Tag Archives: condo association

2021 LEGISLATIVE UPDATE

561-288-3999

danw@wassersteinpa.com

CONDOMINIUM ASSOCIATIONS

Emergency Powers

The emergency powers are now expressly applicable to an emergency declared due to a public health crisis such as COVID-19. The powers can now be used to prevent harm anticipated to be caused in connection with the emergency and not just after the harm or damage has occurred.  During a declared state of emergency, in addition to Board meetings, members meetings, committee meetings and elections can be held in whole or in part virtually via telephone, real-time video conferencing or similar real-time communication. However, the emergency powers cannot prohibit unit owners, tenants, guests, agents or invitees of a unit owner from accessing the unit or the common elements or limited common elements for the purpose of ingress and egress from the unit when access is necessary in connections with (a) the sale, lease, or transfer of title of a unit or (b) the habitability of the unit or for the health and safety of such persons unless a governmental order or public health directive from the CDC has been issued prohibiting such access to the unit.  However, such access is subject to reasonable restrictions adopted by the Association. The “disaster plan or emergency plan” can now be implemented during the emergency rather than just before or after the emergency.  In determining to close or limit access to the condominium property the Board can now rely on the advice of “public health officials” and not just an emergency management official or other licensed professional.

COMMENTARY: These changes are useful to expand and clarify the emergency powers so that they clearly apply not only in connection with hurricane-type disasters, but also during a state of emergency declared for a pandemic or other type of public health crisis.  However, there are still some issues that remain unclear such as the ability to not only conduct the various meetings electronically, but whether unit owners are allowed to count for quorum and cast a vote over such mediums (and not by paper or an electronic voting platform).  Another open issue is whether the Board can close or limit access to certain groups of people, such as social guests, while allowing access to others, such as residents or certain family members.

Transfer Fees and Security Deposits

The maximum transfer fee charged in connection with a change of ownership or a lease has been raised from $100.00 per applicant to $150.00 per applicant. This fee will be adjusted every 5 years pursuant to the Consumer Price Index.  The authority to charge a security deposit for a lessee, which formerly was required to be in the Declaration or Bylaws, may now also be authorized in the Articles of Incorporation.

COMMENTARY: A most welcome update as the old $100 cap caused some Association’s to lose money on processing applications.  It was simply an outdated amount and quite honestly, $150 might still be a low cap.  However, with the litigation that has been brought in the past 5 years against condos that were charging excessive transfer fees, this $150 cap with periodic updates is probably a fair and reasonable compromise. 

While the increase to transfer fees was a valuable change, the extending of authority regarding charging of security deposits to include the articles of incorporation is fairly meaningless since the articles of incorporation almost never contain language dealing with leasing or any other type of use issues.  If the legislature wanted to really extend an Association’s ability to charge a security deposit they should have allowed the authority to exist in the rules and regulations.

8-Year Director Term Limit

The law has been clarified to provide that the 8-year continuous years of service runs from service that commences on or after July 1, 2018.

COMMENTARY: This was a needed clarification.  For the past few years there has been much debate as to whether the 8 year term limits enacted in 2017 (as modified in 2018) applied to “time served” before the law went into effect.  Now we all have certainty that it does not, meaning that this statute will not be something to worry about until 2026, so we can put the snooze button on this one for now. 

However, when we do get to 2026 there is still the possibility that at the end of the 8th year (or really at any other time during their tenure) a Board member could resign (and possibly even be immediately re-appointed) and then contend that they did not serve 8 consecutive and uninterrupted years, thereby making themselves fully eligible to continue to serve without any limitations or restrictions.  Everyone loves a good loophole, right? 

Another lingering issue is the wording of the exception language.  It says that any Board member who has served more than 8 consecutive years can still be elected if there are not enough other willing candidates or if they secure the votes of at least 2/3 of all “votes” cast in the election.  So, if an association has 3 seats up for election and receives 100 ballots then very likely there will be approximately 300 votes in total cast in the election (3 votes per ballot).  2/3 of 300 is 200.  So the Board member would need to secure 200 votes in their favor from 100 ballots and as we all know, you cannot put more than 1 vote per candidate (which would otherwise be called cumulative voting, which is prohibited) so the best any candidate could achieve in this example is 100 votes in their favor, making it impossible for the term limited Board member to possibly achieve 2/3 of all “votes” cast in the election.  As such, the legislature really should reword this exception to be a number of votes equal to at least 2/3 of all valid “ballots” cast and counted in the election.

Board Eligibility – Delinquency Only Based on Unpaid Assessments

The law used to provide that a candidate who was delinquent in the payment of “any monetary” obligation to the Association was not eligible to run for the Board.   Now, the law has been changed to provide that a candidate who is delinquent in the payment of any “assessment” is not eligible to be a candidate. For purposes of this paragraph, a person is delinquent if a payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation and if a due date is not specifically identified in the declaration of condominium, bylaws, or articles of incorporation, the due date is the first day of the assessment period.

COMMENTARY: So one problem solved.  If a unit owner owes a late fee or fine or a few dollars of interest they are still eligible.  Great.  But, what about the timing issue?  That is seemingly clarified in a way that makes it potentially very unfair.  For example, if a unit owner’s intent to run for the Board is due on say the 5th of the month and their assessment for that month came due on the 1st of the month and is not considered late until the 15th of the month, if they have not paid that month’s assessment as of the 5th would they be disallowed to be candidate for the Board?  Sure seems like it!

Collections Letters – Pre-Intent to Lien Letter and New Timelines

Before changing the method of delivery for an invoice for assessments or the statement of account, the Association must now deliver a written notice of such change to the unit owner.  The written notice must be delivered at least 30 days before the Association sends the invoice for assessments or the statement of account by the new delivery method and the unit owner must affirmatively acknowledge his or her understanding that the Association will change its method of delivery before the Association may change the method of delivery. The unit owner may make the affirmative acknowledgment electronically or in writing.

