Eyes in the Sky

November 13, 2014, Posted by L. Chere Trigg


Chere Trigg.jpgDrones have been the topic of conversation for the past several years sparking privacy concerns amongst residential communities. In the state of Florida, Governor Rick Scott signed a bill that limits law enforcement's use of drone aircraft; however, that bill does not pertain to or restrict the commercial and private use of drones. The "Freedom from Unwarranted Surveillance Act," which came into effect on July 1, 2013, allows law enforcement agencies to launch camera carrying surveillance drones under two circumstances: if a warrant from a judge is obtained or if a person's life or property is believed to be in imminent danger. In 2013, the use of drones was reported by both the Miami-Dade and Orange County Sheriffs departments, each owning two drones used solely for training purposes.

However, not all states are restricting domestic drone use. The state of North Carolina for example does not have a bill protecting its citizens from law enforcement agencies using drones. In fact, North Carolina's legislature recently passed a bill giving authorities permission to use drones to photograph open-invitation gatherings without the need to obtain a warrant -- even if the gathering is held on private property. That is not to say there are not regulations in place protecting citizens from peeping toms photographing someone and/or their property. The use of drones for business purposes is also prohibited. For example, photographers cannot sell photos or videos taken with a drone, as drones should strictly be used for recreational purposes.

d2.jpgEven with all of the FAA's rulings, the commercial and private drone industry is expected to become a multimillion dollar industry, creating numerous jobs within the next ten years. The controversial topic revolving around the right or wrong use of unmanned aircraft has many asking: Where can the line be drawn? Drones are easily accessible and are found for sale all over the web. With laws being passed focusing only on law enforcement's use of drones, such as Florida's Senate Bill 92, what can be said about your neighbors flying their drones over your house or condominium unit? Is it deemed acceptable because it is a hobby? Or does your neighbor need to limit drone flying to their property only?

The questions are endless, but communities can set rules in an effort to protect their residents' privacy. At your next association meeting, you could request to limit the flying of drones to certain areas to prevent anyone in your community who may own a drone from flying it near your home, on the common areas or from the condominium property. With the popularity of the technology and lack of restrictions, board members should even consider a ban altogether to avoid any unnecessary hassles. With prices as low as $50 and retailers expecting record breaking sales this holiday season, it is best to put the proper restrictions in place for your community before privacy is jeopardized.

Over the course of time, we will hear of new rules and regulations regarding the use of drones, especially as technology assists in their evolution to become smaller, cheaper and much more efficient than existing methods. Companies like Amazon are already seeking approval from the FAA in an effort to pioneer drone delivery services. Although the use of drones could potentially revolutionize the way many existing companies operate, the bigger focus lies in the misuse of drones, should they begin to trample on privacy laws.


Another HOA Board Meeting Brawl Caught on Video Makes the Nightly News

November 7, 2014, Posted by L. Chere Trigg


Chere Trigg.jpgNicole Kurtz, one of our firm's other community association attorneys in our Miami office, wrote in this blog in September about a fight caught on video at a Sunrise HOA board meeting that was aired by WPLG Local 10 on the station's nightly newscast. Well, it did not take long for the station to air another story featuring a brawl as well as nasty arguments videotaped at another local HOA community.

It appears from the report that the situation at the Mainlands 3 retirement community in Tamarac has escalated to the point of becoming a complete debacle. The residents are clamoring to remove the current directors from the HOA's board, and the president and vice president of the board are resisting their efforts by adjourning or cancelling meetings in order to prevent votes by the members to recall the current board and demand a new election. One of the homeowners in the community is even quoted saying that she believes many of the combatants are carrying concealed weapons to the meetings, and as a result, she is in fear for her and her neighbors' safety.

Click below to view the report from Local 10 News.

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Preparing for the Snowbird - the Unofficial State Bird of Florida

October 27, 2014, Posted by Laura Manning-Hudson


Laura Manning HudsonLast winter was particularly brutal for many parts of the country, and it was among the coldest on record in large swaths of the Midwest. For South Florida however, the weather was as mild and beautiful as ever. TV viewers across the country were often reminded of the spectacular South Florida weather on national television showing ubiquitous scenes of sunbathers on the beach during the nationally televised Miami Heat games.

