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

Advertisements

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

Term Limits for Condominium Directors

FDR was certainly not a fan of term limits.  What about Obama and Romney?  One thing that is clear is that since 2008, the State of Florida has been a fan of term limits, at least for directors of condominiums.

In 2007 and prior, Florida Statute 718.112(2)(d) read:  “If there is no provision in the bylaws for terms of the members of the board, the terms of all members of the board shall expire upon the election of their successors at the annual meeting.”  This essentially meant that so long as your bylaws outlined some sort of term limits, whether they be 12 months or 12 years, those would be the limits imposed on the directors of your condominium association.

However, an amendment to this statute was passed in 2008 which changed it to read:  “Except in a timeshare condominium, or if the staggered term of a board member does not expire until a later annual meeting, or if all members’ terms would otherwise expire but there are no candidates, the terms of all board members expire at the annual meeting, and such members may stand for reelection unless prohibited by the bylaws.”  Notice that the key language from the first sentence of the 2007 version that allowed a condominium association to defer to the term limits in its own bylaws was removed.  The effect is that now, unless your association has staggered terms, directors’ board membership always expires at the annual meeting, effectively limiting all terms to 1 year regardless of what your bylaws might otherwise say!

Some people may love this change.  Some people may hate it.  If a dispute does develop as to whether your association is subject to the amended 2008 version of this statute, an analysis of your governing documents may be helpful.  For example, and as further discussed in the post titled “The Magic Words”, many condominium associations’ governing documents contain language stating that they are governed by the Condominium Act “as amended from time to time”.  Although such documents may predate 2008, and could be 20, 30 or even 40 years old, the fact that they contain these “magic words” means that they are subject to the most current version of the Condominium Act.

Alternatively, for condominium association documents that state that they are simply governed by the Condominium Act or governed by the Condominium Act as it exists at the time the documents were recorded, it may be argued that only those amendments to the Condominium Act that predate the recording of the governing documents are applicable to that particular association.  So, if your condominium association has bylaws permitting say 4 year terms for directors and those bylaws were originally recorded in 2007 or prior and your governing documents nowhere state the magic “as amended from time to time” language, you could argue that the 4 year term for directors still apply.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Donations to the Association: To Give or Not to Give

While donations are usually very much appreciated, the old adage “no good deed goes unpunished” may apply, especially when it comes to associations in Florida!

First, it should be known that there is no statute or regulation that precludes an association from accepting donations, but it is preferable that the donations be monetary. If an owner decides to donate their time instead, and performs repairs, modifications or alterations to common elements, they need to understand that they will be held to the same standard as a contractor, meaning that they must perform the work in a professional and workmanlike manner and that they may be held responsible should they fail to complete the work or should they cause damage to the property. If the donating owner is not a licensed and insured professional with regard to the work they undertake, and something goes awry, the board may also be held responsible for allowing unqualified individuals to perform such work. These concerns should certainly be considered before allowing an owner to donate their time.

It is also important to remember that most associations have restrictions on changes to the aesthetics of the community so if someone does give a monetary donation, they need to understand that such generosity does not allow them the right to make material changes on which they get to unilaterally decide. While it may be that a donating member believes that they are improving the community’s aesthetics, other members may see such changes as an unacceptable departure from the aesthetics of the community that they expected to be kept intact when they bought their property. Actions such as painting a room a certain color or modifying landscaping could be deemed a material alteration if they are a departure from what was originally in place and such action would require a vote of the membership.

While donations are certainly rare and may indeed be beneficial for the community, it is important that the association and the owner consider the preceding information before making a decision.

Look for this article to be published in an upcoming edition of the South Florida Cooperator publication!

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