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Articles Posted in Governing Documents and Amendments

Florida community associations typically have the right under their governing documents to regulate and approve leases and tenants. However, some association boards of directors are under the misconception that they can easily develop and implement new leasing restrictions via a board vote, and that they have the authority to approve or reject prospective tenants as they please without facing any scrutiny of their decisions.

As my colleague Laura Manning-Hudson wrote in this blog in her June 9 post titled “Suit Against Boca Condo Association Spotlights Importance of Governing Document Amendments, Filings,” a lawsuit filed earlier this year against Boca Pointe Condominium Association highlights the importance of properly adopting leasing restrictions to an association’s governing documents and recording them in the local court registry where the association is located.

Residential-lease-agreement-300x199According to the suit, the association’s new leasing restriction, which it apparently adopted via a simple vote of the board the directors, was never approved by all the unit-owner association members via a formal vote. The only leasing restriction in the association’s recorded declaration states that owners are only restricted from renting units for terms of less than thirty days, contradicting the new restriction that the board tried to implement. If the allegations in the lawsuit hold up in court, the association could be forced to pay the plaintiff unit-owners’ lost rental income and legal bills.

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A lawsuit that was recently filed against the Promenade at Boca Pointe Condominium Association highlights the importance of properly adopting changes to an association’s governing documents and recording them in the local court registry where the association is located. If the allegations in the lawsuit hold up in court, the association for the Boca-area community could be forced to pay the plaintiff unit-owners’ lost rental income and legal bills.

According to the suit, the association is making up rules to prevent condo owners Gerardo and Ana Vizcaino from leasing their unit for a full year. The suit states that the association’s new rule, which it apparently adopted at an August 2020 board meeting after a simple vote of the board the directors, was never approved by the members by a formal vote.

Indeed, the suit alleges that the association president acknowledged in a notice to all of the unit owners that the board’s adoption of a rule restricting rentals to one tenant per 12-month period was invalid because it had not been approved by the unit owners via an amendment to the governing documents. The only restriction in the association’s recorded declaration pertaining to rentals states that owners are only restricted from renting units for terms of less than thirty days. No other restrictions are included in the recorded governing documents.

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MTobacksrhl-law2-200x300An article by the firm’s Michael Toback was posted today as the featured expert guest commentary column on the homepage of the website of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, and will soon be appearing in the “Board of Contributors” page of the print edition.  The article, which is titled “Ruling Illustrates Perils in Foreclosures of Noncompliance With Documents, Miscalculating Claim of Lien,” discusses a recent ruling by the state’s Fourth District Court of Appeal that highlights not only the significance of associations complying with the provisions of their governing documents in foreclosures, but also the implications of a mistake in the calculation of the “assessment amount due” in determining the ultimate validity of an association’s claim of lien.

Michael’s article begins by noting that most community association governing documents require the association to provide an annual budget to each homeowner with the assessments for the coming year and their due dates, as well as a certificate setting forth the amount of current assessments upon request.  If an owner becomes delinquent in their assessment payments, Florida law calls for associations to issue a demand letter to the owner outlining the amounts that are outstanding. If such demands prove unsuccessful after 45 days (30 days for condominiums), associations may then file a claim of lien against the owner’s residence for the assessment amount due.

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His article continues:

. . . In Pash v. Mahogany Way Homeowners Association, the HOA filed a foreclosure against unit-owner Gary Pash claiming he had failed to pay outstanding quarterly assessments and costs.  Both parties filed dueling summary judgment motions, and the circuit court ultimately entered summary judgment for the HOA and denied summary judgment for the owner.

The Fourth DCA panel’s majority opinion overturned the HOA’s summary judgment, concluding that the evidence presented by the HOA failed to include each of the relevant budgets and notices, together with the proof they were provided to the unit owner, in order to combat Pash’s affidavit in opposition.

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A recent survey by the Community Associations Institute found that 67 percent of respondents have noticed an increase in home-based businesses operating within their communities due to the COVID-19 pandemic. In the same survey, 83 percent of respondents reported that their community restricts home-based businesses, but 73 percent indicated that their association was now being more lenient when it came to approving residents’ requests to operate businesses such as daycares, school learning pods, hair stylists and others from their homes.

