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.


Lenders Win Another Decision Barring Community Associations from Collecting Interest, Costs and Fees in Addition to Assessments

February 17, 2014, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonThe recent decision in the case of United States of America v. Forest Hill Gardens East Condominium Association, Inc. and Forest Hill Gardens Property Owners' Association, Inc. serves to clarify an issue that many community associations have faced in years past. That is: Are foreclosing lenders responsible for costs, late fees, interest and attorneys fees in addition to the 12 months or one percent of past due assessments? Many law firms attempted to collect these fees on behalf of their community association clients and, for many years, banks paid. However, in recent years, the banks have started challenging the demand for payment of anything other than the statutory safe harbor amounts that they legally owe. The summary judgment issued by the federal district court in Forest Hill Gardens sends a strong warning to associations that are considering making these demands in the future.

The decision came in early January with the court issuing a partial summary judgment in favor of the federal government and its Housing and Urban Development agency (HUD), which as a result of bank foreclosures had become the successor and assignee to the mortgages issued on two units at the Forest Hill Gardens East condominium in West Palm Beach. The ruling found that HUD was not liable for interest and attorney fees as well as other collections costs against the units during the twelve-month period prior to foreclosure. The court found the statutory provision stipulating that foreclosing lenders are liable to community associations only for the "safe harbor" amounts of the last 12 months of assessments or one percent of the mortgage, whichever is less, to mean exactly what it says. The court also found that the association's demands for additional funds for interest, collections costs and attorney fees had no legal basis.

Bank owned 2.jpgTo make matters worse for the condominium association - which had attempted to argue that a provision of its declaration of condominium was invalid - the court agreed with HUD that not only was the association's declaration of condominium still valid, but that the provision at issue - which provided that foreclosing lenders will not be liable for any assessments which were due prior to taking title to a unit - applied in this case. The court found that HUD had no liability whatsoever to the association for the unpaid assessments that accrued prior to its taking title to each of the two units. Nada. Zero.

Further, potentially exacerbating the results of this disastrous ruling for the association in this case, the court may determine that the association must pay HUD's attorney fees for the defense that it mounted to counter the association's demands for sums that exceeded the safe harbor maximums. In a similar case issued last year, the Third District Court of Appeal in Miami ruled that a foreclosing lender was entitled to collect its attorney fees from an association.

While this ruling does not set a legally binding precedent for future rulings on this issue in state courts in Florida, the message that it and similar rulings in the state and appellate courts are sending to community associations appears to be very clear. Florida community associations would be well advised to avoid seeking sums from foreclosing lenders that exceed the safe harbor maximums, as more and more decisions are finding in favor of lenders. In addition, associations that pursue these "other" costs risk the possibility of having to pay lenders' legal fees and costs, and they may also end up receiving nothing from the lenders for past-due assessments based on antiquated provisions from the associations' own governing documents.


Firm Obtains Court Order Discharging Mortgage from Penthouse Unit Owned by Association

February 13, 2014, Posted by Nicholas D. Siegfried


Nick Siegfried 2013.jpgDuring the foreclosure crisis, lenders elected to file foreclosure actions but often failed to conclude their cases, resulting in the dismissal of many foreclosure actions throughout the state. Community associations were then left to decide whether to pursue their own foreclosure remedy or continue to wait for the lender to foreclose. In these situations, we recommended an aggressive strategy to our clients and advised them to pursue their foreclosure remedy notwithstanding the large mortgage on the property. This would at least allow the association to rent the unit while it waited for the lender to commence a second foreclosure action. However, in this recent case, the lender waited too long to re-file its second foreclosure action.

Upon my review of the lender's foreclosure action, I determined that its right to foreclose was barred by the five-year statute of limitations. After seeing so many community associations struggle due to the delays of lenders, I was very pleased to have assisted our community association client in securing a court order discharging a $1.44 million first-mortgage on a penthouse unit. The ruling is emblematic of the challenges that some banks are facing after they failed to expeditiously pursue and preserve their foreclosure rights.

In the recent decision, the Miami-Dade Circuit Court granted the association's motion for summary judgment declaring the first mortgage held by the lender null and void and discharged of record from the penthouse unit owned by the association. MD court seal.JPG The court agreed with our contention that the bank's cause of action accrued more than five years ago when the bank's loan servicer filed its initial foreclosure suit, thereby accelerating the amounts due under note and mortgage and starting the "clock" for the lender to file its foreclosure action.

