Condo Associations' Rights to Enter, Maintain and Rent Abandoned Units Expanded by New Florida Law

July 22, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgThe Florida Legislature has enacted a number of new laws over the last several years that were in direct response to the foreclosure crisis and the meltdown in the housing market. The latest example of such a law was enacted during this year's legislative session and deals with abandoned units in condominiums.

The new law, ยง 718.111(5)(b), essentially enhances certain rights of access to units. It provides that condominium associations may now enter abandoned units in order to inspect, make repairs, remediate mold, restore utilities, or otherwise maintain and preserve the condominium property. The law defines abandoned units as one that is the subject of a foreclosure action and no tenant appears to have resided in the unit for at least four continuous weeks without prior written notice to the association, or when there is no foreclosure and no tenant appears to have resided in the unit for two consecutive months without prior written notice to the association and the association is unable to contact the owner.

Florida legislature photo.jpgThe law stipulates that associations must provide at least 48 hours prior written notice of their intent to enter an abandoned unit to the owner at the last address reflected in the association's records. In addition, if the owner has previously consented in writing to receiving email notifications, the association can email this notice to the owner.

Any expenses incurred by associations pertaining to abandoned units may be an assessment against the unit owner and enforceable as an assessment against the unit, meaning it can be subject to a lien and foreclosure if not paid. The new law also enables associations to obtain a court-appointed receiver in order to lease the abandoned unit and use the rental income to offset its costs and expenses as well as for unpaid assessments.

This new law should help to provide some clarity and relief for condominium associations that have been forced to contend with abandoned units in the aftermath of the foreclosure crisis. It will enable associations to move quickly in petitioning the courts to appoint a receiver and begin collecting rent for abandoned units in order to cover their expenses and assessments. While it might be advisable to pursue some of the remedies made available by this new law, questions remain regarding whether it will afford the intended relief envisioned by the legislature. Association directors and managers would be well advised to consult with qualified and experienced legal counsel prior to implementing steps in pursuing the remedies afforded by this law.


Pet Pig Dispute in Lake Worth Association Makes the Nightly News

July 7, 2014, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonOne of the more memorable service animal disputes that my fellow community association attorneys at our law firm and I recall learning about was chronicled recently in a report by WPTV- NBC Channel 5 News in Palm Beach County. The station's story had many of the most common elements found in service animal disputes: a pet owner insisting that her association must allow her to keep the family pet because the pet helps alleviate anxiety disorders, and an association that is demanding removal of the animal because it is expressly prohibited by the association's governing documents. The key difference in this case is that Wilbur, the animal in question, is a 65 pound pot-bellied pig.

The dispute is taking place in a suburban Lake Worth community, and it appears to have all of the makings for one that will be headed for litigation due to the obstinacy being displayed by both sides.

"I didn't know it was a problem until we got a violation letter," explains the owner, in the station's report. She says that her association is trying to force her to get rid of her pig, and she vows that she "will fight, fight, fight with everything I have to keep this animal here."

pbpig.jpgShe explains that she is determined to keep Wibur because of what he means to her two kids, and she has produced documents for the association demonstrating that both of her children have been previously diagnosed with ADHD and one of them with Asperger Syndrome. The owner indicates that she has even had Wilbur trained and registered in an animal assisted therapy program at the Humane Society of Broward County. She insists that "he helps them come out of their shell."

The report goes on to explain that the association's rules clearly state that "only common household pets" and "no livestock" are allowed in the community. It notes that lawyers representing the association said in a statement that they are trying to verify the medical conditions of the children in order to verify whether Wilbur qualifies as a service or emotional support animal.

"A pot-bellied pig is not a common animal, but it's a lot more common than you think," says the owner. In fact, the Palm Beach County Commission has voted to no longer consider pot-bellied pigs as "livestock," but they also decided that it would be up to specific associations to determine whether they can be allowed as pets.

Pursuant to Florida's Fair Housing Act, an association is required to make reasonable accommodations in its rules, policies, practices, or services, when such accommodations may be necessary to afford a disabled person an equal opportunity to use and enjoy a dwelling. The failure to make an accommodation when required could result in a discrimination complaint being filed against the association. However, while the Fair Housing Act requires that an association may have to allow a resident to keep what would otherwise be a prohibited pet, such pet cannot become a nuisance to other residents.

It will be interesting to see how this case turns out. Both sides appear to have strong arguments to support their respective positions, and there is no doubt that it would be reasonable for a court to find that pigs are not common household pets. However, because pot bellied pigs are becoming increasingly common as pets, perhaps the time has come for associations to consider amending their governing documents to specify the types of animals that are allowed. Otherwise, they too may one day face the possibility of difficult and costly litigation to determine the outcome of a pet pig as a service animal in their community.

