it easy to send or forward regrettably uncivil communications.

Disagreements are bound to happen in any community association, and striving for unanimity from members on issues is not the aim. In the majority of cases, board directors, members, and management all want what is best for the community but may disagree on the approach. A civil and business-like approach to association communications and decisions can allow members to respectfully voice their disagreements, while also understanding that the board may need to make difficult decisions they do not like or agree with. The board should have the ability to inform members what behaviors, such as personal attacks, are unacceptable. This applies to communications between board members as well. Directors should be ready to address poor behavior from another director if the need arises.

Some communities have implemented a board member code of conduct within their governing documents to set a standard for civility. Such a code can help set rules and guidelines for interactions between directors, and with members, management, staff, and contractors. This language can also help set reasonable expectations as to how directors must conduct themselves when it comes to maintaining the privileged nature of communications, disclosing potential conflicts of interest, and setting aside personal agendas. This helps directors better understand how to fulfill their fiduciary duties and helps members have more confidence that directors are conducting themselves in the best interest of the community as a whole. Association counsel can assist in drafting this language to best fit the needs of your community.

Implementing reasonable rules governing meeting conduct can also be helpful to ensure that meetings are conducted in a productive, business-like manner. Members have a right to attend board meetings and a right to speak on agenda items at the meetings. The association can adopt written reasonable rules governing the frequency, duration, and manner of unit owner statements. The board can emphasize that these rules are not to limit owners’ right to speak but rather so that all may have an opportunity to be heard and ask their questions. Where issues may turn contentious or difficult decisions need to be made, association counsel can attend and assist the board in conducting the meeting.

At the end of the day, the board members have a fiduciary duty to the members of the association, which means they must act in the best interest of the association as a whole, act in good faith, and avoid conflicts of interest. When directors are newly elected, they must certify in writing that they will work to uphold the association’s governing documents and policies to the best of their ability and will faithfully discharge their fiduciary responsibility to the association’s members. Whether or not a code of conduct is in place in the community, these are mandatory responsibilities of any director sitting on the board of a community association. These responsibilities also mean that the board will have to make tough decisions, which will not necessarily be popular with members, but that are beneficial to the community as a whole.  Maintaining civility throughout this sometimes-difficult process will go a long way in enhancing the members’ respect for the board members and the board members respect for each other and the members.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

Yes, it’s that time of year again. The six month long hurricane season in South Florida. South Florida has seen an increase in hurricane activity over the past years, and that is expected to continue this year.  Let’s look at some ways community associations to prepare for such storms.

Information on how to prepare for storms and emergencies usually revolves around preparing the building, securing association property, etc. Let’s talk about some of the other, just as important aspects that community associations need to be aware of in order to properly prepare for a storm, natural disaster or emergency.

Preparing for hurricanes, tropical storms and other disasters is a year round endeavor.    Management contracts, landscaping contracts, security contracts, elevator contracts and construction contracts should all be reviewed for emergency procedures and in particular named storms. Some of the particular provisions that can be added into these types of contracts are:

Management Contracts

  • What extraordinary relief services will be provided by your management company?
  • What is the priority of relief services to be provided?
  • What additional charges will you incur to have your manager oversee repair projects and does your management contract obligate the association to use your manager in this capacity?

 

Landscaping Contracts

  • What relief and cleanup services will be provided and in what time frame post-storm?
  • What preventative services can be provided pre-storm (i.e., tree trimming, staking trees, etc.)?
  • Tree trimming should be completed before June 1st.

 

Security Contracts

  • What relief services will be provided and in what time frame post-storm? How soon after a storm passes will you once again have security personnel in place?
  • In the event of a name storm, when will security leave their post? When do they return ?
  • If you have electronic gates, what does your contract require in terms of securing those in the event of a storm?

 

Elevator Contracts

  • What relief services will be provided and in what time frame post storm?
  • If you do not have a generator for your elevator(s) what arrangements has the board made in the event the power is out for any length of time and residents cannot use the elevators?
  • What preventative services can be provided pre-storm? Is a generator advisable and affordable?

 

Construction Contracts

  • Any contracts for construction work on the association property should contain a clause requiring the contractor to secure the premises and their work material in the advent of a storm.

 

Miscellaneous Contracts

  • Does the association lease any space to third parties? If so, do those contracts require the association to take any steps to secure the leased premises or clean up the leased premises in the event of a storm?

Association storm preparation and recovery should be a part of every one of the above types of contracts.

An association should have video and photographic documentation of the property condition, as well as an inventory of all association property, before a natural disaster or emergency occurs.  This documentation should he updated every year

Documents

Community associations are not-for-profit corporations and, as such, rely heavily on various documents to function properly. Association records should be scanned and uploaded for temporary secure internet storage with hard copies placed in watertight Ziploc bags and secured in a fireproof box. With proper advance planning, your board will have peace of mind that the following documents have been safeguarded and will be available in the immediate aftermath of a storm.

Documents to be secured include:

  • Insurance policies
  • Resident lists
  • Financial records
  • Employee records
  • Contracts
  • Association Governing Documents
  • Community Plat
  • Plans & Specifications for the community
  • Video, photographs and inventory list of association and association property

Computer Records

  • Hard Drive back-up – thumb drive, online storage, thumb drive

Staff

Don’t forget your staff!  If the association has employees, the association’s policies and procedures with regard to those employees’ duties regarding storm preparation and storm cleanup need to be reviewed with legal counsel to ensure compliance with all local and federal ordinances. In addition, the board needs to discuss with counsel proper protocol to allow employees to leave early to secure their own residences and property in the advent of a storm and/or not to report to work after the storm until the property has been determined to be safe.

Post disaster

Immediate Actions

  • Account for the whereabouts of residents;
  • Attend to the injured;
  • Secure the community from acts of vandalism and looting.
  • Notify the police in the event of a theft;
  • Document damage with photographs and video;
  • Before making arrangements to remove storm debris other than life threatening or access obstructing, contact your city to see what plan of action it has for debris removal;
  • “Drying In”/”Shoring Up” the building structures in order to mitigate against further damage;
  • Remove, where necessary, wet carpet, wall board, cabinets, etc. when necessary to prevent the growth of mold;
  • Survey the property and identify areas needing priority attention; and
  • Open lines of communications with the unit owners, contact emergency services, and notify the contractors and employees, advising of their duties and needs.

Reconstruction & Restoration

  • Contact Your Attorney Immediately. This is critical to ensure that your insurance provider’s requirements are met and that your community’s rights are protected.
  • Contact Your Insurance Agent.
  • Resist the natural urge to use a public adjuster to shepherd your claim without first discussing advantages and disadvantages with legal counsel.
  • Do NOT sign any contracts or releases without having them properly evaluated in advance by legal counsel.
  • Resist the attempts by out-of-state and possibly unlicensed vendors who swarm to our state in the aftermath of a disaster to do business with you.
  • Do not suspend common sense and/or forget to use the resources available to you. Performing due diligence on contractors should still be the norm.
  • Discuss possibilities for conventional financing and/or SBA disaster loans to fund repair and reconstruction projects with your legal counsel.
  • Be aware that most damage is not apparent to the visible eye or to anyone other than trained experts. Even if hurricane damage is not readily apparent at first, experts should be consulted to determine the extent of battering your community suffered.

Claims process

DO NOT SETTLE A CLAIM WITHOUT YOUR ATTORNEY’S INVOLVEMENT.

Carefully document the event; this will provide the claims adjuster with a head start in evaluating the claim.

  • Retain damaged property until a claims adjuster approves disposal (unless retaining such items poses a danger to safety).
  • Prepare an inventory list of property damaged. List the quantity, the description, the actual cash value and actual loss. Attach bills, receipts and related documents.
  • The claims adjuster from the insurance company should contact you in 2-5 business days from the date that you reported your claim.
  • With your attorney obtain all possible evidence in the claim.
  • Evidence includes, but is not limited to invoices, receipts, pictures, estimates, governing documents and correspondence regarding the claim.
  • The evidence will be used to document the condition of the property and maintenance prior to the event, as well as damages caused by the loss, emergency repairs performed to mitigate further damage, and repairs made to the property.
  • The damages that still need repair will be determined with an engineering baseline.
  • Ensure compliance with all conditions precedent pursuant to the terms of the policy.
  • Hire forensic experts to obtain a scope of repairs to bring the property back to its pre-loss state.
  • Notify the insurance company that the association’s attorney is representing the insured (association).
  • Attempt to coordinate a re-inspection of the property with the association’s expert and the insurance company to review discrepancies between what the insurance company says is due and what the association’s expert says is due.
  • Make all attempts to settle claim amicably.
  • Do not “give in” just to settle a claim.
  • Take further steps as necessary after consultation with your attorney.

Taking the above steps will assist the association in preparing for natural disasters or emergencies, dealing with the immediate aftermath and properly processing insurance claims

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

For many Homeowners’ Association (“HOA”) owners and board members, the words “turnover” and “transition” are two of the most anxiously anticipated yet mysterious terms in community association lingo. Often used interchangeably, the phrases generally refer to the period of time (or “triggering event”) in the development of the community at which the developer is required, either by the association’s governing documents or Section 720.307, Florida Statutes, to relinquish control of certain rights and exemptions as it relates to the Association’s operation and management of the Association’s property. While many HOA governing documents define the “turnover date” differently, as a matter of Florida law, the transition of association control from the developer to the owners of the association begins when the non-developer members of an association are entitled to elect at least a majority of the members of the board of directors of the association (Section 720.307(1), F.S.). Pursuant to Chapter 720, Florida Statutes (the “HOA Act”), members are entitled to do so by law when one of the following events occurs:

  • 3 months after 90% of parcels in the community have been conveyed from the developer to owners
  • Event or date provided by the governing documents
  • Developer abandonment of the responsibility to maintain and complete the community amenities and infrastructure
  • Developer filing a suggestion of Chapter 7 bankruptcy
  • Developer losing title to property through foreclosure or deed-in-lieu of foreclosure
  • Appointment of receiver by circuit court

Section 720.307(4), F.S., requires the developer, within 90 days of turnover, to deliver to the new board various documents, including but not limited to all deeds to the common property owned by the association, original copies of the association’s governing documents, permits, contracts, insurance policies and financial records since the inception of the association. Although the HOA Act requires the developer to “turn over” certain documents and items to the owner-controlled association, there is actually very little in the way of developer rights and reservations that a developer must relinquish after turnover, especially if not specifically required by the language of the association’s governing documents.

For example, a HOA declaration may contain language requiring the owner-controlled association to obtain the express written consent of the developer prior to any amendment to the declaration which affects that developer’s rights, even after the developer has turned over the association. Or, the declaration may grant to the developer the exclusive right to construct improvements within the community for “so long as Developer owns any Lot in the community” regardless of the turnover date. To the chagrin of many association boards, there may also be language in the governing documents which categorically exempts developer-owned lots from any obligation to pay any assessments (even after the developer has completed construction on the lot and is using it as a rental property!).

The ultimate question for many associations is: “If the developer has turned over the association, shouldn’t they have to turn over all of their rights in the community as well?” After all, many association members find it difficult, if not impossible, to effectively maintain and improve their home, specifically, and to operate and manage the community, generally, while the non-owner employees of an often out-of-state multinational corporation control the ins-and-outs of their neighborhood.

It does appear, as evidenced by the language of Section 720.3075(1), Florida Statutes, that the Florida legislature has considered the issue of developer-rights after transition. However, it is arguable whether this particular section of the HOA Act goes far enough in ensuring the protection of homeowners and their owner-controlled associations after developer transition. Section 720.3075(1), Florida Statutes, expressly prohibits any clause in the association’s governing documents that has the effect of: (a) allowing the developer to unilaterally make changes to the HOA documents after transition, (b) prohibiting or restricting an association from suing the developer, or (c) allowing the developer to cast votes in amount exceeding one vote per residential lot. Undoubtedly, each of the aforementioned rights are crucial in helping the association to “pick up the pieces,” after developer turnover. However, when the documents reserve rights such as the developer’s unilateral authority to make committee appointments or restrict vendor access to the community, it often leaves the board’s hands tied to deal with the day-to-day issues that quickly begin to arise in a new owner-controlled development.

Among the first things an HOA board post-transition should do is consult with the association’s attorney before, during and after the transition process in order to ensure that (1) the owner-controlled board is aware of its statutory and contractual obligations to the association’s members and (2) the developer has timely met all of its turnover obligations. This is especially important for communities where there might be a claim for construction defects or funding deficits. During those initial post-transition conversations with the board’s attorney, one of the second action items is to consider amending the governing documents to better reflect the post-transition community. This does not mean amending the developer completely out of each of the governing documents. To the contrary, the board might consider amending the documents in such a way that authority is shared between the association and the developer until the developer no longer owns property in the community; after which time, all authority is automatically vested in the association. Lastly, the board should solicit the input and assistance of the community-at-large. Many HOA boards have appointed an owner-led “Governing Documents” review committee which informs the board and the association’s attorney of owner concerns, recommendations, and suggestions throughout the amendment process.

The transition period can seem overwhelming and unwieldy for many HOA boards; however, it does not have to be. New owner-controlled HOA boards would be wise to begin the document review process early in order to determine how they can most effectively transition their community from simply another “development” to a place that looks and feels like “home.”

 

Shayla J. Mount

Attorney at Law, Becker
Orlando | bio

 

In many ways, the managing and operating of a condominium association is akin to operating a business. A primary similarity is the importance of careful and accurate financial planning and budget preparation. The board of directors of an association has fiduciary duties to its members. By paying close attention to the legal and technical requirements of condominium association budget preparation, the association can better assure its members of a smooth-running fiscal year ahead.

The legal and technical requirements of condominium association budgets can be found in Chapter 718, Florida Statutes (the “Condominium Act”) and Section 61B-22 of the Florida Administrative Code. An association’s bylaws may also contain certain financial requirements to which a board and/or budget committee should pay attention. Although the statutory and code requirements apply to all condominium associations, there is no one-size-fits-all for budget preparation. The intricacies of the budget will differ based on a number of factors, such as the size of the condominium, ongoing and upcoming projects, various maintenance obligations, etc.

The budget will cover one fiscal year, which typically tracks the calendar year. However, the association’s bylaws may indicate a different twelve-month period as its fiscal year. The important part is knowing when the fiscal year begins so that the board can ensure plenty of time for planning. For example, many associations which have a fiscal year that follows the calendar year begin planning their budget in the summer months in order to have a proposed budget by November. An additional time requirement to be aware of is that any meeting at which the proposed budget will be considered requires 14 days statutory notice. However, your association bylaws may require a longer notice, such as a 30 days’ notice of a budget meeting. If your bylaws require a longer notice (such as 30 days) rather than the statutory 14 days’ notice, you must follow the bylaw notice requirement. The notice must include the date, time, and location of the budget meeting as well as a copy of the proposed budget. The completed notice must also be posted in a conspicuous location on the property at least 48-hours before the meeting. Although the budget meetings must be opened to all members, the board is generally authorized to adopt the budget without a vote of the owners.

As for what goes in the budget, it is divided into two main sections: an operating budget and a reserves budget. Again, similar to a business, an association’s operating budget displays the costs of the day-to-day operations of the association. This means that this section reflects reoccurring monthly and annual expenses. The operating budget may include, for example, expenses for management fees, recreational facilities rent, insurance, and taxes. There are certain items that must be contained in the budget pursuant to Section 61B-22 of the Florida Administrative Code, such as the beginning and ending dates of the period covered by the budget, all estimated common expenses or expenditures of the association including the categories set forth in Section 718.504(21)(c), Florida Statutes, and other items. The total assessment for each unit type according to the proportion of ownership should also be included in the operating budget, either on a monthly basis or for the period for which assessments will be due (e.g., if the association collects quarterly assessments). A key point to remember about the operating budget is that the money budgeted is not restricted to the particular purpose specified on the adopted budget. If necessary, the association board may use its business judgment to spend money designated for one purpose for other purposes.  

The second section of the association’s budget is the reserves budget. The Condominium Act requires the association to maintain reserve accounts for capital expenditures and deferred maintenance. A capital expenditure is the purchase or replacement of an asset whose useful life is greater than one year. Deferred maintenance is any maintenance that is performed less frequently than a year or results in maintaining the useful life of an asset. This is distinguishable from routine maintenance, which needs to be included in the operating section of the budget. The Condominium Act also specifies that the reserves must include roof replacement, building painting, and pavement resurfacing, regardless of the amount of the maintenance or replacement cost. The association is also obligated to include any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. Unlike the operating funds which are not restricted to a particular purpose, reserve funds must be used for their intended purpose, unless a majority vote of the members is obtained to use the funds for other purposes. This means that the board cannot use reserve funds designated for one purpose to cover an unexpected expense without an approval vote.

Although as stated above, a board generally has the authority to adopt the budget without a vote of the membership, the Condominium Act does provide the members with two exceptions. First, the members can vote to waive reserves or partially fund reserves. The board can put the reserves question up to a vote if it so chooses. If no vote to waive or partially fund reserves is taken or not enough members vote to do so, the board must adopt the budget with fully funded reserves.

The second time at which a membership’s vote may be taken is if the board adopts an annual budget which requires assessments exceeding 115 percent of the assessment. At least 10 percent of the members must submit a written request for a special meeting of the owners to consider a substitute budget within 60 days after the adoption of the annual budget. A proper meeting notice must be sent out, and a membership meeting will be held. If there is not a quorum present at the meeting, or if the substitute budget is not adopted, the previously adopted annual budget remains in effect.

The ins and outs of preparing a condominium association budget can be complex, and association counsel should be consulted when needed. The board should begin early to assess the current financial picture of the community as well as its long-term financial needs and goals.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

What a year. Because of COVID-19 issues, associations have dealt with owners working from home, children remote learning, contractor issues, common area issues, the pool, the gym, the visitors, the cleaning, the quarantine, the masks, and so on. Quite a year indeed. Many associations have spent more time speaking with their attorney, and hopefully insurance agents, than they would have liked to. But along with all the other lessons, dealing with a pandemic has taught associations, perhaps the most important one in the long run will be – know when to contact your professional.

Of course, it is easy to determine when to contact your attorney when the association has a contract dispute, has been sued, violations, problem owners, problem tenants, etc. But there are other, not so obvious times as to when an association should contact its attorney. We will get to those in a bit. But what about other association professionals? When should an association contact its accountant, its insurance agent, engineer? Let’s discuss some of these scenarios.

Accountant

Your association should be working with an accountant that specializes in association work. There are many nuances in dealing with condominium, cooperative and homeowner associations, especially in regard to what forms to file, how to present the year-end financial statements, including statutory required information, etc. How will pre-paying a loan affect the association’s tax filing status? Are surplus funds taxable? Can the association sell a unit it owns via foreclosure and make a profit? Is that profit taxable? These are all questions that should be discussed with your association accountant before the association takes action on the questioned items. The response from your accountant may allow the association to make a more informed decision as it pertains to how such decisions affect the association’s year end statement and taxable items. The association should be in communications with its accountant as needed, and certainly more than once a year, especially when it is time for the year-end report. Utilize your accountant when assessing the above issues.

Insurance Agent

The association insurance agent should be involved in many aspects of your association. If the only time you hear from your insurance agent is when it is time for the annual renewal, the association should consider a new agent. Your insurance agent should proactively be working with management and the board to reduce risks in the community. Your agent should inspect the property at least once a year to identify risks and advise the association how to eliminate or mitigate such risks.

Large association contracts (roof repair/replacement, painting, concrete restoration, air conditioning, cooling towers, renovations, etc.) typically have association insurance requirements as well as indemnification provisions. These contract provisions should be sent to your insurance agent for review and comment before any such contact is signed (of course they should be reviewed by your association attorney as well). The contract may call for insurance the association currently does not have, or indemnification requirement specifically excluded by the association’s current policies. If the association signs a contract that contains insurance requirements or indemnification that the association’s existing polices do not cover, in the event of a claim, the association may be paying out of pocket for such claims. If the association is paying out of pocket to defend a contractor for damages or injury caused by the contractor, such costs can get very high very quickly. Always have your insurance agent review the insurance and indemnification provisions of these types of contracts after your association attorney has made any revisions he or she deems necessary.

Finally, you may want to contact your insurance agent in regard to social events. If the association plans on serving alcohol, such as at a holiday event, do you have insurance for that? What about allowing others to serve alcohol when a social room is used by the owners for an event – does the association have insurance for that? Are you inviting the public in for an event? Does the association have insurance for that?

Engineer

Most condominium and cooperative associations have engaged an engineer from time to time, whether to prepare specifications for a job or to oversee large construction or renovation projects. But there are other times an association may want to utilize an engineer.

The roofing company will tell you they will supervise the roof installation. The painting company will tell you they will inspect the paint job. The general contractor will tell you they will inspect the concrete restoration work. And they all will. So why should as association pay an engineer to inspect and oversee such work? I would hope the answer is obvious. No disrespect to any of the aforementioned contractors, but an association should always have its own engineer overseeing such work. The association engineer works for the association; the inspectors from the various companies work for the company. An association should always factor in the cost of its own engineer when planning the costs for such large projects.

There are other times an association should utilize its engineer. If your association is approving owner renovations through an architectural control board (“ARB”) or other similar body, or even just the board, generally board members are not qualified to review plans. If an owner is installing a new floor or changing out a door, an engineer may not be necessary; when an owner is making structural changes in a unit, combining units, installing a pool, adding an addition, etc., the association should engage an engineer to review all plans and inspect the work to insure it is done according to the association approved plans. Generally, an association can pass such costs on to the owner, but you need to check with your association attorney to determine if any amendments or rules must be enacted to do so.

Attorney

As you can see from the above information, there are many times an association should consult with its professionals. Typically, the attorney is the one associations consult with the most. I am not exaggerating when I tell you I have some clients I am in contact with on a daily basis. There are many factors at play when considering when to contact the association attorney – manager experience, board experience and involvement, age of the association, etc. Some associations contact their attorney regarding every violation or violation letter. Other associations only contact their attorney when they have been sued. There is no one size fits all.

Any large contracts should be reviewed by your attorney. Does that mean the attorney needs to review the contract for a $5,000 water heater? Perhaps not. But be wary of one page “proposals” contractors ask you to sign; be wary if asking for 50% or more down (never sign such a contract without attorney review); be wary of signing any proposal that is valid “today only” or “this week only”; and never sign an AIA contract before your attorney has reviewed the contract.

All requests for a reasonable accommodation (handicap parking, emotional support animal, service animal, ramp, pool lift, etc.) should always be sent to the attorney for review.

If the association is considering denying a sale or lease application for any reason, consult with your attorney before the association denies the transaction.

If there are any questions on official record requests, or written inquiries, contact your attorney. Rule interpretation. Guest interpretation. Vehicle towing questions. Employee questions. Document interpretation. Consult your association attorney for all of these questions before the association makes a decision that may require your attorney to untangle later.

Finally, please do not make the mistake I see all too often. The association sends the attorney a significant contact for review.  The attorney diligently reviews the contract, making notes as to revisions, addendum, etc. Turns to the last page of the contract – already signed by both parties. Asks the association why it is signed already – “we already signed it, just wanted to see if you had any comments”. Don’t be that association!

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

Your condominium association elections for your Board of Directors are governed by the Florida Condominium Act (Chapter 718 of the Florida Statutes), and Rule 61B-23.0021 of the Florida Administrative Code.  Your association governing documents may also contain requirements for your election. Generally, these requirements are contained in the association’s By-Laws. With this in mind, there are a number of key deadlines and procedures that the association must follow to have a valid election.

The election should be held on the same day and at the same time as your association’s annual membership meeting.  Your governing documents may specify when the annual meeting will take place (such as, for example, the third Monday in January), or the documents may give the Board more flexibility in setting the date. The location for the meeting is specified in the governing documents, or if not specified, is required to be held within forty-five (45) miles of the condominium property. However, due to the pandemic, the location has become a more complicated issue. Many associations are now hosting their annual meetings virtually through platforms such as Zoom or Teams, or in a hybrid manner by setting a location for a limited number of masked attendees and/or to count paper ballots.  Whether an association decides to continue with the virtual component of its meetings once large gatherings are safe will depend on the association. As there is no size fits all, a conversation with your association attorney may be helpful.

Once the date is set, the board needs to be a wary of a number of deadlines. Sixty (60) days prior to the election, the association must send out a first notice. The first notice needs to contain the name and address of the association, and the date of the meeting. If the association has provided for and authorized electronic voting, this first notice is also required to disclose the procedure and deadline for members to consent to electronic voting. 

 

The association should not create a committee to nominate candidates, but the board may want to create a search committee to encourage members to run. Those who wish to be considered as candidates in the election must submit a notice of intent to run at least forty (40) days before the election is scheduled. The Florida Condominium Act contains a number of eligibility requirements for candidates. The candidate must not be delinquent in paying any monetary obligation to the association. The candidate must not have been previously suspended or removed from the board of directors by the Division of Florida Condominiums, Timeshares and Mobile Homes. Lastly, the candidate cannot have been convicted of a felony, unless the person’s civil rights have been restored for at least five years. The governing documents of the association may have other requirements for eligibility. A common requirement for many associations is that the candidate be a member of the association, or the owner of the unit. It is crucial for the association to ensure that the candidate is eligible by this fortieth day to be placed on the ballot. The placement of an ineligible candidate on a ballot is an error that has the potential to invalidate an election if discovered too late.

Candidates may wish to introduce themselves to their neighbors, especially in large condominiums or if the candidate is new to the community or has not previously been active in the community. To do so, the Florida Condominium Act allows candidates to submit one-sided information sheets, no larger than 8 ½ inches by 11 inches. This information sheet must be submitted at least thirty-five (35) days before the election. The Florida Administrative Code states that this information sheet may contain such information as the candidate’s education, qualifications or background. It is also crucial for the association to mail all timely received information sheets with the ballots and the second notice, as described below.

The number of vacancies on your Board may vary from year to year. For example, this may happen if your governing documents allow for staggered terms, wherein directors have terms which expire after different numbers of years. If there are not enough eligible candidates who give their notice of intent to run (in other words, there are more vacancies than candidates), the association is not required to have an election. Because these notices must be received forty days prior to the election, an association will know early on whether they will need to hold an election. If no election is necessary, the association will still hold its annual meeting on the date scheduled, and at this meeting, announce the names of the new board and the number of unfilled seats.

Between fourteen (14) and thirty-four (34) days before the election, the association must send a second notice to all members. This second notice is much lengthier than the first. It needs to include the agenda for the meeting, the candidate information sheets, the ballot, and two envelopes. These two envelopes consist of an “outer” envelope and an “inner” envelope, both strictly regulated by the Florida Administrative Code. This double envelope system allows the association to maintain the secrecy of the ballots and anonymity of the voter. The outer envelope will indicate the name of the voter, the unit number, and a signature space. The information should then be verified by the association, which can be done in advance of the meeting by an impartial committee. This is the time at which the association would check, for example, that the owner’s voting rights have not been suspended. The committee should not, however, open the envelopes prior to the meeting. The ballot will be contained in the inner envelope, which will have no identifying information. At the meeting, the envelopes will be separated  prior to tallying the votes so as to maintain secrecy.

The Florida Condominium Act requires that at least twenty (20) percent of the eligible voters in the community cast ballots for the election to be valid. This requirement is different than the requirement of having a quorum to hold various meetings. There is no quorum requirement for an election. Lastly, the election is decided by a plurality of votes.

There are a number of issues that may arise prior to, during, or even after your election. Your association attorney can guide you through the election process to ensure that your association is following all pertinent provisions of the Florida Condominium Act, the Florida Administrative Code, and your governing documents. 

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

One full year into the COVID-19 pandemic and people have really started to appreciate (or abhor) their neighbors. The extra time at home or stuck in one’s condominium unit has caused an increased sense of awareness and, in some cases, aggravation regarding the comings and goings and habits of our neighbors. Many community associations, and especially condominiums, throughout the state have attempted to avoid becoming the next COVID-19 “hot spot” by temporarily closing community amenities and facilities to owners and guests to avoid unnecessary exposure (and the litigation guaranteed to follow) of residents to the virus. Today, as federal, local, and state governments continue to remain cautious to prevent the spread of COVID-19, the availability of vaccines coupled with the general anxiety of cabin fever has caused many community association boards to reconsider decisions to temporarily close common facilities like clubhouses, gyms, and pools.