South Florida's mild winters have made the Snowbird, those part-time residents who flock here by the hundreds of thousands from December through March, the unofficial state bird of Florida. Many of these Snowbirds own units in condominiums and homeowners association communities, making it necessary for full time residents and managers to adjust to the influx of residents. In order to make the transition into the "season" run smoothly, community associations can take a few simple steps to prepare.

For full time residents, board members and managers, the return of the Snowbird is the ideal time to reconnect with friends and ensure that the association has all of their current contact information. Snowbirds should also be sure to change their mailing addresses for all association communications from their residences up north to their local address in the community.

fs1.jpgA nice way to welcome Snowbirds back to their winter homes is with a special reception for all of the residents in the community clubhouse or pool area. Speaking of which, the association's common areas (card rooms, meeting rooms, pool areas, and clubhouse) are also likely to see more engagement by residents hosting their own gatherings and events over the holidays. Anyone who may be considering reserving the common areas for private gatherings should be reminded to schedule ahead of time with management in order to ensure availability.

Boards of directors should also be prepared for increased attendance at meetings. There will certainly be more architectural review submissions from unit owners who are planning changes to their seasonal homes, so any architectural review committee should be prepared for the increased workload.

For condominiums, parking garages will be much fuller, and management should be prepared to promptly respond to any parking or security issues that may arise in order to avoid their escalation into disputes between residents. Residents who live in gated communities should also confirm that their access cards/fobs/transponders are active in order to avoid pileups of vehicles at community entrances.

By working closely together and planning ahead, association boards and their property managers can make the transition into the busy winter season run as smoothly as possible.


Palm Beach Condo & HOA Expo on October 15th

2015 Legal Update Seminar Picture.jpgOn October 15th, the firm participated in the Palm Beach Condo and HOA Expo at the Palm Beach County Convention Center. It was a huge event attended by hundreds of property managers, board members, owners, and fellow industry experts. Attorney Laura Manning-Hudson presented the 2015 Legal Update course which had an outstanding turnout of over 150 attendees. Attorneys Evonne Andris and Nelson Rodriquez were also in attendance and answered questions throughout the day giving out great advice and engaging in lively conversation with those who stopped by our booth. To all who attended and visited our booth, thank you for making the Palm Beach Condo and HOA Expo so memorable!


Guest Column by Helio De La Torre in Daily Business Review: Un-American Condo Termination Law Needs To Be Changed

Helio De La Torre 2013.jpgFirm partner Helio De La Torre wrote a guest column that appeared in the Daily Business Review last Friday, September 26, calling for the Florida legislature to consider significant changes to the state's condominium termination law.

Helio's column reads:

"In light of the importance of property rights in our society, it has come as a shock to many that the condominium termination law, which was amended by the Florida Legislature in 2007, is now being used successfully throughout the state by real estate developers to take over communities and force unwilling homeowners to sell their residences at prices that are often well below their original purchase price, and in many instances, below their remaining mortgage debt.
The new changes to the condominium termination law were enacted in response to the hurricanes of 2004 and 2005, which ravaged many condominiums throughout Florida. Scores of these condominiums could not afford the repairs, so they were abandoned and languished. As a result, in 2007 the legislature amended the state's condominium laws in order to lower the thresholds for terminating condominiums so that they could be sold to developers with the option of converting the entire community to rentals."

Helio concludes by discussing the outlook for changes to this controversial law:

"State Rep. Carl Zimmermann, D-Palm Harbor, filed a bill in this year's legislative session that was aimed at giving those owners an opportunity to recover their investment, but the bill died in committee.


It now appears that such a bill would have the support of Florida's next governor, regardless of who prevails in the November gubernatorial election. Gov. Rick Scott has asked state regulators to determine what could be done to stop the abuses of this law, and a spokesman for Charlie Crist has indicated that the former governor now believes the law needs to be changed.

Zimmermann's proposal was to require developers to pay at least 110 percent of the original purchase price, or 110 percent of the fair market value, whichever is greater. Another option was proposed by former Gov. Jeb Bush, who vetoed the condominium termination amendment in 2006. He suggested only allowing for a single vote per person/entity, regardless of the number of units owned. A third option would be to change the law so that it applies only to properties with significant hurricane damage as opposed to allowing it to be applied for undamaged complexes.

All of these options should be considered by the Florida lawmakers during the next legislative session, as a remedied version of this law continues to make sense for condominium communities that are badly damaged by hurricanes and need to be renovated or converted. However, as it now stands, the law is allowing for unintended consequences that have effectively wiped away the property rights of some Florida homeowners."