Click here to see the report in the WPTV Channel 5 website.


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HOA Takeover Case in Las Vegas Provides Lessons for Florida Community Association Elections

June 23, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgCommunity association boards control the purse strings of the communities they govern, and as such they have been long-standing targets of individuals seeking to defraud associations. A recent case involving the takeover of a number of Las Vegas HOAs in a scheme to steer large construction contracts to a Nevada general contractor appears to have set a new bar for the heights to which individuals will go in their efforts to defraud HOAs for contracts worth millions of dollars.

The accounts of the Nevada case read as if they come directly from the pages of a novel about a wild and far-flung criminal enterprise, proving yet again the old adage that reality can be stranger than fiction. The U.S. Justice Department investigation revealed that 11 homeowners associations were defrauded of millions of dollars in the takeover scheme that took place from 2003 to 2009, and federal prosecutors are seeking jail time for the defendants in addition to approximately $25 million in restitution. The alleged mastermind behind the scheme has pleaded not guilty to conspiracy and fraud charges leveled against him and 10 others.

Besides conspiring to commit mortgage fraud in order to secure mortgages for straw buyers in the communities, the defendants are accused of getting their straw buyers elected to the boards through bribery, ballot stuffing, intimidation and dirty tricks. Once on the board of the HOAs, these directors would secure lucrative construction contracts benefiting the organizers of the fraud. Accounts tell of co-conspirators travelling to Mexico to print phony ballots and counting ballots in co-conspirators' offices, and one co-conspirator used his master key at a condominium complex to remove ballots from mailboxes. Other tactics involved "dumpster diving" efforts to retrieve discarded ballots at a condominium complex that would be used to fix an election, and attending HOA board meetings in order to intimidate board members who were not friendly with the individuals involved in the scheme. It is also alleged by a co-conspirator that he regularly witnessed HOA board members come to the office of another co-conspirator to receive cash payments.

A total of 35 defendants have now pleaded guilty in the case, leaving the remaining defendants to stand trial on Oct. 14. The investigation into the scheme is considered to be the largest public corruption case ever brought by the Justice Department in Nevada.

meeting vote.jpgThis case serves as an important reminder for Florida community associations about the level of involvement and vigilance that is necessary in order to help avoid becoming a victim of this type of fraud. It is imperative for unit owners to monitor and participate in their association's elections and meetings, and they should always be on alert for suspicious tactics by owners or other groups surrounding board member campaigns and elections. Owners should also ensure that they vote in all elections and submit their own ballots whenever possible, as fraudsters will typically attempt to secure and utilize ballots from those who do not normally vote in the elections or do not reside in the community or condominium. In addition, owners should determine whether their ballot was counted or disallowed at the election due to the submission of more than one ballot for their unit.

If association members believe that suspicious political activity has taken place and the integrity of their board of directors and their election has been compromised as part of a conspiracy to commit fraud, they should consult with highly experienced legal counsel in order to discuss and determine their next steps. Election recalls, court appointed receivers, and injunctive relief precluding boards from awarding contracts to conspiring vendors are among the measures that can be pursued in order to correct or avoid injustices that may have occurred or may be in the works. Additionally, experienced community association legal representation may aid in processes related to criminal investigations by state and federal law enforcement agencies in such cases.


Partner Jeffrey Respler Discusses Quantum Condo Association's Construction Defect Lawsuit in Daily Business Review


Jeffrey Respler srhl-law.jpgThe firm's lawsuits alleging major construction defects against the developer, general contractor, architect and engineers behind Miami's Quantum on the Bay condominium towers were the subject of an article by the Daily Business Review that appeared in the June 16, 2014, edition of the newspaper. The lawsuits allege that the defendants' work resulted in hundreds of defects, including stucco and HVAC problems as well as inadequate drainage that has led to severe flooding in the community's fitness center and loading dock.

Firm Partner Jeffrey S. Respler is quoted in the article indicating that "[t]he unit owners want to have the property that should have been delivered to them. At the end of the day, we're not looking for a windfall. We're only looking to be made whole."

The lawsuit names as defendants developer Terra ADI-International Bayshore LLC, builder Facchina-McGaughan LLC, architect Nichols Brosch Wurst Wolfe & Associates Inc., contractor Fred McGilvray Inc., and engineers Florida Engineering Services Inc., VSN Engineering Inc., Gopman Consulting Engineers Inc. and John J. Kirlin LLC, a Maryland-based firm that specializes in plumbing, heating, ventilation and air conditioning.

