The use of drones by owners and residents of units in HOA and condominium communities has created concerns across the country over potential privacy and safety issues for community association managers and their boards of directors.  Sales of drones to consumers in the U.S. are expected to grow from 2.5 million in 2016 to 7 million in 2020, according to a report from the FAA.  As the popularity of drones continues to soar, associations will need to come to terms with how they wish to address their use within their communities.

At the FishHawk Ranch community in the Tampa area, the use of drones by a homeowner has created such an uproar that it drew the attention of local TV news.  The area’s CBS affiliate recently chronicled the battle that is brewing in the community over homeowner Frank Bragg and his collection of a half-dozen drones.

Bragg demonstrated his drones and the images that they capture to the station’s reporter, but the HOA president says those images are proof of the problem.  He says that Bragg has been flying the drones over the community pool, and there have been Facebook posts raising privacy concerns and calling the homeowner out for “hovering over the kids’ area with half-naked children.”

Bragg contends he was practicing flying the drone while his daughter played in the pool, and he notes that drones are not restricted by the current HOA rules.

drne-300x200Police were called once when Bragg was told to stop flying the drones and refused to comply, but they did not take any action because he had left before they arrived. The latest move from the HOA was to revoke Bragg’s privileges to use the community’s amenities.

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MTobacksrhl-law2-200x300The firm’s Michael Toback authored an article that appeared as a “Board of Contributors” guest 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 “Association Documents Override State Law in Previous Owners’ Assessments,” focuses on the growing consensus among Florida’s district courts of appeal that community associations’ existing governing documents, including their declaration of covenants, override existing Florida law assigning liability to new unit owners for the previous owners’ unpaid maintenance assessments.  His article reads:

The latest ruling reaffirming this holding came in late May from the Third District Court of Appeal in the case of Beacon Hill HOA v. Colfin Ah-Florida 7. The association appealed the final summary judgment in favor of Colfin, which had acquired a unit in the community via foreclosure sale, finding that the company was not liable for any amounts owed by the previous owners of the property due to the language in the association’s recorded declaration.

During the trial court proceedings, the association argued that language in its declaration allowing it to exercise any powers afforded to a corporation amounted to what is referred to as “Kaufman” language, which refers to a clause indicating that the declaration is subject to the applicable Florida laws “as amended from time to time.” The association asserted that the declaration incorporated future changes in the law, and thus the joint and several liability provision assigning liability to subsequent owners for previous owners’ assessments that was adopted into the state’s HOA laws in 2007 was included under the declaration.

However, the appellate panel disagreed with the association’s contention and affirmed the lower court’s ruling. Its opinion cited a 2015 holding by the Fourth District Court of Appeal in Pudlit 2 Joint Venture v. Westwood Gardens Homeowners Association.

dbrlogo-300x57In the Pudlit case, the Fourth DCA found that Florida Statute Section 720.3085 could not impair or supersede a pre-existing declaration provision, as that would infringe on the prohibitions against the impairment of contract rights and freedom to contract under the Florida state constitution. The appellate court in Pudlit found that as a successor to the mortgage holder, Pudlit is a third-party beneficiary to the provisions of the governing documents. The court also noted that the language in Chapter 720 of the Florida Statutes indicating that it is “not intended to impair such contract rights” that were “effective before the effective date of the act” made the existing law inapplicable.

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GaryMars3-200x300Firm partner Gary M. Mars authored an article that appeared as a “My View” guest column in today’s “Business Monday” section of the Miami Herald.  The article, which is titled “Condo Fraud Legislation Adds Teeth to Florida’s Laws,” focuses on the ramifications of the newly minted Florida law that established criminal penalties for some of the most common maneuvers of association fraudsters.  Gary’s article reads:

The new legislation, which will add teeth to the Florida laws governing the administration of condominiums by establishing criminal penalties for fraudsters, has been signed into law by Gov. Rick Scott and took effect July 1.

The El Nuevo and Channel 23 reports revealed many cases of electoral fraud and forgery, conflicts of interest, mismanagement, and rigged bidding systems at a number of condo associations in South Florida. The Miami-Dade circuit court grand jury investigation focused on some of the cases from the news reports and several others, and its findings illustrated in detail that the state’s laws and enforcement measures are inadequate.

The grand jury report was severely critical of the Florida Department of Business and Professional Regulation (DBPR), which has jurisdiction over the administration and enforcement of a vast majority of the state’s condo laws. “Unfortunately, the DBPR seems ill-suited to resolve, correct or prevent many of the recurring problems that have been brought to their attention,” it concludes.

