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

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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The Quail Run story demonstrates the power one, two or a few delinquent owners have over the paying owners.  According to the Sun-Sentinel, close to 100 condo owners have been shut out of the pool, clubhouse and other Quail Run recreational facilities, even though a very small minority are behind in payment of maintenance fees.

The Condominium Act was amended, effective July 1, 2010, to allow associations to suspend use rights in the event an owner is more than ninety (90) days delinquent.  Section 718.303, Florida Statutes says in part:

If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid.

There is a similar provision in the statutes that govern homeowners' associations operations.  Section 720.305, Florida Statutes likewise states (in part):

If a member is delinquent for more than 90 days in paying a monetary obligation due the association, an association may suspend, until such monetary obligation is paid, 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 of up to $100 per violation, against any member or any tenant, guest, or invitee.

Thus, it is evident that the association (whether a condominium association or a homeowners' association) has certain remedies available to it against a delinquent owner.  The question here is whether this punishment may be imposed against all owners in a particular sub-association when some are delinquent and others paid in full.

Many communities are developed with several neighborhoods inside a large subdivision.  There is a master association that bears responsibility for certain portions of the property, generally including the roads, perimeter fencing or walls, security gates and recreational facilities.  In newer communities, typically the governing documents will give the master association's board the choice to 1. collect assessments directly from the individual owners, or 2. to require the sub-association to pay the aggregate amount.  Obviously the latter is far easier for the master association administratively - keeping track of 5, 8, 10 or 15 payments is a lot easier than keeping track of hundreds or thousands of payments from individuals.  The master doesn't necessarily need to keep track of property transfers or participate in many of the lender foreclosure actions when the sub-association bears responsibility for payment of the assessments attributable to its units/homes (although in many cases it may be wise).

Not all governing documents give the master association the options stated above.  Some of the declarations merely require the sub-association to act as a conduit, not as a guarantor of payment.  Some declarations actually require the master association to collect assessments from the individual owners.

One of the sub-association boards in the Quail Run community decided it could not absorb the costs of owners in default and only paid the master association for the unit owners that submitted their payments.  The master association, relying on the language of Section 718.303, Florida Statutes, then suspended use rights for everyone in that neighborhood, rather than limiting the suspension to the owners in default.   A hearing was recently held to determine whether the master association was right or wrong by taking that action.  We'll be sure to report on further developments in this particular case as they become known.  In the meantime, be sure counsel has reviewed your governing documents to see what options are available to secure your community's continued viability.

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The social media phenomenon is huge.  I hear the word "Twitter" practically every day on television news programs, talk shows or on the radio and have established a Twitter account in an effort to learn what the fuss is all about.  Social networking sites like Facebook, Twitter, YouTube and Linked-In provide an easy way to disseminate information.  These new means of connecting on-line often can replace community association mailings and provide a forum for the residents to connect with each other as well as the board of directors.

Community associations often have websites that feature for sale items (homes or personal property), photos of the community and community events, forms for use by homeowners to request architectural approval or report maintenance/repair needs, a link to the governing documents and much, much more.  Many associations post financial information on line on pages protected by passwords, allow members to review their account to see if payment was posted and even pay assessments.  Websites have served associations well over the past decade and therefore extending communication by utilizing social networking platforms is not unexpected.  In fact, a quick search of sites like Facebook and Linked-In shows many community associations (or their members) have already ventured in to this arena.

However, as with any new endeavor, the benefits must be weighed against the detriments.  Questions are bound to arise.  Who is entitled to post information or comments?  Is there a filter before the general public has access to the information?  Is the Board liable for erroneous information? Can the association post information about owner use violations?  What if the owner isn't really in violation?  Can the site include photographs of community residents or individual homes?  Is the content of the site considered "official records" of the association?  If so, what are the retention requirements?  We discuss some of these issues in the following posts:

E-mails, Instant Messages (IM), Twitter & Board Meetings, Are E-mails, Instant Messages (IM), & Twitter Transcripts "official" records of the Association?, and Are E-mails, Instant Messages (IM), & Twitter Transcripts "official" records of the Association? (Round 2).

I also found the article, Social Networking Can Improve Communications But Watch our for the Liability Risks  interesting as it notifies community leaders about potential pitfalls associated with use of social media sites.  The author warns community leaders to be cognizant of potential claims of libel/defamation, copyright infringement, invasions of privacy, plagiarism and interference with contract, to name a few.  This article also addresses whether insurance coverage is typically available for claims and surmises that exclusions will appear in future policies.

