MichaelHymanFirm partner 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 “Injunction Against Condo Owner Illustrates Just How Ugly Things Can Get,” focuses on a ruling in Broward Circuit Court last year that granted an injunction to a South Florida condominium association against the owners and residents of a unit in the 55-and-over community.  His article reads:

The association alleged that the defendants violated key provisions in the community’s declaration by threatening and disturbing other residents with their aggressive actions. In fact, one unit owner sought a restraining order against Juan Gonzalez, whose conduct ultimately resulted in his arrest for domestic violence and resisting an officer. The association alleged that this sort of conduct had been going on for several years, but it had escalated into more violent and aggressive levels. In addition to seeking injunctive relief against the defendants, it also sought to have the court require them to vacate the dwelling.

The court found that the defendants had threatened and disturbed other unit owners with repeated aggressive behavior and threatening words and actions. It ruled that the “credible evidence also established that the association tried to remedy the defendants’ behavior by speaking to the defendants, having the defendants appear before a committee of unit owners for the development of harmonious relations, calling the police on multiple occasions and having legal counsel send letters of violation demanding that the threatening and aggressive behavior stop, all to no avail.”

dbrlogo-300x57The ruling states that the association called a meeting of its grievance committee, during which Gonzalez acknowledged that he had been banging on the ceiling of his unit, and he suggested that he would not have to serve much time in prison if he killed somebody. It reads: “On numerous occasions continuing until the current time, he would use a stick or other object to bang on his ceiling, claiming that the occupant above his unit was making too much noise, but in reality these noises were common day-to-day noises such as walking through the apartment or taking a shower. On one occasion, he walked upstairs to use a baseball bat to bang on the occupant’s door, frightening her deeply that the defendant was attempting to break into her unit and resulting in the police being called to the premises. He later approached this same occupant when she was on the common areas, threatening her to her face. On another occasion, the defendant Juan Gonzalez threatened a staff member with a knife, and threatened the property manager that the defendant would run him over with his car.”

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Nicole-Kurtz-2014-thumb-120x180-87971The firm’s Nicole R. Kurtz 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 “Short-Term Rentals Not a Violation of Rules Against Business, Non-Residential Uses,” focuses on the ramifications of a recent ruling by the First District Court of Appeal that found short-term rentals do not constitute a violation of association rules prohibiting business uses of residences.  Her article reads:

In the case of Santa Monica Beach Property Owners Association v. David Acord, the association appealed a lower court’s order dismissing its action against the homeowners who rented their homes on a short-term basis. The association’s argument in both the lower court and the appellate court was that such short-term rentals constituted a violation of the community’s occupancy restrictions, which required that the homes be used for residential, non-business uses. Specifically, the association’s argument hinged on the community’s occupancy restrictions, which provided that the plots “shall be used only for residential purposes … nor shall any building on said land be used as a hospital, tenement house, sanitarium, charitable institution, or for business or manufacturing purposes nor as a dance hall or other place of public assemblage.”

The association’s complaint for declaratory judgment alleged that the Acords’ two homes in the beachfront community were being used for a “business purpose” not permitted by the association’s occupancy restrictions, as the owners offered the homes for rent on the home-sharing site VRBO.com, received income for renting the properties on a short-term basis, were required to collect and remit state and local sales and bed taxes, and had obtained a license to operate their properties as transient public lodging establishments under the name “Acord Rental.”

The Acords responded by contending that the association’s complaint failed to state a cause of action, and that the short-term rental use of the homes did not violate the restrictive covenants. They argued that because the short-term tenants were using the homes for residential purposes, regardless of the fact that they were paying for their stays, the homes were being used in accordance with the community’s occupancy restrictions.

dbr-logo-300x57The trial court agreed with the Acords and dismissed the association’s complaint. It reasoned that the proper focus in making a determination as to whether the short-term rental of the homes was in violation of the association’s occupancy restrictions was to determine the actual use undertaken at the properties. The trial court found that the nature of the homes’ use was not transformed from residential to business simply because the owners were subject to regulations that required licensure and they earned rental income. The court also noted that because the restrictive covenants were silent on the issue of short-term rentals, and failed to provide for a minimum lease term, any ambiguity as to whether short-term use was permitted must be resolved in favor of the homeowners’ free and unencumbered use of their properties.