Our firm congratulates Helio for shining a spotlight on the significant problems with this law and calling for Florida's lawmakers to address these issues during the next legislative session.

Click here to read the complete article.

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Recent Arbitration Decision Offers Stern Warning to Associations Making Certain Alterations Without a Membership Vote

September 25, 2014, Posted by Laura Manning-Hudson


Laura Manning HudsonAn arbitration decision rendered earlier this year by the State of Florida Division of Condominiums involving a dispute over alterations approved by a condominium board without a prior meeting and vote of the unit owners did not surprise our firm's community association attorneys. We often find ourselves reminding association directors and property managers that the changes they are considering - albeit seemingly minor in nature - could be among those changes that are considered "material alterations" requiring approval by the membership.

While what constitutes a "material" alteration is not always clear, the rule of thumb is that if it changes the color, form, shape, elements or specifications from the original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance, then it is material. And, while the additional costs and time commitments that the approval process entails can be considered a bit ponderous, this recent decision serves as an important reminder of the potentially significant economic repercussions of forgoing the vote.

The case involved alterations that were approved by the Nine Island Avenue Condominium Association board of directors, which included changes and improvements to the pool deck furniture including cushions and fixtures, trellis, observation deck, pool steps and ladder, landscaping, the color of the paint in the koi pond, and the removal of a water filtration system. pool deck renovation.jpg After a hearing that took two full days and included a number of witnesses and experts for both the unit-owner petitioner, Ms. Jacqueline Simkin, and the association, the arbitrator found in favor of the unit owner and concluded that prior approval by the unit owners was required for practically every single alteration that had been made at the property.

The order concludes:

"Unless the alteration is approved by 66 2/3% of the unit owners, no later than December 31, 2014, the Association shall:

a. Return the color of the recreation deck waterways and curbing to the original light gray, and return the color scheme of the deck furnishings to original grey-blue, or something substantially similar;

b. Rebuild the trellises to the original footprint, design intent, appearance, and natural weathered wood finish, subject to current code requirements;

c. Return the gazebo to its original natural weathered wood finish;

d. Rebuild the wooden observation deck over the waterway;

e. Replace the pool egress ladders with ladders substantially similar to original, such that the steps extend farther down into the water and can be used as a means of egress from the pool by unit owners;

f. Return the entrance drive landscaping to its original, or substantially similar, condition; and

g. Repair or replace the building water filtration system with a comparable system utilizing current technology."

Depending on how the final vote of the members turns out, the association may be facing significant expenses in order to return some or all of these elements to their original condition prior to the alterations being completed. These expenses, not to mention the potentially contentious nature of the meetings that will lead up to the vote as a result of this significant lapse in judgment, will certainly prove to be more costly and difficult for the association than the vote that it should have undertaken prior to moving forward with the alterations. Not to mention the attorneys fees and costs incurred by the association in defending this proceeding - and the unit owner's attorneys fees and costs which the association will be responsible to reimburse.

This costly lesson comes free of charge to all other Florida condominium association boards of directors that are considering moving forward with what potentially may be considered a "material alteration" without obtaining prior membership approval as required by the Condominium Act. Bypassing the approval process is simply not worth the financial risk, as this condominium association learned the hard way.


Video of Fight at South Florida Condo Board Meeting Makes Nightly News

September 16, 2014, Posted by Nicole R. Kurtz


Nicole Kurtz 2014.jpgOur firm's other community association attorneys and I have witnessed, or heard about, scores of heated exchanges between disgruntled unit owners and board members at community association board of directors' meetings. However, a video that aired on WPLG Local 10 nightly news last week involving the physical attack of a unit owner by the then-president of the condominium association governing the Waterbridge Condominiums in Sunrise left many of us shocked.

In the video, association member Stephen Smith is shown requesting association financial documents from the members of the board at a 2009 video-recorded board meeting. Subsequent to his request, the then-president of the association, Jacqueline Chance, physically attacks Smith, causing a brawl between the two and others present at the meeting. WPLG reports that Chance was charged with battery as a result of the altercation, and she pled no contest to same. The station further reports that the depicted violent exchange was not the first time Smith was attacked by a board member within this community. Smith was apparently criticized and confronted by board members in previous years in connection with his requests for association records.