What should you include in your community association social media policy?  Well, you want to prohibit profane language or terms that relate to a particular ethnic, racial or other protected group of course.  You probably don't want to allow your members (or "friends") to use the site to solicit business prospects.  You need to reserve the right to refuse to post or delete any content or material that is not suitable for the site.  You also need the appropriate disclaimers.  This is just a partial list to alert you to some of the considerations involved when embarking into the world of social media.

Let us know how your community uses social networking to further association goals and objectives. 

 

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Associations, community leaders and managers are often the target of housing discrimination claims.  It is against Florida law to discriminate against anyone with respect to sale, rental or terms and conditions of housing based upon race, color, national origin, sex, handicap, familial status or religion.

New HUD rules would expand the categories of persons entitled to protection on a federal and sometimes state level, depending on the program.  HUD seeks to clarify that housing cannot be denied based on marital status, sexual orientation, or gender identity and, further, specify that all eligible families will have the opportunity to participate in HUD programs.  These categories of protected class are already included in many local ordinances throughout Florida.  You can review the proposed text of the rule HERE.

HUD already defines the term “family” with a broad scope in connection with many of its housing programs.  Its definition includes a single person and families with or without children. HUD’s proposed rule would clarify that families where one or more members of the family may be an LGBT individual, have an LGBT relationship, or be perceived to be such an individual or in such relationship would not constitute a basis for excluding those families from HUD benefits. The current definition of the term ‘‘family,’’  is based on the U.S. Housing Act of 1937 (42 U.S. 1437a) (1937 Act).  Section 3(b)(3)(B) of the 1937 Act provides as follows:
 

Families.—The term ‘‘families’’ includes families with children and, in the cases of elderly families, near-elderly families, and disabled families, means families whose heads (or their spouses), or whose sole members, are elderly, near-elderly, or persons with disabilities, respectively. The term includes, in the cases of elderly families, near-elderly families, and disabled families, 2 or more elderly persons, near elderly persons, or persons with disabilities living together, and 1 or more such persons living with 1 or more persons determined under the public housing agency plan to be essential to their care or well-being.

There are various resources on this site that address discrimination issues, such as:

Condos & HOAs: It Pays NOT to Discriminate - Case Examples 

Do Group Homes & Assisted Living Facilities Violate HOA Covenants & Restrictions? 

55 & Over Housing: What is the 80/20 Rule? 

We will continue to address discrimination issues in the future and alert you to new cases or administrative decisions from time to time.
 

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Mediation is an effective way to resolve disputes. Florida Courts require the parties to a lawsuit to attempt to settle the dispute at mediation before the trial starts.  There are many benefits to mediation - it is private, the proceedings are confidential, if successful it reduces the costs to each side of the case and enables the parties to "think outside the box".  The mediator is a neutral third party (in Florida they must be licensed) that facilitates the discussion and helps the parties explore alternative ways of resolving their dispute.   In short, mediation has a lot of benefits and I highly recommend it for the vast majority of cases.

The Florida Supreme Court mandated mediation for all circuit court residential mortgage foreclosure cases involving homestead property.  The Florida Supreme Court initiated a task force review of foreclosure cases in 2009 and the findings were not surprising, at least not to community association board members dealing with delinquencies.  The task force recommended mediation to manage "the massive volume of residential mortgage foreclosure cases".   

Mediation increases costs for the mortgagee (at least $750 for the program plus attorney's fees), delays the process and may actually work against the borrower that participates in the program in the long run.

First, the program coordinator must contact the borrower.  The borrowers typically don't respond, so a second notice is sent and sometimes even a third notice is sent.  That all takes time.  Once contact is established the borrower must meet with an approved mortgage foreclosure counselor, that takes more time.  Then the borrower must assemble and provide certain financial information to the mediation program coordinator before mediation will be scheduled. 

"Pro-se" borrowers (borrowers without legal counsel) often are not aware they may request documents from the mortgagee, such as:

• Evidence it owns and holds the note and mortgage sued upon;
• An account history showing the application of all payments by the borrower during the life of the loan;
• The mortgagee's determination of present net value of the mortgage loan; and
• The most current appraisal of the property.

A reporter for the Palm Beach Post found foreclosure mediation only had a 6% success rate.  The article quotes a report indicating program coordinators established contact with less than half of the borrowers that qualified for the program.  Less than half of those borrowers actually participated in mediation.  All of this must take place before the Court will act on any notice for trial, motion for default final judgment, or motion for summary judgment filed in the case. 

