Florida Condo & HOA Legal Blog : Florida Condo Lawyer & Attorney : Becker & Poliakoff Law Firm : Condominium & HOA Law Blog

Close to 200 Community Leaders and Professional Property Managers participated in the first of a series of webinars presented by Becker & Poliakoff, P.A.

On Wednesday, May 28, 2009, CALL presented a webinar explaining legislative activities during the 2009 legislative session.  Co-executive directors Yeline Goin and David Muller were active in Tallahassee and throughout the State of Florida during the latest legislative session, advocating for the interests of Florida Community Associations.

Attorney Yeline Goin started the session with an in-depth explanation of the impact of SB 714, which was sent to the Governor on May 18th.  Governor Crist has 15 days to sign or veto the bill before it becomes law.  Ms. Goin alerted the participants to lobbying efforts encouraging a Governor's veto.

SB 714 impacts insurance obligations of condominium associations and condominium owners, addresses eligibility for service on a board of directors of a condominium association, as well as fire and life safety issues.  Please click here for more information about the Bill.

Attorney David Muller explained changes resulting from SB 2080 which would prohibit Community Associations from enforcing deed restrictions that preclude xeriscaping.  Becker & Poliakoff previously provided its clientele with the University of Florida's recommendations for 'Florida-friendly' landscaping in its Community Update publication.

Mr. Muller alerted the participants to increased filing fees for foreclosure lawsuits, explained changes to Chapter 617, Florida Statutes that would result from SB 2330 and impacts from HB 1495.  He noted that despite reports from other sources, HB 1495 does not include a condominium mitigation loan program that was initially contemplated by the legislature.

Mr. Muller advised the participants of CALL's continuing effort for legislative changes necessary to improve Community Association financial problems, particularly with regard to the financial responsibilities of lenders and investor-owners.

To View Becker & Poliakoff’s Insider's Analysis of the 2009 Legislative Session - New Laws Affecting Community Associations go to:

http://events.vcall.com/VCall/ReplayLogin.aspx?room=2146003612

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Florida Attorney General Issues Advisory Legal Opinion Indicating that Golf Courses located within platted residential subdivisions are not subject to separate taxation.

Impact of AGO 2009-23 may save Community Associations thousands of dollars in property taxes.

Florida Attorney General Bill McCollum recently issued AGO 2009-23 answering two questions posed by Seminole County's Property Appraiser.

Section 193.0235, Florida Statutes, generally provides that the common elements (as defined) within a subdivision are nominally valued for property tax purposes, since the value of those amenities is included as part of the valuation of the homes themselves.  It provides, in relevant part:

Ad valorem taxes and non-ad valorem assessments shall be assessed against the lots within a platted residential subdivision and not upon the subdivision property as a whole. An ad valorem tax or non-ad valorem assessment, including a tax or assessment imposed by a county, municipality, special district, or water management district, may not be assessed separately against common elements utilized exclusively for the benefit of lot owners within the subdivision, regardless of ownership. The value of each parcel of land that is or has been part of a platted subdivision and that is designated on the plat or the approved site plan as a common element for the exclusive benefit of lot owners shall, regardless of ownership, be prorated by the property appraiser and included in the assessment of all the lots within the subdivision which constitute inventory for the developer and are intended to be conveyed or have been conveyed into private ownership for the exclusive benefit of lot owners within the subdivision.
 

Seminole County's Property Appraiser inquired whether there should be a distinction between property actually held in the name of the Community Association or property held in the name of the Developer (or subsequent developer), as there were a number of golf courses that had yet to transition from developer to association control.  Property taxes for common areas of community associations are generally passed on to the owners of the properties within the subdivision.  Thus, golf courses in communities that were no longer subject to developer control or ownership were nominally valued (meaning no taxes due), but if the developer retained ownership of the golf course in another community, taxes were imposed and generally passed on to the Association members.

The Attorney General said that regardless of ownership, a golf course designated on a plat or approved site plan as a common element for the exclusive benefit of the lot owners that is subdivision property (not included in the developer's inventory) should be nominally valued.

Community Associations are urged to review the tax bills for all common areas or common elements within their subdivisions as they may not only be entitled to substantial savings, but refunds as well.

Please check back for future updates with regard to taxation of common areas.

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State of Florida’s Division of Administrative Hearings finds that Industry Bulletins and Technical Advisories issued by Bureau of Elevator Safety are not improperly adopted rules.

