Articles Posted in Homeowners association law

Each year, our elected state representatives and senators meet in Tallahassee for a legislative session where they review and debate an extensive amount of proposed bills, only to send a few of those bills to the governor to be signed into law.  For the third year in a row, our elected lawmakers will be discussing a bill that has once again resurfaced, and if passed, may have a significant impact on community associations’ wallets.

House Bill 483 — also known as Senate Bill 398 or “the home tax” bill — proposes to place a considerable amount of requirements relating to the issuance of estoppel certificates on the condominium, cooperative or homeowners association responsible for preparing them. If signed into law, community associations will need to be both financially and operationally prepared to abide by the stringent changes set forth in the bill.

An estoppel is a legally binding document prepared by a community association or its agent that discloses any liens, overdue assessments or any other money owed to the association, such as late fees and attorney’s fees.  Estoppels are required by title companies in standard real estate transactions in order to inform the seller and buyer of any outstanding financial obligation(s) on the unit or parcel.  If prepared incorrectly, the community association could be liable for miscalculated or incomplete balances, resulting in a loss for the association.

Contrary to some people’s beliefs, estoppels aren’t generated by the push of a button. They take time and precision to prepare, which is why a bill that shifts even more of the burden on the association could be detrimental.

Florida-legislature2-300x169One of the main components of this proposed bill is to mandate more rigorous deadlines for the preparation of estoppels.  Currently, associations have 15 days to prepare and deliver an estoppel once it is requested.  The bill would shorten this period to 10 business-days, which could be difficult for associations of varying sizes and levels of sophistication, as some will be anchored by antiquated bookkeeping or a lack of resources.

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With the approval of Amendment 2 last November to legalize the use of medical marijuana in Florida, the state legislature and Department of Health are now developing the rules and regulations that will govern the use of cannabis by those who suffer from a number of ailments listed in the new constitutional amendment.  Likewise, now is also the time for associations to begin discussing and considering the implementation of their own rules and restrictions regarding the use of the drug by unit owners in their communities.

For most communities, the question of whether the use of medical marijuana should be allowed in the common areas will likely cause the most unease.  Other concerns include the use of cannabis inside of the residences, especially in condominiums where the odor could permeate into the common elements or other residences, and some properties may wish to ban the drug from the community in its entirety.

It remains unclear whether the state’s lawmakers will attempt to ban the smoking of medical marijuana.  If smoking marijuana is allowed under the laws that will be adopted in order to comply with the amendment, community associations will need to address whether they must make exceptions to their rules in order to allow residents with a doctor’s prescription to smoke medical marijuana.

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When the Condominium Act was amended several years ago to allow associations to demand and collect rent directly from the tenants of unit owners who were delinquent in the payment of their monthly fees, community associations thought it was an answer to their prayers.  Associations were struggling to recover from the foreclosure crisis, and many homeowners made the decision to rent their units to make some money but, unfortunately, they also chose not to pay their associations.

However, utilization of this amendment has proven to be difficult and sometimes costly to enforce in cases in which de facto tenants and their landlords are able to demonstrate to the court that a tenancy under the letter of the law is not actually in place.  How many times have we heard that the tenant is “family,” that the tenant does not pay the landlord, and that there’s no lease in place?

A noteworthy example is found in a ruling last year by the Miami-Dade County Circuit Court Appellate Division in the case of Cecil Tavares v. Villa Doral Master Associationvdoral-300x226 Tavares had conveyed his condominium unit via quit claim deed to a new owner, but he and his wife continued to live there.  When the new owner went into arrears with the association, it attempted to collect the rent directly from Tavares and eventually filed for an eviction.

The county court granted default judgment in favor of the association and issued a writ of possession to enable it to move forward with the eviction, but Tavares appealed on the question of whether the court erred by defining him as a tenant based on the quit claim deed.

