Laws Governing Recording, Speaking at Community Association Meetings

January 26, 2012, Posted by L. Chere Trigg


Chere Trigg.jpgCommunity associations strive to maintain compliance with all of the laws governing board, committee and membership meetings, but unfortunately disputes pertaining to meetings are not completely uncommon. This article is meant to serve as a primer on the laws governing the rights of members to attend, speak at and record meetings, which are some of the most troublesome problem areas involving the meeting laws for associations.

Florida law provides that either owners and/or their authorized representatives have the right to attend association meetings that are open to the membership. Generally, tenants, guests or relatives who are living in the residence cannot attend such meetings unless the owner designates them as their proxy holder for meetings (if the association's governing documents permit non-owners to serve as proxy holders or the non-owners have a properly executed power of attorney).

Members and/or their authorized representatives also have the right to speak at association meetings. However, they are restricted to speaking only about the designated agenda items for that particular meeting. Although most meetings are open to members, members and their authorized representatives are prohibited by law from being able to bring up and discuss new issues that are not listed on the duly posted agenda for the meeting. In addition, boards are allowed to adopt rules and regulations for speaking at meetings, such as imposing time limits on speeches and comments, limiting the number of times an individual may address a specific agenda item, requiring the raising of hands in order to be recognized, and even requiring the submission of written requests in advance of the meeting. Further, for homeowners associations, the statute specifically limits owner speeches on agenda items to three minutes, provided the owner submits a written request to speak to the association prior to the meeting.

Bear in mind that condominium unit owners can petition the board to include specific items on the agenda for the next board meeting. However, in order to do so, the petition must be signed by at least 20 percent of the voting interests of the association. Upon an association's receipt of a petition signed by a sufficient number of owners, the association must hold a meeting of the board of directors within 60 days. It is also important for associations to be mindful that owners cannot disrupt the meetings to distribute petitions in order to solicit signatures, but they are allowed to distribute and seek support for their petitions immediately prior to or after a meeting. In addition, while the board is required to place the requested item or topic on the agenda for the next board meeting, the law does not require the board to take a vote or any other action with respect to the matter. Also, for homeowners associations, owners are limited by statute to speaking for a maximum of three minutes on items that have been added to a meeting agenda by written petition.

videographer.jpgOwners and their representatives are also allowed to record open meetings using audio and/or video equipment. For condominiums, in addition to the rules that may be promulgated by the associations from time to time, owners are also subject to the rules for recording meetings set forth in the Florida Administrative Code. For instance, pursuant to the Code, owners are only permitted to utilize equipment that does not produce distracting sound or light emissions. Condominium boards also have the right to regulate video and/or audio recording at the meetings, such as having owners give written notice in advance of the meeting of their intent to tape record or video tape meetings, requiring that the equipment is set up prior to the start of the meeting, and requiring that the videographer not move around during the course of the meeting.

It is also important to point out that the laws enabling owners to attend, speak at and record meetings exclude those meetings between the board and the association's attorney to discuss proposed or pending litigation and meetings to discuss personnel matters. Additionally, committee meetings are also open to owners and are subject to the same laws allowing them to speak at and record the proceedings.

By diligently following the applicable laws and setting clear rules for speaking at and recording meetings, associations can help to make their meetings run as smoothly and effectively as possible.


A Guide on the Turnover Process for Community Associations

January 26, 2012, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonCommunity associations may only have to go through it once, but the turnover of the association from the developer to the unit owners is of critical importance for the long-term financial health of associations. Here is a helpful overview for the community associations that are now undergoing the process:

Turnover, which governs the transfer of control of the association from the developer to the unit owners, begins with granting the unit owners a director seat on the board of directors when the developer reaches a set percentage of units sold and closed. If the community's governing documents do not specify, then the developer must adhere to the statute which provides that turnover must take place within three years after 50 percent of units are conveyed to purchasers, within three months after 90 percent of the units are conveyed, or within seven years after the recording of the declaration of condominium. After these trigger dates, unit owners other than the developer are entitled to elect at least a majority of the board of directors.

Pursuant to Florida law, the developer has to "turnover" all of the association's documents to the unit-owner controlled association. These include, but are not limited to, the original recorded declaration of condominium, articles of incorporation and bylaws, the minute books, financial records, bank accounts and statements, personal property of the association (e.g., indoor and outdoor furniture, office equipment, computers, etc.), and all of the construction plans and specifications including a list of names and addresses of all of the contractors, subcontractors and suppliers utilized in the construction or remodeling of the condominium. iStock_000004444042Medium.jpg The developer must also provide copies of all of the insurance policies, certificates of occupancy, permits, warranties, unit-owner roster, and all of the contracts that the developer controlled association may have executed for services such as for management, cable, telephone, security and other services.

Two of the most critical items that must be provided by the developer to the unit owner controlled association are an inspection report, which must be completed and signed by an architect or engineer, and a financial audit, which must be prepared by an independent certified public accountant. The inspection report must consist of a detailed list of the required maintenance, useful life and replacement costs for the roof, structure, fire protection systems, elevators, heating/cooling systems, electrical, plumbing, pool, pavement, drainage, irrigation, and paint. If the unit owners are already seeing problems with any of these elements as the report is being issued, they must immediately compare what they are actually seeing and experiencing with the information in the report in order to determine if there is a defect.