While most association boards are anxious to reopen the community’s amenities to owners and their guests, community association boards should carefully balance the benefit of reopening facilities with the associated and increased costs and risks of doing so. Even the most cautious and cost-savvy boards would not have had the foresight to plan financially in advance for increased costs and expenses associated with heightened cleaning and sanitizing costs, supplying employees and staff with personal protective equipment, and enforcement against violators who fail to comply with the association’s COVID-19 related rules and regulations. Below are some tips to help boards manage COVID-19 related costs in the short and long term.

  1. To the extent authorized by the association’s governing documents and Florida law, increased maintenance and cleaning expenses should be passed on to individual members using common facilities who fail to comply with applicable rules and regulations.

Most community association boards are generally and specifically authorized by the declaration, articles of incorporation, and/or bylaws to make and adopt rules and regulations governing the use of the community-owned property and facilities. Additionally, both the Condominium and Homeowners Association Acts authorize associations to adopt reasonable rules and regulations pertaining to the use of common areas and facilities. (See Section 718.123(1), F.S. (Condominium Act) and Section 720.304(1), F.S). If your association has not already done so, the board should consider passing a resolution adopting new rules or amending current rules which impose on owners increased responsibility while using the common facilities and specifically restrict the use of common facilities by owners and residents who are sick or may have been exposed to the virus. Such rules should also require owners using the facilities to do so with increased care and to ensure that they use appropriate sanitizing and social distancing measures after each use. For example, there should be a rule requiring individuals using gym equipment to clean and sanitize the equipment after each use.  A failure to comply with such rules (i.e., using equipment while sick) would be considered “negligence” on the part of the violator and may require the association to hire a specialty cleaning crew or equipment to sanitize the area after that individual’s use. In which case, the association’s rules and regulations should entitle the association to impose upon the owner the increased costs or expenses associated with the increased cleaning as a result of their negligent behavior. For some homeowners associations, the declaration may allow the board to levy an “individual assessment” against the owner for these increased costs. Condominium associations may also be authorized by their governing documents to “charge” (not assess) the owner for increased costs due to owner negligence, however, such a charge may not be secured by a lien against the unit. Also note that Section 718.111(4), Florida Statutes, prohibits a condominium association from charging a “use fee” against an owner unless authorized by the declaration or by a majority vote of the association, unless the charges relate to expenses incurred by the owner having exclusive use of the common elements. The most common example of this is if an association has to hire a cleaning service after a clubhouse is used. Rosso v. Golden Surf Towers Condo. Ass’n, Inc. 651 So. 2d 787 (Fla. 4th DCA 1995)

  1. Levy fines for non-compliance and earmark fines collected for COVID-19 prevention related measures.

Once the association has adopted its COVID-19 related rules and regulations, the board should not be shy in enforcing them against violators. Pursuant to Section 718.303(3), Florida Statutes (Condominium Act) and Section 720.305(2), Florida Statutes (Homeowners Association Act), boards have the authority to levy fines against any member or any member’s tenant, guest, or invitee for failure to comply with the governing documents and reasonable rules of the association (after a duly noticed board meeting and 14 days’ notice and opportunity for hearing before an impartial fining committee).  Unlike assessments, the collection and use of which is anticipated and restricted by the association’s governing documents and annual budget, the collection of fines for non-compliance are additional funds available to the association which can be used as necessary to supplement the association’s operational costs. The association should consider earmarking non-compliance fines to help fund the increased costs and expenses related to COVID-19 prevention in the community.

  1. Plan ahead. Consider including a line item in the association’s annual operating budget to account for increased COVID-19 costs.

Hindsight is 20/20, but unfortunately, the COVID-19 forecast is not. What is certain is that all associations will undoubtedly have to plan for and guard against the threat of COVID-19 exposure on the association property for the foreseeable future. As such, the association’s board should assess actual expenses and costs incurred during the past year and incorporate and plan for the same in the association’s operational budget going forward.

 

  1. Consider opening only those common facilities and amenities for which the association has developed an enforceable plan of action.

There is no one-size-fits-all COVID-19 plan, and any prevention methods and measures adopted by the board should consider the unique circumstances (including facilities available, number of residents, etc.) which face the particular association. There is also no requirement that the association open (or close) all common facilities and amenities at the same time. For example, while the association may be prepared to reopen the gym, provided that residents are required to bring their own towel and sanitizing spray, the association may keep the pool and pool deck temporarily closed while the association identifies a preferred vendor for specialized cleaning as necessary. Taking a phased re-opening approach allows the association’s members access to some facilities while giving the board time to deliberately consider and plan for how to safely and cost-effectively re-open other facilities which may require more association attention and resources.

  1. Ask for in-kind donations and contributions from owners and residents.

Since the frantic first days of the pandemic, the hoarding of gloves, masks, and other personal protective equipment has resulted in personal stockpiles of these items large enough to supply a doctor’s office. Additionally, mask-making has turned into a national past time and has spurred countless and selfless donation campaigns across the country. To help fulfill the association’s need for items (and to prevent unnecessary and costly purchases), the association may consider hosting a mask, glove, and/or cleaning equipment drive during which residents are encouraged to donate extra unused items to be used by the association to stock the common areas and facilities. Such efforts demonstrate the association’s understanding for member’s concerns and their desire to take advantage of community facilities and also fosters a sense of ownership among residents to remind them that that preventing the spread of COVID-19 is not just a board obligation but a community-wide responsibility.

 

Shayla J. Mount

Attorney at Law, Becker
Orlando | bio

 

New Laws Regarding Emotional Support Animals

Other than political debate, perhaps nothing else evokes more of an “emotional” response than the issue of emotional support animals in a no pet community.  While this is not a new issue, and has been discussed many times in this forum and others, new laws in Florida may affect how your community may handle a request for an association to make a reasonable accommodation to its governing documents, rules and regulations or policies to allow a resident to maintain an emotional support animal in a no pet community.  These new laws may also affect how or what an applicant submits, what an association can be required to submit and may temper some of the, shall be say, not necessarily accurate portrayal of a requestor.

I want to be very clear that the comments in this article, as well as well as the new laws discussed, would have no effect at all on a legitimate application for an emotional support animal from an applicant that qualifies for an emotional support animal.  The new laws have been enacted, and have unfortunately become necessary, to address the plethora of requests for a reasonable accommodation for persons who do not qualify for such an accommodation, and merely want to bring their pet into a no pet community because they want to, not because they need to medically.  Such inappropriate applications have been accompanied by, for example, letters from podiatrists attesting to psychological issues; letters from registered nurses attesting to psychological issues, etc.  No disrespect to our podiatrist and registered nurse friends; I just use them as an easy example of health care practitioners that have written letters stating a person is disabled due to a psychological issue.

We are all familiar with the basic requirements that must be provided by a medical health care provider’s letter in support of an applicant’s request for a reasonable accommodation to maintain an emotional support animal in a no pet community.  The letter must state that the applicant is disabled, that the disability affects a major life function, which one, and how the animal ameliorates the effects of the disability on the major life function.

Recent changes to the law in Florida affect what is required in order for a person to make a valid request for a reasonable accommodation in Florida.  Changes in §413.08, F.S.; §419.001, F.S.; §456.072, F.S.; §760.22, F.S.; §760.23, F.S.; §760.24, F.S.; §760.25, F.S.; §760.27, F.S.; §760.29, F.S.; §760.31, F.S.; §817.265, F.S., all of which are effective as of July 1, 2020, have changed the landscape a bit in regard to such requests.

For example, Section 817.265, Florida Statutes, provides:

A person who falsifies information or written documentation, or knowingly provides fraudulent information or written documentation, for an emotional support animal under s. 760.27, or otherwise knowingly and willfully misrepresents himself or herself, through his or her conduct or through a verbal or written notice, as having a disability or disability-related need for an emotional support animal or being otherwise qualified to use an emotional support animal, commits a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. In addition, within 6 months after a conviction under this section, a person must perform 30 hours of community service for an organization that serves persons with disabilities or for another entity or organization that the court determines is appropriate.  (Emphasis added.)

In addition, Section 456.072, Florida Statute, was amended to provide that a health professional who provides information, including written documentation, indicating that a person has a disability or which documentation supports a person’s need for an ESA without personal knowledge of the person’s disability or disability-related need for the specific ESA, is subject to disciplinary action. 

Moreover, Section 760.27, Florida Statutes, provides, in relevant part:

(1) DEFINITIONS.-As used in this section, the term:

(a) “Emotional support animal” means an animal that does not require training to do work, perform tasks, provide assistance, or provide therapeutic emotional support by virtue of its presence which alleviates one or more identified symptoms or effects of a person’s disability.

(c) If a person’s disability-related need for an emotional support animal is not readily apparent, request reliable information that reasonably supports the person’s need for the particular emotional support animal being requested. Supporting information may include:

  1. 1. Information identifying the particular assistance or therapeutic emotional support provided by the specific animal from a health care practitioner, as defined in s. 456.001; a telehealth provider, as defined in s. 456.47; or any other similarly licensed or certified practitioner or provider in good standing with his or her profession’s regulatory body in another state. Such information is reliable if the practitioner or provider has personal knowledge of the person’s disability and is acting within the scope of his or her practice to provide the supporting information.

…  (Emphasis added.)

Finally, pursuant to FHEO-2020-01, dated January 28, 2020, HUD advised that a housing provider may take into consideration the totality of the circumstances surrounding the request, including facts such as, but not limited to, bringing the animal on property without seeking approval, the documentation provided was purchased online, etc. 

The changes in the law apply to condominium, cooperatives and homeowners’ association.  Some of the changes allows a housing provider, including a community association, to request certain written documentation prepared by a health care practitioner in a format prescribed in rule by the Department of Health.

The practitioner or provider of the supporting information must have personal knowledge of the person’s disability and must be acting within the scope of his or her practice.  The new laws also provide that if a person falsifies information or written documentation or knowingly provides fraudulent information to obtain an emotional support animal,
they can be charged with a misdemeanor of the second degree.  These new laws can, and should be, a deterrent to those who do not really qualify for a reasonable accommodation for an emotional support animal from applying for a reasonable accommodation, as well as a deterrent for health care professionals providing such letters for those who do not qualify for them.

Enforcing these new requirements and laws should make is easier for those who legitimately  require the services of an emotional support animal to qualify with an association.  Remember, all requests for an emotional support animal should be discussed with your association attorney to make sure the request contains the required information.  An association should never merely deny an application for a reasonable accommodation; the association is required to engage in the “interactive process” in an attempt to obtain the required information.  For these reasons you should always discuss any type of request for a reasonable accommodation with the association attorney. 

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

How Community Associations Can Handle the Continuing Popularity of Short-Term Rentals

Despite a year that has drastically curtailed traveling due to the global COVID-19 pandemic, the popularity of online vacation and short-term rental platforms, such as Airbnb and others, has persisted as people have sought escapes to private homes instead of hotels and to upgrade their work-from-home routines to somewhere with a view. Airbnb is only one of a number of platforms that has facilitated the process by which owners can rent out their properties or a section of their properties for any number of days. Florida has remained a popular choice for short-term vacation rentals, with its sunny weather and numerous beachside properties.

These online platforms have popularized income-generation from short-term rentals for some property owners. This includes owners whose properties are located within community associations. Short-term vacation rentals create a host of issues for community associations and for neighboring owners—issues that may be exacerbated by the COVID-19 pandemic. Short-term guests are likely unfamiliar with association rules and regulations, or may simply not care. This may result in nuisance behaviors, such as excessive noise, unauthorized parking, or improper trash disposal. Short-term guests also are not impacted by the long-term effects of the wear and tear of common facilities and therefore may disregard proper use of the facilities, or worse, cause damage to the property. Moreover, guests unapproved by the association always have the possibility of being a security risk to the community. Some of these issues are exacerbated by the COVID-19 pandemic as associations seek to protect their residents with additional rules aimed at curbing the spread of the virus within the community. For example, a short-term renter may unwittingly attempt to use the pool or gym despite a rule prohibiting all guests.

All types of community associations face issues with short-term rentals. However, they may be much more visible in condominium associations where a unit is bound on other sides to other units, as opposed to single-family lots in homeowners’ associations. Part of the difficulty association boards face with short-term rentals is enforcement of existing regulations and/or COVID-19 specific rules. A weekend-renter who hosts a noisy gathering on Saturday night may be gone the next day. A family who foregoes wearing masks when walking around the common areas may have already caused harm by the time the owner is contacted regarding the violation.

In addressing short-term rentals, community associations should first look to their governing documents. A provision defining short-term rentals and restricting such use of the property would prove most effective. Because the short-term rental boom is still a relatively new issue, many association documents will not contain such a provision. If so, an association should seek to amend its governing documents. While not always easy to accomplish, this is generally the most effective way to deal with short term rental issues.

Condominium associations face an added challenge even if they successfully amend their documents. In 2004, the Florida Legislature amended the Condominium Act to limit the impact of such an amendment. Per Section 718.110(13) of the Condominium Act, an amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period of time applies only to unit owners who consent to the amendment and to unit owners who acquire title to their units after the effective date of the amendment. Therefore, this amendment would not serve the association against owners currently engaging in short-term rentals without their consent. The Homeowners Association Act does not contain a similar provision.

Other restrictions that are more commonly found in association documents may also be useful in restricting an owner’s ability to set up short-term rentals. Some common restrictions found in association governing documents specify a minimum term of a lease, such as six months or a year, or specify the number of times a property may be rented per year. Florida courts have long upheld properly adopted leasing restrictions.

Many associations have sought to utilize the “residential use” restriction contained in their governing documents to restrict short-term rentals. Such an endeavor would first require a close examination of this provision. For example, the governing documents may mandate residential use, or in other cases, may prohibit commercial uses of a unit. Any interpretation, and thus application to a short-term rental, would turn directly on the express language of the provision. These provisions have been extensively litigated in courts across the country. This is so because defining the bounds of activities that constitute residential use or commercial use is not a bright line. Moreover, certain activities of short-term renters may be consistent with residential usage of the property, while the owner is generating income from the use. Nevertheless, courts have generally been reluctant to apply a residential use provision as a restriction on short-term rentals.

Most significant to Florida community associations is the First District Court of Appeal’s 2017 decision in Santa Monica Property Owners Association v. Acord. In Acord, the court found that where renters were using the property for ordinary living purposes, such as eating and sleeping, the duration of the rental was not relevant. The court went on further to explain that the nature of the use of the property was not changed from residential to commercial simply because the owner earned income from the rentals. The court included a laundry list of cases from out-of-state jurisdictions wherein courts have held that short-term vacation rentals did not violate the residential use restriction at issue. Acord as a case of first impression and the only Florida appellate case on the issue serves as a signal to associations that relying on its residential use restriction may not be enough to curtail short-term vacation rentals in the community.

Of note are two 2020 cases from jurisdictions outside of Florida wherein the courts have sided with associations in interpreting the residential use restriction. In Cherry Home Association v. Barker, a Michigan community association sued several owners engaging in short-term rentals, citing the residential use limitation in their declaration. In a creative argument, the owners argued that they had not violated the residential use restriction because they had not turned a profit from their rentals. The judge granted the association’s injunction, finding that earning a profit does not determine whether a use is residential or commercial. The owners’ poor business skills did not make the use non-commercial. In the second case, Hoffman Revocable Trust v. Marshall, the Kentucky Court of Appeals agreed with the association that an Airbnb rental is a commercial use, rather than residential use, comparing the transaction to that of a hotel’s. These cases have no binding effect on Florida courts, but may serve as persuasive tools for courts, as well as for associations unable to amend their governing documents and needing to rely on a residential use restriction.

Outside of the governing document provisions, an association has several other steps it can take to address short-term rentals. First, an association should document violations as they arise and send the appropriate violation letters to the owners. Although the quick departure of a short-term renter may dampen the efforts of the association to resolve an issue regarding that particular guest, a thorough record of violations against the particular owner is vital to an association’s enforcement efforts. Second, going directly to the source by contacting the online platform may be an option in some instances. For example, the Airbnb Terms of Agreement makes hosts responsible for complying with laws, rules, regulations and contracts with third parties, specifically listing homeowner and condominium association rules that may restrict subletting, short-term rentals, and even longer-term stays. Lastly, an association may have to resort to legal action against owners who repeatedly violate their association’s governing documents.

Short-term vacation and rental websites, such as Airbnb and Vrbo, are not diminishing in popularity anytime soon. Moreover, the potential uptick in demand for leisure travel following the wide distribution of the COVID-19 vaccine may very-well cause a rise in demand for such short-term rentals. It is important for association boards to be aware of potential issues resulting from short-term rentals.

Now is the time to take proactive action to arm your association with the tools required to deal with these types of problems.

 

Karyan San Martano

Attorney at Law, Becker
Ft. Lauderdale | bio

 

The “Nuisance Problem” –

When Do Annoying Behaviors and Activities within and Surrounding the Community Become a Legal Nuisance and How Can your Community Deal with It?

It seems like everybody’s got a problem with somebody these days. Sure, certain quirks and behaviors can certainly be classified as “annoying.” Who isn’t annoyed by that neighboring co-worker or spouse that insists on singing loudly and proudly, not to mention off-key, even with their earphones plugged in?? While irritating, not every annoyance rises to the level of a legally actionable nuisance.  This article will explore recent case law concerning when an individual or Association may have a potential claim for nuisance based upon the common law definition of nuisance and related provisions in the community association’s governing documents. 

(I) Nuisance Defined

             Common Law Nuisances

For as long as there have been feuding neighbors, there have been legal claims alleging that one or other have in some way engaged in an activity or behavior which creates a nuisance and therefore in some way injures the other party and/or their property.  Over time, courts have established the common law definition for nuisance based upon the rulings in these court cases.  In general, neighbors have a common law duty not to interfere with or to render each other unsafe or insecure in life or in the use of their property. Windward Marina LLC v. City of Destin, 743 So.2d 635, 639 (Fla. 1st DCA 1999). Stated another way, “an adjoining property owner cannot maintain a…nuisance on his property which is injurious to the…property rights of an adjacent landowner and not be answerable [for it].” McClosky v. Martin, 56 So. 2d 916, 918 (Fla. 1951).

Anyone can be subject to a claim for common law nuisance depending on the specific facts and circumstances of the case.  A determination of whether a particular activity or behavior is a “common law nuisance” is largely subjective and is based in part on the sensitivities and impact of the activity on the person bringing the claim.  Generally speaking, ordinary, occasional disturbances or annoyances, no matter how infuriating, do not rise to the level of a common law nuisance.  Notwithstanding, certain “noises” have been deemed by courts in the past to be a nuisance. Some examples include the following:

  • Low-flying aircraft (City of Jacksonville v. Schumann, 199 So. 2d 727, 729 (Fla. 1st DCA 1967)
  • Airboats ( Lake Hamilton Lakeshore Owners Association v. Neidlinger, 182 So.3d 738, 741 (Fla. 2d DCA 2015)
  • Chickens and Roosters (Erwin v. Alvarez, 752 So.2d 1261, 1262 (Fla. 2d DCA 2000)
  • Air Conditioning Equipment (Davis v. Levin, 138 So. 2d 351, 352 (Fla. 3d DCA 1962)

Ultimately, whether a common law nuisance exists is a question of fact that is based upon the evidence presented to the court and a consideration of the reasonableness of the individual’s use of their property and how their use affects the private rights of others. Depending on the facts presented in the case, a court has generally broad discretion in not only determining if a common law nuisance exists but also whether the individual claiming the nuisance is entitled to an injunction order prohibiting the person from engaging in the activity, monetary damages or both.  Importantly, a common law claim of nuisance is based upon the facts presented and is not based on a specific provision of a contract or Florida Law.  Accordingly, a party that successfully brings a claim for common law nuisance may be entitled to monetary and/or injunctive relief but would not automatically be entitled to recover their attorney’s fees and costs incurred in bringing the case.

Contract Based Nuisances

For properties and individuals who are subject to an HOA or Condominium declaration, most community association governing documents also contain a use restriction which prohibits “nuisances” from occurring within the community. These nuisance provisions contain a generally broad definition which usually refers to any “unreasonable annoyance” that interferes with the “peaceful possession and proper use of the property.”  Although most community association documents prohibit nuisance behaviors, the term “nuisance” is not defined in either the Condominium Act (Chapter 718, Florida Statutes) or the HOA Act (Chapter 720, Florida Statutes).  Because there is no standard definition of nuisance provided in the Condominium Act or HOA Act, it is necessary to look to the specific nuisance provisions of the association governing documents (if any) to determine what types of behaviors would constitute a violation of the nuisance provisions in the declaration.  Some declaration provisions may only broadly prohibit “any nuisance or annoyance” in the community without providing a specific definition of what is meant by the term “nuisance.”  Other nuisance provisions may also include a list or example of specific activities that constitute a nuisance under the declaration, for example, discharging a firearm on the property or “illegal or criminal activities” such as illicit drug use.  Very rarely do nuisance provisions specifically define as a nuisance non-criminal annoyances such as an incessantly barking dog or a loud television or radio playing in the wee hours of the morning.  As further outlined by the recent case summarized below, it is possible that a particular activity or behavior may constitute a common law nuisance but does not constitute a “nuisance” as defined by the association’s governing documents.  Conversely, a nuisance under the Association’s documents may not rise to the level of a commo law nuisance.   In contrast to a common law nuisance claim, to the extent that an individual successfully raises a claim for nuisance under the association’s declaration, they may be contractually entitled to recover their attorney’s fees and costs.

  1. Roebuck v. Sills, 2020 WL 5938189 (Fla. 1st DCA 2020)

In one recent nuisance case, Roebuck v. Sills, 2020 WL 5938189 (Fla. 1st DCA 2020), a neighbor (hereinafter referred to as the “annoyed neighbor”) sued his next door neighbor (hereinafter referred to as the “annoying neighbor”) claiming that the annoying neighbor’s pool pump equipment and exterior lighting created a common law nuisance and also violated the nuisance provisions of the HOA Declaration.  (For the sake of this article, the neighbors will be referred to as “annoyed neighbor” and “annoying neighbor”. These designations are loosely based upon the nuisance allegations raised in the case and are NOT a statement or opinion as to the personal character or personality of either of the neighbors involved in the lawsuit.) At trial, the annoyed neighbor claimed that the noise and light generated by the annoying neighbor’s newly installed pool equipment could be seen and heard through the master bedroom window and thus impacted the annoyed neighbor’s ability to sleep and enjoy his property (the pool equipment was located between 12-14 feet away from the master bedroom window). The annoyed neighbor sued the annoying neighbor seeking both an injunction and monetary damages, including attorney’s fees and costs. After a four-day bench trial, the court’s ultimate decision was “on the fence” as to whether the noise and light could be considered both a common law nuisance and a nuisance pursuant to the definition of the Declaration. The trial court found that the noise and light created a common law nuisance but did not violate the nuisance provisions of the Declaration. The trial court awarded monetary damages to compensate for the construction of a wall and an injunction which prohibited use of the exterior lighting and pool equipment between 9:30 pm and 9:30 am.

Both neighbors appealed the trial court’s order and on appeal, the annoyed neighbor argued that not only did the annoying neighbor fail to obtain pre-approval from the Association’s Architectural Review Board prior to installing the pool pump and exterior lighting but that the installation of the same violated the nuisance provision in the Declaration which stated as follows:

“Nothing shall be done or maintained on any Lot or Common Property which may be or become an annoyance or nuisance to any other Lot in the vicinity thereof or to its occupants, or to the Common Property. […]”

Although this provision did not provide a formal definition for “annoyance or nuisance” it did state that any dispute or question as to what may be or become a nuisance “shall be submitted to the Board of Directors and the written decision of the Board of Directors shall be dispositive of such dispute or question.” Roebuck, 2020 WL 5938189 at *3. The evidence presented to the Court revealed that the annoyed neighbor did not seek or obtain a written decision from the Board regarding whether the items in question did constitute a nuisance as it is defined by the Declaration.  The evidence further reflected that the annoying neighbor had in fact complied with the design review and approval process contained in the Declaration.  Accordingly, and because there was no other evidence suggesting that the annoying neighbor had otherwise breached the Declaration, the appellate court upheld the trial court ruling that the pool pump and exterior lighting were a common law nuisance but not a nuisance under the Declaration.

The final issue on appeal in this case dealt with the award of attorney’s fees since both parties partly prevailed in the case. On one hand, the annoyed neighbor was the prevailing party because the court found that the pool pump and lighting constituted a “common law” nuisance. On the other hand, the annoying neighbor was also deemed the prevailing party as it related to the breach of Declaration claim because the pool pump and lighting did not violate the nuisance provisions of the Association’s Declaration.  Upon further review, the appellate court found that the language of the Declaration only entitled the Association to recover attorneys’ fees and costs if the Association was the prevailing party in enforcement litigation.  The language did not also entitle individual owners to recover their attorney’s fees and costs from other owners, even if they were the prevailing party in the case.  Therefore, there was no way for either party to collect attorney’s fees from the other on a claim related to a breach of the Declaration. Although the Declaration did not expressly provide for prevailing party attorney’s fees for individual owners, the court also looked to the language of Section 720.305(1), Florida Statutes, of the HOA Act, which provides in part as follows:

“[…]The prevailing party in any such litigation is entitled to recover reasonable attorney fees and costs. […]”

The Court interpreted the phrase “such litigation” to include “the sort of Homeowners’ Association Act-based litigation described by the statutes, involving the governing documents.”  Id. at *4. Accordingly, even though the express language of the Declaration did not provide for attorney’s fees for successfully defending against a breach of Declaration claim, the language of the HOA Act did and thus, the annoying neighbors were entitled to recover their attorneys’ fees and costs. 

(III) Nuisance Behaviors and Activities that Occur Within the Community

As evidenced by the facts and result in the aforementioned case, claims for nuisance brought by and against members of the Association are subject to common law, the provisions of the HOA (or Condominium) Act and the specific nuisance provisions contained in the association’s governing documents.  As outlined by the Court in the Roebuck opinion, an activity may constitute a common law nuisance without rising to the level of a “nuisance” as the term is defined by the association’s governing documents.   An individual (or association) bringing a nuisance claim as a violation of the governing documents should carefully review the language of the relevant nuisance and enforcement provisions to determine the following

(a) Is there a specific definition for “nuisance” provided in the Declaration?  Is the definition broad (“any annoyance or nuisance”) and/or are specific activities defined as a “nuisance” by the express language of the provision (i.e.: discharge of firearm, illegal or criminal activity)?

(b) Is there a mechanism by which the Board (or board designated committee) can make a determination as to whether an activity constitutes a “nuisance” for purposes of the Declaration? 

(c)  What relief is the “prevailing party” entitled to (i.e.: attorney’s fees and costs, injunction, monetary damages, all of the above)?

The association’s board of directors should carefully review the current nuisance provisions contained in the association’s governing documents (if any) to determine if an amendment to the language is appropriate to more specifically address certain behaviors or activities which have become a prevalent problem throughout the community.  Ideally, the definition for nuisance should be broad enough to include a wide range of potentially troublesome activities (i.e.: criminal activity) yet specific enough to address certain actions which may not be a “common law” nuisance but may still threaten the peace and safety of other members in the community. 

You will also need to consult with your attorney as to any conditions precedent required before filing a lawsuit.  In an HOA you will have to file a demand for pre-suit mediation pursuant to Section 720.311, Florida Statutes, before filing a complaint to enforce a nuisance provision of the Declaration; in a condominium association you will have to file a petition for arbitration pursuant to Section 718.1255, Florida Statutes, before filing a complaint to enforce a nuisance provision of the Declaration

(IV) Nuisance Behaviors and Activities that Occur Outside the Community but that Directly Affect or Impact your Community

Often times, communities may be confronted by the nuisance behaviors of individuals or entities that are not members of the association and thus are not subject to the provisions of the HOA Act or the association’s governing documents (i.e.: a deteriorating wall abutting the community that is owned by the neighboring association or an incessant, loud noise or smell created by the activities of a neighboring property owner).  In these cases, the appropriate claim is that the behavior or activity is a common law nuisance.  As outlined by the Court in Roebuck, because a claim for common law nuisance is not based on a particular statute or contract (i.e.: Declaration), the prevailing party in the litigation is not entitled to recover attorney’s fees and costs even if they are entitled to monetary damages and/or an injunction against the individual or entity requiring them to stop the nuisance behavior or activity.

Consult with your Association’s attorney today to review the nuisance and enforcement provisions contained in your governing documents!

