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

Attention HOA and other home owners, board members and CAMs:

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As previously addressed in our prior CALL Alerts, many portions of SB 530 (the “glitch” bill) were primarily drafted by CALL, at the request of members of the Legislature, to clear up some of the confusion that arose from SB 1196 (the 2010 community association bill that became law). SB 530 was originally accompanied by HB 1035, and later by HB 1195. We are pleased to announce that HB 1195 passed out of the Legislature today and will now be sent to the Governor for action. We have no reason to believe the Governor will veto the bill, but final confirmation normally takes a matter of 3 or 4 weeks. We will keep you posted.

Here is a summary of the issues CALL worked on and drafted language for which are contained within this bill:

Official Records (Condominiums and HOAs)

• Will clarify that owners are permitted to consent in writing to the disclosure of their protected contact information.
• Will clarify that although personnel records are not available for inspection by owners, the owners will be permitted to inspect employment agreements and budgetary and financial records that indicate the compensation paid to employees.

Open Meetings (Condominiums)

• Will permit condominium boards the right to hold closed meetings (not open to unit owner observation) for “personnel” matters. Legal counsel need not be present. (This is already the law in the homeowners’ association context.)

Attachment of Rents (Condominiums, Cooperatives and HOAs)

• Will clarify that “future monetary obligations” includes all rent due from the tenant to the unit or parcel owner and must be paid to the association until all delinquent accounts are paid in full.

Director Certification (Condominiums)

• Will provide that condominium association directors may submit proof of educational course attendance (in lieu of signing the certification form) and such course must have been completed within 1 year before or 90 days after the date of the election or appointment.
• The written certification is valid as long as the director serves on the board without interruption.

Suspensions (Condominiums, Cooperatives, HOAs)

• Will allow suspension of common element use rights for non-payment (no hearing is required) and for bad acts (hearing is required).
• Will clarify that if voting rights are suspended, the suspended vote will not count towards quorum or vote required to approve an action.
• Suspensions for non-payment will not require hearing, but will require board approval at properly noticed meeting.
• The Bill also contains some provisions that were primarily advocated through other constituents and groups:

Collection of Rent from Tenants (Condominiums, Cooperatives, HOAs)

• Will provide a form letter to be sent to tenants explaining the tenant’s obligation to pay rent to the association.
• Will provide tenant with immunity from any claim by the landlord related to the rent timely paid to the association after the association has made written demand.

Elections and Staggered Terms (Condominiums)

• Will clarify that board member terms do not expire at the annual meeting if all of the member terms would expire at the annual meeting but there are no candidates.
• In those cases where the board member terms expire at the annual meeting, the board members may stand for reelection unless prohibited by the bylaws. (This suggests that term limits may be permitted, if provided in the bylaws).
• Will clarify that a candidate must be eligible to serve on the board at the time of the deadline for submitting a notice of intent (i.e., 40 days before the election) in order for his or her name to be listed as a proper candidate on the election ballot or to serve on the board.

Termination (Condominiums)

• Will provide for “partial” termination of condominiums and that amendments providing for same are not subject to s. 718.110(4).
• Plan of termination in a partial termination must reflect the remaining interests in the non-terminated portion of the condominium.
• Modifies distribution protocol and mortgagee participation to reflect partial termination.
• Will allow for termination because of economic waste or impossibility if a condominium includes units and timeshare estates where the improvements have been totally destroyed or demolished. Will require a plan of termination be filed in court by a unit owner seeking equitable relief.

Membership Agreements (Condominiums)

• Will provide for association acquiring membership agreements by vote of a majority of entire voting interests instead of reference to declaration and s. 718.113(2).

Management Fee Collection (Cooperatives)

• Will remove provision from 2010 statute allowing cooperative associations to lien for collection services for which the association has contracted.

Homeowners’ Associations/Bulk Television/Internet/Information (HOAs)

• Will create s. 720.309(2) to basically mirror condominium statute, as amended in 2010, regarding bulk purchase of information or internet services.
• Will prohibit homeowners’ associations from denying individual service to any resident from certificated or franchised provider.

Bulk Buyers/Bulk Assignees (Condominiums)

• Will amend definition of “bulk assignee” and “bulk buyer” to mean a person who acquires more than 7 condominium parcels in “a single condominium.”
• Will provide that bulk assignee is not liable for warranties under 718.203(1) or 718.618, except “as expressly provided by the bulk assignee in a prospectus or offering circular, or the contract for purchase and sale executed with a purchaser,” or for design, construction, development or repair work performed by or on behalf of the bulk assignee.
• Will provide that if, at the time the bulk assignee acquires title to the units and receives an assignment of developer rights, the developer has not relinquished control of the board, for purposes of determining the timing of transfer of control, a condominium parcel acquired by the bulk assignee is not deemed to be conveyed to a purchaser, or owned by an owner other than the developer, until the condominium parcel is conveyed to an owner who is not a bulk assignee.
• Will require filing with the division and certain disclosures to purchasers and lessees if bulk assignee or bulk buyer is offering “more than seven units in a single condominium” for sale or for lease for a term exceeding 5 years.
• Will provide that bulk assignee or bulk buyer are not required to comply with the filing or disclosure requirements if all of the units owned by the bulk assignee or bulk buyer are offered and conveyed to a single purchaser in a single transaction.
• Will provide that a person acquiring condominium parcels may not be classified as a bulk assignee or bulk buyer unless the condominium parcels were acquired on or after July 1, 2010, but before July 1, 2012.