An Association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed to the Association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees. A rebuttable presumption that an association mailed a notice in accordance with this subsection is established if a Board member, officer, or agent of the association, or a manager provides a sworn affidavit attesting to such mailing.  The Statute contains a form that should be used.

COMMENTARY: While there was previously never a requirement to send a unit owner a delinquency letter free from attorney’s fees before sending an account for collections, most all Associations routinely sent courtesy letters, warning letters or demand letters, usually through their management company and often at no charge to the unit owner.  So, management companies will likely just have to modify their existing letters and make sure that they are substantially in the form that is now required by the statute.

The notices of Intent to Lien and Intent to Foreclose the Lien have been increased from 30 days to 45 days.  This makes the timeframes consistent with those provided for in homeowners associations for the same notices.

Annual Budget

The Board shall adopt the annual budget at least 14 days prior to the start of the Association’s fiscal year.  In the event that the Board fails to timely adopt the annual budget  a second time, it shall be deemed a minor violation pursuant to the Division of Condominiums and the prior year’s budget shall continue in effect until a new budget is adopted.

Notice of Members Meetings

The annual meeting has always required at least 14 days advance notice.  The statute has been clarified to provide that if the bylaws do not specify a timeframe for written notice of other types of unit owner meetings, then this same 14 day notice requirement applies to those as well.  It further clarifies that the notice may be posted on condominium property or association property rather than only condominium property.  Association property is deeded property owned by the association as opposed to condominium property identified in the Declaration of Condominium as common elements.

COMMENTARY: When we think of a condominium association unit owner meeting we all default to 14 days advance notice, and while a condo association can now possibly give less notice than 14 days if the bylaws allow for it (for unit owner meetings besides the annual meeting), the reality is most everyone will continue to default to the same 14 days notice and that is probably the safest way to operate (unless of course a condo needs to move quickly to take a unit owner vote on something like a waiver of reserves or amendment of documents and the bylaws allow for the meeting to be noticed on say 10 days notice instead of 14).

Official Records

Bids must be kept for at least 1 year after the receipt of the bid.  Before bids had to be kept for at least 7 years.

Renters now have the right to inspect and copy the declaration of condominium in addition to the bylaws and the rules. Previously, renters had the right to inspect and copy only the bylaws and rules.

COMMENTARY: This is a good correction.  The original intention was clearly to allow renters the opportunity to view the documents that actually govern their residency and those provisions were most definitely not going to be found (in most instances) in the bylaws, which usually contain such exciting information as how the Association notices its meetings, what is needed for a quorum and how proxies are used.  Renters don’t care about any of that.  They really just want to know the use restrictions that are associated with their occupancy and since those are most commonly found in the declaration, adding that document to the list made a lot of sense.

Any person with the right to inspect and copy official records may not be required to demonstrate any purpose or state any reason for the inspection.

Condominiums with 150 or more units have been required to maintain a website and post certain notices and documents on it since January 1, 2019.  The new law now provides that the Association can, in lieu of posting on the website, make such documents available instead “through an application that can be downloaded on a mobile device.” The downloadable application must be independent and operated by a third-party provider and must be accessible through the internet and meet all other requirements imposed on the website by the Statute.

COMMENTARY: The legislature, much like my 95 year old grandmother, has seemingly discovered the existence of mobile applications or “apps” as the kids call them.  Better late than never!

Natural Gas and Electric Vehicle Charging Stations Installed by Unit Owners

Continuing with the theme of supporting technology, unit owners may now install a natural gas fuel station or electric vehicle charging station within the boundaries of their limited  common element or “exclusively designated” parking spaces. Like electric vehicle charging stations, the unit owner must have the station separately metered and must comply with all federal, state and local laws and regulations for installation, maintenance and removal.  Also, the contractor hired to install the stations on behalf of the unit owner cannot lien the common elements or Association property if the contractor is not paid for  the work but can lien the unit owner’s unit.

COMMENTARY: In my opinion, the bigger change here is adding the “exclusively designated” parking space language because some unit owners have assigned parking that is not actually a limited common element but rather a deeded parking space that they own.  Under the prior statutory language the Association could have actually denied such unit owners from installing an electric charging station since their parking space was not a “limited common element” but now that ambiguity is gone and that is a good thing. 

Of course, the other “big” addition here is allowing for natural gas fuel stations to be installed in unit owner parking spaces as well.  Wake me up when natural gas vehicles become a thing.

Natural Gas and Electric Vehicle Charging Stations Installed by the Association

The Board of an Association may make available, install, or operate an electric vehicle charging station or a natural gas fuel station on the common elements or Association property and establish the charges and the manner of payments for the unit owners, residents or guests who use them and the installation of either type of device shall not constitute a material alteration or substantial addition to the common elements or Association property.

COMMENTARY: We have had several clients ask about installing common area charging stations and the concerns were usually the cost of installation, how to bill for usage, the limited applications (at least for now until electric cars become more prevalent), the issue of certain individuals monopolizing the equipment and of course, the big issue of it being a material alteration and potentially requiring a membership vote.  However, having the legislature remove the material alteration concern is fantastic progress and should help “pave the way” (pun intended) to encourage more electric vehicles.

Alternative Dispute Resolution

Arbitration through the DBPR, Division of Condominiums is no longer mandatory for the disputes to which it previously applied (except for election and recall disputes which must still be arbitrated or go to court). The Association or the unit owner now has the option to either go through arbitration (which the parties can agree to be binding and final) or instead go to pre-suit mediation (like homeowners associations have been able to do for quite some time) and if not resolved through pre-suit mediation to then go directly to court.