Retrofits required for Universal Elevator Keys, Automatic Fire Alarm Initiating Devices and Replacement of Single Wall Hydraulic Cylinders.

A state or municipality may require building owners or occupants to make improvements essential to life safety. The public has a right to the safest method of protection and the government generally has the duty to provide such protection. Accordingly, a local government may require reasonable changes in buildings previously built in order to comply with new codes and standards for the protection of health and safety, notwithstanding the fact that the buildings and improvements, at the time of construction, complied with the regulations then in effect.

A factor to be considered when analyzing the validity of regulations requiring changes in existing buildings, is whether the public welfare demands retroactive application, and whether the property owners are unreasonably burdened vis-à-vis the public benefit. The question then is whether the burden upon the property owner is so great compared to the public benefit that the ordinance must be held invalid. Courts have found that there are "no hard and fast rules" in these cases.

A court will analyze the application of the ordinance or code from a cost-benefit perspective and determine whether the ordinance is reasonable as applied to existing buildings or whether the ordinance deprives the owners of their property rights without due process. As you might imagine, on life safety issues, the courts will ordinarily be inclined to rule in favor of the exercise of the government police power.

Government agencies themselves are often at odds with each other with regard to enforcement of codes and retroactive application of building safety requirements. Recently the City of Miami Beach was at odds with the Department of Business and Professional Regulation, Division of Hotels and Restaurants over enforcement of Industry Bulletins and Technical Advisories issued by the Bureau of Elevator Safety requiring compliance with standards published by the American Society of Mechanical Engineers.

The Department of Professional Regulation indicated that it specifically intended to “require the single wall hydraulic cylinder safety provision of the ASME A17.1, 2000 Code [Section 8.6.5.8] to be enforced as part of the annual elevator inspection.” It indicated that this provision was “so important to life safety that corrective action is required for all existing single wall hydraulic cylinder elevators.”

Extensions and variances are available under certain, but limited, circumstances. Please contact us if your community needs advice how to handle an adverse Elevator Inspection Report.

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One of the most important issues for any legal claim is the statute of limitations, and claims for construction defects are no different. The statute of limitations is the time frame within which a lawsuit must be filed in order to have any recovery against the party or parties responsible for the damage. This is especially important where the defect is one resulting in building leaks.

Assume that you hire a roofing contractor who replaces your roof. The day after making final payment you discover water damage on the ceiling. You determine the new roof is leaking. You have 4 years from that date within which to file suit. The reason is that a claim for construction defects must be brought within four years of the time that a defect was discovered, as in our hypothetical, or should have been discovered through the exercise of reasonable diligence. The Statute of Limitations would begin to run from the date of the first leak. This puts the onus on an owner to not ignore the problem, but conduct reasonable investigation and file suit if necessary. The liability of the contractor is not endless, but is limited by the statute of repose, which cuts off any and all claims for construction defects ten years from the completion of the contract. For example if the leak was discovered 7 years after completion of the contract, then you would only have 3 years left to file suit.

An important point is that the limitations period continues to run, even if the contractor attempts to repair the roof. I have seen numerous cases over the years where people had the contractor attempting to repair the building to no avail, and then found themselves outside the limitations period. Unfortunately, there is no tolling of the limitations period. If the contractor spends years trying to fix the roof, and suit was not filed within 4 years, then you have lost your legal rights. Every owner should be vigilant and take necessary steps to protect their rights.

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In these pressing economic times, Board members are trying to do whatever it takes to save money. While this mindset is certainly prudent, Boards need to be careful about being "penny wise and pound foolish." Clients regularly call and ask what they can do to stop owners from violating the association's use restrictions. This inquiry is typically followed with a caveat that the Board cannot spend a lot of money on legal fees to procure compliance. In other words, get these people to comply with our rules but do it cheaply.  Hence, the fining process.  

Imposing fines may indeed be an inexpensive alternative to filing lawsuits or arbitration petitions but does it actually help in curing violations or deterring owners from violating the association's use restrictions?  

