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A couple of years ago we saw the Florida state legislature add teeth to Florida’s condo and HOA laws governing theft, fraud, abuse and conflicts of interest. Recently, the Department of Business and Professional Regulation, the state agency that governs community associations, followed suit by implementing harsher civil disciplinary guidelines for condominium association infractions.

The new guidelines detail the civil penalties and disciplinary procedures for violations of the Condominium Act and the Florida Rules of Administrative Procedure involving accounting records, assessments, boards, budgets, common expenses, conflicts of interest, debit cards, elections, estoppel certificates, final orders, fiduciary duty, investigations, records requests, financial reporting, reserves, special assessments and websites.

dbprlogo-300x170For minor violations, the disciplinary guidelines call for the agency’s Division of Condominiums, Timeshares and Mobile Homes to issue the association with a written Notice of Noncompliance “due to the violation’s lower potential for public harm.” If the association fails to comply with the stipulations called for in the Notice, it could result in sanctions and enforcement with monetary penalties being imposed in amounts between $5 and $10 per unit for each violation. The maximum penalty for minor violations is $2,500, for a single minor violation.
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susanodess-srhl-224x300LindseyTLehr-200x300An article authored by shareholders Lindsey Thurswell Lehr and Susan C. Odess was featured as the “My View” guest commentary column in the Business Monday section of today’s Miami Herald.  The article, which is titled “Lawsuits by Condo Associations Against Neighboring Developers, Builders Are New Norm,” focuses on the spate of recent lawsuits against South Florida condominium developers and general contractors alleging their construction work caused physical damage to neighboring condominium towers.  Their article reads:

. . . This new litigation trend appears to have especially taken hold in South Florida, where several prominent condominium developers and contractors have been sued by adjacent associations for damages emanating from their construction sites. The lawsuits raise claims for structural damage, fallen stucco, splattered paint, excessive dirt, broken glass/windows, and other damage resulting from the construction practices of neighboring developments.

The insurer for the 1060 Brickell Condominium Towers brought a lawsuit alleging construction debris from Panorama, 1010 Brickell and the Bond damaged the two 1060 Brickell buildings. The lawsuit claims that the construction activities at these properties damaged 1060 Brickell’s facade, balconies, railings, pool deck, roof, cooling tower and other components.

MHerald2015-300x72The entire development team behind the ultra-luxe Porsche Design Tower faced a similar lawsuit brought by the association for the adjacent Millennium Condominium. The association alleged that its building suffered millions of dollars in damage caused by the Porsche Tower’s construction next door, including extensive cracks to the lobby, parking garage and pool deck. Engineers concluded that the cracks were caused by excessive vibrations from the pile-driving equipment used for the neighboring tower’s foundation, and the suit also alleged concrete overspray splattered onto Millennium’s balconies, ruining the building’s paint job and related exterior components.

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Nicole-Kurtz-2014-200x300An article authored by the firm’s Nicole R. Kurtz was featured as the guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  Her article, which is titled “Association Election ‘Shenanigans’ Lead to Contentious, Costly Litigation,” focuses on the takeaways for Florida community associations from the case involving the strange and suspicious circumstances surrounding an Orlando-area HOA’s last annual election.  It reads:

A case in which a trial court concluded may have involved some association election “shenanigans” is going back to the trial court for further proceedings after the Fifth District Court of Appeal reversed the lower court’s order mandating binding arbitration.

“What should have been a rather routine meeting of the Association was cloaked with mystery, intrigue, and confusion,” begins the Fifth DCA’s unanimous opinion in the case of Winter Green at Winter Park HOA v. Richard Ware et al. Indeed, mystery, intrigue and confusion seem to be very apropos for describing the set of circumstances that unfolded during the Orlando suburb’s annual meeting and election.

It all began when somehow two nearly identical notices were sent out to announce the upcoming annual meeting and election to the homeowners. Both notices included the necessary agenda and accompanying documents, however the notice prepared by the association’s property manager set the annual meeting date for November 15, 2017, while the other notice announced the annual meeting was to be held on November 12, 2017.

dbr-logo-300x57Fifty-five members of the association attended the Nov. 12 meeting, which was sufficient to establish a quorum, but the owners were surprised to find that neither the property manager nor any of the current board members were present. An owner was even dispatched to the property manager’s office to seek clarification on the manager and directors’ absence, but he found no one there.

