Articles Posted in Community Association Law

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

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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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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MichaelHymanFirm partner Michael L. Hyman 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 “Injunction Against Condo Owner Illustrates Just How Ugly Things Can Get,” focuses on a ruling in Broward Circuit Court last year that granted an injunction to a South Florida condominium association against the owners and residents of a unit in the 55-and-over community.  His article reads:

The association alleged that the defendants violated key provisions in the community’s declaration by threatening and disturbing other residents with their aggressive actions. In fact, one unit owner sought a restraining order against Juan Gonzalez, whose conduct ultimately resulted in his arrest for domestic violence and resisting an officer. The association alleged that this sort of conduct had been going on for several years, but it had escalated into more violent and aggressive levels. In addition to seeking injunctive relief against the defendants, it also sought to have the court require them to vacate the dwelling.

The court found that the defendants had threatened and disturbed other unit owners with repeated aggressive behavior and threatening words and actions. It ruled that the “credible evidence also established that the association tried to remedy the defendants’ behavior by speaking to the defendants, having the defendants appear before a committee of unit owners for the development of harmonious relations, calling the police on multiple occasions and having legal counsel send letters of violation demanding that the threatening and aggressive behavior stop, all to no avail.”

dbrlogo-300x57The ruling states that the association called a meeting of its grievance committee, during which Gonzalez acknowledged that he had been banging on the ceiling of his unit, and he suggested that he would not have to serve much time in prison if he killed somebody. It reads: “On numerous occasions continuing until the current time, he would use a stick or other object to bang on his ceiling, claiming that the occupant above his unit was making too much noise, but in reality these noises were common day-to-day noises such as walking through the apartment or taking a shower. On one occasion, he walked upstairs to use a baseball bat to bang on the occupant’s door, frightening her deeply that the defendant was attempting to break into her unit and resulting in the police being called to the premises. He later approached this same occupant when she was on the common areas, threatening her to her face. On another occasion, the defendant Juan Gonzalez threatened a staff member with a knife, and threatened the property manager that the defendant would run him over with his car.”

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Nicole-Kurtz-2014-thumb-120x180-87971The firm’s Nicole R. Kurtz 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 was titled “Short-Term Rentals Not a Violation of Rules Against Business, Non-Residential Uses,” focuses on the ramifications of a recent ruling by the First District Court of Appeal that found short-term rentals do not constitute a violation of association rules prohibiting business uses of residences.  Her article reads:

In the case of Santa Monica Beach Property Owners Association v. David Acord, the association appealed a lower court’s order dismissing its action against the homeowners who rented their homes on a short-term basis. The association’s argument in both the lower court and the appellate court was that such short-term rentals constituted a violation of the community’s occupancy restrictions, which required that the homes be used for residential, non-business uses. Specifically, the association’s argument hinged on the community’s occupancy restrictions, which provided that the plots “shall be used only for residential purposes … nor shall any building on said land be used as a hospital, tenement house, sanitarium, charitable institution, or for business or manufacturing purposes nor as a dance hall or other place of public assemblage.”

The association’s complaint for declaratory judgment alleged that the Acords’ two homes in the beachfront community were being used for a “business purpose” not permitted by the association’s occupancy restrictions, as the owners offered the homes for rent on the home-sharing site VRBO.com, received income for renting the properties on a short-term basis, were required to collect and remit state and local sales and bed taxes, and had obtained a license to operate their properties as transient public lodging establishments under the name “Acord Rental.”

The Acords responded by contending that the association’s complaint failed to state a cause of action, and that the short-term rental use of the homes did not violate the restrictive covenants. They argued that because the short-term tenants were using the homes for residential purposes, regardless of the fact that they were paying for their stays, the homes were being used in accordance with the community’s occupancy restrictions.

dbr-logo-300x57The trial court agreed with the Acords and dismissed the association’s complaint. It reasoned that the proper focus in making a determination as to whether the short-term rental of the homes was in violation of the association’s occupancy restrictions was to determine the actual use undertaken at the properties. The trial court found that the nature of the homes’ use was not transformed from residential to business simply because the owners were subject to regulations that required licensure and they earned rental income. The court also noted that because the restrictive covenants were silent on the issue of short-term rentals, and failed to provide for a minimum lease term, any ambiguity as to whether short-term use was permitted must be resolved in favor of the homeowners’ free and unencumbered use of their properties.

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