Articles Posted in Condominium Association Law

Each year, our elected state representatives and senators meet in Tallahassee for a legislative session where they review and debate an extensive amount of proposed bills, only to send a few of those bills to the governor to be signed into law.  For the third year in a row, our elected lawmakers will be discussing a bill that has once again resurfaced, and if passed, may have a significant impact on community associations’ wallets.

House Bill 483 — also known as Senate Bill 398 or “the home tax” bill — proposes to place a considerable amount of requirements relating to the issuance of estoppel certificates on the condominium, cooperative or homeowners association responsible for preparing them. If signed into law, community associations will need to be both financially and operationally prepared to abide by the stringent changes set forth in the bill.

An estoppel is a legally binding document prepared by a community association or its agent that discloses any liens, overdue assessments or any other money owed to the association, such as late fees and attorney’s fees.  Estoppels are required by title companies in standard real estate transactions in order to inform the seller and buyer of any outstanding financial obligation(s) on the unit or parcel.  If prepared incorrectly, the community association could be liable for miscalculated or incomplete balances, resulting in a loss for the association.

Contrary to some people’s beliefs, estoppels aren’t generated by the push of a button. They take time and precision to prepare, which is why a bill that shifts even more of the burden on the association could be detrimental.

Florida-legislature2-300x169One of the main components of this proposed bill is to mandate more rigorous deadlines for the preparation of estoppels.  Currently, associations have 15 days to prepare and deliver an estoppel once it is requested.  The bill would shorten this period to 10 business-days, which could be difficult for associations of varying sizes and levels of sophistication, as some will be anchored by antiquated bookkeeping or a lack of resources.

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GaryMars-200x300Firm partner Gary M. Mars 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 “Airbnb Gone Wild? Ruling Clarifies Rules on Short-Term Condo Rentals,” focuses on a recent decision by the Second District Court of Appeal that found that the fairly standard language present in the declarations of condominium and accompanying rules and regulations for many properties does not grant unit owners with the unrestricted right to lease their residences.  Gary’s article reads:

The ruling came from the Florida Second District Court of Appeal in the case of Le Scampi Condominium Association v. Hall. Le Scampi had petitioned the lower court for injunctive relief against the unit owners to prevent them from leasing their residence for less than one month without prior approval by the association in violation of its rules.

The Halls did not dispute to the trial court that they had rented their unit for periods of less than one month without prior approval, which constituted violations of the association’s rules. Their defense was based on arguments that those rules were unenforceable because they conflicted with their right to lease their unit under the community’s controlling documents.

The lower court issued a final summary judgment in favor of the Halls based on its finding that the conflict indeed existed and the language in the original declarations of condominium for the property supersedes any lease restrictions in the rules and regulations.

dbr-logo-300x57The appellate panel found that the trial court’s interpretation of the declaration was inconsistent with its plain language. It ruled that the section in question does not provide that the right to sell, lease or transfer a condominium unit is unrestricted with the exception of a notice requirement. Instead, the declaration merely imposes a prior-notice requirement and specifies the contents of the notice, but it does not otherwise address a unit owner’s right to sell, lease or transfer their unit to persons other than family members.

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One of the most common problem areas for condominium associations and their property management is parking.  Spaces are at a premium in most communities, and issues arise when unit owners and tenants fail to park in their designated spots.  Associations and their property managers must be well prepared in order to effectively contend with parking violations.

Most condominium bylaws allow for the adoption of reasonable rules and regulations governing the use of the common elements, which typically include parking areas and spaces.  Boards and management should determine whether the bylaws and/or rules are already adequately addressing parking in the community or if amendments to the governing documents and/or rules may be needed.

Some of the most typical issues addressed by parking rules are designated parking areas and spots for owners, guests and vendors, and spaces for commercial vehicles, boats on trailers, recreational vehicles, personal watercraft, campers, motorcycles and all-terrain vehicles.  Some communities have restrictions on the number of vehicles that a unit owner is allowed to park onsite, and some have time limits for the parking of vehicles in certain areas.

npark-227x300Bear in mind that all parking rules and restrictions must comply with the Fair Housing Accessibility Guidelines developed by the Department of Housing and Urban Development (HUD) with respect to designating handicap parking.

Once clear rules and restrictions are in place, condominium boards should develop effective enforcement measures, which will typically include warnings, fines (typically using a graduated scale that increases commensurately with each violation, but consistent with statutory constraints), and towing.  The bylaws or rules pertaining to towing should allow for the association to assess the costs to the corresponding unit owner, and towing notices and requirements must strictly comply with Florida law.

