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

Within hours of any disaster, affected communities will be besieged with offers by companies and individuals offering disaster recovery assistance.

 Please resist the urge to contract with these initial providers until you have done the following:

1. Activate Your Disaster Plan. Once residents are safe, the community must begin surveying the property and assessing the damage. A designated information facilitator should set up system of information sharing among local homeowners and a disaster coordinator should serve as liaison to emergency services providers;
2. Secure your community from acts of vandalism and looting;
3. Remove storm debris to prevent accidents from occurring on the property;
4. Secure building structures to mitigate further damage;
5. Evaluate & Determine needs for immediate reconstruction and evaluate financing options including advances from insurance company for financial advances. BEWARE OF ANY INSURANCE COMPANY OFFERING MONEY IN EXCHANGE FOR RELEASES OR SETTLEMENTS.
6. Suspend or cancel on-going contracts such as lawn or pool maintenance if allowed for in your contract;
7. Review governing documents particularly anything related to "repair after casualty" provisions in the insurance section to establish process for reconstruction;
8. Initiate reconstruction planning using the five phases of reconstruction: project planning/scheduling; construction bidding; contract negotiations; construction/repair/rehabilitation; project completion/close out.
9. Review Insurance policies to determine filing requirements for proof of loss forms.
10. Meet with licensed professionals familiar with your community which may include: a) architect/engineer to assess damage and prepare plans; b) construction manager to oversee selection of general contractor and begin competitive bidding process; c) attorney to review insurance policies, governing documents, construction contracts and any vendor agreements; and d) public adjuster who is independent of your insurance company's adjuster who can be helpful with the nuances of an ambiguous insurance policy. Most independent adjusters work for a fee based upon percentage of insurance proceeds.

Following these ten steps will help communities recover and rebuild as quickly and effectively as possible.

Best Advice: Make sure every contract is with a Florida Licensed and Insured Contractor and that it is reviewed by a Licensed Florida Attorney, prior to signing.

We thank all the webinar participants who shared personal experiences and submitted well thought-out questions to the facilitators.  If you could not attend today, please return to this site for a link to the recorded presentation.

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In anticipation of Friday's webinar, here is the first in our two-part checklists for community associations.

Becker & Poliakoff's 12-point Hurricane Preparedness Checklist includes the following tips for those who need to prepare their communities for the upcoming hurricane season: 

1. Disaster Plan – Do a risk analysis of potential consequences of a storm and develop a complete disaster plan, designating a responsible community member as Disaster Plan Coordinator and another as Information Facilitator to field queries and respond to from community members;
2. Evacuation Routes - Establish clear building or community evacuation routes and be sure that all community members are provided with copies or printouts and that routes are clearly marked as storms approach; conduct building or community evacuation drills in the weeks leading up to hurricane season;
3. Emergency Generators & Supplies – Be sure emergency generators are in working order and have adequate fuel supplies, stock a building or community emergency supplies storeroom with flashlights, batteries, water and other necessities for residents and employees in the aftermath of a tropical storm;
4. Backup Computer Files – Be sure that computer files crucial to running the building and association are backed up to CDs or Portable Storage Devices and keep a list of office computer hardware and software vendors and repairmen in case computers crash or systems fail; 
5. Secure the Premises – Make preparations for routine lockdown of the building or other facilities as a storm approaches, so the building is secure during the storm and safe from vandalism or looting if a hurricane strikes; 
6. List of Owners & Employees – Have on hand a current, hard-copy reference list complete with the names all property owners, emergency contact numbers and details of second residence addresses, as well as a list of all association employees, with full contact details; 
7. Photograph or Video Premises – Keep a visual record through video or photographs of premises, facilities and buildings to facilitate damage assessment and speed damage claims in a storm aftermath; 
8. Building and Facilities Plans – Make sure a complete set of building or community plans are readily available for consultation by first-responders, utilities workers and insurance adjusters following a storm; 
9. Insurance Policies & Agent Details – Be sure all insurance policies are current and coverage is adequate for community property, facilities and common areas and compliant with State Law; full contact details for insurance companies and agents should be readily available in the event of a storm; 
10. Bank Account Details & Signatories – Keep handy a list of all bank account numbers, branch locations and authorized association signatories, and make contingency plans for back-up signatories in case evacuation or relocation becomes necessary; 
11. Mitigation of Damages – In the immediate aftermath of a storm, take the necessary steps to mitigate damages -- this includes "Drying- In," which is the placement of tarps on openings in the roof and plywood over blown out doors and windows, and " Drying –Out," which is the removal of wet carpet and drywall to prevent the growth of mold; and, 
12.  Debris Removal – Have a plan for speedy removal of debris by maintenance staff, outside contractors or civic public works employees, should a hurricane topple trees and leave debris in its wake. 