For the financial report, the developer's accountant must complete and submit a detailed audit in order to determine whether expenditures were for association purposes and if the billings, cash receipts and related records reflect whether the developer was charged and paid for the proper amount of assessments. If the association disagrees with the audit or wishes to verify the sums that the developer's financial audit shows, the association should immediately retain its own accountant to evaluate the audit. This should also be the same approach with the inspection report, as associations that believe there is a defect that is overlooked in the developer's report should hire their own engineer to complete inspections and submit a report that addresses the construction issues. Both of these reports as well as all of the records above are required to be turned over to the association within 90 days after the date of turnover, otherwise the developer could face a lawsuit in which it will very likely be made to immediately provide the reports as well as pay the association's legal fees in the matter.

Associations also have to go through the process of the resignations of the previous directors under the prior administration as well as the transfer of the bank account(s), which will require new signature cards for the new officers. Associations should also carefully review and assess the contracts that the developer has entered into in order to determine their duration and termination provisions, as vendors may have sold the developer on long-term contracts. However, the Condominium Act provides that unit-owner controlled associations can cancel long-term contracts entered into by the developer with a 75 percent vote by the members.

In general, associations would be well advised to immediately address any construction or financial issues with the developer during the turnover process rather than afterwards. The longer that an association waits before addressing any construction issues, the easier it becomes for the developer to be able to claim that the problem may be due to improper maintenance rather than a defect for which it could be liable. Our attorneys work very closely with community associations going through the turnover process, and we encourage association directors and members to contact us with any questions about the process.


South Florida Municipalities Starting New Trend to Force Homeowners to Pay for Code Enforcement Repairs

January 19, 2012, Posted by Salvador A. Jurado, Jr.


Thumbnail image for Salvador Jurado Gort Gray.JPGSeveral municipalities in South Florida now appear to be starting a new trend that is likely to gain momentum in the months and years to come. These municipalities, which include West Palm Beach, Palm Beach County, Hallandale Beach and Sunrise, have changed the manner in which they bill homeowners for code enforcement repairs in an effort to force the owner to pay or face the possibility of losing their property. With so many abandoned properties winding their way through the slow pace of the foreclosure process, this change is likely to receive significant consideration and approval by many municipalities in the months to come.

It is no secret that many homes located throughout communities in South Florida, including those in homeowners associations, have been abandoned in the aftermath of the foreclosure-fueled housing meltdown. These abandoned homes take a huge toll on neighborhood property values. Many of these properties have become eyesores with broken windows, doors and fences, making them a safety and security hazard for the community at large. When this happens, HOAs and homeowners in communities without associations should contact the code enforcement department of the local municipality to request that the necessary inspection and repairs be made.

iStock_000007544792Medium.jpgTypically, municipalities place liens on the property for the cost of the repairs. But with abandoned homes it often takes years to collect. Now, the municipalities mentioned above have approved new measures to add the costs of the repairs to the property owner's tax bill, which must be paid annually or the owner risks losing the property.

Other South Florida municipalities, many of which presumably face significant sums in property maintenance liens on abandoned homes, are bound to carefully consider this measure, as it is likely to be met with widespread approval by local taxpayers and property owners who have been footing the bill for the repairs to abandoned homes. The change should make it much easier for municipalities to continue to maintain and repair abandoned properties without the fear of taking on additional expenditures that may not be recouped for years.

Our attorneys will continue to monitor and write about important issues for South Florida communities and homeowners in this blog, and we encourage community association members, directors and managers to add their e-mail address in the subscription box on the right in order to automatically receive all of our future articles.


Appellate Ruling Enables Association to Selectively Enforce its Rules Due to Specific Language in its Declaration of Covenants

January 11, 2012, Posted by Stephanie M. Chaissan


Thumbnail image for Stephanie Chaissan SRLDS.jpgA recent decision by the Fourth District Court of Appeal has the potential to be misconstrued by community associations to mean that they can arbitrarily and selectively enforce their governing documents against members. In the case of Heath v. Bear Island Homeowners Association, Inc., the appellate court upheld the lower court's decision in favor of Bear Island Homeowners Association, noting that a clause in the association's Declaration of Covenants and Restrictions specifically stated that it was not required to seek enforcement of its declaration in connection with all violations.

Most community association attorneys, including those at our firm, counsel their clients to avoid acting arbitrarily in the enforcement of their rules and other governing documents because it could lead to effective legal defenses by owners challenging the association's enforcement actions. Associations are required to enforce their covenants equally against all owners, and the failure to do so may result in an owner claiming that the association has engaged in "selective enforcement." By enforcing its governing documents only against some owners, while allowing others to commit violations without fines or other sanctions being imposed, an owner may be able to defend against an enforcement action by claiming that the association has not equally enforced its documents. Additionally, there have been cases in which owners have prevailed in court by arguing that their association waived its right to enforce a specific provision of the covenants because it had previously neglected to enforce it against other members.