"The biggest problem is whenever there's even a minor rain event, there's flooding," explains Respler in the report. "Every single day, the association people have to go out and pump the drainage wells in this luxury development. If not, there's flooding - even when there's no rain."

The article describes how sandbags are being used at the property to keep water out of a service area during storms, and residents have been forced to have repairs made to swamped elevators.

Respler concludes: "The parties who we know are responsible are pointing fingers at each other. We are just the end users. We weren't there when it was being built. The bottom-line fix is we're probably going to have to move the drains to the front of the property. The speculation is the building was built too low."

Click here to read the complete article in the DBR's website (registration required).

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Service Dog Dispute Costs South Florida Condo Association $300,000

June 5, 2014, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonSeveral of my colleagues and I have written extensively in previous articles in this blog about the issues surrounding service dogs in communities that maintain strict restrictions against pets. We have discussed how many of these communities have been forced to contend with residents whose requests for exemptions for service dogs have been highly questionable and, in some cases, even complete shams. However, a recent case that was covered in an article in The Miami Herald illustrates the dangers that associations - and their board members - may face if they grossly miscalculate and overreact to a request for a service dog from an individual who is obviously disabled.

In Sabal Palm Condos. of Pine Island Ridge Ass'n v. Fischer, unit owner Deborah Fischer suffered from multiple sclerosis and was confined to a wheelchair, so she acquired Sorenson, a trained service dog. The association's pet policy only allowed for a cat or fish, or another pet weighing less than 20 pounds and only with prior permission of the board. Fischer asked the condominium association to accommodate her disability by allowing her to keep Sorenson, who weighs more than 20 pounds.

The association responded by requesting copies of Fischer's medical records from all of her healthcare providers who diagnosed or treated her disability, which she claimed made a service dog necessary. Sabal Palm also requested that she provide "all documents relating to the nature, size and species of dog, as well as all documents regarding any training it received."

sdog.jpegFischer provided the association with a letter from Sorenson's trainer describing the tasks he was trained to perform, and she enclosed a photo of herself in her wheelchair with Sorenson. However, this was not good enough for the association, and Sabal Palm went on to request additional documentation, which Fischer provided, that made her disability and her need for a service dog extremely evident and clear.

Shockingly, the association responded by filing a lawsuit against Fischer and her husband seeking a declaratory judgment that it need not accommodate Fischer by allowing her to keep Sorenson based on the fact that the dog was over the 20 pound weight restriction. Fischer countersued claiming that the association and its president discriminated against her when it refused to accommodate her request to keep Sorenson.

The court found that Sabal Palm violated the federal Fair Housing Act (FHA). The judge's 30-page order states that the defendant's disability was so obvious and her need for a service dog had been so clearly established that the association failed to reasonably accommodate her disability as required by federal law.

"Sabal Palm got it exactly -- and unreasonably -- wrong," wrote U.S. District Judge Robert N. Scola, Jr. That the condo association "turned to the courts to resolve what should have been an easy decision is a sad commentary on the litigious nature of our society. And it does a disservice to people like Deborah who actually are disabled and have a legitimate need for a service dog as an accommodation under the FHA," Judge Scola concluded.

In addition, the court also found that the association's president was personally liable to Fischer, as "[i]ndividual board members or agents such as property managers can be held liable when they have personally committed or contributed to a Fair Housing Act violation."

After Scola ruled in the Fischers' favor, their attorney negotiated a $300,000 settlement with Sabal Palm.

The lessons from this case should be very clear to associations and their directors. Residents who are obviously visibly disabled and establish that they need the assistance of a service animal should be accommodated. Unfortunately, abuse by individuals without disabilities masquerading the need for fake service animals has lead many associations to distrust applicants to the detriment of those who are truly disabled. However, associations that turn to the courts to confirm their decision to deny accommodations in such cases without using common sense or listening to the advice of highly qualified and experienced legal counsel can bring significant legal liabilities and expenses to their communities.


Preserving HOA Covenants and Restrictions Under the Florida Marketable Record Titles Act

May 28, 2014, Posted by Roberto C. Blanch


Thumbnail image for Roberto Blanch 2013.jpgEven though it has been in place for decades, many homeowners association directors are unaware of the requirements under the Florida Marketable Record Titles Act (MRTA) for HOAs to reaffirm and renew their covenants and restrictions 30 years after they were originally recorded in the local county records. MRTA was created to extinguish claims to property which are at least 30 years old in an effort to stabilize property law by clearing old defects from titles, limiting the period of record searches, and clearly defining marketability by extinguishing old interests of record. One of the unintended consequences of the Act is that the Declarations of Covenants, Conditions and Restrictions recorded for HOAs may be set to expire after 30 years of the date which they were recorded. However, MRTA provides a specific process for HOAs to renew and preserve their covenants and restrictions in order to keep them in place after the 30-year term. Keep in mind that for most HOAs, if the residents are no longer compelled to act in accordance with the community's declaration, the results could be catastrophic for the association's administration and finances.

