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Florida Condo & HOA Legal Blog

News & Updates on Condo & HOA Laws & Legislation in the State of Florida

Estoppel Bill Raises a Number of Concerns (HB 611)

Posted in CALL Alert, Legislation

HB 611call_logo.png, by Rep. Wood (R-Winter Haven) bill will be heard in Civil Justice Subcommittee today, Wednesday, March 4, at 12:30. The Chair of the Civil Justice Subcommittee is Kathleen Passidomo (R-Naples).

The bill significantly changes the procedures for requesting and delivering estoppel certificates whenever property is sold in a community. CALL (Community Association Leadership Lobby) has a number of concerns about the bill including, but not limited to:

  1. The bill provides an unreasonable cap of $100 for the preparation of an estoppel certificate. The current law allows the association to charge a “reasonable fee”. The bill would allow the association to add another $50 if the owner is delinquent and another $50 if the estoppel certificate is requested on an expedited basis. The caps proposed by the bill do not take into account everything that is involved in producing an accurate estoppel certificate, and the liability which the association incurs, especially considering the waiver language in the bill (explained further in number 3 below).
  2. The bill will prohibit the association from asking that the estoppel fee be paid in advance as a condition of delivering the estoppel certificate. Rather, the bill will require that the estoppel fee be paid to the association from the proceeds at closing. This could be a significant burden to associations, especially in those cases where sales fall through and the association has to produce a number of different estoppel certificates for the same unit. If the association has to delay collecting fees until the deals close, it will add significant time and costs to the process as a result of the association now having to monitor closings and chase after their fees. The current procedure, which works very well, is that the fee is paid at the time the estoppel certificate is prepared.
  3. The bill provides that the association waives any right to collect any amounts in excess of theamounts reflected on the estoppel certificate from anyone who relies on the certificate, including the unit owner. The current law allows the association to collect the delinquent fees against an owner, even if there is an unintentional error in the estoppel certificate. It is simply not good public policy for the waiver language to insulate a delinquent unit owner from having to pay the fees he or she owes and shifting that responsibility to his or her neighbors in the form of bad debt.
  4. The bill reduces the time that the association must comply with a request for an estoppel certificate from 15 days to 10 days. This will mainly hurt smaller associations that do not have a management company or attorney preparing their estoppel certificates.

As a whole, these proposed legislative changes will negatively hinder an associations ability to charge a reasonable estoppel fee and to collect those fees promptly. Therefore, CALL opposes the bill as currently written and will ask the members of the Civil Justice Subcommittee to vote “no” on the bill.

Registration for the 2015 Florida Communities of Excellence Conference & Awards Gala is Now Open!

Posted in Communities of Excellence

Florida Communities of Excellence
Earlier today, we opened registration for the 2015 Florida Communities of Excellence Conference & Awards Gala that takes place May 15 in Weston.Our 7th annual celebration will feature the biggest slate of Awards in our history, plus more exhibits, attendees and fun than ever before. Best of all, it’s an opportunity to network with community association leaders and industry professionals from across the state.If you are a board member, resident, or active association manager, there is no cost to attend the Conference & Awards Gala, but you must register.

We’ve also just published the day’s agenda, which I’ve included below.

Finalists will be announced within the next two weeks.

Looking forward to seeing you in Weston!
Alan Penchansky
Executive Director
The Florida Communities of Excellence Awards

Agenda

Information on the Managers of Excellence Reception & Luncheon, which starts at noon and requires a separate registration and payment, is below the Agenda.

1:00 pm Badge pick-up
1:30 – 4:30 pm Sponsor exhibits open
2:30 – 4:30 pm VIP area for finalists open
3:00 – 4:00 pm Conference Session — “Designing Florida’s Newest Communities: A 10-year look ahead with our state’s most innovative developers” — Leading condo and HOA development companies will offer a glimpse into the community associations of the future.
4:30 – 6:00 pm 2015 Awards Ceremony (Sponsored by FirstService Residential)
Master of Ceremonies: Tom Hudson, syndicated financial columnist/ vice president of news and special correspondent, WLRN Radio, South Florida
6:00 pm Gala Reception (Sponsored by Associa)
8:00 pm 2015 Florida Communities of Excellence Conference & Awards Ceremony concludes

Managers of Excellence Reception & Luncheon with Keynote Presentation (Sponsored by Sentry Management)

Requires a separate registration. Not included with the free conference and award gala.