4th DCA photo.jpgIn the recent Bear Island decision, the court based its ruling on the specific language of the association's Declaration of Covenants, which plainly stated that the association "may, but shall not be required to, seek enforcement of the Declaration." The plaintiff in the case, who was a unit owner and a member of the association, petitioned the court for an injunction to force the association to enforce the terms of its declaration against other owners who had modified and improved their properties without first seeking prior approval by the association. Due to the specific language in the declaration, the court found that the plaintiff did not have a clear legal right to injunctive relief.

Associations should avoid reading more into this case than what is actually there. The ruling applies only to the appropriateness of injunctive relief to force an association to enforce its governing documents when the association's declaration specifically states, in plain and clear language, that the association is not required to seek enforcement. Community associations, including those with this or similar language in their declarations, should continue to act equally towards all members and avoid arbitrary enforcement of their governing documents, as the failure to do so could continue to result in owners successfully defending against an enforcement action or challenging the association's actions.

This ruling is bound to receive a fair amount of attention, and we encourage associations with questions about its applicability to their enforcement actions to consult with our community association attorneys or their own qualified and experienced legal counsel.


Rule Change Has Significant Implications for Mediations Involving Community Associations

January 3, 2012, Posted by Stephanie M. Chaissan


Stephanie Chaissan SRLDS.jpgA change to the Florida Rules of Civil Procedure that took effect on January 1, 2012, has significant implications for the future of all mediations in Florida, including mediation proceedings involving community associations.

The Florida Supreme Court recently ratified a significant change to the state's mediation procedures found in Rule 1.720 of the Florida Rules of Civil Procedure. The new rule now requires that each party (or its representative) that appears at the mediation proceedings must have the "full authority to settle." This means that the party or representative must be the final decision maker with respect to the issues presented at the mediation and must have the legal capacity to enter into a binding agreement on behalf of the party.

A major impetus for this change has been the problems stemming from bank foreclosure mediations. Generally, banks and their servicers in these cases have sent to mediations an individual who did not have the authority to approve a settlement, or worse, would have such individual appear telephonically. Further complicating the problem is the fact that oftentimes several different departments within a bank may be required to approve a proposed settlement, and fewer than all of these departments attended the mediation. The change in the rule forces the banks and their servicers to send to mediation their agents who have the complete authority to consider and authorize a settlement with no additional consultation.

Under the amended rule, each party must file a Certification of Authority at least 10 days prior to appearing at the mediation. The certification must identify the person who will be attending the mediation and must further confirm that this individual has the full authority to settle the issues raised at mediation. In other words, the person identified must be the "final decision maker with respect to all issues presented by the case who has the legal capacity to execute a binding settlement agreement on behalf of the party." Sanctions may be imposed for the failure to file a Certification of Authority or the failure of the individual(s) actually identified in the certification to appear at the mediation. These sanctions can include awarding the opposing party its attorneys' fees and costs.

Mediation.jpgThis amendment to Rule 1.720 applies to all mediations within the State of Florida, but it will likely have a great impact on the manner in which community associates handle mediations. Traditionally, community associations have sent the association president, property manager or a designated board member(s) to attend mediations, and these representatives would reach only a tentative settlement at the mediation, which the entire board of directors would need to approve or reject at a later date. Under the rule change, this approach is no longer acceptable. The community associations must now either have a quorum of its board appear at the mediation or send a representative who has been pre-authorized by the board to accept a settlement that meets certain parameters that have been pre-approved by the board. The appearance of such individuals at mediation could arguably be considered a board meeting, and therefore should be noticed, albeit as a privileged meeting at which the association's legal counsel should be in attendance. Alternatively, if a quorum of an association's board cannot attend the mediation, it will be imperative for a duly noticed board meeting to be held in advance of the mediation in order to vote on the settlement terms that the association is willing accept and whom they will authorize to attend.

Of course, the individual(s) who attends the mediation on behalf of the community association will continue to be able to reject any settlement offers at the proceeding. Simply rejecting a proposed offer does not, by itself, indicate that the attendee lacks the authority to settle. However, they must also be able to accept a settlement without the need for a subsequent final review and approval by the board. As community associations often utilize mediation either as a prerequisite to litigation or as a means to avoid costly and prolonged litigation, this rule change has very significant implications for all of the community associations in the state.

This rule change should help to make mediations in Florida more effective and expeditious for community associations and all others who take part in these proceedings. Our South Florida community association attorneys have helped many homeowners associations and condominium associations use mediations to find fair resolutions to various types of lawsuits and disputes. We will continue to write about these and other important matters for associations in our blog, and we invite association members, directors and property managers to submit their e-mail address in the subscription box on the right in order to automatically receive all of our future articles.


Community Associations Should Effectively Use Eviction Proceedings Against Tenants Who Refuse to Comply with Rent Payment Demands

December 12, 2011, Posted by Laura Manning-Hudson


Thumbnail image for Laura Manning HudsonCommunity associations throughout Florida have benefited greatly from last year's amendments and this year's expansion of the Condo Act enabling associations to collect rent payments directly from the tenants of delinquent unit owners. Pursuant to the Condo Act, associations are now able to quickly and effectively evict tenants who refuse to comply with their demands for rent. However, some associations needlessly delay utilizing the new teeth that the legislature has provided and exerting legal pressure by filing for eviction against tenants with creative explanations for why they are unwilling to pay the association.