The court found that the lender had initially filed suit against the borrower and the association in January of 2007 and elected to accelerate that payment of the complete balance due on the mortgage, but the action was dismissed when the lender's attorneys failed to appear at the initial case management conference in December of 2010. The bank then waited until December of 2012 to file its second suit to foreclose on its mortgage, but the filing was nearly a full calendar year after the five-year statute of limitations had expired.

This is not the first ruling of its type in which a lender's foreclosure suit has been barred by the statute of limitations. So far, no appellate court has addressed this issue.

Our community association attorneys will continue to monitor and write about these cases and other important rulings for Florida associations in this blog, 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.


Progressive Condo Associations Working to Accommodate Electric Cars

January 31, 2014, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonWith the spike in gasoline prices over the last five years, plug-in electric vehicles (PEV) are becoming increasingly popular, and auto industry analysts predict that Florida will be among the leading states in the country for PEVs. For those who reside in a single-family home, plugging in these vehicles for overnight charging presents little difficulty, however the challenges of charging them overnight can be significant for someone who lives in a condominium. Our firm has already had several condominium association clients inquire about their responsibilities and options for accommodating these cars, and their approaches toward finding a solution can vary a great deal.

There are three different levels of PEV charging stations. A level one charging station requires a standard 110-volt household outlet and takes anywhere from 12 to 20 hours for a full charge. A level two charging station uses a 220-volt outlet - such as those that are used for large kitchen appliances, water heaters and washer/dryers - and is two to four times faster than a level 1. A level 3 charging station is the most expensive type of charging station costing in the range of $50,000 and therefore not likely to be considered by most associations.

Due to the abundance of standard 110-volt outlets coupled with the low cost of installation, a level one charging station would seem to be the easiest to deploy and use, and many condominiums may be able to accommodate PEVs simply by using existing outlets or installing new ones in the parking garage.

carchrg2.jpgAs PEVs become more and more popular however, associations may want to consider installing a level 2 charging station in order to make the property more appealing to their current and future unit owners with electric cars. The installation cost for level 2 charging stations averages around $2,000 for basic models and, in addition to the faster charge times of four to eight hours for a full charge, some of the more advanced level 2 charging stations also feature retractable or suspended cords, usage tracking and billing capabilities, and the ability to charge up to four cars at once.

There are several challenges for condominium associations when dealing with these charging stations. First, as we know, parking spaces are hot commodities in condominiums. Therefore, determining the most beneficial location for installing a level 2 charging station could present an issue for a condominium, as could a request for the installation of additional level 1 outlets throughout a parking garage. Generally, there is nothing in a condominium's governing documents that would obligate an association to equip a parking space with a separate electrical outlet. However, because most board's are empowered to approve an owner's request to install one (since residential unit owners cannot usually make any additions, alterations or improvements in or to the common elements without the prior consent of the board), the next issue is overcoming the location. Are there any common element areas where a station could be installed? Will the association have to ask owners to transfer, swap or relocate parking spaces? Does the association have the power to require owners to swap or transfer their parking spaces? These are all questions that must be answered before a condominium can make a determination as to what type of charger to install and where to put it.

Additionally, associations should be advised that utility costs incurred by an individual owner through the use of the electrical outlet would not constitute a common expense for which the association and, therefore, all the unit owners would be responsible. Therefore, associations should require that the utility costs for the electrical outlet be separately metered and billed directly to the unit owner. FPL can add sub-meters for these outlets in order for the association to bill the PEV owners for the electricity that their vehicles consume. FPL estimates that electric bills will go up by approximately $34 per month in order to charge a PEV enough to drive 1,000 miles per month. The company offers some excellent information and resources for condominium associations that are considering their options for accommodating PEVs at www.fpl.com/electricvehicles, and questions can also be sent to electric-vehicles@fpl.com.

Again, while the location of such a station in the parking garage and the allocation of parking spaces around it for PEVs present certain obstacles for associations, the added benefit and marketability of the property to PEV owners could easily outweigh these financial and administrative burdens. And, as the usage of PEVs continues to grow, progressive-minded associations that embrace this new technology could gain a significant marketing edge by helping their unit owners to go green and drive electric.


