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

CALL recently notified its members of changes to HB 319 which is the community association bill filed by Rep. Moraitis.  The changes were considered and approved by the House Civil Justice Subcommittee on December 7th.  The five (5) amendments:

1. Clarify that condo election procedures do not apply to timeshare condominium associations.
2. Clarify that mortgagees only have to pay 12 months of base assessments that accrued prior to acquisition of title (or 1% of the original mortgagee, whichever is less), but also clarify that other purchasers bear responsibility for all debts owed by the prior owner including collection costs and attorney's fees;  
3. Require a majority of condominium unit owners to approve creating a "condo within a condo", giving those owners a voice in determining the future of their community;
4. Conform the laws governing cooperative associations to be more consistent with condo laws.  This portion of the bill would allow co-ops to hold closed board meetings to discuss personnel matters; impose a deadline for challenging elections; require board member education or self-certification and otherwise mirror portions of the condo laws; 
5. Clarify mortgagee financial obligations in homeowners’ associations.

Future amendments to the bill will hopefully speed-up foreclosures and give judge’s more power to impose sanctions for delays.  There are efforts to relieve associations from liability for payment of past due amounts when title to property is acquired as a result of lien foreclosure.  

Look for more legislative updates directly from Tallahassee as this is just one of the bills being tracked by CALL.
 

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Ok - Florida's Government in the Sunshine Act does not apply to community associations, but community associations do have what is commonly referred to as 'sunshine' requirements.  Several years ago the Firm published a pamphlet outlining the 'dos' and 'don'ts' of noticing meetings.  We have recently updated this publication to incorporate changes to the statutes governing community associations and include more information for volunteer board members and CAMs.

 Check out our other informative publications.

 Download this informative pamphlet to learn about or refresh your knowledge of:

• Meeting Notice Requirements
• Owners' Rights at Board Meetings
• Keeping Minutes of Board Meetings
• Notice of Committee Meetings &
• Exceptions to the 'Sunshine' Law

We include a chart for your use as a at-a-glance guide as well. 

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You may wonder why the distinction is important. There are different laws for each type of association. The rights and responsibilities of owners are different in each type of community and procedural operations are likewise different. Here are a few examples:
 

Election Procedures:

Proxy wars in condominiums led to substantial revisions of the Condominium Act - one of those revisions eliminated use of proxies for elections and created a balloting procedure requiring advance nominations (no nominations from the floor) and a 2 envelope system for casting election ballots. Once an election ballot is received by a condominium association, it cannot be revoked. Most HOAs use general proxies for most matters, including the election of directors. In an HOA nominations are allowed from the floor. The proxy holder would then consider the nominees and vote in the manner they believe is appropriate without consulting the voter (proxy giver). Proxies can be revoked and a later dated proxy will control, leading some HOA owners to solicit proxies multiple times if they want to control the outcome of an election.

Quorum Requirements:

A quorum is not necessary to hold a condo election. The Condominium Act only requires participation (ballots) by 20% of the members in order to hold a valid election. This provision ensures that the members (owners) have a say in association leadership even if the majority of the members don't care and don't vote. HOA owners do not enjoy that benefit as there must be a quorum to hold an election. Many owners do not participate in association affairs. They ignore mailings, do not attend meetings and do not send back proxies. That number rises when homes are abandoned, in some stage of foreclosure, bank owned and the like. The lack of participation can prevent an election from being held and the existing board members stay in office which leads to owner complaints from time to time.
 

Dispute Resolution:

The State’s mandatory, non-binding arbitration program has been in place since 1992. The Court system became overburdened with condominium cases and litigation is highly procedural, creating a substantial disadvantage to pro-se defendants (homeowners without legal counsel). The purpose of the statutorily-mandated arbitration procedure is to provide a more informal and cost-effective forum for resolution of condominium disputes. HOAs don't have access to the arbitration system with 2 exceptions: election and recall issues. Thus, a homeowner frustrated because the board ignores all requests for records has to file a lawsuit after he or she sends a statutory offer to participate in pre-suit mediation. That HOA owner does not have an enforcement agency to call to get help obtaining the records and doesn't have the option of filing a user-friendly petition for arbitration. 
 