COMMENTARY: This is great news for anyone that has gone through the arbitration process because it is slow and unrewarding, the rulings have been inconsistent over the years and the arbitrators rarely have awarded full fees incurred, meaning that the Association has almost always had to come out of pocket to enforce its governing documents.

Discriminatory Restrictions

The Board may remove illegal discriminatory restrictions contained in the governing documents without an owner vote.

COMMENTARY: Although illegal provisions were unenforceable anyway, making it simple to eradicate such provisions from the record books was a laudable step forward.

Fines

Payment of a fine approved by the fining committee is now due 5 days after the notice of the approved fine is provided instead of 5 days after the fining committee meeting was held.

HOMEOWNERS ASSOCIATIONS

Emergency Powers

The emergency powers are now expressly applicable to an emergency declared due to a public health crisis such as COVID-19. The powers can now be used to prevent harm anticipated to be caused in connection with the emergency and not just after the harm or damage has occurred.  During a declared state of emergency, in addition to Board meetings, members meetings, committee meetings and elections can be held in whole or in part virtually via telephone, real-time video conferencing or similar real-time communication. However, the emergency powers cannot prohibit unit owners, tenants, guests, agents or invitees of an owner from accessing the parcel or the common areas for the purpose of ingress and egress from the unit when access is necessary in connections with (a) the sale, lease, or transfer of title of a unit or (b) the habitability of the unit or for the health and safety of such persons unless a governmental order or public health directive from the CDC has been issued prohibiting such access to the unit.  However, such access is subject to reasonable restrictions adopted by the Association. The “disaster plan or emergency plan” can now be implemented during the emergency rather than just before or after the emergency.  In determining to close or limit access to the community property the Board can now rely on the advice of “public health officials” and not just an emergency management official or other licensed professional.

COMMENTARY: These changes are useful to expand and clarify the emergency powers so that they clearly apply not only in connection with hurricane-type disasters, but also during a state of emergency declared for a pandemic or other type of public health crisis.  However, there are still some issues that remain unclear such as the ability to not only conduct the various meetings electronically, but whether unit owners are allowed to count for quorum and cast a vote over such mediums (and not by paper or an electronic voting platform).  Another open issue is whether the Board can close or limit access to certain groups of people, such as social guests, while allowing access to others, such as residents or certain family members.

Amendments

Any governing document, or amendment to a governing document, that is enacted after July 1, 2021, and that prohibits or regulates rental agreements will only apply to:

  1. An owner who acquires title to the parcel after the effective date of the governing document or amendment; or
  2. An owner who consents to or votes in favor of to the governing document or amendment.

COMMENTARY: It is interesting that they used the phrase “prohibits or regulates rental agreements” because there are several rental-related amendments that I would contend do not “prohibit or regulate” the actual rental agreements themselves, but instead have an effect on the renters themselves or on other ancillary matters such as approval processes, background checks, transfer fees and security deposits.

With respect to those who did not consent to or vote in favor of a rental amendment retaining their protection from it when there is a change of ownership, this new law further provides that a change of ownership (in this context) is not deemed to occur when an owner conveys the parcel to an “affiliated entity”, when beneficial ownership of the parcel does not change, or when an heir becomes the owner.  The term “affiliated entity” is defined in the statute and any such entity desiring to carry over the protections afforded to the predecessor must furnish to the Association documentation as may be requested.

COMMENTARY: The primary purpose of this provision is to allow owners to confidently re-deed their property to a trust or limited liability community for estate planning or asset protection purposes without fear of losing their protection from rental amendments that they did not vote to approve that were passed after July 1, 2021.  It will also protect those who are involuntarily thrust into ownership upon the death of the owner from being subject to such rental amendments as well.

Although this new law appears to be fairly broad and protective of the owners with regard to rental amendments, it does provide a key exception–a homeowners association may amend its governing documents to prohibit or regulate rental agreements for a rental term of less than 6 months and may prohibit the rental of a parcel more than three (3) times in a calendar year and those types of amendments will still apply to all parcel owners regardless of whether or not they voted for it.

COMMENTARY: This exception is crucial because it will allow homeowners association that do not already have restrictions on short term rentals to still pass such restrictions after July 1, 2021 with the confidence that if they are approved by the required percentage of the membership that such restrictions will apply to all owners regardless of whether or not they voted in favor and the community can avoid being overrun by AirBNB, VRBO and other short-term type uses.

For the past few years, there was a requirement that notice of an adopted amendment being recorded had to be mailed to the owner’s address as listed on the property appraisers’ website.  The notice may now be mailed to the mailing address the Association has listed in the Association’s official records.

COMMENTARY: This is another correction of a past mistake.  The property appraiser is not always a reliable of information and requiring the Association to rely on it would mean every time they sent out a document they would have to verify every owner’s address against the property appraiser’s information to make sure what they had on file was up to date.  Thankfully this administrative nightmare is over.

Board Adopted Rules

For the past few years, amendments to Board adopted rules and regulations had to be recorded with the County because the legislature previously revised the statutory definition of “governing documents” to add rules and regulations.  The definition has now been reverted back to how it previously existed, which means that rules and regulations are no longer part of the statutory definition of “governing documents” and accordingly, amendments to rules and regulations no longer have to be recorded.

COMMENTARY: This is a good corrective measure as it was clearly never the intention of the legislature to require rules and regulations to be recorded and it was just an unintentional consequence of them trying to expand the scope of the definition of “governing documents”.  This is good for homeowners associations as it will save them money on recording costs that they will no longer have to pay.

Board Meeting Notice

In addition to any of the authorized means of providing notice of a meeting of the Board, the Association may, by rule, adopt a procedure for conspicuously posting the meeting notice and the agenda on the Association’s website or an application that can be downloaded on a mobile device for at least the minimum period of time for which a notice of a meeting is  also required to be physically posted on the Association property.  Any rule adopted must, in addition to other matters, include a requirement that the Association send an electronic notice  to members whose e-mail addresses are included in the Association’s official records in the same manner as is required for a notice of a meeting of the members.  Such notice must include a hyperlink to the website or such mobile application on which the meeting notice is posted. This is in addition to the traditional notice that is still required.