MHerald2015-300x72The report found that the DBPR’s “failure to demand that its investigators utilize, or comprehend basic investigative techniques is breathtaking.” Astoundingly, one of the agency’s investigators testified that he did not know basic information and needed to consult with his supervisor. Continue reading

Laura-Manning-Hudson-Gort-photo-200x300Firm partner Laura M. Manning-Hudson is quoted in an article that appears in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, on Gov. Rick Scott’s veto of a bill that would have relaxed fire-protection requirements for older Florida condominium towers.  The article, which is titled “Scott Cites London High-Rise Fire in Vetoing Condominium Bill,” focuses on the Governor’s stance that the recent horrific tragedy of the deadly London apartment tower blaze has spotlighted the need for strong fire safety in residential buildings.  The article reads:

Pointing to a high-rise fire in London that killed dozens of residents, Gov. Rick Scott vetoed a bill that would have eased fire-protection requirements for older condominium buildings in Florida.

House Bill 653, which passed the Legislature with only one dissenting vote, dealt with requirements for retrofitting high-rise condominium buildings with fire sprinklers and other types of safety systems. The bill would have pushed back deadlines for the work and provided an avenue for condominium residents to vote to opt out of retrofitting.

Supporters pointed to potentially high costs for condominium residents, but the state fire marshal’s office and fire-protection groups asked Scott to veto the measure.

In doing so, he cited the June 14 fire at Grenfell Tower in London that killed dozens of people.

dbrlogo-300x57“Since my first day as governor, I have fought to make Florida the safest and most affordable place to live and raise a family,” Scott wrote in a veto message. “Decisions regarding safety issues are critically important, as they can be the difference between life and death. Fire sprinklers and enhanced life safety systems are particularly effective in improving the safety of occupants in high-rise buildings and ensure the greatest protection to the emergency responders who bravely conduct firefighting and rescue operations. While I am particularly sensitive to regulations that increase the cost of living, the recent London high-rise fire, which tragically took at least 79 lives, illustrates the importance of life safety protections.”

Laura M. Manning-Hudson, a partner in the West Palm Beach office of Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, said it was “easy to understand” the governor’s reasoning in the wake of the fire.

“The governor made an important statement about the need to strike a better balance between cost-of-living and safety considerations with this veto,” she said. “The Legislature should revisit the matter during next year’s session.”

A House staff analysis said condo buildings that are three stories or more and have been constructed since 1994 are required to have sprinkler systems and, as a result, comply with the requirements. But the bill would have affected older high-rise buildings.

Our firm salutes Laura for sharing her insights into the veto of this legislation with the readers of the Daily Business ReviewClick here to read the complete article in the newspaper’s website (registration required).

Florida community associations are always seeking to implement the most cost-effective options at their disposal to collect unpaid dues and compel unit owners/residents to comply with their rules and restrictions.  Condominium associations used to have very few practical remedies at their disposal to address delinquencies and violations.  They could file lawsuits or arbitration actions, but the costs of pursuing these cases can be a significant expense, and the imposition of fines requires the use of a fining committee and can be difficult to collect.

As a result of legislative changes to the state’s Condominium Act a number of years ago, associations are now able to suspend the rights of an owner, tenant or guest to use common elements and facilities if the owner of the unit is delinquent more than 90 days in paying a monetary obligation to the association.  Condominium associations may also suspend, for a reasonable period of time, the right of an owner and/or resident to use common elements and amenities for the failure to comply with any provisions of the association’s declaration, bylaws or rules.

Pool-300x227As with the imposition of fines, suspensions for rule and covenant violations may only be imposed if the association provides the owner/resident with at least 14 days advance written notice of the committee hearing.  The committee must be composed of other unit owners who are neither board members nor persons residing in a board member’s household, and suspensions may not be imposed without the majority consent of the committee. Continue reading

House Bill 6027 was signed by Governor Rick Scott. The Bill makes changes to the financial reporting requirements of Florida condominiums, homeowners’ associations, and cooperatives, and will be effective as of July 1, 2017.  The Bill may be summarized as follows:

  • Sections 718.111(13)(b) and 719.104(c)2, Florida Statutes, are amended to remove the requirement that an association that operates fewer than 50 units, regardless of the association’s annual revenues, shall prepare a report of cash receipts and expenditures in lieu of financial statements, and instead bases financial reporting requirements strictly on annual revenues.
  • Sections 718.111(13)(d) and 719.104(b), Florida Statutes, are amended to remove the restriction which limit the ability of a condominium and cooperative association, respectively, to waive the financial reporting requirements of such Sections for more than three consecutive years.
  • Section 720.303(7), Florida Statutes is amended to remove the requirement that a homeowners’ association that operates fewer than 50 parcels, regardless of the association’s annual revenues, may prepare a report of cash receipts and expenditures in lieu of financial statements, and instead bases financial reporting requirements strictly on annual revenues.