There are many other differences between condominium and homeowners' association operations and some associations turn to the Division of Florida Condominiums, Timeshares and Mobile Homes for guidance.  We will discuss one recent declaratory statement that addressed leasing office space in a future post.

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Board members at the Village of Doral Place have been embroiled in a legal battle involving the community pool for years. Clever investors bought the pool parcel at a tax sale in 2003. Condo owners didn’t even know about any property tax delinquency until the investor put up a locked chain link fence and a “no trespassing” sign, blocking entry. Finally, after years and years of litigation, the appellate court ruled that the swimming pool was a common element of the condominium, and the statute barring separation and partition of common elements prevented a tax deed sale even though the condominium association failed to pay the property taxes assessed against the parcel. The condominium association regained control after the court set aside the tax deed and it reimbursed the investors for the amount paid for the parcel, plus interest.

This case should remind community leaders of some basic due diligence tasks.

Many developments (whether HOA or condominium) contain property that for one reason or another is not categorized by the Property Appraiser as common element or common area. In some cases the property was not officially deeded to the association. Often, the tax collector will continue to utilize the developer’s prior address or an old management company address for all tax notices, since no one updated the records. If taxes remain unpaid, the county will hold a tax certificate sale. Whoever bids for the lowest interest rate for a particular property, and the taxes which are in arrears, will obtain the tax certificate. Once a tax certificate is outstanding for a period of two years, the tax certificate holder may apply for a tax sale to occur. Unfortunately, failure to update records maintained by the Property Appraiser can lead to issuance of tax certificates and then tax sales can take place without any real notice to the association. 

The distressed real estate market increases the chances that issues like these will ‘slip through the cracks’. Some developers went bankrupt or lost the property as a result of foreclosure before transferring title or completing the development. Simple title searches will often reveal whether all property subject to the covenants or declaration of condominium has been categorized properly for tax purposes.

Community leaders should be aware that under Florida Statute §193.0235, ad valorem taxes or non-ad valorem assessments 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 a subdivision, regardless of ownership. Any subdivision property that is designated on the plat or plan as a common element is included in this definition. Therefore, recreational facilities or property actually and exclusively used by the lot owners, regardless of ownership, and designated as such on the plat, approved site plan, or otherwise as a common element for the exclusive benefit of lot owners should not result in a separate tax bill, but many associations pay these taxes for years and years since they didn’t take the appropriate action. The same is true with respect to the common elements of a condominium. Valuation of the units for property tax purposes takes into account the common elements.

Don’t let this happen to you – make sure the community common elements or common areas are categorized and assessed properly before you pay years of tax bills or face similar disputes.

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One of the Federal housing programs benefiting low-income renters is commonly referred to as "Section 8" which is rental subsidy, limiting the monthly rent payment for the person qualifying for the program.   If someone qualifies for the program, the federal government pays for a portion of the rent and the tenant pays the rest.  The program coordinator evaluates whether the rental payment sought by the owner of the property is appropriate (fair market).  In most cases the bulk of the payment is made by the government entity (usually administered by a local housing authority) directly to the owner of the leased property.  Many types of properties house tenants that participate in the Section 8 program - condominiums and houses within homeowners associations are no exception. 

The Florida community association laws allow the association to demand rent paid by a tenant if the owner fails to pay assessments.  What if the actual tenant only pays a nominal sum since he or she participates in this rental subsidy program?  Does that mean the association can only collect a hundred dollars (+/-) when the rent may be closer to a thousand dollars?  Does the housing authority continue to pay the bulk of the rent to the delinquent owner? 