In many of the cases that the community association attorneys at our firm are seeing where tenants refuse to comply with an association's demand for rent, the tenants are residing in units that are in foreclosure. Many of these renters are under short-term or month-to-month leases, and they are often paying reduced rental rates because of the pending foreclosure. In some situations, the associations have no record of the lease on file or they are told that there is no lease between the tenant and the unit owner. When some of these tenants receive the association's demand, they reply by indicating that they are no longer paying rent to the unit owner, or that the owner has agreed to let them remain in the residence until the foreclosure is over.

For many associations, this type of reply from a tenant causes them to question their ability to file an action for eviction - a right that the law allows and which can exert considerable legal pressure on the tenant to force them to begin paying the association. Thumbnail image for Eviction filing.jpg Under the Condo Act, associations have the right to file a complaint for eviction in the name of the landlord if the tenant refuses to comply with the association's rent demand. The association simply needs to follow the procedures set out in the Condo Act by sending an initial notice letter requiring the tenant to make his or her monthly payments to the association. If the tenant does not make the payment to the association, then the association has the right to commence eviction proceedings as if it were the landlord in a landlord-tenant action by sending a three-day notice of nonpayment. If payment is still not made after the three-day notice, then the association can immediately file a complaint for eviction, which has the benefit of being expedited by court. In eviction proceedings, a five-day summons is issued - meaning that once the tenant is served with the complaint, the tenant has five days to respond. If the tenant raises any defense other than payment, the tenant is required to pay the rent into the court registry. Failure to respond or make the rent payment into the court registry results in an immediate default judgment for removal of the tenant with a writ of possession.

Once the eviction process is underway, the association should bear in mind that it is still possible to negotiate with the tenant to try and get them to start making some sort of a monthly payment if they wish to remain the residence. Sometimes the tenant will agree to pay an amount equal to the monthly maintenance fee. If so, at least the association can begin collecting payments for the current and future months of the tenancy. Bear in mind that if the tenant has a written lease on file with the association, the tenant cannot be obligated to make monthly payments to the association in excess of the amount of the rent payment set forth in the lease.

As the slow pace of the foreclosure process continues to unwind with many thousands of condominiums and homes in South Florida, cases of tenants refusing to comply with these types of rent demands are bound to continue to grow. For the associations that hope to recover from the housing market meltdown as quickly as possible, using these eviction proceedings against tenants who refuse to comply offers them a powerful new collection tool.


Community Associations Must Act to Respond to Bank Foreclosure Dismissals, Delays

November 28, 2011, Posted by Jonathan M. Mofsky


Jonathan Mofsky Gort photo.jpgThe repercussions of the robo-signing debacle are still reverberating in foreclosure cases that are being heard today in the South Florida courts. Delays and dismissals of the banks' foreclosures due to improper paperwork and loan documentation have become the norm, and this is dealing another significant financial blow to the community associations that have already been struggling with unprecedented numbers of foreclosures during the last several years.

The South Florida community association attorneys at our firm have found that it has become imperative to take a very active role in the banks' foreclosure cases in order to help ensure that any delays are kept to a minimum. Many bank foreclosures are being delayed or dismissed because the bank's paperwork is questionable or the homeowner has retained a foreclosure defense attorney to mount a number of strategic defenses. This makes it vital for the associations and their legal counsel to regularly monitor the dockets for these cases, and to quickly take action to speed things along as necessary.

iStock_000008621021-resize.jpg

Associations can enter a request for a status conference on the case, which would enable them to determine the exact progress of the case and the nature of any delays. They can also file a Motion to Compel, which essentially asks the court to require the bank to take specific actions by set deadlines. If the association takes title to a property via its own foreclosure action then, in the bank foreclosure, the association can make a request for a summary judgment in the bank's favor. If the delays are taking place in the earliest stages of the bank's case, the association's attorneys should make these efforts to notice the case for trial and move it to the final judgment hearing as soon as possible. If the bank's case is almost complete and the bank has received a final judgment, the association can ask the court to set or reset the sale date for the property. Many banks that reach this stage are cancelling their foreclosure sales just days prior to the sale date, and the courts have been receptive to requests from the associations to immediately reset the sale dates.

If a bank's foreclosure is dismissed, or even prior to it being dismissed, it may be prudent for an association to proceed with its own lien foreclosure action, as the bank's delays or dismissal creates a window of opportunity. If the association is comfortable owning the residence and the governing documents allow rentals, then the association can and should quickly foreclose and take title to the residence, as it is then able to begin renting the unit to recoup the past-due fees and assessments. If the bank's foreclosure is dismissed, it could take the bank a significant amount of time for it to gather missing documentation and try again to foreclose on the residence. During that time, the association is able to use the residence to generate revenue.

As the delays and dismissals in the lenders' foreclosure cases continue to slow the pace of the entire process, the community associations that act quickly to move the bank cases along or take title to the properties are the ones recovering from the housing meltdown as expeditiously as possible. Our attorneys will continue to write about these and other pressing issues for Florida community associations, and we encourage association members, directors and property managers to submit their e-mail address in the subscription box on the right in order to automatically receive all of our future articles.