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RobertoBlanch2013

Firm partner Roberto C. Blanch authored a “My View” guest column that appeared in today’s edition of “Business Monday” in the Miami Herald.  The article, which was titled “Condos’ Task:  Addressing Airbnb Short-Term Rentals,” focuses on how local municipalities and community associations are responding to the issues that are being created by short-term rentals using Airbnb and its competitors.  Roberto’s article reads:

The issues created by short-term rentals facilitated by Airbnb and its competitors have been among the most pressing problem areas for condominium and homeowners associations during the past several years. While most community association governing documents prohibit short-term rentals, the enforcement of these restrictions has proved to be challenging and costly, and as a result, many association boards of directors and property managers are implementing strategic countermeasures and monitoring tactics.

South Florida has been particularly affected, given the area’s standing as a major international tourist destination, and the Miami market has ranked among the top five home-sharing markets in the U.S., according to Airbnb.

A number of South Florida municipalities have adopted new measures to enforce restrictions on these nontraditional rentals. In particular, the City of Miami Beach has been leading the charge with some of the most stringent regulations and fines in the country.

MHerald2015-300x72Miami Beach ordinances allow for vacation and short-term rentals (less than six months and one day) in certain zoning districts, but they are banned in all single-family homes and in a number of zoning districts. Fines for violators previously ranged from $500 to $7,500, but they were increased dramatically in March 2016 by the city commission to $20,000 for first-time violators.

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MichaelChapnicksrhl-law-thumb-120x180-94116Firm partner Michael E. Chapnick 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 “Ruling Illustrates Unpredictability of Fair Housing Litigation for Associations,” focuses on a recent ruling by the First District Court of Appeal that highlights the unpredictable nature of Fair Housing Act litigation for unwary associations.  Michael’s article reads:

The decision came in the case of Harbour Pointe of Perdido Key Condominium Association v. Henkel, which originated from a housing discrimination complaint filed by James Henkel with the Florida Commission on Human Relations pursuant to the Fair Housing Act.  Henkel alleged that the association committed discriminatory housing practices by making modifications to the closing pressure of doors that rendered many of the common areas at his condominium inaccessible to him.

The administrative law judge with the Division of Administrative Hearings presiding over the case concluded that Henkel had failed to establish that the association discriminated against him based on his handicap, but the commission disagreed with the ALJ’s conclusions of law and ruled against the association.

In the association’s subsequent appeal before the First DCA, the majority found that the commission erred in its determination that the association had committed discriminatory housing practices by allegedly making modifications to the opening pressures of doors that rendered them noncompliant with the Fair Housing Act’s standards.  The two judges concluded that the ALJ properly found that Henkel had not proven a prima facie case of discrimination because the association did not design or construct the condominium.  They also ruled that the evidence was insufficient to show that the association had modified the doors, as its oversight of the property had recently been transferred from the original developer.

dbr-logo-300x57A concurring opinion states: ” … the respondent did not design or construct Mr. Henkel’s building, nor make any alterations to the disputed door pressures after assuming ownership of the building.” It goes on to find that evidence indicated the door pressures were not adjustable.

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At the start of summer, associations should evaluate their pool rules and procedures in addition to conducting all of the necessary inspections of their pools, spas and related equipment.

With the help of qualified professionals, the inspections should include all pools and pool equipment as well as the surrounding amenities, including gates, fences, signs, locker rooms, etc.

Association pool rules should focus on health and safety, and should avoid focusing on classes of protected persons, particularly families with children.  Making the activities of children the focus of prohibitory rules can substantially increase the potential that an association will receive a complaint alleging discriminatory conduct under federal, state and local fair housing laws.  Even prohibiting something as seemingly innocuous as “pool toys” could be deemed discriminatory, if directed specifically at children, rather than at all persons.

Likewise, unless your community avails itself of the Housing for Older Persons exemption to the anti-discrimination provisions of the Fair Housing Amendments Act of 1988, designating “adults only” pools or use times may give rise to FHA violations.  Furthermore, some courts have found that not permitting children access to pools and other amenities unless accompanied by parents could also give rise to FHA violations.

pool-rulesSome of the most common safety-related rules include:

  • No running.
  • No glass containers.
  • No diving in shallow areas.
  • No pushing, horseplay, roughhousing, or dunking.
  • No smoking and/or tobacco products in the pool area.

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Condo & HOA Board Members May be

Neglecting the Duties You are Owed

Are you concerned that the developer of your condominium did not deliver on the promises made to you when you purchased your condominium unit?  Are you concerned with the construction of the condominium in which you live?  For most individuals the purchase of a condominium unit can be their most important investment.  However, many of the decisions impacting this investment are not up to the owner of the unit, but rather they are left up to a board of directors controlling the association.