 

Shayla J. Mount

Attorney at Law, Becker
Orlando | bio

 

Distinguishing between Statutory and Non-Statutory Reserves under the Florida Homeowners’ Association Act

Considering the fiduciary responsibilities officers and directors have to the homeowners’ association’s members, it is important to understand not only the importance of including reserve accounts in an association’s budget, but also to understand when reserve funding is mandatory under the Florida Homeowners’ Association Act. Unlike condominium associations, maintaining fully funded reserve accounts is not always mandatory for homeowners’ associations.

Reserve accounts allow the association to set aside funds for deferred or long-term maintenance of common areas or for capital expenditures, so as to eliminate the need for special assessments.

Although Homeowner Associations may collect periodic assessments from homeowners for the regular operation and maintenance of these common areas, such as routine pool cleaning, a large repair or replacement due to deterioration, such as pool remarciting or replacement of a clubhouse roof, will not typically be covered by these periodic assessments. Deterioration of common elements is unavoidable, and can be accounted for over years, rather than upon needing replacement. Akin to a safety net savings account or a rainy-day fund, reserves can also cover large and unexpected expenses, which will inevitably arise.  Without a reserve fund, the association may have no choice but to raise assessments or levy a special assessment on homeowners. Even if homeowners may initially be reluctant to pay more to fund reserves, they usually will be more displeased with a large, unexpected bill due to the association’s lack of planning. This also results in an uneven penalization of current homeowners, who are now responsible for deterioration that occurred over the years but was not paid for by prior owners. Additionally, delay in collecting on special assessments may delay repair, cause further deterioration, and result in a loss of property value.

Because of their significance in running a financially healthy community, the Homeowners Association Act was amended to provide for reserves. However, the statute does not mandate reserve accounts for all homeowners’ associations. Reserve accounts thus fall into two categories: statutory reserves, which are mandatory and must follow the requirements of the statute, and non-statutory reserves, which are board-created and limited by the association’s governing documents.

Statutory Reserves

The Homeowners Association Act was amended to provide for reserve accounts, but has only made reserves mandatory if they fall into the following two categories: reserves initially established by the developer or mandatory reserves affirmatively elected by members of the association. A reserve account established in one of these two ways means that the association must determine, maintain, and waive the reserves in accordance with the statutory requirements laid out in section 720.303(6) of the Homeowners Association Act.

If the developer initially established reserves, the developer has an obligation to fund the reserves while it maintains control of the homeowners’ association.   In the event that the developer fails to fund or properly waive the reserves, homeowners will have a cause of action against the Developer for recoupment of such funds. That type of action is beyond the scope of this article. The statute further requires that the budget reflect in what manner developer created reserves will be used. While the developer still controls the association, it will not be able to vote to use the reserves for other than intended purposes, unless approved by a majority of non-developer voting interests. Once the developer has turned control over to the association, the developer may still vote its interest to waive or reduce the funding of the reserves for the units it owns. It is therefore recommended that a community approaching turnover from developer control double check that the developer is properly funding its reserves or properly waived or reduced the funding.

In associations where reserve accounts are not initially provided for by the developer, the members may elect to establish statutory reserve accounts by a majority of the total voting interests of the association at a duly noticed meeting where the item is on the agenda. This can be done either by a vote at a duly called meeting or by written consent. Like developer-established reserve accounts, under this method, the vote must designate the components for which the reserves are to be used. In the years following the approval, the board must include the required reserve accounts in the budget and continue to do so every year after that.

Once established either by the developer or by the membership, statutory reserves must be funded, or must be waived. To waive or decrease funding for such reserves, a majority vote at a meeting with quorum present must be taken. Notably, this vote to waive or reduce the reserves applies to only one budget year. The association, if it so chooses, may terminate such a reserve account by approval of the majority of the voting interests of the association. The Homeowners’ Association Act also explains the formulas for properly calculating the funding of these reserve accounts, and the accounting must be done as provided. For those who are familiar with condominium reserves, statutory homeowner association reserves generally must be treated in the same manner as condominium reserves.

Non-Statutory Reserves

As noted above, funding reserves for homeowners’ associations is only mandatory under the statute if the developer has established reserve funding or if the owners have voted to establish statutory reserves. However, an association may choose to maintain a “non-statutory reserves.” Essentially, these accounts are board-created and their funding is limited by the governing documents of the association. The most significant difference is that these accounts are not mandatory and do not have be maintained or waived according to the Homeowners’ Association Act (as required in the Condominium Act).

Subject to document-based limitations on assessment increases, the board decides how much to include in the reserve account as part of its regular budgeting process. The association is obligated to prepare an annual budget reflecting annual operating expenses, including estimated revenues and expenses for the year. The association should endeavor to accurately calculate its estimated expenses and revenues as overstating anticipated expenses to put into a reserve account is not consistent with the statute’s budgeting requirements. As with calculating statutory reserves, it is recommended that the association consult  a reserve professional.

Because the reserve accounts are not bound by the statutory requirements, the board may choose to waive, reduce, or even eliminate the reserves. Further, the board may also decide to use the reserves for other than intended purposes. Although this means that the board may have more leeway in how to spend the reserves or in deciding to underfund the reserves in times of hardship, it is important to remember that the board still owes a fiduciary duty to the association’s members. Underfunding reserves or waiving reserves altogether may lead the association to rely on special assessments, as described above. An association that decides not to provide for reserves but is responsible for repair and maintenance that may result in a special assessment is obligated to include specific statutory language addressing this conspicuously in its annual financial report.

Since the amending of the Homeowners’ Association Act, a distinction between statutory and non-statutory reserves has arisen. Because the board may not have to fund reserves at all, or may have to strictly follow statutory requirements to fund such reserves, it is important to understand how the reserve accounts were initially set up. If reserves are not mandatory, it is recommended that the association nevertheless set up reserve funds to ensure a continuing healthy financial future for the community.

 

Karyan San Martano

Karyan San Martano

Attorney, Becker Ft. Lauderdale | bio

 

political signs

Political Signs

Increasingly, I am being asked by clients about whether they can prevent residents from displaying political signs from their units or lots. These clients all have restrictions against signs in their governing documents. The main concern, and response to enforcement, relates to the First Amendment: the right to free speech. 

Importantly, the First Amendment to the United States Constitution prevents state actors from limiting the right to freedom of speech unless such limitations are narrowly tailored and otherwise proper. This is especially true when the speech that is the subject of regulation is political in nature. 

The First Amendment applies to “state actors.” In Quail Creek Prop. Owners Ass’n, Inc. v. Hunter, 538 So. 2d 1288, 1289 (Fla. 2nd DCA 1989), the Second District Court of Appeal in examining an association’s sign restriction found that “neither the recording of the protective covenant in the public records, nor the possible enforcement of the covenant in the courts of the state, constitutes sufficient “state action” to render the parties’ purely private contracts relating to the ownership of real property unconstitutional.

To be a “state actor,” the Eleventh Circuit Court of Appeal has held that a “Court must conclude that one of the following three conditions is met: (1) the State has coerced or at least significantly encouraged the action alleged to violate the Constitution (‘State compulsion test’); (2) the private parties performed a public function that was traditionally the exclusive prerogative of the State (‘public function test’); or (3) ‘the State had so far insinuated itself into a position of interdependence with the [private parties] that it was a joint participant in the enterprise[ ]’ (‘nexus/joint action test’). Rayburn ex rel. Rayburn v. Hogue, 241 F.3d 1341, 1347 (11th Cir.2001). “Like the Eleventh Circuit, the state courts of Florida have also determined that homeowners’ associations existing under the laws of the State of Florida, are not state actors for purposes of fulfilling the “color of state law” element.” Murphree v. Tides Condo. At Sweetwater by Del Webb Master Homeowners’ Ass’n, Inc., No. 3:13-CV-713-J-34MCR, 2014 WL 1293863 (M.D. Fla. 2014).

While an association may turn to the courts for enforcement of an anti-sign restriction, which arguably involves “state action,” the Eleventh Circuit Court of Appeal has limited the context in which judicial enforcement of a private covenant would involve sufficient state action to implicate the First Amendment to the enforcement of racially restrictive covenants. Id.

While there are risks in enforcing an anti-sign restriction in the context of political signs, it is likely that an association can have restrictions against political signs, that such restrictions do not involve state action, and that their enforcement would not be prohibited by the First Amendment.

 

Marielle E. Westerman

Marielle E. Westerman

Community Association Law, Becker Tampa | bio

 

Electric Vehicle Charging Stations

“Sit Back and Enjoy the Ride:

Practical Considerations for Condominium Boards Regulating Electric Vehicle Charging Stations”

On July 10, 2020, Governor Ron DeSantis announced over $8 million of the state’s budget this year will be dedicated to strengthening Florida’s electric vehicle infrastructure. The intent of what Gov. DeSantis described as a “long-term investment” is to “promote reduced emissions and better air quality” and to “improve mobility and safety for the ever-increasing number of Floridians that drive electric cars.” Undoubtedly, many of these electrically mobile Floridians also reside in one of the thousands of condominium associations located throughout the state. And while many Tesla enthusiasts await with bated breath the latest and greatest in electric powered vehicles, many condominium boards are fearful of how their condominium property may be negatively impacted by this latest Jetson-inspired craze.

What Your Association CANNOT Do.

In sum, s. 718.113(8)(a), F.S., prohibits any declaration or Board-rule or policy from prohibiting a unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area. Importantly, unit owners do not have a unilateral, unrestricted right to install EV stations anywhere they please. The right is specifically limited to the owner’s limited common element (LCE) parking area.  In other words, owners do not have the right to install EV stations on the Common Elements, within their units, or anywhere outside of the boundaries of their designated limited common element parking areas as outlined in the Association’s Declaration.

What Your Association CAN Do.

Where the Declaration does provide an LCE parking space for units, the Association can do the following:

  1. The Association can obligate the installing owner to pay for the costs of installation, operation, maintenance, and repair, including the costs to obtain hazard and liability insurance to cover the charging station.
  2.  

    Because the EV station will be located on limited common elements, the Association can also require the Owner to provide to the Association proof that it is named as an additional insured on the Owner’s policy within 14 days of Association approval for the EV installation.

  3. The Association can also require the Owner to:
    1. Comply with bona fide safety requirements, consistent with applicable building codes or recognized safety standards, for the protection of persons and property.
    2. Comply with reasonable architectural standards adopted by the association that govern the dimensions, placement, or external appearance of the electric vehicle charging station, provided that such standards may not prohibit the installation of such charging station or substantially increase the cost thereof.
    3. Engage the services of a licensed and registered electrical contractor or engineer familiar with the installation and core requirements of an electric vehicle charging station.
    4. Reimburse the association for the actual cost of any increased insurance premium amount attributable to the electric vehicle charging station within 14 days after receiving the association’s insurance premium invoice.
  4. The Association can place a lien on the Unit in order to enforce payment of costs associated with the Owner’s installation and use of the EV station.
  5.  

    The language of s. 718.113(8)(d), F.S. allows the Association to enforce payment of EV costs using the lien collection provisions provided in s. 718.116, F.S.. What is not clear is whether the Association is required to specially or individually assess the owner for the EV costs prior to filing a lien for the same. It is best to consult your Association’s Governing Documents and your Association attorney for further guidance on this process.

     

  6. The Association can deny an EV installation, if there is proof that it will cause irreparable harm to the Association property.
  7. This is best determined by an electrical engineer or other expert who can assess the Association property’s optimal electrical capacity and usage.

 

What Your Association SHOULD do.

  1. Amend Governing Documents to provide express easement and obligations for Unit Owners related to the installation and maintenance of EV stations.
  2. Because most condominium declarations recorded prior to the statute change will not reference an owner’s statutory right to install an electric vehicle charging station, the language of Section 718.113(8)(g), F.S. provides a statutory “implied easement” across the condominium’s common elements for this purpose regardless of the easement language contained in the Association’s governing documents. 

    If the Association is able to obtain the necessary votes to amend the Declaration, it should do so to specifically include an express easement to Unit Owner’s for the installation, maintenance and repair of electric vehicle charging stations.   The amendment should also outline the costs and liability responsibility of Unit Owners for their stations.

     

  3. Amend Governing Documents to address subsequent Unit Owner obligations and responsibilities for charging station maintenance and removal.
  4. Section 718.113(8)(d), F.S. makes the “unit owner who is installing” the station responsible for the costs of installation as well as removal and repair. This language, as it is currently written, can be interpreted to impose this responsibility only on the installing owner and does not specifically impose any continuing maintenance responsibility on any subsequent owners who may purchase the unit (and the appurtenant charging station) from the installing owner.

    Any amendment to the Declaration or Board policy related to EV stations should make sure to specifically impose maintenance and costs responsibility upon the installing owner and any subsequent owners.

     

  5. Engage an engineer or professional to assess the Association’s electric capacity prior to an influx of EV installation requests.
  6. Although every Unit Owner is technically entitled by the Condo Act to install an electric vehicle charging station within their LCE parking area, it is practically impossible for any condominium association to grant every owner’s request given the energy constraints of the condominium property. The Association should consult with an electrical engineer or other professional to conduct an independent assessment of the Association’s capacity to safely accommodate EV stations at the condominium property.

 

Shayla J. Mount

Attorney at Law, Becker
Orlando | bio

 

Budgets

With budget season approaching, Florida community associations must consider their capital expenditures and long-term maintenance needs. Community associations set aside a portion of their budgets for capital expenses and deferred maintenance, frequently referred to as “reserves.” The reserves are for expenses that do not occur on a regular basis and reserves are designed to ensure that funds will be available for repairs and maintenance without the need for special assessments. Different components will have varying useful lives; for example, a roof may have a useful life of several decades, whereas a building may require painting every few years. Community associations can either reserve, specially assess, or borrow funds to pay their capital expenditures and long-term maintenance needs. When preparing your annual budget, reserve requirements will depend on whether your association is a condominium, cooperative, or a homeowner’s association and the assets your association maintains.

Condominiums & Cooperatives

Condominiums and Cooperatives share similar concepts and reserve requirements. The Condominium Act and the Cooperative Act, and the corresponding Florida Administrative Code sections, have important nuanced differences. You should consult your Association attorney for him or her to review the relevant Act and Administrative Code sections in determining your association’s obligations when reserving for future expenses.

The Condominium Act and Cooperative Act requires that reserves include at least roof replacement, building painting, pavement resurfacing, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. The association may consider each asset separately when determining if a deferred maintenance expense or the replacement cost of an item exceeds $10,000. Alternatively, the association may group similar or related assets together. The condominium portion of the Florida Administrative Code give the example of an association that is responsible for two swimming pools, each with less than $10,000 in deferred maintenance expenses but together require more than $10,000 in deferred maintenance expenses, may establish a reserve for the pools. The reserves must be maintained in a separate account from the operating account unless they are commingled for investment purposes. In that case, the reserves must be separately accounted for in the combined account. Combining the accounts requires the Association to account for the reserves separately from the operating account and the Association must be very cautious to insure there are no mistakes in this regard.

Reserves are calculated using a formula based upon the estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item that can be found in the statutes and/or Florida Administrative Code. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item as a result of deferred maintenance. The formula must provide funds equal to the total estimated deferred maintenance expense or total estimated replacement cost for an asset or group of assets over the remaining useful life of the asset or group of assets. The formula must be based on either a separate analysis of each of the required assets, “straight-line method,” or a pooled analysis, “pooled method,” of two or more of the required assets. Associations should periodically obtain a reserve study to determine the useful life and replacement costs of its reserve items and make adjustments to its reserve funding based on changes. Both the straight-line and pooled reserve methods require setting aside funds based on the cost to repair and replace the capital assessments and remaining useful life of the assets. The projected annual cash inflows may include estimated earnings from the principal’s investment, although the reserve funding formula may not include any balloon payments. The method of calculating each is beyond the scope of this article. The association’s accountant or attorney should be consulted for questions regarding each method.

When adopting a budget, the association must send every unit owner a proposed budget, including full funding of reserves. At the members’ meeting, reserves may be waived or partially funded by a vote of the membership. Limited proxies may be used for the vote to waive or partially fund reserves and the limited proxies must conform to the form adopted by the Division of Florida Condominiums, Timeshares, and Mobile Homes. The limited proxies must include specific statutory capitalized and bold language. If a vote to waive reserves is not conducted, if the vote falls short of a majority, or a quorum is not present, the budget with full reserves goes into effect. Your governing documents may provide a different threshold to waive or partially fund reserves, so your governing documents must be referenced to determine if a different threshold must be met.

Reserve funds must be used for the purpose that they were reserved. This means there is no such thing as “borrowing” from reserves. Any use of reserves for other than the intended purpose must be approved by the membership.

Homeowners’ Associations

Unlike condominiums or cooperatives, homeowners’ associations are not required to establish reserves unless initially established by the developer or the membership of the association affirmatively elects to provide for reserves. Member approval to establish reserves requires approval from a majority of the total voting interest. When establishing reserves by a membership vote, the approval must state that reserves shall be provided for in the budget and must designate the components for which the reserve accounts are to be established. Once the membership provides for reserve accounts, future budgets must include reserve accounts unless waived or partially funded by a majority vote of the members at a meeting where a quorum is present.

If the association maintains reserves, but those reserves were not initially established by the developer or a vote of the membership, then funding of such reserves is limited to the extent that the governing documents limit increases in assessments, including reserves. The annual budget may include reserves that are not required by staute.

Computation of the reserve accounts may be either via a pooled or straight-line method similar to that used by condominium and cooperative associations. If the developer initially established reserves or the membership elected to establish reserves, the reserves must be funded unless a majority of the members present at a members’ meeting votes to waive or partially fund.

If reserves were not initially established by the developer or by a vote of the membership and the association maintains improvements that may result in a special assessment if reserves are not provided, the association must include in its financial report the language mandated by Section 720.303(6)(c)1, Florida Statutes. Additionally, if the association maintains reserves, but those reserves were not initially established by the developer or by a vote of the membership, then the association must include in its financial report the language mandated by Section 720.303(6)(c)2, Florida Statutes.

Marielle E. Westerman

Michael​ Casanover

Attorney at Law, Becker
Ft. Lauderdale | bio

Association Loans/Lines of Credit

In this time of growing financial crises, associations are increasingly considering loans/lines of credit in order to have sufficient cashflow in the event of  budget shortfalls caused by increasing delinquencies or in order to pay for projects that cannot be funded through the operating budget alone but cannot be postponed.

In considering loan/line of credit terms as well as structuring repayment options for owners, associations must be aware of documentary limitations on borrowing and owner assessments as well as legal limitations on borrowing and owner assessments.

Loan/Line of Credit Terms

Associations must be aware of typical loan terms that can run afoul of common provisions in association documents if not handled properly. Such typical terms include the pledging of reserves, real property, personal property, and insurance payments.  In many instances, the inclusion of such terms requires membership approval rather than board approval alone by statute. For instance, the pledging of statutory reserves requires the same approval of the membership as is needed for using reserves for a purpose other than the specified purpose of the reserve account(s).   the Boards must also be aware that the governing documents can restrict the right to borrow money in ways different than the statutes, and such limitations must be addressed.

Repayment Options

In obtaining a loan/line of credit, the repayment of same must always be a consideration. Typical repayment options involve special assessments or the inclusion of payments in future operating budgets. Consideration must be given to the financial climate that is likely during the term of the loan/line of credit. For instance, if during the life of the loan/line of credit, financial instability or crises is likely, then the association needs to plan for the possibility that units/homes may go into foreclosure.  In such a circumstance, if the association has levied a special assessment, the payment obligation to pay the special assessment could be wiped out in the event of a bank foreclosure. Care must be taken to draft special assessments so as to avoid such a scenario.

In terms of repayment of a special assessment, the following cases are relevant. In a 2003 “Declaratory Statement” entitled In Re: Petition For Declaratory Statement, Walter Grover, Unit Owner, Portofino Condominium Apartments of Pompano Beach, Inc., DBPR Final Order No. BPR-2003-02688 (November 15, 2003) was issued. In this matter, the condominium association levied a special assessment and adopted a payment plan. It was determined that it was permissible for a condominium association to permit some owners to prepay a special assessment levied by the Board, while other owners paid over time at a stated rate of interest, where all of the owners were given the same option to either pay a lump sum or to pay in installments. Accordingly, to the extent that an association desires to levy a special assessment in connection with a loan, this statement would stand for the proposition that an association can give the owners the option to either pay up front or over time at the stated interest rate. It should be noted, however, that Declaratory Statements are, as a matter of law, only binding between the parties involved. However, they are at least persuasive authority as to the interpretation of the law from the state agency which has jurisdiction to enforce the condominium laws. However, these pronouncements are not “the law” in the same manner as specific statements in the statutes nor rulings from appellate courts. The second case that is problematic for association is a Fourth District Court of Appeals case entitled Gallagher v. Seagate of Gulf Stream Condominium Ass’n, Inc., 423 So.2d 640 (Fla. 4th DCA 1983). In the Seagate case, the lessor of a recreation lease offered an optional buyout proposal to all unit owners. The non-purchasing unit owners were then assessed a reduced monthly rent and purchasing unit owners were not assessed any portion of the rent. Because the Condominium Act provides that rent on a recreation lease is a common expense, and because common expenses are shared by all unit owners, the Court concluded that excusing one unit owner from payment of his share of the common expenses violated the statute unless all owners were likewise excused from payment. This case could be argued for the proposition that excusing any unit owners from their payment of interest is likewise unlawful.

Lastly, some associations desire to include a “due of sale” provision as to the payment of special assessments. Such a provision is likely not enforceable as it would create two different assessment collection categories which would likely be in conflict with the statutes and most governing documents. It is not to say, a “due on sale” provision of a special assessment would always be invalid but such provisions must be thoroughly reviewed by counsel.

In many instances, if possible, the inclusion of repayment of a loan/line of credit is best handled through inclusion in the regular annual budget of the association. This is so, because the pitfalls and risks of special assessments as to subsequent title holders is reduced since only the past assessments are, in some cases, limited or extinguished through mortgage foreclosure.

Conclusion

In this climate of fast changing economic conditions, associations must thoroughly consider the options available for financing their needs and how they can repay such obligations in order to best position themselves for financial stability.

Marielle E. Westerman

Marielle E. Westerman

Community Association Law, Becker
Tampa | bio

Not All Approaches are “Created Equal” When Getting Rid of Old Discriminatory Covenants

One of the most important and valuable aspects of a property owners’ rights is that owner’s ability to market and sell their property and to do so free from the fear of “hidden” or outdated restrictions or claims which may have previously burdened their property. What to do when a person raises a claim of a 50-year old unrecorded and unused easement agreement between neighbors executed by way of a “gentleman’s handshake”?  Or, what about the long lost great-grandnephew who arrives home from sea with an unrecorded quit claim deed to the property executed and delivered to him personally by his deceased beloved aunt 40 years earlier?  Chapter 712, Florida Statutes, or the “Marketable Record Title Act” (“MRTA”), was first introduced by the Florida Legislature in 1963 with the goal of protecting owners from certain types of stale and undocumented claims against property which are more than 30 years old from the property’s “root of title” (ie: deed).   Since its introduction, the application of MRTA in helping to clear title to property by automatically extinguishing potentially troublesome real estate claims has done much to provide stability and peace of mind to buyers and sellers alike. (Not to mention the cost and time savings for title companies in conducting and reviewing a 30-year title search as opposed to a 100-year title search!)

For years, state legislatures have struggled with balancing the need to protect an individual’s valid property rights while facilitating the removal of outdated, irrelevant and potentially illegal burdens or claims which undermine the free transfer of property.  This year, the Florida Legislature passed a comprehensive housing anti-discrimination bill (SB 374), which, among other changes, seeks to simplify the state-level administrative process for persons affected by housing discrimination.  In addition to removing the requirement that persons alleging housing discrimination must first exhaust their administrative remedies prior to filing a lawsuit for the same in state court, this bill also specifically amends the provisions of Chapter 712 to automatically extinguish any “discriminatory restriction,” defined to mean  “a provision in a title transaction […] that restricts the ownership, occupancy, or use of any real property in this state by any natural person on the basis of a characteristic that has been held  […] by the United States Supreme Court or the Florida Supreme Court be protected against discrimination under the Fourteenth Amendment [to the US Constitution] or under s. 2 Art. I of the State Constitution, including race, color, national origin, religion, gender or physical disability.”

Unfortunately, the existence and influence of discriminatory use restrictions in real estate transactions were at one time common place, not just in the Florida but throughout the country. For example, the 1948 United States Supreme Court case, Shelley v. Kraemer, 334 U.S. 1 (1948), involved the attempted and unsuccessful purchase of a home by an African American couple in St. Louis, Missouri, in which a neighboring property owner sued to enforce a 1911 race-based restrictive covenant which specifically prevented purchase of the property by “people of the Negro or Mongolian Race.”  In that case, the U.S. Supreme Court found that any state court action to enforce such a blatantly discriminatory restriction was in violation of the Equal Protection Clause under the Fourteenth Amendment of the U.S. Constitution.  

The Shelley case made it clear that state courts cannot enforce discriminatory covenants, however, the case did not go so far as to invalidate the existence of discriminatory covenants in the first place.  In other words, even after the Shelley case, community associations and individual neighbors (in lieu of a community association) were still free to create, impose and abide by such discriminatory restrictions, as long as they did not bring a claim to enforce those restrictions in a state court.   Although rare, the reminders and remnants of this period in American history are still evidenced today.  More specifically, some older associations may have provisions in their Declaration or other governing documents which contain obviously discriminatory restrictions based upon a person’s racial, national, ethnic, or religious identification.  To the extent that these restrictions exist in an association’s governing documents, even if they are not enforced, it leaves an association open to liability for claims of discrimination under the Federal and Florida Fair Housing Acts.

The intention of the proposed amendments to Chapter 712 are commendable and long overdue. However, legislators must be careful not to “throw the baby out with the bath water.”  In other words, the attempt to deal with the rare instances in which these discriminatory restrictions still exist should not have the affect of invalidating other restrictions which may be objective, yet unintentionally discriminatory. For example, does a declaration provision restricting holiday decorations to a particular time frame or holiday season diminish or infringe upon a person’s equal protection rights based upon their religion if that person wants to maintain Christmas decorations year-round?  Or is a pet restriction which prohibits or limits the number of pets a person may have in their unit, automatically subject to extinguishment under MRTA because, on its face, the restriction discriminates against a disabled person claiming to need a service or emotional support animal?

Other states have taken more narrowly tailored approaches to address old restrictions which are blatantly discriminatory. For example, in California, a restriction is found to be discriminatory and thus void as a matter of law after notice, review and confirmation by the county attorney.  In Washington state, the law includes a specific list of examples within the statute of potentially discriminatory provisions which are considered void.   The language of SB 374 as passed provides neither a preliminary or subsequent objective review process, by a court or county attorney, nor a list of examples which would help identify or more specifically define a “discriminatory restriction” which would be subject to automatic extinguishment under the new MRTA provisions.  A more narrowly tailored approach would help curb potentially disingenuous claims from owners that an otherwise legitimate and reasonable restriction is “discriminatory” just because it in some way restricts that owner’s use of their property.  Without further direction from the legislature in the first instance as to the type of provisions that are considered “discriminatory,” an Association’s Board is left to wonder whether they may be enforcing a provision that may ultimately be challenged as “discriminatory” and thus void and unenforceable under MRTA.

 

Shayla J. Mount

Attorney at Law, Becker
Orlando | bio

 

PLEASE NOTE:  THE COMMENTS IN THIS ARTICLE MAY REQUIRE MODIFICATION DUE TO THE FAST MOVING EVENTS IN REGARD TO THE COVID-19 OUTBREAK.  NEW DIRECTIVES AND ORDERS ARE BEING ISSUED ON THE FEDERAL, STATE AND LOCAL LEVEL DAILY.  PLEASE CONISDER THE MOST RECENTLY AVAILABLE INFORMATION WHEN REVIEWING THE BELOW ARTICLE.

 PLEASE CONTACT YOUR ASSOCIATION ATTORNEY IN REGARD TO ACTIONS TAKEN IN REGARD TO AN ASSOCIATION’S EMERGENCY POWERS AND OTHER ACTIONS IN THE INTERESTS OF THE HEALTH, SAFETY AND WELFARE OF ASSOCIATION RESIDENTS.

