Condominium Association Law

March 20, 2023

Florida Legislature Considering Bills Proposing Changes to Condo Safety Reforms, Construction Defect Lawsuits

by Roberto C. Blanch

Roberto C. Blanch

As the 2023 Florida legislative session gets underway, there are several bills impacting associations and real estate that our firm’s South Florida community association attorneys will be keeping a close eye on and discussing in our blog.

Senate Bill 154 and House Bill 1395

Perhaps the most important of these are Senate Bill 154 and House Bill 1395, which deal with issues such as inspections and condominium association financial reserves that were addressed in the condo safety reform law that was passed last May with the adoption of Senate Bill 4D during a special legislative session. Under the new law, inspections are required for buildings that have been occupied for 30 years — or 25 years if they are within three miles of a coastline. After these initial inspections, the buildings will have to go through the process again every 10 years.

If adopted, the new bills could result in changes to the time by which buildings, including those within three miles of a coastline, will have to be inspected. The two bills include different timeframes by which the initial milestone inspection may have to be performed (e.g., SB 154 triggering all such inspections at 30 years with discretion for local officials and authorities having jurisdiction to compel some at 25 years depending on “local circumstances, including environmental conditions such proximity to salt water”; or HB 1395 requiring the initial inspections at 25 years for all buildings regardless of proximity to salt water).

February 26, 2023

Miami Herald Real Estate Column by Christyne Santisteban: “Growing Condo Association Budgets Require Deft Touch by Directors, Property Managers”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Miami Herald “Real Estate Counselor” column was authored by Christyne D. Santisteban and appears in today’s edition of the newspaper. The article, which is titled “Growing Condo Association Budgets Require Deft Touch by Directors, Property Managers,” focuses on how condominium associations should respond to the increased costs and financial pressures they are now facing. Her article reads:

. . . [M]any condominium associations are being forced to increase their annual budgets and augment their monthly dues, and/or to implement special assessments to pay for specific unexpected shortfalls.

Needless to say, anytime costs and collections go up dramatically, questions will arise from concerned owners over how their associations’ funds are being spent. That is why transparency and communications will play a key role for associations that are increasing their budgets and assessments.

The best approach for associations and their directors to adopt will be that of full disclosure and complete transparency, which actually begins by determining where cost-cutting adjustments could possibly be made. This may entail meetings and negotiations with key vendors.

Association directors should also schedule and hold discussions over such budgetary and collections increases at all the necessary board meetings that it takes to address owners’ questions and concerns.

February 20, 2023

Community Associations Institute’s Condo Safety Initiatives Recognized with Prestigious Public Affairs Council Award

by Roberto C. Blanch

Roberto C. Blanch

The Public Affairs Council, which is the leading nonpartisan association for public affairs professionals worldwide, recently awarded its 2022 Lobbying Strategy Innovation Award to the Community Associations Institute for the organization’s condominium safety policy response and initiatives.

In the aftermath of the horrific collapse of Champlain Towers South that claimed 98 lives, CAI released its Condominium Safety Public Policy Report based on the work of its special task forces to recommend changes to laws and best practices that may help both communities and legislators to better address building safety.

The participants in these task forces included engineers, insurance experts, building officials, local government leaders, property managers, attorneys, lenders, and others. Over the course of three months, more than 600 individuals devoted a great deal of time to discussions, surveys, interviews, and research to identify clear recommendations.

The resulting Condominium Safety Public Policy Report provided extensive policy positions and recommendations covering reserve studies and funding, building maintenance, and structural integrity. Since its release, CAI’s government and public affairs team has continued to conduct outreach to state legislators and their staff as well as key individuals in federal housing agencies.

February 12, 2023

Herald Column by Gary Mars: “National Media Focuses on Impact of Florida’s New Condo Safety Law on Association Budgets”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Miami Herald “Real Estate Counselor” column is authored by shareholder Gary M. Mars and appears in today’s edition of the newspaper. The article, which is titled “National Media Focuses on Impact of Florida’s New Condo Safety Law on Association Budgets,” begins by discussing a recent segment on Fox Business Network’s Mornings with Maria show about the financial repercussions of Florida’s new condominium safety law on the state’s condo associations and their unit owners. It reads:

. . . The host and panelists point out that the mandates for reserves and engineering safety inspections/reports represent new expenses that will need to be borne by condo owners. Their message to recent buyers or those who may be considering a condo in the Sunshine State: Do your homework and come to terms with the fact that the current monthly association dues for many properties are very likely going to see substantial increases in the near future.

Panelist Mitch Roschelle also bemoans that after the Champlain Towers South tragedy, many condominium owners in the state are no longer willing to serve on their board of directors for fear of exposure to potential legal liabilities for their votes and decisions.