12 Noon – 1:30 pm

Begun in 2011, the Managers of Excellence award recognizes outstanding Florida professional community managers whose community or communities have received an award or have been a finalist in multiple categories in the Communities of Excellence Awards in two or more years. To date, 29 outstanding managers have been recognized for their achievement.

Luncheon Keynote: Julie Adamen, principal of Adamen Inc., a management and employment consulting firm specializing in the community management industry. Julie is a nationally known author, speaker and trainer in community management.

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When Must an HOA Board Provide Reserve Schedules to Residents?

Posted in Budgets, Reserves & Financial, Reader Q&A

83066040Question: When must the board for a homeowners’ association provide the reserve schedules to the members? Can this information be provided at the annual meeting, or does it need to be included with the pre-meeting notice? D.D. (via e-mail)

Answer: It depends. Chapter 720 of the Florida Statutes, often called the “Florida Homeowners’ Association Act” provides that an association is “deemed to have provided for reserve accounts” if reserve accounts have been initially established by the developer or if the membership of the association affirmatively elects to provide for reserves by a majority vote of the owners. Such reserves are often referred to as “statutory reserves”, although this term is not actually used in the statute.

If the association maintains statutory reserves, Section 720.303(6)(e) of the Act requires that reserves shall be computed by a formula based upon the estimated remaining useful life and established replacement cost or deferred maintenance expense of each reserve item. This calculation is usually contained in a document called the “reserve schedule”, which would need to be part of the proposed budget.

However, unlike the law for condominiums, there is no requirement that an HOA send out the proposed budget in advance of the meeting where it will be adopted. Rather, Section 720.303(6)(a) of the Act simply states that the association “shall provide each member with a copy of the annual budget or a written notice that the budget is available upon request at no charge to the member.” This is generally interpreted to mean the adopted budget, as opposed to the proposed budget, must be sent, or made available to, the homeowners.

If the association does not maintain “statutory reserves”, any reserve funds included in the budget are usually referred to as “non-statutory reserves.” There is essentially no regulation in the Act as to such funds, except that Section 720.303(6)(b) of the Act states that the funding of non-statutory reserves “is limited to the extent that the governing documents limit increases in assessments.”

Assessment Allocations for Condominium Units are Set in the Governing Documents

Posted in Assessment Collection, Common Areas, Reader Q&A

147313556Question: We own a unit in a five unit condominium.  Four of the units are contained in one building and one unit is a standalone building. The units in the four-plex are each approximately 1,750 square feet, while the unit in the standalone building is approximately 2,300 square feet. Our declaration of condominium provides that all assessments are to be shared equally by all units. That is, each unit owner is responsible for one fifth of the assessments. Those in the four-plex have now determined that this is not equitable and the owner of the standalone unit should be responsible for a greater portion of the assessments. It is possible for assessments to be distributed based on square footage? J.S. (via e-mail)

Answer: Assessments by a condominium association are to be allocated as set forth in the declaration of condominium. The statute which existed when your condominium was created permitted the developer to allocate assessment obligations in any way it chose. The current statute requires that assessments be allocated either on an equal per unit basis or based on square footage of the apartments (units).

Both versions of the statute (the current statute and the version which existed when your condominium was created) provide that once the allocation is established, any change to that allocation must be approved by the record owner of all units and all record owners of liens on the units unless the declaration of condominium, as originally recorded, allows amendment of the allocation provision by a lower voting threshold.

I would suspect, although a proper review of the document would be required, that your original declaration follows the statutory scheme and would require unanimous approval for reallocation.

Condo Association Board Can’t Change Amendment Provision

Posted in Reader Q&A

iStock_000015793606XSmallQuestion: Our bylaws state that amendments to the bylaws must be approved by “at least a majority of the total votes in the association.” This has always been interpreted to mean half the units, plus one. Now the board is saying that the required vote is the majority of the members present at a meeting where there is a quorum. Can the board change the amendment provision in the documents? W.O. (via e-mail)

Answer: No. The board can interpret the documents, but cannot change them if a unit owner vote is required. Some documents reserve a right of amendment in the board to comply with statutes, address illegal provisions, and the like, but that is not at issue here.

One of the most common problems I see in documents for both condominiums and homeowners’ associations is imprecision in terminology related to voting. In my opinion, there are only two alternatives that should be used, and they should be used consistently throughout the documents.

If it is the intention that the document be subject to change or vote based upon all owners, then the clause should read that the amendment or action must be approved by “a majority vote of the entire voting interests.” If the concept is based upon those who vote (which is usually preferable from an operational and policy standpoint), the language should be “a majority of those present, in person or by proxy, and voting at a duly noticed meeting of the association at which a quorum has been established.”