Community-Wide Smoking Bans Are Sparking Up Debate at Condo Associations and HOAs

January 20, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgThe Miami Herald and the South Florida Sun Sentinel featured articles in recent weeks about communities that are implementing community-wide smoking bans, including inside of the private dwellings of the residents. The Florida Clean Indoor Air Act already prohibits smoking inside of public buildings, which is interpreted to include the indoor common areas of condominium developments, but there are no laws regulating smokers' rights to smoke inside of their units or in their private balconies, porches and yards. As smoking rates continue to decline due to the adverse health problems associated with smoking and secondhand smoke, the question of whether community associations can impose community-wide smoking bans, including inside of owners' residences, is becoming a very hot topic with associations across the country.

The associations and boards that take up this issue and seek to implement such a ban may face significant challenges. New developments, such as the AquaVita Las Olas condominium which was featured in the Sun Sentinel article and will open later this year in Fort Lauderdale, are instituting smoking bans in their original declaration of covenants and condominium documents, so buyers are aware of the restrictions prior to their purchase. However, for existing communities which seek to institute such a ban on their current and future owners, their ability to amend their declaration of covenants with these new restrictions may ultimately be challenged, and the enforcement of such a ban may present serious difficulties.

s.jpgExisting communities wishing to implement the bans by a new amendment to their governing documents would be wise to consider several measures to make the new restrictions more practical and enforceable. Chief among these would be to create a "grandfather exception" to allow existing owners who are smokers to continue to smoke inside of their residences but to ban any new owners from doing so after the amendment has been ratified. Another suggestion would be to allow owners and their guests to smoke in the private balconies of condominium residences but to ban smoking inside of the units, as the complaints about secondhand smoke typically come from neighboring residents who indicate that the smoke and odor seeps through air vents and walls from adjoining units. In addition, the enforcement of the new smoking restrictions will become difficult if not impossible, as association boards and property managers will be unable to determine whether violations are taking place if they are denied access to the residences of owners who are suspected of smoking.

Given these considerations, condominium associations and HOAs that are adamant about implementing these smoking bans should consult with their attorneys and work with their owners, including both the proponents of the new bans as well as the smokers who wish to maintain the status quo. By using grandfather exceptions, allowing smoking in the balconies and only seeking bans for the residences of new owners who are informed of the smoking restrictions prior to their purchases, these restrictions may stand a better chance of becoming viable solutions for communities wishing to ban smoking within their properties as widely as possible.


Can a Manufacturer of Material Also Be a Supplier, Thus Triggering Condominium Warranties Pursuant to Section 718.203?

January 3, 2014, Posted by Jason M. Rodgers-da cruz

Jason.jpgIf you have construction defect involving a manufacturer, consider the most recent case on whether manufacturers owe statutory warranties to condominium associations pursuant to Section 718.203. The court in Port Marina Condo Ass'n v. Roof Servs., 119 So.3d 1288 (4th DCA 2013), broadly defined the term "Supplier"in addressing a condominium association's statutory warranty action against a roofing manufacturer pursuant to Section 718.203(2), Florida Statutes. The condominium association identified leaks emanating from the roof of the boat storage building and contacted the roofing subcontractor to correct the defects. The roofing subcontractor attempted to make repairs, but was unsuccessful at correcting the leaks and advised the association that the roofing product was defective.

The association then contacted the roofing manufacturer and was notified by the manufacturer that the installation was defective, not the product. Seeing no relief, the association filed suit against a roofing subcontractor and against the roofing manufacturer for breach of Section 718.203. The roofing manufacturer filed a motion to dismiss arguing that Section 718.203 did not apply to product manufacturers. The trial court granted the motion to dismiss with prejudice, relying on the holding set forth in Harbor Landing Condominium Owners Ass'n v. Harbor Landing, LLC, 78 So.3d 120 (Fla. 1st DCA 2012). The association appealed the trial court's decision on the basis that it sufficiently alleged that the roofing manufacturer was a supplier within Section 718.203, and that the trial court should have allowed an amendment to the complaint. In reviewing the trial court's ruling, the appellate court recited the elements necessary for bringing an action against a manufacturer for breach of Section 718.203, as follows: "(1) the defendant is a supplier of materials to a condominium; (2) the materials failed to conform to the generally accepted standards of merchantability applicable to goods of that kind, or materials failed to conform to the requirements specified in the contract; and (3) the failure of the goods to conform was the proximate cause of the plaintiff's damages." The court then focused on the term supplier and manufacturer within the purview of Section 718.203. The court noted that neither supplier nor manufacturer were defined in Chapter 718 and therefore, referenced Black's Law Dictionary which defines a supplier as "'a person engaged, directly or indirectly, in the business of making a product available to consumers,'" and "'a manufacturer as a person or entity engaged in producing or assembling new products.'" The appellate court also addressed Harbor Landing and deduced that it did not establish a rule automatically exempting a manufacturer from Section 718.203(2) warranties.