Elections and Recalls

For many years, election and recall disputes in homeowners association could only be filed with the DBPR, Divisions of Condominiums. Now, an election or recall dispute can still be filed with the Division or it can instead be filed directly in a court.  Pre-suit mediation is not required before filing in Court.

COMMENTARY: This is great news for anyone that has gone through the arbitration process because it is slow and unrewarding and the rulings have been inconsistent over the years.  But hey, if you like those qualities in your adjudication process then you can still choose to avail your Association of arbitration through the DBPR!

Official Records

Ballots, sign in sheets, voting proxies, and all other papers relating to voting by parcel owners are official records and must be maintained for at least 1 year after the date of the election, vote, or meeting.

Information an Association obtains in a gated community in connection with guests visiting homeowners or community residents are protected official records and cannot be inspected and copied by owners making official records requests.

COMMENTARY: This is a sensible addition to the list of records that are not available for inspection since a list of who is coming and going to and from a property is something for which there is a reasonable expectation of privacy.

Statutory Reserves and Developer Deficit Funding

Statutory or “mandatory” reserves used to be established in 3 ways:

  1. The developer initially established them prior to turnover in the budget;
  2. The governing documents as drafted by  the developer mandate reserves; or
  3. The members voted to establish them after turnover.

The new law removes the first type such that statutory reserves are now only created if they are mandated in the governing documents or by a vote of the members.

Year end financial reporting has also been modified to provide that if a homeowners association does not maintain statutory reserves or the governing documents do not obligate  the developer to create reserves that this must be noted on the year-end financial report with a bold all caps disclaimer.  The change here is adding the “governing documents” term to the provision.

While a developer is in control of a homeowners association, the developer may (but is not required to) include reserves in the budget.  If the developer does include reserves in the budget, the developer may determine the amount of reserves included.  The developer is not obligated to pay for:

  1. Contributions to reserve accounts for capital expenditures and deferred maintenance, as well as any other reserves that the homeowners association or the developer may be required to fund pursuant to any state, municipal, county, or other  governmental statute or ordinance;
  2. Operating expenses; or
  3. Any other assessments related to the developer’s parcels for any period of time for which the developer has provided in the declaration that in lieu of paying any assessments imposed on any parcel owned by the developer, the developer need only pay the deficit, if any, in any fiscal year of the association, between the total amount of the assessments receivable from other members plus any other association income and the lesser of the budgeted or actual expenses incurred by the association during such fiscal year.

This law applies to all homeowners associations existing on or created after July 1, 2021.

COMMENTARY: This new law is likely a reaction to the Centex case from 2017 in which the Court determined that developers who established statutory reserves had a duty to pay those reserves (above and beyond their deficit funding of operating expenses) while they remained in control or to annually vote to waive or reduce such reserves.

Collections Letters – Pre-Intent to Lien Letter

Before changing the method of delivery for an invoice for assessments or the statement of account, the Association must now deliver a written notice of such change to the owner.  The written notice must be delivered at least 30 days before the Association sends the invoice for assessments or the statement of account by the new delivery method and the owner must affirmatively acknowledge his or her understanding that the Association will change its method of delivery before the Association may change the method of delivery. The owner may make the affirmative acknowledgment electronically or in writing.

An Association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the owner which specifies the amount owed to the Association and provides the owner an opportunity to pay the amount owed without the assessment of attorney fees. A rebuttable presumption that an association mailed a notice in accordance with this subsection is established if a Board member, officer, or agent of the association, or a manager provides a sworn affidavit attesting to such mailing.  The Statute contains a form that should be used.

COMMENTARY: While there was previously never a requirement to send an owner a delinquency letter free from attorney’s fees before sending an account for collections, most all Associations routinely sent courtesy letters, warning letters or demand letters, usually through their management company and often at no charge to the owner.  So, management companies will likely just have to modify their existing letters and make sure that they are substantially in the form that is now required by the statute.

Discriminatory Restrictions

The Board may remove illegal discriminatory restrictions contained in the governing documents without an owner vote.

COMMENTARY: Although illegal provisions were unenforceable anyway, making it simple to eradicate such provisions from the record books was a laudable step forward.

Fines

Payment of a fine approved by the fining committee is now due 5 days after the notice of the approved fine is provided instead of 5 days after the fining committee meeting was held.

ADDITIONAL COVID LEGISLATION

COVID-19 Vaccine Proof Documentation – F.S. 381.00316(1) – (6)

A business entity, as defined in Florida Statute 768.38 to include any business operating in this State, may not require patrons or customers to provide any documentation certifying COVID-19 vaccination or post-infection recovery for them to gain access to, entry upon, or service from the business operations in this State.  This statute does not otherwise restrict businesses from instituting screening protocols in accordance with state or federal law to protect public health.  The department may impose a fine not to exceed $5,000 per violation. 

COMMENTARY: There is some debate as to whether this law applies to community associations because they may not be deemed a “business entity” and owners and guests may not be considered “patrons” or “customers”.  However, it is my belief that a community association cannot require proof of vaccination to use the common areas or amenities.

COVID-19 Liability Protection – F.S. 768.38

This new provision of the law protects corporations, including community associations, from civil liability for damages, injury, or death which arises from or related to COVID-19 as long as the Association “made a good faith effort to substantially comply with authoritative or controlling government-issued health standards or guidance at the time the cause of action accrued.”   The statute of limitations to bring a claim against the Association is within 1 year after the damage, injury or death occurred.

COMMENTARY: This should give community associations some degree of peace of mind that they will be shielded from liability for COVID-19 claims.  However, just be prepared that lawsuits will still be filed contending that a good faith effort to comply with health standards was not met.