Careful Deliberation Required for Associations Considering Suspensions of Voting Rights

November 22, 2011, Posted by Roberto C. Blanch


Roberto Blanch.JPGIn addition to the suspension of the rights to use the shared amenities in a condo or HOA community for association members who fail to pay their monetary obligations, the legislature has also enabled the associations in the state to suspend the voting rights of delinquent unit owners. However, unlike with the suspension of the rights to use the pool or the fitness center, there are some potential drawbacks for some associations with the suspension of voting rights that require careful consideration.

HOAs and condominium associations are both able to suspend the voting rights for owners who become delinquent in the payment of monetary obligations exceeding 90 days. These suspensions are automatically lifted upon the full payment of all monetary obligations currently due and overdue by the member. HOAs are also able to suspend both the voting rights and the use rights of the common elements in the community for noncompliance with the governing documents.

As with the issuing of fines, some of these collections remedies require advance written notice and a hearing opportunity for the unit owner. However, with a suspension of voting rights for being delinquent, the law does not require a notice or a hearing. Associations only need to adopt a collection policy which includes the suspension of voting rights as a remedy, and this new policy should be communicated in writing and at a general membership meeting. A typical association policy for the suspension of voting rights establishes that the board of directors will take a vote at a meeting of the board to initiate the suspension of a delinquent member's voting rights.

meeting vote.jpgUnfortunately, the use of this remedy against delinquent members has the potential to backfire for some associations that may rely on the votes of their large numbers of delinquent owners on a regular basis. Voting suspensions serve to reduce the pool of potential voters on any issues that require membership votes, and there is a section of the statute (720.305 for HOAs and 718.303 for condos) that implies that the number of owners who would be needed to constitute a quorum is reduced by the number of units with suspended voting rights. However, there remains some debate as to whether that was the true intent of the revision to this statute by the legislature, and this uncertainty creates the potential for votes to be challenged by recalcitrant members on the grounds of whether they achieved the required number of voters to fulfill the quorum.

Due to these issues, the most prudent policy for associations which depend on the voting by delinquent members in order to carry forth their votes on a regular basis would be to avoid the suspension of voting rights.

Suspending the voting rights of nonpaying members is just one of the remedies that the associations can use to spur these unit owners to bring their accounts current. The condominium associations and HOAs in the state should carefully consider and utilize this and all of the other collections measures that the law allows.

Our community association attorneys represent more than 500 condominium associations and HOAs throughout South Florida, and we will continue to monitor and write about important issues impacting the associations in this blog. We encourage association members, directors and property managers to submit their e-mail address in the subscription box on the right in order to automatically receive all of our future articles.


Congratulations to Associate Georg Ketelhohn, Recipient of the 2011 Eddy McIntyre Community Service Award by the National Gay and Lesbian Task Force


As we noted in our blog earlier this year, we would like to congratulate associate attorney Georg Ketelhohn on being named the recipient of the 2011 Eddy McIntyre Community Service Award by the National Gay and Lesbian Task Force. We are very proud to have Georg as a member of the firm.

George Ketelhohn receiving award.jpg

Pictured above is Georg receiving the award from Cindy Brown, last year's winner, at the 15th annual Miami Recognition Dinner on Saturday, Oct. 15, at the Fontainebleau Miami Beach. More than 1,000 attended the event, including The L Word star Pam Grier; Task Force Executive Director Rea Carey; Andrew Tobias, treasurer of the Democratic National Committee; Miami-Dade Mayor Carlos Gimenez; and Miami Beach Mayor Matti Herrera Bower.

In 2002 prior to joining our firm, Georg resigned his position as an associate attorney with another South Florida law firm where he had worked for more than five years in order to serve as the unpaid campaign manager for Save Dade's successful "No To Discrimination" campaign, which defeated an attempt to legalize discrimination against lesbians and gays.

"Georg is the consummate activist. He sacrificed his law career to co-chair the successful campaign to defend the Human Rights Ordinance against repeal," says Liebe Gadinsky, Task Force board member. "It was then that he became a hero to me and countless others, who may not know him but will forever benefit from his leadership, dedication and brilliance."

Click here to read more and see additional photos from the event.


Florida Friendly Landscaping Considerations for Community Associations


Two owners were debating whether Florida's xeriscaping law applied to their association. One owner believed that since their HOA's declaration was recorded prior to the effective date of the Xeriscape legislation, it did not apply to his association. In this instance, that owner was wrong, and this article will explain why.

As we experienced this season's drought earlier this year, all one needed to do is canoe along the Loxahatchee River (or look out the car window in some places), to see its unusually shallow depth, as roots once covered with water now lay bare. Lake Okeechobee is so low that it can no longer spill into the canals that feed some of our local reservoirs. Xeriscaping's goals are to conserve water, protect the environment and still create a visually appealing yard. Albeit, beauty is in the eyes of the beholder.