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With the approval of Amendment 2 last November to legalize the use of medical marijuana in Florida, the state legislature and Department of Health are now developing the rules and regulations that will govern the use of cannabis by those who suffer from a number of ailments listed in the new constitutional amendment.  Likewise, now is also the time for associations to begin discussing and considering the implementation of their own rules and restrictions regarding the use of the drug by unit owners in their communities.

For most communities, the question of whether the use of medical marijuana should be allowed in the common areas will likely cause the most unease.  Other concerns include the use of cannabis inside of the residences, especially in condominiums where the odor could permeate into the common elements or other residences, and some properties may wish to ban the drug from the community in its entirety.

It remains unclear whether the state’s lawmakers will attempt to ban the smoking of medical marijuana.  If smoking marijuana is allowed under the laws that will be adopted in order to comply with the amendment, community associations will need to address whether they must make exceptions to their rules in order to allow residents with a doctor’s prescription to smoke medical marijuana.

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When the Condominium Act was amended several years ago to allow associations to demand and collect rent directly from the tenants of unit owners who were delinquent in the payment of their monthly fees, community associations thought it was an answer to their prayers.  Associations were struggling to recover from the foreclosure crisis, and many homeowners made the decision to rent their units to make some money but, unfortunately, they also chose not to pay their associations.

However, utilization of this amendment has proven to be difficult and sometimes costly to enforce in cases in which de facto tenants and their landlords are able to demonstrate to the court that a tenancy under the letter of the law is not actually in place.  How many times have we heard that the tenant is “family,” that the tenant does not pay the landlord, and that there’s no lease in place?

A noteworthy example is found in a ruling last year by the Miami-Dade County Circuit Court Appellate Division in the case of Cecil Tavares v. Villa Doral Master Associationvdoral-300x226 Tavares had conveyed his condominium unit via quit claim deed to a new owner, but he and his wife continued to live there.  When the new owner went into arrears with the association, it attempted to collect the rent directly from Tavares and eventually filed for an eviction.

The county court granted default judgment in favor of the association and issued a writ of possession to enable it to move forward with the eviction, but Tavares appealed on the question of whether the court erred by defining him as a tenant based on the quit claim deed.

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GaryMars-200x300The firm’s Gary M. Mars shared his insights into the ramifications of a recent Miami-Dade grand jury report on condominium association fraud in an article in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was written by DBR reporter Samantha Joseph, notes that “[c]riminal charges could soon be in store for misbehaving condominium board members and managers if recommendations in a Miami-Dade grand jury report gain traction.  Self-dealing, destroying accounting documents, withholding records, participating in kickbacks, interfering in elections and other willful violations of Florida’s condominium statute could leave individual board members criminally liable for the first time.”

The DBR article reads:

The question isn’t whether there’s fraud and abuse among some of the boards, according to the grand jury report, which cites thousands of annual reports of alleged wrongdoing to Florida’s Department of Business and Professional Regulation. The question is how to police it and shore up a regulator described as a toothless tiger.

“Our investigation exposed . . . severe weaknesses within the current laws and regulations,” the grand jury concluded. “Because the condo laws and regulations lack ‘teeth,’ board directors, management companies and associations have become emboldened in their willful refusal to abide by and honor existing laws in this area. They even engage in fraudulent activity which goes unpunished.”

The report took aim at the Department of Business and Professional Regulation — an allegedly understaffed agency with broad jurisdiction over condo associations and more than 1 million businesses and professionals, including accountants, contractors, cosmetologists, veterinarians and real estate agents.

“The DBPR seems ill-suited to resolve, correct or prevent many of the recurring problems that have been brought to their attention,” it stated.

dbr-logo-300x57. . . Longtime community association counsel Gary Mars, shareholder at Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel in Miami, applauded the agency’s efforts in juggling thousands of complaints that would otherwise clog civil courts, but suggested an overhaul to place criminal cases beyond the department’s purview.

“Ultimately these should end up in a court proceeding, rather than going through a state agency,” he said.

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MTobacksrhl-law2-thumb-120x179-96777The 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 was titled “Rulings Clarify Application of Safe Harbor Caps on Association Dues,” focused on a couple of recent Florida appellate court rulings that brought additional clarity to the application of the criteria for foreclosing lenders and servicers to qualify for the caps that limit their liabilities for association dues.  Michael’s article reads:

In Brittany’s Place Condominium Association v. U.S. Bank, the Second District Court of Appeal settled some lingering questions as to whether a lender or servicer that takes title to a residence via a mortgage foreclosure must also be the current owner of the first mortgage when the final judgment of foreclosure is issued.

