Condominium Association Law

September 1, 2022

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

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.

July 17, 2022

Firm’s Latest Miami Herald Real Estate Column by Lindsey Thurswell Lehr: “Condo Terminations Require Ample Consideration by Association Directors and Unit Owners”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest “Real Estate Counselor” column in the Miami Herald appears in today’s newspaper and is again authored by partner Lindsey Thurswell Lehr. Her column, which is titled “Condo Terminations Require Ample Consideration by Association Directors and Unit Owners,” focuses on the rise in South Florida in condominium terminations involving building-wide purchases of all the units by developers. While such terminations may be inevitable for some buildings, Lindsey writes that they are typically contentious with some owners steadfastly opposed to the forced sale of their property. Her column reads:

. . . Florida’s condominium termination statute is one of the most controversial aspects of the state’s condo laws. The current statute, which has seen several significant changes over the years, enables owners to work together in the bulk sale of their units to a developer hoping to demolish a condominium and build a new one in its place.

Currently, the statute allows for an optional termination with a vote of 80 percent of the unit owners, but it also enables five percent or more of the owners to block a termination from proceeding for a period of 24 months by rejecting it in writing or via a negative vote.

As my fellow firm partner Oscar Rivera wrote in this column in February, condominium developers are now setting their sights on many potential targets for termination bids in South Florida’s red-hot real estate market.

For aging properties that are now uncovering potential structural life-safety issues, the lessons from Surfside cannot be ignored. They must either immediately ratify a plan to fund and execute the necessary repairs and remediation, or they must work to secure the best possible condo termination exit strategy for all the unit owners as expeditiously as possible.

July 3, 2022

Firm’s Miami Herald Real Estate Column by Lindsey Thurswell Lehr: “Community Associations Should Consider Amending Their Amendments Process”

by Siegfried Rivera

Siegfried Rivera

The latest edition of the firm’s Miami Herald “Real Estate Counselor” column appears in today’s edition of the newspaper and is authored by Lindsey Thurswell Lehr. The article, which is headlined “Community Associations Should Consider Amending Their Amendments Process,” focuses on the inability for many community associations to amend their governing documents, and it suggests a possible solution. Lindsey’s article reads:

. . . Declarations, covenants and bylaws are recorded in the local court registry and provided to all buyers prior to their purchase, as they essentially set the terms of the contract and serve as mini constitutions setting forth the rights and duties between unit owners and their association.

These governing documents are originally codified by a community’s developer, and they often include dated and problematic provisions that are in dire need of updating as communities grow and owners’ goals change.

However, amendments to an association’s recorded governing documents often require a vote of the unit-owner membership, and sometimes the documents demand a minimum approval of two-thirds or even three-quarters of all the owners for an amendment to be ratified.

Such voting thresholds are extremely difficult for most communities to achieve. In fact, many Florida communities have difficulty achieving the legally mandated minimum voter-participation requirements to conduct valid board member elections or hold membership meetings.

Indeed, changing the recorded governing documents is often significantly more difficult than matters requiring only a simple vote of the board of directors, but communities with troublesome and outdated provisions should still take the challenge head on and make it a priority.

June 19, 2022

Firm’s Miami Herald Real Estate Column: “Community Associations Should Break Ties with Developer, Board Members During Turnover”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Miami Herald “Real Estate Counselor” column by Gary M. Mars appears in today’s print edition of the newspaper and is titled “Community Associations Should Break Ties with Developer, Board Members During Turnover.” The article focuses on the turnover process by which control of a community’s operations and management is transferred from its developer to the home/condo buyers. Gary notes that this is one of the most critical junctures for the future administrative and financial wellbeing of all condominium and HOA communities, and those owners who have made the investment to be the charter members of their new association should always begin their takeover with the same vital step: breaking ties with the developers’ board members and experts. His article reads:

. . . Turnover is when a new community’s unit owners get their opportunity to hire independent legal counsel, financial professionals, and engineers to conduct meticulous audits and inspections. A very careful review of all a community’s rules and business records, as well as the physical state of the entire property, is very much the order the day. The end goal is to hold the developer, as well as its contractor, suppliers and design professionals, accountable for any budget shortfalls and construction deficiencies.

Given the nature of the task at hand, this work should always begin with the careful vetting of prospective advisor accountants, attorneys and engineers to ensure only independent and highly qualified professionals are retained by the new owner-controlled board, which must be expeditiously transitioned away from any directors and professionals appointed by the developer during its preceding control of the association, or with any ties to the developer.

The financial, engineering and legal experts retained by the new unit owner-controlled board of directors will be charged with representing the interests of all the owners by holding the developer, contractor, suppliers and design professionals to their warranty and financial obligations. They should also be tasked with changing any rules regulating community affairs, collections policies, and construction matters that were in place under the developer’s regime for its primary benefit.

June 5, 2022

Miami Herald Real Estate Column by Roberto Blanch: “Lawmakers Deliver Huge Milestone in Evolution of Florida’s Condo Laws”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Real Estate Counselor column in today’s Miami Herald is authored by Roberto C. Blanch and titled “Lawmakers Deliver Huge Milestone in Evolution of Florida’s Condo Laws.” The article focuses on the state legislature’s passage of the most far-reaching condominium safety reforms in Florida since Hurricane Andrew. It reads:

. . . The changes include many of the proposals from engineering, legal and community association industry task forces aimed at studying the perceived shortcomings that led to the Surfside catastrophe. They require inspections for buildings three stories or higher 30 years after completion and every 10 years thereafter. Buildings within three miles of the coast must be inspected at 25 years, then every 10 years. The first buildings impacted are slated to be those constructed before July 1, 1992, as they must complete their first structural inspections prior to Dec. 31, 2024.

The inspections are aimed at identifying any substantial structural deterioration that may present life-safety dangers, and whether remedial or preventive repairs are recommended. The reports on their findings will be required to be distributed to association unit owners, prospective buyers and local building departments, which may then require the start of repairs within specified timeframes if substantial deficiencies are identified.

Associations will also be required to conduct reserve studies every 10 years for the funding of structural repairs and, most important, beginning by 2025 they will no longer be allowed to waive funding of many reserve components.

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