The statute requires that a "Notice to Preserve" must be filed in the public records of the county where the property is located prior to the expiration of the 30-year period. This Notice must be approved by at least two-thirds of the members of the board of directors, and the notice of the meeting regarding the ratification of the Notice to Preserve must be provided at least seven days prior using the statutorily required meeting notice procedures.

For associations seeking to revive declarations that have already expired, MRTA also provides procedures.

MRTA.jpgThe statute includes guidelines as to the substance of the Declaration of Covenants, Conditions and Restrictions that is being submitted for revival, and it establishes that "the proposal to revive a declaration . . . shall be initiated by an organizing committee consisting of not less than three parcel owners located in the community . . . and no later than 60 days after the date the proposed revived declaration and other governing documents are approved by the affected parcel owners, the organizing committee or its designee must submit the . . . . materials to the Department of Community Affairs for review.

HOA declarations enable the associations to impose fees, file liens, collect assessments and implement other protocols that provide for the administration and financial viability of the community. It is imperative that HOAs preserve or revive and maintain their covenants and restrictions under MRTA in order to avoid potentially severe consequences, including the possibility of challenges by lot owners arguing that the covenants and restrictions with respect to their lot have been extinguished. Our firm's other community association attorneys and I strongly advise HOAs to check the recording date for their declarations and work with experienced legal counsel in order to avoid the expiration of their governing documents under MRTA.


Legislature Passes Bill to Allow Some Legal Work Performed by Community Association Managers

May 12, 2014, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonWith the ending of the most recent legislative session on May 2, 2014, the Florida Legislature addressed the issue of what many attorneys in Florida have considered the unlicensed practice of law by community association managers. House Bill 7037 was adopted this term and expands the role that CAMs play in the associations that they administrate. Effective July 1, 2014, community association managers will now have a much broader scope of powers and duties, including the ability calculate the votes required for a quorum or to approve an amendment, to negotiate financial terms of contracts (subject to approval by the association), determine amounts due to the association before the filing of a civil action, draft pre-arbitration demands, meeting notices and agendas, and calculate and prepare assessment and estoppel certificates.

However, many of the recent amendments to a community association manager's responsibilities are directly contradictory to the opinion of The Florida Bar, Fl bar logo.JPGwhich has taken this issue to the Florida Supreme Court. Pursuant to the state's constitution, the Supreme Court has exclusive jurisdiction to define the practice of law and regulate the unlicensed practice of law in the state.

As I wrote in this blog in October of 2012, the Supreme Court previously adopted an advisory opinion that found that managers would be engaging in the unauthorized practice of law if they should prepare claims of lien and satisfactions of claims of lien documents, as these documents require legal descriptions of the property and establish the lien rights of community associations. The opinion also provided that the drafting of a notice of commencement form would also constitute the practice of law, as would determining the timing, method and form of giving notices of meetings, and determining the votes necessary to take certain actions - because such determinations necessitate an interpretation of Florida law and the association's governing documents. In addition, responding to the association's questions regarding the application of the law to specific matters being considered and advising FSCourt2.jpgthe association that a specific course of action may or may not be authorized under the law would also constitute the practice of law by a CAM.

While many associations believe that they will be able to avoid additional expenses in legal fees if managers perform these tasks, there are a number of legal decisions that illustrate the complications that can arise when managers take on legal responsibilities. Compliance with a statute is critical when it comes to demand letters, claims of lien and pre-arbitration notices. In many cases, associations have ended up incurring more in legal fees to correct mistakes than they likely would have had to spend had they originally used their attorney.

Association boards should bear in mind that the preparation of claims of lien, notices of commencement and other legal documents do not typically result in significant attorney fees, but the ramifications of errors in these documents and forms can prove to be very costly. It is simply not worth the risk for associations or their managers to prepare these documents in order to avoid the relatively nominal legal fees.


Appellate Court Decision Reaffirms That Community Association Liens Are Wiped Away by Tax Deed Sales

May 2, 2014, Posted by Maryvel De Castro Valdes


Maryvel De Castro Valdes - SRLDS.jpgA decision last year by the Second District Court of Appeal clarified an issue that has caused some consternation and confusion among community association boards throughout Florida for many years. The court found that even though the Florida statutes under section 720 governing HOAs stipulate that new unit owners are liable for the unpaid assessments of prior owners, the statutes under section 197 governing ad valorem taxes supersede those under 720 in regards to whether liens for association assessments survive the acquisition of a property via the issuance of a tax deed.