While it did paint a particularly gloomy outlook for the state’s condo associations and owners, this recent morning news show segment was not the first and certainly will not be the last of the national news media reports focusing on the coming increases in Florida condominium association budgets created by the state’s new safety reforms. There is no doubt that many properties are going to need to increase their monthly dues and/or enact special assessments to address immediate needs together with the coming inspections and reserves requirements.

September 1, 2022

Florida’s Mandatory New Condominium Building Reporting System Begins with New Online Form

by Laura Manning-Hudson

Laura Manning-Hudson

The changes that the Florida legislature enacted during its special session earlier this year call for new requirements for structural inspections for buildings that are three stories or higher. They also create new reporting requirements for condominium associations and cooperatives, and call for the enhanced funding of reserves for major structural repairs.

The process established under the new law begins with the reporting of some basic information for all affected buildings throughout the state. The division that oversees condominiums and cooperatives under the state’s Department of Business and Professional Regulation has been charged with establishing the reporting system and collecting the information.

dbprlogo-300x170 The state agency has now officially begun these efforts with its new Building Reporting Form, which can be submitted online and is now available at www.myfloridalicense.com/DBPR/condos-timeshares-mobile-homes/building-report/.

The requested information on the form is very basic, so associations will not have much difficulty with this initial step. It includes the number of buildings on the property that are three stories or more in height, the number of units in such buildings, the addresses of all such buildings, and the counties in which they are located. The form must be submitted by Jan. 1, 2023.

August 21, 2022

Miami Herald Column by L. Chere Trigg: “Community Association Officers, Watch Out for Fraud: If You See Something, Say Something”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Miami Herald “Real Estate Counselor” column appears in today’s edition of the newspaper and is authored by shareholder L. Chere Trigg. The article, which is titled “Community Association Officers, Watch Out for Fraud: If You See Something, Say Something,” focuses on preventing fraud and theft, as well as responding to them whenever they are suspected, in condominium associations and HOAs. Her article reads:

. . . In the community association setting, fraudsters can come in many forms including directors, property managers, bookkeepers, accountants, attorneys, contractors and others. Those who commit fraudulent acts typically pose as experts and work diligently to gain the trust of their victims, then these unscrupulous individuals deploy their schemes and begin to syphon funds from association accounts.

In many ways, modern technology has exposed associations to new sources of potential fraud and financial abuse. The deceit involved in some cases of fraud can be immense, and it often takes much more than cursory reviews of financial and account statements by board members and property managers to determine whether something is amiss.

Some of the telltale signs of potential malfeasance include unusual payments for unbudgeted purchases, payments remitted to unknown vendors, and/or unauthorized signatures appearing on checks or other official documents. However, the variety of potential schemes, which can also include bribes and kickbacks involving unscrupulous vendors, demands the upmost vigilance for effective prevention and detection.

August 14, 2022

Miami Herald Real Estate Law Column by Evonne Andris: “The Costs of Community Association Lawsuits, And How to Avoid Them”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Miami Herald “Real Estate Counselor” column authored by partner Evonne Andris appears in today’s edition of the newspaper and is titled “The Costs of Community Association Lawsuits, And How to Avoid Them.” Evonne’s article focuses on the potential impacts of community association litigation, and the benefits of alternative options for resolving association disputes. It reads:

. . . In such an environment where emotions can run high, boards of directors and the owners they represent should always strive to let cooler heads prevail. While in certain situations litigation is a necessary tool to assist in the governance of a community, it is a tool that should be used with the understanding that escalating conflicts into litigation is almost always detrimental for both sides in association disputes, including those who eventually prevail in the matter.

Litigation is a disruptor of community harmony, and it could lead to very public squabbles that often make the local news. Such coverage can have long-term negative impacts for communities with their indefinite online lifespan via internet searches under a community’s name, making them potentially detrimental for property values.

Real estate brokers can also become keenly aware of communities that are rife with conflicts, and they will steer their clients elsewhere. Some lenders will also inquire about pending litigation in their loan pre-approval questionnaires, and they may become reluctant to approve mortgages for prospective buyers in communities involved in potentially significant lawsuits, or in those that regularly attempt to enforce their rules, policies and decisions through litigation as opposed to other forms of dispute resolution.