A homeowners association in Palm Beach County did not accept the nominal payment from the actual tenant at face value.  It obtained a Court Order directing the housing authority to divert the Section 8 rent subsidy payments from the owner to the association. Wptv (news channel 5) featured a story on this issue (below):

The owner of a property used in connection with a rental subsidy signs a contract with the local housing authority.  That Housing Assistance Payments Contract (HAP) imposes conditions on the owner - one of which is to maintain the property.  The housing authority is entitled to cancel or terminate the contract upon breach by the owner.  

Questions remain whether forcing the housing authority to divert rental payments to an association will result in termination of the contract.  However, this association certainly benefits from the immediate payments. Perhaps its time for HUD to modify the HAP and/or to promulgate rules allowing the housing authority to comply with the Florida community association laws, especially considering the fact that the tenant hasn't violated the terms or conditions of the program. 

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Does your community association enforce all pet restrictions uniformly and consistently?  It’s typical, expected, and almost commonplace when community association boards of directors, managers, maintenance staff or residents “ignore” what is seen as harmless violations of the recorded restrictions or rules and regulations with regard to pets, only to be outraged later when someone sneaks in a 60 lb. pit bull or a 4 foot snake. Sometimes the board’s lack of action stems from its reluctance to spend money to enforce the pet restriction and/or sympathy for the long-term resident and his or her “cute little kitty” or “very quiet bird.”

However, that "niceness"  is likely to work against the board in the end.  A board of directors in Palm Harbor has reportedly reconsidered enforcement action against a homeowner with a dog weighing more than 35lbs.   ABC Action news reported:

Pursuant to Florida case law, the defense of selective enforcement may be established by demonstrating that an association failed to enforce the restrictions in its governing documents against comparable violations. In Killearn Acres Homeowners Assoc., Inc. v. Keever, the board of directors prevailed in a case seeking a homeowner to remove a satellite dish on the side yard since the unit owner could show no other instances of dishes being permitted on a side yard. In another case the court rejected a home owner's attempt to establish selective enforcement by showing the board ignored home businesses, fences, decorative items and solar panels. In, McMillan v. Oaks of Spring Hill Homeowner’s Assoc., Inc., the association was able to obtain a court order requiring the owner to remove a shed that had been installed in their yard.  On the other hand, in Prisco v. Forest Villas Condominium Apartments, Inc. the board lost the enforcement case against a dog owner where the owner proved the board did not require owners to remove cats from the property.

In this Palm Harbor matter, the board reportedly decided to reconsider taking enforcement action since the owner acquired the dog after her brother's tragic death.  Its difficult to know whether the board's reconsideration stems from the circumstances or from the selective enforcement claim. 

The 'take-away' for community leaders and managers:  Do your homework.  Summer is typically slower than other parts of the year - so conduct a survey of the residents and determine who owns pets and what pets are on the property.  Review your parking restrictions and vehicle registrations.  Conduct inspections to determine whether there are any non-conforming uses.  If the rules are important to the community, take them seriously, as a few 'slips through the cracks' can be fatal to an enforcement action.

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I promised an update on the Master Association Blocks Owners from Pool and Recreational Facilities post when a result became known.   A Palm Beach County Circuit Court Judge ruled yesterday that the Master Association governing the Quail Run community was not entitled to suspend use of the recreational facilities by all of the owners in one of the condominiums within the community.  The Court found that Section 718.303, Florida Statutes did not allow the Master Association to suspend the use rights of the compliant, paying owners, due to delinquencies on the part of a few.  Part of the Order says:

"The statute requires that each delinquent member be treated singularly as the Court finds that the statute does not provide that a member who is current in his or her obligations be penalized for payment failure of another member who is delinquent."

Since this is an interim Order in a Circuit Court case, it does not have precedential value, meaning it does not rule over other cases.  However, the ruling reflects one Judge's interpretation of the law.  Thus, community leaders are encouraged to discuss the authority to suspend use rights for an entire subdivision as well as the possible consequences of that action with counsel.

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Over 40% of the Home Loans Issued in Two Major Florida Cities in February are Government-Insured FHA Loans. 

