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Gary-Mars-2021-2-200x300The firm’s latest Miami Herald “Real Estate Counselor” column authored by Gary M. Mars featured in today’s Neighbors section is titled “Possible $8M Fraud Against Florida Community Associations is a Wake-Up Call.”  The article, which is the second of two parts, is on a developing case from Southwest Florida that appears to be one of the largest incidents of fraud and embezzlement ever inflicted on community associations in the state.  It reads:

. . . An excellent Naples Daily News/The News-Press investigation has found that the associations are reporting more than $8 million has been taken from their accounts. Association directors have told the journalists that APMS took sole control of their Wells Fargo Bank accounts by telling them to sign new signature cards but then never submitting them to the bank.

The ordeal that these communities are now undergoing is horrific, and many of us who provide essential services for associations in Florida have been impacted by this case. We shake our heads in disgust at the brazen actions that appear to have taken place, while also hoping that we have successfully helped every association we work with to avoid the potential for any such malfeasance.

Herald-clip-for-blog-4-24-22-297x300The association board members and bankers that appear to have been hoodwinked in this case had in all likelihood grown to trust APMS and its owners wholeheartedly. That would likely explain how the state-licensed property management company allegedly succeeded in securing, submitting and executing all of the necessary documentation in order to remove the community associations and their directors from their own bank accounts. Apparently, the necessary red flags did not go up, resulting in the success of the scheme.

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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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RobertoBlanch_8016-200x300The firm’s latest “Real Estate Counselor” column, which is featured in the Neighbors section of today’s Miami Herald, was authored by shareholder Roberto C. Blanch and titled “Water-leak Suit at Jacksonville Condo Makes Local Headlines, Reveals Telling Lessons.” Roberto’s article focuses on a recent report that aired on both the ABC and NBC affiliates in Jacksonville that included footage of a severe water leak filmed by a condominium tenant. The owner of the unit terminated the tenant’s lease, and he eventually filed a lawsuit against the association after it allegedly declined coverage for extensive water damage including warped floors of costly imported wood, destroyed light fixtures and dangerous mold.  The column reads:

. . . The news report, which can be viewed at tinyurl.com/3un2ktam, illustrates the significant impacts that water leaks can have in condominiums. It is important to note that not all water loss events in condominiums are the result of improper maintenance by the association, as some may result from clogged sinks and toilets, or other owner negligence and causes.

Condominium associations and their property management must periodically inspect and repair their buildings’ common-element pipes and other components. Any leaks that may arise should be quickly and proactively investigated to determine their source and prevent them from causing any further property damage or possible injuries to residents. Miami-Herald-3-13-22-print-page-1-297x300Regardless of a leak’s cause or source,  an association’s management and directors have an obligation to address and potentially eliminate it.

Associations should work with qualified insurance professionals to maintain adequate coverage against the types of damages that are likely to arise from leaks. They should also have a plan of  action in place for the handling of water leaks, including pre-determined arrangements for their immediate remediation and a detailed process for reporting such incidents to the association’s insurance carrier.

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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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Oscar-Rivera-2015-hi-res-200x300Managing shareholder Oscar R. Rivera was proud to be selected by the editors of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, for the publication’s weekly “Leading the Way” column featuring extensive Q&A interviews with South Florida legal leaders.  Now closing in on his fourth decade with the firm, Oscar discusses in today’s article the changes that the firm and the entire legal profession have experienced during the pandemic, and how we have successfully contended with all of the challenges and continued growing.  The article reads:

. . . While Rivera has worked on some of Miami’s most visible developments since joining the firm in 1984 — including representing the developer of 200,000-square-foot Mary Brickell Village — he hasn’t encountered every legal issue his clients face.

Putting heads together to solve new problems was easier before COVID, Rivera said. So was getting to know law clerks’ personalities and training young lawyers. And even if the pandemic were eradicated tomorrow, Rivera knows that many lawyers and staff, including those at his own firm, don’t want to come back every day.

dbr-logo-300x57At the end of 2021, firm founder Steven Siegfried stepped down from his role as co-managing partner, leaving Rivera to lead the evolution of Siegfried Rivera in an eventual post-COVID world.

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Gary-Mars-2021-2-200x300When the editors of the Miami Herald decided they would like to feature a new column to provide timely legal knowledge on real estate topics for the readers of its Neighbors community news section that appears on Sundays, they turned to the attorneys of Siegfried Rivera as the exclusive contributors for the newspaper’s new Real Estate Counselor.  The inaugural edition of the new monthly column authored by the firm’s Gary M. Mars appears in today’s edition and as is titled “All Eyes on Florida Legislature for High-Rise Condo Safety Reforms.”  It focuses on the status of reforms after the horrific tragedy of the Champlain Towers South collapse.  Gary’s article reads:

. . . So far, the most significant changes have come at the federal level from Fannie Mae and Freddie Mac, two government-sponsored companies that acquire residential loans to offer mortgage-backed securities for investors in the secondary market. They both have a massive influence over the terms for mortgages offered by lenders, and they recently released new requirements for loans for residences in high-rise buildings with five or more attached units to meet their standards for acquisition. The changes, which are now being adopted and implemented by major residential lenders, place a heavy focus on structural and financial stability, and they reinforce the importance of meticulous documentation of all appraisals, meeting minutes, financial statements, engineering reports, inspection reports and reserve studies.

Miami-Herald-1-23-22-1006x1024Fannie’s new requirements are already in effect, while Freddie’s will take effect for all mortgages with settlement dates on or after Feb. 28. Its new standards will exclude from eligibility any condo loans for units in communities with what it considers to be critical repair needs, which are defined as those that significantly impact a community’s safety, soundness, structural integrity or habitability, and/or that impact unit values, financial viability or marketability. These include all life-safety hazards, violations of any laws or ordinances, building code violations, fire-safety deficiencies and others.

Subsequently, properties that have already identified elements requiring attention and begun their remediation efforts may become ineligible until such work is completed.

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RobertoBlanch_8016-200x300The lead article at the top of today’s front page of the Sun Sentinel titled “Collapse Drives Tougher Loan Standards” begins with quotes from firm shareholder Roberto C. Blanch and goes on to include quotes from his recent blog post on the topic.  The article, which also appears in the Miami Herald’s website, focuses on the new condominium loan requirements from Fannie Mae and Freddie Mac, the government-sponsored enterprises that make mortgages available to low- to moderate-income borrowers.  It reads:

. . . Reacting to last year’s tragic collapse of the Champlain Tower South in Surfside, Fannie Mae and Freddie Mac, the two companies that back a majority of residential mortgages in the U.S., are scrutinizing deferred condo maintenance issues before approving loans generated by banks and other lenders.

Generally, they will not back loans for condo and co-op units if their buildings have put off major repairs, industry experts say.

Both companies have issued temporary requirements for condo and co-op projects to ensure that buildings are structurally sound, and that associations that govern them have the money to pay for repairs.

Sun-Sentinel-RBlanch-1-21-22-print-clip-1-1024x519The upshot, legal and real estate analysts say, is that some condo buyers around the nation may need to find other sources if they want to finance their purchases. The rules could make it harder for some owners to sell, and place more pressure on condo inventories already tightened by heavy demand.

“It is without a doubt a more heightened scrutiny than what was previously being requested,” said attorney Roberto C. Blanch, who specializes in community association law at the Siegfried Rivera firm in Coral Gables. “The focus is on ensuring the safety and structural soundness and viability of buildings.”

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