Smith explains that in addition to being assailed by board members for requesting association records and questioning the status of the association's reserve account, he has also been harassed for requesting that his unit be repaired by the association following a fire to the condominium building.

Smith has filed a lawsuit against the condominium association based upon a theory of negligence, which Smith says arose because the actions and decisions of the association's board of directors have resulted in his inability to sell his unit. We actively await the outcome of Smith's lawsuit (the next hearing is scheduled for November), as the video and audio recordings included in the report by Local 10 are undoubtedly very damaging to the association.

Click below to watch the video, and click here to read the report on WPLG's website.


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New Case of Theft, Fraud by a South Florida Homeowners Association President

September 15, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgYet another case of theft and fraud inflicted on an association by an HOA president made local South Florida headlines recently. According to news reports, Michelle Changar-Coe, a former homeowners association president, has been arrested and stands accused of embezzling more than $180,000 from her Tamarac community. Police reports indicate that she forged dozens of checks totaling $181,441.85 which were deposited into her bank account. The authorities reported that the fraud and theft occurred at the Mainlands Section 7 homeowners association from January 2009 through December 2013. Changar-Coe, 44, forged the signatures of four persons without their consent between May 2011 and October 2013. While conducting an audit of financial records, a board member found several checks from community funds that appeared to be forged with his signature and reported it to police. He later found a check for $20,475 that he never recalled signing and had been made payable to a "Michel Chandar," a name that was later found to be bogus.

Changar-Coe (pictured below) is being accused of creating a fraudulent agreement for the association to pay a "city liaison" $2,575 per month for representation at City Hall. However, "no such position existed with the city of Tamarac, according to two city officials who provided sworn statements," reads the police report. mcc.jpg She continued to invoice and collect from the association for the fake job from May 2011 to November 2013 using the name of Michelle Charger. Investigators found checks deposited into Changar-Coe's personal bank account bearing the supposed city liaison's name. She has been charged with first-degree grand theft of more than $100,000 and four counts of fraud.

An article by Tamarac Talk (www.tamaractalk.com) further details how the fraud was finally uncovered, detailing that "[r]resident Steve Soloff was suspicious, and informed the board that he had visited the City of Tamarac and spoke with City Clerk Pat Teufel" who had informed him ". . . that in her 10-year tenure with the city, she has never heard of any agreement by a homeowners association to hire a city liaison . . . " and that ". . . she knew of no person named Michelle A. Charger."

Apparently, key details of the fraud were uncovered as a result of a former director's investigation of discrepancies uncovered in connection with the association's finances in early 2012, when a fraudulent court document was presented demanding that such director and another director both resign immediately or face a $1 million lawsuit.

The above account underscores the importance for association directors and managers to implement procedures and policies aimed to avoid the victimization of the association and its members. These efforts may include requiring that at least two board members sign all checks, the requirement for background checks and screenings for managers and employees, the thorough review of all bank statements and financial records presented to directors and managers, the establishment of low limits on discretionary expense approvals without board authorization by the property manager, and a detailed review and understanding by directors of the association's yearly financial audits performed by independent professionals.

Additionally, the foregoing story also highlights the relevance of what a thorough review of association records may reveal following a detailed inspection of official records by or on behalf of owners having reasonable suspicions of wrongful activity by directors or other association representatives. Lastly, this story suggests that in the event that directors have doubts or questions regarding suspicious activities or documents presented to the association, then such concerns should be promptly reported to association counsel for evaluation.

Our firm's other HOA and condominium association attorneys and I work very closely with our clients to help them to avoid and detect theft and fraud in their communities. We write in this blog about important legal and administrative issues affecting associations in Florida, 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.


Right of Access to Personnel Evaluations, Background Screenings for Community Association Directors, Members

September 2, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgOur firm receives a great deal of questions about association matters from the readers of our blog and the listeners of our radio show on WIOD 610-AM every Sunday at noon. We try to provide specific responses to each and every inquiry that we receive. Recently, we received a question from a condominium association board member in Sarasota pertaining to a topic that we have not covered in quite some time and would like to revisit.

The reader explained that his association conducts an annual evaluation of the association's property manager that includes an evaluation questionnaire. The evaluation meetings were conducted with the manager by each of the board members, and the evaluation questionnaire forms were collected by the manager who later delivered them to the board president. The reader asks if there are any Florida laws that govern the right of association board members to access these personnel evaluation forms as well as the results of the background screening that was used prior to the hiring of the property manager.