August 2, 2022

Miami Herald Op-Ed Column by Gary Mars: “Federal Condo-Safety Financing Proposal Can Prevent More Tragedies Like the Surfside Collapse”

by Siegfried Rivera

Siegfried Rivera

For the second time in the last several months, firm shareholder Gary M. Mars authored an op-ed editorial column in the Miami Herald on a vital new piece of federal legislation to provide for condo-safety financing options for condominium associations and their unit owners. Gary’s new article, which is featured in today’s op-ed Opinion page of the Herald, discusses what he calls a perfect storm of rising insurance, inspections, repairs and reserves expenses that could jeopardize the finances of many South Florida condominium associations and force some owners to either sell or face the prospect of foreclosure. It reads:

. . . A recent Palm Beach Post article chronicled how the Portofino South Condominium in West Palm Beach received an 82% increase from its insurance carrier, while its directors and residents had expected an increase of about 25%, which the community got in 2021.

Mary McSwain, 67, who bought her one-bedroom unit in January, said her monthly dues are going from $914 to $1,347.

For most communities, increased insurance costs will come first, but increases created by the provisions of the state (and some county) mandates for structural inspections, repairs and reserve funding are sure to follow. Those provisions do not start until 2024 for the affected buildings, but association boards would be well advised to begin securing and vetting offers from qualified professionals for their long-term budgetary planning.

A federal proposal introduced recently by Florida U.S. Reps. Charlie Crist and Debbie Wasserman Schultz, together with another bill from the same lawmakers introduced in April, could provide relief for communities in immediate need of substantial repairs and renovations. The new Rapid Financing for Critical Condo Repairs Act of 2022 would let the U.S. Department of Housing and Urban Development’s Federal Housing Administration insure condominium association building rehabilitation loans issued by private lenders.

July 31, 2022

Miami Herald Real Estate Column by Jonathan Mofsky: “Ruling Shows Pitfalls of Associations Enacting Changes Without Required Votes”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest “Real Estate Counselor” column in today’s Miami Herald is authored by partner Jonathan M. Mofsky and titled “Ruling Shows Pitfalls of Associations Enacting Changes Without Required Votes.” It focuses on a recent ruling by Florida’s Fifth District Court of Appeal that illustrates the potential consequences of associations that undergo alterations to their amenities and enact rule changes without the required vote and approval of their unit owners. Jonathan’s article reads:

. . . The case initially stems from a filing for mandatory non-binding arbitration with the Division of Florida Condominiums, Timeshares and Mobile Homes under the Department of Business and Professional Regulation. Michelle and Kevin Flint, owners of several units at the Lexington Place condominium in Orlando, objected to the condo association’s elimination of a common element dog park and a court for wallyball (i.e., a sport similar to volleyball played on a racquetball court). They alleged the association performed these material alterations without a vote and majority approval of the unit owners in violation of its own declaration of condominium.

The Flints also challenged a board-enacted rule that prevented tenants from maintaining pets at the condominium, which they claimed violated the pet restrictions contained in the declaration.

The couple prevailed in these proceedings on both issues. However, the association chose to escalate the matter by filing a lawsuit in Orange County circuit court based on the same arguments originally presented in arbitration.

The circuit court also ruled in favor of the Flints and affirmed the arbitrator’s decision. After considering the different provisions in the association’s declaration as well as the arguments of the parties, the court found that because the association’s declaration required approval by a majority vote of the unit owners prior to performing the alterations, the association’s board of directors alone lacked the authority to eliminate the community’s dog park and wallyball court.

July 18, 2022

Firm’s Laura Manning-Hudson Quoted in Condominium Terminations Article on Front Page of Today’s Sun Sentinel

by Siegfried Rivera

Siegfried Rivera

Firm partner Laura Manning-Hudson is quoted in an article on the rise in condominium terminations in South Florida, and the disputes that often arise in communities considering such buyouts of all the units by developers hoping to raze the building and raise a new one its place. The article reads:

. . . The process is known in Florida as a condominium termination. In other states, it’s called a deconversion and it’s happening in cities like Chicago where apartment-to-condo conversions during the early 2000s haven’t succeeded as planned.

According to the Department of Business and Professional Regulation, terminations of 336 condominiums encompassing 24,761 units were approved by the state Division of Condominiums, Timeshares, and Mobile Homes over the decade beginning July 1, 2012. They ranged in size from two units to 544. Thirty-nine were in Broward County, 86 were in Miami-Dade County, and 24 were in Palm Beach County.

Between 2013 and 2019, the annual number of terminations ranged from 32 to 43. During the pandemic, as eviction moratoriums were imposed, the number of terminations fell to 19 in 2020 and 22 in 2021. Eleven terminations have been approved by the division so far in 2022.

But real estate experts predict that terminations will increase in Florida as condo associations seek to avoid strict and costly requirements enacted in May in the wake of the Champlain Towers collapse last year in Surfside. The new laws require associations with buildings at least 30 years old and over three stories high to, before 2025, conduct structural inspections and amass enough money in their reserves to fund necessary structural repairs.