The court then reviewed the sufficiency of the complaint and agreed with the lower court that merely alleging that the manufacturer entered into a contract with the roofing subcontractor was not enough, and that pleading that the manufacturer "owes a duty to exercise reasonable care in "'supplying"" the material was insufficient to establish that the manufacturer was a supplier pursuant to Section 718.203(2). Although the appellate court agreed with the trial court that the complaint was deficient, it concluded that the association should have been given leave to amend the complaint and thus, reversed the trial court's ruling. Accordingly, the association was given another opportunity to properly assert its action for statutory warranties pursuant to Section 718.203(2) against the roofing manufacturer.


Roberto Blanch Elected to the Board of Directors of CAI's SE FL Chapter

RobertoBlanch_8016.jpgThe firm congratulates shareholder Roberto Blanch on being elected to the Board of Directors for the Community Associations Institute's Southeast Florida Chapter. This is Mr. Blanch's first time as an elected director for CAI's SE FL Chapter and his term shall commence in 2014.

Throughout the years, Blanch has been an active member of CAI's SE FL chapter and has served as co-chair of the chapter's Miami-Dade committee. He has helped plan numerous events such as the Chapter's educational breakfast series in Miami-Dade County and its Ask the Experts Panel Discussion.

We are very proud to have Roberto Blanch as a member of our firm and recognize his accomplishment.


Homeowner Alterations

December 9, 2013, Posted by Roberto C. Blanch

Some individuals argue that maintaining the uniform appearance of the homes or units in many condominium or homeowner associations is a valuable aspect of owning a home governed by community associations. However, often times, the owners of homes or units governed by community associations seek to deviate from such uniformity and endeavor to implement alterations to the appearance of their homes or units. The willingness of boards of directors to agree to some of the proposed alterations varies widely from one community to another - and in some instances, associations may not even have the right to oppose proposed alterations. When presented with a situation in which an owner is interested in making an alteration to his home or unit, community association directors should consider certain factors prior to making their determination.

First, it must be determined whether the Association has the right to approve or disapprove the proposed alteration. For instance, in the event that the proposed alteration is deemed to affect or alter common elements or common areas, then the association may not have an option but to deny the proposed alteration given that some statutes and the provisions of some community association governing documents restrict the ability of owners or associations to effectuate changes to the common areas or elements. Furthermore, in some instances, alterations to the common areas or elements may only be allowed in the event a certain vote of the owners or directors is obtained. For example, Florida Statutes provide that material alterations to condominium common elements may not be effectuated unless approved by the vote of 75% of the association's voting interests, unless otherwise provided in the association's governing documents. While home owner associations do not have a corresponding material alteration statutory restriction, the governing documents of such associations may provide a requirement for an ownership vote to approve alterations to the common areas - as is the case with many condominium associations.
Thumbnail image for balcony renovation.jpg
Another issue that should be considered by community associations in connection with owner requests to proceed with alterations is how the alteration may impact the association's obligations to maintain, repair, replace or insure the areas affected by the alteration. For instance, the owner of a condominium unit may want to enclose a patio by installing a new roof over the affected area and extending the enclosed area of the unit. Such alterations result in the creation of new areas that will have to be maintained, repaired, replaced and insured. Furthermore, even if the association is deemed not to be required to maintain, repair or insure such improvements, the creation of such improvements may affect existing improvements for which the association is responsible. In light of the foregoing, for those circumstances in which the association is inclined to allow owners to alter, the association directors should consider establishing a contractual relationship between the owner and the association to clearly define how the maintenance, repair, replacement and insurance responsibilities related to such improvements are to be divided. The proposed agreement may further serve to clarify other conditions related to the alteration and the association's approval thereof. For instance, the proposed agreement should establish requirements for the owner to engage licensed and insured contractors, for the work to be performed in accordance with professionally drafted plans and for required permits to be issued for the performance of the work. Additionally, provisions could be included in such agreement for the protection of the association during and after performance of the work, such as insurance and indemnification protection to be provided by or on behalf of the contractor to perform the work.