Our society is facing a unique threat from the SARS-CoV-2, better known as the Covid-19 outbreak, and community associations are on the forefront. Community association boards are questioning what they can do, what they should do, and what can’t they do. The Condominium Act, Cooperative Act, and Homeowners’ Association Act provides certain emergency powers under certain conditions (see Sections 718.1265, 719.128, and 720.316, Florida Statutes). The President, Governor and multiple local municipalities have issued emergency declarations, so there is no question that a state of emergency exists. While the community association emergency powers were created in anticipation of a hurricane, many of the emergency powers apply to an infectious disease outbreak and the Director of the Division of Condominiums, Timeshares, and Mobile Homes has confirmed that Boards may utilize their statutory emergency powers pursuant to the Governor’s Emergency Orders.

The emergency powers allow meetings with reduced noticed and allow notice by any practicable manner, including publication, radio, United States mail, the Internet, public service announcements, and conspicuous posting on the condominium property or any other means the board deems reasonable under the circumstances. Additionally, an association may cancel or reschedule any meeting, name non-directors as assistant officers who shall have the same authority as the officers during the state of emergency. Associations may levy a special assessment without an owner vote. Based upon the advice of emergency management officials, an association may determine any portion of the property is unavailable for entry or occupancy by unit owners, family members, tenants, guests, agents, or invitees to protect the health, safety, or welfare of such persons. However, the association may not restrict owners from their units or parcels.

In the event of an infectious disease outbreak, nearly everyone has heard the term “social distancing,” but how does that term relate to the operation of a community association? Associations should take proactive measures to limit the gathering of large groups of people. Associations should cancel meetings unless the meeting is required to take emergency action, and then to the extent possible, attendance by the board and membership should be made available through telephone or teleconferencing. If the community association must conduct an election, the board should allow and encourage electronic voting. To the extent that physical ballots are necessary, the board should make remote viewing of the counting available by live video feed if possible. Large gatherings can be further limited by canceling social events, including common element or area rentals by owners who conduct social gatherings, and closing common area recreational facilities such and a clubhouse, community gym, and community dining. Elections or meetings may be held outdoors to limit the number of persons in a particular room and to facilitate social distancing.

Your association must consider the health and welfare of its staff and employees. The association should consider granting employees additional emergency paid time off. While not required to grant such paid time off, unless required by contract, the association should weigh the potential cost verse the risk of a sick employee showing up for work out of fear of missing pay. In light of the risk-reward, many associations may find the additional cost well worth the benefit and peace of mind provided to the whole community. Your association should seek to limit physical contact not only between the residents but also the residents and the staff. The association should consider closing the management office and requiring appointments with the manager and conducting appointments by via telephone or teleconferencing whenever possible.

It is likely associations cannot prohibit owners and their guests from visiting or occupying a unit or parcel, although, you should consult with your attorney regarding what limits can be placed on guests or visitors. Your association can implement specific procedures and limit the number of persons in a common areas or elevators, providing hand washing or hand sanitizer stations in high traffic areas. The association should also consider suspending or postponing optional maintenance or repairs to limit the number of persons visiting the property. The association may also place reasonable restrictions on the owner’s contractors. The board should analyze its current situation to evaluate what measures are necessary to protect persons at the property and continually reevaluate its measures to determine the needs of the community. The association can work with its attorney to determine how best to implement rules and procedures to accomplish the association’s needs.

Keeping your property clean is important during normal times but is imperative during an infectious disease outbreak. The Center for Disease Control and the Florida Department of Health has published recommendations for cleaning and disinfecting common facilities, and your association should consult those resources. Your Association should continually review recommendations by the Centers for Diseases Control and the Florida Department of Health.

What Do I do If An Infected Person Resides Or Has Visited My Community?

A major infectious disease outbreak, such as Covid-19, has not occurred since the adoption of the community association concept, so associations are navigating uncharted waters. If the association becomes aware that an infected person resides or has visited the property, the association will ask, do we tell the residents, and do we disclose the name of the infected person. While there is no guidance from the Division, Florida Statutes, or case law, an association should make its residents aware of the infection so that its residents may exercise caution. However, the association should not disclose the identity of the infected person without that persons written approval. While an association may be concerned that persons in contact with the infected person may need to know as to allow themselves to take appropriate measures, your association should be cognizant that disclosing the identity of the infected person may lead to stigmatizing that person or other negative consequences. If your association becomes aware of an infected resident, the association should notify the Florida Department of Health, or other relevant government authority, to apprise it of the situation. The association should heed the advice and instruction of the Florida Department of Health or other government authority. Discuss any situations regarding cases of the virus in your association with your association attorney.

Infectious diseases and its fallout is a novel challenge for Florida community associations. Your association should keep itself apprised of best practices and advice disseminated from the Florida Department of Health, Centers for Disease Control, or other pertinent authority. Additionally, Becker maintains a free website to aggregate information relevant to Covid-19 at https://beckerlawyers.com/covid-19/ I encourage all community associations to visit the website for the latest information and developments for Covid-19 information relating to the community association. As you have heard many times keep WASHING YOUR HANDS!

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

Managers are on the front lines of many challenging issues for private residential communities but managing a pandemic is uncharted territory for most. With the number of cases of Covid-19 increasing in Florida and the fact that Governor DeSantis has declared a State of Emergency, proactive community association management professionals are thinking about how this virus might impact their residential communities and what can be done to blunt the impact.

There is an increased risk of contracting Covid-19 for health care workers, individuals with respiratory and other underlying health issues, as well as the elderly.  Given the demographics in many shared ownership communities and particularly in “55 and Over” communities, managers should be prepared to contend with a fair amount of fear and confusion about the proper policies and protocols to follow to safeguard the community.

One of the first directives from a board may be to seal off the community as much as possible from outside exposure. The board may wish to limit guests, nonessential contractors and may even inquire as to whether or not residents who have traveled to high risk areas (China, South Korea, Iran or Italy) may be prevented from returning to the community.

Your first course of action is to calm some of the hysteria. If you think a directive sounds implausible, illegal or inadvisable, insist on contacting association counsel for a legal opinion regarding the proposed policy.

Overly restrictive protocol that unnecessarily impacts your residents’ freedoms and quality of life is not likely to withstand a potential legal challenge and also creates unnecessary strain in your community.  Prohibiting owners from having guests or undertaking renovation projects is not warranted at this time.

You can suggest that your members voluntarily reduce the number of guests they invite into the community but prohibiting guests altogether is not a viable option.  However, if your community’s governing documents prohibit short term rentals and you are aware that some owners are violating these restrictions under the guise of having non-paying guests when they are really renting out their units on platforms like Airbnb then working with counsel to curb this activity should be a priority. Limiting the amount of transient residents can reduce exposure.

It is also important to remember that not every private residential community will be impacted in the same way by the spread of Covid-19. In multifamily buildings where residents encounter each other frequently in the elevators, corridors and other common areas, the need to address preventative measures is much more pressing than in an HOA with single family homes and no enclosed common areas.

Draconian solutions to a problem often do more harm than good. There is no legal basis upon which you can prevent residents from returning to their homes. There is also no legal basis upon which you can deny a potential purchaser or potential renter who has recently traveled to a high-risk area.

Asking travel-related questions can have a chilling impact on the proposed transaction thereby exposing the association to a potential claim for interfering with a sale or lease.  Be sure to speak to association counsel before revising your application forms or asking intrusive questions during your interviews.

Since Governor De Santis has declared a state of emergency some boards may reasonably believe that the statutory emergency powers found in Chapters 718, 719 and 720 of the Florida Statutes have been activated. However, those powers were enacted to assist boards in dealing with post hurricane issues so applying them to a medical emergency would be a novel approach. Don’t assume that your board can utilize the same emergency powers that are activated in response to damage caused by an event for which a state of emergency is declared; a legal opinion is needed before your board attempts to use any of the statutory emergency powers.

The board must continue to operate and administer the community’s affairs and holding regular meetings is a large part of that function.  Many boards regularly experience poor attendance at their meetings so there is little reason to be concerned about holding meetings unless you know that you have an active infection in your community. Boards that are concerned about having meetings can certainly use technology such as in-house cable channels or Skype to allow residents to view their meetings from the privacy of their homes.

If you wish to minimize the spread of Covid-19 or the flu, use all of your association’s communication channels (newsletter, email or text group, website, direct mail, and in-house cable channel) to remind your residents to wash their hands frequently. You may also wish to place hand sanitizer stations in high traffic areas in the community.  Advise your residents that if they are experiencing symptoms they should let you know and they should avoid using the recreational facilities such as the Clubhouse, pool and fitness room. Management professionals should follow suit and not report to work if they are feeling ill.

Let your residents know that if they are feeling ill or have any questions or concerns they can contact the Florida Department of Health’s 24-hour hotline that can be reached at ‪1-866-779-6121. 

Lastly, make sure you have updated emergency contact information for all owners including any residents who may be particularly vulnerable.  Covid-19 is the latest in a long string of challenges that those of us who serve community boards experience. This too shall pass but in the interim, prudence and caution is warranted.

 

Donna DiMaggio Berger

Shareholder, Becker
Ft. Lauderdale | bio

 

No Time Limit to Record Amendments

Q After the unit owners in a condominium association vote to approve an amendment, is there a time limit or deadline by which the amendment must be recorded with the county? (M.A. via e-mail)

A Chapter 718 of the Florida Statutes, known as the Florida Condominium Act, extensively regulates amendments to condominium documents. However, the Act does not contain a specific deadline for when properly adopted amendments to the condominium documents must be recorded.

Section 718.110(3) of the Act states that amendments to the declaration are effective when properly recorded in the public records of the county where the declaration is recorded. Similarly, Section 718.112(1)(b) of the Act states that amendments to the articles of incorporation or bylaws are not valid unless recorded in the public records of the county where the declaration of condominium is recorded. Further, Chapter 617, the Florida Not For Profit Corporation Act, provides that amendments to the articles of incorporation must be filed in the office of the Department of State.

In my opinion, the recording of such amendments is a ministerial act that the board would be required to undertake within a reasonable time of the approval of the amendment. While there is room debate what is reasonable, I would say absent unusual circumstances (such as an intervening legal challenge or some after-discovered error), 30 days from approval would be a reasonable time frame.

However, there is also no specific prohibition in the statute preventing an association from recording an amendment long after the owner vote. I occasionally see situations where an association failed to record an amendment due to changes in the board or management or other circumstances, and records an amendment a year or longer after its approval. This is obviously not an ideal situation since you might have new owners who did not get a chance to vote on the amendment and who could claim that they bought there unit based on what was in the public records.

Q Can you explain what a “material alteration” is? We have a constant argument in our condominium association, usually driven by one particular owner, over what the board can and cannot do. (J.F., via e-mail)

A This is one of the most common areas of disputes in condominiums. As you probably know, Section 718.113(2) of the Florida Condominium Act provides that there can be no material alterations or substantial additions to the common elements except as authorized by the declaration of condominium. If the declaration is silent, then 75 percent of all voting interests must approve the alteration or addition (there is usually one voting interest per unit).

The standard still used by the courts today comes from a decision from a Florida appeals court rendered almost 50 years ago. In ruling that a unit owner’s closing in a screened lanai with windows was a material alteration, the court stated that the term means “to palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design, or current condition, in such a manner as to appreciably affect or influence its function, use or appearance.” Using this test, appellate courts have ruled that changing the exterior color scheme of condominium buildings is a material alteration, as is changing mansard roof shingles made of cedar to tile type shingles.

As with most rules, there are exceptions, one being the so-called “necessary maintenance exception,” which originates from a series of appellate court cases from the Second District Court of Appeals (which includes southwest Florida). These cases basically say that certain changes can be made without and owner vote when necessary to comply with law or when necessary for the proper maintenance and preservation of the condominium property.

 

Joseph E. Adams

Office Managing Shareholder, Becker
Fort Myers | bio

 

Special Assessments in Condo

Special assessments happen. The unfortunate reality is that during the life of a condominium building some unexpected expenses are going to arise and the association must take steps to fulfill its obligations to the membership.  If the operating budget cannot handle these expenses, and there is not a funded reserve account which can dray the cost, then it is likely that a special assessment will need to be levied.  In Florida, there is a right way and a wrong way to levy special assessments. Levying a special assessment without following the proper procedures could end up costing the association unneeded legal expenses and heartburn; SO DO IT RIGHT THE FIRST TIME!

Levying a special assessment in Florida requires knowledge of certain provisions of the Condominium Act (Chapter 718, Florida Statutes) and your association’s governing documents.  Section 718.112(2)(c)1, Florida Statutes, provides (in material part)

…written notice of any meeting at which nonemergency special assessments, or at which amendment to rules regarding unit use, will be considered must be mailed, delivered, or electronically transmitted to the unit owners and posted conspicuously on the condominium property at least 14 days before the meeting. Evidence of compliance with this 14-day notice requirement must be made by an affidavit executed by the person providing the notice and filed with the official records of the association….Notice of any meeting in which regular or special assessments against unit owners are to be considered for any reason must specifically state that assessments will be considered and provide the nature, estimated cost, and description of the purposes for such assessments.

Breaking down that statutory language amounts to the association having to take the following actions to properly notice a meeting where special assessments will be considered (1) notice of the proposed meeting must be sent to all owners not less than 14 days prior to the meeting; (2) the notice must also be posted in a conspicuous place on the condominium property not less than 14 days prior to the meeting; (3) the notice must explain what the special assessment will be used for and the amount of the expected special assessment; and (4) the person who mailed or delivered the notice to the owners must execute an affidavit which attests to the fact that the notices were mailed or delivered to all owners and the date that the notices were sent.

It is very likely that your association’s governing documents also address special assessments.  It is important to know whether the board of directors has the sole authority to levy special assessments or whether the membership has to approve special assessments.  Regardless of whether the board or the membership approves the levying of special assessments, the notice procedure stated above must be met.  The board of directors needs to be sure that there are no additional procedural measures that the must be followed when special assessments are being considered.  Usually, but not always, any additional measures will be located within the association’s bylaws.

A critically vital, yet often overlooked, aspect of the special assessment levying process is making sure the special assessment purpose is a proper common expense.  Proper common expenses are defined in Section 718.115, Florida Statutes, but can, and usually are, defined within the association’s governing documents.  It is important to review the governing documents prior to embarking on the special assessment path to ensure that what the association would like to raise the funds for is appropriate (if it is not, an amendment to the governing documents may be required prior to levying the special assessment).

If attention is not properly given to the issues discussed in this article, negative consequence may occur.  These consequences may include unit owners refusing to pay the special assessment because they claim that the association did not follow the proper procedure for levying the special assessment or that the special assessment was not levied for a proper common purpose.  Either argument could lead to costly litigation.  Also, many associations use special assessments as collateral for loans taken from institutional lenders.  Those lenders will very likely require the association’s attorney to verify in writing that the special assessment was properly levied, which he or she will refuse to do unless/until the special assessment is properly adopted.

Hopefully special assessments are rare due to prudent financial planning by the association during the budget process.  Ensuring that the association takes the proper steps to levy a special assessment the first time will ease the headache, stress, and cost associated with having to deal with those owners who refuse to pay or lending institutions which require the special assessment lien rights as collateral for a loan to the association.

 

Jay Roberts

Shareholder, Becker
Ft. Walton Beach | bio

 

HUD’s Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records: Where Do We Stand?

A client recently came to me about amending the declaration of the homeowner’s association to prohibit certain specific violent felons, and, in particular, sexual predators from residing in the association. The client posed the question as to whether the proposed amendment would be discriminatory since they had heard that the use of criminal background checks was no longer allowed. The client’s question rose from HUD’s Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records which was issued in April of 2016.

The guidance stated that “[b]ecause of widespread racial and ethnic disparities in the U.S. criminal justice system, criminal history-based restrictions on access to housing are likely disproportionately to burden African Americans and Hispanics. While the Act does not prohibit housing providers from appropriately considering criminal history information when making housing decisions, arbitrary and overbroad criminal history-related bans are likely to lack a legally sufficient justification. Thus, a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.” Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, https://www.hud.gov/sites/documents/HUD_OGCGUIDAPPFHASTANDCR.PDF, April 4, 2016.   

It is important to note that the HUD guidance was issued under the Obama administration. Under the current administration, the Department of Justice, which can enforce the Fair Housing Act in court, does not appear to have focused its enforcement efforts on the guidance as evidenced by the lack of any significant number of cases on the issue. It is also important to understand that the guidance is not law. Rather, it is “an interpretive rule” which clarifies how disparate impact claims  . . . apply to situations where a housing provider takes an adverse action based on an individual’s criminal history.”  Connecticut Fair Hous. Ctr. v. Corelogic Rental Prop. Sols., LLC, 369 F. Supp. 3d 362, 371 (D. Conn. 2019) citing Jackson v. Tryon Park Apartments, Inc., 2019 WL 331635, (W.D.N.Y. Jan. 25, 2019). 

In terms of creating occupancy restrictions related to criminal activity, the following excerpt of the guidance is important:

“In most instances, a record of conviction (as opposed to an arrest) will serve as sufficient evidence to prove that an individual engaged in criminal conduct.29 But housing providers that apply a policy or practice that excludes persons with prior convictions must still be able to prove that such policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest. A housing provider that imposes a blanket prohibition on any person with any conviction record – no matter when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then – will be unable to meet this burden.

***

A housing provider with a more tailored policy or practice that excludes individuals with only certain types of convictions must still prove that its policy is necessary to serve a “substantial, legitimate, nondiscriminatory interest.” To do this, a housing provider must show that its policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.” Id.

In a brief that was filed in October of 2016 in a Fair Housing case, the Department of Justice wrote that “[a]lthough the FHA does not forbid housing providers from considering applicants’ criminal records, it does require that providers do so in a way to avoid overbroad generalizations that disproportionately disqualify people based on a characteristic protected by the statute, such as race or national origin. To that end, the FHA bars criminal records bans that have a disparate impact on applicants based on race or national origin unless they are supported by a legally sufficient justification.” The DOJ went on the write that “[a]lthough maintaining safety and security at a property is an important duty for housing providers, simply invoking the need to ensure “safety” or “security” cannot justify a screening policy that categorically excludes any tenant who has a criminal conviction. A ban on tenants with convictions without consideration of factors like the conviction’s nature, severity, and recency is over-inclusive and lacks any principled way to assess who, if anyone, poses a risk to safety or security in the property.” United States of America’s Statement of Interest, The Fortune Society, Inc. v. Sandcastle Towers Housing Development Fund Corp.  (E.D. N.Y. 2016).  

In a recent case involving this topic, the court found that “[t]here is no evidence that the PHA’s criminal history policy violates state or federal fair housing laws or the Constitution.” The policy at issue in this case was a provision which stated “[a]n applicant would be mandatorily denied if:

Any household member has been convicted of a homicide-related offense, i.e. the killing of one human being by another. This includes murder, manslaughter (voluntary or involuntary), and conspiracy to commit murder. Mandatory denial is required if the homicide related conviction is within the time frames, as described in Appendix D.” Hall v. Philadelphia Hous. Auth., 2019 WL 1545183  (E.D. Pa. 2019).

In another case, involving an individual that was convicted of rape, the court found that “[t]he exclusion of applicants with criminal records exhibiting previous violent conduct is rationally related to this goal. Indeed, the Fair Housing Act states that an individual may refuse to rent to an applicant that would pose a health or safety risk. 42 U.S.C. § 3604(f)(9). Talley v. Lane, 13 F.3d 1031 (7th Cir. 1994).

The takeaway from the guidance and cases is that it remains possible to restrict occupancy in associations based on criminal activity but, critically, in order to have an occupancy restriction based on criminal activity, the restriction must only restrict based on criminal convictions, be limited to specific crimes that reasonably bear on the purpose of an association in “promot[ing] the health, happiness, and peace of mind[1]” of the residents of the association and that takes into account the nature, severity and time since the conviction.

” = “3” “” “” ACTIVE 13324691v.1

[1]  Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. 4th DCA 1975).

[1]  Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. 4th DCA 1975).

 

Marielle E. Westerman

Marielle E. Westerman

Community Association Law, Becker
Tampa | bio

 

Golf Carts and Your Community

Golf Carts and Your Community

Golf Carts, in addition to the obvious use on the golf course, are increasingly being used for short-distance trips in communities as an alternative to the family car, for example, carrying children and pets from home to the club house or recreation center. Golf Carts share an Association’s common element roads with other motor vehicles, bicycles, pedestrians and animals, creating the potential for liability for an Association. Whether or not to allow Golf Carts and how best to regulate them is a decision faced by Associations with increasing frequency. Consequently, Associations are faced with questions such as whether Golf Carts can be operated on private roads in Associations, what laws govern Golf Cart use, and how an Association should regulate and create policy to control the use of Golf Carts in the community. 

Florida law allows Golf Carts to be operated on private roads, subject to the Association’s restrictions and other applicable governing laws. Associations which choose to allow them should implement rules and regulations for their use, including registration with the Association; proof of insurance which names the Association as an additional insured; and mandatory, signed liability waivers for the Association. Importantly, the insurance agent for the Association should be consulted and made aware that Golf Carts are allowed in the community so the Association can be properly protected with appropriate insurance coverage.

In considering and creating a use policy for Golf Carts it is important to understand some of the Florida laws which regulate them. 

Florida law defines a “Golf Cart” as “a motor vehicle that is designed and manufactured for operation on a golf course for sporting or recreational purposes and that is not capable of exceeding speeds of 20 miles per hour.”[1] A Golf Cart driver does not have to have a driver’s license, [2] but must be at least 14 years old to drive on certain public roadways.[3]

A “Motor Vehicle” is defined as “[e]xcept when used in s. 316.1001, a self-propelled vehicle not operated upon rails or guideway, but not including any bicycle, motorized scooter, electric personal assistive mobility device, mobile carrier, personal delivery device, swamp buggy, or moped. For purposes of s. 316.1001, motor vehicle has the same meaning as provided in s. 320.01(1)(a).”[4]  A Golf Cart is a motorized vehicle. 

An “electric vehicle” is defined as a “a motor vehicle that is powered by an electric motor that draws current from rechargeable storage batteries, fuel cells, or other sources of electrical current.” Accordingly, a golf cart running on a rechargeable battery is a type of electric vehicle but not all electric vehicles are golf carts or low-speed vehicles (i.e., those that exceed 20 mph are electric vehicles but not golf carts).[5]

A “Low-Speed Vehicle” is any four-wheeled vehicle whose top speed is greater than 20 miles per hour but not greater than 25 miles per hour, including, but not limited to, neighborhood electric vehicles. Low-speed vehicles must comply with the safety standards set forth in Chapter 49, Code of Federal Regulations and Sections 571.500, 316.2122.[6]  Per Florida law, “a low-speed vehicle must be equipped with headlamps, stop lamps, turn signal lamps, taillamps, reflex reflectors, parking brakes, rearview mirrors, windshields, seat belts, and vehicle identification numbers; must be registered and insured in accordance with Florida Statute 320.02, and titled pursuant to chapter 319; [and] any person operating a low-speed vehicle … must have in his or her possession a valid driver license,”[7] meaning, typically, that the driver must be at least 16 years old.

Golf Carts are vehicles which are designed to not be capable of exceeding 20 miles per hour; therefore, a golf cart is not a low speed vehicle because low speed vehicles have top speeds greater than 20 miles per hour.

A “Utility Vehicle” means a motor vehicle designed and manufactured for general maintenance, security, and landscaping purposes, but the term does not include any vehicle designed or used primarily for the transportation of persons or property on a street or highway, or a golf cart, or an all-terrain vehicle as defined in s. 316.2074.[8] (Emphasis added).  Golf Carts are not utility vehicles because Florida law excludes golf carts from the utility vehicle definition.

A “Recreational Vehicle,” (a/k/a an “RV”), is a “recreational vehicle-type unit primarily designed as temporary living quarters for recreational, camping, or travel use, which either has its own motive power or is mounted on or drawn by another vehicle . . .  As defined below, the basic entities are: . . “travel trailer,” . . . “camping trailer,” . . .“truck camper,” . . . “motor home,” . . . “private motor coach,” . . .“van conversion,” . . .“park trailer,”. . .“fifth-wheel trailer,” . . . .[9]  Golf carts are not recreational vehicles because Florida law defines each type of recreational vehicle separately from the golf cart definition.

Many Associations are surprised to find that Florida law states that any person operating a Golf Cart as defined above, is exempt from obtaining a driver license.[10] Accordingly, Golf Carts can be operated without the requirement of a driver’s license or insurance. However, there is a minimum age requirement.  Golf Carts may not be operated on public roads or streets by any person under the age of 14.[11]  Additionally, Florida law restricts operation of Golf Carts to the hours between sunrise and sunset, and requires Golf Carts to be “equipped with efficient brakes, reliable steering apparatus, safe tires, a rearview mirror, and red reflectorized warning devices in both the front and rear.”[12] 

Operation of golf carts on state and county roads that have been designated for use by golf cart and on self-contained retirement communities is allowed.[13] Many associations have internal roadways which are generally privately-owned roads. Pursuant to Florida law an Association can implement provisions to regulate its internal roadways in the case where the internal roadways are common elements, and the Association has granted its owners a perpetual, non-exclusive access easement over, across, and through the internal roadways.  Golf Carts may operate on private roads subject to any applicable state and federal law, and if there are no Association restrictions prohibiting such operation. 

In the case of condominiums, “condominium property” is defined as the lands, leaseholds, and personal property that are subjected to condominium ownership, whether or not contiguous, and all improvements thereon and all easements and rights appurtenant thereto intended for use in connection with the condominium.”[14] Unit owners own an undivided share of the common elements, i.e., “portions of the condominium property not included in the units.”[15] (Emphasis added).

Accordingly, a condominium association is permitted to promulgate reasonable rules and regulations pertaining to the use of the common elements, common areas, and recreational facilities.[16] Use of that property is subject only to the provisions in the declaration and to those rules and regulations adopted by the association.[17] (Emphasis added).

Absent restrictions on the operation of Golf Carts, it can be argued that such operation is permitted on an Association’s internal roadways. If an Association wishes to regulate, or even permanently ban the operation of Golf Carts within the community, we recommend an amendment to its Use Restrictions to include the desired Golf Cart rules and regulations, including requirements and prohibitions. This paragraph also applies to other types of vehicles, including low speed and electric vehicles.

As noted above, if an Association allows Golf Carts, the insurance agent for the Association should be made aware so appropriate insurance coverage for the Association can be considered.

An Association may be exposed to liability if an accident occurs involving a Golf Cart and the Association has approved the presence of them, or if banned, has not acted to enforce the ban. If the Association has adopted rules governing the use of Golf Carts but has failed to enforce them and an accident resulted, liability could be alleged on the theory of negligence. For example, if the Association implements a rule requiring Golf Carts can only be driven by persons over 16 and carrying a valid drivers’ license, but a younger unlicensed person was driving when an accident occurred, the Association may be sued for negligence due to failure to enforce its rules.

If an Association chooses to implement a policy permitting Golf Carts within its community, we recommend requiring Golf Cart owners sign a liability waiver for the Association, and provide certain information such as the name, address, and phone number of the Golf Cart owner; the names and ages of eligible/authorized drivers; and proof of insurance including the Association as a named insured. Once the policy is adopted, the Association should enforce its terms. 

[1] FLA. STAT. §316.003(27) & § 320.01(22) (2019).

[2] FLA. STAT §322.04(1)(e) (2019)

[3] FLA. STAT §316.212(7)

[4] FLA. STAT §316.003(43)

[5] FLA. STAT. §320.01(36) (2019)

[6] FLA. STAT. §320.01(41) (2019)

[7] FLA. STAT. . §316.2122(2)-(4) (2019)

[8] FLA. STAT § 320.01(42) (2019)

[9] FLA. STAT  §320.01(1)(b) (2019)

[10] FLA. STAT §322.04(1)(e) (2019)

[11] FLA. STAT §316.212(7)

[12] FLA. STAT. §316.212(5)(6) (2019).

[13] FLA. STAT §316.2125 & § 316.212(1)

[14] FLA. STAT §718.103(13) See Silver Beach Towers Property Owners Ass’n, Inc. v. Silver Beach Investments of Destin, L.C., 230 So3d 157 (Fla. 1st DCA 2017).

[15] FLA. STAT §718.103(8); See FLA. STAT §718.108(1)(a)-(1)(d); FLA. STAT §718.106 for a list of what includes common element.

[16] FLA. STAT §718.123 (1).