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MTobacksrhl-law2-thumb-120x179-96777The firm’s Michael Toback 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 was titled “Rulings Clarify Application of Safe Harbor Caps on Association Dues,” focused on a couple of recent Florida appellate court rulings that brought additional clarity to the application of the criteria for foreclosing lenders and servicers to qualify for the caps that limit their liabilities for association dues.  Michael’s article reads:

In Brittany’s Place Condominium Association v. U.S. Bank, the Second District Court of Appeal settled some lingering questions as to whether a lender or servicer that takes title to a residence via a mortgage foreclosure must also be the current owner of the first mortgage when the final judgment of foreclosure is issued.

The case stems from a 2009 mortgage foreclosure action filed by U.S. Bank against the unit owner and all interested parties, including the association. The bank alleged that it was both the holder and servicer of the note and mortgage, acting on behalf of and with the authority of the owner. It was in possession of the note endorsed in blank, but the Federal Home Loan Mortgage Corp., better known as Freddie Mac, owned the note and mortgage.

After securing a final judgment of foreclosure and acquiring title to the property via the foreclosure sale, U.S. Bank requested an estoppel letter from the association to determine the amount of past-due assessments. The parties could not agree on the extent of the lender’s liability, and the association eventually filed a lien foreclosure complaint against the lender, which then filed a counterclaim to seek compliance with the safe harbor caps.

dbr-logo-300x57The trial court found that there were no genuine issues of material fact and U.S. Bank met the statutory requirements entitling it to the limited liability provisions provided by the safe harbor caps, so the court granted the bank’s motion for summary judgment.

In the subsequent appeal, the association contended that U.S. Bank did not satisfy the safe harbor statute, which requires the entity acquiring title to have also been the first mortgagee or its successor or assignee. The association interpreted “first mortgagee or its successor or assignees” as necessitating ownership of the loan.

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The growing use of drones by consumers across the U.S. is leading to the adoption of new rules and restrictions by the federal government, state governments and community associations.  Questions regarding safety, property damage and privacy abound with drones, and associations are responding by establishing clear parameters for their use by unit owners.

Last year, the Federal Aviation Administration enacted new regulations for the use of unmanned aircraft systems, which are more commonly referred to as drones.  For recreational users, the FAA now requires that drones must be properly registered and labeled with the registration number.  They must only be flown below 400 feet and always within sight of the operator, and they are banned from use near other aircraft and airports as well as over groups of people, stadiums, sporting events, or emergency response efforts.

Privacy concerns over the use of drones with cameras were addressed by a new Florida law that was enacted last year.  The law stipulates that drones with cameras may not be used to record images of privately owned properties or of the owners, tenants or occupants of properties in violation of their reasonable expectations of privacy without their written consent. drne-300x200 Reasonable expectations of privacy are presumed if individuals are not observable by others located at ground level in a place where they have a legal right to be, regardless of whether they are observable from the air with the use of a drone.

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For community association attorneys, it often seems that no matter how much we caution homeowners and condominium associations to take all of the necessary safeguards in order to prevent theft and embezzlement, new cases of blatant fraud always seem to crop up.

The latest example was chronicled in a recent article by the Palm Beach Post.  The article focuses on the arrest of the bookkeeper for the master homeowners association of Cypress Lakes, a 1,000-home, 55-plus community off Haverhill Road in West Palm Beach.

PBPfpKristine K. Moore, the bookkeeper, was charged with embezzling nearly $95,000 over the course of years from the association.  Moore was paid $44,000 per year and had been employed by the association for more than six years.

According to a police affidavit, management reviewed the association’s credit card bills and called police in April 2014 after discovering about $10,700 in charges for personal purchases during the preceding several months.  Additional review then uncovered much larger losses, including missing cash deposits that had been paid by homeowners.

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Michael-Clark-Gort-photo-thumb-120x180-45140Firm partner B. Michael Clark, Jr. authored a guest column that appeared as a “Board of Contributors” feature in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was titled “Court Upholds Concurrent Cause Doctrine in Win for Property Policyholders,” focused on the positive ramifications for Florida commercial and residential insurance policyholders of the state Supreme Court’s recent decision in the case of Sebo v. American Home Assurance.  Michael’s article reads:

The recent Supreme Court of Florida decision in Sebo v. American Home Assurance rejecting the “efficient proximate cause doctrine” in favor of the “concurrent cause doctrine” for property insurance claims represents a significant win for residential and commercial policyholders.

