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Articles Posted in Condominium Association Law

Nicole-Kurtz-2021-200x300The firm’s latest Miami Herald “Real Estate Counselor” column authored by Nicole R. Kurtz appears in today’s Neighbors section and is titled “Federal and State Reforms Necessary to Address Florida’s Residential Insurance Woes.”  It focuses on the precarious state of Florida’s home insurance market, which will be the subject of a special session by the state legislature this week.  Nicole’s article reads:

. . . An article by the Miami Herald’s Ben Conarck recently chronicled how the horrific Champlain Towers collapse “has further inflamed an exodus of insurers no longer willing to underwrite policies in an increasingly risky Florida condo marketplace.” It noted that condominium associations are being forced to resort to the surplus market for less coverage at costlier rates.

“Condo associations are having a hard time getting their pre-Surfside policies renewed, forced instead to sift through estimates for less protective plans that cost twice as much, or higher. Those lucky enough to renew their policies are doing so at 30% to 50% premium increases,” according to Conarck’s expert sources.

Herald-clip-for-blog-5-22-22-1-100x300They also indicate “[s]piraling costs and tighter restrictions in both the insurance and lending industries have led to a new fear that some particularly troubled condo buildings will be uninsurable. Companies are going to be demanding inspection and financial records — and even meeting minutes — to determine how much risk is in any given building.”

Indeed, some analysts are predicting that the state’s residential insurance market is nearing a total collapse. They point to the six property and casualty companies that offered homeowners insurance in the state but have liquidated since 2017, with two more that are in the liquidation process this year.

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A recent case from Leesburg, Florida, illustrates why community associations should avoid issuing and using debit cards in the name of the association.

According to a recent report by Leesburg News (www.Leesburg-News.com), John Joseph O’Connor was arrested and stands accused of stealing nearly $3,000 from the Coachwood Colony HOA by making multiple ATM withdrawals with the association’s debit card shortly after he resigned as president. The transactions were discovered by the association’s new treasurer, who reviewed the bank statements after joining its board of directors and discovered nine unauthorized ATM withdrawals totaling $2,972.

The astute treasurer contacted the bank and was told that the debit card used for all the transactions was the one issued to O’Connor.

cwood-300x161The Lake County Sheriff’s Office was notified, and a deputy questioned O’Connor who said he lost his wallet with the HOA’s debit card and had reported it to the bank. However, further investigation revealed that he had never reported the card missing, and ATM surveillance video proved to be incriminating. He was arrested and released on a $7,000 bond, and is scheduled to appear in Lake County Court on May 31.

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Gary-Mars-2021-2-200x300The firm’s Gary M. Mars was the first South Florida community association attorney to weigh in on the recently proposed SAFER in Condos Act in a major local media outlet with his article in today’s op-ed page of the Miami Herald.  The article, which is titled “After Surfside, Federal Condo-Safety Legislation Deserves Bi-Partisan Support,” focuses on the SAFER in Condos Act that was recently introduced in the U.S. Congress by Florida representatives.  It notes that questions regarding condominium safety have been in the spotlight since the horrific Champlain Towers tragedy that claimed 98 lives, and changes failed to pass in the state legislature but have been enacted at the federal level from lenders and also at the local level from counties and municipalities.  Gary’s article reads:

. . . Part of the reason the state legislature could not agree on a set of reforms was because the new funding requirements for structural repairs would have been too much for the unit owners of many condominium communities to bear. Plus, financing options for both condominium associations and their unit owners for such extremely costly property restorations were getting worse by the day, as interest rates have been on the rise and are predicted to continue climbing.

Herald-clip-for-blog-5-3-22-462x1024For a problem of this magnitude and national scope, only the federal government has the capability and resources to truly make an impact.  Its first effort at addressing it was proposed on April 18 by U.S. Reps. Charlie Crist (D-St. Petersburg) and Debbie Wasserman Schultz (D-Broward, Miami-Dade) in the form of the Securing Access to Finance Exterior Repairs (SAFER) in Condos Act of 2022.  The legislation would allow condominium owners to finance critical building repairs with loans backed by the Federal Housing Administration (FHA). Unit owners would be able to combine a special assessment from their association for structural repairs with their existing mortgage debt into a new, 30-year loan insured under the FHA home rehabilitation program.

For those who do not have a mortgage or would prefer to leave it as is and continue to pay it off, the legislation also grants owners access to the FHA Property Improvement Program to finance such an assessment over a 20-year term.

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Gary-Mars-2021-2-200x300The firm’s latest Miami Herald “Real Estate Counselor” column authored by Gary M. Mars appears in today’s “Neighbors” section under the headline “Southwest Florida Community Associations Appear to Fall Victim to Massive Fraud.”  The article focuses on what appears to be one of the largest cases of fraud and embezzlement ever committed against Florida community associations that is now unfolding in Southwest Florida.  Gary’s article reads:

. . . Association directors, and also to some extent the property managers they retain, have control over communities’ purse strings, and for some enclaves we are talking about multiple millions of dollars per year. Such amounts under the control of so few have made condominiums and HOAs a favorite target of crooks and fraudsters for generations. Swindlers have embezzled millions of dollars from communities, before getting caught and facing the music in the vast majority of cases.