House Bill 1237 was also signed by the Governor. The Bill modifies several sections of Chapter 718, Florida Statutes, such as creating anti-kickback provisions, criminalizing certain acts, requiring websites for associations of a certain number of units and further regulating potential conflicts of interest, among others and will be effective as of July 1, 2017.  The Bill may be summarized as follows:

CONDOMINIUM ASSOCIATIONS

Financial Reporting (Section 718.71, Florida Statutes)

  • A new law is created specifying that condominium associations shall provide an annual report to the Department of Business and Professional Regulation containing the names of all financial institutions with which they maintain accounts. Any association member may obtain a copy of the annual report from the department upon written request.

Anti-Kickback Provision (Section 718.111, Florida Statutes)

  • This new law provides that an officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value or kickback for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to an association.
  • Any officer, director, or manager who knowingly solicits, offers to accept or accepts any thing or service of value or kickback is subject to civil and, if applicable, criminal penalties.

Criminalization of Certain Acts (Section 718.111, Florida Statutes)

The following acts are now punishable as criminal acts:

  • Forgery of a ballot envelope or voting certificate used in a condominium association election is punishable as a felony of the third degree in accordance with Section 831.01, Florida Statutes.
  • Theft or embezzlement of funds of a condominium association is punishable based upon the amount of the theft or embezzlement in accordance with Section 812.014, Florida Statutes.
  • Destruction of or refusal to allow inspection or copying of an official record of a condominium association that is accessible to unit owners within the time periods required by general law in furtherance of any crime is punishable as tampering with physical evidence in accordance with Section 918.13, Florida Statutes or as obstruction of justice as provided in Chapter 843, Florida Statutes.
  • An officer or director charged by information or indictment with a crime referenced above must be removed from office and the vacancy shall be filled, unless the bylaws provide otherwise, by electing a new board member, and the election must be by secret ballot. The vacancy created by the removal of such officer or director shall be filled until the end of the officer’s or director’s period of suspension or the end of his or her term of office, whichever occurs first.
  • If a criminal charge is pending against the officer or director, he or she may not be appointed or elected to a position as an officer or a director of any association and may not have access to the official records of any association, except pursuant to a court order.
  • If the charges are resolved without a finding of guilt, the officer or director must be reinstated for the remainder of his or her term of office, if any.

Hiring of Legal Counsel (Section 718.111, Florida Statutes)

  • An association may not hire an attorney who represents the management company of the association.

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Senate Bill 1520 was signed by Governor Rick Scott on June 16, 2017. The following is a summary of the bill, which will take effect on July 1, 2017:

SB 1520 amends 718.117, Florida Statutes, regarding the optional termination of condominiums, making it more difficult for a Plan of Termination to be passed without full consent of the unit owners.  The changes to the law reduce the amount of unit owners required to reject a plan, postpone the time until another plan can be voted on, and requires that the plan be approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (“Division”) based on factual and public policy reasons. Further, it guarantees that an optional termination will not result in a unit owner receiving less than his or her purchase price of the unit.

Changes to 718.117(1), (3) and addition of (21):

Applicability

  • The statute contains language indicating it is controlling over language in a condominium’s declaration and applies to all condominiums in the state in existence on or after July 1, 2007. The phrase: “Unless the declaration provides for a lower percentage” has been stricken indicating that the threshold established in the statute is the minimum vote required for optional termination.

Optional Termination

  • Prior to the effective date of the amendment, in order to approve a plan of termination, 80% of unit owners must approve the plan, and no more than 10% of unit owners can object. The changes to the statute now require an 80% unit owner vote approving a plan of termination; with less than 5% objecting. Additionally, the changes to the statute now provide that once the plan of termination passes a unit owner vote, it would then need to be approved by the Division.
  • The Division will have 45 days to review the Plan of Termination and notify the association of any deficiencies, or if it is rejected. If the Division does not respond within 45 days, the plan is deemed accepted.  Under the new law, plans of termination will now need to include factual circumstances that show that the plan complies with Section 718.117, Florida Statutes, and supports the public policies of the section, which are listed below.
  • If a plan of termination is rejected by 5% or more of the total voting interests of the condominium, then a new plan may not be considered for 24 months, as opposed to the current period of 18 months.
  • Under the current law, a condominium owner who purchased a unit from the developer must be made “whole” upon termination. In other words, the plan of termination could not provide for paying the unit owner less than the original purchase price. SB 1520 removes the language that restricts this requirement only to the original unit owner, meaning that an owner who purchased a resale condominium would also be entitled to receive a minimum of the purchase price upon optional termination. The bill applies this section to all unit owners, not just the ones who object to the plan.