Homeowners’ Association Board of Directors Eligibility and Meetings (HOAs)

• Will carry over the provisions in the Condominium Act regarding board eligibility. A person delinquent in the payment of any monetary obligation to the association for more than ninety (90) days, and convicted felons will not be eligible to serve on the board.
• Will allow members of a homeowners’ association to speak at meetings of the board with reference to all designated agenda items, and will no longer require a petition of the voting interests to speak at a board meeting.

Manual Fire Alarms (Condominiums and Cooperatives)

• Will clarify that a condominium, cooperative or multi-family residential building that is less than four stories in height and has an exterior corridor providing a means of egress is exempt from installing a manual fire alarm system. This corrects the glitch from last year when two different bills adopted different language. One bill referred to buildings less than four stories in height, and another bill referred to condominiums one or two stories in height.

Hurricane Protection (Condominiums)

• Will clarify that an association is permitted to install impact glass or other code compliant windows as hurricane protection.

Joint and Several Liability (Condominiums and HOAs)

• Will provide that an association that acquires title to a unit through foreclosure is not liable for unpaid assessments that came due before the association’s acquisition of title in favor of any other condominium association or homeowners’ association which holds a superior interest on the unit.

We will notify you as soon as Governor Scott takes action on this Bill. In the meantime, we encourage all of our CALL members to contact the Governor and urge him to sign HB 1195 into law. Governor Scott’s contact information is listed below:

Governor Rick Scott
Phone: (850) 488-7146
Fax: (850) 487-0801
Email: rick.scott@eog.myflorida.com

Very truly yours,

Yeline Goin and David Muller, Co-Executive Directors
Community Association Leadership Lobby (CALL)

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

The Firm recently published its last community association newsletter for the year.  For the past few years Volume XII of Community Update is a Year In Review. We take this opportunity to re-visit the articles that appeared in our publication during the past year and hope you find it useful as a reference to the important issues that impact your daily operations. You can access the Community Update archives through the Links section on the right-hand side of this site.

2010 Webinars Available On-Demand

Funding Owner Delinquencies: Collecting Rent From Tenants

Moderated by Lisa Magill, Presented by Scott Petersen and Guest Seth Heller.

Analysis of an Insurance Coverage Lawsuit

Moderated by Ken Direktor, Presented by Robert I. Rubin and Guest Andrea C. Northrop.

As one year ends another begins and so does another series of events intended to benefit our clients, industry contacts and friends. Condominium Board Member Certification classes are scheduled throughout the State and many of you already registered to attend the Annual Community Association Leadership Conference in your area.

Because the goodwill of those we serve is the foundation of our success, it's a real pleasure to say "Thank You" as we wish you a full year of health, happiness and prosperity.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As you already probably know, the Condominium Act was amended as a result of SB 1196.  Newly elected Board Members must either take a state approved educational course to qualify for Board service or submit a written certification to the Secretary of the Association.

Becker & Poliakoff is pleased to inform you that we have been approved by the Department of Business & Professional Regulation Division of Florida Condominiums, Timeshares and Mobile Homes to teach the required course materials to newly elected Board Members.

This course, “Everything You Wanted To Know About Being A Board Member But Were Afraid To Ask!”, will be taught at various locations throughout the state.  All instructors are attorneys practicing Community Association Law and have been certified by the Department of Business & Professional Regulation.

Why Attend?
- Comply with State Law - rather than simply "certify" yourself
- Understand your legal responsibilities and obligations including your “fiduciary duty”
- Receive our new publication “You’re a Board Member, Now What?” for day to day questions and strategies for handling board responsibilities
- Receive a Quick Reference Guide of checklists, statutory deadlines and charts to assist with elections, meetings and other Board responsibilities.

Topics Covered:
Operations * Records Maintenance * Dispute Resolution * Budgets & Reserves
*Elections * Financial Reporting & More 

Registration is required and you will receive your Certificate of Completion at the end of the course.  ClickHERE for the schedule and information how to register.
 

• Email This
• Print
• Comments (8)
• Trackbacks
• Share Link

The Community Association Leadership Lobby (CALL) Announced Last Week it is Working on a 'Glich' Bill to Clarify Several Community Association Rights and Remedies.

The purpose of the CALL bill is to make proposed changes to Chapters 718, 719 and 720, Florida Statutes to address certain “glitches” resulting from SB 1196.  Co-Executive Directors Yeline Goin and David Muller explained that any large piece of legislation is likely to have unintended consequences and need further clarification.
 