The marketability of the homes in your community is highly dependent upon the availability of mortgage financing.  We've included several posts on this site regarding purchase money financing issues over the past 2 years, including reporting on the changes to federal underwriting guidelines. Since mortgage financing (or lack thereof) severely impacts community association operations, Community Associations Institute (CAI) announced it is "stepping up its Congressional and federal regulatory advocacy on behalf of American homeowners, home buyers and common-interest communities."   CAI issued a statement on behalf of its 30,000 members that included the following quote:

"The stakes for homeowners, home buyers and communities are enormous,” says CAI Chief Executive Officer Thomas M. Skiba, CAE. “Rules being developed today may likely govern mortgages for the next several decades. If you live in an association or work in the community association industry, you need to understand the magnitude of these issues, keep abreast of the latest developments and weigh in when such opportunities are available.”  

You can learn more about CAI's new initiative at Mortgage Matters.

The mortgage crisis is also evident by comparing the percentages of FHA backed home loans.  FHA project approval has proven to be a significant factor in home sales. DataQuick Information Systems reports the following increases in Florida:

The future of GSE (Government Sponsored Enterprise) financing is also up-in-the air.  However, Fannie Mae announced an incentive program it says will help stabilize communities.  Purchasers of Fannie-Mae owned HomePath properties are eligible for financial assistance to help pay up to 3.5% of the closing costs.  Fannie Mae-owned HomePath properties are listed on HomePath.com and most listings include detailed property descriptions, photographs, information about local schools and more.

Proactive community leaders have taken steps to ensure their communities are approved for favorable purchase financing.  You may want to discuss project approval or certification with your community association attorney.

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Showcase Your Excellence - Submit Your Entry for Consideration by Independent Judges in the Florida Communities of Excellence Awards! 

This independently judged program enables the top communities in the state to promote their accomplishments and raise their profiles while documenting their success and enabling others to learn from their accomplishments across numerous categories.  Publisher and sponsor Jim McMurray noted the awards "saw 100% growth in its first two years and the program will expand even further for 2011.”   Florida Community Association Journal co-founded the Awards with the law firm Becker & Poliakoff, P.A.

Communities often rely upon the advice, effort and fortitude of their managers.  Therefore, "Managers of Excellence”  will also be selected.  This award is to recognize professionals working with communities that have distinguished themselves with consistently high rankings in the initial three years of the Awards.

There are plenty of categories so every size, type and shape of community can participate.  Go to:  Florida Communities of Excellence for more information and entry forms. 

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The Office of Program Policy Analysis & Government Accountability (OPPAGA) Issues Report Outlining Various Options for Regulation of Homeowners Associations (HOA).

 OPPAGA evaluates performance and accountability of various governmental activities.  The Draft Report finds that the legislature showed significant interest in regulating Florida's Mandatory Membership Homeowners Associations over the past several years.  In 2007 a Senate interim study recommended alternative dispute resolution mechanisms to facilitate resolution of homeowner issues.  The 2008 Select Committee on Condominium and Homeowners Association Governance recommended increasing enforcement, mandatory education for board members and allowing local law enforcement to access association records during an investigation.  In 2009, the Community Association Living Study Council recommended immediate legislative action to curtail the powers of homeowners associations.

The Draft Report describes several options available to the Legislature, to wit:

The Ombudsman's Office reports that most of the complaints about HOAs concern properties in South Florida.  The complaints are largely similar to Condo/Coop complaints - the majority of which include lack of access to association records, election disputes, selective enforcement of covenants and the inability to participate at meetings.

Is it time for Florida to provide more oversight to HOAs?  Would Florida homeowners benefit from the services of the Ombudsman or the DBPR?  Would the costs justify or outweigh the benefits?

There are a number of bills filed for consideration during the 2010 legislative session - some of which include additional regulations for HOAs.  Please refer to other posts on this site for information about pending bills or visit CALL to participate in the legislative process.

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