This shall serve as Wasserstein, P.A.’s newsletter regarding recent legislative changes of which you should be aware.  Please note that the following is only a summary of the key changes and updates that have already gone into effect or will go into effect July 1, 2021 (along with some color commentary).  Please feel free to share it with your fellow board members and property managers!

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Wasserstein, P.A. – 2015 Legislative Update

Wasserstein Logo CMYK

561-288-3999

danw@wassersteinpa.com

2015 LEGISLATIVE UPDATE

This shall serve as Wasserstein, P.A.’s newsletter to our clients regarding recent legislative changes of which you should be aware.  As of July 1, 2015 the most significant bill for community associations that was passed into law was HB 791.  Most changes included in HB 791 impact both condominiums and homeowners associations unless otherwise specified.  The following are the key changes and updates:

CONDOMINIUMS AND HOMEOWNERS ASSOCIATIONS:

Electronic Voting: One of the most significant changes passed this session is that associations may now conduct elections and other membership votes via an electronic (internet-based) system. The new law includes requirements necessary to establish an electronic voting method, including a board resolution adopting this manner of voting.  An owner’s consent to online voting is required, but if the owner does not consent then he or she is still entitled to vote by paper ballot.

Electronic Transmission of Proxies: As the law previously existed, it did not allow for proxies to be submitted electronically (scanned, faxed, e-mailed, etc.).  The new law contains language similar to the language already found in Florida Statute 607.0722(10), which governs for-profit corporations, and is being added to Florida Statute 617.0721, which governs not-for-profit corporations, including both condominium and homeowners’ associations.  This new law will allow for owners to submit their proxies electronically, which will certainly facilitate membership voting by making it easier to participate (albeit participation by non-participation since its by proxy!).

Electronic Notice to Owners: This part of the bill removes from the statutes the requirement that electronic notices to owners must be authorized by the bylaws (this requirement generally meant an amendment of the bylaws was necessary since many were recorded back when the Internet was merely just a dream of the U.S. Army, Al Gore, Bill Gates or whomever else claims to have invented it and electronic notice was not even contemplated!). Now, as long as the owner consents in writing, the association may provide the owner with electronic notice and save some trees.

Suspension of Voting Rights and Amenities: A welcomed change and clarification adopted by this bill is that when an owner’s voting rights are suspended, they are effectively removed from the total number of voting interests in the community for purposes of calculating a quorum or obtaining approval of membership action.  Basically, they are removed from the denominator of the fraction.  So if you have a community of 100 units and need 67% to vote in favor of the proposed action, and 10 owners have had their rights suspended, you need only 67% of 90 rather than 67% of 100.  The bill also clarifies that the suspension of right to use amenities applies to owner, their tenants and guests, regardless of number of units owned by the owner.

Fines: This section of the bill clarifies that it is the Board of Directors that is responsible for levying fines and that the fining/covenant enforcement committee hearing must be impartial and limited to the purpose of approving or rejecting the fine levied by the Board.  This is a change I find to be somewhat poorly conceived as it 1) takes away significant authority from the committee and places further burden on the Board and 2) is a somewhat poorly worded amendment to existing law confounding whether the fine is to be determined by the Board and then approved or rejected by the committee after the fact, at a subsequent fining hearing, or if the hearing takes place first and then the fine is levied.

CONDOMINIUM ASSOCIATIONS ONLY:

Application of Payment/Assessments: The Condominium Act sets forth that any payments received by owners on a delinquent account are applied first to interest, then late fees, then collections costs and attorney’s fees, and lastly, the unpaid assessments. The bill amends Florida Statute 718.116(3) to reinforce that this application of payments is to be followed regardless of any purported “full accord and satisfaction” or “payment in full” language or any other restrictive endorsement that may accompany a short or partial payment tendered to the association.

The reason for this change is to overrule a 2014 appellate decision (referred to as the St. Croix case) that held that if a check was tendered for less than the total amount owed, but was accompanied by any of the “full accord and satisfaction” or “payment in full” language, the acceptance of the payment essentially settled the account for the amount accepted.  This caused associations, their managers and attorneys to have to be overly cautious when processing each and every payment to make sure they were not waiving any amounts rightfully owed and even to turn away certain payments, but now that fear has been allayed, at least as to condominiums.

What I would like to see clarified is the last part of the statutory application.  The last item to which payments are applied are unpaid assessments but the question remains, to which unpaid assessments are those payments applied, the oldest or the most recent?  It would make sense to apply payments to the oldest unpaid assessments first and that is often how they are handled in practice as it is most fair to the delinquent owner (since the older an assessment, the larger amount of interest that accrues).  However, it would be nice to have a clarification.  Just wishful thinking on the part of an association lawyer.

Official Records: Previously, the Condominium Act had a catch-all type of provision that made “all other records of the association…which are related to the operation of the association” part of the official records. The new law clarifies that those “other” records are limited to only “written” records.  Effectively, items such as audio or video recordings of meetings or security camera video footage are now no longer considered “official records” and accordingly, do not have to be made available to owners seeking to inspect the official records.  An interesting debate is whether e-mail constitutes a “written” record and if so, whether audio or video files transmitted via e-mail are then made part of the official records.

Distressed Condominium Relief Act: The bill also extended the “distressed condominium relief act” also known as the “bulk buyer law” until July 1, 2018.  It had been set to expire, or “sunset” on July 1, 2016.  This is important for investors that buy distressed condominium projects as it gives them immunity from various obligations affiliated with being a developer.

Insurance: The new law modified a provision that previously made the association responsible for certain “uninsured losses.”  This change really just fixes a glitch and clarifies that the association’s obligation to subsidize insurance shortfalls for items that may otherwise be the unit owner’s responsibility is limited to situations where the association was actually responsible to insure the damaged element.