In the case of Cricket Properties, LLC v. Nassau Pointe at Heritage Isles Homeowners Association, Inc., Cricket Properties filed a quiet title action after acquiring title to property that was part of the Nassau Pointe HOA, which raised an affirmative defense that Cricket was liable for all unpaid assessments that came due up to the time of the transfer of title. Cricket responded by arguing that because it had acquired title through the issuance of a tax deed its title was free and clear of association liens for unpaid assessments, as is provided under Section 197.573.

The HOA replied that its statutory right to lien and foreclose on its lien for past-due assessments under Section 720.3085 superseded and controlled the issue. The statute states that all new parcel owners are jointly and severally liable with prior owners for "all unpaid assessments that came due up to the time of transfer of title."

2dca.jpgThe Second DCA panel's unanimous opinion explained that the issue turns on whether the acquisition of property by a tax deed is considered a "transfer of title." The court referenced prior case law stating that a tax deed does not represent a transfer of title but rather constitutes the commencement of a "new, original and paramount" title that "creates in the purchaser a new and original title entirely disconnected with that of the former owner." The court therefore concluded that liens for unpaid assessments do not survive the issuance of a tax deed. In addition, because the language of the statute for condominium associations on this issue is nearly identical to that of the HOA statute, the ruling should also hold true for condominiums.

While this ruling essentially ensures that the issuance of tax deeds wipes out association liens for prior unpaid assessments in Florida, associations can at least find some solace in the fact that new property owners who acquire title through a tax deed sale are still bound by the association's governing documents. They must begin paying all assessments incurred after gaining title to the property through the issuance of a tax deed, and the association's covenants and restrictions governing the property remain in effect.


Community Association Boards Need to Know and Understand the Exclusions and Requirements in their Association Insurance Policies

April 28, 2014, Posted by Roberto C. Blanch


Thumbnail image for Roberto Blanch 2013.jpgCommunity associations maintain a number of different types of insurance policies to cover various risks, including physical damage, bodily injury, and employee or director dishonesty. Association boards typically rely on their insurance agents to help them shop the major insurance carriers for the most competitive premiums and coverage. Ultimately, policies are acquired by associations, often times with little thought about their provisions other than the costs of the premiums related to the coverage. However, recent experiences with two of our firm's community association clients have served as reminders pertaining to the importance for board members and property managers to understand the provisions of their insurance policies, including the exclusions and conditions of such coverage.

The first case involved a lawsuit filed against a community association wherein a unit owner claimed that he sustained property damage due to water leaking from a fire sprinkler discharged within the unit located above his unit. The owner alleged that the association was negligent in its hiring of a contractor engaged to perform annual evaluations of the building's fire sprinkler system. During one of the inspections, a sprinkler pipe burst causing major water damage to the claimant's residence and other portions of the common elements and units located below. When the association filed its insurance claim related to the damage caused by the leak, the insurance carrier denied coverage indicating that the association failed to meet some of the complex conditions for defense and coverage to be afforded. water.jpg Specifically, the policy in question required that tedious steps be taken to ensure that the association was named as an additional insured under the contractor's policies, and it also stipulated that the contracts with such contractors include an indemnification clause to protect the association.

The second example involves a dispute regarding a request for a service animal accommodation at a condominium. After the association responded to the request with specific inquiries regarding the nature of the accommodation and disability, the unit owner filed a lawsuit against the association alleging that its requests are discriminatory. The association filed a claim under its "directors and officers" insurance policy to cover its legal costs and defense, but the carrier immediately responded by pointing out that the policy specifically excluded coverage for any claims related to assistance animals.

In both of the above examples, the respective association board members and property managers claimed that they were unaware of the exclusions or coverage conditions, despite the costly consequence to the associations related to the associations' failure to comply. While the above-described exclusions or coverage conditions may be rare or may not be found in all community association insurance policies, these cases illustrate the need for managers and directors to be informed as to the critical terms of their insurance policies. In an effort to avoid encountering costly experiences such as these, it is vital for association boards and property managers to have a detailed discussion with their insurance agents and legal counsel in order to gain a comprehensive understanding about the exclusions of their associations' insurance policies and the conditions with which associations must comply to ensure that they are obtaining the coverage for which they are under the impression they have paid.