Fannie Mae recently announced its plan for pre-litigation mediation in Florida.  Fannie Mae requires mortgage servicers to refer delinquent mortgage loans to one of its approved attorneys along with contact information for a primary liaison/team that can make decisions regarding loan modifications or other avenues for resolution of the delinquency.  If the circumstances meet Fannie Mae's mediation requirements, the servicer must offer mediation to the borrower.  It can fine servicers for failing to comply with the program.

Will pre-litigation mediation speed up the foreclosure process or produce even longer delays?  Its hard to predict, but borrowers that have encountered difficulties contacting anyone at the lender or mortgage servicer now at least have another chance to save their home or negotiate a solution.

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We receive a number of reader inquiries on a weekly basis.  In most cases a response to the inquiry is included in the comment field itself, after the relevant blog post.  Here are a few of the inquiries received in the last week, with our responses:

QUESTION: How can I learn if my townhouse is FHA certified?

RESPONSE: Go to this website to look up your community: https://entp.hud.gov/idapp/html/condlook.cfm

QUESTION: Do Florida Statutes address a CPA audit report that is anything other than a unqualified report? For example: The Board of Directors declines to present a statement of cash flows and a qualified report is issued by the CPA.

RESPONSE: The association's members can vote to waive an audit for three (3) consecutive years and during that time merely produce a report of cash receipts and expenditures. The Association must engage an accountant to prepare an audit in the fourth year if the revenue exceeds $400,000.

QUESTION: We are an 11 unit condominium. Must we send a 60 day first notice of our Annual condominium meeting? Do current Florida condominium statutes and bylaws govern our procedures?

RESPONSE: Section 718.112(2)(d), Florida Statutes allows an association of 10 or fewer units to vote for different election and voting procedures. Generally statutes relating to remedies or procedure will override conflicting governing documents. Condominium elections must be held in compliance with the statutes and yes, the first notice must be furnished to the members at least sixty (60) days in advance.

QUESTION: We need the legal ability to remove a owner who fails to follow condo laws, rules and regulations - not abiding by the 55 and older rule - having a grandson live there. Any help would be greatly appreciated.

RESPONSE: If the community qualifies as Housing for Older Persons (HOPA), then the association can proceed by filing a lawsuit (if in the jurisdiction of the 4th DCA) or file a Petition for Arbitration with the Division of Florida Condominiums, Time Shares and Mobile Homes.
The governing documents must clearly define the occupancy restrictions. Our Firm has successfully handled several cases involving violations of age restrictions.

QUESTION: I am a property manager and hear of associations with rules and guidelines that are not equal. I have found a condo association that allows owners to have pet but renters can not. Can they do this? Would this fall under a discrimination to renters?

RESPONSE: An analysis must be done to determine whether rules and regulations are valid and enforceable in any particular case. I am aware of at least one arbitration decision that upheld a rule prohibiting tenants to bring pets on to the property.

Remember, the information on this site is general in nature and not intended as legal advice.  We try to point you in the right direction, but encourage you to discuss the specific facts and circumstances of issues impacting your association with counsel. 

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Squatters Occupying Abandoned Homes May Have Claim Against Owners While Authorities Charge Adverse Possession Filers With Fraud.

A company called Helping Hands Properties, Inc. claimed 48 properties in Broward, including a $1 million house in Coral Springs.   Another, Saving Florida Homes, Inc. filed notice in official county records that it was taking possession of 100 homes in Broward and three in Palm Beach County - up to 10 properties were claimed in just one day.   The company owners say that taking possession of dilapidated properties improve the neighborhood.  Authorities say they are just trespassing and stealing.  Are these companies just manipulating the system for their own benefit or are they performing a public service?  What can you do if this happens in your neighborhood?

Adverse Possession - What is it?

Florida statutes address adverse possession - a process to obtain title without buying a property.  To acquire title by adverse possession, such possession must be adverse, hostile, open or notorious, exclusive and uninterrupted, for seven years.

There are two types of adverse possession. Adverse possession under "color of law" (§95.16, Florida Statutes) means the possessor’s ownership claim is based upon a written document in the county public records. Adverse possession without "color of law"(§95.18, Florida Statutes) means there is no recorded document purportedly creating ownership.

To claim adverse possession under color of law, the document (deed, etc.) does not have to be valid. However, the possessor must have accepted the instrument in the honest belief that it conveyed ownership. Possession means that the property has actually been used or enclosed. 