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Laura-Manning-Hudson-Gort-photo-200x300Our firm’s South Florida community association attorneys are often called upon by journalists for their insights into the issues impacting condo communities and HOAs.  When The New York Times “Wealth Matters” columnist Paul Sullivan decided he needed to turn to a highly experienced community association attorney for input for a major article on association living, he called on shareholder Laura Manning-Hudson in our West Palm Beach office.

Paul’s article, which is titled “When Condo Boards and Residents Clash, Legal Bills Mount” and appeared in the Your Money section on Saturday, March 30, 2019, focuses on some of the most common issues that can cause disruptions and financial strains for community associations.  It reads:

My mother-in-law recently regaled me with a tale of intrigue, money and power in her South Florida homeowners association.

Seeking to raise about $6 million to refurbish the 20-year-old community, the association’s board had voted to assess each homeowner $7,000. But a group of vocal residents fought back, setting up a power struggle.

This conflict is nothing new to anyone who has dealt with a condominium board or homeowners association, which has well-defined obligations to the residents. As the overseer, it hires workers to cut the lawn, take out the trash, clean lobbies and common areas and maintain pools, tennis courts, golf courses and other amenities. If the elevator breaks or the roof leaks, the board gets it fixed.

But if it wants to do something cosmetic — renovate the lobby, add pickle ball courts or install a fitness center — the board needs to put its idea to a vote of the residents.

timslgo-300x46The article continues:

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Drones have become extremely popular for those who yearn for the latest gadgets and gizmos.  Many associations have already adopted rules to address the use of drones in their communities, and those that have not done so should give it serious thought and consideration.

When equipped with cameras, drones can be used to violate the privacy of association residents, not to mention their ability to cause major property damage, so associations should take a proactive approach toward developing and implementing rules and restrictions to protect the interests of those residing within their community.  Specifically, some examples of the rules and policies that associations are implementing include:

d2-300x176Restricting the space within which drones may be flown, such as over their operator’s personal lot, or those lots of adjoining neighbors (with their prior permission).

Limiting drone use to association common areas that are away from roads, buildings, playgrounds and other amenities.

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As the 2019 Florida legislative session gets underway, all indications are that this will be a very busy year for new legislation affecting the more than 48,000 community associations in the state. Here are some of the bills that my fellow community association attorneys at our firm and I will be monitoring very closely:

HB 153 – Requires landlord to provide physical copy of any restrictive covenants that govern premises to tenant at specified time; requires written notice be provided to tenant of any changes to covenants within specified time.

HB 155, known as the Community Recall Act – Amend Section 720.303, F.S. to require owners living in an HOA to physically reside in the community in order to vote to recall a member of the board of directors.

HB 565 – Removes housing discrimination as cause of action for relief & damages stemming from violations of Florida Civil Rights Act of 1992; revises timeframe & conditions under which aggrieved person may commence civil action to enforce specified rights; authorizes, rather than requires, civil action after alleged discriminatory housing practice; authorizes civil action regardless of whether aggrieved person filed complaint with commission; prohibits aggrieved person from filing specified action in certain circumstances; provides exception.

Florida-legislature2HB 647 – Requires certain associations to post certain signs or symbols on buildings; requires State Fire Marshal to adopt rules governing such signs & symbols; provides for enforcement; revises provisions relating to evidence of association compliance with fire & life safety code; revises provisions related to retrofitting.

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Residents of the Phillips Bay Condominium in Orlando, Fla. are finally breathing a sigh of relief after a years-long saga of a nightmare neighbor appears to be coming to an end with a conviction for aggravated stalking. Residents are now awaiting a final ruling from the court on the penalty for the third-degree felony, which under Florida law can be as high as five years in prison, five years of probation and $5,000 in fines.

According to an arbitration order from the state’s Division of Condominiums under the Department of Business and Professional Regulation, the complaints against unit owner Marianna Seachrist (pictured below) at the condominium association began in early 2014, shortly after she moved in to the community. Neighboring unit owners complained of constant pounding and rumbling noises at all hours of the day and night, and police were eventually called when Seachrist threatened to hire someone to kill one of the board members.

mariannaseachrist--240x300The loud and disruptive noises continued, and the threatening behavior escalated to the point that some residents lived in fear of walking around the community. After multiple incidents and calls to police, her downstairs neighbor was granted a temporary injunction for stalking protection in 2015.

