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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GaryMars-200x300The firm’s Gary M. Mars shared his insights into the ramifications of a recent Miami-Dade grand jury report on condominium association fraud in an article in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was written by DBR reporter Samantha Joseph, notes that “[c]riminal charges could soon be in store for misbehaving condominium board members and managers if recommendations in a Miami-Dade grand jury report gain traction.  Self-dealing, destroying accounting documents, withholding records, participating in kickbacks, interfering in elections and other willful violations of Florida’s condominium statute could leave individual board members criminally liable for the first time.”

The DBR article reads:

The question isn’t whether there’s fraud and abuse among some of the boards, according to the grand jury report, which cites thousands of annual reports of alleged wrongdoing to Florida’s Department of Business and Professional Regulation. The question is how to police it and shore up a regulator described as a toothless tiger.

“Our investigation exposed . . . severe weaknesses within the current laws and regulations,” the grand jury concluded. “Because the condo laws and regulations lack ‘teeth,’ board directors, management companies and associations have become emboldened in their willful refusal to abide by and honor existing laws in this area. They even engage in fraudulent activity which goes unpunished.”

The report took aim at the Department of Business and Professional Regulation — an allegedly understaffed agency with broad jurisdiction over condo associations and more than 1 million businesses and professionals, including accountants, contractors, cosmetologists, veterinarians and real estate agents.

“The DBPR seems ill-suited to resolve, correct or prevent many of the recurring problems that have been brought to their attention,” it stated.

dbr-logo-300x57. . . Longtime community association counsel Gary Mars, shareholder at Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel in Miami, applauded the agency’s efforts in juggling thousands of complaints that would otherwise clog civil courts, but suggested an overhaul to place criminal cases beyond the department’s purview.

“Ultimately these should end up in a court proceeding, rather than going through a state agency,” he said.

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Michael-Hyman-srhl-lawThe firm’s 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 “Association Deficits Don’t Excuse Developer From Funding HOA Reserves,” focuses on a recent decision by the Florida Fifth District Court of Appeal that found a developer was not excused from funding reserves while it remained in control of the association and was funding deficits in the operating expenses.  Michael’s article reads:

For the developer of the Sullivan Ranch community in Mount Dora north of Orlando, it appears that its decision to stop funding reserves after it established the account and began funding it in 2007 has significantly backfired. The Fifth District Court of Appeal recently overturned a lower court’s summary judgment, which concluded that the developer was excused from funding reserves while it remained in control of the association and was funding deficits in its operating expenses.

The Fifth DCA’s decision in Sara R. Mackenzie and Ralph Mackenzie v. Centex Homes et al. illustrates the importance for developers of HOA communities to tread carefully whenever they attempt to avoid funding for association reserves. Condominium developers are provided with a statutory mechanism to avoid funding for reserves if they guarantee a set minimum level for the association’s entire annual budget during its first two years of existence, but the laws governing HOAs do not include this exemption.

dbr-logo-300x57Based on the circumstances in this case, it appears that the developer of the community was either unaware of its statutory requirements governing the funding of reserves or it failed to adequately think through its actions. After establishing the account for the association’s reserves and funding it in 2007, the developer opted to pay Sullivan Ranch’s operating expenses in lieu of making any contributions to the reserve account in the following years, claiming that it had made no guarantee to fund the reserves.

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Steve-Siegfried-2013-srhl-lawSteven M. Siegfried, our firm’s founder who launched the practice 40 years ago in 1977, was the subject of a “Profiles in Law” article published by the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which appears in today’s edition of the newspaper, chronicles his career and highlights his achievements as a construction law specialist, professor and writer for the last four decades.

The profile article, written by DBR reporter Samantha Joseph, reads:

Steven M. Siegfried wrote the book on construction law. The literal book. The one the American Bar Association published in 1987 as an early nod to a then-fledgling practice area.

His work, “Introduction to Construction Law,” became a standard reference for real estate and construction lawyers across Florida for the past three decades. Over several incarnations, it helped establish the Siegfried Rivera Hyman Lerner De La Torre Mars & Sobel partner as a foremost authority on a specialty he’s long championed.

The article notes that Steve’s other publications focus on construction lien law, construction defects, condominium warranty claims and the statute of limitations, culminating with his authoring of “Florida Construction Law” by Aspen Publishers in 2001.

dbr-logo-300x57It states that his concentration on construction and community association law began in 1976, when he foresaw that the real estate sector would become a pillar of the region’s economy that would require highly specialized practitioners.  The article notes that his firm “will celebrate its 40th anniversary this year. It employs 46 attorneys concentrating on real estate, construction, community associations, and property insurance . . . from offices in Miami-Dade, Broward and Palm Beach counties.”

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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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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 “Disputed Condo Election Offers Important Lessons for Association Boards,” focused on a recent appellate ruling that illustrated the importance for boards of directors to act with a clear understanding of their capabilities to alter association election procedures.  Her article reads:

Allegations of questionable or even downright fraudulent tactics by candidates in annual association elections are not entirely uncommon. When suspicious activities begin to call into question the integrity of the election, some boards of directors hit the panic button and take actions that will not stand the test of their governing documents or the Florida Administrative Code.

Such appears to be what took place in a disputed election at the Palm Aire Country Club Condominium in Pompano Beach that culminated in a recent ruling by Florida’s Fourth District Court of Appeal. While the appellate panel’s opinion does not address the reasons for the association board’s actions, noting only that “there is some ambiguity as to what exactly occurred” at the board’s Feb. 29, 2016, meeting, the opinion essentially invalidates the board’s 6-3 vote at the meeting to postpone the annual election that was set for two days later on March 2.

Even though a majority of the board voted to postpone the election, it took place as originally scheduled on March 2, and new directors were elected. The management company for the property, M&M Property Management LLC, subsequently refused to recognize the authority of the prior board of directors and instead began working with the newly elected directors.

dbr-logo-thumb-400x76-51605-300x57In response, the prior board of directors filed suit against M&M seeking a temporary injunction to compel the management company to stop operating in service of the new board of directors. The prior board was granted the temporary injunction, and in turn M&M was ordered to recognize the board as it existed prior to the March 2 election.

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This year our firm is celebrating the 40th anniversary of its founding.  In 1977, Steven M. Siegfried had the vision to bring great lawyers and supporting staff together to focus on every aspect of Florida’s burgeoning construction, community association and real estate industries.

As Florida has grown, so too has SRHL.  Maintaining our focus, we are now 46 attorneys in our three South Florida offices.  As required by the evolution of the industries in which our clients excel, we have incorporated expertise in insurance, creditors’ rights, and the commercial transactions and disputes that relate to these core competencies.  We also have developed an expertise in aircraft transactional work.

As we reflect on our 40 years of service in these vital industries, we take pride in having played significant roles in some of the most important and challenging projects throughout South Florida and the nation.  We look forward to furthering our role as one of the most trusted sources for legal counsel and representation in these fields in the years to come.

 

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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