Adverse possession without color of law is not based on any recorded document, but mere use of the property is not enough to claim ownership or entitlement. The possessor must pay the property taxes and installments of all special improvement liens levied against the property by the state, county and city. The additional requirement of tax payments not only evidences the possessor claims ownership, but places the record owner on notice that property taxes are being paid by someone else. That gives the record owner an opportunity to investigate and take action.

Remember - possession must be open, notorious and hostile to claim adverse possession. Permissive use, like when you allow kids to play soccer, use motorbikes or camp on the property, means the possession is not adverse.  

In a New York Times article, one of the company owners explained he allowed tenants to fix up the property instead of paying rent.  Strategic defaults create plenty of opportunities to seize abandoned homes.  Letters sent to property owners and banks notifying them of the plan to take over the home were reportedly ignored.  He now faces up to 15 years in prison.

This tactic can pose problems for community associations.  More and more community associations have acquired title to homes as a result of foreclosures.  Those associations must monitor the use of the property and file eviction actions to remove unauthorized occupants to avoid claims of adverse possession.  The same is true for bank-owned properties.  A lender may not be aware of the actual use or condition of the home, especially if its not actively marketed for sale.  The association needs to remain cognizant of the actual use and take action to verify whether that use complies with the governing documents.  Ignoring use violations creates even further problems, especially when the association tries to take action much, much later.

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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 Florida Department of Community Affairs and Florida Division of Emergency Management announced availability of the latest guidebook in the State's Best Practices Series titled, “Post-Disaster Redevelopment Planning: A Guide for Florida Communities.”

Over the past four years the Department and the Division have concentrated efforts on community resiliency and long-term sustainability through Post-Disaster Redevelopment Planning.  Statewide experts with the Division of Community Planning, the Department of Community Affairs and the Florida Division of Emergency Management worked together with funds from the National Oceanic and Atmospheric Administration through the Florida Coastal Management Program, the Florida Department of Environmental Protection, and the Federal Emergency Management Agency through a Hazard Mitigation Grant researching lessons learned from previous disasters and developing guidelines for the future. This research was evaluated when drafting the planning process.  The guidelines were tested through a series of pilot projects. This new 152 page guidebook is the culmination of this effort.

This guidebook, along with other resources, is located on the Department’s website here: Post-Disaster Redevelopment Planning; A Guide for Florida Communities.  

Community Associations can learn a lot from these and other resources published by the Department of Community Affairs.

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Common Exemptions for Condominium and Cooperative Associations do not Apply to Homeowners' Associations.

The Florida Department of Health enforces regulations on public swimming pools.  While community association pools are generally not open to the public, its likely they are considered public pools for the purpose of compliance with Chapter 514 of the Florida Statutes and Rule 64E-9 of the Florida Administrative Code.

The Florida Administrative Code defines a "public pool" as basically any pool that does not qualify as a private pool.  Section 514.011, Florida Statutes defines a private pool as a facility used only by an individual, family, or living unit members and their guests which does not serve any type of cooperative housing or joint tenancy of five or more living units.  Condominium and cooperative associations have the benefit of the exemptions set forth in Section 514.0115 which say:

Pools serving no more than 32 condominium or cooperative units which are not operated as a public lodging establishment shall be exempt from supervision under this chapter, except for water quality.

Pools serving condominium or cooperative associations of more than 32 units and whose recorded documents prohibit the rental or sublease of the units for periods of less than 60 days are exempt from supervision under this chapter, except that the condominium or cooperative owner or association must file applications with the department and obtain construction plans approval and receive an initial operating permit. The department shall inspect the swimming pools at such places annually, at the fee set forth in s. 514.033(3), or upon request by a unit owner, to determine compliance with department rules relating to water quality and lifesaving equipment. The department may not require compliance with rules relating to swimming pool lifeguard standards.

Unfortunately, these exemptions do not mention homeowners' associations.  Even condominium communities (with more than 32 units) must comply with new safety requirements and must remember to apply for renewal as required by the code.

Enforcement of the revised pool regulations has put a strain on some community associations, such as the Rose Garden Villas in Lee County where the residents will have to spend over $200,000 on rebuilding costs.  Community leaders question why it is necessary to comply with these stricter requirements after the pool has been open without incident for years and years.  

The government may require reasonable changes in existing buildings in order to comply with new requirements and standards for the protection of health and safety of the public, regardless of the fact the buildings complied with the applicable codes at the time of construction.   Nonetheless, not all regulations are retroactive and variances are available in the appropriate circumstances.  If your community faces this dilemma, its a good idea to discuss whether you can appeal a denial of an exemption or obtain a variance.

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The rule of caveat emptor is sage advice.

