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

Associations lose hundreds of thousands of dollars to unlicensed and uncertified contractors every year. Associations should protect their property by avoiding unlicensed contractors. Unlicensed individuals cannot pull permits and usually carry no insurance. Licensing is not necessarily a measure of competence but it presupposes a certain degree of professionalism and commitment to the industry. When dealing with an unlicensed contractor and the work is not done in accordance with the applicable building codes or workmanship standards, there is no recourse against the unlicensed individual other than through the courts.

Although licensing is not a guarantee of the contractor’s work, it can protect the Association from a number of potential problems such as:

• Unlicensed contractors are often unfamiliar with building codes, inspection sequences and inspection requirements.
   
• Limited recourse for breach of contract and/or defective work. When dealing with a licensed contractor, the Association always has the option of contacting the appropriate licensing agency. Some agencies are able to resolve issues and assist in recovering consumer losses. At a minimum, licensing agencies have the authority to suspend or revoke licensing privileges. This does not eliminate all contractor problems, but does provide contractors with an incentive to conduct fair business practices and comply with the law.
   
• Unlicensed contractors are usually uninsured. If an Association uses an unlicensed contractor and property damage occurs, the individual may have no way of reimbursing the Association for damages caused. Furthermore, if a third party suffers an injury at the Association’s property, there may be no insurance coverage. Many homeowners insurance policies exclude claims arising from unlicensed construction practices.
   
• Unlicensed contractors cannot pull permits. If the Association pulls the permits for an unlicensed contractor, then the Association, not the person doing the work, is held responsible.
   
• If the Association hires an unlicensed contractor, the Department of Business and Professional Regulation or the Building Department may issue a cease and desist order to stop the work, and may decide to take legal action against the Association to impose civil penalties for aiding and abetting unlicensed activities.
   
• If the Association hires an unlicensed contractor and the work is not completed in accordance with state and local building codes, the Association may have to pay additional monies to have the work brought into compliance.
   
• If an unlicensed contractor does not pay his subcontractors or suppliers, the Association may be liable for these costs. Subcontractors and/or suppliers who work for unlicensed contractors still have the right to file liens on the Association’s property.

There are steps that Associations can take to help protect themselves from unlicensed contractors. When hiring a contractor, Associations should:

1. Always ask to see the State of Florida license.
    
2. Note the license number and verify that the license is current and in good standing. To check on the license, call 850-487-1395 or visit www.myfloridalicense.com.
    
3. Ask for references and check each one.
    
4. Always get several estimates for comparison.
    
5. Never pay in cash, and never provide large up-front deposits. Beware of scams when individuals ask for money up-front or will only accept cash.
    
6. Beware of writing checks made payable to individuals especially, when the Association is dealing with a company or a corporation.
    
7. Everything should be in writing. At a bare minimum, a contract should include the contractor’s names, address and professional license number; a detailed description of the work to be completed and materials to be supplies; a completion date and total cost.
    
8. Have an attorney review all contracts before signing anything.

In these economic times, there are many individuals who try to hold themselves out as licensed contractors. They usually make promises of quick and inexpensive repairs and require large up-front deposits. When work needs to be done, Associations should choose a contractor carefully and make sure the contractor is properly licensed and insured.

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Members of Becker & Poliakoff's Hurricane Preparedness and Claims Recovery Team presented "Hurricane Season 2009: Are You Ready to Weather the Storm?"   

Shareholders Ken Direktor and Herb Brock explained the importance of developing a disaster plan that includes safeguarding documents by making digital backups, advising residents of local shelters and identifying and coordinating with the Local Emergency Management Coordinator.

Participants learned about the emergency powers granted by the legislature in Section 718.1265, Florida Statutes and what they, as community leaders and managers, need to do to prepare for a substantial casualty.  

Participants were reminded to review insurance policies and create a spreadsheet showing the types of policies, the carriers, policy numbers and contact information for the agent.  The speakers encouraged community association leaders to make arrangements with landscapers or other contractors in advance, so they are "first in line" to receive debris removal and other emergency services.

If you would like to view/listen to the recorded webinar, click on the link below.

http://events.vcall.com/VCall/ReplayLogin.aspx?room=2146003661

Becker & Poliakoff, P.A. maintains an extensive library of disaster recovery resources for community associations, including a 12-point preparedness checklist, videocasts and numerous articles on its hurricane recovery website.  Click here to review those materials.