An excellent Naples Daily News/The News-Press investigation that remains ongoing appears to reveal sadly yet another example of the type of rampant fraud that can be inflicted on communities.

Herald-clip-for-blog-4-10-22-349x1024The case stems from an initial lawsuit filed by the Compass Point South at Windstar condominium association in Naples last April against American Property Management Services, owner Orlando Miserandino Ortiz, and his wife and co-owner Lina Munoz Posada. It alleges that the association and its board members lost access to their Wells Fargo Bank accounts because APMS did not add their names to the accounts, effectively locking them out.

The case was expanded in January with a new lawsuit listing 24 additional plaintiffs and new allegations, including that there is good cause to believe that the owners have left the U.S. and have been residing in Colombia for more than a year. Both complaints allege Miserandino placed funds in accounts that only he could access, preventing the associations from keeping tabs on or accessing their money. According to interviews by the journalists with the association directors, APMS took sole control of their accounts by telling them to sign signature cards but then never submitting them to the bank.

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Gary-Mars-2021-2-200x300The firm’s latest Miami Herald “Real Estate Counselor” column authored by Gary M. Mars appears in today’s Neighbors section and is titled “What’s Next for Condo-Safety Reforms After Legislature Fails to Act?”.  The article focuses on the very poor marks that the state legislature has received in newspaper editorials from the Herald and across the state for its failure to pass any condominium-safety reforms after the horrific Champlain Towers tragedy.  It notes the editorials lament that the two chambers ultimately could not reach bicameral agreement on whether to require condominium associations to maintain financial reserves for major structural maintenance and repairs, and they are certainly correct to bemoan the legislative shortfall.  Gary’s article continues:

. . . However, from the point of view of someone who has kept a finger on the pulse of the state’s condominium laws for the past 30 years, the failure of the legislators to pass reforms during the session that began just over six months after the collapse was not surprising. Lawmakers in Florida as well as other states have been grappling with the issues of high-rise structural inspections and condominium association financial reserves for decades, not-to-mention fire sprinkler and suppression systems that can be very difficult and expensive to retrofit into older buildings.

It was perhaps overly auspicious of lawmakers to propose sweeping reforms without having first ironed out many of the important aspects of the proposals in the pre-session legislative meetings. They put forth many of the recommendations from task forces from engineering/construction trade groups and The Florida Bar, but they ultimately could not agree on the details of inspection dates and reserve funding levels.

Miami-Herald-3-27-22-print-page-342x1024Even with no changes to the state’s laws, significant condo-safety reforms are being implemented by lenders after major changes in underwriting requirements from government-sponsored Fannie Mae and Freddie Mac. In fact, many associations have already been struggling to comply with the new requirement from these quasi government agencies for lenders to have the condominium associations for mortgage applicants complete an eight-page form. For towers in their teen years that have never conducted any kind of major engineering inspections, association directors are completely unequipped to attest to their buildings’ current structural integrity in these questionnaires, and the potential legal liabilities would preclude them from making such representations.

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Gary-Mars-2021-2-200x300An article featuring insights from firm shareholder Gary M. Mars appears on the front page of today’s Sun Sentinel.  The article, which is headlined “Failed Condo Safety Bill Leaves Residents, Buyers in Limbo,” focuses on what is in store for condominium safety reforms from lenders and insurers after the measures before the Florida Legislature failed to pass during the 2022 session that ended last week.  The article reads:

. . . Some condo lawyers argue that it was too ambitious to expect that a sweeping safety bill could be passed in a short three-month legislative session.

“I know it was very, very ambitious legislation,” said Gary Mars, a condo lawyer at Siegfried Rivera in Coral Gables.  “It would have taken a lot of effort to get it through all of the machinations developing legislation of this type.”

He noted that not every building is in dire structural straits, or even old enough to be required to follow inspection rules such as the ones in Broward and Miami-Dade counties, which mandate deep-dive studies after 40 years.

Sun-Sentinel-3-21-22-print-page-1-1-100x300“I represent a lot of associations in buildings in their teenaged years,” he said.

“They’re getting sophisticated reports” from their engineers about deferred maintenance issues such as waterproofing, balcony restorations and painting, Mars said.  But the reports don’t cover structural issues.

“They may have wonderful reports, but those reports don’t give the association the ability to check the box” about the building’s overall condition, he said. “There’s not a perfect solution to this problem.”. . .

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The demands for increased access to condominium financial records and structural reports in Florida after the horrific Champlain Towers tragedy are leading to possible changes at the state and local levels, and they just led to a new local ordinance in Miami-Dade County.