Now is a terrific time to buy a home, whether a condominium, single-family home or other type of housing.  Homes prices have fallen, interest rates are low and there are plenty of homes on the market to choose from.  I encourage you to take advantage of this opportunity if you can.  However, please know what you are buying - save yourself from heartache and future troubles.    HOA Examiner recently ran a string of articles with advice for home buyers, particularly first time buyers.  A couple of them are posted below:

• HOA Rules and Regulations: friend?
• HOA Rules and Regulations: foe? (no, it isn't that bad)

I'd like to reiterate and expand on some of the points mentioned.  

Your home is your Castle, right?  This maxim, originating as far back as the 1700's, stands for the proposition that a homeowner may do as he (or she) pleases in his (or her) home, free from invasions of privacy.   Well, when you buy a home in a community governed by an association, you cannot always do what you please, so its important to understand both the benefits and the obligations of shared ownership housing.

 One Florida appellate court explained this concept succinctly.  It said:

Every man may justly consider his home his castle and himself as the king thereof; nonetheless his sovereign fiat to use his property as he pleases must yield, at least in degree, where ownership is in common or cooperation with others. The benefits of condominium living and ownership demand no less. The individual ought not be permitted to disrupt the integrity of the common scheme through his desire for change, however laudable that change might be.
[Stirling Village Condominium Association v. Breitenbach, 251 So.2d 685 (Fla. 4th DCA 1971].

With that in mind, here is some additional advice for home buyers:

• Read the Documents!  All of the contributors to the HOA Examiner articles listed this as the number one priority.  You need to understand what is permitted and what is prohibited.
• Look at the Budget:  What will you have to pay in monthly or quarterly fees?  The mortgage may be affordable, but you cannot afford the home if you cannot pay the assessments (maintenance fees) required.  Associations in Florida have the right to foreclose if assessments aren't paid in a timely manner.   
• Look at the Financial Statements: Is there money in reserve for major projects?  Did the association collect the bulk of the budgeted assessments?  How many special assessments were levied?
• Ask Questions:  If you feel the governing documents are vague, ask!  Ask whether you are allowed to have 2 or 3 cars, ask whether your visitors can park on the street overnight, ask whether you need permission to change the exterior appearance of the home or hang holiday lights from your balcony.  Ask when the association last replaced the roof.  Ask if there are any plans to renovate the clubhouse or security gate.  The board will welcome someone who genuinely cares about the rules because they want to be in compliance.

As I said to Adam Sinclair, you can live very happily in an association setting, once you find the right place for your lifestyle.  Neighbors can turn into life-long friends, you and your family can enjoy the amenities, comfort, security and maintenance standards community associations have to offer.  Don't fret, the right community is waiting for you to find it!

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Is your Association Leaving Money on the Table?

Bank foreclosures continue to be an impediment to collection of unpaid assessments in many communities.  Sure, after the 2010 legislation became effective, community associations are entitled to collect either 1% of the original mortgage debt or 12 months worth of assessments from the mortgagee (whichever is less), but what about the rest of the balance?  Does it disappear into thin air?

Because a bank foreclosure will usually directly impact the ability to successfully lien and foreclose, communities must be aware of other alternatives to collect unpaid assessments.

Strategic Defaults - According to Wikipedia:

A strategic default is the decision by a borrower to stop making payments (i.e. default) on a debt despite having the financial ability to make the payments.

While many owners who lose their units in foreclosure cannot pay, it is important to remember that a unit owner is personally liable for all unpaid assessments that are left when a bank forecloses.  The Association may seek to collect the balance on the account from the former owner.  More and more, people who do have assets make choices to abandon properties because there is no equity.  If there is a possibility that an owner has assets to satisfy a judgment, a community should consider taking action against a former member to collect those unpaid assessments.

Many associations are thinking short-term instead of long-term when they decide to forgo pursuing a money judgment for the balance between what a lender pays if it takes title as a result of foreclosure and the outstanding obligations on the account. Yes, there are costs involved. If the association doesn't have a lawsuit pending, it needs to file a lawsuit. There are attorneys fees, filing fees, costs associated with service of process, etc. If the association already has its lawsuit pending, most of those costs have already been absorbed - so why not wait for the bank to foreclose (and pay its statutory obligation), then continue to pursue the balance against the former owner? A judgment is recorded in the county and with the State's registry; it is initially valid for 10 years and can be renewed for another 10 years. During that time if the debtor desires to buy another property, obtain financing for purchase of a vehicle, college, etc., the judgment will appear.

