Articles Posted in Leasing and Tenants

GaryMars-200x300Firm partner Gary M. Mars 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 “Airbnb Gone Wild? Ruling Clarifies Rules on Short-Term Condo Rentals,” focuses on a recent decision by the Second District Court of Appeal that found that the fairly standard language present in the declarations of condominium and accompanying rules and regulations for many properties does not grant unit owners with the unrestricted right to lease their residences.  Gary’s article reads:

The ruling came from the Florida Second District Court of Appeal in the case of Le Scampi Condominium Association v. Hall. Le Scampi had petitioned the lower court for injunctive relief against the unit owners to prevent them from leasing their residence for less than one month without prior approval by the association in violation of its rules.

The Halls did not dispute to the trial court that they had rented their unit for periods of less than one month without prior approval, which constituted violations of the association’s rules. Their defense was based on arguments that those rules were unenforceable because they conflicted with their right to lease their unit under the community’s controlling documents.

The lower court issued a final summary judgment in favor of the Halls based on its finding that the conflict indeed existed and the language in the original declarations of condominium for the property supersedes any lease restrictions in the rules and regulations.

dbr-logo-300x57The appellate panel found that the trial court’s interpretation of the declaration was inconsistent with its plain language. It ruled that the section in question does not provide that the right to sell, lease or transfer a condominium unit is unrestricted with the exception of a notice requirement. Instead, the declaration merely imposes a prior-notice requirement and specifies the contents of the notice, but it does not otherwise address a unit owner’s right to sell, lease or transfer their unit to persons other than family members.

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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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The problem of short-term rentals with the help of Airbnb and other similar websites in violation of community association rules has quickly become one of the most pressing issues facing associations today.  Even though Airbnb, HomeAway and VRBO claim they prohibit their hosts from renting residences in communities with rules against short-term rentals, enforcement of this policy by the online home sharing providers is virtually nonexistent.

This makes it incumbent upon the associations and their property managers to proactively monitor and investigate for unauthorized rentals and their online listings, which can be extremely difficult.  In most cases, the unit owners conducting the rentals know full well that they are violating their association’s rules, so they do what they can to avoid detection.

abnbTheir ploys, which typically include walking their new guests into the property and advising security that their visit is authorized, are enabling many rentals to go undetected by management and staff.  The result can be very troubling for associations, as unfettered short-term rentals can create a revolving door for guests with none of the prior screening and background checks that are typically performed for new residents and tenants.

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Roberto C. Blanch

Roberto C. Blanch

Firm partner Roberto C. Blanch was quoted by reporter Carla Vianna of the Daily Business Review, South Florida’s only business daily and official court newspaper, in an article that appeared in today’s edition about the issues facing community associations involving short-term rentals via Airbnb.  The article reads:

Guests hoping to stay at a condo during the Miami Open tennis tournament found themselves stuck in a lobby with no access to the unit they rented on Airbnb, the online home-sharing service.

The family was denied keys to the property by the condominium’s management company.

. . . Miami-Dade County’s sunny beaches and high-rise condos make it a top destination for home-sharing networks like Airbnb and its users. The influx of visitors opting for alternatives to Miami’s pricey hotel rooms, like the family visiting for the Miami Open, is pushing demand for short-term rental options.

An estimated $2.4 billion was spent on lodging via Airbnb during the year ended in September 2015, commercial real estate firm CBRE Inc. reported. More than 55 percent was captured by five U.S. cities: New York, Los Angeles, San Francisco, Miami and Boston.

The rise of a sharing economy is creating a rift between condo owners looking to make extra cash and association boards whose members don’t want to share an elevator with strangers.

. . . “It has become a problem in a lot of condos,” said Roberto Blanch, a Miami attorney with Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel.

dbr logo-thumb-400x76-51605Associations at Mint and Ivy, two high-rise towers in downtown Miami’s Riverfront complex on the Miami River, are cracking down by restricting elevator and garage access to residents with a specific key fob or vehicle barcode, said Ari Tenzer, founder of the Tenzer law firm. Tenzer, who sits on his condo association board, said property managers are logging onto the Airbnb site themselves to catch violators.

Suspected violators receive written notice as a warning. They could also be called before a grievance committee.

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If your condominium’s governing documents allow dogs and renters, my bet is there’s a large number of both in your community. We get a lot of questions from condominium boards asking how they can reduce the number of renters and dogs in their buildings because – in the words of one manager: “Our building is going to the dogs!”