The case stems from a 2009 mortgage foreclosure action filed by U.S. Bank against the unit owner and all interested parties, including the association. The bank alleged that it was both the holder and servicer of the note and mortgage, acting on behalf of and with the authority of the owner. It was in possession of the note endorsed in blank, but the Federal Home Loan Mortgage Corp., better known as Freddie Mac, owned the note and mortgage.

After securing a final judgment of foreclosure and acquiring title to the property via the foreclosure sale, U.S. Bank requested an estoppel letter from the association to determine the amount of past-due assessments. The parties could not agree on the extent of the lender’s liability, and the association eventually filed a lien foreclosure complaint against the lender, which then filed a counterclaim to seek compliance with the safe harbor caps.

dbr-logo-300x57The trial court found that there were no genuine issues of material fact and U.S. Bank met the statutory requirements entitling it to the limited liability provisions provided by the safe harbor caps, so the court granted the bank’s motion for summary judgment.

In the subsequent appeal, the association contended that U.S. Bank did not satisfy the safe harbor statute, which requires the entity acquiring title to have also been the first mortgagee or its successor or assignee. The association interpreted “first mortgagee or its successor or assignees” as necessitating ownership of the loan.

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The growing use of drones by consumers across the U.S. is leading to the adoption of new rules and restrictions by the federal government, state governments and community associations.  Questions regarding safety, property damage and privacy abound with drones, and associations are responding by establishing clear parameters for their use by unit owners.

Last year, the Federal Aviation Administration enacted new regulations for the use of unmanned aircraft systems, which are more commonly referred to as drones.  For recreational users, the FAA now requires that drones must be properly registered and labeled with the registration number.  They must only be flown below 400 feet and always within sight of the operator, and they are banned from use near other aircraft and airports as well as over groups of people, stadiums, sporting events, or emergency response efforts.

Privacy concerns over the use of drones with cameras were addressed by a new Florida law that was enacted last year.  The law stipulates that drones with cameras may not be used to record images of privately owned properties or of the owners, tenants or occupants of properties in violation of their reasonable expectations of privacy without their written consent. drne-300x200 Reasonable expectations of privacy are presumed if individuals are not observable by others located at ground level in a place where they have a legal right to be, regardless of whether they are observable from the air with the use of a drone.

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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 “Disputed Condo Election Offers Important Lessons for Association Boards,” focused on a recent appellate ruling that illustrated the importance for boards of directors to act with a clear understanding of their capabilities to alter association election procedures.  Her article reads:

Allegations of questionable or even downright fraudulent tactics by candidates in annual association elections are not entirely uncommon. When suspicious activities begin to call into question the integrity of the election, some boards of directors hit the panic button and take actions that will not stand the test of their governing documents or the Florida Administrative Code.

Such appears to be what took place in a disputed election at the Palm Aire Country Club Condominium in Pompano Beach that culminated in a recent ruling by Florida’s Fourth District Court of Appeal. While the appellate panel’s opinion does not address the reasons for the association board’s actions, noting only that “there is some ambiguity as to what exactly occurred” at the board’s Feb. 29, 2016, meeting, the opinion essentially invalidates the board’s 6-3 vote at the meeting to postpone the annual election that was set for two days later on March 2.

Even though a majority of the board voted to postpone the election, it took place as originally scheduled on March 2, and new directors were elected. The management company for the property, M&M Property Management LLC, subsequently refused to recognize the authority of the prior board of directors and instead began working with the newly elected directors.

dbr-logo-thumb-400x76-51605-300x57In response, the prior board of directors filed suit against M&M seeking a temporary injunction to compel the management company to stop operating in service of the new board of directors. The prior board was granted the temporary injunction, and in turn M&M was ordered to recognize the board as it existed prior to the March 2 election.

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For community association attorneys, it often seems that no matter how much we caution homeowners and condominium associations to take all of the necessary safeguards in order to prevent theft and embezzlement, new cases of blatant fraud always seem to crop up.

The latest example was chronicled in a recent article by the Palm Beach Post.  The article focuses on the arrest of the bookkeeper for the master homeowners association of Cypress Lakes, a 1,000-home, 55-plus community off Haverhill Road in West Palm Beach.

PBPfpKristine K. Moore, the bookkeeper, was charged with embezzling nearly $95,000 over the course of years from the association.  Moore was paid $44,000 per year and had been employed by the association for more than six years.

According to a police affidavit, management reviewed the association’s credit card bills and called police in April 2014 after discovering about $10,700 in charges for personal purchases during the preceding several months.  Additional review then uncovered much larger losses, including missing cash deposits that had been paid by homeowners.

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