While the debtor/former owner may not have sufficient cash-flow right now, who knows what the future will bring? If the debtor has significant assets in another state, the association can even take the extra step of domesticating the judgment in another state and pursue collection efforts there.

Asset Searches Can Be Helpful in the Decision Making Process

An asset search may help discover assets. It is more difficult (sometimes almost impossible) to collect from a corporate unit owner or a foreign person.  Nonetheless, your community should consider its options after a bank foreclosure - you may be leaving money on the table.

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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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Community Leaders Can Challenge Property Tax Assessments With Board Resolution.

Hasn't the real estate market changed in the last few years?  Owners and Board Members long for the days of escalating prices when everyone paid maintenance fees and even if they didn't, there was plenty of equity in the property to satisfy delinquencies after or in connection with a foreclosure. 

That has all changed.  Revenue is down and so are property values.  Shouldn't you pay less?  Of course you should and probably do - property appraisers have been adjusting values, but are the new numbers realistic?  Both the multi-family and single family home values fell dramatically - now is the time to establish a lower base assessment for yourselves and your owners.

How?  Pursuant to Section 194.011(3), Florida Statutes, condominium, cooperative and homeowners associations can file a joint petition.   The relevant portion of the statute says:

A condominium association, cooperative association, or any homeowners' association as defined in s. 723.075, with approval of its board of administration or directors, may file with the value adjustment board a single joint petition on behalf of any association members who own parcels of property which the property appraiser determines are substantially similar with respect to location, proximity to amenities, number of rooms, living area, and condition. The condominium association, cooperative association, or homeowners' association as defined in s. 723.075 shall provide the unit owners with notice of its intent to petition the value adjustment board and shall provide at least 20 days for a unit owner to elect, in writing, that his or her unit not be included in the petition.
 

Thus, once the Board of Directors passes a resolution it may file the tax appeal petition with the Value Adjustment Board.  The Value Adjustment Board will appoint a Special Magistrate to conduct a hearing to determine whether the market value of the property set forth on the TRIM notice was higher than the actual market value on January 1 of this year.

The collective power of the association is useful in the appeals process.  First, the per property fee for filing is less.  The fee may be paid by the Association, in fact §718.111(3), Florida Statutes and §720.303(1), Florida Statutes specifically authorizes the association to protest ad valorem taxes for the common facilities.  The common elements and facilities are nominally valued for tax purposes, since the actual value is included in the value of the homes/units. 

Factors to Consider in a Protest:

• Part of the property may qualify for an exemption
• Foreclosure & delinquency rates
• Structural or storm damage / construction work limiting use of the property
• Changes in the surrounding area i.e. blocked views from new construction
• Increased property insurance costs
• Changes in use - chinese drywall & other limitations on use

Each unit or home owner is given the opportunity to opt-out of the appeal if they want to pursue an appeal on their own or just don't want to participate.

Use professionals to assist in the tax appeal process.  A professional should know how to craft the appeal, can determine whether any exemptions apply and understands the process - all to present your case in the most favorable light. 

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Community leaders should understand the financial wherewithal of the associations they lead.  Unit and Home Owners also have rights to review financial records.  It seems like we hear about theft of association funds more and more these days.  Simply leaving finances in the hands of a manager, bookkeeper or treasurer is not enough.  For some practical ideas how to stay "in the know", please see the following article published by HOAleader:

Five Questions to Ask Your Manager about Your Homeowner Association's Finances

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Fourth District Court of Appeal Enunciates Two-Pronged Test to Evaluate Decisions Made by the Board of Directors of a Community Association.

The officers and directors of community associations have a fiduciary relationship to the members (owners), as stated in §718.111(1)(a) and §720.303(1), Florida Statutes.  The directors are obligated to discharge their responsibilities in good faith.  Board decisions are generally protected by the "business judgment rule".  The theory behind this rule is that Courts should not substitute their judgment for the judgment of the elected or appointed board members, so long as the members of the board acted in compliance with established standards of conduct.   Florida Statutes, Section 718.111(1)(d), provides:

 (d) As required by s. 617.0830, an officer, director, or agent shall discharge his or her duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner he or she reasonably believes to be in the interests of the association. An officer, director, or agent shall be liable for monetary damages as provided in s. 617.0834 if such officer, director, or agent breached or failed to perform his or her duties and the breach of, or failure to perform, his or her duties constitutes a violation of criminal law as provided in s. 617.0834; constitutes a transaction from which the officer or director derived an improper personal benefit, either directly or indirectly; or constitutes recklessness or an act or omission that was in bad faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.