So far, the CALL bill proposes many important legislative items, such as:

• Allowing condo boards to meet in private to discuss personnel matters just like HOA boards;
• Allowing condos and HOAs to collect management company collection charges from delinquent owners and clarify the parameters of action on the part of management;
• Ensuring that rent collected from a tenant is applied to the oldest balance on the unit owner's account; and
• Ending any argument that cable or television programming is a “utility service” - authorizing immediate suspension when a unit owner is more than 90 days delinquent. 

The CALL team always entertains comment from its members.  If you are a member or would like more information, please visit www.callbp.com or email call@becker-poliakoff.com.
 

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link

As a result of SB 1196, the law now prohibits HOA directors, officers, or committee members from receiving any salary or compensation from the association for the performance of his or her duties as a director, officer, or committee member.   This is basically the same rule that applies to condominium association directors.

However, Section 720.303(12), Florida Statutes significantly expands the restrictions upon HOA directors, officers and committee members.  In addition to the above, the law also says that a director, officer, or committee member “may not in any other way benefit financially from service to the association.”  The reference to "service to the association" in this second part of the sentence is not limited to those services performed in connection with the duties of the director, officer or committee member.  That is a substantial change in the law.  Read strictly, this means that HOA directors, officers, or committee members:

• cannot work as association employees;
• cannot serve as a paid manager; and
• cannot provide services through firms or business entities in which such persons hold a financial interest.

The previous law allowed the association to enter into contracts with companies involving 'interested directors',  if the director disclosed his or her financial interest, if the contract was fair and reasonable, and if the interested director refrained from voting.

There are exceptions.  If your community has and still employs or contracts with companies in which a director has a financial interest (stands to gain from the contract), there are two options laid out in the statute.  Compensation is permitted if it is authorized by the governing documents or if the members vote to authorize compensation.  The vote should take place in advance of hiring or contracting with an 'interested director'.

Reimbursement for out-of-pocket expenses is specifically allowed.  If your community has not developed a procedure for application and payment for out-of-pocket expenses, now is a good time to create your procedures and formally adopt them at a meeting.  Most governing documents authorize the board to reimburse directors (and others) for expenses, but do not specifically outline what types of expenses may be incurred, whether certain types of expenses require advance approval, what documentation must be submitted or who approves the reimbursement, etc.

There are other exceptions for directors appointed by the developer, for recovery of insurance proceeds and if all members benefit financially from some action taken by the association.

• Email This
• Print
• Comments (7)
• Trackbacks
• Share Link

SB 1196 made significant changes to the statutes regarding year-end financial reporting requirements for condominium and homeowners' associations. 

Condominium Associations

Condominium associations must provide their members with a year-end financial report (or notice that a report is available, free of charge) within 120 days of the end of the fiscal year. The level of required financial report depends upon the association’s annual revenues.

• Associations with revenues of more than $400,000.00 must produce an audit.
• Associations with revenues of $200,000.00 to $400,000.00 must produce a review.
• Associations with revenues of $100,000.00 to $200,000.00 must produce a compilation.
• Associations with revenues of less than $100,000.00 must produce a report of cash receipts and expenditures. 

However, if the condominium has less than 75 units, the law merely requires a report of cash receipts and expenditures, regardless of the association's annual revenue.  While the unit owners may vote to reduce the level of financial reporting, it is worthwhile to discuss the benefits of each level of review with your accountant.

Section 718.111(13), Florida Statutes directs the Division of Florida Condominiums, Timeshares and Mobile Homes to adopt rules setting forth uniform accounting principles and standards.  The 2010 changes require those rules to set standards for reporting a summary of association reserves.  Communities that reserve on a line-item basis (straight line method) will need to include a good faith estimate disclosing the annual amount of reserve funds that would be necessary for full funding once the Division adopts rules.  Condominium associations should therefore engage in some due diligence when preparing reserve schedules.  A reserve study is always a good idea as it not only provides the basis for the annual reserve schedule, but will also identify the projects requiring priority attention.

Homeowners' Associations

Section 720.303(6), Florida Statutes, part of the Florida Homeowners’ Association Act,  has been amended regarding budgets and reserves, but those changes likewise impact the year-end financial reports.   The 2010 changes distinguish between "statutory" and "non-statutory" reserves.  There are different disclosures required, depending on the type of reserves established.

HOAs that do not include "statutory"  reserve schedules and funding for those reserves in their annual budgets must include the following disclosure in the year-end financial statements:

THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO SECTION 720.303(6), FLORIDA STATUTES, UPON OBTAINING THE APPROVAL OF A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION BY VOTE OF THE MEMBERS AT A MEETING OR BY WRITTEN CONSENT.

