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.




Introducing Our Informative New Videos on Community Association Issues

September 29, 2011, Posted by Roberto C. Blanch


Our firm is very proud to serve as one of best sources for information and sound legal insight for community associations in Florida via our blog and our live weekly radio show. As a complement to the topics that we discuss in both this blog and the radio show, we are launching a new series of online videos featuring brief discussions from our attorneys about some of the most pressing issues that we cover.

The videos will become a regular feature in our blog and on our website, and the best way to make sure that you do not miss them is to subscribe to the blog by submitting your e-mail address in the subscription box on the right.

Click below to watch my first video introducing the new series and discussing the types of topics that we will be covering in our future videos.



Associations Can Effectively Fight Back Against Lien Stripping from Members in Bankruptcy

September 20, 2011, Posted by Jeffrey S. Berlowitz


Jeffrey Berlowitz - Siegfried law firm.jpgThe recent report in The Miami Herald stating that the number of South Florida homeowners who owe more on their mortgage than their property is worth remains above 400,000 was very disquieting for the thousands of community associations in the region. Many of these associations have already discovered that their members who file for Chapter 13 bankruptcy have the opportunity to wipe away their association lien and second mortgages or secured credit lines if they are able to demonstrate that they have no equity in their property because it is now valued at less than what they owe on their first mortgage. With so many homeowners underwater on their first mortgages in South Florida, the use of these lien stripping provisions under the bankruptcy code seems destined to continue to rise.

Thankfully for the associations, there is a strategy that we have been using with considerable success to enable them to fight back and avoid lien stripping. It hinges on the fact that the criteria in the bankruptcy code for lien stripping to take place essentially creates an all or nothing requirement for the debtor who is trying to show that they have no equity in the residence. Thumbnail image for Underwater house.jpg If the association is able to demonstrate to the bankruptcy judge that there is even just one dollar in equity in the residence, then the debtor is unable to strip away the association lien or second mortgage.

The issue becomes a "battle of appraisers." Given that, we are counseling our association clients in these cases to obtain detailed professional appraisals based on recent comparable sales and the condition of the residence that show that it is worth more than the balance due on the debtor's first mortgage. We then submit the higher appraisal to the bankruptcy court, and in many of these cases we are able to reach a settlement to recoup some of the delinquent fees that would otherwise have been eliminated using lien stripping. In one recent case, the association was owed $28,000 and we secured a settlement for $17,000 to be paid through the Chapter 13 bankruptcy, marking a very successful outcome for the association in today's "debtor friendly" bankruptcy world.

The results, of course, will vary based on the amount that the homeowner owes under their first mortgage and the strength of the association's higher appraisal. However, we have certainly realized a great deal of success using this approach, and we plan to continue using it on behalf of many of our association clients that are facing the prospect of receiving nothing for what they are owed from prior to their member's bankruptcy filing.


Suspension of Common Element Use Rights

August 19, 2011, Posted by Roberto C. Blanch


Roberto Blanch.JPGDirectors and managers of Florida community associations seem to be on a never-ending search for effective tools to compel unit owners or their tenants and guests to comply with the association's rules and restrictions. Until not too long ago, Florida condominium association boards had few practical remedies at their disposal to address violations. Of course, the condo associations could file lawsuits or arbitration actions to seek recourse for violations, but the costs of pursuing these cases is a significant deterrent, despite the hope that they will recover attorney's fees and costs should they prevail. The associations may also impose fines - if their governing documents allow - but deterrents to the implementation of fining as a viable remedy include the caps applicable to such fines and the difficulty of getting individuals to serve on fining committees.

As a result of recent legislative changes to the Condominium Act, associations gained the ability to suspend the rights of an owner, tenant or invitee to use common elements, common facilities or any other association property, in the event that the owner of the unit is delinquent more than 90 days in paying a monetary obligation to the association. Subsequently, as a result of the 2010 legislative session, a condominium association may also suspend, for a reasonable period of time, the right of a unit owner, or a unit owner's tenant, guest or invitee, to use the common elements, common facilities or any other association property for the failure to comply with any provision of the declaration, the association bylaws or reasonable rules of the association.