Learn more valuable tips during the free webinar Anatomy of a Disaster Claim, presented by Board Certified Construction Law attorneys and special guest engineer Rick Slider.  Return to this site for a checklist of items for communities to consider immediately after a storm.

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Associations struggling with bad debt pushing the envelope trying to make up for deficits.

Earlier this week news reports showed homeowners living without water service to their homes.  The association shut down the water service because the homeowner didn't pay maintenance fees for several months. The homeowners' attorney claims that the Board acted illegally.  The Board, on the other hand, wants to put as much pressure on the owners to pay maintenance fees. 

In an earlier post I described actions prohibited by Florida's consumer protection laws.  I received quite a few comments indicating that associations regularly publish debtor lists to embarrass or harass the delinquent owners and associations have shut down cable or other television programming, restricted access to recreational facilities, deactivated entry devices for security gates to the property (forcing owners to use the guest gate) and stopped other services.  But can an association in Florida shut down services when an owner doesn't pay?

Condominium Associations cannot prohibit owners' access or use of the common elements.  Section 718.106, Florida Statutes guarantees every owner's right to use the common elements, which would include the recreational facilities (if part of the condominium), regardless whether they have fulfilled their responsibility to pay maintenance fees.  However, in response to cries from community leaders throughout the State, legislation was proposed during the 2009 session to permit condominium boards to suspend certain rights of use as a result of non-payment.  We are likely to see proposals in the 2010 session addressing this issue as well.  Community leaders and managers can stay up-to-date with respect to legislative activities by participating in the Community Association Leadership Lobby (CALL), which is a Statewide not-for-profit advocacy effort that not only monitors, but participates in drafting legislation designed to improve association operations.

Homeowners' Associations do have support to suspend use of "common areas and facilities" if the governing documents are written in a certain way.  Section 720.305, Florida Statutes contains the following provisions:

If the governing documents so provide, an association may suspend, for a reasonable period of time, the rights of a member or a member's tenants, guests, or invitees, or both, to use common areas and facilities and may levy reasonable fines, not to exceed $100 per violation, against any member or any tenant, guest, or invitee. A fine may be levied on the basis of each day of a continuing violation, with a single notice and opportunity for hearing, except that no such fine shall exceed $1,000 in the aggregate unless otherwise provided in the governing documents. A fine shall not become a lien against a parcel. In any action to recover a fine, the prevailing party is entitled to collect its reasonable attorney's fees and costs from the nonprevailing party as determined by the court.

A fine or suspension may not be imposed without notice of at least 14 days to the person sought to be fined or suspended and an opportunity for a hearing before a committee of at least three members appointed by the board who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee. If the committee, by majority vote, does not approve a proposed fine or suspension, it may not be imposed.

The requirements of this subsection do not apply to the imposition of suspensions or fines upon any member because of the failure of the member to pay assessments or other charges when due if such action is authorized by the governing documents.

The term 'common areas' is defined in the Homeowners' Association Act, but the term 'common facilities' is not described.  The governing documents may define the term 'common area' more specifically and may even include (generally by an amendment) a definition of 'common facilities', but is the cable service either?  What about water service?  Are the pipes carrying the water or the wires carrying the television programming owned and/or maintained by the Association?  What if the television programming is through a satellite system and you don't even have any wires in the common areas?

These questions have yet to be answered by an appellate court.  An adverse ruling with respect to either of these types of actions exposes community associations (and their leaders under certain circumstances) to liability, so it is very important to consult with counsel before trying to shut off any type of service.

It is also important to note that the statutes specifically prohibits restricting access to the individual home.  It says:

Suspension of common-area-use rights shall not impair the right of an owner or tenant of a parcel to have vehicular and pedestrian ingress to and egress from the parcel, including, but not limited to, the right to park.
 

Community leaders can and should be proactive when it comes to collecting assessments and maintenance fees, but they need to be concerned with liability issues.  Therefore, I encourage you to consult with counsel to determine what, if any, changes to the governing documents will improve your position, as no association can operate without its primary (and generally only) source of revenue.

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HUD Implements New Approval Process for Condominium Projects to Qualify for FHA Insured Mortgages.

Website Allows Users to Search for FHA Approved Projects.