HOAs that include "non-statutory" reserve funding in their annual budgets must include the following disclosure in the year-end financial statements:

THE BUDGET OF THE ASSOCIATION PROVIDES FOR LIMITED VOLUNTARY DEFERRED EXPENDITURE ACCOUNTS, INCLUDING CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE, SUBJECT TO LIMITS ON FUNDING CONTAINED IN OUR GOVERNING DOCUMENTS. BECAUSE THE OWNERS HAVE NOT ELECTED TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO SECTION 720.303(6), FLORIDA STATUTES, THESE FUNDS ARE NOT SUBJECT TO THE RESTRICTIONS ON USE OF SUCH FUNDS SET FORTH IN THAT STATUTE, NOR ARE RESERVES CALCULATED IN ACCORDANCE WITH THAT STATUTE.

Confused yet?  Well, if you are you'll be interested in the Community Association Officers Forum.  Broward, Miami-Dade and Palm Beach Colleges, in a partnership with Edison State College, is providing free board member training to address these and other issues. Four three-hour sessions include topics of interest to new and experienced board members and, as a bonus, each session has one hour of the newly state-mandated training.
 

• Email This
• Print
• Comments (15)
• Trackbacks
• Share Link

• Can your association collect rent from tenants? 
• Can your association disable a key fob or entry device if an owner doesn't pay?
• High-rise building owners - are you familiar with changes to the fire sprinkler retrofit laws?
• Do your community documents give mortgagees a free ride after foreclosure?

We will answer these questions and more at Ironstone Bank on Tuesday, October 5, 2010 from 5:00 to 7:00 P.M. where I will discuss the 2010 Legislative Changes Impacting Condominium and Homeowners' Associations.

• Have you neglected major projects because of the economy?
• Do your common areas need updating?
• Would your residents enjoy new amenities?

 The presentation will also cover Capital Improvement Loans for Long Term Savings.  Interest rates have never been lower and many contractors are idle  - now just may be the perfect time to tackle that unsightly parking lot and entrance, update amenities and other projects.

The presentation is free and refreshments will be served.  To RSVP contact Rachael Chao at 954-771-6948 or rachael.chao@ironstone.com.

 Location:  Ironstone Bank, 6555 North Federal Highway, Fort Lauderdale

• Email This
• Print
• Comments (6)
• Trackbacks
• Share Link

SB 1196 Includes New Remedies for Collecting Money Owed to Associations.

Community leaders and managers have complained for years about investor owner delinquencies.  Why should the owner continue to collect rent from his or her tenant without paying maintenance fees and/or assessments?  Sure, both the Condominium and Homeowners Acts allowed the association to apply to the Court to request the appointment of a rent-receiver, but to take advantage of that provision it had to file the foreclosure lawsuit.  The law requires notices to the delinquent owner, preparation and recording of the claim of lien, filing and serving the foreclosure lawsuit - all before the association could ask the Judge for authorization to collect rent.  It could take several months to obtain the appropriate Court Order - all while the account remains delinquent. In some cases the tenant moves out before the association has the chance to collect any rent.  Of course there are costs and expenses involved with that whole process. 

Recently (as reported on this blog in Condo Receiver Helps Collect Assessments; Q&A: Condo Receivers; Collecting Rent from Tenants; Q&A: Collecting Rent from Tenants (revisited) ) the Courts have extended the law to allow 'blanket receiverships' for all units subject to foreclosure - and even more recently some Orders were entered authorizing the receiver to collect rent from tenants occupying units even before the association filed for foreclosure.

Well, in response to those cries for help the legislature included a 'self-help' procedure for associations.  The first paragraph of this portion of the new law says:

If the unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association, the association may make a written demand that the tenant pay the future monetary obligations related to the condominium unit to the association, and the tenant must make such payment. The demand is continuing in nature and, upon demand, the tenant must pay the monetary obligations to the association until the association releases the tenant or the tenant discontinues tenancy in the unit. The association must mail written notice to the unit owner of the association’s demand that the tenant make payments to the association. The association shall, upon request, provide the tenant with written receipts for payments made. A tenant who acts in good faith in response to a written demand from an association is immune from any claim from the unit owner.
 

 The Association must follow a specific procedure to collect rent from tenants.  There are some pitfalls to avoid.  Its a good idea to discuss these issues with counsel or allow counsel to send the demands on your behalf. 

• Email This
• Print
• Comments (26)
• Trackbacks
• Share Link

Associations have new enforcement mechanisms available - due process requires careful planning & paperwork for associations to take advantage of these new remedies effectively.

 Condominium Associations:

Up until now condominium associations had to have authority to levy fines in the recorded governing documents and did not have the ability to tell delinquent owners to stay out of the pool or gym.  That changes as a result of SB 1196.

After July 1, 2010 (the effective date of the new law), condominium associations will be able to levy fines as a result of violations of the governing documents or rules.  Of course the association must still provide 14 days written notice of the violation and the opportunity for a hearing before a committee of unit owners before imposing any fines,  The fine cannot be levied or imposed if the committee does not agree.