As with the imposition of fines, these suspensions may only be imposed if the association provides the owner with at least 14 days' written notice and an opportunity for a hearing. If applicable, the unit's occupant, licensee or invitee must also receive such notice. The hearing must be conducted and held before a committee of other unit owners who are neither board members nor persons residing in a board member's household. If the committee does not agree, then the suspension may not be imposed.

Pool.jpgUnlike suspensions for failure to pay monetary obligations, the wording of the newly adopted changes to the statute does not limit the portions of the common elements, common facilities or association property that may be suspended for the failure to comply with any provision of the declaration, the association bylaws or reasonable rules of the association. This distinction creates the argument that associations may be more aggressive in this type of suspension, to include the suspension of the use of parking spaces, limited common elements, etc. - though conservative practitioners caution that this is not necessarily the case.

Additionally, the success of this type of remedy may depend upon various factors, including whether the community has the ability to enforce the suspension, whether there are community facilities that are worthwhile suspending, and whether there are qualified owners who are willing to serve on the committee that is required to impose the suspension. Lastly, when implementing the suspension, board members should be aware of what the association may be required to do in order to enforce the suspension in the event that the suspended individual defies it.

In light of the implications and procedural considerations related to the suspension of use rights, we encourage board members and managers alike to work closely with their association's legal counsel in order to determine the best course of action to address violations in their community.


Appellate Ruling Reaffirms That Courts Won't Accept Strategic Defenses, Counterclaims from Delinquent Unit Owners

August 16, 2011, Posted by Nicholas D. Siegfried


Nicholas Siegfried Gort photo.jpgA recent ruling by the Third District Court of Appeal reinforced the message that the courts are sending to unit owners who attempt to derail the collections efforts of their community associations with strategic counterclaims and legal maneuvers. The appellate panel upheld the Miami-Dade Circuit Court judge's decision in favor of the condominium association in a case in which the unit owner who failed to pay a special assessment brought a counterclaim for breach of fiduciary duty against the association.

The condominium association in the case, 21/22 Condominium Association, Inc. received a summary judgment of foreclosure against Coral Way Condominium Investments, Inc., which owned six units in the property and failed to pay its share of a special assessment for flood damage and air conditioning repairs. Coral Way had responded by filing its own counterclaim for breach of fiduciary duty against the association, arguing that the special assessment was invalid and would not have been necessary were it not for the association's alleged breach.

3rd district court of appeal.jpgThe appellate panel upheld the lower court's decision, noting that the allegations of breach of fiduciary duty are not a valid defense or avoidance to payment of the assessment. The court concluded that any success on its claim for breach of fiduciary duty would entitle Coral Way for reimbursement of its dues that were paid toward the purported improper expenditures, but it would remain responsible for the payment of the special assessment.

This and other similar rulings by the Florida courts are enabling community associations in the state to prevail in their collections efforts against owners who attempt to avoid paying their fair share by using strategic legal tactics and counterclaims. These court decisions are effectively deterring unit owners and the attorneys who represent them from using these questionable legal tactics against the associations, and their overall effect will continue to benefit the associations which are struggling to maintain their financial stability.


Circuit Court Rules Housing Authority's Rent Payments Should Go to HOA

July 28, 2011, Posted by Salvador A. Jurado, Jr.


Salvador Jurado Gort Gray.JPGA recent ruling by a Palm Beach Circuit Court judge represents a potentially significant boon for Florida HOAs and condo associations that wish to collect the rent from Section 8 Housing Voucher program tenants who are leasing from unit owners who become delinquent in their monthly association fees. The municipal housing authority involved in the case declined to pay its share of the rent for the unit occupied by a Section 8 tenant, arguing that Florida Statute 720.3085(8) does not apply to them. The judge in this case ruled that the law does indeed apply to these types of government agencies and mandated that the West Palm Beach Housing Authority begin making the payments in question directly to the association.