Obviously, if a higher threshold (for example, two-thirds or seventy-five percent) is to be used, that language can be substituted in. Both the Florida Condominium Act and the Florida Homeowners’ Association Act are guilty of using different terminology, in various sections, creating confusion. I recently had the opportunity to review a set of condominium documents where the required voting threshold was at issue, and the drafter addressed voting requirements eight different ways, creating confusion as to which phrase meant what.

I would also point out that if condominium or HOA documents are updated to include more precise voting language, provision should also be made for removing from the required vote any votes which have been suspended due to nonpayment of assessments, as well as votes pertaining to units owned by the association. An attorney experienced in condominium or HOA law is your best bet to provide guidance. Amendments of this nature should never be drafted by board members or managers, and probably not even by attorneys who do not focus some significant percentage of their practice in this area of law.

In your particular case, I find no ambiguity in the reference to “total votes”, and believe there is little question it would be interpreted to require any amendment to be based on the entire membership, not just those who vote.

Security Lights Keep Resident Awake At Night

Posted in Common Areas, Reader Q&A, Safety and security

LampQuestion: Our condominium building just had new security lights installed.  These new lights were not discussed at a membership meeting and the unit owners were not given the opportunity to vote in favor of or against the installation.  These lights illuminate my entire unit, making it difficult for me to sleep.  Can the board make these changes to the common areas without owner approval? S.M. (via e-mail)

Answer: A “convincing factual predicate” must exist, and this usually requires the occurrence of serious security breaches.

Absent a known danger justifying the project, the installation of security lights must be approved as a material alteration.  Pursuant to the Florida Condominium Act, the required vote for material alterations is 75 percent of all unit owners, unless otherwise provided in the declaration of condominium.  Many declarations of condominium will include a provision addressing material alterations, and some even grant the board authority to approve certain material alterations.

In addition to the “material alteration” issue, you might also have a claim for nuisance. Simply stated, nuisance is when one party (here, the association) engages in otherwise lawful conduct, but which has the effect of unreasonably preventing another person (here, you) from the peaceful possession of their property.

The law will not afford protection to the hypersensitive, and a court would likely engage in a balancing of the respective interests. While a bright light shining into one’s bedroom window is no doubt bothersome, a court might also inquire as to the intensity of the new lights, the reason their placement in that location was needed, and whether alternatives to alleviate their undesirable effect (for example, blackout shades) are available.

HOA Interfund Reserve Transfers Usually Board Prerogative

Posted in Budgets, Reserves & Financial, Reader Q&A

516780641Question: Can the board of a homeowners’ association move monies from one reserve account to another, or for operating purposes, without membership approval? D.D. (via e-mail)

Answer: Section 720.303(6)(h) of the Florida Homeowners’ Association Act states that “statutory” reserve funds (this is the industry accepted legal “slang” term and not a term used in the statute itself)  and any interest accruing thereon shall remain in the reserve account or accounts and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a meeting at which a quorum is present.

In an HOA,  “statutory reserves” come into being in one of two ways. First, they can be “voted in” by majority vote of the entire membership. I have rarely dealt with an HOA who “voted in” mandatory statutory reserves.

The second type of “statutory reserves” are those reserve funds which the first owner-controlled board “inherited” from the developer-controlled board. In other words, if the developer set up reserve funds when it initially controlled the association, then those reserve funds are also “statutory reserves.”

Most HOA reserves are “non-statutory” reserves (meaning that they are not voted in by the members nor carried over from the developer). With “non-statutory” reserves, broad discretion is given to the board as to whether to include them in the budget at all, and if so, at what level to fund, and once funded, how the money is spent. The governing documents may also place limits on the board.

Becker & Poliakoff Announces Free Condo and HOA Seminars for February, 2015

Posted in Events

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Classes may be subject to change.
Please visit http://www.bplegal.com/events for up to date information.

Leadership Conference-2015 Legal Update/Condo Construction Projects
Gone Wild!