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The Florida Consumer Collection Practices Act Prohibits Associations From Posting Delinquency Lists and Taking Other Actions to Collect Assessments and Maintenance Fees.

 There have been a number of newspaper articles explaining actions taken by community association boards and managers to collect delinquent assessments.  The Miami Herald reported that some associations post lists of the names of the owners behind on their fees and others deny security access devices to tenants of delinquent owners.  

The Wall Street Journal reported that some associations were taking control of the unoccupied units and renting them on a short term basis until the bank foreclosed.  

While we are all familiar with the idiom "drastic times call for drastic measures",  community leaders and property managers should understand that Florida law prohibits unfair or abusive tactics with regard to debt collection, including the collection of assessments.   Although the prohibitions in the Federal Fair Debt Collection Practices Act do not apply to the person or entity owed the debt (the 'creditor', which in this case is the Association), both community associations and their managing agents are responsible for compliance with the Florida Laws.

Among other practices, Section 559.72, Florida Statutes, prohibits the following:

• Use of profane, obscene, vulgar, or willfully abusive language in communicating with a debtor or any member of his or her family;
   
• Communication with a debtor under the guise of an attorney by using the stationary of an attorney or forms or instruments which only attorneys are authorized to prepare;
   
• Orally communicating with a debtor in such a manner as to give the false impression or appearance that such person is associated with an attorney;
   
• Publishing or posting, threatening to publish or post, or causing to be published or posted before the general public individual names or any list of names of debtors, commonly know as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts;
   
• Mailing any communication to a debtor in an envelope or postcard with words typed, written, or printed n the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to “Deadbeat, Jane Doe” or “Deadbeat, John Doe”;
   
• Communicating with the debtor between the hours of 9 p.m. and 8 a.m. without the prior written consent of the debtor.

While every association must be diligent with its collection efforts, those efforts must be in compliance with legal and ethical standards.

On the other hand, the Florida Courts are cognizant of the problem and have allowed Associations to have receivers appointed for the purposes of collecting rent from tenants when the owners of those units are facing foreclosure as a result of non-payment of assessments.  Remember to check this site in the future for more information about proactive methods to collect assessments.

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A reader recently posed the following question:

In preparation of next years election of board members, where or how do I find a division approved education provider?  How will the new member become aware of the educational curriculum to obtain a certificate of satisfactory completion.
 

The reader may have posed this question believing that the certification requirements of SB 714 were in effect. 

Nonetheless, the Division of Florida Condominiums, Time Shares and Mobile Homes publishes information about approved educational providers on the website maintained by the Department of Business and Professional Regulation. 

The Office of the Condominium Ombudsman also offers education.  The courses are described as follows:

• Condominium Rights and Obligations - A general overview of the statutory rights and responsibilities of board members and unit owners.
   
• Condominium Elections - An in depth review of the requirements for the noticing, mailing, and balloting in a condominium election. A mock election will be conducted.
   
• Condominium Meetings - A comprehensive course on condominium meetings, notices, and parliamentary procedure.
   
• Basic Condominium Finances - An overview of condominium finances, including statutory requirements, budgets, financials, and reports.
   
• Serving on a Board of Directors - Information for persons considering or serving on a board of directors in a Florida condominium.
   
• Condominium Rules and Regulations - A review of rules and regulations in Florida condominiums and how they affect the community.

There are numerous opportunities for education and training throughout the state.  The above merely represent course curriculum posted by the State.

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Recently, Congress enacted legislation that requires all over the air broadcast television signals to be transmitted in a digital format. This means that the aerial, “rooftop” and “rabbit ear” antennas designed to receive analog signals will no longer be of any use. In fact, if your television set is not capable of receiving a digital signal, you will need to purchase a converter box (or perhaps a new TV) to be able to continue watching your favorite programs.

This change (from analog to digital) will undoubtedly result in more subscriptions to satellite (i.e. DIRECTV) service. Owners will begin installing antennas and other devices to their units and  lots. Thus, boards need to be familiar with the applicable federal laws governing the installation of satellite antennas.