The term "Xeriscape" originated in Denver, Co., during a drought in the early 1980s. In our great state, we refer to this as "Florida-friendly landscaping" as governed by Chapter 373, Florida Statutes. Florida-friendly landscaping is defined in Section 373.185, Florida Statutes, to mean:

"quality landscapes that conserve water, protect the environment, are adaptable to local conditions, and are drought tolerant. The principles of such landscaping include planting the right plant in the right place, efficient watering, appropriate fertilization, mulching, attraction of wildlife, responsible management of yard pests, recycling yard waste, reduction of stormwater runoff, and waterfront protection. Additional components include practices such as landscape planning and design, soil analysis, the appropriate use of solid waste compost, minimizing the use of irrigation, and proper maintenance."

xeriscaping.jpgAs applied to all residential community associations, the law also provides that a "deed restriction or covenant may not prohibit or be enforced to prohibit any property owner from implementing Florida-friendly landscaping on his or her land..." Even local governments cannot interfere. Local government ordinances cannot prohibit, or be enforced to prohibit any property owner from implementing Florida-friendly landscaping on their land.

The reason why the homeowner above was incorrect is because of the text in the statute that makes the law retroactive and the application of what is referred to as "police powers." The law provides that conserving and protecting the state's water resources is a "compelling public interest" and "that the participation of homeowners' associations and local governments is essential to the state's efforts in water conservation and water quality protection and restoration." When government relies on its "police powers" (a/k/a to protect the health, safety, and welfare of our citizens), then the law in question applies without regard to the otherwise necessary "impairment of existing contract" analysis. (Remember, The Grand Condominium v. Cohn from earlier this year?) The competing interests of an association's well-drafted architectural guidelines which provide for Florida friendly landscaping alternatives - as contrasted against an owners' request to plant a beachfront cactus garden - should prove interesting.

On a completely different note, every now and then a case comes along too interesting not to share. As I was catching up on some reading this past weekend, I came across this gem from the Florida Division of Arbitration. In "Domaine Delray Condominium Association v. Koylan," a 2010 decision, the arbitrator held that the unit owner and his son must stop the following activities: i) littering on the common elements, ii) screaming in their unit, iii) yelling at board members, iv) allowing transients from staying in the unit, v) appearing nude in the common elements, vi) digging up sod on the common elements, vii) using the pool to wash their pots and pans, viii) leaving the association water running, ix) to cease maintaining unsanitary conditions in their unit, x) covering the windows with prohibited materials, xi) creating disturbances that required police and fire department to visit the condominium. Events like this remind me how lucky most of us are, and how much I enjoy living in my quiet HOA.


Examining This Year's Legislative Changes to Condo, HOA Association Acts

Every year, after the legislative session is concluded, it is always an adventure to see how various bills were tweaked along their way to becoming laws. Drafting legislation is a process in which the bill's author must not maintain any pride of authorship whatsoever. For example, often a bill's text is tweaked when Senate and House bills are combined, each needing to leave their unique mark.

This year's 2011 community association legislation is no exception, and as a result, both the Condominium and Homeowners Association Acts now provide that "an association, or its successor or assignee, that acquires title to a unit through the foreclosure of its lien for assessments is not liable for any unpaid assessments, late fees, interest, or reasonable attorney's fees and costs that came due before the association's acquisition of title in favor of any other association, as defined in s. 718.103(2) or s. 720.301(9), which holds a superior lien interest on the unit. This subparagraph is intended to clarify existing law."

Florida legislature photo.jpgBefore we examine how this law can affect your association, let's first take a peek at how the new law actually "clarifies existing law." Remember learning not to believe everything you read? Well, it's true! There is little chance this new law is a clarification of existing law because there is no existing law addressing this subject matter in the first place! Nevertheless, let's apply the new law to a hypothetical situation that will soon likely mirror real life events:

Let's say Daniel Debtor lives in a sub-association community that has a master association, too, and that Daniel is behind in his assessment obligations to both the sub-association in the amount $3,000, and to the master association in the amount of $2,500. Both associations send Daniel Debtor the statutorily required notice of intent to record a lien and notice of intent to foreclose the lien. Not only was the master association's declaration recorded before the sub-association, but the master association recorded its lien against Daniel's property one month before the sub-association. As fate would have it, the sub-association decides to foreclose, acquires title to the home, and leases it out to Timmy Tenant for $500 per month. Shortly after the sub-association acquired ownership of the home, the lender begins its own foreclosure and, as a result, around one year later, Betty Buyer purchases the home during the court ordered auction. What does Betty owe to the master association?

Betty Buyer will only have to pay assessments that remain due to the master association from the date the sub-association acquired the title. As a result of the new law, the master association's prior assessment debt against this lot (through the date the sub-association acquired title) is wiped out, as the sub-association along with its successors in title no longer have liability to pay the master association's assessment arrearage. Title to the home passes from the sub-association to Betty through a "clerk's deed" because she was the successful bidder at the lender's court ordered auction. Thus, Betty Buyer is a "successor" in title to the sub-association. Applying the new law, the master association's prior lien that secured its assessments owed is completely wiped out through the date that the sub-association acquired title.