Depending on the language in your governing documents, you may have to keep living with the dogs unless or until your membership votes to amend them. If your association’s declaration does do not expressly restrict tenants from having pets, then an amendment will be necessary since a rule cannot conflict with a recorded restriction.

Although the association is authorized to adopt and enforce reasonable rules and regulations governing the operation and use of the condominium property, under Florida law in order for such rules to be valid and enforceable they must not contradict a recorded restriction in the association’s governing documents. In general, provisions in the declaration take precedence over any conflicting language in the rules.

esupdog.jpgWhile the Division of Condominiums has upheld and enforced association rules that specifically differentiate between unit owners and tenants, in such cases the declaration contained express provisions to substantiate the rule. Specifically, the Division upheld a condominium association’s rule restricting tenants from maintaining pets on the premises but allowing pet ownership by unit owners. In Grove Isle Condominium Association, Inc. v. Levy, et al, the association’s declaration provided that “[n]o pets may be kept on the condominium property except for usual and ordinary domesticated pets weighing less than twenty-five (25) pounds which may be kept by unit owners . . .” Based upon that provision, the arbitrator held that the board-adopted rule prohibiting tenants from maintaining pets was valid and consistent with the association’s declaration, which specifically granted unit owners the right to own pets – but was silent on the issue of tenants’ rights regarding pet ownership.

Similarly, in the arbitration case of Quatraine Condominium II Association v. Bradley, the association’s declaration provided that original owners of the condominium were permitted to maintain pets in the condominium residences. The board adopted a rule which provided that lessees were not allowed to have any pets. The arbitrator held that differential treatment between owners and renters was valid.

As such, we recommend that before your board starts promulgating rules that could be unenforceable and, if challenged, subject your condominium to expensive legal fees, check first with qualified legal counsel with regard to the options in your community.

Foreclosures by community associations against their delinquent unit owners were virtually unheard of 10 years ago, as lenders would almost always move quickly with their own foreclosures against these owners, and their first-mortgage liens are superior to those of associations. Today, the practice has become the prudent approach for cases involving lenders that try to place their mortgage foreclosures into a holding pattern while they wait for the housing market to make a complete recovery.

Many community association attorneys now counsel their clients to complete their own foreclosure actions in certain cases in advance of the banks in order to acquire and rent the residences before the lenders’ foreclosures are finalized. With so many lenders taking years to complete their foreclosures, the revenues from these rentals have helped to relieve a great deal of the financial strains that some associations have faced.

Last year, the state legislature added some clarity to the law governing the liabilities of foreclosing lenders to associations for the prior owners’ association debts. The banks had argued in a number of cases that associations which foreclose in advance of mortgage lenders have effectively put themselves in the position of the prior owner, which is not entitled to collect any past-due fees. An amendment to the law fixed this loophole, and now lenders are still held liable for the safe-harbor liability caps to associations that have completed their own foreclosure in advance.

As such, the question for associations facing lender foreclosure cases that appear to be dragging on is when they should pull the trigger and foreclose their outstanding lien held on the property for unpaid past-due assessments. The answer requires qualified legal counsel to carefully review the case file along with the property appraiser website, tax collector website, court dockets and official records. Considerations that always have to be taken into account include the amount that is owed under the first mortgage, if there is also a second mortgage on the property, the exact status of the mortgage foreclosure case, and the status of the tax records on the property.

MT2.jpgIn addition to these universal considerations, some cases may also include issues involving the deterioration of the unit itself. Associations will need to carefully consider their options involving residences that will require major renovations in order to prepare them for rental. This is very important, as associations cannot rely on third parties to purchase these properties via the foreclosure sales but rather they must prepare to take title to the units.

Another important aspect of these prolonged foreclosure cases is that they can set the tone for associations that wish to take a firm and uniform stance on their collections and payment-enforcement efforts. Sending a demand letter and recording a claim of lien but going no further, even when a foreclosure that should take only a few months to complete begins to approach the one-year mark, is probably not the ideal precedent for associations to set.

While the banks are beginning to move their mortgage foreclosures a bit quicker, oftentimes they are still moving far too slowly for associations which are being burdened by the property’s outstanding unpaid assessments. Together with qualified legal counsel, associations should carefully weigh all of the above-mentioned matters and considerations to determine whether to move forward with their own foreclosure actions in advance of lenders or to wait to enforce their liens.

Many community association boards and property managers are still unfamiliar with Florida Statute 83.561 enacted this summer, offering limited protections to tenants in foreclosed homes.