[17] Id.

discriminatory conduct

Can an Association Be Held Liable for Discriminatory Conduct of Residents?

On a daily basis we read about acts of hatred and discrimination occurring in our society. As residential communities are microcosms of the society at large, associations, too, are increasingly faced with determining how to deal with such issues. Legal precedent has established that associations may be held liable for discriminatory acts committed by its Board members as well as its agents, including the association manager. Pursuant to a 2016 rule enacted by the U.S. Department of Housing and Urban Development (“HUD”), however, associations can also be held liable for failing to “correct and end” discriminatory acts of residents.

Specifically, 24 CFR, Section 100.7(a)(1)(iii), provides that a person is directly liable for “[f]ailing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it.” (Emphasis added.) “Person,” as the term is used in this rule, includes community associations. “Discriminatory conduct” includes unlawful conduct engaged in because of a protected characteristic (race, color, religion, sex, familial status, or national origin). Thus, under this rule, it is possible for an association to be held directly liable where it (1) knew or should have known about discriminatory conduct by one resident towards another resident; (2) had the authority to correct the conduct; and (3) failed to take steps to end the conduct.

This rule raises more questions than it answers which is especially concerning given the potentially dire consequences an association may face if it fails to address the discriminatory conduct of a third-party. For instance, can an association really be expected to “correct and end” the discriminatory conduct of a resident when its enforcement options are limited by statute and the governing documents which may ultimately prove ineffective? HUD’s published response to this issue was that associations regularly rely upon notices of violations, threats of fines, and fines as mechanisms to compel compliance with the community’s restrictions and they should, therefore, use whatever legal means they may take to end the harassing conduct. In practice, however, is a fine or violation letter, or even the inability to vote or use the common areas really going to correct the discriminatory acts of a person driven by prejudice? Further, what if the third-party’s actual activity, even if discriminatory in nature, is not specifically prohibited by the association’s governing documents? Does that mean that the association does not have the “authority to correct the conduct” and would not be held liable under the rule, or does it mean that the association would be required to amend its governing documents to address discriminatory acts by residents? Additionally, does this mean that associations are now responsible for looking at the motivations behind a resident’s actions to determine if they are discriminatory in nature?

Presently, there are no real answers to these questions. Given, though, that the rule requires an association to “take prompt action” the immediate take away is that an association simply cannot ignore a discriminatory situation between residents and would be well advised to consult its community association attorney to discuss the particular facts of the situation and work towards a solution that complies with the current HUD rule.

 

Sara K. WilsonSara K. Wilson

Attorney at Law, Becker
Naples | bio

 

 

Are Signed Election Ballots Valid?

“Are Signed Election Ballots Valid?”

Q: At the recent annual meeting for my condominium there was a hotly contested election. Several ballots were signed by owners, thus no longer making them secret. The association rejected these votes. Should those votes have counted? A.P.

A: Yes, these votes should have counted. This issue was addressed in the arbitration case of Alvarez v. Club Atlantis Condominium Association, Inc. In this case an association rejected ballots because either the owner signed the ballot, signed the “inner envelope”, or signed both. The association claimed this violated the Condominium Act as well as the association’s own voting instructions, all of which required secret ballots and a specific procedure for balloting. The arbitrator stated “…that the secrecy of the ballot is designed primarily to benefit the individual voter. Since it is a personal privilege, that privilege may be waived by the individual voter. The unit owners in this case, by signing the ballots or inner envelopes, waived their right of secrecy provided for in the statute and rules.”

In response to the association’s argument that exact compliance with the statute and rules for voting and balloting was required, so that any ballot not strictly conforming to the statute and rule would be automatically invalid, the arbitrator stated that “substantial compliance is the standard by which to judge the effectiveness of the vote…[and]…the failure of the individual unit owners to preserve the secrecy associated with their ballot does not render their ballots invalid.”

Q: In your recent March column you addressed a question concerning the problems created by short term rentals. Are there any bills pending with the Florida Legislature which impact short term rentals? F.C.

A: Yes, there are several bills currently pending before the Florida Legislature which address short term rentals, including the following:

Senate Bill 824 (filed by Senator Manny Diaz, Jr., Hialeah Gardens) provides that Florida property owners who choose to use their properties as a vacation rental have a constitutionally protected right to do so. This bill preempts certain local regulations and ordinances regarding short term rentals. As an example, local governments would not be able to require inspections or impose occupancy limits on vacation rentals. The House companion to this bill is HB 987.

Senate Bill 812 (filed by Senator David Simmons, Longwood) addresses transient lodging (short term rentals) and conflicts with the Bill discussed above, inasmuch as it confirms that local governments may regulate vacation rentals. This Bill also requires that a valid certificate of registration be displayed in rental listings and advertisements (failure to do so results in a civil penalty ranging from $50-$100/day until compliant).

Senate Bill 1196 (filed by Senator Debbie Mayfield, Melbourne) provides that state regulation of rentals (with regard to the issuance, revocation or renewal of licenses) is subject to a community association’s leasing restrictions regarding same. This Bill would also allow the Division of Hotels and Restaurants to notify an online hosting platform of an advertisement for a shortterm rental which fails to display a valid license number issued by the Division, and the hosting platform would be required remove all advertisements and listings for that property within three business days, unless the listing is brought into compliance. A hosting platform which fails to take such corrective action would be subject to fines up to $1,000 per offense (with each day or portion of a day on which a hosting platform is violating the Division’s directive considered a separate offense) and to suspensions, revocation or refusal of a registration.

Whether any of these bills will ultimately become law remains to be seen, as there are a few weeks remaining of the legislative session. You can access the full text of these bills by going to the Florida Senate website (www.flsenate.gov).

 

David G. MullerDavid G. Muller

Board Certified Condominium and Planned Development Law Attorney, Becker
Naples | bio

 

 

Illegal Rentals

Illegal Rentals Might Mean Jail Time

Owners with illegal unit rentals can end up in jail. At least they can if they live in Miami Beach. The City of Miami Beach is on the forefront of municipalities cracking down on illegal Airbnb rentals. The city announced it will prosecute hosts who provide fake business license numbers in order to list their properties on the site. The penalty is 60 days of jail time and/or a $500 fine. Cities across the U.S. are battling illegal short-term rentals which are believed to negatively impact the quality of life for the neighbors. Property values are affected in condominium associations with a revolving door of unknown occupants.

In Miami Beach Airbnb must now list the host’s business license if the rental is within the City limits. Airbnb will not be required to verify the license numbers are correct and that they tie to the right property. The way it works is that a host must obtain a business license and a resort tax registration number. There are areas within the City which prohibit short term rentals of six months or less. Hosts who use the Airbnb platform to illegally allow short term rentals in areas where they are prohibited face steep penalties of $20,000 for the first violation and $40,000 for the second and $20,000 for each subsequent one.

By requiring a host to post a business license number and a resort tax registration certificate number on their listings, code enforcement officers can more easily police the Airbnb listings. Other short-term rental platforms conform to the business license posting requirement, but they, too, have hosts providing fake numbers.

It is a welcomed breath of fresh air to see a city employing a cutting-edge approach to dealing with such short-term rental violations which oftentimes plague condominium associations. Other municipalities would be well-advised to follow suit as the enforcement efforts not only add funds to a city’s coffers but also provide back-up to the local constituent associations which are having difficulty enforcing their own short-term rental bans. A condominium association would not be delegating its duties to the city, but a team approach would be used to have multiple layers of policing to enforce the rental restrictions against the scofflaw hosts.

 

Rosa M. de la Camara

Shareholder, Becker
Miami | bio

 

condominium elections

Avoiding Election Pitfalls

Many condominium associations are gearing up for, or in the midst of, election season, which presents challenges and questions regarding the election process. Condominium elections that fail to follow the procedures outlined in the Condominium Act, Florida Administrative Code, and the association’s governing documents can result in an election being voided.  Homeowners’ associations should check their governing documents to determine if they have adopted condominium election procedures or condominium-style elections.  Homeowner association governing documents detail the election procedures.  Running afoul of proper election procedures that result in an election that must be “redone” can jeopardize the credibility of the board and manager in the members’ eyes.

Condominium elections are conducted on the date of the annual meeting, regardless if a quorum is present. While a quorum is not required, at least twenty percent (20%) of the eligible voters must cast ballots to have a valid election. Condominium elections must be done by secret ballot or voting machine and may including online voting if the association has provided for and authorized online voting. Proxies may not be used to elect directors but may be used for other matters occurring at the annual meeting, such as voting to waive or partially fund reserves or amendments to the governing documents. Unlike many homeowners’ associations, a condominium cannot use a nominating committee but may create a search committee to encourage eligible persons to run for election.

First, the association must determine the date of its election as the election date controls deadlines for sending and receipt of notices. Often the annual meeting date, or date range, will be dictated by the governing documents, so the association should start with a review of its governing documents. At least sixty days before the election, all owners must be mailed or electronically transmitted, if the owner has opted into electronic notice, the first notice of the election. The first notice must contain the name and mailing address of the association and must disclose the procedure and deadline to consent to electronic voting if the association has provided for and authorized electronic voting. If the association fails to follow the procedures for the first notice, the election must be re-noticed with a new first notice if the election is more than sixty days away; if the election is less than sixty days away, then the election must be rescheduled. If the error is discovered after the election, then the association must conduct a new election.

At least forty days before the election, eligible persons who desire to be a candidate must give the association their notice of intent to be a candidate. U.S. mail, facsimile, personal service, telegram, and email all suffice as notice, and such notice is effective upon receipt. However, the Association should implement procedures so it can verify a candidate timely submitted the notice, and you do not get into a dispute with a prospective candidate who claims to have slipped the notice under the manager’s door at 11:59 pm on a Wednesday evening for a Thursday deadline.

At least thirty-five days before the election, the board candidates may furnish the association with a candidate information sheet. The association may not edit, alter, or modify the content of the information sheet. The Association must furnish the candidate information sheets to each owner, which should accompany the second notice of the election. If the Association fails to send all eligible voters the candidate information furnished by each eligible candidate, then the association must send an amended second notice, which must explain the need for the second notice and include the candidate information sheets, to all owners assuming there is sufficient time to do so.  If there is not enough time, then the election must be rescheduled and a new second notice sent to all owners. If the election has already occurred, then the election is void and must be redone. 

For an election to be necessary, a vacancy requires two or more eligible candidates. If not enough eligible candidates notice their intent to run, then an election is not required and will not be conducted. Since write-in candidates and nominations from the floor are not accepted, the association will know well in advance of the scheduled election if it is necessary. The association should also be aware to ensure only eligible candidates are listed on the ballot.   The association should review its governing documents to determine if board members must be unit owners.  Further, persons delinquent on any monetary obligation due to the association are not eligible to be a candidate for board membership. The date to measure delinquency is the last date notices of intent to be a candidate are due, not the election date. Also, persons convicted of a felony in Florida or in a United States District or Territorial Court, or who has been convicted of any offense in another jurisdiction which would be considered a felony if committed in Florida, are not eligible for board membership unless such felon’s civil rights have been restored for at least five years as of the date such person seeks election to the board. If an election is not required, then the association holds a membership meeting, usually the annual meeting, to announce the names of the new board members and if one or more board seats are unfilled.

If there are more eligible candidates, the association proceeds with the election.  Between fourteen days and thirty-four days before the election, the association sends a second notice of election to all unit owners.  Make sure to check your governing documents for this notice, as although the statutes require a fourteen day notice, your governing documents may require a thirty day notice.  The second notice should contain the candidate information sheets and the association may not endorse, disapprove, or comment on a candidate. The second notice should also include the ballot along with the outer envelope addressed to the person authorized to receive the ballots and a smaller inner envelope in which to place the ballot. The outer envelope must indicate the name of the voter, unit for which the vote is cast, and signature space for the voter.  After the voter completes the ballot, the voter must place the ballot inside the smaller inner envelope and seal the envelope. Then the voter must place the sealed inner envelope in the outer envelope and seal the outer envelope. The voter then signs the outer envelope and returns it, personally or by mail, to the association. Upon receipt, by the association, the ballot may not be rescinded or changed.

Before the meeting, the association may verify the outer envelope information in advance of the meeting. To verify before the meeting, the association must appoint an impartial committee at a duly noticed board meeting. The impartial committee may not contain current board members or their spouses, officers or their spouses, or candidates for the board or their spouses. The committee must meet the day of the election but before the meeting to check the signature and unit identification on the outer envelope against a list of qualified voters. The voter should then be checked off a list as having voted. If a voting certificate is required, then the committee should check to ensure that the owner has placed a voting certificate on file with the association, and the voting certificate holder has cast the ballot. Unsigned outer envelopes, units that require a voting certificate holder but have not submitted a voting certificate to the association, units where the voting certificate holder did not vote, and units submitting duplicate outer envelopes shall be disregarded. The committee should not open outer envelopes until the actual election meeting.

The association does not want to have to search the county’s official records the night of the election to determine which units require a voting certificate and its designee. For a quicker and smoother election process, the association should indicate on a copy of its roster of owners which units require voting certificates and who is designated as the voting certificate holder.

On the day of the election, the association should transport the envelopes containing the ballots to the location of the election. Also, the association should have blank ballots available for distribution to the eligible voters who have not already voted. Ballots distributed at the meeting shall be placed in the same inner and out envelope system used by persons returning ballots before the election. If an impartial committee has not been previously appointed, the association should appoint such a committee at a board meeting before the annual meeting. The impartial committee will then validate the outer envelopes in the same manner listed above. Once the outer envelope validation is complete, the valid outer envelopes may be opened, which should be done in the presence of the owners. Once the first outer envelope is opened, or accessing the electronic votes, the polls are closed, and no additional ballots may be accepted. The inner envelopes must be opened and counted in the presence of the unit owners. Any inner envelopes containing more than one inner ballot envelope must be disregarded.  If a ballot indicates a vote for more candidates than vacancies, the vote is disregarded.  A plurality of ballots case decides the election.

 

Michael Casanover

Michael Casanover, Esq.

Attorney at Law, Becker
Fort Lauderdale | bio

 

master association elections

“Master Association Elections Can Be Confusing,” News-Press

Q: What are the Florida requirements for election of the board of directors and the eventual election of officers in a multicondominium association? Can anyone who is a member of any of the individual boards run for election? Does each association get a single vote? Does each association choose a representative who then becomes a member of the board which then elects officers? How does it work? (J.J., via e-mail)

A: The legal structuring of multi-tiered condominium communities is a rather complex issue, and the manner in which the developer chose to set up the community will be of the most relevance. Developers usually set up multibuilding projects under some sequential development scheme, using “phase” condominiums, “series” condominiums (which then often involve a “master” association and “association property”) and “multicondominiums.”

Since your question mentions “individual boards,” I assume you are really asking about a “master association” since a multicondominium by definition is one association that operates more than one condominium, since there is only one board. In multicondominiums, you still sometimes see bylaws that provide for representational board seats from the various condominiums operated by the association, although it is my experience that the majority follow “at large” voting procedures where any unit owner from any condominium has an equal opportunity to run for the open board seats.

For multicondominium associations created on or after July 1, 2000, Section 718.405 of the Florida Condominium Act requires, among other things, that the voting rights of the unit owners in the election of the directors be described in the condominium documents. Section 718.103(30) of the Florida Condominium Act also states the voting interests of the association are the voting rights distributed to the unit owners in all condominiums operated by the multicondominium association. For matters related to a specific condominium, the term “voting interests of the condominium” is used, sometimes referred to as “class voting.” So for true multicondominium associations electing directors, the simple answer is “follow the documents.”

If, as I suspect, you are actually dealing with a “master association,” the situation is decidedly more complicated. The first question to resolve is whether the association is governed by the condominium statute, or some other statute. At the risk of oversimplification, if any members of the association are not condominium unit owners or their governing representatives (e.g. “subassociations”) you are not covered by the condominium statute. If all members are condominium unit owners or their representatives, you would fall under the condominium statute although there is a different rule for pre-1991 communities where there is a split of authority under the Florida case law.

I have seen many different types of board election procedures for “condominium master associations.” Obviously, the simplest, and most clearly compliant with the statute is the “regular” condominium election procedure where “at large” elections are held and anyone can put their name in to run for the board. Beyond that, there are many different types of procedures I have seen, including where the president of each subassociation is a master board member, where the board of each subassociation appoints the master board member, where the unit owners in the subassociations elect their master board representative, and where all members get to vote on all candidates, even those from another condominium (an “at large” election).

The law in this area is different for condominiums than it is for homeowners’ associations. For condominium master associations, the basic rule is, again, “follow the documents.” However, there are some issues that have not been addressed by the courts, and have proven problematic for the state agency which enforces the statute, such as how you square a particular voting procedure with certain provisions of the statute, such as the provision stating “any unit owner” wishing to run for the board may do so by following certain procedures. This is definitely an area where there are some “holes” in the law which I hope are someday fixed.

 

Joseph E. Adams

Office Managing Shareholder, Becker
Fort Myers | bio

 

Back to Basics

Back to Basics

There are articles every month covering community association issues, which you can find from a plethora of sources. This magazine, other similar magazines, national magazines, newspaper articles, everyone’s favorite blog, attorney resources, Internet, etc. Most of these articles deal with specific issues, such as short term rentals, or emotional support animals, or the latest case law and how it applies in general to associations, and other specific issues. I want to go back to some of the basic tenants of association operations, back to many items that are not discussed on a day to day basis, but which can, and do, lead to problems and issues in community associations.

I want to discuss items that appear to be so basic, board members and managers overlook them, take them for granted, misconstrued how such items are to be handled or just plain forgot how to deal with such basic issues.

Proxies

Limited proxies are required to be used for many things in condominiums, such a voting on proposed amendments, waiver of reserves and waiver of financial reporting requirements, to name a few.  When the limited proxies are turned in to the association, either via mail or in person, they are not required to remain sealed until the meeting, like election ballots.  Proxies should be opened and tallied as they come in; this way the association knows where it stands in regards to the proxy vote before it calls the meeting to order.  This can save the association a lot of time at the meeting that is spent finally opening and tallying all the proxies at the meeting.  You do not need a special meeting, committee, open the proxies in front of everyone at the meeting, etc., as is required with condominium election ballots.

The same theory holds true for proxies in homeowner association elections, which, unlike condominium associations, can be used for the election of directors unless the governing documents provide otherwise.  There is no requirement that homeowner association election proxies can only be opened at the election meeting, unless the governing documents provide otherwise.  Save some time at your meetings – open proxies in advance of the meeting and keep a running tally.

Rules

In my experience board members and managers have more trouble in properly amending and passing rules as any other topic.  There are many subtleties and complexities when discussing an association’s rule making powers, and an association should never attempt to undergo rules changes without consulting its attorney.

The first thing to look at is if the Board has the authority to pass rules and regulations.  While most documents grant such authority, some do not.  If the Board is not granted the authority in the governing documents to pass rules, it has no authority to do so.  So while most documents do contain such authority, just make sure yours do so.

Some documents state that the Board has the authority to make rules regarding the use of the common elements.  Common areas does not include the units.  So if your documents only allow the Board to pass rules regarding common elements, the Board cannot pass rules regarding unit use, such as quiet hours, limiting work hours in the unit, arguably guest restrictions, etc. 

A few association documents require the members to approve all changes to the Rules. Obviously this can be problematic.  It is more of a problem if you have such a requirement, it is not followed, and then an owner challenges the Board’s attempted enforcement of an improperly passed rule.

Assuming the Board has the authority to pass rules, changes in a rule regarding unit use requires a fourteen (14) day posting and written (or electronic if authorized) notice to owners regarding the proposed rule change.  I have seen many rules invalidated because the requirement was not followed.

Finally, as a general overview, any rule must be reasonable.  Who decides what is reasonable?  Ultimately a judge or jury, which is a situation you do not want to be in, where a judge or jury is making such a determination.  Word to the wise – check with your association attorney when considering adopting or amending rules and regulations.

Contracts/Notice of Intent

Obviously most contracts (especially those in excess of $10,000.00) should be reviewed by the association’s attorney before being executed by the Board.  Sometimes a contractor will ask the association to sign a notice of intent, which, according to the contractor, merely puts the contactor on notice that the association intends to sign a contract without actually signing the contract yet.  DO NOT SIGN such a notice of intent without running it by the association attorney first.  Most notices of intent are, in fact, a form of a binding contract, and provide for penalties and payments in the event the association does not, eventually, sign a contract.  Any time a vendor tells you that it is not necessary to have your attorney review such a “simple” document, a red flag show go up in your mind.  I have seen this become more prevalent recently in regard to rooftop leases for cell towers.  I through reading of the notice of intent revealed the association was locking itself into a 99 year lease with the vendor.  I do not think or advise, that any association would want to enter into such an agreement without its attorney reviewing such a document.

Please be extremely careful before signing a one page contract that has print so small on the back of the page that it is hard to read even with a magnifying glass (I am not exaggerating).  Many of these types of “simple” contracts (telephone systems, garbage removal / dumpsters, etc.) are simple only for the contractor, as they lock an association into the vendor’s right of first refusal, automatic renewals, etc.

Running an association is not easy for volunteer board members, and is not easy for trained, professional managers either.  Do not make the job harder than it already is, and open the association up to criticism of legal action, over simple, day to day matters.  Don’t be afraid to ask your professionals for help, and don’t be penny-wise and pound foolish when it comes to seeking legal advice to help with association operations. 

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

borrowing money

Borrowing Money

As buildings age, repairs become necessary. For associations that have not funded reserves, money will be in short supply, leaving two possible options depending on what is permitted under your governing documents: special assess and/or borrow money from a bank.

The problem with special assessing, especially in some communities, is that unit owners may be on fixed incomes and cannot afford a sudden spike in monthly payments. Under such circumstances some associations consider applying for a loan from a bank so that funds are immediately available for repairs or reconstruction but repayment is spread over time, thus lowering the monthly payments for each unit owner.

In considering these issues, I have prepared the following checklist which should be followed to guide you through this process.

  1. Speak to your attorney first. There are a number of legal issues with regard to loans such as, whether you have the authority to borrow; and if you do, whether the Board can make this decision or if a vote of the owners is required. It is also import to consider whether the association has the authority to special assess its members or if a membership vote is required for that as well. These are threshold issues that must be reviewed.
  2. It is important to discuss with your attorney, first, and then with the bank, what type of collateral you will use. Some loans have not been able to be finalized because the Board did not consider this issue in advance. Generally speaking, real property is not used as collateral for community association loans. The collateral is created primarily by providing the bank a lien on your accounts receivables; which includes your assessments and special assessments as well as other income derived from other sources. Most term sheets require that “all” funds be used as collateral without any consideration of the three points listed below because they are not used to working with community associations. Keep in mind the following basics regarding collateral:
    – Reserves accounts and reserve funds can only be used for the purposes for which they were intended, unless the membership vote to use those funds for another purpose. Therefore, as a general rule, you should not use your reserve accounts (without a vote of the membership) as collateral.
    – Special assessment funds can only be used for the purposes for which they were levied. If the special assessment was not levied for the purpose of repaying the loan it should not be used as collateral.
    – Property/casualty insurance proceeds should not be used as collateral. Such insurance is usually purchased for the unit owners and their mortgagees (a general statement in Declarations of Condominium) and, therefore, should only be used for the purposes for which they were intended without the risk that the bank will retain those funds to pay down the loan when you need those funds in the aftermath of a casualty.

Many associations skip any discussions with their attorney during these initial steps which causes a number of problems when the process is too far underway.

  1. The Board should determine which bank it wishes to use for its loan transaction. You should consult with your attorney as he or she has probably worked with a number of banks and can give you a list of banks which handle loans for community associations. The Board will determine which bank has the best interest rate and repayment terms based on its own discussions with these banks.
  2. Provide the bank with all of the financial reports, budgets, audits, etc. that they may require. If you are approved, the bank will provide you with either (or both) of a term sheet and/or a commitment letter. These documents outline the main terms of the loan. Some banks use both; others use one or the other. It is by no means a complete list of terms but it outlines the most salient points and requirements. Your attorney should review the term sheet and commitment letter PRIOR TO execution of those documents. If you don’t take that step you could find your association stuck with the choice to live with bad terms or to walk away from the non-refundable loan commitment fee paid at the time you return this document.
  3. Once the term sheet and/or loan commitment letter have been negotiated the bank will provide you with a set of loan documents. Generally, it is best to let a bank use their attorney to generate the loan documents than to use computer generated documents which are not specifically geared to condominium or homeowner association loans. It should be noted that the association will pay the bank’s attorney’s fees as well as its own attorney’s fees. That is standard practice. Your attorney will review the loan documents to ensure that not only the terms from the term sheet and/or commitment letter made it into the text of the loan documents but that the other terms are also equitable to the association. By way of example, some loan documents will include provisions which makes the officers signing the loans a personal guarantor. We reviewed one loan document recently which stated, that if the person signing is married that his personal assets, to the extent they were separable from his spouse, would be used as collateral. We required the bank to remove that text and all similar text and substituted a clause that stated that the persons executing are doing so for and on behalf of the association and not in his/her personal capacity. I think the reader can see the problem that could have resulted had the association president signed the loan documents without consulting legal counsel.
  4. Revising and negotiating the text of the loan documents is the next step. Depending on the bank and their attorney this can be a quick process or a long drawn out process. That’s why the preliminary steps are important to follow as it can weed out a bank that may not wish to be flexible in changing its documents.
  5. An opinion of counsel letters is required for most, but not all loans. This is the bank’s way of obtaining an extra layer of protection for the repayment of its loan. The opinion is done, with the permission of the association, for the benefit of the bank. The bank will want to know if the association has the authority to enter into the loan and if it took all of the proper steps to approve the loan.
  6. Loan closing is the final step. All of the paperwork is signed and the loan and opinion of counsel letter (if required) returned in to the bank.

Loan documents are very complex documents and should not be handled by the Board without the assistance of legal counsel.

 

Mark D.Friedman

Shareholder, Becker
West Palm Beach | bio

 

key

Why Do They Need a Key to My Unit???

“Every man may justly consider his home his castle and himself as the king thereof; nonetheless his sovereign fiat to use his property as he pleases must yield, at least in degree, where ownership is in common or cooperation with others. The benefits of condominium living and ownership demand no less” Sterling Village Condominium, Inc. v. Breitenbach, 251 So.2d 685, 688 (Fla. 4th DCA 1971). The foregoing case is famous in condominium law circles for being a seminal case in defining material alterations and substantial additions in the context of common elements, but the passage I cite applies to many (if not most) contexts of common interest life. The issue de jour is a fundamental example of the need to yield some exclusivity rights for the benefit of all your neighbors.

Why do they (the condominium association) need a key to my unit? The answer is quite simple: water, fire, and other perils do not care where unit boundaries begin or end. The law recognizes this basic fact. Section 718.111(5)(a) of the Florida Condominium Act states “The association has the irrevocable right of access to each unit during reasonable hours, when necessary for the maintenance, repair, or replacement of any common elements or of any portion of a unit to be maintained by the association pursuant to the declaration or as necessary to prevent damage to the common elements or to a unit.” This provision of the Act recognizes that the association must be able to enter the unit to (1) perform its maintenance obligations and (2) protect the condominium property (both units and common elements).

The DBPR’s Division of Condominiums, Condominiums, Timeshares, and Mobile Homes has recognized that owners must provide the condominium association with a means of access to the unit (e.g. key or punch code) in order to be able exercise the statutory easement rights contained in Section 718.111(5)(a), Florida Statutes. Of course, associations (and the managers and vendors providing services to associations) must exercise this right of access with respect for the occupants of the unit. In non-emergency situations, this means providing appropriate notice to the unit owner of the particular need for access and when the access will occur. In cases where the unit must be accessed in an emergency situation, the association should give a prompt report to the unit owner of why the unit needed to be accessed, who accessed the unit, and what, if any, actions were taken in the unit. Lastly, the statutory easement right discussed in this article should not be conflated in manner to allow an association agent access to a unit for any reason whatsoever. The language of the statute is clear that the purpose of the access is to perform association maintenance functions and to protect the condominium. Any easement for access other than those purposes needs to be stated within the declaration of condominium.

 

Jay Roberts

Shareholder, Becker
Ft. Walton Beach | bio

 

defamation

Say What?

In terminating a third party vendor, a board of directors must be careful in disseminating information concerning the basis for its decision – especially if the decision was due to poor performance or contractual violations by the vendor.