The FCC addresses this situation in its Over the Air Reception Devices (“OTARD”) Rule to Section 207 of the Federal Telecommunications Act of 1996. This rule prohibits a condominium or homeowner’s association from enforcing restrictions that unreasonably impair the installation, maintenance, or use of antennas used to receive video programming. The OTARD rule applies to video antennas, including direct to home satellite dishes that are less than one meter (39 inches in diameter), television antennas, and wireless cable antennas. The rule also applies to antennas that receive and transmit fixed wireless signals to access the Internet. However, the rule does not apply to amateur (“ham”) radio antennas, CB antennas or other antennas that do not receive video programming.

The OTARD rule applies to owners who place video (or Internet) antennas on property that they own or lease or on property that is within their exclusive use or control (such as a balcony or patio). The rule does permit an association to enforce reasonable restrictions that do not impair the antenna installation or the ability to receive a quality signal. Restrictions needed for safety or historic preservation, for example, would be acceptable and enforceable.

It is important to note that the OTARD rule and other FCC restrictions do not apply to the association’s common elements or common property. No owner has the right to install a satellite antenna (including wiring and related hardware), or anything else for that matter, upon, in or over the common elements or common properties. As such, boards may properly adopt and enforce rules restricting owners from installing antennas or other items on or across its common elements or common properties.    

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It is important for all condominium purchasers to know the very strong warranties that come with their purchase of a condominium unit. A developer grants each first-time purchaser of a condominium unit implied warranties under Section 718.203, Florida Statutes. The warranties are for fitness of purchase and merchantability and commence upon the issuance of the Certificate of Occupancy for the subject improvement and continue for three years or one year from turnover, whichever comes last, but in no event more than 5 years from C.O. There is also an implied warranty of fitness for purpose for contractors and suppliers providing labor and material to the construction of the Condominium improvements. This warranty commences upon the issuance of a Certificate of Occupancy and continues for 3 years. 

The warranty period should not be confused with the statute of limitations. An Association’s statute of limitations with regard to known defects is tolled until transition of the Association and expires 4 years from transition. This means that as to known defects, responsible parties have to be pursued within the 4 year period from transition. For latent defects, that is claims which are not known and cannot be discovered through the exercise of reasonable diligence, suit can be brought for up to ten years from completion of each improvement. This means that so long as any suit is commenced within 4 years from the time the defects were discovered or should have been discovered with the exercise of reasonable diligence, which shall not exceed 10 years, the suit will be timely.

Of course the Chapter 558, Florida Statutes, procedure may toll the statute of limitations, and I will discuss more about that next post.

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On March 30, 2009 the Division issued a Final Order in Humphrey v. Carriage Park CAI a case involving among other things a request for records where the owner sought “all correspondence, e-mails to or from the Department of Business and Professional Regulation.”

In its ruling the Division stated that there was no violation for failing to produce e-mails which never became the official records of the Association.  The Division explained:

• The property of an individual director does not become the property of the Association because of his office on the Board.
• Even if directors communicate among themselves by e-mail strings or chains, about the operation of the Association, the status of the electronic communication on their personal computer would not change.
• An e-mail to an individual or all directors as a group, addressed to their personal computers, is not written communication to the Association because there is no obligation for a director to turn on a personal computer with any regularity, or to open and read e-mails before deleting them.

The Division in a footnote to its opinion stated a different decision could be reached “if the Association owns a computer on which management conducts business including e-mails…; or if e-mails are printed up and passed around for discussion at a board meeting.”

Given the ever changing trends in technology and the manner in which Associations conduct business, a Board needs to be wary that the status of e-mails as official records despite the Humphrey decision is still in flux. In other words, tomorrow, these very same e-mails which today are not official records could be. Also while a link has never been made equating IM or Twitter transcripts to e-mails this too could change as these forms of e-communication become more and more popular amongst Board members.

For more information on the role of e-communications and Association look at my May 12, 2009 post or the recent article by the Sun-Sentinel titled Boards a-Twitter about laws.

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SB 714 Designed to Clarify Insurance Requirements & Provide Relief to Homeowners by Delaying Fire Sprinkler Retrofit.

Condominium Unit Owners Required to Maintain Insurance Coverage.

Governor Charlie Crist vetoed SB 714.  Too bad - SB 714 would have relieved Condominium Unit Owners from maintaining individual property insurance and likewise relieved Associations from the burden of requesting insurance certificates. 

Governor Crist expressed his concerns regarding the fire sprinkler retrofitting extension in his veto letter, citing safety risks. This means that condominium associations throughout Florida will have to retrofit their buildings, or  partially retrofit (if authorized by membership vote as set forth in Section 718.112(2)(l), Florida Statutes) by December 31, 2014, something that struggling condominium associations cannot afford at this time.