During the 2008 – 2014 foreclosure crisis, a federal law was passed, The Protecting Tenants at Foreclosure Act, which assisted bona fide tenants by providing them the opportunity to stay in the property after the completion of the foreclosure. The Protecting Tenants at Foreclosure act expired in December 2014 to be replaced by Florida Statute 83.561.

Similar to the federal act, Florida Statute 83.561 only applies to tenants who are renting under a valid arm’s length transaction rental agreement for a rate that is not significantly below market value, and where the tenant is not the mortgagor in the subject foreclosure or the child, spouse or parent of the mortgagor in the foreclosure.

Unlike the expired federal act, Florida Statute 83.561 requires a new owner, including an association, wishing to terminate the tenancy after acquiring a property via foreclosure, to provide the tenant with a 30-day written notice of termination, which should be in substantially the following form:

NOTICE TO TENANT OF TERMINATION

You are hereby notified that your rental agreement is terminated on the date of delivery of this notice, that your occupancy is terminated 30 days following the date of the delivery of this notice, and that I demand possession of the premises on …(date)…. If you do not vacate the premises by that date, I will ask the court for an order allowing me to remove you and your belongings from the premises. You are obligated to pay rent during the 30-day period for any amount that might accrue during that period. Your rent must be delivered to . . . (landlord’s name and address).

If the tenant fails to vacate the property after the 30-day period expires, the new owner may apply to the court for a writ of possession based upon a sworn affidavit that the 30-day notice of termination was delivered to the tenant and the tenant has failed to vacate the residence after the 30-day period has expired. If the court awards a writ of possession, the writ must be served on the tenant.

Unlike the federal act, Florida Statute 83.561 does not require for the new owner to intend to occupy the residence in order to terminate the tenancy, nor does it seek for the tenant to complete the terms of the rental agreement. Rather, the new law assist tenants in foreclosed homes by providing a 30-day window to seek alternate living arrangements, while ensuring compliance by the new owner of the tenant’s rights as afforded under Florida law.

Community associations that acquire title to a unit via foreclosure and wish to terminate a tenancy should consult with qualified legal counsel in order to ensure compliance with the requirements under Florida Statute 83.561.

RobertoBlanch2013.jpgFirm partner Roberto C. Blanch was quoted in the main cover story of this week’s edition of the South Florida Business Journal, the region’s exclusive business weekly. The article, which is titled “Listings on Airbnb, Similar Sites Often Violate Rental Rules at South Florida Communities,” focuses on the difficulties that some local condominiums are having with short-term rentals that are stemming from listings on Airbnb and its rival websites.

The article reads:

“It becomes a tough pill to swallow for board members and unit owners who see units advertised for short-term rentals when the rules don’t allow for short-term rentals,” said Roberto Blanch, who specializes in community association law at Coral Gables-based Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel. “You have associations that don’t have the means by which to screen these people, who for all you know could be coming in to raise hell on a long weekend.”

. . . One of Blanch’s clients recently asked him if the owner of a short-term rental website could be brought into a claim “to the extent it knowingly or willingly participated in a violation of the association contract,” he said.

But Blanch noted that would be “probably a bit of an aggressive approach, but it is a problem real enough that it merits looking into these questions.”

Our firm congratulates Roberto for sharing his insights into this important new issue for condominium associations with the journalists at the South Florida Business Journal and the publication’s readers. Click here to read the complete article in the publication’s website (subscription required).

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A recent article in The Boston Globe chronicled the case of a condo owner who earned rave reviews as a host on the vacation rental website Airbnb. He went to great lengths to accommodate the needs and whims of his guests, but apparently his willingness to oblige did not extend to his condominium association and fellow neighbors.

The unit owner was fined $9,700 for violating his condominium association’s rules against short-term rentals via the increasingly popular website, which allows users to list their residences for short-term rentals aimed at guests who desire more homey accommodations. The owner has retained an attorney to try to negotiate a lower fine, and he is quoted as saying that he “didn’t expect, as an owner, having somebody else in my own home would be a problem.”

Perhaps he should have known better, as most association’s covenants and rules prohibit short-term rentals, and some even include an application process with background checks for prospective tenants. Yet he and other unit owners are claiming ignorance of the rules after being hit with fines ranging anywhere from $100 to $1,000, depending on their associations’ bylaws, for each night that they have rented their units, according to the newspaper’s report.

With Florida’s countless luxury waterfront condominiums replete with investor-owned units that sit idle during large swaths of the year, the growing popularity of Airbnb and its rivals HomeAway and VRBO represents a potentially significant new problem area that should receive the attention of many association boards throughout the state. The prospect of a revolving door of short-term guests presents security and nuisance concerns, especially for condominiums, and the boards of the state’s condo associations would be well advised to review and possibly strengthen their covenants to specifically ban these types of rentals as well as ensure adequate enforcement provisions and procedures.