New Video on Associations Collecting Directly From Tenants of Unit Owners

April 25, 2014, Posted by Maryvel De Castro Valdes


The housing market may be in recovery mode, but many community associations continue to face significant challenges with unpaid assessments from unit owners. One of the remedies that our firm's community association attorneys have discussed in prior articles in this blog is the ability that associations have to collect the rent directly from the tenants of owners who are delinquent in the payment of their monthly association dues. In this two-minute video, I discuss how associations are now routinely demanding and receiving the rent payments directly from the tenants of the owners who fall behind on their assessments.



Enforcing Rules by Imposing Fines

March 31, 2014, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonOne of the most common topics that our firm's other community association attorneys and I are asked about is how to enforce association rules against residents who purposefully and repeatedly violate them. First and foremost, it is important that rules and regulations, and other requirements set forth in an association's governing documents, be enforced uniformly to every member, director and resident, lest they be rendered meaningless and unenforceable over time. For repeat violators who appear to have no intention of complying and living by the rules, one of the most effective weapons for an association to use is the imposition of fines.

Florida law allows both HOAs and condominium associations to impose fines against members, tenants, guests and invitees who violate the community's declaration, articles of incorporation, bylaws or any rules adopted by the association. For both HOAs and condominiums, fines may not exceed $100 per violation, and the fines may be imposed for each day that the violation continues, with a statutory cap that the fines cannot exceed $1,000 per violation.

pool rules.jpgIn both HOAs and condominiums, it is important to follow the statutory procedures for the imposition of fines in order to enforce them at a later date. In order to impose a fine, the association must create a "fining committee" - some call it the "violations committee" or the "covenants committee," but whatever your community decides to call it, the committee must be comprised of three unit owners who are NOT on the association's board of directors - or are NOT the spouse or family member of a director. Once a violation is committed, the offending resident (owners and tenants alike) must be given 14-days notice of a hearing before the committee, which, after hearing all of the facts, decides whether a fine should be imposed. Interestingly (and importantly), if the committee decides that a fine should not be imposed, then the board of directors must accept that decision and the fine may not be imposed. However, if the committee decides that a fine should be imposed, then the board of directors has the option to (1) set the fine amount or (2) waive the fine altogether.

Once fines are imposed, the next question is always "how do we collect them?" While condominiums may not convert fines into liens, the HOA statute does provide that if the fine exceeds $1,000, then the fine can be converted into a lien against the homeowner's property. Certainly the fine can be collected in the event an estoppel is issued for a sale of the unit, and all associations have the ability to file legal actions to recover fines, in which case the prevailing party is also entitled to recover its reasonable attorneys' fees and costs in the matter.

Ultimately, if the fining process does not result in compliance and the rule violations and non-payment continue, condominium associations may file petitions for arbitration with the Division of Condominiums, and HOAs may file suit in county or circuit court to enforce the violations and the fines. For cases in which the rule breaker has clearly demonstrated that they will continue to refuse to comply with the rule and pay the fine imposed by the association, pursuing legal action against the violator is typically highly effective.


Florida Legislature Considering Bill to Shop Condominium Policies From Citizens Property Insurance to New Private Companies

March 17, 2014, Posted by Laura Manning-Hudson


Laura Manning HudsonFor the last several years, the state of Florida has been pursuing major efforts to shrink the size of the state-run Citizens Property Insurance, and the company's policy count has reached its lowest level since 2006. Now the legislature is considering expanding these efforts to Citizens' insurance policies for condominiums and apartments. Senate Bill 7062 would increase rates for new master condo policies and allow unregulated "surplus lines" insurers to pull existing condominium and apartment policies away from Citizens. However, in an election year when Gov. Rick Scott has expressed concerns about any measures that would increase rates, the bill faces a difficult uphill climb.

Recently, the Senate's Banking and Insurance Committee, which is now considering and shaping the bill, voted to eliminate a measure that would have allowed rate hikes of up to 15 percent for commercial-residential policies instead of the current 10 percent maximum. An amendment to the bill stipulates that "prominent notice" must be given stating that surplus lines policies are not protected by the Florida Insurance Guarantee Association and their rates are not controlled by the Florida Office of Insurance Regulation. The amendment also allows Citizens policyholders to reject offers from surplus lines companies, and it states that those who opt to switch from Citizens to a surplus lines carrier will be allowed to switch back to Citizens if they so choose.

Citizens sign.jpgThe lawmakers in the committee did not debate a provision in the bill that eliminates a discount for master condo policies which bundle hurricane coverage with other perils such as fire and plumbing leaks (which is what condominiums purchase now). The bill would preclude Citizens from selling these "multi-peril" bundled policies, so condo associations would be required to purchase separate hurricane and "all other perils" policies at very likely a higher cost. This provision would only apply to new policies issued after June 30, 2014.