The new test to determine whether the board's decision should be protected by the business judgment rule comes from a case where an owner prevented the association from extending balcony concrete repairs into her unit.   The engineer for the project said to remove the concrete four inches beyond the corrosion, which necessitated work in the unit, not just the balcony.  The owner hired her own engineer who said the extra work wasn't necessary.

The association sued to gain access to the unit to perform the repairs recommended by the project engineer.  The appellate court explained that its review of the board's decision was limited by the business judgment rule and held:

...courts must give deference to a condominium association's decision if that decision is within the scope of the association's authority and it is reasonable - that is, not arbitrary, capricious, or in bad faith [emphasis added]

The case was sent back to the trial court for analysis pursuant to the new test, to wit:

• Does the board have authority to invade the unit to perform common element repairs?
• and, if so
• Is the decision to do so reasonable or, in other words, was the board decision to invade the unit arbitrary, capricious or made in bad faith?

This case is hot off the press and therefore not final if the parties file motions for rehearing.

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Thank you everyone for the thoughtful questions and comments regarding SB 1196.  I have literally received hundreds of questions and comments over the past week - either through this site or by email.  Since many of the questions relate to the same issues, I'd like to share some of the responses. 

QUESTION:  Rumor has it that the Governor has a bill before him that would raise the voting approval to 75% for apparently new Condo and/or HOA amenities. True or false?

RESPONSE: You may be referring to the new section 720.31, Florida Statutes. It says that HOAs can acquire leased property, memberships and other interests in lands or facilities (including country clubs, marinas, golf courses, etc.) more than a year after recording the Declaration if the governing documents contain that authority or if 75% of the members agree.

QUESTION:  Are cable TV services considered a utility? Our HOA pays approx. $50 per month per unit for basic services. Comcast has refused to cut the services for those people who have stopped paying their maintenance fees, even if we pay the monthly dues and pay for the service to shut off the service. Without cable TVs service, it might give those people who have refused to pay their maintenance fees, an incentive to do so.

RESPONSE: You hit the $64,000 question. Maybe Comcast will change its policy as a result of the new law. I understand Comcast (and perhaps some other providers) believed that suspending service to individuals constituted a violation of the telecommunications act and federal regulations. Check back in a few weeks - we will be sure to post something related to suspending cable/television programming and are planning a webinar devoted to telecommunication issues in light of SB 1196. 

(P.S.  If your community is paying $50 per month for basic bulk services it should attempt to renegotiate that deal.)

QUESTION: Please inform me if there is a new requirement for board members to take a class or an exam to run for the board otherwise the association will be null and void.
Is this something new? please let me know

RESPONSE: The new law (effective July 1) requires board members to provide the association with a certification or evidence of completion of an approved course within 90 days of being elected or appointed.

QUESTION: Does SB1196 say anything about the requirement of installing hard wired smoke detectors in condominium buildings that are less than 3 stories in height? Is it still a requirement in these buildings?

RESPONSE: SB 1196 contains a provision that allows buildings of less than 4 stories with outside access (catwalks) to avoid installing manual fire alarms.

QUESTION: The new law stipulates that upon foreclosure the lender must now pay up to 12 months of back hoa dues or 1% of loan balance vs 6 months. Is that effect immediately once the bill goes into effect regardless of when the loan was placed on the property?

RESPONSE: While it is hard to predict how the lenders will interpret the bill, many community association attorneys believe that the new law will apply to acquisitions of title by lenders that take place July 1, 2010 forward, if the original mortgage was recorded after April 1992 (the effective date of the "safe harbor").

Remember, this information doesn't constitute legal advice & these responses are general in nature. Please consult with counsel to determine how the new laws will impact your operations.

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The Regular Session ends April 30th.  We've previously highlighted changes in SB 1196 and HB 561 that would impact Condos & Co-Ops, here is some information for HOA leaders and managers: 

Records Access:   §720.303(5)

• Owner entitled to presumption that Association willfully denied record access after 10 business days if owner submits request via certified mail, return receipt requested.  Doesn't address what happens if no one picks up the certified letter.
• Association may charge "reasonable costs" in addition to photocopy fees to reimburse it or a vendor for the lost employee time associated with duplicating the records.
• Personnel records for the association's employees will not be subject to inspection (including disciplinary, payroll, health, insurance).
• Personal identifying data of members (ss #, credit card #, emergency contact info, etc.) will not be subject to inspection, although the address used for association mailings is still part of the roster list and subject to inspection.
• Passwords used to safeguard data and software and/or operating systems will not be subject to inspection.

