Articles Posted in Developer Association Turnover

The residents of the Concord Station community north of Tampa in Land O’Lakes, Fla. recently shared their complaints and confusion with a reporter from one of their local television stations over their HOA’s use of a drone equipped with a camera in their community.

The residents indicate in the station’s report that they received an online notice from their HOA alerting them that it would be flying the drone, which the association confirmed that it operated over the community in addition to a vehicle equipped with a mounted camera.

The residents who expressed their opposition to the HOA’s use of a drone were concerned about the invasion of their privacy, especially if the drone is recording video of their backyards.  One of them indicates:  “If the drone is flying above my property, I’m going to consider that a trespass to our property and we’re going to take appropriate measures to make sure that we protect our privacy rights.”

d2-300x176The property management company for the association explains in the report that they are using the drone to chronicle all of the physical characteristics of the community in hopes of helping to avoid the possibility of homeowner hassles in the future.  The video from the drone is being used for documentation of the state of the community, which is now transitioning from a developer-controlled association to one that is controlled by the unit owners.  The company also noted that the aerial images and video could also be used for promotional and marketing purposes in the future.

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Michael-Hyman-srhl-lawThe firm’s Michael L. Hyman 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 Deficits Don’t Excuse Developer From Funding HOA Reserves,” focuses on a recent decision by the Florida Fifth District Court of Appeal that found a developer was not excused from funding reserves while it remained in control of the association and was funding deficits in the operating expenses.  Michael’s article reads:

For the developer of the Sullivan Ranch community in Mount Dora north of Orlando, it appears that its decision to stop funding reserves after it established the account and began funding it in 2007 has significantly backfired. The Fifth District Court of Appeal recently overturned a lower court’s summary judgment, which concluded that the developer was excused from funding reserves while it remained in control of the association and was funding deficits in its operating expenses.

The Fifth DCA’s decision in Sara R. Mackenzie and Ralph Mackenzie v. Centex Homes et al. illustrates the importance for developers of HOA communities to tread carefully whenever they attempt to avoid funding for association reserves. Condominium developers are provided with a statutory mechanism to avoid funding for reserves if they guarantee a set minimum level for the association’s entire annual budget during its first two years of existence, but the laws governing HOAs do not include this exemption.

dbr-logo-300x57Based on the circumstances in this case, it appears that the developer of the community was either unaware of its statutory requirements governing the funding of reserves or it failed to adequately think through its actions. After establishing the account for the association’s reserves and funding it in 2007, the developer opted to pay Sullivan Ranch’s operating expenses in lieu of making any contributions to the reserve account in the following years, claiming that it had made no guarantee to fund the reserves.

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Gary M. Mars

The firm’s Gary M. Mars authored an article that appeared in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  Gary’s article, which was titled “Ruling Reminds New Associations to Watch for Developers Waiving Reserves,” focuses on a recent appellate ruling regarding the issue of developers waiving their funding of reserves prior to the turnover of an association for a new community from the developer to the unit owners.  His article reads:

A recent appellate ruling shined a spotlight on the all-too-common issue of developers improperly waiving their funding of reserve accounts while they retain control of an association for a new community before its turnover to the unit owners.

The ruling served as an important reminder for the owners at new developments of the careful vigilance that they need to exercise for any questions involving the funding and use of reserves by developers.

The ruling was filed by the Fifth District Court of Appeal in the case of Meritage Homes of Florida v. Lake Roberts Landing Homeowner Association. Meritage, the developer of the subdivision located in Winter Garden, appealed the trial court’s final judgment in favor of the homeowner association, which found that the requirement for HOA reserve accounts in the city code of Winter Garden cannot be waived as Meritage had attempted.

Meritage based its appeal on its contention that the lower court’s ruling created an impermissible conflict with section 720.303(6)(f), Florida Statutes, which expressly grants homeowner associations the right to waive reserves. The developer’s initial annual budget planned for the HOA’s operating expenses as well as an $11,000 deferred maintenance reserve account, but it later approved a budget that completely waived its funding of the reserves.

dbr logo-thumb-400x76-51605Meritage asserted that it issued written notice to all of the association members, which included several homeowners at that point, but none of the members other than Meritage attended the budget meeting in which the board members approved the budget sans reserves.

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MichaelHyman.jpgThe firm’s Michael L. Hyman wrote an article that appeared in today’s edition of the Daily Business Review, South Florida’s only business daily and official court newspaper, about the recent decision by the First District Court of Appeal in the case of Silver Shells v. St. Maarten at Silver Shells Condominium Association. His article reads:

The First DCA’s decision in the case of Silver Shells v. St. Maarten at Silver Shells Condominium Association stems from a lawsuit by the Destin condominium association for one of the towers in a multi-building property against the developer.

The suit sought to require the developer to turn over control of the master association to the unit owners and convey a “beach property” that was initially included in the common properties which it was required to convey to the master association at the time of turnover.

The appellate court found that the association’s claim that the developer improperly amended restrictive covenants to effectively remove the beach property in question from the common properties is barred by the statute of limitations.

The opinion held that the five-year limitations period began to run when the association for the building was turned over to the unit owners, and the association’s action had not been filed within five years of that date.

Michael’s article concludes:

The takeaway from this ruling for this condominium association as well as other new condo associations in similar master-association communities is that the clock starts ticking on their limitations period to challenge any of the developer’s actions on the date in which their building’s association is turned over by the developer to the unit owners.

The developer will continue to have the “power of the pen” to implement any amendments that it sees fit to the covenants for the master association while it maintains control during the build out of the community, so it is incumbent on the associations for the individual towers that have already been turned over to the unit owners to maintain a careful eye on all of the developer’s amendments and, when necessary, challenge them before their limitation periods expire.

In this case, the association’s challenge to the developer’s amendment that enabled it to retain ownership of the beach property, which apparently included a lucrative ongoing revenue stream for the rental of beach chairs and umbrellas, may have prevailed had it been filed before the five-year limitations period had expired.

Our firm congratulates Michael for sharing his insight on this new appellate decision with the readers of the Daily Business Review. Click here to read his complete article in the newspaper’s website (registration required).

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