Articles Posted in Condominium Association Law

Hurricane Irma is now a category five storm that is predicted to impact the state of Florida by late this week.  As all community associations prepare their properties for the storm, they should also take specific measures to prepare for any insurance claims that may arise.  Below is an excerpt from an article by firm partner Laura M. Manning-Hudson on these pre-storm insurance recommendations that was posted in this blog earlier this year:

At 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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Florida community associations, just as with all other property owners in the state, can be held liable for crimes committed on their properties.  Associations and other property owners owe a duty to their residents and guests to undergo reasonable steps to protect against foreseeable crimes.

There have been cases over the years of Florida associations being sued by the victims of crimes that took place in their community for allegedly failing to implement adequate security measures.  Some of these suits, especially those involving severe injuries, have been resolved in considerable rulings or settlements in favor of the victims.  These awards, combined with the litigation costs and the possibility of increased insurance premiums, can be financially disastrous for many associations.

ggate-300x225Exactly what is considered reasonable security is the key question before the courts in these negligence claims. Other considerations include whether the crime that took place was foreseeable.  For instance, in a gated high-end community, residents and guests may expect a greater level of security, so some might argue that such community is to take measures at a higher standard.

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The outcome of this year’s legislative session evoked a lot of confusion from property managers and boards of directors serving the community association industry.  As a result, we have received a lot of requests from our readership asking for clarification on some of the laws that were enacted. In this post, we will be tackcc-article-photo-fb-3-300x158ling the debit card provision in an effort to clear up some misconceptions about the new legislation.

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The new Florida law that establishes criminal penalties for association fraudsters should help many associations to contend with suspicious and irregular activities by unscrupulous board members.

Association boards of directors control the purse strings for their condo communities, and as such they have always made for extremely appealing targets for fraudsters who conspire to assume control via their annual elections.  In a Las Vegas case, a U.S. Justice Department investigation revealed that 11 associations were defrauded of tens of millions of dollars in a board of directors takeover scheme from 2003 to 2009.  Forty-one defendants were convicted of rigging board elections through such tactics as traveling to Mexico to print phony ballots, using the master key at a condominium complex in order to remove ballots from mailboxes, and retrieving discarded ballots from condo dumpsters.

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After several years of failed attempts, the estoppel bill has become law in Florida and mandates major changes to the way community associations in the state prepare estoppel letters (also called estoppel certificates), which are legal documents detailing the amounts owed by a unit owner prior to the sale of their residence.

Below are the changes required by the new law:

  • Reduces the time associations have to respond to written or electronic requests for estoppel certificates from 15 days to 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 the date of issuance of the 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. Continue reading

The 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.

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Firm 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. Continue reading

Firm 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.

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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. Continue reading

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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