The laws related to community association official records and their accessibility to association members and directors specifically designate "personnel records" of the employees of associations as protected official records. The statutes for both condominiums and HOAs specifically stipulate that personnel records are not to be made accessible to unit owners. However, these and other types of protected official records must also be maintained by the association, and they must be made available to all board members. The members of the board of directors are fiduciaries of the association, and as such they are obligated to make important financial and administrative decisions for the association. In order to carry out their function in this role, they must have access to all of the protected official association records that are specifically barred from the unit owners who are not directors of the association. In addition, it should be noted that there may be other factors that must be considered with regard to the right of a director or association member to have access to such records. As such, we recommend that community association board members consult with legal counsel with inquiries they might have in connection with the specific circumstances of their community's personnel records.

Our community association attorneys and I regularly consult and advise our clients on the proper procedures and best practices for maintaining the association's official records and providing association members with access to such records in accordance with Florida law. We write about important legal and administrative issues for condominium associations and HOAs in this blog on a regular basis, and we encourage association director and members as well as property managers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.


Appellate Ruling Creates New Wrinkle Over Acceptance of Partial Payments That Are Endorsed as Full Payments

August 29, 2014, Posted by Roberto C. Blanch


Thumbnail image for Roberto Blanch 2013.jpgAs if collections of delinquent accounts were not already difficult enough for condominium associations and HOAs in Florida as the state recovers from the foreclosure crisis, a recent ruling by the Second District Court of Appeal has unfortunately created a new wrinkle that will require community association managers, directors and their legal counsel to pay close attention when accepting partial payment of assessments from owners. The court's ruling in the case of St. Croix Lane Trust v. St. Croix at Pelican Marsh Condominium Association essentially now makes it a necessity for associations to consult with experienced legal counsel when they receive checks that are in any way endorsed as representing the full and final payment of assessments owed by the owner on whose behalf the payment is made.

Prior to this ruling, associations and their attorneys were guided by the 2008 ruling by the Third District Court of Appeal in the case of Ocean Two Condominium Association v. Kliger which held that associations cannot refuse partial payments of assessments made by or on behalf of owners. In its opinion, the court in Ocean Two further suggested that its conclusion might even apply in the event that the partial payment included a restrictive endorsement such as "Paid in Full" or "Full and Final Payment."

However, in the St. Croix case, the unit owner's attorney specifically wrote to the association attorney stating that the payment made by the owner in the amount of $840 was to be considered as the full and complete payment for the settlement of the account, which the association claimed was delinquent in excess of $38,000. While the association responded to the owner's attorney by denying that the partial payment was the full and final payment of the amount owed, it accepted and deposited the check, applying the funds as a partial payment in accordance with Florida condominium law.

2dca.jpgDespite the previous ruling in the Ocean Two case, the appellate panel in St. Croix reversed the trial court's ruling, finding that the association's depositing of the check containing the above-described restrictive endorsement operated as an "accord and satisfaction," resulting in a waiver of the association's right to collect the remaining debt alleged to be owed by the owner.

This ruling appears to create a conflict with regard to the extent to which the appellate courts will consider the partial payment of assessments including restrictive endorsements to constitute an "accord and satisfaction" of a larger debt owed by the owner on whose behalf the partial payment is made. As such, it is possible that this conflict may ultimately be taken up for resolution by the Florida Supreme Court or may result in action by the state legislature.

In the meantime, associations should pay very close attention to any payments that are made with restrictive endorsements of any kind indicating that such payments reflect the complete and final payment of the amount owed to the association. Managers and directors presented with similar circumstances would be well advised to consult with experienced and qualified legal counsel before depositing such payments if they are not indeed for the full and final amount owed.

Our community association attorneys will continue to monitor and write about the consequences of this ruling as they relate to the handling of partial payments that are made with restrictive endorsements indicating such payments to be full payments. We encourage association directors and members as well as property managers to submit their email address in the subscription box at the top right of this blog in order to automatically receive all of our future articles.