The foregoing underscores the importance of exercising caution when presented with owner requests to alter home, units or common elements in properties governed by community associations. In light of the broad impact and long term effect that owner alterations might produce, it is advisable for community association directors and managers to consult with qualified and experienced legal counsel to ensure that the association is adequately protected.


Do I Really Have To Turn Over A Copy Of The Key To My Castle?

November 12, 2013, Posted by Laura Manning-Hudson

For anyone who lives in a condominium you know that there are certain trade offs that are made as compared to living in a single family home. For instance, you don't have to mow your own grass, you don't have to paint your own home, and you don't have to maintain your own landscaping. But you do have to allow your condominium association into your unit and sometimes you even have to give them a copy of the key. Yes, the State of Florida requires that all condominium associations have the irrevocable right to access all condominium units. Recall that an association has a duty to protect the common elements of the condominium and preclude damage to owner's units caused by the common elements. As such, the legislature has recognized this duty and codified the duty in Section 718.111(5), Florida Statutes. While an association's right of access to the units is broad and not restricted to instances in which an emergency is presented, it comes into play whenever the association's related functions of maintenance, repair, or replacement of property are implicated, and, although the statute does not require that each owner turn over a copy of the key to their unit, many condominium documents, rules and even simple board policies require owners to provide management with a copy of the key to their unit. Thumbnail image for Laura Manning Hudson

There have been numerous challenges to an association's right to require that a copy of an owner's key be turned over - all of which have been upheld even amid allegations from owners that they fear theft of their valuables or simply don't trust their board members. Both the Division of Condominiums and Florida courts have found that an association's right of access - which is provided for the protection of all unit owners - outweighs any concerns by owners that their valuables could be taken especially where precious minutes could be lost if the association had to find an owner or neighbor or resort to a locksmith for breaking down the door.

While access is allowed, it is not unlimited. Such access must be during reasonable hours, when necessary, for the maintenance, repair, or replacement of the common elements or any portion of a unit to be maintained by the association. In order to avoid the potential for unnecessarily upsetting residents, whenever it is practical or possible, condo association boards should provide notice to their residents of an upcoming inspection in order to allow the resident the opportunity to be present for the inspection. It is also good business practice to have more than one person enter the unit with the contractor. Failure to allow the association access to the unit, or even to turn over a copy of the key to the unit (if required by the association's governing documents) could result in the association taking legal action against the resident.

Finally, for those associations that do maintain copies of keys to units, instituting safeguards to protect the keys by limiting the number of personnel who have access to the keys and/or who know where the keys are located, goes a long way in ensuring and gaining the trust of the residents.


HOAs: To Reserve or Not to Reserve?

October 8, 2013, Posted by Roberto C. Blanch

Many homeowner associations' boards of directors find themselves working on their association budgets for the upcoming fiscal year. A good deal of those budgets will include line items for the funding of unforeseen contingencies. In some instances, the directors preparing such budgets will classify the funds in those line items as "Reserve" funds without knowing that laws governing Florida homeowner associations provide for special treatment of such funds. Since the use of designated reserve funds are restricted by Florida law, community association directors should exercise caution before categorizing a budgetary contingency line item as a reserve account. Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Roberto Blanch.JPG