Delinquent condominium owners have more to worry about than fines - the new laws will allow the association to suspend voting rights and use of common, recreational facilities if they are more than ninety (90) days past due in paying a monetary obligation.  The term "monetary obligation" is not defined  - it could include non-assessment obligations such as late fees, fines, transfer approval or screening fees and the like.  The association cannot suspend the use of limited common elements (such as the balcony attached to the unit), nor may it suspend portions of the property necessary to access the unit - such as hallways, elevators, parking spots, etc.  The association cannot suspend utilities.

Homeowners Associations:

The new laws actually limit homeowners' associations powers when it comes to suspensions.  In the past, suspensions could be imposed in the HOA context for either use violations (violations of the governing documents or rules) or delinquencies.  After July 1, 2010, suspensions may only be imposed by HOAs when a member is more than ninety (90) days past due. While it doesn't make sense (especially since Section 720.3085 limits late fees for delinquent assessments), the changes arguably limit fining as well.  Fourteen (14) days written notice and an opportunity for a hearing before a committee is required in either case.  If the committee (by majority vote) does not agree with the fine or suspension, it may not be imposed. 

HOAs cannot suspend use of portions of the property necessary to access the parcel (roads, etc.) or utility services. 

The law prohibits the HOA from filing a lien if the fine is less than $1,000 - does that mean that it can lien for fines of $1,000 or more?  Well, that remedy certainly needs to be included in the governing documents - so check with counsel.  If you're governing documents limit the amount of the fine, now is a good time to consider amendments.

Fines and suspensions must be considered at a properly noticed meeting.  Written notice of the fine or suspension (voting or use) must be furnished to the owner (and occupant if applicable).

Will these new procedures and remedies work?  Its hard to say, but attempting to take advantage of these remedies without following the required procedures is certainly likely to lead to disputes and may expose the association to liability.  Proceed with caution.

• Email This
• Print
• Comments (22)
• Trackbacks
• Share Link

The law isn't even effective yet and everyone wants to know where, when and whether they need the "board certification" required by the changes to §718.112(2)(d), Florida Statutes in SB 1196. 

All good questions but please let me clarify - condo directors elected after the effective date of the law either need to provide the association with a certificate containing various representations or evidence they have completed an education course. 

The statute says:

b. Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. In lieu of this written certification, the newly elected or appointed director may submit a certificate of satisfactory completion of the educational curriculum administered by a division-approved condominium education provider. A director who fails to timely file the written certification or educational certificate is suspended from service on the board until he or she complies with this subsubparagraph. The board may temporarily fill the vacancy during the period of suspension. The secretary shall cause the association to retain a director’s written certification or educational certificate for inspection by the members for 5 years after a director’s election. Failure to have such written certification or educational certificate on file does not affect the validity of any action.

The 2008 amendments to Section 718.112(2)(d)3., of the condominium act required candidates for the board to submit a certification form (prepared by the Division) to the association along with their notices of intent.  This change now requires the elected directors (not candidates) to certify:

• they have read the governing documents & association's policies;
• they will work to uphold the documents & policies to the best of their ability; and
• they will faithfully discharge their fiduciary responsibilities.

Who is an approved education provider?  Well Becker & Poliakoff is of course!  We have provided education to board members, licensed property managers & industry representatives for more than thirty (30) years.  The Firm offers on-line education as well as live, interactive webinars for those who cannot take off work or devote a Saturday to course work.

There are other approved providers in the State of Florida - CAI (Community Associations Institute) is a provider and offers on-line courses in addition to live seminars (most of which are free).

• Email This
• Print
• Comments (9)
• Trackbacks
• Share Link

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.

• Email This
• Print
• Comments (20)
• Trackbacks
• Share Link

Community association leaders and managers should become aware of changes to record inspection obligations now that SB 1196 has been signed into law.

Roster List (Condo):

The roster list is an important document.  Telephone numbers have traditionally been included in the roster list, despite objections over the years.  The roster list also includes email addresses of the members if they have consented (or requested) to receive notices and other association information by email.  SB 1196 says that the email addresses and telephone numbers of the members must be removed from the association's records if the owner revokes consent to receive notice by electronic transmission.  Please discuss modifications to the roster or creating a procedure for owner consent to include this information with association counsel, as many owners have come to rely upon the roster or directory to remain in contact with friends and neighbors.

Civil Penalties (Condo):

Last year the act was amended to authorize civil penalties against anyone (individuals - i.e. board members, manager, etc.) that knowingly or intentionally defaced or destroyed accounting records.  It also authorized civil penalties for knowingly or intentionally failing to create or maintain the accounting records.  SB 1196 now limits the civil penalties to the time period the records are required to be maintained.  Penalties are likewise not appropriate for failing to create or maintain these records unless there is a finding of intent to harm the association or one or more of its members.