Firm Nominated for The Florida Community Association Journal Readers' Choice Award


FLCAJ readers choice awards.jpgThe firm is proud to announce that we have been nominated for The Florida Community Association Journal Readers' Choice Awards in the legal services category, which recognizes service providers that provide exemplary service to community associations and exhibit a high level of proficiency, reliability, fairness and integrity. There are three levels of achievement: Diamond, Platinum and Gold. Each level is determined by an open voting system. The level of achievement is directly related to the number of votes cast for the service provider.

The award winners will be announced on January 15, 2015, at a special ceremony in West Palm Beach. Please click here to vote for us.


Former Homeowners Strike Windfall from Foreclosure Surplus

August 5, 2014, Posted by Jonathan M. Mofsky


Jonathan Mofsky Gort photo.jpgWould you be surprised to learn that an owner could walk away from his home, stop making mortgage payments, avoid all personal liability for debt on the property and still make nearly $100,000 after the property is foreclosed upon by a mortgage lender? Well, it can happen.

In a recent opinion released on July 23rd by the Third District Court of Appeal, the appellate court ordered approximately $99,500 in surplus funds to be returned to Miami residents Walter and Eider Pineda. The ruling reverses a trial court order which directed the funds to be applied as payment toward the balance owed to the first mortgage lender, instead of being disbursed to the Pinedas. A review of this interesting ruling reveals that it was more of a case of the foreclosure auction buyer (third-party purchaser) making mistaken assumptions rather than a novel legal argument, but nonetheless the result is a huge amount of foreclosure surplus going to the ex-owners of the property despite their non-payment of both the first and second mortgages.

The ruling by the Third District Court of Appeal reverses the trial court order which directed that the approximately $99,500 in surplus generated by the foreclosure sale to Nocari Investment, LLC, the third-party purchaser at the auction, be applied as payment toward the balance owed to the first mortgage lender, which was Wells Fargo Bank. Nocari, however, argued that it would be inequitable for the Pinedas to have the surplus funds since they filed for bankruptcy protection and received a discharge of their debt to the first mortgage lender. 3rd district court of appeal.jpg While Nocari believed that the surplus funds would be refunded back to Nocari and applied as payment toward the superior lien on the property, the appellate court sympathetically disagreed. The opinion reads, in part, as follows:

While we are sympathetic to Nocari's equitable argument, the fact remains that distribution of surplus foreclosure proceeds is governed by a plain and unambiguous statutory procedure which clearly provides that the owner of record is entitled to the surplus proceeds. Where the legislature has provided such a process, courts are not free to deviate from that process absent express authority.
Neither the statutes nor the case law governing distribution of surplus foreclosure sale proceeds provides a mechanism authorizing a third-party purchaser to obtain the surplus. The statute is clear: the owner of record at the time of the recording of the lis pendens is entitled to any surplus proceeds . . . Nocari was neither an "owner of record," an assignee of an owner, nor "subordinate lienholder," . . . and thus was not entitled to any surplus funds.

While there was no community association involved in this case, the ruling highlights some important reminders for associations as well as third-party purchasers. For the community associations, the ruling should serve as a reminder of the importance for condominium associations and HOAs to preserve their ability to collect surplus funds generated by foreclosure sales. Community associations are often named as subordinate lienholders in mortgage foreclosure cases, and they should engage counsel to closely monitor the status of such cases, file appropriate responses to protect their interests and entitlement to surplus generated by the foreclosure sale, and file timely motions with the court so they are not barred from collecting foreclosure surplus. For the third-party purchasers, the ruling illustrates the importance of performing due diligence and working with qualified legal counsel in order to act with certainty and understand the complete ramifications of their bids at foreclosure auctions.

I, along with our firm's other community association attorneys, work very closely with our clients on foreclosure cases and motions for surplus to ensure that their lien rights and ability to collect as subordinate lienholders are protected. We monitor and write about important legal and business issues affecting Florida community associations in this blog, and we encourage association directors, members and property managers to submit their email addresses in the subscription box at the top right of the blog in order to automatically receive our future articles.


Firm's Jeffrey Berlowitz Authors Guest Column on Associations Contending with Bankruptcies by Unit Owners in July Issue of Florida Community Association Journal


Jeffrey Berlowitz - Siegfried law firm.jpgOur community association attorneys contribute articles on association issues to a number of publications on a regular basis. In the July issue of Florida Community Association Journal, the leading publication focusing on associations in the state, partner Jeffrey S. Berlowitz wrote an extensive article on the latest court decisions and legal strategies that are offering some relief for associations which are contending with unit owners who file for bankruptcy.