Currently, there are few insurers that are actively involved in the commercial-residential market. Citizens underwrites 43 percent of the market, representing nearly $93 billion in insured value. American Coastal Insurance Co., QBE Insurance Corp. and American Capital Assurance Corp. represent another 40 percent, and the remaining 20 percent is shared among a handful of other insurers. There are also very few insurance agents who specialize in the commercial-residential market for condominium policies.

Citizen Property Insurance has issued statements indicating that it would take 18 months to develop the commercial business clearinghouse, but even then it would have to be different than the personal-residential clearinghouse because of the complex nature of these policies for condos and apartments. According to Citizens, the number of commercial-residential policies only represents two percent of its overall policy count, but that two percent accounts for 20 percent of the insurer's probable maximum loss from a hurricane.

Our firm's other community association attorneys and I will continue to monitor the status of this bill, and we encourage association directors, members and property managers to submit their email address in the subscription box at the top right of the blog in order to receive all of our future articles.


Appellate Court Once Again Restricts Condo Association's Collections After Association Takes Ownership of Foreclosure Unit

March 7, 2014, Posted by Nicholas D. Siegfried


Thumbnail image for Nick Siegfried 2013.jpgLast year, several of our firm's community association attorneys wrote in this blog about the decision by the Third District Court of Appeal in the case of Spiaggia Ocean Condominium Association Inc. v. Aventura Management LLC that has since caused many Florida condominium associations to reconsider their collections strategy. In the split decision in early 2013, the appellate panel ruled that when the association for the Surfside condominium obtained title to a unit through its own foreclosure action, the association disavailed itself of its ability to collect assessments from the third-party purchaser at the bank's foreclosure sale. The appellate court reversed the order from the Miami-Dade trial court and remanded the case back to the trial court. However, the trial court again ruled in favor of the association, and the third-party purchaser appealed to the Third DCA. This time, the appellate court reversed the ruling and remanded the case back to the trial court with specific instructions to enter judgment in favor of the third-party purchaser.

The new unanimous appellate panel found that the trial court misinterpreted the appellate court's original majority opinion last year, but Judge Leslie B. Rothenberg wrote for the panel that the previous 2-1 split decision was "somewhat ambiguous" and "could have been clearer."

3rd district court of appeal.jpgIn the 2013 majority opinion, the appellate court found that Florida law clearly provides that "the previous owner is jointly and severally liable" together with the new owner for all unpaid assessments that come due up to the time of the transfer of title. "The plain language of the Statute does not state or suggest that an exception is to be made when the previous owner is the condominium association." Therefore, by positioning itself as the "previous owner," the majority held that the condominium association became liable for the unpaid assessments and could not then impose that liability solely onto the eventual new owner.

After the case was remanded back to the trial court, the trial court ruled that all three parties were jointly and severally liable for the unpaid assessments, but that the association as the creditor could collect in full from any of the three parties it chose. The trial court ruled that the third-party purchaser was required to pay the full amount of unpaid assessments, and that its only remedy was to seek contribution from the prior owners: the association and the original owner.

The new appellate ruling concludes that the trial court "erred in holding Aventura Management jointly and severally liable with the prior two owners," the association and the original owner who went into foreclosure. The new appellate opinion finds that the third-party purchaser "cannot be held liable for the unpaid assessments of the original owner." The third-party purchaser could only be held liable for the unpaid assessments of the immediate prior owner, the association.

The Third DCA's recent ruling in this case sends a clear message to Florida condominium associations that when they take title to a unit, they will be unable to collect prior owners' past-due assessments from the subsequent third-party purchaser at the bank's foreclosure sale. The Florida legislature remedied this loophole for homeowners associations last year by amending the law to exclude homeowners associations, under Florida Statutes Chapter 720 governing HOAs, from being considered as the previous owner under the statute when HOAs take ownership of foreclosure units prior to banks' foreclosures. We will have to wait and see whether the Florida legislature will take similar action in 2014 in order to remedy this issue for condominium associations under Chapter 718, Florida Statutes.


Are Owner Email Addresses, Telephone and Fax Numbers Exempt from Disclosure Requirements to Unit Owners?

February 25, 2014, Posted by Jonathan M. Mofsky


Thumbnail image for Jonathan Mofsky Gort photo.jpgOur other South Florida community association attorneys and I often receive questions about whether the fax numbers, telephone numbers and email addresses of unit owners are official records of the condominium. If they are deemed to be so, then Florida law stipulates that they must be made available to unit owners who make an official records request.