Most Florida community associations have restrictions prohibiting commercial business activities from being conducted in residents’ units. Some include blanket bans on commercial activity altogether, while others make a distinction between permissible and impermissible activities.

homework-300x200It makes sense for associations to regulate and restrict businesses from operating within their communities, especially for commercial activities that entail increased traffic and noise, but the upsurge in working from home in the new post-pandemic normal calls for HOAs and condominium associations to take a prudent approach that is guided by reason. Today’s technology allows for a great deal of work to be done from home with no disruptions whatsoever to the community at large. Rather than attempting to ban all commercial activities in a community, the better option is to specifically delineate in the governing documents the types of activities that are not allowed.

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The Florida Marketable Record Title Act (MRTA) requires HOAs to reaffirm and renew their covenants and restrictions 30 years after they were originally recorded in the local county records.  MRTA was created to extinguish claims to property which are at least 30 years old in an effort to stabilize property law by clearing old defects from the chains of title to real property, limiting the period of record searches, and clearly defining marketability by extinguishing old interests of record.

One of the unintended consequences of the Act is that the declarations of covenants, conditions and restrictions recorded by HOAs may be set to expire after 30 years of the date in which they were recorded.  Keep in mind that for most HOAs, if the residents are no longer compelled to act in accordance with the community’s declaration, the results could be catastrophic for the associations’ administration and finances.

Flalegislature-300x169The Florida legislature passed a law earlier this year to update the process for HOAs to renew and preserve their covenants and restrictions under MRTA in order to keep them in place after the 30-year term.  Under the new law, which is now in effect, at any time during the 30-year period following the effective date of the title for the covenants and restrictions of a community association, the association may preserve and protect those covenants or restrictions from extinguishment by following more simplified filing procedures which include the following:

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Many associations’ governing documents include clauses that prohibit commercial business activities from being conducted in a resident’s unit.  Some include a blanket stipulation banning commercial activity altogether, while others make a distinction between permissible and impermissible activities.  While it makes sense for associations to want to regulate and restrict businesses from operating within their communities, HOAs and condominium associations should take a prudent approach that is guided by reason.

When considering how to regulate and enforce restrictions against commercial activities, associations should focus on the impact that particular activities have on the community and the quality of life of those who make it their home.  Today’s technology allows for a great deal of work to be done from home with no disruptions whatsoever to the community at large.  homework-300x200Rather than attempting to ban all commercial activities in a community, the better option is to specifically delineate in the governing documents the types of activities that are not allowed.

Some of the activities that communities wish to ban are those that entail significant vehicular traffic, including from clients as well as vendors and delivery vehicles.  Continue reading

For many condominium associations in Florida, the amount of board members serving on a board of directors is usually dictated by the association’s governing documents or bylaws. There are associations, however, whose documents are silent on the number of directors that can be elected. In the absence of such a provision, condominium associations would have to refer to Chapter 718, Florida Statutes, which provides that a board of administration of a condominium shall be composed of five members.  For those bylaws that do include language with specifications regarding a board’s size, the average number of board members serving typically ranges from three to five board members. But is there an ideal size?

While there is no “right” size for a board of directors, community associations that are considering decreasing or increasing their existing board’s size should always evaluate the pros and cons of doing so. It is possible for a board to be either too big or too small. Continue reading

LindseyTLehr-thumb-200x300-94705Helio De La Torre 2013The firm’s Helio De La Torre and Lindsey Thurswell Lehr were interviewed during the last few days by reporters from the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, and The Real Deal, one of South Florida’s leading sources for real estate news and analysis.  They were asked by the journalists for their insights into the ramifications of a decision last week by the Third District Court of Appeal that has significant implications for the future of condominium terminations in Florida.

The case pitted the Tropicana Condominium Association against the developer of the neighboring Ritz-Carlton Residences in Sunny Isles Beach.  The appellate court ruled in favor of the developer, which had ties with a group of five unit owners at the Tropicana, finding that the property’s bylaws required unanimous approval for a sale, despite the 80 percent threshold in the amended condominium termination legislation from 2007.  It agreed that the five holdouts’ refusal to sell was enough to block the termination that was favored by the association because the property’s 1983 governing documents predate the legislative amendment and require all unit owners to approve termination.

The Third DCA ruled that the 2007 changes to the Florida statute don’t apply retroactively to condominium declarations from prior to 2007 unless they contain certain language that incorporates amendments to the state’s Condominium Act.