Misuse of Information (Condo):

We know the association cannot publish debtor lists or use the delinquency records to embarrass or harass its members, but the board (or management) has little to no control over what happens to records once they are in the possession of a unit owner.  SB 1196 says the association is not responsible for misuse of records properly obtained in connection with an owner's rights to inspect and copy.

Personnel Records (Condo & HOA):

Personnel records for association employees such as payroll, disciplinary actions, health and insurance records are no longer accessible to members.  I know a few managers that are happy with this change.

Owner Information (Condo & HOA):

Private information such as email addresses, telephone numbers, emergency contact information, social security numbers, driver's license and credit card numbers of the owners are not accessible to members.

Condo and HOA owners are not entitled to obtain the association's passwords, electronic security records, software or operating systems that manipulate data.

Presumption (HOA):

In HOAs the presumption that the association willfully failed to make records available if the records were not available within 10 business days only arises if the request was sent via certified mail, return receipt requested.

Inspection Costs (HOA):

If the association does not have a copy machine at the record site, or the owner requests more than 25 pages of records, copies may be made by an outside vendor or management company personnel - in that case the association may charge for the actual costs of the copies and hourly charges for vendor or employee time to cover the administrative costs to the vendor or the association.

You may need to change your association's record retention and/or inspection policies in light of these changes.

• Email This
• Print
• Comments (21)
• Trackbacks
• Share Link

 Concern for Florida's Consumers Important in Decision to Veto SB 2044 (Property Insurance) and SB 1964 (Design Professional Liability).

Governor Crist vetoed SB 2044, despite support from the Florida Insurance Commissioner and other industry representatives.  The Governor expressed his concerns that increases in insurance premiums and changes to mitigation discounts would be especially hard on Florida's consumers during "these very difficult economic times".

Consumer protection was likewise a major factor with respect to the veto of SB 1964.  Governor Crist agreed with critics of the bill who argued design professionals are not entitled to avoid liability, effectively "removing a consumer's right to bring a tort action against them for economic damages caused by their negligence".  Shifting the burden of economic loss to consumers without sufficient alternative remedies was not acceptable to the Governor.

On the other hand, HB 965, relating to real property assessments, received the Governor's approval.  Owners of properties affected by Chinese drywall may be entitled to a downward adjustment of the assessed value of the property for tax purposes.   Contact your local Property Appraiser to request re-valuation - you may be entitled to a significant discount.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

SB 1196 contains significant changes for community associations.  

Governor Crist had until June 1, 2010 to act on SB 1196.  While I have included bullet point explanations of some of the changes, over the next few weeks please check for more in depth information about how these new provisions will impact your association's operations.

Community associations across the state are breathing a sigh of relief - many of them will not be required to retrofit the buildings with fire sprinklers or install fire alarms, both expensive propositions in light of the record number of foreclosures and budget shortfalls.  In most cases elevator upgrades can be put off for five (5) years - hopefully the residential market will gain stability in that time, making the costs associated with the elevator improvements easier to fund.

Attention:  If you are a non-paying, non-resident unit owner and lease your unit, the association may demand future payments of rent from the tenant to satisfy your financial obligations, without filing a lawsuit first. 

Legislators all over the state heard complaints about the repair, upkeep and staffing requirements associated with recreational facilities.  Paying unit owners were demonstrably upset (justifiably so) that non-paying owners could enjoy the use of the recreational facilities, in some cases precluding paying owners from use due to over-crowding.  Under this new law, associations can suspend the use of recreational facilities if assessments are more than ninety (90) days past due.  Of course, associations cannot suspend any utility services, parking spaces or means of access to the unit.  The effectiveness of suspending use rights remains to be seen, but the provision itself should make owners think twice before defaulting.

This bill also includes the "Distressed Condominium Relief Act".  While the act doesn't protect buyers that acquire title after July 1, 2012, it will impact condominium associations for a number of years with respect to warranty, construction, accounting claims and the like.

• Email This
• Print
• Comments (52)
• Trackbacks
• Share Link

What impact will bulk buyers and/or bulk assignees have on your condominium?

SB 1196 creates new Sections 718.701 through 718.708 entitled the "Distressed Condominium Relief Act".   The intent of these provisions is to encourage investors to buy unsold developer inventory, with the goal of stabilizing the condominium market.  It also protects lenders from assuming the responsibilities of the developer when they take title to the units in connection with developer defaults.  If this provision becomes law (the bill has been presented to the Governor) it will only apply to purchases (or other acquisition of title) that take place before the law 'sunsets' on July 1, 2012.  A bulk purchase before the effective date of the statute will not protect any buyer considered an "insider" pursuant to §726.102(7), Florida Statutes or anyone with the intent to "hinder, delay or defraud any purchaser, unit owner, or the association".

What is a bulk assignee?  Basically any person or entity that acquires more than seven (7) units in a condominium where there is an assignment of rights from the original developer.

What is a bulk buyer?  Any person or entity that acquires more than seven (7) units but does not receive an assignment of rights other than:

• the right to conduct sales, leasing and marketing activities on property;
• the right to be exempt from the working capital contribution; and
• the right to be exempt from the association's rights of first refusal (transfer approval procedure).