For those associations which are already contending with owners who are utilizing these websites for short-term rentals or suspect that it is taking place, their rules enforcement actions should begin with thorough investigations. In a non-confrontational and courteous manner, the property manager or board member should inquire with the new guests in the residences that are suspected of being rented as to the nature of their agreement with the unit owner and how they discovered the property. They should document their findings, and they should also research the websites to find and save the offending listings.

abnb.jpgArmed with this information, they can then move forward on two fronts: directly with the owner as well as with Airbnb or the website listing the unit. Airbnb includes in its terms and conditions for hosts that they must comply with the rules governing rentals in their communities, and the site reserves the right to purge any listings that it deems to be in violation of its terms. Presumably, the company and its rivals would be willing to consider the removal of listings by hosts that are in violation of community association rules, and one of my colleagues at our firm has learned of a case from a client in which Airbnb was contacted by the association and pulled a listing from its site after it learned of the rule violation.

In addition, associations should share the evidence that they have gathered of the rentals using these websites with their legal counsel, who can use the information to issue an immediate cease and desist letter to the unit owner and help the association to determine an appropriate enforcement mechanism. However, for unit owners who have already begun enjoying the rewards of their rentals, it is a safe bet that they will be reluctant to discontinue them.

For the ardent renters who will refuse to comply with these demands and continue to rent their residences, the association counsel should move quickly to file a Petition for Mandatory Non-Binding Arbitration on the rule violation with the state’s Division of Condominiums, Time Shares and Mobile Homes, administered under the Department of Business & Professional Regulation. The Division of Condominiums, through its Arbitration Division, is equipped to quickly and efficiently conduct arbitrations on disputes involving covenant and rule violations, and its final orders can involve both the issuance of injunctive relief (i.e., requiring someone to do or not do something), as well as requiring the non-prevailing party to pay the reasonable attorneys’ fees and costs of the prevailing party incurred in bringing the action to enforce the association’s covenants and rules.

In the new peer-to-peer sharing economy, Airbnb and the other websites enabling homeowners to rent their residences to short-term guests are here to stay and likely to enjoy continued growth in the years to come. The associations in Florida that wish to avoid these short-term rentals should act now in order to protect the interests of their members.

Our firm’s other community association attorneys and I are often asked by condominium association board members about the rights of tenants who are renting units in a condominium to use the common elements – as well as their ability to participate and vote in meetings and elections.

The Condominium Act provides that tenants who are leasing units in communities “shall have all use rights in the association property and those common elements otherwise readily available for use generally by unit owners.” This means that associations must allow renters to have the same use rights as unit owners to the pool, fitness center, clubhouse, tennis court, etc. Renters may also use the parking spaces designated for their unit.

For unit owners who are leasing their residences, the law also provides that they “shall not have such rights except as a guest, unless such rights are waived in writing by the tenant.” The law further provides: “The association shall have the right to adopt rules to prohibit dual usage by a unit owner and a tenant of association property and common elements otherwise readily available for use generally by unit owners.” tenright.jpg This means that owners who rent out their units may not also come by to swim in the pool whenever they want!

With regard to association meetings and voting, tenants do not typically have the right to attend meetings because they are not owners, however, tenants who are conferred with a Power of Attorney by their unit owners may attend and speak at the association meetings. Voting rights and requirements for board membership are generally document specific and can be found in the association’s bylaws.

Another issue that often arises is whether condominiums can prohibit tenants from having pets even if the governing documents allow unit owners to have pets. The issue turns on the exact language in an association’s governing documents. Many board members are surprised to learn that they may adopt rules that restrict tenants from having pets based on the language in their recorded documents – but this is not always the case. Many association documents require a unit owner vote to amend the documents in order to restrict tenants from having pets.

Finally, if a tenant or their landlord/unit owner violates the association’s rules and regulations or other governing documents, the Condominium Act has empowered the association to restrict the tenant’s ability to use the common elements. This also applies to the tenants of unit owners who become more than 90 days delinquent in the payment of their association dues.

With so many investor-owned units in South Florida condominium communities, significant percentages of tenants under short and long-term leases are likely to be a permanent characteristic. Associations should bear in mind that laws do exist to protect tenants’ rights in order to help ensure that associations avoid the possibility of unforeseen legal liabilities.