Specifically, Florida law provides HOA boards with the discretion to fund their association's budget with reserve accounts for capital expenditures and deferred maintenance for which the association may be responsible, except to the extent that the association's developer established the reserves or the associations' membership elected to provide for budgetary reserves. Therefore, while it is advisable for associations to have some funds on hand for anticipated capital expenditures and deferred maintenance, in the event that HOA reserves were not established by the association's developer or the associations' membership, then boards might wish to consider categorizing such funds as something other than "reserves" (e.g. "Contingency Funds"). Of course, directors in those communities without "reserve" accounts should be mindful of limits that might be imposed upon increases resulting in the level of assessments charged to owners as a result of the increases to budgetary funding for capital expenditures and deferred maintenance. Additionally, directors HOAs without established reserves will have to be sure to comply with statutorily required disclaimers to the association's membership if the association is responsible for the repair and maintenance of capital improvements that may result in special assessments if reserves are not provided. The terms of such disclaimer will differ in the event that formal reserves have not been established but the association is providing for the funding of capital expenditures and deferred maintenance.
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For those HOAs with reserves established by the association's developer or membership, directors should pay special attention to the statutory conditions for the funding of such accounts and the limitations imposed by law as to the use of the funds accrued in reserve accounts. For instance, the applicable statutes provide a formula that must be followed as to the annual funding of the reserve account. Additionally, once reserves are formally established, the applicable statutes permit for the funding of reserves to be reduced or waived upon obtaining a favorable vote from a majority of the association's membership voting at a meeting at which a quorum is present. Lastly, the funds that have accumulated in reserve accounts shall remain in such accounts and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a meeting at which a quorum is present.

Once again, the foregoing serves to illustrate the importance of having HOA directors work closely with a team of experienced and qualified community association managers, accountants and attorneys in order to steer clear of the pitfalls that may arise in the complex world of community association administration.


Do You Really Need to Install A Fire Sprinkler System In Your Condominium Building?

September 12, 2013, Posted by Roberto C. Blanch

Many condominium buildings throughout Florida will be required by local municipal ordinance or other requirements to retrofit their buildings with code-compliant fire sprinkler systems. The estimates provided to a good deal of those associations indicate that the costs associated with such retrofitting may exceed the million dollar range. However, the owners of units in a large number of the condominium associations which would be required to retrofit their buildings with fire sprinkler systems may not be in a position to pay the assessments that may have to be imposed by the association in order to comply with the foregoing retrofit requirements. Fortunately, Florida law offers condominium associations with breathing room - providing unit owners with the ability to vote to forego the retrofitting that may be required by the local governmental authorities having jurisdiction.Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Roberto Blanch.JPG

The Florida Condominium Act provides that the local governmental authorities having jurisdiction cannot require a condominium building to be retrofitted with a fire sprinkler system if a majority of the voting interests within the condominium vote to forego such retrofitting. Those associations that do not vote to forego the retrofitting requirement may not be obligated to retrofit their buildings prior to December 31, 2019. The law further provides that associations which have not obtained the vote to forego the retrofitting requirement, and which have not yet achieved compliance with the applicable retrofit requirements, will have to initiate the application process for the issuance of a building permit by December 31, 2016, for the installation of such fire sprinkler system by the December 31, 2019, deadline.

It is important to keep in mind that the above-described majority vote of the association's voting interests may be obtained by written consent of the association's members or by a vote at a duly noticed meeting at which a quorum has been achieved. If the vote is to be taken at a meeting, then the use of limited proxies may facilitate the association's efforts to obtain the vote. Once the required vote is achieved, then other steps must be followed. For instance, a certificate of the vote to forego the retrofitting requirement will have to be filed in the public records of the county where the condominium is located. Additionally, a written notice must be sent to the owners within 30 days of the vote announcing the successful results and a notarized affidavit must be kept with the association's official records to document that the foregoing notice was properly sent. Within 60 days from recording the above-described certificate, the association must also file a notice with the Florida division of condominiums announcing the successful vote. Lastly, each unit owner is required to provide a copy of the notice sent by the association to anyone renting his unit and to the purchaser of the owner's unit prior to the closing of such sale.

It should be noted that the decision to forego retrofitting is one that should be carefully evaluated by condominium directors, managers and unit owners given that buildings which forego retrofitting will not have the fire sprinkler systems that could play a vital role in protecting the residents of such buildings from injury and damage in the event of a fire. Additionally, buildings that forego retrofitting may be required to pay higher insurance premiums and may be subject to lower property values due to the lack of life safety systems valued by some purchasers. Moreover, even after a successful vote to forego retrofitting, owners of units in a condominium may trigger a vote to require retrofitting, provided at least 10% of the voting interests petition for such a vote.

Given the tedious requirements involved in above-described process and the impact such vote might have on a community, it is advisable that associations seek the assistance of their legal counsel in the process to ensure that the votes have been properly obtained and to minimize the risk of liability that may result from a failure to comply with the applicable requirements.