The bulk buyer, however, must comply with the association's transfer approval procedures with respect to the units acquired in the bulk purchase.  

Bulk assignee's are not saddled with warranties covering work performed under the direction of the original developer and do not need to fund the unfunded portion of the previous developer assessment guarantee.  They are, however, required to supply the post transition association with an audit for the period of their control and warrant their own work.   

Floridians are sadly getting used to dark, empty buildings.  Hopefully these provisions will accomplish the desires objectives.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

A number of bills CALL tracked this session were sent to Governor Crist recently.  He has until June 1, 2010 to act (veto or sign) on the following bills:

• SB 1196, Relating to Community Associations
• HB 663, Relating to Building Safety
• HB 713, Relating to Department of Business and Professional Regulation
• HB 1035, Relating to Elevator Safety
• HB 1411, Relating to Timeshare Foreclosures

We've included bullet point summaries of SB 1196 on this blog, but refer you to the actual text of the bill for more complete information.  Community Update will outline the impact of important bills on community associations - Becker & Poliakoff''s association clients will receive the electronic version shortly.

The Governor's office is in the process of reviewing SB 1964.  We've included concerns about this bill before in Condos/HOAs Have a Lot to Lose if Design Professional Protection Bills Become Law.  In 1999, the Florida Supreme Court codified a long standing principle that design professionals should be held accountable for economic loss damages that they cause just like other professionals in Florida. Board certified construction law attorney Steve Lesser said the following:

[Design professionals] have an obligation to design to meet code and protect the health, life & safety concerns of consumers.  An error in design judgment can be devastating to a unit owner and homeowners that cause damages and in fact- economic damages.  An elevator that fails to operate at the appropriate speeds and breaks down results in loss of use which is an economic loss.  Imagine how this could impact elderly unit owners.  A parking garage that is not properly shored up based on engineering calculations can result in economic loss.  These consumers are largely lay persons that often sign agreements (presented by the professional) that contain limitation of liability clauses. 
 

Please contact the Governor's office to express your support or opposition to 2010 legislation.  Make your voices heard in Tallahassee. 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

• Email This
• Print
• Comments (4)
• Trackbacks
• Share Link

Take a well deserved bow. You did it! Today the Florida House of Representatives overwhelming passed CS/CS/CS/SB 1196 (passed on 4/16/2010 by the Florida Senate) sending it to Governor Crist for his signature. Please take a moment to contact the Governor (http://www.flgov.com/contact_governor) and urge him to sign the bill right away. This is very important given his veto of similar last year.

This bill is of SIGNIFICANT POSITIVE IMPACT to community associations. It addresses everything from mortgagee liability (foreclosure crisis) to elevators, to sprinklers, to renters, etc. CALL has sent out earlier alerts containing details and be on the lookout for another summary to be released via the CALL website soon. Please contact your Legislators (both Representative and Senator) and thank them for their support.  From your CALL team on the ground at the Capitol…..THANK YOU!

All your emails, calls, visits and involvement were invaluable. We are only as good as the rest of our team…YOU! Thanks for once again proving you are THE voice for good community association public policy. Attention has been paid.

• Email This
• Print
• Comments (7)
• Trackbacks
• Share Link

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.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

There are only a few short weeks left for Florida's elected officials to pass meaningful legislation and at this point in the session it seems that the HB 561/SB 1196 Bill Package is the most likely to pass. These bills are in a constant state of flux and the information below only highlights major points in the bills (as of April 15, 2010). We encourage you to review the full text of the bills by accessing the Senate’s website here for HB 561 and here for SB 1196 and likewise encourage CALL members to contact the appropriate legislators by using the Legislator Connect feature on its website (www.callbp.com).  Here are a few highlights from the bills:

Fire Alarm Systems: - Amending s. 633.0215, F.S. 

Buildings less than four stories with exterior means of egress and exterior corridors will not have to install a manual fire alarm system (per Section 9.6, Life Safety Code in the Florida Fire Prevention Code).

Fire Sprinkler Retrofit - Amending s. 718.112 and s. 719.1055(5), F.S

Full “opt-out” will be permitted with affirmative vote of two-thirds (2/3rds) of the entire membership. Will only permit reconsideration of opt-out vote once every three years at a special meeting called by a petition of 10% of the voting interests.

Extends deadlines for associations that don’t opt out to the end of 2019.

Elevators – Amending s. 553.509(2)  and 399.02, F.S., (Phase II Firefighters’ Service)

Allows for a five (5) year delay to retrofit with a special access key for elevators in condominiums and cooperatives unless the elevator is replaced or requires major modification.  Allows associations to "opt-out" of elevator operation by alternative power source with affirmative vote of majority of owners of condominium.

Designation of Limited Common Elements by Amendment - Creates s. 718.110(14), F.S. - only in SB 1196

Allows association to designate limited common elements by amendment, so long as the building component is designed for use by specific owners.