HOMEOWNERS ASSOCIATIONS ONLY:

Homeowners Association Act: Florida Statute 720, which governs homeowners association, is now officially known as the “Homeowners Association Act.”  Neat.

Governing Documents Includes Rules and Regulations: While most everyone has always considered the rules and regulations adopted by an association to be part of their “governing documents,” that term, as used throughout the Homeowners Association Act (my first time calling the statute by its new official name…exciting stuff!) is now deemed to explicitly include the rules and regulations.

Notice of Amendments: While the Homeowners Association Act still requires the providing of notice to the membership of recording an amendment to the governing documents, failure to do so does not affect the validity of the amendment.

Eligibility for the Board of Directors: Taking a page out of the Condominium Act, the Homeowners Association Act now provides that an individual who is delinquent in the payment of any financial obligation owed to the Association as of the last day that he or she could nominate himself or herself to the board is not eligible to be a candidate and may not be listed on the ballot.  Once on the Board, a member’s delinquency leash is a bit looser (so as not to create excessive vacancies) as it is not until they become 90 days delinquent in the payment of any monetary obligation owed to the Association that they are deemed to have abandoned their seat on the Board, creating a vacancy to be filled accordingly.

OTHER BILLS AFFECTING ASSOCIATIONS:

Evicting Tenants of Properties in Foreclosure:  HB 779 is meant to replace the Protecting Tenants in Foreclosure Act of 2009.  Once a property is acquired at foreclosure, the new owner, whether a lender or third party purchaser, must provide a bona fide tenant (someone who was leasing at arm’s length, at a market rate) with only 30 days’ notice of the termination of the rental agreement before eviction can be pursued (if the tenant does not timely vacate).  This is a much shortened window of time for tenants to vacate as compared to the prior Protecting Tenants at Foreclosure Act of 2009 which provided that a bona fide tenant was allowed to stay in the property for the entire remaining term of their lease unless the new owner wanted to actually reside at the purchased property.

Termination of Condominiums: Since this is not something that commonly comes up with condominium associations, thankfully, I will only mention that the Condominium Act now provides that if a termination vote fails, another vote to terminate may not be considered for 18 months and voting interests that have been suspended are still entitled to vote on the termination. Also, a termination vote may not take place until 5 years after the recording of the declaration of condominium unless there is no objection.

Daniel Wasserstein
E-mail: danw@wassersteinpa.com
561-288-3999

Common Contractual Conditions to Cover Community Associations

contractpic‘

As a community association attorney, I see many contracts come across my desk for review.  What concerns me are the number of contracts that do not.  You aren’t dealing with Vito Corleone and an irrefusable offer!  Any time a vendor is seeking to provide work or services to your community, you are the one in a position of power and it is of the utmost importance that your association insist on some basic protections.

First, you will want to make sure the vendor is licensed, that they are adequately insured, that they provide worker’s compensation coverage to their employees and that they will agree to name the association as an additional insured on their general liability policy.  These base requirements will be applicable to most all vendors providing goods and services to community associations and confirmation from the vendor should be insisted upon at the outset.

Next are the legal protections in the contract itself – indemnification and prevailing party attorney’s fees.  Simple enough to have input into any agreement, but when omitted can lead to disastrous results.  What happens if during the course of a vendor’s work they injure one of your residents or cause damage to a resident’s personal property?  You guessed it – that resident is suing the association.  Without an indemnification provision, the association will likely have to bear the burden of defending itself and potentially paying for a vendor’s mistake.  Now what happens if the vendor does not cause any injuries or property damage, but simply fails to live up to the terms of the contract?  If your contract with that vendor does not allow the prevailing party in litigation to recover its attorney’s fees from the losing party, it means that even if your association won its lawsuit against the vendor, the association would not be able to recover its attorney’s fees, which very well could exceed the underlying claim.

Finally, where appropriate, your association should insist that any guarantees or warranties on labor or materials be provided in writing along with the contract and before work begins so that the association knows exactly what the vendor or manufacturer will be providing (or more importantly, not providing).  Often, a contract will reference generally that the vendor or manufacturer will provide a warranty but does not specify the duration, limitations or conditions.  Make sure to get a copy of these documents before putting pen to paper.

Of course, to best ensure your community’s protection, it is recommended that you retain the services of a community association attorney to review all contracts.  Conveniently enough, the contact information for such an attorney can be found immediately below.

Daniel Wasserstein
E-mail: danw@wassersteinpa.com
561-288-3999

Abandonment Issues

Empty

All that empty space and no right to use it…until now.

A year ago I wrote an article titled “Is Your Association Down with OPP?”  discussing the pros and cons of renting out empty units without first taking title.  The legislature has heeded the call and last month amended the Condominium Act to allow condo associations certain rights with regard to abandoned units, including the right to rent them out.  Here’s how it works:

After mailing or hand delivering a 2 day notice to the owner of record at their last known address, a condominium association can now enter a unit to clean it up, perform necessary maintenance or repairs, and to turn on utilities (get that A/C going to prevent mold!) if a unit is “abandoned”.   The association can then charge all costs incurred to the unit ledger and lien for the amounts (if they are unpaid) the same as an assessment.  Also, if a unit is “abandoned” a condominium association can petition the court to appoint a receiver to rent out the unit to offset costs incurred with regard to the unit and unpaid assessments.

A unit is defined as “abandoned” if:

  1. The unit is in foreclosure and no tenant appears to have resided in the unit for 4 continuous weeks without providing prior written notice to the association (i.e.-someone sending a letter stating they will be out of town for a month);

       OR

  1. When a unit is not in foreclosure, but no tenant appears to have resided in the unit for 2 consecutive months without providing prior written notice to the association and the association is unable to contact the owner or determine their whereabouts after reasonable attempts.