Since the ruling comes from a circuit court, it does not set a binding precedent, and other courts in the state could rule differently on the matter. However, the ruling should prove to be very persuasive for other judges facing the exact same question about the applicability of the law to municipal housing authorities administrating the Section 8 program.hud logo.jpg The law was established last year to allow community associations to collect rent directly from tenants leasing units from owners who default on their association fees, and it was modified during the last legislative session to clarify that associations can collect the rent for past-due assessments.

In light of this ruling, it is reasonable to presume that Florida municipal housing authority directors and administrators will use it as guidance in future cases and become more inclined to comply with requests by community associations to pay their share of the monthly rental payments for Section 8 tenants directly to HOAs and condominium associations. Community association attorneys at our firm and elsewhere will be sure to make the local housing agencies aware of this ruling when presenting them with requests for rental payments to be made to associations.

Our attorneys who focus on community association matters will continue to monitor and write about the issues affecting HOAs and condominium associations in the state, and we encourage association directors and members as well as property managers to submit their e-mail address in the subscription box on the right in order to automatically receive all of our future blog posts.


New Law Protects Condo Associations from Liability for Accidentally Releasing Owners' Personal Information

July 8, 2011, Posted by Helene Brown


Helene Brown Gort Photo.JPGA recent report that appeared in both the Sun-Sentinel and Miami Herald sheds light on a new law that shields condominium associations, but not homeowners' associations, from liability for inadvertently releasing an owner's personal information, such as a driver's license number, credit card number and Social Security number, as long as the information was voluntarily provided as part of an official record of the association and without the association's request.

The law, which took effect July 1, modifies a Florida law that prohibited associations from releasing such information. While the amended law continues to prohibit associations from knowingly distributing an owner's personal information or releasing details specifically requested by a board or association, owners would be wise to avoid providing personal information to their association without a specific request. In addition, board members should remove such information when it appears in correspondence from a unit owner.

locked info.jpgThe purpose of the law is to protect associations from liability for accidentally releasing personal information as part of a records request. Additionally, the law enables the associations to avoid the difficulties of wiping out all of the personal information of owners found in their records.

The new law also allows condominium associations to release an owner's phone numbers, email addresses and other addresses in member directories, so long as they have received prior written approval by the owner.

Our community association attorneys will continue to monitor and write about new laws and court decisions affecting condominium associations and HOAs in Florida, and we encourage association members, directors and property managers to submit their e-mail address in the box on the right in order to automatically receive all of our future blog posts.


Our 2011 Legislative Update for Community Associations

This 2011 legislative update addresses those changes that could likely affect your association. This information is presented with you, the reader, in mind. The 2011 legislative changes are first organized by the type of association to which the new law applies. For your overall ease in assimilating this new and important information we have provided both a reference to the statute that is being amended, and at the conclusion of each section, reference to the appropriate bill number is provided in the event you would like to refer the bill's actual text for further reading.

While the bill with the most direct and extensive impact to community associations is House Bill 1195, signed into law by Governor Scott on June 21, 2011 and codified in the Laws of Florida in Chapter 2011-196, the following bills are also reviewed: House Bill 59, House Bill 883, Senate Bill 408, and Senate Bill 650. Unless otherwise stated, the effective date of the legislation is July 1, 2011.

Please contact your association's attorney to discuss any questions you may have as to how these new laws may affect your association. Please contact our firm if you would like to receive additional information regarding one of the many 2011 legislative update seminars we are in the process of scheduling, or to host a seminar.

We hope that you find this information useful.

Sincerely,

The Lawyers at Siegfried, Rivera, Lerner, De La Torre & Sobel, P.A.