The law on this issue is now clear. Section 718.111(12)(c)(5) of the statutes specifies certain records which are exempt from disclosure to unit owners, and provides, in part, that the following records are not accessible:

"Social security numbers, driver's license numbers, credit card numbers, email addresses, telephone numbers, facsimile numbers, emergency contact information, addresses of a unit owner other than as provided to fulfill the association's notice requirements, and other personal identifying information of any person, excluding the person's name, unit designation, mailing address, property address, and any address, email address, or facsimile number provided to the association to fulfill the association's notice requirements. Notwithstanding the restrictions in this subparagraph, an association may print and distribute to parcel owners a directory containing the name, parcel address, and telephone number of each parcel owner. However, an owner may exclude his or her telephone number from the directory by so requesting in writing to the association. The association is not liable for the inadvertent disclosure of information that is protected under this subparagraph if the information is included in an official record of the association and is voluntarily provided by an owner and not requested by the association."

Based upon this provision, email addresses and fax numbers are now exempt from disclosure unless an owner has provided consent to receive notices by electronic transmission.

directory.jpgIn addition, pursuant to the provision, telephone numbers are also exempt from the association's disclosure requirements for records requests. Telephone numbers are only distributed if the association has elected to circulate a directory with the contact information for all owners. However, associations should consult counsel for an opinion on procedural recommendations prior to developing and circulating such a directory. While the association's main roster can include telephone numbers, these telephone numbers are not published to other unit owners. The only information that is subject to disclosure are the names, unit designations, mailing addresses, property addresses and, as stated in the statute, email addresses and fax numbers only if provided to the association for notice purposes. While such information may not be accessible to unit owners, there may be exceptions for unit owners who are board members of the association.

Our community association lawyers monitor and write about important issues for community associations in this blog, and we encourage association directors, members and property managers to enter their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.


Recent Rulings Provide Some Relief for Associations Contending with Bankruptcies by Unit Owners

February 20, 2014, Posted by Jeffrey S. Berlowitz


Jeffrey Berlowitz - Siegfried law firm.jpgI have written several articles in this blog about the challenges that community associations are facing with unit owners who file for personal bankruptcy and utilize what is known as the "lien stripping" provisions of the bankruptcy code to avoid pre-bankruptcy maintenance assessment arrears due to their associations. If approved by the bankruptcy court, these code provisions enable a debtor in bankruptcy to wipe away second mortgages and association liens tied to their real property if they are able to demonstrate that they owe more to their first mortgage lender than what their home is worth. However, recent court decisions are a boon for the associations that lose certain of their lien rights against these bankruptcy debtors and then attempt to collect the past-due assessments from the subsequent buyers of the properties.

In a case recently decided by one of our local bankruptcy judges in the Southern District of Florida, the court determined that even if an owner strips off a condominium association lien because their unit lacks equity and is ultimately released from their pre-bankruptcy personal obligations to the association, the subsequent owner will not receive the benefit of the prior owner's lien strip off and will remain liable to the association for the prior owner's unpaid assessments that were due at the time title to the unit transferred to the subsequent owner. bankruptcy court sign.jpg In other words, no matter what a unit owner in bankruptcy accomplishes in their bankruptcy case with respect to their liability for maintenance assessments, nothing can impact a subsequent owner's personal liability for the unpaid assessments and nothing in the prior owner's bankruptcy impacts the association's right to pursue payment from that subsequent owner.

Similarly, in a case in which I represented the community association, a new third-party purchaser at the prior owner's foreclosure sale argued in court that they were not liable for the prior owner's unpaid assessments because the prior owner filed bankruptcy and received a personal discharge from his obligations to the association. The new owner asked the court to give it the benefit of the prior owner's bankruptcy discharge and the resulting avoidance of the prior owner's personal liability to the association for unpaid assessments.

I successfully demonstrated to the court that the bankruptcy discharge had no legal bearing on the statute assigning liability for past unpaid assessments to new property buyers. The court concurred and issued a summary judgment in favor of the association, ruling that the subsequent purchaser does not receive the benefit of the prior owner's bankruptcy discharge.

The lien stripping provisions of the bankruptcy code have definitely taken a financial toll on many community associations throughout Florida. Thankfully for the associations, these recent rulings by a state circuit court and local bankruptcy court should provide some clarity that the courts are not going to exacerbate the damage lien stripping brings upon an association by applying it to subsequent buyers. Our other community association attorneys and I will continue to write about important issues for Florida associations in this blog, and we encourage association directors, members and property managers to submit their emails in the subscription box at the top right of the blog in order to receive all of our future articles.