If your association has questions as to how best to make use of this great addition, it is recommended you contact a community association attorney.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Speedy Foreclosure Law – A New Way to Avoid Delay

delays

The average number of days it has taken a lender to foreclose in Florida has been estimated at almost 900 days!  In many of these cases the borrower has defaulted in the lawsuit or has otherwise abandoned the property, so responsibility for this delay has often rested with the lender.  

Why would a lender purposely delay obtaining an uncontested judgment?  For one, the lenders have been happy to postpone recognizing the loss on their books.  Lenders have also been adverse to the possibility of taking title without a purchaser ready to assume the responsibilities of ownership.  These responsibilities include maintenance and upkeep expenses, tax and insurance liability, but most notably as to associations, the obligation to pay not only a portion of prior assessments, but also the ongoing obligation to pay future assessments until the property is sold.  

Facing these liabilities, the orchestrated inertia that has permeated in lender foreclosures is certainly understandable.  Delay is beneficial for the lenders because it allows them to move their cases at their own pace and avoid liabilities they are not prepared to take on.  Delay is also beneficial to the borrowers as they receive the gift of an extended reprieve which often equates to months (and sometimes years) of rent free living.  Who does the delay hurt?  The associations, which have continued to bleed assessments as lender foreclosures crawl towards finality.  While some association attorneys, including me, have taken proactive measures to prod these cases along, it certainly helps to have more tools at our disposal.

Enter the new speedy foreclosure bill, HB 87, that was just recently signed into law by Governor Rick Scott.  Amongst other things, it provides associations with statutory leverage to push uncontested lender foreclosures towards completion.  Previously the law allowed only the lender to seek what is called an “order to show cause” where the borrower would have limited time to show cause as to why a final judgment should not be entered.  If the borrower failed to show such cause or otherwise failed to participate in the proceeding, a final judgment of foreclosure would be entered without the need for further litigation.  Of course, with the overarching culture of delay, this tool was seldom used by lenders.  With the new speedy foreclosure law,  this right has been extended to associations and now they too can force the borrower to show cause as to why a judgment of foreclosure should not be entered against them in the lender’s case.  

While HB 87 should facilitate the movement of uncontested lender foreclosures towards a quick resolution, it is important to realize that many lenders may decide to stall even the filing of their actions since they have now lost a degree of control.  Although this new law is certainly a beneficial development for associations, as the sign above suggests it will remain an inevitability to “Expect Delays”.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Going Green to Save Some Green – Installing Solar Panels to Reduce Energy Costs

Solar Panels

When it comes to aesthetics, associations in Florida generally try to maintain the uniformity of the community by making sure owners are staying consistent with the original design.  Minor alterations, modifications or additions are usually permissible but many decisions that would otherwise be within an owners control, such as the color of their house or installation of an outdoor enclosure, are often disallowed when one submits to association living.  So long as they are not selectively enforced, these aesthetic restrictions are justifiable because they help to preserve everyone’s property value by maintaining the integrity of the community, and with the economy the way it has been, homeowners certainly need to preserve every dollar of their property’s value.

So what about all this we hear about “going green”.  Sounds like a great idea, right?  That is of course until it shows up in the form of ugly black solar panels on your neighbor’s roof .  Under the aesthetic restrictions just discussed, you would think that your association would be able to preclude your neighbor from installing such an eyesore, right?  Wrong!  The Florida Statutes (section 163.04 for those scoring at home) specifically allow owners in HOAs and condos the right to install solar collectors on their home or on the roof of their condo free from any deed or covenant restrictions that the association would normally seek to impose.  If installed on a roof, the association is only allowed to determine the location where the solar collectors may be placed, but even then the location must be within an area with a southern orientation and the selected location must not impair the effectiveness of the solar collectors.

So it seems that just when you think the association has absolute control over aesthetics, renewable energy proves to be the higher power.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Pipe Burst – Who’s Responsible?

A pipe burst in a condominium can be everyone’s worst nightmare.  Its usually a haphazard, unpredictable event causing significant damage, but the aftermath can be even more challenging to filter out than the displaced water.  Both the Association and the affected unit owners will be carefully evaluating the nature of the damage, potential insurance coverage as well as causation, and all of this can certainly put a damper on carefree condo living.

Since most major pipe bursts are random occurrences, the Association should initially focus its efforts on repairing the pipe, analyzing the damage and preparing a claim to be submitted to the Association’s general liability insurance carrier.  The Association is obligated to maintain the common elements and the sooner it can obtain the insurance funding, the sooner the Association can replace certain items such as drywall (or in this case, wetwall) so as to prevent further damage to the common elements and potential health risks.

But what about poor Mrs. Unit Owner who had her hard wood floor coverings, her fancy drapes and her antique furniture damaged by a haphazard pipe burst?  Surely the Association’s insurance must cover those items too, right?  Actually, Florida Statute 718.111(11), which governs insurance requirements for condominium associations, requires that an Association’s insurance specifically exclude coverage for these types of personal property found within a unit and puts the obligation squarely on the unit owner to self insure against this type of loss.

So is Mrs. Unit Owner out of luck if she did not have insurance on her personal property?  Not entirely.  This is where the issue of causation comes into play–what caused the pipe to burst?  It could indeed be that another unit owner was negligent in attempting to make alterations which inadvertently caused damage to the common element pipe.  Alternatively, it could have been a situation where the Association was warned by a professional that a particular common element pipe was weak and preventative maintenance was never taken to address the issue.  In either case, the negligent party could be on the hook for all the resulting damage, not only the damage to the common elements but also to the internal surfaces, components, fixtures and personal property contained inside all affected units.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Is Your Association Down with OPP?

During the current economic crisis, associations across Florida have searched for novel and alternative ways to combat their mounting assessment delinquencies.  Taking control of OPP, also know as “other people’s property,” has become a common way for associations to recoup their losses, but this may prove to be naughty, by nature.