In Florida, a cause of action for defamation can be brought against a corporation, including specifically, a community association. “Defamation” is defined as the unprivileged publication of false statements which naturally and proximately result in injury to another.” Hoch v. Loren, 273 So. 3d 56 (Fla. 4th DCA 2019). “The elements of a claim for defamation are as follows: “(1) publication; (2) falsity; (3) actor must act with knowledge or reckless disregard as to the falsity on a matter concerning a public official, or at least negligently on a matter concerning a private person; (4) actual damages; and (5) statement must be defamatory.” Jews for Jesus, Inc. v. Rapp, 997 So.2d 1098, 1106 (Fla. 2008). “In order for a defamatory statement to be actionable it must be published. Publication requires communication to one other than the person defamed.” Am. Ideal Mgmt., Inc. v. Dale Vill., Inc., 567 So. 2d 497, 498 (Fla. 4th DCA 1990). However, “[o]ne who publishes defamatory matter concerning another is not liable for the publication if (a) the matter is published upon an occasion that makes it conditionally privileged and (b) the privilege is not abused.” Nodar v. Galbreath, 462 So.2d 803 (Fla.1984).

Given that defamation can be a viable cause of action against an association, the question becomes “how can a board convey to the membership the reasons it had for terminating a vendor.” The answer is that the board can convey the information to its members but it must be extremely careful in doing so.

The case of American Ideal Management, Inc. v. Dale Village, Inc. is extremely helpful in understanding how a board of directors can communicate information to its members regarding unflattering information involving a third party vendor. In American Ideal Management, Inc., the board of directors of a community association terminated its management company. Id.  In explaining its decision, the board posted two informational bulletins outlining its reasons for terminating the company. Id. The company sued the Association for defamation. Id. In its defense, the association asserted that the bulletins were subject to a qualified privilege and, accordingly, the association could not be liable for defamation. Id. The management company countered the association’s argument by asserting that a qualified privilege did not attach to the bulletins because the elements of a qualified privilege were not met. Id.

The essential elements of a qualified privilege are (1) good faith; (2) an interest in the subject by the speaker or a subject in which the speaker has a duty to speak; (3) a corresponding interest or duty in the listener or reader; (4) a proper occasion, and (5) publication in a proper manner. The qualified privilege vanishes, however, when the defamatory statement is made with express malice.” Nodar v. Galbreath, 462 So.2d 803 (Fla.1984) (internal citations omitted).

Importantly, the management company was able to produce evidence that the bulletins had been sent to non-member residents. The bulletins had also been posted on the bulletin board of the association’s recreation center. The management company asserted that the recreation center was frequented by non-residents.  The court noted that “the communication reached not only owners and residents of the park who would have a corresponding interest but also there is at least circumstantial evidence that it reached nonresidents. Id. The publication of the bulletins to these non-members opened the door to defeating the association’s claim of qualified privilege. Id.

The ability to successfully assert a qualified privilege is very important as it can defeat a defamation claim because “where a qualified privilege exists, plaintiffs must prove express malice or malice in fact in order to recover. Actual malice, or malice in fact, constitutes an abuse of a qualified privilege leaving the defendant liable.” Schreidell v. Shoter, 500 So. 2d 228, 230 (Fla. 3rd DCA 1986) (internal citations omitted).

“The Supreme Court defines express malice as ‘ill will, hostility, evil intention to defame and injure.’ Nodar 462 So.2d at 811 citing Montgomery v. Knox, 23 Fla. 595, 3 So. 211 (1887). The Supreme Court has unequivocally established that all of the three elements (ill will, hostility and evil intention to defame and injure) and more must be shown. Nodar at 811 fn 8. It is insufficient that the speaker have generalized feelings of hostility and malice towards the Plaintiff. Only if the Plaintiff demonstrates the primary motivation for the statements uttered was express malice, is the privilege overcome.” Boehm v. Am. Bankers Ins. Grp., Inc., 557 So. 2d 91, 94 (Fla. 3rd DCA 1990).

While harm to another may be incidental as a result of an unflattering publication, unless the harm is the primary motivation, malice cannot be established. It goes without saying that a board should not make or publish any communication if the intent of the communication is to harm another.

While the court in American Ideal Management, Inc. remanded the case back to the trial court to determine whether non-residents would have a sufficient interest in the bulletins to warrant extending the qualified privilege to cover publicizing the bulletins to them, it would be very unwise for an association to publish unflattering information regarding a vendor to anyone other than its own members.

Thus, to protect itself from a defamation claim, a board must only make and publish information that is truthful and without malice, that is communicated only to its members and is made for the purpose of informing its members about association business.

 

Marielle E. Westerman

Marielle E. Westerman

Community Association Law, Becker
Tampa | bio

 

Picking a Good Attorney

Is Picking a Good Holiday Wine like Picking a Good Attorney?

As we approach the holidays, we often find ourselves in the hunt for a good bottle of wine to give as a gift. Each year the process of selecting a bottle of wine reminds us of challenges of picking a good attorney. How do we know when we have selected the right wine for the occasion or the right attorney for the project? On reflection, the considerations in making the selections are very similar.

Stores

It seems like we can find wine sold in grocery stores, gas stations, pharmacies, and even in some department stores. Similarly, lawyers are in homes, strip malls, bank buildings, and office complexes, among other locations. Although one may find an excellent wine being sold in a gas station, it is a given that there is a better chance of finding that fine wine in a store that sells wines. So it is with attorneys, you may find an excellent attorney who practices out of his or her home, but you are more likely to find a skilled attorney working in a professional office for a law firm that includes the exact type of law that you need.

Bottles

Wine comes in attractive bottles of different shapes and sizes, some looking traditional and others stylized to catch your eye. Attorneys likewise have a wide variety of appearances, some traditional and some progressive. Can you judge the quality of the wine by the appearance of the bottle and more importantly for our discussion, can you judge the quality of the lawyer by his or her appearance? Human nature tells us that, yes, we want the bottle of wine to look impressive much like we want our attorney to look appropriate for the task. So we conclude that appearance is a factor, whether we like it or not. But, is it true that good wine must be in an appropriately attractive bottle? No. The same is true for lawyers; appearance is not an indication of quality.

Names

As we pass by the wide variety of wines on display, there are names that we recognize. There are names we do not recognize. Sometimes an exotic name creates an aura of being special, but sometimes an unfamiliar name is a signal of a one-off, somewhat out of place, and not likely to impress. For lawyers, it is much the same, as there are names that represent quality while other names are unknown or even out of place as you make your search for an appropriate attorney. Just as it is highly unlikely that an automobile manufacturer will create a wine appropriate for your occasion, it is also unlikely that an attorney whom you know for providing excellent advice in maritime law would provide you with that same high quality advice in community association law and vice versa.

Labels

The label on a bottle of wine may indicate that it was made with the finest ingredients in a faraway country. That sounds exotic and therefore creditable in the world of wine, however is it any different than the label applied in marketing by your prospective attorney indicating his or her traits and legal pedigree? Should you not check on the experience of the wine distiller and the actual experience of the attorney being reviewed? The answer is, yes. The winery creates the label. The lawyer creates his or her marketing. You are not buying labels. You are buying wine or hiring an attorney. Don’t be sold by the label.

Awards and Ratings

Distinguishing oneself in a competitive industry such as fine wines, or the practice of law, is challenging. To complicate matters for the consumer, there are many ratings and award systems and sources, some more reliable and objective than others. Unfortunately, there are some organizations which, for a fee, will publish and promote a wine or a lawyer with virtually no vetting process. Just as when selecting the right wine, the consumer should view such recommendations with healthy skepticism and scrutiny, look beyond the appearance created by accolades. The attorney best suited to handle your issue should be specifically experienced in the right legal specialty, rather than in a “blend” of general experiences which do not provide the nuanced knowledge that is critical to properly handle legal challenges. Look beyond the shiny appearance of awards and ratings and judge the lawyer by his or her fitness and experience to handle your legal issue, much like you should judge the wine for the occasion.

Descriptions

Descriptions abound in the advertising of law firms as well as wines. Is your attorney “aggressive?” Is your wine “bold?” Do you want those characteristics, and do you even know what that means, practically speaking? Descriptions of a lawyer’s characteristics, as in wine, may be somewhat helpful and illustrative of what to expect; however, a description is just based on someone else’s opinion, generally someone trying to persuade the consumer. Choosing the right attorney should not be based on passionate, descriptive language alone. To ensure the right fit, do not be solely convinced by descriptions; look for an attorney with the depth of quality only created through experience. The same, they say, for wines. We are skeptical of a 2019 vintage wine, probably with good reason.

References 

We like to ask the clerk in the wine store to recommend a bottle. We can accept or reject the clerk’s recommendation, but it is almost certain that the clerk behind the counter in the wine store knows more about wines than we do. In picking an attorney to represent a community association, seek references from people who know community association attorneys. The best references come from people who work in the area of law. He or she may be a judge, a lawyer, an accountant, a community association manager, or an engineer, if that person has regular contact with attorneys providing services to community associations. You are free to accept or reject those references. Consider the source and his or her opportunity to know quality just as we consider the recommendations of the clerk behind the counter.

Age

A newly minted attorney and a newly bottled wine may have a lot in common. They look good on the outside, but it is what’s inside that counts. Does your wine just taste like grape juice, or is it a carefully aged delicacy befitting the occasion for which it was chosen? Is your attorney fresh out of school, eager to aggressively represent you, but without experience applicable to your issue? Or, has your attorney dealt with your specific problem before? If so, how many times and under what circumstances? Has your attorney successfully reached settlements for other clients dealing with your legal problem?

Keep in mind that passing the bar exam and obtaining a license to practice law is an accomplishment as is bottling a brand new wine. Exciting and long-anticipated, to be sure; however, passing the bar exam only demonstrates a grasp of the minimum foundation of understanding needed to practice law; and sometimes, a new bottle of wine is just fermented grapes. Experience, specific to the applicable area of law, is what provides the breadth and depth to successfully resolve your legal issue.

Free Samples?

The wine distributor’s representative in the grocery store will happily give you a taste of wine for free, hoping that you will buy the bottle. However, you can be certain the free sample is not from the carefully aged bottle of reserve. A fine bottle of wine does not need free samples to sell itself. This is a good example of “you get what you pay for,” and similarly applies to legal representation. When a lawyer offers below-market prices, or “freebies” to handle ancillary issues if you also bring other work to their firm, you may find yourself getting unfavorable outcomes, which can require exponentially more expensive fixes later, or worse, result in losing an opportunity forever. Picking an experienced attorney, qualified with the depth of knowledge to advise you correctly from the beginning, will not be free, or even cheap. However, in the long run, in legal representation, you get what you pay for and choosing an attorney because he or she is inexpensive (or free) may leave you disappointed and possibly paying heavily later on.

Cost

Does anyone want to give a cheap bottle of wine as a gift? We suspect that you would prefer to have an appropriately priced bottle; one that represents you well. The same concept applies to attorneys. A cut rate attorney is easy to recognize, like the cheap bottle of wine, and in the end neither provides value. Yet we know that many of us could not tell the difference between an expensive wine and a moderately priced quality wine. Here, there may be a difference. The attorney working at the “cheap” rate may take longer to accomplish the task. Assuming that the task is completed as it should be and ends up costing much more than the “expensive” attorney who charges that rate because he or she is worth it and does get the task completed efficiently, which attorney would you choose? That attorney may have years of experience, legitimate credentials that set him or her aside from his or her peers, and with experience that yields efficiency and quality and after all, isn’t that what you are looking for in your lawyer?

So, no easy answers, just considerations. Given the market place is crowded with so many bottles to choose from, pick the best quality that you can afford, based on doing your homework before you enter the store and do the same before you hire the lawyer.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

 

Carolyn Meadows

Attorney at Law, Becker
Tampa
 | bio

 

sea

Sea Level Rise: Forewarned is Forearmed

We have all heard the environmentalists’ cry about the Dead Sea shrinking. Water levels are falling at an average rate of three feet per year due to evaporation and human diversion of tributaries. The opposite conundrum sea level rise is not occurring quite as rapidly but is equally as concerning.

Sea-level rise is an important issue which cannot be discounted by Florida communities, especially coastal ones, if they want to be resilient and prepared for expected adverse effects. The statistics for Florida are not encouraging. Miami has the most to lose in terms of financial assets of any coastal city in the world, just above New York City. Florida has more residents at risk from sea level rise than any other U.S. state. Relative sea levels in South Florida are roughly four inches higher now than in 1992. The National Oceanic and Atmospheric Administration predicts sea levels will rise as much as three feet in South Florida by 2060.

Thus far, government and municipal action seems lacking. Some cities have approved bonds for measures such as shoreline stabilization, storm drainage improvements, elevating sea walls, and raising roads. Municipalities also need to address legal issues, such as changing building and zoning codes, eminent domain, land takings, and tax incentives for developers, among others.

In addition, the legal implications of sea level rise in Florida, at every level, are vast. When the state or local municipalities enact stricter building elevation requirements and developers elevate new construction, what will happen to adjacent properties which have lower elevations? This would likely cause water run-off and flooding on adjacent parcels which may, in turn, create private litigation in neighbor vs.  neighbor  disputes  based  on  negligence  or  nuisance concepts. Suddenly your older condominium is being flooded by water run-off from the new building next door which is at a higher elevation. Aggrieved owners might sue local governmental agencies, planners, realtors, and even their own real estate transactional attorneys.

Condominium and homeowner associations are quasi-governmental microcosms which also need to be proactive to protect their residents’ property values. Boards may likewise face liability for failing to take preventive measures to avoid water intrusion. There are important factors for boards to consider, such as planning for the financial impact of mitigation efforts through reserve funding. A reserve study can help plan for necessary capital improvements and address underground facilities such as garages and drains. If your community is on the water, consider raising the seawall. If your community is undergoing a 40 or 50 year recertification, consult with your electrical contractor to see if any adjustments can or should be made to low-lying electrical wiring and outlets even if not yet required by code. Review the municipal codes which affect your community. Boards should begin taking proactive steps now to address future needs.

While sea level rise is nowhere near as dramatic as the Dead Sea’s sea level drop, there are many factors which need to be considered by Florida communities to mitigate the adverse impacts. The question with tides is not whether they’re rising, but when will a significant impact be felt? Efforts and energies can be focused on beginning to prepare for your community’s future needs, including addressing a myriad of legal issues.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

tree-roots

The (Tree) Root of the Problem: Who is Responsible when Tree Roots and Branches Cause Damage?

They say good fences make good neighbors. But trees, on the other hand, have been known to strain the relationship between neighbors. Damage and disruption amongst neighboring lot owners, caused by tree roots and branches, is a very common problem in Florida. Not surprisingly, Florida courts have addressed this issue and have carved out a very specific rule of law on this topic.

There are two theories which have been brought before Florida courts in an attempt to hold adjacent property owners liable for damage caused by trees encroaching past the property line. They are actions for nuisance or negligence. However, neither action has succeeded. The Third District Court in Vaughn v. Segal, 707 So.2d 951 (Fla. 3d DCA, 1998), held that there is no cause of action in such circumstances in either nuisance or negligence.

In Richmond v. General Engineering Enterprises Co., 454 So.2d 16, 17 (Fla. 3d DCA, 1984), the plaintiff sued for money damages based on the alleged “negligence” of the defendant in permitting branches of a ficus tree growing on its property to extend over and onto the next lot where the plaintiff’s home was located. While the Court acknowledged that there was substantial authority to the contrary in other States’ jurisdictions, the Court took the position that in Florida, “in view of the undoubted right of the land owner himself to cut off intruding roots or branches at the property line, no such action may be maintained.”

As for nuisance, the rule of common law and the majority rule in this country, which is followed in Florida, is that a possessor of land is not liable to persons outside the land for a nuisance resulting from trees and natural vegetation growing on the land. The joint property owner to such a nuisance, however, is privileged to trim back, at the adjoining owner’s own expense, any encroaching tree roots or branches and other vegetation which has grown onto this property. While the complaint claimed certain damages for a nuisance allegedly created by the trees growing on the neighboring land, such damages were not recoverable under the established law of this State. Gallo v. Heller, 512 So.2d 215 (Fla. 3d DCA, 1987).

As a result of the above referenced rule of law in Florida, many community associations refuse to get involved in these types of “owner versus owner” disputes. The law gives owners the right and obligation to have the tree roots and branches cut at the point when they “cross over” onto their property.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

FHA

FHA Issues New Rules Regarding Condominium Approvals

Many of you are aware that the Federal Housing Administration (FHA) insures financing to owners for their purchase of a home.  These homes include condominiums in condominium associations.  FHA loans are great for new home buyers, or those who cannot afford a large down payment, as they typically require a lower down payment.  In regard to condominiums, the entire condominium association / building has to be approved by the FHA in order for applicants to qualify for an FHA insured loan. 

Some condominium associations go through the exhaustive FHA approval process, some choose not to do so.  Some associations want to be FHA approved to facilitate sales; some associations do not want to be FHA approved because they do not like the low down payments and low initial owner equity in the units.  If an association is not FHA approved, the FHA will not insure financing in that community.  If a prospective purchaser wanted to move into a non-FHA approved building utilizing an FHA insured loan, they could not do so, and had no options, other than securing other than FHA insured financing, to buy in that building.

In an effort to promote affordable and sustainable homeownership, the FHA recently published a new final regulation and policy implementation guidance, establishing a new single unit condominium approval process.

Previously, if you wanted to purchase a condo using an FHA loan, you had to choose a unit that was located within a previously approved condominium project. The entire building had to be FHA approved before a person could buy an individual unit with an FHA-insured mortgage loan.

The new FHA rule introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA insured financing.  The new rule also extends the recertification requirement for approved condominium projects from two to three years, and allows more mixed-use projects to be eligible for FHA insurance.

The new rules create a pathway for an individual owner to get an association FHA qualified.  This owner initiated pathway did not exist before, as only the association itself could apply for, and become, FHA qualified.  The new FHA rules do not affect any possible restrictions in an association’s governing documents, and there is nothing in the new rule to imply that an Association must accept an FHA loan (although an association should certainly to check with its attorney if contemplating not to do so).

According to HUD Secretary Ben Carson, these FHA rule changes could be especially helpful for younger first-time buyers, as well as some seniors:

“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families … Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”

According to the press release, as of October 15, 2019, individual units in a non-FHA approved association may be eligible for Single-Unit Approval if the individual condominium unit is located in a completed project that is not FHA approved and, for condominium projects with 10 or more units, not more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

While this new rule opens up a pathway for an individual to qualify a community, the process is almost as complicated as the association qualifying, which may make it challenging for an individual owner to process such an application. 

The HUD press release goes on to state

“The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.  As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.”

Both associations and potential buyers need to be aware of these changes in the FHA approval process.

The HUD press release can be found at https://www.hud.gov/press/press_releases_media_advisories/HUD_No_19_121, last viewed 1:12 pm on August 20, 2019.

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

construction

When Construction Occurs Next Door, Your Board Needs to Get Involved Early!

It’s likely that at some point during your community’s lifespan, new construction will occur nearby and the impact on your residents will vary both short and long-term depending on the steps your Board takes early in the process. Sometimes new construction is welcomed enthusiastically by the members of an established community but more often than not, nearby construction strikes dread in the hearts and minds of many residents and board members who fear noise, disruption, debris, impaired views and incidental damage.

Communities facing the prospect of new construction next door should not go “on the attack” but should engage experienced counsel to help them navigate the construction process, set realistic expectations for their residents, reach agreement on protective measures to be provided by the contractor/developer, and receive compensation where appropriate.  If handled properly, the new construction can do much to enhance your community’s value. If mishandled, you could wind up with new construction that encroaches on your land, damages your landscaping and exterior amenities, adversely impacts drainage, and, in severe cases, causes structural cracks in your buildings.

Naturally, the individuals or corporate entity driving the new construction want your community’s support to sail through the governmental approval process. Boards who feel that their concerns and issues have been properly addressed by the developer next door will be much more likely to provide that support.

There are many factors to discuss and consider with the developer including the intensity of the proposed use, traffic, compatibility issues, construction management, easement agreements, rezoning, and other material issues.  Municipal Land Developer Codes usually require public participation so starting a dialogue early in the process affords your Board with an opportunity for your community and the developer to speak with a unified voice and to address major issues and concerns before being heard in a public hearing.  The developer will certainly want to address your concerns in private rather than face them at a public hearing.

Some common issues that should be addressed include:

  • Debris
  • Nuisance
  • Structural impact
  • Encroachments (both on their side and yours)
  • View Impairment
  • Buffering and noise mitigation measures
  • Trademark Infringement (depending on the name of the new community, shopping center, etc.)
  • Security

These kinds of negotiations may take six months to well over a year and will include your counsel attending and speaking at multiple Board meetings, Developer Town Halls, Municipal Public Hearings, researching City Zoning and Land Use, reviewing Mas6ter Plan Design guidelines, clarifying construction issues/timelines and negotiating the design to take into account view-lines, setbacks, traffic, loading, etc.

If you serve on an association board, you well know that directors are sometimes held responsible by some community members for issues completely outside your control. Don’t let neighboring construction become another boiling point in your community.

 

Donna Berger

Shareholder, Becker
Fort Lauderdale | bio

 

insurance puzzle

Putting the Puzzle Together Regarding Insurance Coverage and Exclusions

In those pages and pages of insurance documents detailing your available insurance coverage you’ll also find exclusions explaining what is not covered in your insurance policy. There might, however, be some exceptions to those exclusions that should keep the claim from being excluded under the policy. Confused yet?

That knotted paradigm is illustrated in a case that was decided by the Florida Supreme Court. In John Robert Sebo v. American Home Assurance Company, 208 So.3d 694 (Fla. 2016), the Florida Supreme Court was asked to determine whether coverage existed under an all-risk policy when multiple perils combined to create a loss and at least one of the perils was excluded by the terms of the policy. The court concluded that coverage did exist in such a scenario. In other words, the Florida Supreme Court decided that insurance companies should not deny coverage for property damage just because it had more than one cause so long as the policy covers at least one of the causes.

Let me explain. John Sebo, the insured homeowner, had an insurance policy that covered rain and hurricane damage but not damage from construction defects. His house was damaged during Hurricane Wilma. The investigation showed the damage was because of the rain and construction defects.

The Florida Supreme Court noted that it was “confronted with determining the appropriate theory of recovery to apply when two or more perils converge to cause a loss and at least one of the perils is excluded from an insurance policy.” Two competing theories had to be analyzed in reaching a final decision. The first, the efficient proximate cause (EPC) theory provides that the peril that set the other one in motion is the cause to which the loss is attributable. This meant that in Sebo a trial would have been required to determine which peril was set in motion first.

However, the Florida Supreme Court rejected the application of the EPC theory, preferring the application of the concurrent cause doctrine (CCD).  Under this theory, coverage may exist where an insured risk constitutes a concurrent cause to the loss even when it was not the prime cause for the loss.

Ultimately, the Court in Sebo concluded that there was no reasonable way to distinguish the probable cause of the property loss since the rain and construction defects acted in concert to create the destruction. The Court then looked at the plain language of the insurance policy and found that the policy’s plain language did not preclude recovery.

This confusing paradigm is also illustrated in the case of Bartram, LLC v Landmark American Insurance Comp., 864 F. Supp. 1229, (N.D. Fla. 2012).  That case centered on a dispute between an apartment complex and several insurance carriers. The apartment complex sustained significant water damage caused by faulty workmanship in the building’s construction. While the apartment owners acknowledged that the costs to repair the faulty workmanship itself was not covered, the water (a Covered Loss) that infiltrated and damaged the building should be covered because of the exception. Of course, the insurance companies disagreed and argued that the apartment owners were not entitled to coverage. Ultimately, the Court disagreed with the insurance companies and concluded that the apartment owners were entitled to insurance coverage.

These cases (Sebo and Bartram) illustrate the importance of understanding not just your available insurance coverages but also your applicable exclusions. While you may have coverage for, say, property damage from a hurricane, the insurance company may argue that coverage does not exist as a result of some exclusion in your policy such as faulty workmanship or wear and tear. While the cases I’ve discussed here suggest that in a scenario like that you should be afforded coverage, the fact remains that your insurance company may deny coverage as a result of the exclusion contained in your policy and its “no” should not be readily accepted. Understanding what is and is not covered under a policy is key, as is having an attorney experienced in dealing with carriers in these situations.

 

Hugo V. Alvarez

Shareholder, Becker
Miami | bio

 

Indemnity and the Association By Sanjay Kurian, Esq.

Indemnity and the Association

Indemnification. A scary word and a confusing subject. However, almost all contracts for services contain requirements for one party to indemnify the other from damages. Often these clauses are in small type of allegedly “standard form” agreements. For purposes of today’s blog, let us discuss non-construction services. Indemnification for construction contracts is governed by section 725.06, Florida Statutes which is not applicable to non-construction contracts. Look at any contract you have with a service provider and inevitably the following language, or similar, will appear:

Party A agrees to the fullest extent permitted by law, to indemnify and hold harmless Party B, its officers, directors, members and employees from all liabilities, damages, losses and costs, including but not limited to reasonable attorney’s fees, to the extent caused by the negligence, recklessness or intentional wrongful conduct of Party A.

In layman’s terms, this means that one party (the indemnitor) has contractually obligated itself to protect a second party (the indemnitee) against damages which may result from the indemnitor’s conduct. These damages would include any foreseeable damages resulting from a negligent act or omission, including damages to person or property. Sounds easy enough. However, who is indemnifying whom?

The language most often seen in these contracts is similar language to the form language above:

Association agrees to the fullest extent permitted by law, to indemnify and hold harmless contractor, its officers, directors, members and employees from all liabilities, damages, losses and costs, including but not limited to reasonable attorney’s fees, to the extent as a result of any work done at the Condominium by contractor.

The Association has agreed to indemnify the contractor for work done at the condominium by the contractor. It requires the Association, which does not control the project or those working on it, to protect the contractor. Why would the Association agree to this? Think about the fire alarm monitoring, elevator maintenance or other monthly service provider. Many of these companies perform services, which if done improperly, could result in damage to persons or property and ultimately claims against the Association. Courts will enforce such agreements to indemnify, even if it is a bad deal for one side.

All service contracts should require the contractor to indemnify the Association. If the contractor will not negotiate the term, then another contractor should be considered. These terms, like most contract terms, can be negotiated even if the contractor says such terms are “industry standard.” The Association should be protected from sloppy safety procedures, carelessness or negligence of the contractor. Finally, remember that indemnification in the absence of adequate insurance may be illusory, but that is a subject for another day.

 

Sanjay Kurian, Esq.

Board Certified Construction Law Attorney, Becker
Tampa
 | bio

 

Attorney-Client Privilege When Board Members Sue the Association

Attorney-Client Privilege When Board Members Sue the Association

Many Associations have just completed their election season and find that a person or persons newly elected to the Board are involved in a case being defended or prosecuted by the Association. Now what? Clearly, a conflict of interest exists but participation in a lawsuit against the Association is not one of the factors that makes you ineligible to sit on the Board. Therefore, the person(s) can take their seat on the Board so long as every other aspect of the election process was valid. The Board however still needs to take measures to ensure that the strategy and legal opinions obtained from counsel on behalf of the Association continue to be privileged. This can be accomplished in a few ways. One option is for the person(s) with the conflict to recuse themselves from participating in any meeting/vote regarding the lawsuit. Their fiduciary duty to the Association would be fulfilled but what if that means there is no quorum of the Board to make a decision? Also, they would have to know of the meeting in order to recuse themselves and this would tip them off that something was up? The better alternative is to have an open Board meeting for the sole purpose of creating a committee of members of the Board who do not have the conflict of interest. This meeting would be open to all members of the Board and the Association. The persons with the conflict should be allowed to vote on the issue and their fiduciary duty should dictate that they vote in favor of such a committee. During this meeting the Board should also vest all powers necessary to allow settlement or resolution through appeal in the committee. Otherwise, if the committee continually had to return to the Board for more authority, the person(s) with the conflict would be able to deduce what was going on and the creation of the committee would be for naught.