 Read Governor Crist's veto letter (click here).

Gary A. Poliakoff explained the negative impact of the veto in correspondence to the Governor (click here to read that letter) highlighting how significantly condominium and community associations have been hurt by the mortgage foreclosure crisis.

Consequently, the following insurance requirements, largely resulting from 2008 legislation, are still in effect:

1. Unit Owner coverage is still mandatory. 
2. Unit Owner insurance coverage must contain $2,000 "special assessment" coverage.  SB 714 would have corrected the language to "loss assessment" coverage. 
3. The Association is still required to be named an additional insured and loss payee on insurance policies issued to Unit Owners.
4. Association boards must set the master policy insurance deductible at an open board meeting - the notice of the meeting must contain the amount of the proposed deductible, available funds and cite the assessment authority as well as estimate potential assessments against each unit for possible casualty costs that are not funded by insurance coverage.
5. Unit Owners are still required to insure "improvements and additions" that benefit fewer than all the owners.  This is problematic from a number of perspectives, especially in light of the fact that the term "improvements and additions" is not defined.  This provision in Section 718.111(11)(g)(1), Florida Statutes may be interpreted to mean that Unit Owners bear responsibility for portions of the property traditionally insured by the master policy, such as balconies, vehicle enclosures such as carports (if the coverage is available), storage spaces and the like. 

 A press conference is being held today, June 4, at the South County Civic Center located at 16700 Carter Road, Delray Beach, Florida at 1 P.M.  Senator Deutch and Representative Kelly Skidmore will address legislative issues, foreclosures and ways to confront association financial losses.  CALL urged Senator Deutch to ask the Speaker of the House and the President of the Senate to call a special session to address these important problems. 

Community leaders are encouraged to contact their elected representatives and express their concerns.

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Florida Law Governs Rules or Covenants Prohibiting Solar Collectors or other Renewable Resource Energy Devices.

 Many community leaders may not be aware of Section 163.04, Florida Statutes which prohibits enforcement of restrictions precluding homeowners from obtaining energy from renewable resources.

Florida's legislators made sure this law applied to Condominium and Homeowners' Associations with amendments shortly after the Taylor v. The Ridge at the Bluffs HOA case.

Owners of condominium units are specifically permitted to install solar collectors or energy devices, so long as the installation is wholly within the boundaries of the unit and does not involve patio or balcony railings.  The Statute says, in relevant part:

A deed restriction, covenant, declaration, or similar binding agreement may not prohibit or have the effect of prohibiting solar collectors, clotheslines, or other energy devices based on renewable resources from being installed on buildings erected on the lots or parcels covered by the deed restriction, covenant, declaration, or binding agreement. A property owner may not be denied permission to install solar collectors or other energy devices by any entity granted the power or right in any deed restriction, covenant, declaration, or similar binding agreement to approve, forbid, control, or direct alteration of property with respect to residential dwellings and within the boundaries of a condominium unit. Such entity may determine the specific location where solar collectors may be installed on the roof within an orientation to the south or within 45° east or west of due south if such determination does not impair the effective operation of the solar collectors.
 

While many states have adopted similar legislation to encourage the use of renewable energy sources, it seems that community association leaders have yet to embrace improvements requested by homeowners within the communities.  In fact, there is an effort to create federal regulations securing home and/or unit owners' access to renewable energy improvements and the public is critical when HOA or Condo Boards reject homeowner requests based solely on aesthetic grounds.

On the other hand, the Philadelphia Business Journal reports that communities with energy efficiencies built in- including solar panels, have retained value, even in this market.  Lower utility bills is an attractive feature that causes the property to stand out from the competition.

The boundaries of a unit vary from condominium to condominium.  Boundaries are described differently in similar types of properties - so a ruling in one community does not mean that another association cannot prohibit owner modification requests.  Community leaders are encouraged to consult with counsel to determine the scope of the Association's rulemaking authority before a dispute arises.

Additionally, condominium associations may take advantage of energy saving devices to reduce expenses.  The Condominium Act was amended to permit the installation of solar collectors and other energy efficient improvements.  Progressive leaders of community associations will discover long-term savings and increase property values at the same time.

 For more information and examples of great projects see 'Green' Practices to Ease Future Financial & Budgeting Concerns.

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