The most traditional and legally sanitary way for associations to take control of delinquent properties in the community is through the foreclosure process.  Once a property becomes delinquent, an association can file their lien (after complying with all statutory pre-conditions) and then foreclose on a property through the court system.  If the resulting foreclosure sale does not yield a third party buyer, then title is vested in the name of the association.  The association is then free to sell the property, or, as more commonly occurs, rent it out until such time as the mortgage lender forecloses their superior lien and takes title.  The association can take such actions because, of course, the association legally owns the property.

But what about the situation where the association has not obtained title to a particular property in the community, but believes it to have been abandoned by its owner?  This is not such an uncommon occurrence, especially where many properties in Florida were purchased during the real estate boom as second homes or investments.  When the economy went sour, the owner may have simply decided to walk away because they either could no longer afford the property or because they were upside down on their mortgage, or both.  From this situation, emerged a new strategy whereby associations began renting out these abandoned properties without actually taking title to them or obtaining consent of the owner (come to think of it, my friend owes me $100, maybe I should rent out the treadmill in his garage–I know for a fact he abandoned that piece of equipment long ago!).

While the renting of abandoned properties may derive well-needed income for the association and the actual owner may never know, or for that matter, care, this author does not recommend the practice.  Renting a property is one element of the “bundle of rights” that only an owner has with respect to their property.  Such rights can only be conveyed to third parties, such as the association, if provided for by Florida law.  While the Florida Statutes were indeed amended in 2010 to allow an association the right to collect rental payments from the tenant of a delinquent owner, they do not allow for an association to change the locks and actually place a tenant in a property owned by a delinquent owner–a key distinction.

The bottom line is that while the businessman sitting on one shoulder is telling me that this is a great way to score some needed cash for associations with the motto “it isn’t wrong unless you get caught” the lawyer sitting on my other shoulder is reminding me of all the ponzi schemers, robo-signers, etc. that lived by that same mantra and we all know how they have fared over the last few years.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Quest for Quorum

For community associations in Florida, when it comes to having a valid meeting of the membership the statutes applicable to condominiums and homeowners associations both require that there be a “quorum.”  A quorum, as defined by the internet equivalent of Webster’s dictionary, Dictionary.com, defines a quorum as “the number of members of a group or organization required to be present to transact business legally.”  So although this word may sound like just another typical piece of lawyer jargon derived from a dead language (Latin, not Sanskrit, for those scoring at home), it has the potential to be the undoing of a lot of hard work if the proper number is not achieved.  One of the confounding circumstances is that many assume that the condo and HOA statutes are completely in sync and while this may often be the case, the statutory requirement for a quorum at a meeting of the membership of a condo differs quite significantly from that for HOAs.

Chapter 718 governs condominiums in Florida and with regard to achieving a quorum, subsection 718.112(2)(b)(1) states that “unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members is a majority of the voting interests.”

Chapter 720 governs HOAs in Florida and with regard to achieving a quorum, subsection 720.306(1)(a) states that “unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be 30 percent of the total voting interests.”

So unless a number lower than these figures is provided for in an association’s bylaws, for condominiums to have a quorum at a meeting of the membership there must be at least 50% of the membership plus 1 present, in person or by proxy.  This is significantly higher than for HOAs where only a minimum of 30% of the membership must be present, in person or by proxy.  It follows that if your association wants to take action on something requiring a vote of the membership, such as amending of the governing documents, knowing the appropriate quorum requirement is crucial to ensuring the validity of the proceedings.

It is also important to note another related difference between the statutes.  While Chapter 720 is silent on the issue, Chapter 718.112(2)(b)(2) provides that “a voting interest or consent right allocated to a unit owned by the association may not be exercised or considered for any purpose, whether for a quorum, an election, or otherwise.”  In the current economy, where units are often foreclosed upon and taken title to by associations, it is important that condo associations understand that per this statute, they cannot use ownership of units to satisfy a quorum requirement, nor can the association vote the interest of these units in any way whatsoever.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Rent Your Condo…I Don’t Think So!

It’s my property and I can do whatever I want with it, right?  Wrong!-at least when it comes to renting out a condominium unit.

Most condominium owners in Florida are allowed to rent their units subject to approval by the governing association.  However, when an owner is delinquent in paying assessments on a unit, the condominium association has the right under Florida Statute 718.116(4) to withhold approval of any lease on the unit, regardless of the reasonability of lease or quality of the tenant (provided, of course, that the governing documents of the condominium allow the association the right to approve or disapprove of leases).

While this law may prove frustrating for owners who might look to the rental income as a way to pay down their assessment debt, the purpose of this law is to prevent delinquent owners from entering into below market leases that they can afford only because of their non-payment of assessments and other obligations such as their mortgage.  Not only does this law protect the community from depressed rental values, but it also helps to avoid the stigma that might be associated with an association permitting a delinquent owner access to a stream of revenue where he or she has little to no expenses and little incentive to pay down their debt.  It also protects a prospective tenant from getting in over their head with a landlord who may have little to no interest in laying out any cash, including that which may be necessary to fund major repairs to the unit such as air conditioning or plumbing.

Now lets say a unit owner pushes hard for approval of their lease and it is at fair market value and the prospective tenant passes an initial screening.  An alternative to disapproving the lease in the manner described above is founded in another law, Florida Statute 718.116(11), that allows an association to demand and receive rental payments from a delinquent owner’s tenant.  If this can be agreed upon as a condition of approval, it may prove to be a viable option for the association and serve as a justification to the rest of the community as to why the lease was approved.  For more information on this option, see “Got Rent? Going After Delinquent Owners’ Rental Income“.

Either way, the association should make sure that it creates a policy for dealing with these scenarios to ensure that all unit owners are being treated fairly and uniformly.

Daniel Wasserstein

E-mail:  danw@wassersteinpa.com

561-288-3999