SIEGFRIED, RIVERA, LERNER, DE LA TORRE & SOBEL, P.A.
The Construction, Real Estate and Community Association Law Firm of Florida


TABLE OF CONTENTS PAGE(S)

Letter of Introduction ii


Table of Contents iii


Condominium Associations 1-5


Homeowners Associations 6-10


Cooperative Associations 11-12


Applicable to all Types of Associations 13


Property and Casualty Insurance 14


Public Lodging & Mobile Home Parks 15




CONDOMINIUM ASSOCIATIONS

§718.111 The Association
§718.111(12) Official Records. The Condominium Act now requires associations to obtain facsimile numbers in addition to the existing requirement to obtain email addresses for those members who opt to receive notices electronically. The email address and facsimile numbers are not accessible to other unit owners unless they are provided to fulfill association notice requirements or the unit owner first provides the association with their written consent to disclose the information. However, there is no penalty for an association's inadvertent disclosure of this information. HB 1195

Work Product Privilege. The work product privilege exception continues to include records prepared for litigation and is now broadened to include records "prepared in anticipation of litigation" as compared to the previous requirement that such litigation was "imminent civil or criminal litigation." HB 1195

Other Records Not Subject to Disclosure. Other records of the association that are not subject to disclosure as a result of a unit owner's official records request include personnel records of the association or management company employees including, but not limited to, disciplinary, payroll, health and insurance records. However, the term "personnel records," does not include written employment agreements with an association employee or management company, or budgetary or financial records that indicate the compensation paid to an association employee. HB 1195

Recap: Official Records Exempt from Disclosure. As revised §718.111(12) (c) provides, in relevant part, that:

...Notwithstanding the provisions of this paragraph, the following records are not accessible to unit owners:

1. Any record protected by the lawyer-client privilege as described in s. 90.502 and any record protected by the work-product privilege, including a record prepared by an association attorney or prepared at the attorney's express direction, which reflects a mental impression, conclusion, litigation strategy, or legal theory of the attorney or the association, and which was prepared exclusively for civil or criminal litigation or for adversarial administrative proceedings, or which was prepared in anticipation of such litigation or proceedings until the conclusion of the litigation or proceedings.

2. Information obtained by an association in connection with the approval of the lease, sale, or other transfer of a unit.

3. Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health, and insurance records. For purposes of this subparagraph, the term "personnel records" does not include written employment agreements with an association employee or management company, or budgetary or financial records that indicate the compensation paid to an association employee.

4. Medical records of unit owners.

5. Social security numbers, driver's license numbers, credit card numbers, e-mail addresses, telephone numbers, facsimile numbers, emergency contact information, any 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, e-mail address, or facsimile number provided to the association to fulfill the association's notice requirements. However, an owner may consent in writing to the disclosure of protected information described in this subparagraph. 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.

6. Electronic security measures that are used by the association to safeguard data, including passwords.

7. The software and operating system used by the association which allow the manipulation of data, even if the owner owns a copy of the same software used by the association. The data is part of the official records of the association.
[emphasis added]

Continue reading "Our 2011 Legislative Update for Community Associations" »


Broward County Sues Local Condominium Over a Service Animal Dispute

The community association attorneys at our firm have seen our share of disputes involving service animals at local condominiums, but the recent case involving a senior citizen in Century Village in Deerfield Beach has received more media attention than any other service animal case in South Florida that we can recall. The three-year saga spurred by a Chihuahua named Sweetie has escalated into a federal lawsuit by Broward County against the condominium association.

Click here to read the article on the case from the Sun-Sentinel, which also appeared today in The Miami Herald.


Georg Ketelhohn to be Honored by National Gay and Lesbian Task Force


George KetelhohnThe law firm of Siegfried, Rivera, Lerner, De La Torre & Sobel would like to congratulate our 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.

Here's an excerpt from The Miami Herald's "Gay South Florida" blog on the announcement along with a link to the complete article:

WASHINGTON, May 11 -- The National Gay and Lesbian Task Force announced today that it will honor Georg Ketelhohn at the 15th annual Miami Recognition Dinner on Saturday, Oct. 15, at the Fontainebleau Miami Beach. This major fundraising event recognizes individuals for their outstanding contributions to the social, cultural, political and humanitarian needs of the lesbian, gay, bisexual and transgender (LGBT) community.