The state’s highest court has determined that the appropriate theory of recovery for claims in which two or more perils contribute to a loss but at least one of the perils is excluded from coverage is the concurrent cause doctrine. Under the rejected efficient proximate cause theory, when multiple perils cause a loss, it is the efficient cause — the one that sets the other in motion — to which the loss is attributed.

For the insurance industry, the efficient proximate cause doctrine has always been preferred. If the carriers are able to demonstrate that the efficient cause behind a loss is excluded from coverage under the policy, then the entire claim may be denied.

dbr-logo-thumb-400x76-51605-300x57Sebo makes the concurrent cause doctrine the legal standard to be applied for property insurance claims in Florida. Now insurers must cover a loss even if the covered peril is the secondary cause of the loss, which was concurrent with but not the primary or efficient cause.

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For those who live in community associations, board membership should be viewed in the same vein as a civic duty.  An effective board of directors is essential for the financial and administrative wherewithal and stability of every community association, so all unit owners who are able should volunteer to serve at least one term to contribute to their community’s overall success.

Some association members have the mistaken perception that the responsibilities of serving as a director are too complex and demanding for their capabilities and skill sets.  While it is a serious commitment in terms of time and attention, board membership should not be viewed as being too daunting of an undertaking for the average unit owner.

The key to success for practically every board member lies in their use of the most effective professional and educational resources that are available.  Of course, this should begin with relying on only the most experienced professionals such as attorneys, property managers, accountants, insurers, etc., but that is just the start.

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Community association living has many advantages and desirable qualities.  Residents share expenses in order to be able to enjoy relatively carefree maintenance of their property and the use of amenities such as pools, fitness centers, meeting rooms, and other appealing features.  However, in exchange for enjoying benefits derived from community association living, such as the pooling of the financial burdens of an association via the monthly maintenance payments, members should be mindful of a vital commitment which contributes to the wellbeing of their community:  serving on the association’s board of directors.

An effective board of directors is critical for the financial and administrative performance of a community and association.  Boards, which are in charge of making very important decisions affecting all unit owners and residents, are comprised of volunteer owners who rise to the call of serving their community in order to make it the best that it can be for all of an association’s members.

Unfortunately, in many cases, we often find that unit owners become complacent when a community’s board of directors is doing its job effectively.  Volunteering for board service is often perceived to be a daunting and thankless commitment by individuals who lead busy lives and do not wish to take on new responsibilities.

Effective remedies to tackle apathy towards board member service typically stem from implementing and maintaining long-term strategies to encourage serving.  It should begin by encouraging all members of the association to attend and participate in the association meetings, motivating eligible attendees to consider serving on the board of directors in the future.   Sharing informational resources on board service from industry groups, such as the Community Associations Institute (www.caionline.org) and other reputable sources, may also stimulate owners to aspire to serve on the board.

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With the holiday season approaching, now is the time that many condominium associations in Florida are gearing up for their annual meetings and board member elections.  It is essential for the current board and property management to have a complete understanding of the condominium election process.

At least 60 days prior to date of the meeting and election, the association must mail, deliver or electronically transmit a first notice of the election to each unit owner.  This first notice sets forth the date, time and location of the meeting.  Those members who wish to be considered for board membership must then give written notice of their intent to run for the board to the association at least 40 days prior to the scheduled date of the election.  Although not required, candidates have an additional five days to submit information sheets about themselves.

A second notice of the annual meeting and election together with an agenda for the meeting must then be mailed, delivered or electronically transmitted to all of the members together with a ballot that lists every candidate who submitted their names to run for board membership. meetingvote Any information sheets submitted by the candidates must also be included with the distribution of the ballot – regardless of their content.  Return envelopes that allow for owners to print and sign their names and include their unit numbers should also be included with this mail out.

In order to have a valid election, and be able to open envelopes and count votes, at least 20 percent of the eligible voters must cast a ballot.  Unit owners are not permitted to allow any other person to vote using their ballot, and all of the ballot envelopes must be retained by the association for at least one year.

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