That's right! Based on this new law, the association that first acquired title wipes out any other association's assessment lien through the date of acquisition of title, without regard to the actual lien priority. What was that, you ask? You believe that this sparkling new law actually retroactively impairs existing contracting rights? Well, at its very core, every "declaration" is a contract between the community and each homeowner. In addition, many declarations have language that provides that a recorded lien dates back to the day of recording of the declaration itself! There even already exist other statutes that address lien priority, too. Does this mean, similar to the application of the "safe harbor" statutes that define a lender's assessment liability, that this new law only applies to declarations recorded after the effective date of the new law? Could be.

Remember, Timmy Tenant? During the year it owned the home, the sub-association leased it to him. Timmy is a tenant and not a "successor or assignee" to the sub-association's acquisition of title. With that in mind, can the master association make demand upon the sub-association's tenant to pay the rent to master association? A most excellent question indeed! Until the courts provide guidance or the legislature amends this new law, we'll all be well advised to watch this one closely.


Attorneys Participate in CAI Community Association Day Show, Continental Group Conference & Expo, Broward Coalition Expo


Our attorneys speak and take part in many local events and conferences focusing on community association issues, and this fall we are participating and speaking at several of South Florida's premier events for condo associations and HOAs.


SRLDS at CAI show 10-11.jpg


Pictured above is our team of attorneys and staff at our booth at the Community Association Day Trade Show hosted by the Gold Coast Chapter of the Community Associations Institute. They answered questions from the hundreds of attendees throughout the show, which took place on Friday, Oct. 14, at the Palm Beach County Convention Center.

We are also proud to sponsor The Continental Group's annual South Florida Conference and Exposition, which will take place at the Seminole Hard Rock Hotel & Casino on Friday, Oct. 28. The firm's Helio De La Torre will be one of the featured speakers at the event, and he will focus his presentation on how associations should handle construction issues as part of the turnover process. He and several of our other attorneys will also be available to answer questions at the event.

The following Friday, Nov. 4, our attorneys will also be participating and answering questions from attendees at the Broward Coalition's Share & Learn Trade Expo taking place at the Signature Grand in Davie.

Our attorneys will also be taking part in the CAI Southeast Florida Chapter's Hot Topic Breakfast taking place on Tuesday, Nov. 8, at Jungle Island in Miami. The featured speaker will focus on "Budgeting and Bad Debt," and the event qualifies for 1-CEU credit. More information on the breakfast is available by calling Jill Proietti at (954) 816-0661.

Click here to learn more about all of our upcoming events and seminars.


Lender Payment of Assessments During Foreclosure


Never underestimate the power of the United States bankruptcy courts. As a much younger lawyer, I was amazed to learn that in a bankruptcy proceeding, rather than requiring a process server to serve the complaint upon the defendants, a debtor-plaintiff can actually serve their bankruptcy complaint on the creditor-defendants by U.S. First Class Mail! Yes, the bankruptcy court is full of surprises. A bankruptcy court might even be able help fix the unfixable, unanswerable problem: How can an association require a first mortgagee lender to pay assessments during the lender's own self-stalled foreclosure?

If you're following recent developments in the foreclosure courts, you already know that many lenders have stopped their foreclosures cold because they have no confidence in their very own mortgage documents. Apparently, with the securitization of mortgage backed securities, "Wall Street" failed to keep track of the actual mortgage documents. For analogy, imagine the paperwork that evidences each residential mortgage as a stack of paper six inches high. Imagine how many six inch stacks of paper can fit into a semi-trailer. Now imagine each semi-trailer full to the brim with these six inch stacks. Remember, each six inch stack represents only one mortgage. Think of the loaded semi-trailer as the hard asset upon which each mortgage backed security was created; one semi-trailer for each mortgage backed security that was created. With that in mind, imagine that the semi-trailer representing only one of seemingly countless mortgage backed securities, is bought and sold multiple times each day to multiple investors from all over world . . . every day for several years. What happened to the semi-trailers? Where are all of those loan documents that together comprise the mortgage backed security?

Recently, "60 Minutes" suggested that hundreds of thousands of loan documents were re-created by companies outsourced by our nation's largest lending institutions. These re-created documents are nothing more than forgeries. Any lawyer who knowingly forecloses a debtor based on fraudulent documents commits a fraud on the court, not to mention exposing their client to significant liability. Meanwhile, associations, large and small, suffer from a continued lack of assessment revenue from these stalled foreclosures.

For a time, upon proper motion, the trial courts were ordering stalling lenders to either move their foreclosures along or pay assessments. On appeal, the appellate courts reversed. Primarily, they held that where a remedy at law exists, the trial courts could not create equitable relief for associations. With that in mind, how can the lender ever be responsible to pay assessments before it finally acquires title to the property?

bankruptcy court sign.jpgThe answer, pending the financial strength of your association, might be a bankruptcy to reorganize the debts of the association. In these situations, a Chapter 11 bankruptcy might just be what the doctor ordered. Not only does it provide the restructuring of existing debts, but it allows the federal bankruptcy court to do what the state courts cannot. Specifically, under federal bankruptcy law, the court can order the secured creditor (in this case, the lender whose mortgage is secured by the property) to pay a "surcharge" during the reorganization.

As discussed in the recent United States, Southern District Bankruptcy Court case, In re the Spa at Sunset Isles Condominium Association, the federal bankruptcy "surcharge" can be implemented to require a lienholder (the lender) to be charged with the reasonable costs and expenses incurred by the debtor (the association) to preserve or dispose of the lienholder's collateral to the extent that the lienholder derives a benefit as a result.