First, associations cannot even consider this option unless the authority to impose fines is found within the governing documents (e.g declaration of condominium, declaration of restrictive covenants or the bylaws). If the board indeed has the power to impose fines, it must establish a separate (fining) committee. The committee must consist of at least 3 owners who are not board members, not related to board members and do not live in the same household as a board member. Then, before any fine may be imposed, the Board must provide the offending owner with reasonable advance notice (i.e. 14 days) of the date, time and location for the owner to appear before the fining committee. The offending owner must be given the opportunity to explain to the committee why a fine should not be levied. If the fining committee determines not to impose a fine, no fine may be imposed. The Board cannot overrule the fining committee and levy a fine where the committee votes not to impose a fine.Even if the committee votes to fine an offending owner, the fine cannot exceed $100.00 per day for a continuing violation and no fine in a condominium may exceed $1,000.00 for any single violation. Homeowners associations actually have the ability to levy fines in excess of $1,000.00 but may only do so if the specific fine amount is described within its governing documents.

But, do fines really work? In both condominiums and homeowners associations, no fine (if unpaid) may become a lien against the owner's home or unit. Therefore, if a unit owner fails to pay a fine, the association’s recourse to collect the fine would be to file a claim for damages in small claims court. Also, and perhaps most importantly, the imposition of a fine does not automatically cure the underlying violation. A fine does not force the owner to comply. Indeed, many owners would gladly pay a $1,000.00 fine in order to keep their dog or continue with that fourth-story addition on their home. Thus, while imposing fines may seem like an attractive and cost-effective solution, it does not guaranty an owner's compliance with the association's governing documents. If an owner refuses to abide by the rules, the Board's only realistic option may be to file suit (or an arbitration petition as the case may be) and seek the entry of an injunction against the non-complying owner. If successful, the association is entitled to an award of its reasonable attorney's fees and costs. Then, if such owner fails to comply, the judge may levy sanctions, hold the owner in contempt of court or ultimately issue a bench warrant for the owner's arrest.            

So, does the fining process really work?  

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Many communities were marketed as 'adult communities' and the governing documents contain provisions prohibiting permanent occupancy by children.  Are they legal or enforceable?  Joseph Adams provides a brief explanation.

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Magazines/Newspapers, TV shows, movies, and radio programs are all a buzz about people communicating instantly through Twitter, IM, e-mails and the like. Too often we are tempted to shoot off an email or see someone on IM and shoot them a quick message and this temptation is seeping into the way in which Board members communicate with each other.

Can these communications be considered Board Meetings?
 

Florida case law has yet to answer this question. Both Florida Statutes Section 718.112 and 720.303 provide that a Board meeting exists whenever a quorum of the Board meets to discuss Association business. Merriam-Webster defines meet as “to come into the presence of”; “to come together with especially at a particular time or place”; “to come into contact or conjunction with.”  The term “meet” originally required in-person meetings and has since been expanded to include meetings conducted telephonically.

Without any legal precedent to guide us, we need to look at the word “meet” as a communication of the Board which provides for instant responses/interactions amongst the Board members. Accepting that, e-mails should not be considered a meeting since responses could take minutes or hours or even days to be sent. For the responses to be instantaneous, the Board would have had to agree to all be available via e-mail at a set date/time. IM on the other hand, is more along the lines of having a conference call and therefore could more appropriately be deemed a Board meeting when a quorum of the Board is present in the IM chat.

Even with the above delineation, the Board needs to be very careful to ensure that when a quorum of the Board is communicating outside of a properly noticed meeting that no decisions (no matter how large or small) are made. This avoids arguments in litigation that the action of the Board was improper and therefore invalid.

Stay tuned, my next posts will touch on whether these items are considered “official records” of the Association.
 

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SB 714 Most Significant Change for Community Associations.   Community Association Leadership Lobby (CALL) summarizes changes resulting from SB 714.

While there were a number of bills filed and debated this legislative session, not many of them passed.  SB 714, filed by Senator Jones, modifies the insurance provisions of the Condominium Act, extends the deadline for high-rise fire safety retrofits, clarifies board eligibility issues and repeals a law requiring an alternate power source for elevators under certain circumstances.   As of the date of this post the bill has not been signed into law.  Some of the changes include:

Insurance:

• Condominium Unit insurance policies (“HO-6”) issued or renewed after July 1, 2009 will include at least $2,000.00 loss assessment coverage. 
• F.S. 718.111(11) now refers  to “property” insurance instead of  “hazard” insurance. 
• Removes some of the detail required in the notice of the board meeting to set the insurance deductible for the master policy.
• Removes the requirement for each condominium unit owner to purchase contents (HO-6) coverage
• Removes the requirement to name the Association as a loss payee and an additional insured on HO-6 policies issued to condominium unit owners.

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