The article discusses the "lien stripping" provisions of the bankruptcy code and how associations can respond:

With regard to associations, most owners who file for Chapter 13 are striving to save their home from foreclosure. However, what is becoming more prevalent with bankruptcy filers who reside in community associations is the taking advantage of a debtor friendly component of the bankruptcy laws affording a debtor the right to "strip off" second mortgages, lines of credit and association liens in the event that the debtor evidences to the court that the value of their unit is less than the amount due on their first mortgage. If successful, then the unit owner may receive the benefit of a complete avoidance of an association's lien claim in the amount that existed as of the date of the bankruptcy filing; ultimately a remarkable benefit to a debtor and a potentially harsh outcome to the community association.
. . . Associations should be well advised that an owner's intentions to lien strip an association claim does not mean that the association cannot challenge or object to the owner's effort to avoid the association's lien. My colleagues and I have assisted associations in overcoming lien stripping efforts by debtor owners notwithstanding the debtor-friendly law supporting lien stripping. This is accomplished by countering the owner's value of their home with an appraisal procured by the association which demonstrates that the value of the unit at the time of the bankruptcy filing was greater than the amount due under the owner's first mortgage. Simply stated, this is an "all-or-nothing" deal: If the bankruptcy court determines that the unit maintains even just a single dollar of equity, then the owner will be required to cure all arrears due to the association over the life of the bankruptcy plan. Should the court find that the unit is underwater and lacks equity, then the owner will be in a position to carry out the bankruptcy plan to strip off the amount due to the association as of the day in which the bankruptcy case was filed. Given the risk associated with going before the bankruptcy court in this all-or-nothing lien stripping venture, wherein the bankruptcy judge will make a finding on the unit's value that will inure entirely to the benefit of either the association or the debtor/owner, often the parties will amicably resolve the matter wherein the association agrees to accept a portion of the arrears paid through the bankruptcy plan by the debtor/owner, as opposed to having the association's lien avoided entirely. However, should the matter proceed to a valuation hearing before the bankruptcy judge, no matter the findings of the court, an owner remains liable to the association for all regular monthly maintenance assessments as well as any special assessment that come due after the day the bankruptcy case was filed.

flcaj_logo.jpgJeffrey also writes about recent rulings that preclude bankruptcy lien strips from being extended to subsequent buyers:

Additionally and as a related event connected to the craze of the foreclosure crisis in South Florida over the last several years, associations are finding that investors (a/k/a "third-party buyers") are positioning themselves to purchase units in foreclosure. Florida Statutes governing associations provide that a "subsequent owner" is liable to the association for the prior owner's outstanding maintenance obligations. Notwithstanding, these third-party buyers who purchase a unit out of foreclosure that was formerly owned by an individual who filed for bankruptcy relief have creatively argued that they should get the benefit of the prior owner's bankruptcy discharge or, in certain circumstances, the prior owner's avoidance of the association's lien via the lien stripping action and, therefore, are not liable to the association as the subsequent owner for the prior owner's liabilities that were released through the bankruptcy case.
Those arguments have failed. Recent court decisions favor associations that lose certain of their lien rights against bankrupt owners and then attempt to collect the past-due assessments from the subsequent buyers of the properties. In a case that was decided by one of the local bankruptcy judges in the Southern District of Florida earlier this year, the court determined that even if an owner strips off a condominium association lien because the unit lacks equity and that individual 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 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. In other words, no matter what a unit owner in bankruptcy accomplishes in their bankruptcy case with respect to their liability for association 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 a community association, a successful third-party purchaser at the prior owner's foreclosure sale argued in state court that it was not liable for the prior owner's unpaid assessments because the prior owner filed bankruptcy and received a personal discharge from his monetary 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 the new subsequent property owner. The court concurred and issued a summary judgment in favor of the association and ruled that the subsequent purchaser does not receive the benefit of the prior owner's bankruptcy discharge.

Click here to read the complete article.


Guest Column by Firm's Stuart Sobel on the Decline in Trials Appears in Daily Business Review


Stuart Sobel 2013.jpgPartner Stuart Sobel has authored a number of guest columns that have appeared in the Daily Business Review and the National Law Journal during the last several years, and his latest article published in the July 3 edition of the Daily Business Review is drawing considerable attention by the South Florida legal community.