If the Association is one in which the majority of the Board makes up the person(s) with the conflict, there will not be enough disinterested Board members to create a committee which could handle the litigation. The option then is to have non-board members partake in the committee. In this instance, the Board should decide how many additional persons are needed. My recommendation would be if you have a 5 person Board with 3 persons having a conflict, that you add 3 additional non-board members to the committee. The most diplomatic way to do this would be to have an open Board meeting for the purpose of the creating the committee but advising on the notice that the Board will seek 3 volunteers to sit on the committee from the non-Board members. During the meeting, the Board would explain the purpose of the committee, the fiduciary duty to the Association and the requirement that the privileges afforded a litigation be preserved despite any friendship with the person(s) having the conflict. For obvious reasons, relatives of the persons with the conflict should not be allowed to sit on the committee. Should only 3 volunteers seek to be part of the committee, nothing else is necessary. Should however more than 3 volunteers seek to be part of the committee, the Board should vote on each one until the 3 spots have been filled. Another option would be to have the members vote on the volunteers.

Please note, if your governing documents provide another procedure for setting up a committee (such as landscaping, architectural, etc.) you may want to follow that procedure all together. Similarly, if the governing documents require that you have a litigation committee, then you need follow that procedure, always ensuring that the person(s) with the conflict do not sit on the committee. Regardless of how this committee is seated, the first thing to do is set a closed meeting with counsel. This will permit the attorney to meet the persons she will be dealing with during the litigation. Additionally, the attorney will be able to explain the duties of the committee as they pertain to the Association in terms of the suit and bring the committee up to speed on what is going on in the case. The attorney will also be able to get an understanding of what the committee wants in terms of resolution (i.e., settlement or trial). One last thing, when creating the committee, it should be clear that the committee is created solely for the purpose of the case at hand and all that goes with it (counterclaims, third party claims, etc.) and that it dissolves immediately once the case is resolved. Again, if your governing documents create a method for dissolving a committee, the Association should follow those procedures.

 

Marilyn Perez-Martinez

Attorney at Law, Becker
Miami | bio

 

Former Felon Board Member Eligibility

Former Felon Board Member Eligibility

Fla. Stat. §§ 718.112, 719.106 and 720.306 each contain a limitation on an individual’s ability to serve on a community association board of directors if the person is a convicted felon. Specifically, a convicted felon is not eligible to serve on a community association board “unless such felon’s civil rights have been restored for at least 5 years as of the date on which such person seeks election to the board.”

The restoration process for voting rights and a person’s eligibility for such restoration were previously dictated by the rules of clemency that each Florida governor set. Prior to Governor DeSantis, Governor Scott had adopted clemency rules that that differed from prior rules in that:

People with nonviolent convictions had to wait 5 years after they completed all of the terms of their sentence before being allowed to apply for restoration of civil rights.

The 5-year period noted above would reset if an individual was arrested for even a misdemeanor during that five-year period, even if no charges were ever filed.

Certain felons were required to wait seven years before being able to apply to have their voting rights restored, and had to appear for a hearing before the clemency board.

A provision allowing people to apply for a waiver of the rules, in place under Bush and Crist, was eliminated.

Under this system, the Florida Commission on Offender Review had a database that one could search in order to determine if a person’s voting rights had been restored. This database can be accessed at: https://fpcweb.fcor.state.fl.us.  Presently, this database can be used to determine whether a convicted felon can serve on a community association’s board of directors.

The foregoing process has been upended by the passage of Amendment 4 in 2018. Amendment 4 provided that:

Article VI, Section 4. Disqualifications.—

(a) No person convicted of a felony, or adjudicated in this or any other state to be mentally incompetent, shall be qualified to vote or hold office until restoration of civil rights or removal of disability. Except as provided in subsection (b) of this section, any disqualification from voting arising from a felony conviction shall terminate and voting rights shall be restored upon completion of all terms of sentence including parole or probation. (b) No person convicted of murder or a felony sexual offense shall be qualified to vote until restoration of civil rights.

The intent of Amendment 4 was that a former felon’s voting rights would be automatically restored upon completion of the felon’s sentence. Thus, a former felon would not have to go through the clemency process by applying for restoration of voting rights.

This year the Florida legislature enacted Fla. Stat. § 98.0751 to provide additional provisions related to the qualifications for restoration pursuant to Amendment 4 as well as the process for an election supervisor to determine eligibility. Notably, the Legislature also enacted Fla. Stat. § 98.0585 which provides that out of “public necessity that information related to a voter registration applicant’s or voter’s prior felony conviction and whether such person has had his or her voting rights restored through executive clemency or pursuant to s. 4, Art. VI, of the State Constitution, which is held by an agency and obtained for the purpose of voter registration, be confidential and exempt from public records requirements and be used only for purposes of voter registration.”  Accordingly, a voter registration form submitted to a supervisor of election is confidential and not subject to disclosure. Fla Stat. § 98.0585.   

The difficulty that community associations will face is that it is not easy to determine whether a person has completed their sentence as defined by Fla. Stat. § 98.0751 so as to have their voting rights automatically restored.

First, there is not a central database accessible by the general public of judgments of conviction.  One would have to know the county in which the conviction occurred.  Once that information is obtained, the next difficulty is that many judgments of conviction are not readily viewable online through a clerk of court’s online record viewing system thus requiring obtaining the judgment of conviction from the clerk of court. Lastly, while the determination of whether a person has actually completed their prison sentence may be relatively easy to make, whether that person completed any obligation for restitution and the repayment of court costs and fees is not. 

This determination will likely require the assistance of the association’s attorney. While the effects of Amendment 4 will not be fully felt for a few years, the problems in readily being able to determine a potential director’s eligibility may warrant the creation of a database such as the one maintained by the Florida Commission on Offender Review or a legislative change that would make determining whether a convicted felon is eligible to serve on a community association board of directors more straight forward.

 

Marielle E. Westerman

Marielle E. Westerman

Community Association Law, Becker
Tampa | bio

 

Are E-Mails Official Records?

Whether you live in a condominium, cooperative or homeowner association, the Statue governing your community defines the term “official records”. In defining official records, each Statue has a catch-all provision.

All other written records of the association not specifically included in the foregoing which are related to the operation of the Association.

Sections 718.111(12), 719.104(2), and 720.303(4), Florida Statues.

Questions abound as to whether e-mails are official records. The Department of Business and Professional Regulation (“Division”) has ruled that e-mails to an association can be considered official records and are therefore subject to inspection and copying by owners or their representatives. The question is, what are e-mails “to an association?” Are personal e-mails between board members official records? What about an owner’s e-mail to a board member’s email address and the board member’s response to that owner – is that considered an official record subject to another owner’s inspection and copying?

Division rulings have held that e-mails to an individual director or to all directors as a group, addressed only to their personal computers are not written communication to the association and therefore not considered an official record. This is because there is no obligation for a director to turn a personal computer with any regularity, or to open and read e-mails before deleted them. Irzarry v. Laguna Point Condominium Association, Inc., Arbitration case No. 08-05-2791 (April 10, 2009/Final Order). This point was further clarified in the arbitration case of Humphrey v. Carriage Park Condominium Association, Inc., Case NO. 08-04-0230 (March 30, 2009/Final Order/Campbell), where the arbitrator stated that “any e-mails received by, stored upon, or otherwise contained upon or within the personal computer devises (e.g., computers, laptops, cell phones, tablets, etc.) of Directors shall be considered the personal property of the Director upon whose devise said e-mail exists.” I other words, the e-mail does not belong to the association.

However, arbitrator in Humphrey went on to state “[t]he conclusion may be different if the association owns a computer on which management conducts business including e-mails (analogous to government public records); or if e-mails are printed up and passed around for discussion at a board meeting.” In other words, e-mails to an association’s e-mail address, the (“@codename.com”) are considered official records.

It is important to have a clear understanding of and a policy in place related to e-mail to assure that those e-mails that are official records are properly kept and those e-mails that are not official records are properly deleted. There are also exceptions for things such as communications that relate to litigation, which must be considered when creating and implementing an e-mail policy. It is therefore strongly recommended that all associations involve their attorney when formulating their e-mail retention policy.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

Estoppel Certificates

A Requirement of Condominiums, Cooperatives, and Homeowner Associations

Some associations are not complying with the new laws on Estoppel Certificates which is required of condominiums, cooperatives, and homeowners associations. Prior to July 1, 2017, the association only had to provide the prospective purchaser with information about the monies owed to the association attributable to the unit being purchased. Now, the association must provide a certificate with a considerable amount of additional information as described below. If the information is prepared incorrectly the association may be estopped (barred or precluded) from alter going back to that individual for the funds or violations that were omitted from the certificate. My recommendation is that the association have their attorney prepare the initial certificate and provide that certificate to their manager or management company as some of the information requires a review and analysis of the association’s governing documents.

There is a long list of information which is required to be in the estoppel certificate found in Sections 718.116 (Condo), 719.108 (coop), 720.30851 (HOA), Florida Statues which includes (by way of example only and not as a complete list):

  • parking or space number, as reflected in the books and records of the association;
  • attorney’s name and contact information if the account is delinquent and has been turned over to an attorney for collection;
  • an itemized list of all assessments, special assessments, and other monies owed;
  • an itemized list of any additional assessments, special assessments, and other monies that are scheduled to become due for each day after the date of issuance for the effective period of the estoppel certificate is provided.

The statue then requires you to provide:

  • whether there are any open violations of rules or regulations noticed to the unit owner in the association official records;
  • whether the rules and regulations of the association applicable to the unit require approval by the board of directors of the association for the transfer of the unit and if so, whether the board has approved the transfer of the unit;
  • whether there is a right of first refusal provided to the members or the association, and if there is if the members of the association have exercised that right of first refusal; In addition, the association is also required to provide a list of, and contact information for, all other associations of which the unit is a member, provide contact information for all insurance policies maintained by the association, and provide the signature of an officer or authorized agent of the association.

For some associations, your manager has handled this certificate when it was just a matter of filling in the amounts owed, because they took care of the accounting for the association. However, reviewing and analyzing association documents to correctly answer the questions on rights of first refusal and other legal issues should be handled by your association attorney and then provided to management for future use thereafter. Further, if the management contract does not provide for charging for estoppel certificates, the Board will need to approve a resolution in order to do so.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

Communication With Your Attorney

Most attorneys are adept and accustomed to using a variety of forms of communication with their clients. Most attorneys will also charge for communications with their clients, so clients should consider what is best, not only in the context of cost, but also what is best for providing and receiving legal advice. As an attorney representing community associations, one of the most satisfying aspects of that practice is being able to efficiently answer questions and providing legal guidance to my clients. However, I know that certain methods of communication work better for some clients. If you prefer communication by mail, e-mail, facetime, text, or in person, make your preference known to your attorney.

If you are a community association manager, I can offer you the following seven (7) observations to assist in effective communication with counsel:

  1. Designated Point of Contact. The Association should designate one person to communicate with the attorney, while providing copies of that communication to all board members in a confidential setting. If we assume that the typical board of directors has five members, the association does not want to pay for five separate communications with the attorney regarding the same subject matter, plus a communication between the community association manager and the attorney. The attorney does not need to receive six almost identical communications regarding the same issue. The community association manager typically has good communication skills and can succinctly state the legal issue and related questions, therefore, he or she is often the best choice for both the association and the attorney. Sometimes, one or more board members wants to assume this role. The association is the client, therefore, this is their choice to make.
  2. Ask Specific Questions. The attorney’s response and legal advice are responsive to the question presented. Therefore, a full statement of the relevant facts and a clear statement of the question will provide the most valuable and legally accurate response to the association’s question. Providing an incomplete (intentionally or unintentionally) or inaccurate set of facts may result in the attorney providing an incorrect or even useless response answer to the association’s actual question. This is not the time for secrets, selective omissions or hiding facts from your attorney. Even small details may have legal significance to your issue and to your attorney. Most attorneys will respond to the question as presented and will not make an assumption that the association actually had a different question to be answered. Asking the correct question should yield the most accurate answer, not just the answer that was wanted. Therefore, the statement of the facts and the composition of the question should be given the appropriate attention to detail.
  3. Confidentiality. Communications with counsel regarding legal issues are confidential and privileged. Directors should be reminded of that fact on a regular basis. Many attorneys will mark all such communications “Attorney/Client Confidential” and you should do the same. Attorney/client confidentiality may be waived by sharing copies of the communications with any person who is not on the board of directors, therefore extreme caution is required when handling communications with counsel. Please do not share legal opinions with other managers or board members from another community, unless the original recipient gave you written consent to do so.
  4. Official Records. Communications with counsel should be segregated in a file clearly marked “Attorney/Client Confidential” to avoid the inadvertent disclosure of confidential communications. These documents containing legal advice of counsel or attorney’s work product are not available for inspection and copying by unit/lot owners.
  5. Costs. While we recognize that no one likes to pay attorney’s fees, a short consultation with counsel can often save the association significant funds when the association implements the contemplated action. For example, having contracts reviewed by counsel is a highly recommended defensive action by a board of directors. It is much easier to decide to not enter into a contract due to legally objectionable terms than it is to get the Association out of that same contract after it has been entered into without the advice of counsel. It is usually much less expensive to add legally desirable language to a contract than to later face the consequences of the omission. The adage that “contracts are made to be broken” is neither factually nor legally correct. A court will not save your association from a bad contract, if it is an otherwise lawful contract. Contracts are easily created by conduct, even in the absence of a signature.
  6. Communicate, Communicate, Communicate. Your attorney is not a mind reader. It is impossible for anyone to interpret silence. Regular, clear and accurate communication with your attorney can provide you with support and assurance that the board of directors and that the association are operating in compliance with its governing documents and in compliance with Florida law. While it is clear that some legal fees may be a cost of the association “doing business” it is also a form of insurance that is often far less expensive than not communicating with your counsel. Addressing issues and decisions in real time is far less expensive than the litigation that can result from a wrong decision. Communicate early and often.
  7. Document the Response. It is basic that a community association should not rely on the manager for legal advice, but that is what often occurs when the manager is asked to relay or interpret a conversation that she or he has had with association counsel. Request a written response, whether it is a confirming e-mail or a formal written legal opinion each time that you seek legal advice. If you want citations to a statute to cases and references to the governing documents, specify your expectations so that there is no question as to the adequacy of the response. Although most legal advice is not a simple “yes” or “no” it need not be a confusing treatise. There are times when you should not get the response in writing, but there should be a reason for not putting the response in writing when that occurs. You have a right to clear understandable response from the attorney.

Finally, communication increases confidence and comfort. There is no (legal) question that should not be asked, if it is a question that you or a member of the board of directors may have. Keep the lines of communication open with your attorney.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

Can Homeowners’ Association Board Restrict Fences?

Can Homeowners’ Association Board Restrict Fences?

 

Q

My homeowners’ association board of directors sent out a new set of guidelines that they intend to adopt. There are a number of provisions that limit what an owner may do with their private property. For example, it states that while fences are permitted, they may only be privacy fences constructed of particular materials, and chain-link fences are prohibited. Also, there is a list of authorized colors that owners can paint their houses. While I understand that the homeowners’ association is there to protect every owner’s property value, these rules seem to be over the top. Can the association tell me what type of fence I can put up or what color I can paint my house? (R.D. via e-mail)

A

Maybe. The first issue to always consider is what the community’s governing documents say concerning the board of director’s authority to adopt such restrictions. Declarations of covenants routinely contain requirements that alterations that are visible from the exterior of the lot be approved by either the board of directors or an architectural review committee. Some declarations also contain specific requirements or prohibitions concerning alterations, such as regulations of or prohibitions against fences. Some are more general.

If the declaration grants the board of directors or the architectural review committee the authority to approve certain exterior alterations, but do not specifically identify what types of alterations would be approved, or what types of materials may be used, the association must have some kind of objective guidelines in order to be able to uniformly apply the restriction. Section 720.3035 of the Florida Homeowners’ Association Act also discusses required guidelines concerning the location, size, type, or appearance of alterations which are to be approved by the association.

Assuming the board has the appropriate authority in the governing documents to adopt architectural guidelines or other rules affecting the use of the parcel, and further assuming the guidelines are properly adopted, such guidelines would generally be enforceable. Typically, 14 days’ notice must be given to each parcel owner prior to the board’s adoption. Specifying colors that an owner may paint their home, or the type of material they may use for installing a fence are relatively common.


 

Q

I live in a condominium and have an interest in running in the next election to be on the board. What is the requirement to obtain “certification” required by the state? (V.R. via e-mail)

A

The Florida Condominium Act states that within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and policies.  The written certification must also confirm that the new director 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.

Alternatively, the newly elected or appointed director may submit a certification of satisfactory completion of a board certification course administered by an education provider approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation that has been taken within one year before, or 90 days after, being elected or appointed.  The written certification or the educational certificate is valid for as long as the board member continuously serves on the board.  The association must maintain the certificates for five years after a director’s election or for the duration of the director’s uninterrupted tenure on the board, whichever is longer.

If a director fails to timely file the written certification or educational certificate, the director is suspended from service on the board until he or she complies. The board may temporarily fill the vacancy during the period of suspension.

Both the Florida Cooperative Act and the Florida Homeowners’ Association Act contain similar director certification requirements.

 

Joseph E. Adams

Office Managing Shareholder, Becker
Fort Myers | bio

 

HOA Rules to be Recorded

Do My HOA’s Rules Have to be Recorded?

For many years, homeowners’ associations (HOA) were only required to record their rules and regulations if their governing documents required that they be recorded. As of July 1, 2018, that is no longer the case.

Section 720.306 was amended by the Legislature to address the manner in which amendments are carried. The amendment adopts much of the same procedure of underlining and strikethroughs used in condominium covenant amendments. If the amendment is extensive such that underlining and strikethroughs would lead to confusion then the amendment must include the following notation “Substantial rewording. See governing documents for current text.” and underlining and strikethroughs are not needed. §720.306(1)(e), Fla. Stats.

You may however wonder what this requirement has to do with an HOA’s rules and regulations. The change to Section 720.306(1)(e) requires the use of underlining and strikethroughs (with the exception noted above) and recording for all amendments to the “governing documents.” A term defined by Section 720.301(8) to include the declaration, articles of incorporation, bylaws and the Association’s “rules and regulations adopted under the authority of the recorded declaration, articles of incorporation, or bylaws and all adopted amendments thereto.” §720.301(8)(c), Fla. Stats. (emphasis added). This means that in order for rules to be amended in the HOA setting, they must be typed a certain way and the amendment itself will not take effect until “recorded in the public records of the county in which the community is located.” §720.306(1)(e), Fla. Stats.

 

Marilyn Perez-Martinez

Attorney at Law, Becker
Miami | bio

 

Can My Association Board Pass a Rule Regarding That?

Can My Association Board Pass a Rule Regarding That?

You attend your association’s monthly board of directors meeting because you notice an item on the agenda that piques your interest. The board of directors is scheduled to consider and pass a rule regarding _________ (you fill in the blank).  You ask yourself “Can they do that?”  The answer, as it is many times, is “it depends”.

The first place to look is the association’s governing documents.  The governing documents (declaration, articles of incorporation or bylaws) must give the board of directors the authority to promulgate rules and regulations.  If this authority is not contained anywhere in the association’s governing documents, then the board does not have the authority to promulgate or amend rules and regulations.

If the authority does exist in the governing documents, then the board has the authority to promulgate reasonable rules and regulations.  Again, you must look to the governing documents to see if such rules must also be approved by the membership.  While not common, some association documents do require membership approval, so be sure to check your documents for such a requirement.

Assuming that the board can pass reasonable rules without membership approval, how does that work?  There are essentially two categories of cases in which an association attempts to enforce rules of restrictive uses. The first category is dealing with the validity of restrictions found in the declaration. The second category involves the validity of rules promulgated by the board of directors.

Restrictions found in a declaration are clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed. White Egret Condominium, Inc. v. Franklin, 379 So.2d 346 (Fla. 1979).   As such, a use restriction in a declaration may have a certain degree of unreasonableness to it, and yet withstand attack in the courts.

However, where a rule is created by the board of directors, such rule is subject to a test of reasonableness.   If a rule is reasonable, the association can adopt it, if not, it cannot.  Hidden Harbor Estates, Inc. v. Norman, 309 So.2d 179 (Fla. 4th DCA 1975). What this means is that if a rule is challenged, the association must be able to show the rule is reasonable.  The challenging owner is not required to show the rule is unreasonable; the burden is on the association to show that the rule is reasonable. 

In addition to being reasonable, there are other limitations on board enacted rules.  A board enacted rule cannot be in contradiction with any other provision of an association’s declaration, articles of incorporation or bylaws.  Any conflict between a provision in an association’s rules and regulations and an association’s declaration, articles of incorporation or bylaws will be resolved against the rule and in favor of the provision in the declaration, articles of incorporation or bylaws.

Furthermore, a rule cannot amend a provision of the declaration.  Unfortunately, many associations attempt to do just that by passing rules that, if challenged, would not be upheld by the courts as a valid rule.  For example, if your governing documents provide that owners who want to sell or lease their unit must provide a copy of the sales contract or lease to the association, and nothing more, a rule that provides sales and leases must be approved by the association would not be upheld by a court if challenged. 

Similarly, if your governing documents do not include restrictions limiting leases to no less than 3 months, or that leases must be at least one year in length, the board cannot pass a rule to that effect.  Such restrictions must be in the declaration, unless, arguably, the declaration specifically grants the board the authority to pass additional rules and regulations regarding leasing.

Also, you should be aware that there is now a difference regarding rules and regulations in what the defined term “governing documents” means in regard to a homeowners association as opposed to a condominium association.  Chapter 720, Florida Statutes (the “Homeowners Association Act”) was amended to include an association’s rules and regulations in the definition of an association’s “governing documents”.  See Section 720.301(8), Florida Statutes.  Chapter 718, Florida Statutes, (the “Condominium Act”) does not contain a similar provision or definition.  So while the defined term “governing documents” includes rules and regulations in a homeowners association, the same defined term does not include rules and regulations in a condominium association.

Finally, whenever an association is considering amending or addition rules and regulations, it should always do so in consultation with its attorney.  The attorney should review the rule to make sure it is not in conflict with any provisions of the declaration, articles of incorporation or bylaws; make sure there are no potential housing law issues or other legal issues in regard to the proposed rule and that the proper meeting notice requirement for the board to consider and pass the rule are followed.  In condominium, homeowner and cooperative associations, written notice of any meeting at which amendments to rules regarding unit (or parcel) use will be considered must be mailed, delivered, or electronically transmitted (to those who have consented in writing to receive official association notices electronically) to owners and posted conspicuously on the property not less than 14 days before the board meeting.

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

water leak

The Subrogation Situation

With increasing frequency, insurance companies that provide unit owner insurance are suing community associations to recover payments made to the unit owner that are related to water leaks in the unit. The problem with these lawsuits is two-fold. First, the insurance companies are waiting years to bring them, although still within the statute of limitations for the lawsuit, but nonetheless to the detriment of the community association’s defense of the case as records and memories fade overtime. Secondly, the cases are many times brought in small claims court as a result of the insurance company seeking at most $5,000.00 in “reimbursement” from the community association. The issue with defending a small claims court case is that the cost of defending the lawsuit can be more than the amount the insurance company is seeking which puts pressure on the community association to simply settle. The basis of the insurance company’s lawsuit against the community association is negligence; the insurance company claims that the association had a duty to take some action, failed to take the action and such a failure led to loss that resulted in the insurance payment to the unit owner.

What can be done to limit a community association’s exposure to such lawsuits? First, the community association should consult with its attorney to determine if an amendment to the declaration for the association should be adopted related to subrogation. Next, community associations need to promptly respond to complaints related to leaks and properly document repair work in a detailed manner so that the location and extent of work is easily understood. The documentation related to repair work should be kept for 7 years and be readily accessible. Community associations should perform routine maintenance and inspections of property that the association is required to maintain in order to identify in advance of a water leak areas of needed maintenance. Lastly, anytime there is a water leak or other casualty to unit, the association must thoroughly document, in writing, what happened to cause the leak, what was done in response to the leak and all communications between the association, the unit owner and the unit owner’s insurance company and adjuster. Such documentation should be shared with the community association’s attorney and kept in the association’s official records.

 

Marielle E. Westerman

Marielle E. Westerman

Community Association Law, Becker
Tampa | bio

 

electronic voting

Does Electronic Voting For Community Associations Really Work? How Do You Implement?

Q: I heard that the law in Florida recently changed and that owners in community associations can now vote electronically. What is required to implement electronic voting in my community?  And does it really work? A.A. via e-mail

A: You heard correctly. During the 2015 Legislative Session, a new law was passed authorizing condominiums, cooperatives and homeowners associations to conduct elections and other owner votes through an internet-based online voting system. In the spring of 2016, the Department of Business and Professional Regulation adopted administrative regulations to implement the new electronic voting statutes for community associations.

The first step is for the Board to decide if they wish to offer electronic voting to their members by adopting a resolution. The resolution will establish the procedures and deadlines for owners to consent to electronic voting and, thereafter, opt out of electronic voting (if desired). Written notice of the board meeting at which the resolution will be considered must be mailed, delivered, or electronically transmitted (where an owner has consented in writing to receive official notices by e-mail) to the owners, and conspicuously posted at least fourteen (14) days before the meeting.

The next step is for the Board to select an operating software system to utilize and administer the electronic votes. The administrative regulations require the use of sophisticated operating software which will enable the electronic voting website provider to accurately tally votes and be able to defend the result. The operating software also needs to be able to preserve the secrecy of owner votes in the election of directors. There are several different vendors who offer operating software to community associations for a fee. Most of the vendors utilize a similar electronic voting format: (1) the association provides a roster of eligible voters, (2) a unique PIN number is sent to the e-mail address provided by the owner, (3) owners are asked to create a user name and password to log on to the website; and (4) the owner votes electronically.

The Board does not have the right to force owners to vote electronically. Owners have the option to decide if they wish to vote electronically. Owners who do not consent to vote electronically must still be permitted to vote the “old fashioned” way via paper. At the membership meeting the electronic votes and the paper votes are tabulated together and the voting results announced.

Electronic voting does work. Several of my association clients have successfully used electronic voting at their meetings and elections. I predict that electronic voting will become commonplace very soon. The days of shuffling through stacks of paper at association annual meetings may soon be over.

 

David G. MullerDavid G. Muller

Board Certified Condominium and Planned Development Law Attorney, Becker
Naples | bio

 

 

Material Alterations to lobby

Material Alterations

We receive numerous questions from our condominium association clients regarding proposed “material alterations” to the common elements. In general, the board is empowered with authority to maintain the common elements. However, certain changes to the common elements may be considered a “material alteration” which may require unit owner approval. Florida courts have held that a material alteration is one which “palpably or perceptively varies or changes the form, shape, elements or specifications” of the common elements “in such a manner as to appreciably effect or influence its function, use or appearance.” Sterling Village Condominium, Inc. v. Breitenbach, 251 So.2d 685 (Fla. 4th DCA 1971). In many instances the material alteration questions we receive pertain to redecorating common elements, such as a lobby area. If the change in the new décor theme of the lobby is considered a material alteration (as opposed to routine maintenance/replacement), approval of the unit owners may be required. Section 718.113(2)(a), Florida Statutes, requires 75% of the total voting interests to approve a material alteration unless the declaration provides for an alternative approval method/standard. Many condominium association declarations contain a provision which specifically establishes a unit owner approval standard for material alterations to the common elements. Other governing documents specifically carve out exceptions whereby the board of directors alone can approve certain material alterations without the need to obtain unit owner approval. For example, many governing documents will grant the board discretion to approve a material alteration if the cost of said alteration is below a specific dollar amount. This area of condominium law is complex and there are additional considerations which may impact the ultimate analysis (e.g. what if the alteration is required to comply with code, etc.), which are beyond the scope of this article.

 

David G. Muller

David G. Muller

Board Certified Condominium and Planned Development Law Attorney, Becker
Naples | bio

 

 

rental-agreement

Are HOA Owners “Grandfathered” In from New Rental Restrictions?

The Florida Condominium Act states that an amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their unit after the effective date of the amendment.

There is no similar provision contained within the Florida Homeowners’ Association Act. The amendment to the condominium statute was the legislature’s reaction to a Florida Supreme Court case which held that because condominiums are a “creature of statute”, unit owners take title to units knowing that most of the legal rights under their condominium documents can be changed by amendment. Homeowners’ associations are subject to slightly different legal principles including how courts review amendments to covenants and restrictions. I am of the opinion that there are generally no “grandfathered rights” in the HOA context, but the language of individual governing documents plays a large role in the analysis of this issue. This means an HOA should always have an attorney review the governing documents for that community if rental restrictions are being considered.