Official Records – s. 718.111(12), F.S.

• Individual director liability for failure to maintain or destruction of official records is limited to cases where there is intent to harm the association or one or more of its members.
• Association not liable for unit owner misuse of information obtained from official records.
• Exempts personnel records (disciplinary, payroll, health and insurance records) from unit owner access.
• E-mail addresses, telephone numbers, emergency contact information, and any unit owner contact information other than the addresses to send notices are exempt from unit owner access.
• Association’s electronic or computer security data, including passwords, software and operating systems are exempt from unit owner access.

Common Expenses - Amending s. 718.115(1)(d)1., F.S.

Communication services (as defined in Chapter 202), information services, and internet services obtained pursuant to a bulk contract shall be deemed a common expense. (In HB 561 contracts entered into for these services by the developer or prior to transition may be canceled within 120 days of the transition meeting.)

HB 561 also creates new §718.112(3), F.S. that allows the bylaws of umbrella organizations governing a minimum of 1000 units to employ a marketing firm for the community as a common expense.

Board Eligibility – Amending s. 718.112(2)(d), F.S.

Co-owners in condominiums with more than 10 units cannot serve together unless they own more than one unit or there are not enough volunteers to fill all slots. Does not apply to timeshare condominiums.

Requires directors to supply association with new certification form or take a state-approved education class. Directors are suspended until they comply.

Collections and Foreclosures – Amending s. 718.116 and s. 719.109(3), F.S

Changes mortgagee liability cap from 6 months to 12 months after acquisition of title by foreclosure (or deed in lieu) but retains 1% cap.

Association may demand a tenant pay rent to the association to satisfy delinquency for that condominium unit with written notice to the unit owner. Landlord/owner must provide tenant with credit for any amounts paid to association. Association can evict tenant that fails to comply.

Enforcement Mechanism – Amending s. 718.303, F.S.

• Allows suspension of use rights if owner is more than 90 days past due. Cannot suspend use of limited common elements, utility service, parking spaces, elevators or impede access to/from unit.
• Requires board to vote on suspension/fine at duly noticed board meeting and advance notification to the unit owner.
• Allows association to suspend voting rights after 90 days of non-payment.

Filling Vacancies on Board – Creating s. 719.106 (1) 6, F.S.

Vacancies are filled for remainder of the term by vote of majority of remaining directors, even if less than a quorum or only one director. In the alternative, the Board may hold an election to fill the vacancy.

There are many more provisions - click below for additional content and come back to this site for information on changes to the Homeowners' Association Act (Chapter 720, Florida Statutes) and updates directly from Tallahassee.

• Email This
• Print
• Comments (8)
• Trackbacks
• Share Link

This week marks the final three weeks of the 2010 Legislative Session. The Regular Session is scheduled to end “Sine Die” on Friday, April 30. This, folks, is when things get…how shall…I say it….uh, interesting.

Every Session about 3000 bills are filed and about 10 percent, or 300 bills are actually passed by the Legislature. Therefore, as Committee meetings shut down and bills are no longer being heard, Sponsors start looking for moving bills (or vehicles) which are heading to each Chambers’ Floor to amend their bill language onto. This is a two-edged sword. Nothing is ever really dead until that final gavel raps the Session’s end. So if you are a proponent of certain language you are trying to pass you can attempt to load it onto a germane bill but so can those trying to pass language you are opposed to. The CALL team is pouring over the many, many Floor amendments which are being filed to make certain the Legislature passes those things which are helpful to community association residents and the volunteers who serve their communities and doesn’t pass language deemed harmful.

The most important Community Association package CALL is diligently working with the Legislature and Governor on is SB 1196 and its companion bill, HB 561. Both bills have successfully passed several Committees and are still on track to head to each Chambers’ Floor in a timely manner. As is the manner of the “give and take” legislative process, the bills have changed since their initial introduction. The latest version can be found at  http://www.flsenate.gov/data/session/2010/Senate/bills/billtext/pdf/s1196c3.pdf and we urge you to visit the link and review the 102 pages in the coming days and provide your feedback. Language addressing mortgagee liability was added in the last Committee. As of this version, it increases the liability cap from 6 months to 12 months. Given the VIGOROUS opposition of the lending industry, this is a significant move in the right direction but CALL isn’t through pushing for even more fair and appropriate reforms. For example, removing the “or 1 percent of the mortgage debt, whichever is less” language found in current law, requiring lenders to pay for  necessary repair assessments, etc. The language pertaining to the fire sprinkler retrofit opt out appears to be acceptable to the Governor’s office. There is helpful language pertaining to elevators, fire alarms, etc. which are all helpful to association residents who have been called upon in recent years to bear higher retrofitting costs.

Please stay engaged as we make the final push. This is the most imperative, “volatile”, sensitive time. Don’t assume anything and don’t walk away from the process now. We aren’t.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link