On June 12th the Department of Housing and Urban Development (HUD) published Mortgagee Letter 2009-19 announcing the new process for approval of condominium projects.  As previously reported on this Blog, Fannie Mae, a federally backed lender, announced several changes to its standards, including the imposition of PERS review.

Lenders are now permitted to determine FHA project eligibility, review project documentation and certify compliance with HUD regulations in furtherance of the directives contained in the Housing and Economic Recovery Act of 2008 (HERA).   In order for a condominium project to be eligible for FHA insured mortgages:

• Hazard and Liability Insurance must be in place.  Flood insurance is also required where applicable.
• Any right of first refusal in the declaration of condominium or other governing document cannot violate prohibitions against discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.  Many projects have been rejected as a result of the provisions granting the Association the rights to "screen" and "approve" purchasers.
• Commercial use cannot consist of more than 25% of the floor area and commercial uses must be homogeneous with residential use.
• A single investor cannot own more than 10% of the units.
• The owners of no more than 15% of the units may fall into arrears (defined as more than thirty days past due in maintenance fees or assessments).
• At least 50% of the units must be sold, although pre-sales apply.
• At least 50% of the units must be owner-occupied or sold to owners that intend to occupy the units as a primary or secondary residence.

HUD provides resources for home-buyers to determine whether projects are FHA approved.  You may search by location, name or status.  The website also reveals which projects have been rejected by FHA or whether approval is currently pending.  Click here to search whether your condominium is FHA approved.

FHA loans are advantageous for purchasers as generally there is less money required for the down payment,  lower closing costs and lower interest rates than sub prime loans.  FHA loans are a good option for borrowers that cannot qualify for conventional financing, as other alternatives generally include large pre-payment penalties.  FHA limits have increased as a result of the stimulus package as well.

Condominium project approvals expire two (2) years after the initial approval and re-certification to determine whether the project remains in compliance with HUD guidelines is required for continued approval.  

Community associations may want to consult with counsel to determine whether it is worthwhile to take action to qualify for FHA and/or Fannie Mae approval, especially if recent sales have slowed.

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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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Condominiums and other common interest housing communities have a long history with trying to enforce their use restrictions. These battles often stir much passion. However, rules that ban or limit the size of dogs, cats and other household pets seem to strike an especially sensitive nerve. Many owners love animals and cherish the companionship that a dog or cat can provide. But such owners often find themselves living in an association with these types of "pet" restrictions. Do they need to try and amend the deed restrictions or move to another complex where pets are permitted? Not necessarily. If they suffer from high blood pressure, high cholesterol or depression a pet just may be the right medicine. In addition to the regimen of statins and anti-depressants to treat these ailments, doctors have now apparently discovered a panacea for these and other related illnesses; the emotional support animal.

The dilemma that many directors face is trying to enforce pet restrictions when an owner produces a doctor's note (often written on a prescription pad) telling the Board that he or she needs the pet to help treat the owner's depression or high blood pressure. While the Board must provide reasonable accommodations for an owner who requests assistance in living due to a disability or handicap, the definition of "disability" has become so broad in its interpretation that almost anything can qualify. A disability or handicap is any condition that limits a person's major life activities (e.g. walking, talking, seeing, hearing, and breathing). Courts now routinely agree that mental illness such as depression or bi-polar disorders are disabilities. Similarly, high blood pressure is probably now a disability. If an owner requests a dog or cat to assist them with their particular disability, the Board may have to permit the pet as a reasonable accommodation.

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Free Educational Forum

The Community Association Law Practice Group of Becker & Poliakoff is pleased to announce that the Firm will be holding its Annual Community Association Leadership Conferences beginning on January 16, 2009.

Becker & Poliakoff is well-known for its pioneering role in the creation of the law pertaining to the operation of common ownership housing in Florida. Our attorneys are recognized as individual leaders in the field through published works, public service, legislative activities and industry group leadership positions.

Join us to get the latest information on current topics impacting you and your community. Register today for this FREE conference at www.becker-poliakoff.com/events/ca/ for the event nearest you.

What you will Learn

How to implement important statutory changes enacted during the 2008 Legislative Session including:

• Board member rights and responsibilities;
• Licensure of management companies;
• Insurance and reconstruction-aftercasualty provisions;
• NEW provisions affecting elections and annual meetings;
• NEW collection and foreclosure procedures;
• NEW inspection requirements;
• NEW requirements on votes to waive reserves and financial statements.

Click here to download the PDF information packet.

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