February 7, 2015
Duck Key

Elections, Voting & Sunshine Laws
February 11, 2015
West Palm Beach

Board Member Certification for CONDOS ONLY
February 16, 2015
Ft. Walton Beach

You Have Questions? We’ve Got Answers!
February 16, 2015
Miramar

Collections in Today’s Economy
February 18, 2015
Ft. Lauderdale

Board Member Certification for CONDOS ONLY
February 18, 2015
 West Palm Beach

Board Member Certification for Condos/HOAs/Coops
February 21, 2015
 Miami

Is a “No Pet” Building a Thing of the Past?
February 24, 2015
 Ft. Lauderdale

Architectural Control & Enforcement for HOAs
February 25, 2015
 West Palm Beach

Board Member Certification for Condos/HOA/Co-ops – In Spanish
February 25, 2015
 Miami

Board Certification Course for Condo/HOA/Co-op
February 26, 2015
 Sarasota

HOA Management Contracts Should Spell Out Extra Fees In Detail

Posted in Reader Q&A

168721470Question: Our homeowners’ association recently signed a new contract with a management company. The contract discusses a number of fees that the management company will charge the association in connection with handling certain owner-related tasks such as collections and records inspection. Are these charges permissible? E.M. (via e-mail)
 
Answer: There are two issues to be considered here. The first issue is the terms the association has agreed to in its contract with the management company. The association and the management company can negotiate how the association will be charged for various managerial services. Some associations negotiate for an inclusive price, so that all of the services are included in the monthly fee paid by the association. Other associations negotiate a contract where certain services are paid for on an as-needed basis. Neither approach is necessarily right or wrong, and would depend on each association’s needs and its relationship with its management company. Further, neither the Condominium Act, Chapter 718, or the Homeowners’ Association Act, Chapter 720, discuss how the association should be billed for services by the management company.

However, there are limitations on charges that the owners can be required to pay, with regard to actions taken by the management company, on behalf of the association. Section 720.303(5) of the Florida Homeowners’ Association Act states that an association may impose fees to cover the costs of providing copies of the official records, including the costs of copying and the costs required for personnel to retrieve and copy the records if the time spent retrieving and copying the records exceeds one-half hour and if the personnel costs do not exceed $20 per hour. Personnel costs may not be charged for records requests that result in the copying of 25 or fewer pages. The association may charge up to 25 cents per page for copies made on the association’s photocopier.

Accordingly, in the homeowners’ association context, the association can pass through to the owners certain administrative costs associated with retrieving and copying records as provided by the statute. The Florida Condominium Act does not contain a similar provision and in the context of a condominium, only the cost of copying the documents may be charged to a unit owner.

Further, both the Condominium Act and Homeowners’ Association Act permit the association to charge an administrative late fee, not to exceed $25.00 or five percent of the delinquent installment, if authorized by the governing documents for the association. It is not uncommon for management company contracts to provide that the management company will retain the late fee as compensation for the additional administrative burden of handling delinquent accounts. However, that would be an issue of contract negotiation between the association and the management company.

Condominium Tenants Granted Same Rights In Using Common Property

Posted in Common Areas, Reader Q&A

155000091Question: The common elements of our condominium include a golf course. It is our understanding that when a unit is rented, the tenant obtains all of the owner’s use rights in the common elements. Is it possible to amend our rules and regulations to provide that the rental of units would only be approved if the proposed tenants waived, in writing, some of their rights in terms of use of the golf course?  Specifically, we have a computerized reservation system, with points assigned based on infrequency of use, and our owners feel that tenants should not accrue points in securing preferred tee times. G.V. (via e-mail)
 
Answer: Interesting question. The Florida Condominium Act was amended approximately twenty years ago to state that when a unit is leased, a tenant “shall have all use rights” in association property and those common elements otherwise readily available for use generally by unit owners. That law would seem to apply here. The statute also provides that unit owners can retain use rights in such property, if the tenant waives those rights in writing. This law never made sense to me, since a unit owner who is renting his or her unit would still need to park their vehicle on the property to use the amenity, security monitoring frequency could be doubled, and this part of the law has occasionally proven to be a nightmare to administer.

While the statute does permit an association to adopt rules to prohibit dual usage by a unit owner and his or her tenant, that does not really solve your problem. Although I do not believe any appellate court in Florida has ever been called upon to construe the statute, I often hear it referred to as the “no discrimination against tenants” statute. Parenthetically, there are decisions from the state regulatory agency that provide that an association can “discriminate” against tenants with respect to the use of units, particularly “no pets for tenants” provisions properly amended into the condominium documents.

As to your specific question, and based upon the general common law rule that the lease of property carries the full “bundle of rights”, combined with the language of the statute, I believe that treating tenants differently than owners in accruing points to obtain preferred tee times would place the association on a shaky legal footing, at best.