After Seachrist was served with the injunction, deputies had to return to her condo three successive days because of noise disturbances. In subsequent visits they heard low-bass rumbling and knocking noises, and after obtaining a search warrant they rammed the front door and discovered an elaborate sound system, including three low-frequency speakers mounted to a board and placed face-down on the floor in the living room, hallway and closet. The speakers were also weighed down by dumbbells and cinder blocks, and they were wired to an amplifier using a tablet to play a recording on a loop of bass-clicking noises that would vibrate the room. The setup allowed for the remote operation of the system using a smartphone.

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Reports of association theft, fraud and embezzlement are no surprise to the South Florida community association attorneys at our firm, but two similar reports on the same day from communities on both the east and west coasts of the country drew our attention.

The media reports of the incidents, which both ran on Thursday, Jan. 17th, are very similar. The one in the Nisqually Valley News newspaper in the state of Washington chronicles how the Clearwood Community Association filed a complaint alleging its former bookkeeper embezzled nearly $300,000. The suit against Dolanna K. Burnett, the former bookkeeper, and her husband claims that she wrote multiple checks to herself and covered it up in the accounting system dating back to 2014.

The newspaper article states Burnett had a previous conviction in 2014 for theft, identity theft and forgery. She used counterfeit refund checks totaling $17,000 while she was working for the Tacoma Health Department and deposited them into her personal account. This information was discovered last summer and taken to the Clearwood Board of Directors, which stood by its decision to retain her and continued to use her as its bookkeeper.

This led to an outcry by the unit owners, eventually prompting a majority of the board members and Burnett to resign from their posts.

By the end of the year, the board hired a forensic accountant and discovered evidence that the former employee had been stealing significant sums from the association’s general account for years. It turned the case over to the county sheriff’s office and filed a civil suit against Burnett.

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Laura-Manning-Hudson-Gort-photo-thumb-120x180-18921An article authored by partner Laura Manning-Hudson is featured as the “Board of Contributors” guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Permitted Breach of Rules by Association Does Not Create Liability for Resulting Accident,” discusses the takeaways from a recent case involving a community association’s liability for an automobile accident involving parked vehicles on its streets.  Her article reads:

Lack of parking can be an extremely troublesome issue for many South Florida community associations. For HOAs with rules that prohibit on-street parking, the dearth of available spaces for residents and their guests can leave many homeowners feeling stymied and annoyed.

To remedy the angst of its residents, the HOA for the Seminole Lakes community in Palm Beach County decided to forgo its rule against on-street overnight parking. However, that decision nearly ended up causing the association major legal and financial liabilities, which it was only able to avoid after it appealed a jury’s verdict to Florida’s Fourth District Court of Appeal.

dbr-logo-300x57The case of Seminole Lakes Homeowner’s Association v. Esnard arose from a 2013 car accident in the community between the Esnards and another motorist, who rear-ended their vehicle while they were stopped waiting for two trucks to pass between two parked cars on the street. The Esnards, who were injured in the accident and had their car completely totaled, filed suit against the other driver as well as Seminole Lakes on the basis that the community was negligent and had proximately caused their damages by permitting homeowners and their guests to park on both sides of its streets — contrary to its governing documents.

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Not enough community association boards make effective use of committees.  Committees can be very useful when it comes to providing recommendations to the board and assisting the board with carrying out its duties and responsibilities.  However, many associations do not take the time to establish committees or set parameters for their work so that committees may assist in the operation of the association.

Setting up committees is the responsibility of an association’s board of directors. The board must appoint the members of each committee at a properly noticed board meeting, during which the directors should provide instructions and set parameters for the scope of the committees’ responsibilities.

One of the best approaches is for boards of directors to use their annual meetings to establish various committees, appoint committee members and establish areas of purview for each. Each committee should have at least three members.

meetWith the exception of the rules enforcement committee, board members may also serve as members on committees. Many associations choose to have a board member on each committee along with two non-director volunteers, as this enables the board member to keep their fellow directors abreast of the committee’s work and progress.

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