Budgets & Reserves:  §720.303(6)

• Disclosure in financial report must notify owners of vote necessary to mandate reserves.
• If budget does include 'voluntary reserves', financial report must disclose that the funds may be used for non-reserve purposes and not calculated by statutory method.
• 'Statutory' reserves are reserve accounts established by the developer or created by membership vote.

Director Compensation:  §720.303(12)

Salary or compensation is generally prohibited for performing services as director, officer or committee member unless:

• the financial benefit of a lawful board action will benefit all or a significant number of members;
• the payment is reimbursement for out-of-pocket expenses (each association should adopt procedures or protocols for expense reimbursement, limits and types of expenditures that will be reimbursed);
• the payment is for recovery of insurance proceeds;
• the salary or compensation is authorized by the governing documents;
• the fee, salary or compensation is authorized by membership vote in advance; and/or
• a developer appointee may benefit financially from service to the association.

Fines/Suspensions of Use Rights:  §720.305

• Fines & Suspensions authorized if the member is delinquent for more than 90 days;
• Fines less than $1,000 cannot become a lien (doesn't specifically say that liens are permitted for fines exceeding $1,000);
• Suspensions cannot apply to utility services or property used to access the parcel;
• Written notice to the person fined or suspended is required.

Voting for Directors by Secret Ballot:  §720.306(8)

Adopts 'condo-like' double envelope procedure.

Collecting Rent from Tenants:  §720.3085(8)

Association may demand rent directly from tenant if owner is delinquent.

Acquisition of Recreational Leaseholds or Other Property/Property Use Rights:  §720.31(6)

Similar to §718.114 (condo act).  Allows association to enter agreements to acquire leaseholds, memberships or other possessory or use rights in lands and facilities.  Must be fully described in the declaration or if the action is not taken within 12 months of recording, the declaration must authorize said action as a material alteration/substantial improvement or at least 75% of the members must vote in favor of the action.

Special Assessments by Developer (before turnover):  §720.315

Pre-transition, developer controlled association may not levy special assessments without the approval of a majority vote of non-developer interests.  Vote must take place at duly-called meeting at which a quorum has been attained.

These are just brief bullet points, please refer to the actual legislation for more detail.  Committee amendments are still being filed and considered.

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We are proud to be nominated as a Best Blog in the Sun-Sentinel's Best of Blog Awards.  The voting process is already underway - click HERE to vote for Florida Condo & HOA Law Blog in the Business and Technology Category!

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The governing documents for many community associations provide that the Association must review plans and then issue written consent for construction of improvements or modifications - especially if those improvements or modifications will be visible to other owners, involve the common elements or association property and/or impact utility services to the property. 

We learned long ago from the case of Hidden Harbour Estates, Inc. v. Norman, that condominium residents give up a degree of their individual freedoms for the benefit of all unit owners. Similarly, by virtue of detailed, recorded covenants and restrictions, single-family homeowners give up freedoms they might otherwise enjoy, were they not living in planned communities. These restrictions are an area in which individual autonomy is subrogated to the common good.

All too often, however, property owners ignore the architectural control provisions of the governing documents.  When timely and consistent enforcement action is taken by the Association against an owner who has made unapproved changes, the appropriate remedy awarded by the court is a mandatory injunction. The courts have broad discretion to fashion an appropriate remedy, but usually a court's order requires the offending owner to remove unauthorized changes and to restore the original condition of the property. In several cases the courts have required removal of balcony enclosures, storm shutters, decorative features, fences, patios, and newly painted colors.  Some homeowners in Pasco County, Florida recently learned this lesson the hard way.  Bay News 9 showed demolition of recently constructed expensive docks that were built without HOA consent.  One homeowner said she paid Sixty-Five Thousand ($65,000) Dollars to build the dock - only to watch it being dismantled after losing a court battle with the Association.
 

• A homeowner thought that since he obtained a permit for the installation, HOA approval was not necessary - not true.
• Another homeowner thought that since the HOA didn't own the property underneath the dock that HOA approval was not necessary - not true.
• Another homeowner thought that approval by the Environmental Protection Agency (EPA) overruled the HOA - not true.

HOA leaders need to be cognizant of Section 720.3035, Florida Statutes, which became effective on July 1, 2007. This law does not eliminate an association’s ability to regulate alterations to a lot but does require that authority be specifically stated or reasonably inferred from the written covenants or other published guidelines and standards authorized by the declaration of covenants. Home or Unit Owners need to learn and understand what procedures are in place in their community association to avoid costly problems.

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