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With hurricane season now underway, Florida condominium associations should take the time to ensure that they and their owners are prepared for a storm.  In addition to ensuring that hurricane shutters are operational and all of the necessary supplies are on hand, associations should communicate with owners about insurance and liability under state law.

Florida law requires associations to maintain insurance for all portions of the condominium property as originally installed in accordance with the original plans and specifications, as well as alterations or additions made to the condominium property.  Personal property, including floor, wall and ceiling coverings (i.e., paint, wallpaper, wood flooring), electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments including curtains, drapes, blinds, and similar window treatment components, located within a unit or that unit’s limited common elements, and which serve only that unit, are not covered by the association’s insurance policies.  Unit owners are responsible for maintaining their own insurance coverage for these items.

strm-300x240At the start of every hurricane season, association board members or property management should photograph and/or video all of the main public areas of the condominium property.  These images could become vitally important in the event that a storm strikes and claims are filed.   Associations should also take the time to store copies of their wind, flood and property insurance policies in waterproof cases in a secure location.  If possible, digital copies should also be stored in several computers and devices.

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When a bill passes the Florida Legislature and is sent to the Governor for consideration, the Governor has 15 days from which to sign the bill into law, veto it, or do neither (in which case the bill will automatically become law if unsigned within such 15 days). Senate Bill 398 and House Bill 377 have been signed by Governor Rick Scott. The following are summaries of the bills, which will take effect on July 1, 2017:

Senate Bill 398 amends the provisions of Florida Statutes 718.116, 719.108, and 720.3085 to establish new requirements for condominium, co-operative, and homeowners’ associations regarding the issuance of estoppel certificates.

  • Reduces the time for associations to respond to written or electronic requests for estoppel certificates from fifteen (15) days to ten (10) business days.
  • Requires each association to provide on its website the identity of a person or entity (and their street or e-mail address) to which requests for estoppel certificates may be sent.
  • Provides that estoppel certificates must be submitted by hand delivery, regular mail, or e-mail to the requestor on date of issuance of estoppel certificate.
  • Changes authorized association signatories for estoppel certificates from officer or agent of association to any board member, authorized agent, or authorized representative of the association, including authorized employees of the association’s management company.
  • Establishes the information to be contained in, and the substantial form of, an estoppel certificate. The following information must now be included in the estoppel certificate: the date of issuance, name of unit owner pursuant to association records,  unit designation and address, parking space or garage number pursuant to association records, name and contact information for association counsel if the account is delinquent, fee for the preparation and delivery of the estoppel certificate, the name of the requestor, and assessment and other information, including whether the board of directors has the authority to approve of unit transfers and if there is a right of first refusal.
  • Establishes a 30-day effective period for estoppel certificates sent via e-mail or hand delivery, and a 35-day effective period if delivered by regular mail. Requires issuance of an amended certificate at no charge if the association learns of new information or a mistake made in the certificate prior to the sale or refinance of the unit.
  • Caps the fees which may be charged for preparation of an estoppel certificate at $250.00, unless such certificate is requested on an expedited basis, in which case an additional $100 may be charged; if there are delinquent amounts due to the association from the applicable parcel, the association may charge an additional fee not to exceed $150.00.
  • Provides that no fee may be charged if the estoppel isn’t provided within the 10 business-day deadline; and establishes an aggregate fee limit for requests for multiple units owned by the same owner if there are no past due monetary obligations owed by such owner.
  • Provides that the association waives the right to collect any amounts not included in the estoppel certificate from any person who relies on the information in good faith and his or her successors.
  • Requires that the board of directors pass a resolution to establish the authority to charge a fee for the preparation and delivery of estoppel certificates.
  • Provides that reimbursement for estoppel certificate fees for sales that did not occur may not be waived by agreement if the estoppel certificate fee was paid by someone other than the unit owner. Also provides for prevailing-party attorney fees related to actions for such reimbursements.
  • Provides that the statutory fees authorized shall be adjusted every 5 years in keeping with the Consumer Price Index, and the adjusted amounts shall be published on the DBPR’s web site.

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