At a specified time, the developer of a condominium is required to relinquish control of the association’s board of directors in favor of the unit owners.  The turnover of an association from developer to the unit owners presents the first opportunity for the association’s board to hire a lawyer, an accountant and an engineer to perform important and time-sensitive inspections of the condominium.  These inspections will identify construction defects and other concerns that may exist.  As such, it should not be surprising that a developer would want a “friendly” association board of directors following turnover.  But imagine the havoc an unscrupulous developer could inflict if the association’s newly elected board — or the attorney and engineer working for the unit owners — have financial ties to the developer.

A recent Miami-Dade grand jury report found that there was extensive fraud, mismanagement, stacking of boards and conflicts of interest among condominium association boards (click here for the complete report).  Such misconduct is not limited to Miami-Dade, however.  Perhaps surprisingly, one of the largest public corruption cases set in the fast-paced, scheming neon desert notoriously dubbed “Sin City” did not involve the usual Las Vegas suspects, but rather a contractor, a lawyer, and a stacked board of condominium directors.  In 2015, Leon Benzer, a construction company boss, was sentenced to 15 and a half years in federal prison for orchestrating a scheme to take control of association boards for the purpose of channeling construction defect repairs to Benzer’s company. Benzer’s scheme involved a network of recruited purchasers and real estate agents who would get elected to association boards, hire Benzer’s attorney, and award lucrative contracts to Benzer’s construction company. Through these unethical practices, these individuals violated the duties owed to the association and its unit owners.

Condominium unit owners are considered shareholders of the association, and act in a fiduciary relationship to each owner.  In such relationships, the law demands a higher than ordinary degree of care from each director and officer, with Florida law specifically demanding directors to discharge their duties in good faith.  Simply put, directors should act to protect the best interests of the association and its unit owners, rather than their personal interests or those of affiliated third parties.  The actions of the board members in Benzer’s scheme were in complete disregard of the unit owners’ rights, as they participated in rigging elections and seeking only personal gain.

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The other South Florida community association attorneys at our firm and I are often called upon by our clients with questions regarding how to more efficiently run their board meetings and control the conduct of members during those meetings.  Very often it seems that directors who are simply trying to be polite and respectful of owners by allowing them to express their opinions wind up losing control of the meeting and actually accomplish very little business.  This trend of owners seemingly “hijacking” board meetings is not a new one, but it does seem to be fueled in recent months by the political climate we find ourselves living in now where all people want to be heard.  Fortunately, the HOA and Condominium Acts provide board members with the tools they need to control their meetings while allowing all members to also have their “say.”

Association board meetings are defined as any gathering for the purpose of conducting association business by the members of the board of directors at which a quorum is present.  Unless the association’s by-laws or other governing documents provide for a longer period, notice of board meetings must generally be conspicuously posted within the community 48 hours in advance of the meeting.  However, in certain circumstances (such as the adoption of assessments or some types of rules), written notice must be posted and provided to the members at least 14 days in advance of a board meeting.

In accordance with Florida law, an item of business that is not noticed may only be addressed on an emergency basis, such as situations involving sudden damage to the building, natural disasters and similar events.  Emergency actions must be ratified or approved at the board’s next properly noticed board meeting at which a quorum of directors is attained.

meetThe notice of the board meeting should list specific business items on the agenda.  Boards and managers should make every effort to ensure that all reasonably anticipated topics of discussion are included.  The more specific the agenda, the easier it will be for the board to control the pace and flow of the meeting.  When agendas list broad topics without specific business items, boards leave themselves open to having to address issues brought up by members that would arguably “fit” under broad category headings.  As such, the agenda should be comprised of specific open items from the previous meeting requiring action; specific owner items that may require board action; building maintenance items, as required; project information, updates, requests and actions; and seasonal information, such as annual and budget meeting information as well as hurricane preparation matters.

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Community association board members are asked to do a great deal for the communities they serve.  They give up a great deal of their time and lend their varying expertise to help their communities run as smoothly and effectively as possible.  Given that so much is asked of the directors, it is important that they take appropriate steps to delegate responsibilities to committees comprised of association members.

For most community associations, the benefits of involving committees are extremely worthwhile.  Not only do they create a forum for the implementation and enforcement of vital policies and decisions, they also serve as ideal incubators for prospective future board members.

By their very nature, committees comprised of volunteer owners and residents should have a good understanding of the best policies and practices for their community.  They may be ideally suited to oversee matters that involve the collection of information from the owners as well as the subsequent assessing of the data in order to make strong recommendations for suggested solutions.

Association boards should take the time to closely consider the use of different types of committees and their intended roles and responsibilities.  Most association governing documents will include provisions governing the establishment of volunteer committees and how their decisions will be enacted.

Some of the most popular types of committees are:

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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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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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