On March 1st, the Miami-Dade Board of County Commissioners unanimously approved an ordinance establishing a searchable database for financial statements and structural reports, among other information and documentation, for residential community associations located in Miami-Dade County. The new ordinance requires community associations in Miami-Dade County, including all condominium, cooperative, and homeowners’ associations, to upload certain documents and information to the county’s database, along with a written registration with the Miami-Dade County Department of Regulatory and Economic Resources, by Feb. 1st of each year, beginning on February 1, 2023.

MCboard-300x169The ordinance provides that the documents uploaded to the database will be publicly accessible on the county’s website, and will also be searchable. Some of the documents to be attached to the annual registration submitted to the county include the following: the name of the community association; the name and contact information for the association’s property manager or other designated agent; a list of all officers and directors of the association, including their contact information; a link to the association’s website, if any; a legible copy of the association’s governing documents; a list containing the association’s planned capital projects from the date of registration through February 1st of the following year; a copy of the association’s current budget and financial statements, including any applicable current or approved special assessments; and all reports issued within the last 10 years on the structural status of the property governed by the association, including recertification reports, if applicable.

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Gary-Mars-2021-2-200x300The firm’s latest “Real Estate Counselor” column in the Miami Herald authored by Gary M. Mars is featured in today’s Neighbors section and titled “Electric Vehicle Chargers At or Near Top of Many Condo Community Wish Lists.”  The article focuses on a state law that was ratified last year to facilitate the addition of shared electric vehicle charging stations as an amenity for the use of owners and guests in Florida condominium communities.  It reads:

. . . For condominium dwellers, the lack of access to electrical charging in congested parking garages with assigned spaces initially proved to be a significant challenge for those with EVs. Wisely, the Florida Legislature passed several new laws in recent years to address the installation of charging stations in condominiums, and the law that went into effect last July to facilitate the deployment of shared community EV charging stations may be the most important yet.

Herald-GMars-2-27-22-print-clip-for-blog-101x300The law clarified that the installation of shared EV charging stations for a community’s owners and guests can be ratified via a simple vote of a condominium association’s board of directors, and it would not require a vote and approval of all the unit owners as is needed for projects involving what are called “material alterations.” The prior new charging-station laws addressed installations to be paid for and used by individual unit owners at their assigned parking spaces.

The problem with that model is that very often there is inadequate electrical infrastructure to install such charging stations without it becoming exorbitantly expensive. EV charging requires heavy-duty electrical cables and equipment that are capable of handling the high-capacity loads necessary to fully charge vehicles in just a few hours, as opposed to 12 hours or more using standard 110-volt outlets. Plus, the electrical consumption needs to be metered and billed to the owner, also requiring additional equipment and expenses.

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Oscar-Rivera-2015-hi-res-200x300The latest edition of the firm’s exclusive Real Estate Counselor column in the Miami Herald appeared in today’s Neighbors section and was authored by managing shareholder Oscar R. Rivera.  Titled “Condo Terminations Take Hold as an Exit Strategy for Owners at Aging Towers,” the article focuses on the legal termination of older condominium communities and buyout of all the unit owners to make way for new construction.  Oscar writes that the owners of units in aging condo communities near the water are receiving more offers from industry-leading developers than ever before, and some of these offers are coming just as the 40- and 50-year recertifications for their towers come due.  His article reads:

. . . The costs for repairs, even at the 40-year mark, can be too much for many unit owners to afford. Some associations’ financial reserves are woefully inadequate, or even nonexistent, so they would need to impose significant special assessments to pay for major repairs.

Herald-ORivera-print-clip-2-13-22-300x300In such cases, offers that are sometimes two to three times over market value for each unit can become a very appealing exit strategy for owners, and Florida has a legal mechanism for such condominium terminations that has proven to be effective. Terminations led to the development of the Armani/Casa tower in Sunny Isles Beach and the Una Residences now under construction in the Brickell area.

For developers, the math is even simpler than that of the unit owners. Once the value of the land for redevelopment becomes greater than that of the combined property values of all the existing units in a community, a condominium termination presents a fruitful opportunity.

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When disagreements and disputes arise amongst those who serve on community association boards of directors, emotions can run high in light of the impactful nature of the decisions made by such directors.  However, as association directors are duty bound to act in the best interests of their community and its owners, they should seek to avoid engaging in personal spats and attacks with one another and the owners that could lead to potential legal liabilities for the association.

One of the best examples of the dangers of public rows between association directors and unit owners is now playing out at the Porta Bella Yacht and Tennis Club in Boca Raton (pictured below).  As chronicled in a recent report from www.BocaNewsNow.com, homeowner Samuel Loff filed a lawsuit against the association premised upon an allegation that its board members made inappropriate and inaccurate accusations against him as part of a retaliation campaign.

pbella-300x255The lawsuit alleges that the community’s board of directors retaliated against Loff for an email that he sent to them complaining about security shortfalls and announcing his candidacy for a board seat.  Shortly after his email, the suit alleges that the board began accusing him of making unwanted advances to a female security guard, and it later put those accusations in writing via an email distributed to all the unit owners.

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