The appellate court said in its ruling that “when referencing Florida’s Condominium Act, the declaration [for Tropicana] did not contain the words ‘as amended from time to time.’ Absent this language in the declaration, changes by the legislature to the Condominium Act subsequent to the effective date of the declaration do not become part of the declaration automatically.”

TRDlogoAs Helio explains in the article from The Real Deal that appeared on Nov. 18:

“The statute seemingly had language that suggested the intent was to make it retroactive,” said law firm partner Helio De La Torre, who has represented condo associations in similar cases centering on termination of associations through votes by unit owners. He is a partner of Coral Gables-based Siegfried Rivera, P.A.

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Every four years, as presidential elections heat up, condominium and homeowners association communities throughout Florida are faced with the issue of political signs being posted in front yards, on balconies, in windows and on and around the common areas.  Association attorneys are often consulted, and most would advise associations to be extremely careful with how they create and enforce restrictions that prohibit political expression.

Most associations’ governing documents include restrictions that prohibit residents from posting signs anywhere on the unit or the property.  Political signs, however, give rise to issues of freedom of speech, which is protected by the First Amendment.

The key for associations to remember is that restrictions on freedom of speech under the First Amendment apply only in governmental or public settings, so community associations, as private non-governmental entities, are allowed to restrict signage, including political signs, in accordance with their corresponding state law.  Some states have enacted legislation specifically addressing the issue, but Florida has not and neither has the state’s Supreme Court addressed the issue specifically.

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As a result, Florida’s associations are able to enact and/or enforce rules and restrictions governing the display of political signs by their members, but they are cautioned to do so very judiciously and under the watchful guidance of highly experienced association legal counsel.

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Roberto C. Blanch

Roberto C. Blanch

Firm Partner Roberto C. Blanch wrote an article that appeared in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, about the implications for Florida condominium associations of the recent ruling by the Second District Court of Appeal in the case of The Retreat at Port of the Islands LLC v. Port of The Islands Resort Hotel Condominium Association.  His article reads:

The acquisition of condominium units by investors, including bulk-buyer unit purchasers, has served a critical role in the recovery of the South Florida real estate market. These concerns acquired scores of units at condominium developments during the height of the foreclosure crisis and enabled the associations of many distressed developments to regain their financial footing.

Most of these units were purchased by legal entities, including corporations and limited liability companies, comprised of various shareholders, members, directors and officers. As the recovery of the housing market continues, South Florida’s condominium associations should take a close look at their bylaws and other governing documents regarding the ability of these legal entities to take a majority voting control of their boards of directors.

A recent ruling by the Florida Second District Court of Appeal has clarified that a clause which is commonly found in many condominium association bylaws enables representatives of entity-owned units to have multiple individuals serve as members of the board of directors. In the case of The Retreat at Port of the Islands LLC v. Port of The Islands Resort Hotel Condominium Association, Retreat appealed the circuit court’s summary judgment in favor of the condominium association. The lower court interpreted a provision in the association’s bylaws to limit Retreat’s representation on the association board to one of its representatives, regardless of the number of units that it owned in the property.

His article concludes:

In its reversal of the trial court’s opinion, the appellate panel found that the section of the association’s bylaws in question was devoid of language limiting the number of Retreat’s managing members who may serve as directors, as it was clearly addressing the class of individuals who are qualified to represent a unit owner’s interests on the board rather than the number. The court also noted that the bylaws allow co-owners of a unit to occupy multiple seats on the board if they own more than one unit, so the association already allows for owners of multiple units to occupy multiple seats on the board.

Some condominium association members have traditionally been wary of having one group of owners with shared interests control a majority of their board of directors, arguing that it can be a recipe for problems such as creating favoritism in the board’s decisions and awarding of vendor contracts, as well as facilitating fraud and embezzlement of association funds.

In light of this ruling, association members who wish to restrict entity-owned units, including bulk unit-owners, from having representatives hold multiple board seats and take a majority voting control of their condominium association board of directors should consult with qualified legal counsel to evaluate whether their association’s bylaws and other governing documents should be amended.

Our firm congratulates Roberto for sharing his insights into the implications of this ruling for Florida condominium associations with the readers of the Daily Business Review.

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