"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."

Ketelhohn, who will receive the 2011 Eddy McIntyre Community Service Award, is a litigator with the firm of Siegfried, Rivera, Lerner, De La Torre & Sobel, P.A., and serves as board treasurer for Florida Together, Florida's statewide federation of LGBT and allied organizations.

Click here to see the full story on The Miami Herald's blog.


A New Defense to an Association Assessment Foreclosure?

For some time now an association assessment debtor was precluded from arguing that their failure to pay assessments which led to their association's foreclosure of the debtor's unit (or lot) was due to the association's failure to maintain the common areas. In other words, an owner's failure to pay assessments could not be justified on the basis of the association's failure to perform its duties. In far simpler terms, the courts have held that the ol' "tit for tat" argument was not sufficient to avoid paying assessments.

In the 1987 case of Abbey Park HOA v. Bowen, the 4th District Court of Appeal held just that. In this seminal case, Bowen failed to pay her monthly assessments, which resulted in Abbey Park HOA filing an action to foreclose its claim of lien against Bowen. In response, Bowen filed an answer, affirmative defense and counter claim. The affirmative defense asserted that Bowen was not liable for the assessments because Abbey Park failed to maintain the common elements as per the declaration of covenants. The counter claim sought a mandatory permanent injunction to compel Abbey Park to maintain the common elements and damages for Abbey Park's alleged breach of the declaration.

In reliance on an earlier 1980 4th DCA opinion, Sandles v. Sheridan Lakes, the 4th DCA held that the affirmative defense of failure to maintain the common elements "is inadequate as a matter of law." Since then, courts have routinely held that an association's failure to maintain common elements is not a viable excuse to avoid paying assessments.

4th DCA photo.jpgFast forward to a brand new decision, E. Qualcomm v. Global, issued April 27, 2011: In this very recent 4th DCA case where the court's opinion is still wet on the page and the parties still have time to appeal, the assessment debtors alleged as an affirmative defense that their association failed to maintain the common areas and, as a result, the owner was entitled to a "set-off." The owner also raised a counter claim for the association's alleged failure to maintain the common areas.

You're right if you think this sounds familiar to the Abbey Park case. So why did the 4th DCA reverse the trial court's summary judgment ruling entered in favor of the plaintiff/association? Some might argue that this new case eviscerates Abbey Park.

Whoaa... slow down!

The E. Qualcomm v. Global holding is not at all contrary to the long standing principle that a counter claim for failure to maintain common areas is not a viable defense to an association assessment foreclosure. In this recent case, while it's true the appellate court reversed the summary judgments that were granted by the trial court in favor of the association as to possible damages due to the defendant as a result of the counter claim and the association's assessment foreclosure, the appellate court did not reverse the assessment foreclosure summary judgment because the association failed to maintain the common areas. Rather, it did so because the association had not properly refuted the set off counter claim used as an affirmative defense.

The court did not even mention its own prior holding in the landmark Abbey Park case. Perhaps the court didn't do so because it wasn't necessary. Here, the appellate court reversed the partial summary judgment of foreclosure in favor of the association because it found the association had not properly refuted them. Maybe if the association had argued the rationale of Abbey Park during its summary judgment hearing, then if the trial court had included a detailed discussion of the effect of Abbey Park in its resulting order, perhaps at least the partial summary judgment of foreclosure entered on behalf of the association would have survived?

In any event, during the appeal, the defendant paid its assessment deficiency. The debtor's decision to pay the back assessments due and owing could also be the reason why the appellate court did not rely on its prior Abbey Park decision. It did not have to, as the issue was mooted by the debtor's payment (or, could it be the result of the fact that the lawyer who initially lost the trial court portion of the Abbey Park case is now a sitting judge on the 4th DCA?). Sadly, this also means that we'll never get the needed clarity, and this case will, no doubt, be misconstrued to mean something contrary to what it actually does mean. Nevertheless, the decision does highlight yet another reason for associations to properly maintain the common areas/elements.