The lender had argued that any order requiring it to pay the "surcharge" was improper because state law had already prohibited requiring the lender to pay towards the upkeep of the property prior to the time it acquires title to the property as a result of its own foreclosure. The bankruptcy court looked to Article VI of the United States Constitution, the Supremacy Clause, which provides that the laws of the United States "shall be the supreme law of the land and the judges in every state shall be bound thereby, anything in the Constitution or Laws of any state to the contrary notwithstanding." The court required the lender to pay their pro rata share of preserving the association's common elements.

Not every association is a candidate for a Chapter 11 bankruptcy. Pending the number of foreclosures in your community, the financial shortfall created by the debt, the association's cash on hand, the ability of the association to pay its debts, etc., a Chapter 11 bankruptcy may or may not be appropriate. Clearly, the necessary first step is consultation between the board and qualified bankruptcy counsel.


Community Associations Should Effectively Utilize Florida Division of Condominiums Arbitration Program to Enforce Violations

October 6, 2011, Posted by Laura Manning-Hudson


Laura Manning HudsonFor condominium associations in Florida, enforcing rules against unit owners who are in violation does not require costly and prolonged litigation in circuit court. Condominium associations have the option of using the Mandatory Non-Binding Arbitration Program under the Division of Florida Condominiums, Timeshares, and Mobile Homes for quick and fair resolutions to the vast majority of disputes involving enforcement of restrictions found in an association's governing documents. In fact, condominium associations are not allowed to take disputes involving pets, unapproved construction/modifications, nuisance violations, elections and meetings to the local courthouse without first filing a petition for arbitration under this state program.

Prior to filing a petition for arbitration, the unit owner must be given written notice of the violation and a reasonable amount of time to cure the violation (or cease and desist from the violating activity). If the owner refuses to comply or re-violates, then a petition for arbitration may be filed with the division of condominiums by the association's counsel.

florida_dbpr.jpgOnce the petition is received and reviewed by the division of condominiums in Tallahassee, the arbitrator who is assigned to the case accepts jurisdiction and sends an Order Requiring Answer to the owner via certified mail. The Order requests that a written response to the petition be filed by the owner within 20 days of the owner's receipt of the Order. Once the arbitrator receives a response from the owner, he or she will either enter a final decision or refer the response to the attorney for the association in order for them to review and refute the owner's defenses. Shortly thereafter, the arbitrator will either enter a summary disposition or set the matter for a final hearing.

All appearances with the arbitrator are via telephone, or for the rare, complicated case a live web-conference is used. Arbitration cases typically take from two to six months from start to finish depending on the nature of the violation and the owner's defenses, if any.

In the case where the arbitrator's decision is favorable to the association but the owner still refuses to comply, the association is required to file a complaint in county court to confirm the arbitration award, which is routinely quickly confirmed since the award is admissible into evidence for the court to consider. With that judgment, the association is then able to impose all of the penalties and consequences that its policies allow, including recovery of its attorney's fees and costs from the owner.

In general, condominium associations would be well advised to take advantage of the arbitration program to enforce their policies and restrictions when they are disregarded by rogue owners. The arbitrations are designed to be inexpensive and expeditious for both the associations and their members, who in most cases are not represented by counsel. However, many associations are still reluctant to use this process to enforce the rules against owners who are in violation, even when the owner blatantly refuses to comply. For these associations, not enforcing the restrictions may result in the waiver or loss of the right to enforce those restrictions in the future, which would be unfair to all other members who follow the rules.

Our community association attorneys in South Florida regularly work with many of our condominium association clients to enable them to utilize this arbitration program in order to effectively and cost-efficiently enforce violations against noncompliant owners. We write about important issues for condominium associations such as this in our blog on a regular basis, and we encourage members, directors and property managers to enter their e-mail addresses in the subscription box on the right in order to automatically receive all of our future articles.


New Video on Fighting Lien Stripping by Association Members in Bankruptcy

September 29, 2011, Posted by Jeffrey S. Berlowitz


A couple of weeks ago I wrote an article for this blog that focused on the tactics that we are using to enable community associations to contend with unit owners who file for personal bankruptcy protection. For my first video as part of our new video series, I focused on one of the strategies that we have now been using with considerable success.

Many of these associations are quite surprised when they learn that under Chapter 13 bankruptcy, homeowners can strip away any second mortgages or association liens if they are able to prove that they have absolutely no equity in the home. By submitting to the bankruptcy court a professional appraisal that says that the current market value of their home or condo is actually less than the amount that they owe under the first mortgage, they are able to use the "lien stripping" provisions under Chapter 13 bankruptcy to wipe out everything that they owe to the association or under a second mortgage from prior to the bankruptcy filing.

As you can well imagine, the use of lien stripping has grown quite a bit during the last several years with the meltdown in the housing market, and as a result we are working with a number of our association clients to help them to fight it. To learn more about exactly how we are helping our association clients to successfully contend with lien stripping by their members in bankruptcy, click below to watch my brief video on the matter and scroll down to read my article posted on Sept. 20.