Stuart's column echoed the newspaper's main article for its Litigation Special Report about the decline in trials, especially jury trials, and its impact in our judicial system. He wrote:

About 99.7 percent of cases are resolved without a jury trial. While this may be a testament to other means of resolution, it drastically shrinks the universe of opportunity for trial experience.


Now as a generation of lawyers matures without the cauldron of the courtroom within which to galvanize their skills, many of today's attorneys seek desperately to avoid trial -- exacerbating the loss of experience.

And since our judges are most often selected from our bar of attorneys, those lawyers without trial experience become judges without trial experience. Trials conducted by these judges will become less dependable as an effective means for dispute resolution.

Ultimately, this will intensify the public's negative perception of our justice system in general, and it will undermine the public's confidence in the reliability of a trial as the ultimate means of dispute resolution in particular. Scary.

Stuart concludes:

Can we control the out-of-control discovery and over-lawyering of cases before trial so that budgets are not exhausted and litigants can actually afford the risk of trial?


Hourly lawyers and lawyers wary of malpractice tend to over-lawyer cases until they get close to trial. Then they hedge their bet and begin to persuade clients that trials are just too risky.

Perhaps, if we look to our own practices, we can instead do only what is really necessary to prepare to present a case in trial -- and then present it.

In the process, we save clients money, gain trial experience and restore faith in the system. Just a thought.

Stuart is receiving a great deal of positive feedback and comments from South Florida attorneys and judges on his article, and we hope that the sentiments that he expressed help to bring some added perspective and insight on this critical issue.

Click here to read Stuart's complete article.


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Court Ruling Finds Fannie Mae Does Not Qualify for Safe Harbor Protection from Liability for All Unpaid Assessments in Foreclosure Cases

July 30, 2014, Posted by Laura Manning-Hudson


Laura Manning HudsonA recent ruling in Broward County Circuit Court could have significant implications for Fannie Mae and the community associations with units in various stages of bank foreclosure. In the case of Federal National Mortgage Association v. Park Place at Pompano Condominium, the court ruled that Fannie Mae was not entitled to the statutory "safe harbor" that limits the amount of assessments that first mortgagees must pay to associations when they take title to a unit through foreclosure.

Under Florida law, first mortgagees -- or their successors or assigns -- who acquire title to a unit through foreclosure or a deed in lieu of foreclosure are only responsible to condominium associations for payment of unpaid condo dues in an amount equal to 12 months of assessments or one percent of the original mortgage debt, whichever is less. In cases where owners have not paid their condo dues in years and the bank finally takes title to the unit, this usually amounts to just a couple of thousand dollars.

However, in the Park Place ruling, the court found that even though Fannie Mae bought the loan and had been the assignee of the first mortgagee's right to bid at the foreclosure sale, Fannie Mae did not receive an assignment of the mortgage as is required by Florida law. When Fannie Mae filed an action against the condominium association to have the court determine whether it was entitled to the "safe harbor" amounts, the circuit court agreed with the association that an actual "assignment of mortgage" had to be executed in order for Fannie Mae to be considered an assignee of the first mortgagee and to receive the safe harbor protections afforded to lenders in foreclosure cases.

fmae.jpgThe ruling applied the provisions of section 701.02, F.S. which provides that an assignment of a mortgage is ineffective in law or equity against creditors and subsequent purchasers "unless the assignment is contained in a document, that in its title, indicates an assignment of mortgage and is recorded according to law."

Prior to this ruling, Fannie Mae had consistently been able to cap its exposure for past due condominium assessments in Florida by claiming to be the equitable assignee of the first mortgagee. However, in light of the recent ruling in this case, Fannie Mae may now be treated like any other new owner acquiring title to a foreclosed property, meaning it may be found to be jointly and severally liable with the prior owner for all unpaid common expenses and assessments.

As this was a circuit court ruling, it remains to be seen whether other Florida circuit courts will follow along the same lines or whether they will continue to find that Fannie Mae is the equitable assignee of the first mortgagee. In addition, the federal mortgage agency may now decide to alter its procedures and go through the formalities of assigning the loan.

Our firm's other community association attorneys and I will monitor the repercussions of this decision as it plays out in similar cases in the coming months, and we will provide updates for community associations and property managers as they become available in this blog. 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 automatically receive all of our future articles.