David G. Muller

David G. Muller

Board Certified Condominium and Planned Development Law Attorney, Becker
Naples | bio

 

 

construction-deposit

Construction Deposits, A New Reality to be Managed

For many condominium and homeowners’ associations, 2019 will be a year to consider long overdue construction projects.  The 2018 legislature made it clear to condominium associations that if the project resulted in a modification of the common elements, a prior vote of approval by the membership is required.  Also, some projects will require bids per statute, while most associations will attempt to seek bids as a matter of good business practice.  Unfortunately, the construction industry is dealing with a labor shortage that may result in fewer contractors willing to bid on your project and many contractors seeking an “up front” payment in the form of a “deposit”.

Anyone seeking construction services in today’s expansionary period knows well that contractors are in high demand, and are taking liberties with respect to what they can require as a condition to entering into a construction contract.  There is no doubt that contractors have taken advantage of the lack of supply and the high demands for construction work.  In that regard, the demand for payment of initial deposits has resurfaced as a reoccurring theme.

The last time the construction industry experienced a boom, contractors were asking for advance payments for everything from materials to excessive and increasing labor costs.  Associations, often times, plagued with little options, have succumb to the contractors’ demands for deposits. Although, deposits, that are often well planned and based on logical procedural requirements, they can be minimized as a risk to the association, deposits are still nonetheless susceptible to difficulties.

In the context of a condominium or homeowner association, the issues with deposits are no different.  As practitioners who represent such entities, we have seen a significant uptick in the demand for deposits.  Often times, the deposits are substantial demands, seeking upwards of prepayment of 20% of the contract sum.  When contracts are in the hundreds of thousands of dollars, this could mean significant upfront cash that is given to a contractor with little to no protections often being provided in exchange.

Such unprotected at risk spending can lead to difficulties.  Often times, it is difficult for an association to know whether or not a contractor is financially solvent.  Even in the most expansive and lucrative economies, there are still contractors who have managed to fail in their ability to control the purse, and often fall prey to needing cash from one project to pay another.  Quite often, associations negotiating with such contractors have no idea of the financial straits of the contractor, and are prone to agree to such deposits without appreciating the risk.  Unfortunately, once funding for a deposit is provided to an insolvent contractor, there is typically little recourse or means of recovering those funds from the insolvent contractor.  Unless the association implements certain guidelines protecting such deposits, the associations can often find themselves having to pay twice for such work.

The payment of advance deposits also place havoc with associations’ obligations to make proper payments under the Florida Construction Lien Law.  Although the Lien Law does not specifically address the issue of deposits, the Lien Law does impose certain obligations on associations to assure payment to those subcontractors who may have performed work and improvements on the associations’ property, under a general contractor.  In those cases, where a subcontractor issues its Notice to Owner, the contractor has obligations to assure payment is made to the subcontractor while making payments to its general contractor.  In the case of a deposit, the association has no idea who the subcontractors may be who are looking toward the contractor and the associations’ payments for funding.  When deposits are issued preliminarily on a project, the association has no idea which subcontractors will be performing the work, and how to protect those funds from not being absconded from the subcontractors.  Hence, there may be certain circumstances where the issuance of a deposit violates the association’s obligation to see that the subcontractors are paid, and may open the door to the association having to pay twice for the same work.

Often times, associations need to use the power of the purse to control the contractor and to bring about compliance with the construction contract.  However, in situations where a substantial deposit is issued, the association’s leverage is eroded by the amount that it pays over and above the value of work in place.  As a result, a deposit typically represents an initial overpayment to the contractor.  As more and more cash is provided to the contractor, the contractor gains leverage over the association.  This is a situation an association must avoid, as the association’s control over the purse is the primary power an association has over the contractor.  Therefore, a substantial deposit at the beginning of the project could essentially prevent an association from having the leverage needed to bring about compliance by the contractor at the end of the project.

The foregoing does not mean that deposits are completely out of the question.  Deposits can be managed, as long as the use of those deposits are memorialized in the parties’ contract.  Often times, construction attorneys add provisions that specifically address how the deposits will be used and accounted for.  In such cases, the deposits could be earmarked to be used strictly for the payment of advance material purchases.  In those circumstances, the contract can dictate specific procedures on how the contractor contracts for the materials, while the association makes direct payment to the supplier.  This type of arrangement alleviates any concerns of liens or suppliers not being paid, and provides the association assurances that once the payment are paid, the materials are owned by the association and therefore liens are of no further concern.  The issue becomes more complicated when the contractor seeks a deposit for advance manpower costs or similar expenses.  Since manpower is a much more nebulous issue for the association to oversee, it is advisable that the association does not agree to such advance payments, as there are few means of effectively controlling same.

Notwithstanding the above, there are means other than deposits to relieve the contractor’s concern of being the bank.  Mobilization line items in a schedule of values in the contract can provide the interim relief that contractors seek.  In some cases, construction contracts allow a more frequent submission of applications for payment at the early stages of the project, so as to compensate the contractor for upfront costs.  Such costs can be compiled in a mobilization line item.  Notwithstanding, there should be some limits as to the amounts that will be paid for mobilization, and they should be somewhat aligned with the expenditure of the materials or labor that is being protected.

In conclusion, deposits may be a part of our present reality when dealing with construction contracts.  Although, deposits are fraught with risk, there are means to control that risk.  An association that is confronted with a demand for a sizable deposit, should contact its construction attorney for advice so that the procedures to protect the association are incorporated in the association’s contract with the contractor.  Absent taking such safeguards, an association could expose itself to significant risk, some of which may cause the association to pay twice for the same work, and other events that may cause a complete forfeiture of deposits if provided to insolvent contractors.

 

Conrad J. Lazo

Conrad J. Lazo

Board Certified Construction Law Attorney, Becker
Tampa
 | bio

 

 

 

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

 

emotional-support-animal

Emotional Support Animal

The following is a paraphrased example of the one question that we are asked most frequently:

“I live in a condominium, which has had a “no pet amendment” since it was built.  A person recently purchased a unit and has been seen with a dog that barks all the time.  The owner signed all the disclosure forms that stated “no pets,” but later gave the board a note from a nurse practitioner stating that the dog is an emotional support animal.  What can we do?”

The Federal Fair Housing Act (42 U.S.C. §§3601-3619) and the regulations promulgated thereunder require ‘housing providers,’ – including entities such as condominium or homeowners associations to make reasonable accommodations to disabled persons in rules, policies, practices or services when such accommodations may be necessary to afford a person with a disability the equal opportunities to use and enjoy a dwelling.  Florida’s version of the Fair Housing Act, Section 760.23, Florida Statutes, similarly requires accommodations for disabled persons.  Decisions of federal and state courts in interpreting the Federal Fair Housing Law and Florida’s Fair Housing laws have held that in certain instances housing providers, including a condominium or homeowners association, must accommodate those with a legitimate physical or emotional disability requiring the support or assistance of an animal.

Notwithstanding, simply providing a note from a nurse practitioner or a letter and certificate purchased from the Internet, stating that the dog is an emotional support animal does not provide the governing body of a condominium or a homeowners association the reasonable opportunity to establish that the resident suffers from a disability defined by law; and further, that the applicant requires the physical assistance or emotional support of a dog to reasonably accommodate his or her disability.  Thus, in this instance, it likely would not be unreasonable for the association to carefully request additional information to allow its governing body to evaluate the reasonableness of the request.  The courts and agencies have required that the housing provider open a “dialogue” to allow for a meaningful review of the request.

For example, the association may reasonably request that the resident provide a statement from a medical professional explaining that the requesting party: (a) has a physical or mental impairment (b) explains which major life activities are substantially impaired by the disability or handicap; (c) a description of the accommodation requested; (d) and an explanation of how the accommodation alleviates or mitigates the disability or handicap. If, upon receipt of such additional information, the association concludes that the resident is disabled under the law and that the emotional support of the identified animal is reasonably necessary to accommodate the disability, then approval of the accommodation is required by law.

Where an accommodation is required by law, the resident is still required to maintain the animal in accordance with existing rules and regulations; which among other requirements often include, that residents permit no activity that creates a nuisance or annoyance to other residents.  Such rules require to take all actions necessary to prevent the animal from making a noise that may unreasonably annoy or disturb the peace of neighboring residents.

Keep in mind that where an accommodation is required to be made by law, the animal is not considered a “pet.” Rather, it is an animal that the resident is entitled to have per the law for the physical assistance or emotional support for the disability that the resident is afflicted with. Therefore, the governing board of a community association should always seek the advice of legal counsel before denying the request of a resident for an emotional support animal.  The association’s legal counsel is best suited to advise and assist the governing board with the implementation of appropriate procedures should the board receive such a request.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

 

 

JoAnn Nesta Burnett, Esq. JoAnn Nesta Burnett, Esq.

 

 

Telecommunication Contract Issues

Telecommunication Contract Issues

Other than possibly insurance, the largest single expense for many associations is the cost of bulk telecommunication service. Further, bulk telecommunication service agreements often have multi-year terms, some even going as long as ten years. Therefore, whether your association has a bulk telecommunications agreement or is looking at entering into a bulk telecommunications agreement, there are a number of legal and practical issues that the association should consider in moving forward with such a decision.

With regard to bulk agreements for telecommunication services, both the Florida Condominium Act and Homeowners’ Association Act provide that the costs associated with providing bulk telecommunication services are proper common expenses of the association. Further, both contemplate the authority of an association to provide a range of communication services on a bulk basis. The most common services provided on a bulk basis are television service, bulk internet service and telephone service. Additionally, associations often provide multiple services on a bulk basis from the same provider (such as receiving both cable television and internet service from the same service provider on a bulk basis.)

Further, both statutes also contemplate that the cost for services pursuant to the bulk agreement be allocated on a per unit basis rather than on a percentage basis if there is other than equal sharing of common expenses contemplated in the documents. If your association allocates expenses on something other than an equal per unit basis, you would want to review the allocation of the expenses of the bulk services agreement carefully.

While associations generally have the legal authority to enter into agreements to provide bulk telecommunication services to the owners, such agreements should be carefully negotiated by the association. Issues the association should address in the agreement include but are not limited to:

  • How the distribution system is defined and who will own the wiring once the agreement is concluded.
  • What type of work will the provider have to do within the community to provide the service, whether excavation or other construction will be necessary and what protections are in place for the association and its members?
  • If the provider is using subcontractors to install portions of the distribution system that the association and the owners are protected from any liens recorded by suppliers or subcontractors.
  • What type of insurance does the provider carry and whether that insurance protects the association?
  • What is the term of the agreement, how term is determined and is the termination date of the agreement apparent on the face of the agreement?
  • What are the service standards that the provider must meet and how is the association protected if the provider fails to meet those standards?
  • What type of easement must the association give the provider and does that easement interfere with any third parties’ existing rights?
  • Are the association’s damages against the provider limited in the event a provider breaches the agreement or fails to provide the services that are contemplated?

These are just a few of the issues that the association must address in negotiating a bulk services agreement. Any time an association is considering entering into a new bulk agreement, it should review that agreement carefully and seek appropriate guidance from its attorneys, accountants and insurance agents.

James Robert CavesJames Robert Caves, III is an attorney with the law firm of Becker & Poliakoff, P.A., which represents community associations throughout Florida, with offices in Ft. Myers, Naples and 11 other Florida cities. The firm focuses a substantial amount of its practice on condominium and homeowners association law. 

 

 

What are Pooled Reserves and How Do We Implement Them?

Cash flow funding of condominium reserves, often referred to as the “pooling” method of reserve funding, is a concept that was introduced many years ago through an amendment to the state’s administrative rules regulating condominium finances.

Under the traditional, straight-line method, required reserve contributions are calculated by using a formula that divides the cost of replacing a particular item by the number of useful years that item has left, minus the reserve funds on hand for that item, with the result being the amount to fully fund that item for the next fiscal year. Each reserve component must be separately funded and must appear as a separate line item in the reserve schedule, which is part of the budget. Absent a majority vote of the unit owners, monies for each separate reserve item can only be used for that particular reserve item.

Under the pooling or cash-flow method, each reserve item is still separately funded but the money is put into one account. The reserve schedule computation is a bit more complicated and typically needs to be prepared by an accountant or reserve consultant. The basic theory is that the association attempts to predict the year a particular asset will require deferred maintenance or replacement, and a mathematical formula is then applied to calculate required contributions for each year. In theory, the money should be available when needed, with a lower contribution than required using the straight-line method.

A pooled reserve fund can then be used for any reserve item as the need arises, creating more flexibility for the board, which most associations see as the main benefit, as opposed to having to take an annual owner vote for inter-fund spending when the straight line method is used. In other words, the board can use any money in the reserve fund for an earmarked item that is within the “pool.” Conversely, with straight-line funding, the board could not, for example, use money in the painting reserve to pay for re-roofing, unless a successful vote of the unit owners is obtained.

The main benefit of pooled reserves is greater flexibility in how the money is spent. However, the same result can be accomplished by taking a yearly vote to permit the use of reserves for a non-scheduled purpose.

There are a few negative aspects of pooled reserves, however. First, the formula is complicated and most volunteer board members, community association managers and lawyers do not possess the analytical skills necessary to compute the required charts. Second, since the funding is predicated on anticipated asset failure many years into the future, an imprecise science at best, there can be substantial underfunding if the actual cash flow deviates from the assumptions in the formula. As a result, there may be a greater likelihood of the need to adopt a special assessment.

If your association currently uses straight-line reserve accounts, you would need approval of the unit owners (i.e. a majority of the owners who vote at a meeting where a quorum is attained) to put that money into the “pool.” Once the vote to switch to pooled reserves is successful, no further votes would be required in future years and the association could continue to operate under the pooling method.

 

David MullerDavid G. Muller is an attorney with the law firm of Becker & Poliakoff, P.A., which represents community associations throughout Florida, with offices in Naples, Fort Myers and 11 other Florida cities. The firm focuses a substantial amount of its practice on condominium and homeowners association law. 

 

 

 

Condominium Association Statutory Required Websites – Facts and Myths

Condominium Association Statutory Required Websites – Facts and Myths

Section 718.111(12)(g), Florida Statutes, was added to Chapter 718, Florida Statutes in 2017, requiring that by July 1, 2018, an association with 150 or more units which does not manage timeshare units is required to post digital copies of the documents specified in the section on its website, and lists specific documents that are required to be posted on the association website. In 2018 the section was amended to change, among other things, the effective date to January 1, 2019, as well as changes as to what must be posted.

The website must be an independent website or a web portal wholly owned and operated by the association, or a website or web portal operated by a third-party provider with whom the association owns, leases, rents, or otherwise obtains the right to operate a web page, dedicated to the association’s activities and on which required notices, records, and documents may be posted by the association. The purpose of this requirement is that in the event of a change in management companies or manager, the association must maintain control of the website.

The website must be accessible through the Internet and must contain an area that is inaccessible to the general public, accessible only to unit owners and employees of the Association.

While the statute provides that “upon an owner’s written request” the association must provide the owner with a username and password to access the protected areas of the website, obviously it makes sense to notify all owners of the manner in which to obtain their username and password.

Some of the requirements that must be posted on the association website include:

  • The association’s governing documents (Declaration, Articles of Incorporation, Bylaws and Rules and Regulations).
  • A list of all executory contracts or documents to which the association is a party or under which the association or the unit owners have an obligation or responsibility (this was changed from “Any management agreement, lease or other contract”).  An association is not required to post entire contracts on its website.  Only a listing of such contracts is now required.
  • After bidding for the related materials, equipment, or services has closed, a list of bids received by the association within the past year.
  • The association’s annual budget and any proposed budget to be considered at the annual meeting.  While the statutes only technically requires the posting of “any proposed budget to be considered at the annual meeting”, as a practical matter many, if not most, budgets are not considered at the annual meeting but at a separate budget meeting.  I suggest the association post any proposed budget, even one not to be considered at the annual meeting, on the website.
  • The association’s annual financial report for the preceding year and any monthly income or expense statement proposed financial report to be considered at a meeting.  This appears to require the posting of an association’s monthly financial statement if it is to be considered at a meeting.
  • The board member certification of each director.
  • All contracts or transactions between the association and any director, officer, corporation, firm, or association that is not an affiliated condominium association or any other entity in which an association director is also a director or officer and financially interested.
  • Any contract or document regarding a conflict of interest or possible conflict of interest as provided in ss. 468.436(2)(b)6., and 718.3027(3).
  • The notice of any unit owner meeting and the agenda for the meeting, no later than 14 days before the meeting.  The notice must be posted in plain view on the front page of the website, or on a separate subpage of the website labeled “Notices” which is conspicuously visible and linked from the front page. The association must also post on its website any document to be considered and voted on by the owners during the meeting or any document listed on the agenda at least 7days before the meeting  at which the document or the information within the document will be considered.
  • Notice of any board meeting, the agenda, and any other document required for the meeting, which must be posted no later than the date said notice is required to be posted on the condominium property pursuant to statute.

In addition to the above requirements, an association is also required to insure that official records that are not releasable to owners are not posted on the association website.  However, the association is not is not liable for disclosing information that is protected or restricted pursuant to this paragraph unless such disclosure was made with a knowing or intentional disregard of the protected or restricted nature of such information.

If an association does not post any of the required information, such failure will not invalidate any action or decision of the board.  In other words, if an association does not post meeting minutes or meeting notice as required, such failure, in and of itself, will not act to invalidate any board actions taken at such meeting.

If you have any questions concerning the website requirements, you should contact your association attorney.  Of course your association attorney should review any association website contract before the association executes such contract to insure the contract complies with the statutory requirements.

 

Howard PerlHoward J. Perl is an attorney with the law firm of Becker & Poliakoff, P.A., which represents community associations throughout Florida, with offices in Ft. Lauderdale, Miami, and 11 other Florida cities. The firm focuses a substantial amount of its practice on condominium and homeowners association law. 

 

 

 

alligator

Tragic Alligator Attack Should Cause Community Associations to Consider Alligator Dangers

The recent and devastating death of Shizuka Matsuki, a Florida woman attacked by an alligator, has alarmed and dismayed Floridians while raising many questions for community associations and their residents about alligator safety measures. Floridians are understandably fearful of alligator attacks due to the widespread prevalence of alligators in our state (similar considerations apply to less common and more localized crocodile populations in coastal areas). The disturbing details about the attack bring to mind the horror experienced in 2016 when a child, Lane Graves, was killed at a resort lagoon. While these types of attacks may not happen very often, even a single person or pet taken by an alligator is far too many.

For community associations maintaining the areas abounding bodies of water that are known possible alligator habitats (or at least areas they may occasionally frequent), safety is the primary concern. Associations do not and should not assume a duty to act as protectors and insurers of resident and/or invitee safety when it comes to wildlife; however, associations should, with advice of counsel and in consideration of insurance coverage requirements, take reasonable measures to warn residents and invitees by posting signage regarding the presence of alligators. In addition to signage, associations can, but are not required to, provide barriers (such as fencing) that prevent access to known areas of alligator habitation, while taking care to comply with requirements in the governing covenants and restrictions applicable to any “material alterations” or improvements of the property administered by the association.

Association directors and management personnel should educate themselves and can adopt policies to address the presence of alligators (and other dangerous wildlife). These policies can include contact information for appropriate agency hotlines, such as the nuisance alligator hotline of the Florida Fish and Wildlife Conservation Commission (“FWC”), the administrative agency that handles alligator conservation and removal. The hotline can be reached at 866-FWC-GATOR (866-392-4286). The policy can provide for appropriate animal sighting protocols, such as a requirement that residents and guests report sightings to management in writing, mass notification to residents of alligator sightings, immediate calls to the FWC hotline, strict rules against engagement by unqualified residents, owners, invitees, or association or management personnel, etc. The association can also provide educational materials to new owners and residents regarding the potential or known presence of alligators, including a link to the website for the FWC (www.myfwc.com). Associations with websites should strongly consider including links to these resources. Again, legal counsel should be consulted to discuss the best way to enact these types of policies.

Legal authorities concerning an association’s duties and liabilities relating to this issue are scarce. For example, there are no Florida statutory duties governing or requiring association signage relating to this issue (an issue the Florida Legislature may wish to address), and case law regarding alligator attacks has generally concerned itself with liability to invitees, a group that may be treated differently than residents. Under a longstanding doctrine concerning animals ferae naturae (wild animals) various cases hold that property owners do not have a general duty to invitees to anticipate the presence of alligators (or other dangerous wildlife) or to take extraordinary measures to protect invitees from wildlife, especially when that wildlife is in its natural habitat. However, this doctrine does not necessarily override competing negligence doctrines concerning a reasonable duty of care to maintain the premises in a reasonably safe condition in light of knowledge of a foreseeable risk of harm. Accordingly, there is a potential duty to warn (and possibly a duty not to actively encourage or invite access to areas where alligators are known to frequent) if there is knowledge about the ongoing presence of dangerous wildlife.

For example, in a 2011 appellate case in Georgia that addressed the liability of an association to a house sitter attacked by an alligator, the appellate court permitted the plaintiff to survive a summary judgment motion by the association (i.e. – their case had legal merit and sufficient factual evidence that they could go to trial). The appellate court was then reversed in a Georgia Supreme Court decision that found that the house-sitter assumed the risk in walking by the lagoon at night with knowledge of the potential presence of alligators. While based upon specific local Georgia statutes and doctrines and not necessarily binding on Florida Courts, the decision illustrates a situation in which a jury could potentially find a breach of the association’s duty to warn in relation to an alligator attack and the type of knowledge of the threat that would prevent such a case from going to a jury. The association at issue did in fact have a policy for frequent alligator removal, but did not have signage that could have warned the house sitter. Notwithstanding these issues and uncertainties, associations should work with counsel to focus on reasonable policies to attempt to avoid these types of tragedies, by establishing a plan in the event of alligator sightings, education and notice, and signage that warns residents and invitees of potential alligator dangers.

Jonathan Goldstein

Jonathan Goldstein is a partner with Haber Slade P.A. Goldstein’s practice includes community association law, real estate, construction, and commercial litigation. His email is jgoldstein@dhaberlaw.com.

 

Florida Supreme Court’s Latest Construction Defect Decision

Florida Supreme Court’s Latest Construction Defect Decision: Triggering the Insurer’s Duty to Defend in the Pre-Suit Process

The issue of whether a chapter 558 notice serves as a “claim” under a commercial general liability (“CGL”) policy, such as the one issued by Crum & Forster Specialty Ins. Co. (“C&F”) in Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., No. SC16-1420, 2017 WL 6379535 (Fla. Dec. 14, 2017), has finally been resolved and construction defect claimants can expect earlier participation from their carriers.

Prior to the Altman decision, homeowners and/or condominium associations were frustrated during the chapter 558 process after sending a notice of claim because insured construction parties could not get insurers to become involved in pre-suit negotiations.  Such a result was antithetical to the purpose of chapter 558 – which was instituted specifically to streamline the construction defect claims process and encourage early alternative dispute resolution.

In Altman, the following question was presented to the Florida Supreme Court: “Is the notice and repair process set forth in chapter 558, Florida Statutes, a ‘suit’ within the meaning of the CGL policy issued by the insurer, C&F, to the general contractor, Altman Contractors, Inc. (“Altman”)?”  The Florida Supreme Court recently answered in the affirmative and held that the notice process set forth in chapter 558 does indeed constitute a “suit” within the meaning of the CGL policy at issue – which in turn means that insurance carriers can no longer sit back following receipt of a chapter 558 notice and must instead take an active role earlier in the process. 

‘Duty to Defend’

The Altman case stems from defects in the construction of Sapphire Condominium, a high-rise residential condominium in Broward County. C&F insured Altman for the Sapphire project through a policy that provided, in pertinent part, as follows: “[w]e will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.  We will have the right and duty to defend the insured against any ‘suit’ seeking those damages.” Altman sought a declaratory judgment that C&F owed it a duty to defend and indemnify as part of the chapter 558 pre-suit process to resolve claims for construction defects, and that C&F breached the liability insurance policy by refusing to initially defend Altman in the suit against Sapphire. C&F denied that Sapphire’s chapter 558 notices invoked its duty to defend Altman under the policy because the notices did not constitute a “suit.”  The insurance policy defined the term “suit” as follows:

“Suit” means a civil proceeding in which damages because of “bodily injury,” “property damage” or “personal and advertising injury” to which this insurance applies are alleged. “Suit” includes:

  1. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or
  2. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.

The policy neither defined the term “civil proceeding” nor defined the term “alternative dispute resolution proceeding” within the context of the definition of the term “suit.”  Notwithstanding, the Florida Supreme Court held that the chapter 558 process is included in the policy’s definition of “suit” as an “alternative dispute resolution proceeding.” [Emphasis added]

It is also noteworthy that since the Notice of Claim under chapter 558 is included in the policy’s definition of “suit” as an “alternative dispute resolution proceeding,” the insurer’s consent appears to be required in order to invoke its duty to defend the insured throughout the pre-suit process.  In Altman, the Florida Supreme Court noted that “chapter 558 does not place any obligation on the insured to participate in the chapter 558 process. The chapter 558 framework has never been anything other than a voluntary dispute resolution mechanism on the part of the insured, despite its requirement that the claimant serve the insured with a notice before initiating a lawsuit.”  Given that involvement in the chapter 558 pre-suit process is voluntary as opposed to mandatory on the part of the insurer, it remains to be seen whether insurance carriers will provide consent to participate in the process. 

Nevertheless, upon receipt of a chapter 558 notice, it behooves contractors and subcontractors to tender the notice to their insurance carriers.  It is in the insured-contractor or insured-subcontractor’s interest to encourage its insurance carrier to engage in the chapter 558 pre-suit process.  Absent the insurance carrier’s involvement in the chapter 558 pre-suit process, the insured will be forced to incur its own costs and fees if the insured chooses to participate in the process without the consent of its insurance carrier.  In the event that the insurance carrier fails to provide consent to engage in the chapter 558 pre-suit process and defend the insured, it may be in the insured-contractor or insured-subcontractor’s interest to litigate the matter because the insurance carrier’s duty to defend is then triggered and the insurance carrier will be forced to investigate the construction defect claims – shifting the financial burden from the insured-contractor or insured-subcontractor back onto the insurance carrier.  In light of the foregoing scenario, it is more likely that the insurance carrier will be inclined to give consent to avoid the costs of litigation and to attempt to expeditiously settle the matter – but that is yet to be determined. 

Settling Construction Defect Claims Now More Likely

Moreover, the insurance policy at issue in Altman is a standard commercial general liability policy and as such it is likely to have a profound impact on future chapter 558 construction defect litigation.  Accordingly, defense carriers are more likely to be engaged in construction disputes, particularly during the pre-suit stage after a chapter 558 notice is received – or at least they should in light of this decision.  As such, the chapter 558 process, unlike in many past years, is now likely to encourage the claimant and insured to attempt to settle construction defect claims prior to expending time and resources litigating those claims.  Such a notion is consistent with the legislature’s aim in creating chapter 558 as an effective alternative dispute resolution mechanism, intended to curb construction defect litigation.  Indeed, the Florida Supreme Court in Altman even stated, in dictum, that chapter 558 provides for a “statutorily required presuit process aimed to encourage the claimant and insured to settle claims for construction defects without resorting to litigation.”

In light of the foregoing, it is imperative that individual homeowners, homeowner associations and/or condominium associations, along with their experts, prepare detailed inspection reports that set forth the various construction defects affecting their property, what resulting damage is occurring as a result of those defects, the locations of the defects throughout the property, and determine compliance with the applicable building code, plans, and specifications.  By virtue of more detailed reports in compliance with the requirements of chapter 558, it seemingly becomes more likely that construction defect disputes will result in settlements at an earlier stage – thereby saving the parties exorbitant amounts of money that otherwise would be expended in litigation.

 

David Haber David B. Haber is the founding partner of Miami-based Haber Slade, P.A. He is a commercial litigator with 30 years of experience who has handled multiple complex commercial disputes throughout Florida, including complex commercial litigation, construction, and condominium and homeowners’ association disputes. David can be reached at dhaber@dhaberlaw.com

 

 

David T. Podein Frank Soto is a partner with the firm. He focuses on construction litigation. Frank can be reached at fsoto@dhaberlaw.com.

 

 

 

Brett Silverberg is a JD/MBA student at the University of Miami and a law clerk at Haber Slade. The firm is on the internet at www.haberslade.com.