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Gary-Mars-2021-2-200x300For the second time in the last several months, firm shareholder Gary M. Mars authored an op-ed editorial column in the Miami Herald on a vital new piece of federal legislation to provide for condo-safety financing options for condominium associations and their unit owners.  Gary’s new article, which is featured in today’s op-ed Opinion page of the Herald, discusses what he calls a perfect storm of rising insurance, inspections, repairs and reserves expenses that could jeopardize the finances of many South Florida condominium associations and force some owners to either sell or face the prospect of foreclosure.  It reads:

. . . A recent Palm Beach Post article chronicled how the Portofino South Condominium in West Palm Beach received an 82% increase from its insurance carrier, while its directors and residents had expected an increase of about 25%, which the community got in 2021.

Mary McSwain, 67, who bought her one-bedroom unit in January, said her monthly dues are going from $914 to $1,347.

GMars-Herald-op-ed-8-2-22-for-blog-137x300For most communities, increased insurance costs will come first, but increases created by the provisions of the state (and some county) mandates for structural inspections, repairs and reserve funding are sure to follow. Those provisions do not start until 2024 for the affected buildings, but association boards would be well advised to begin securing and vetting offers from qualified professionals for their long-term budgetary planning.

A federal proposal introduced recently by Florida U.S. Reps. Charlie Crist and Debbie Wasserman Schultz, together with another bill from the same lawmakers introduced in April, could provide relief for communities in immediate need of substantial repairs and renovations. The new Rapid Financing for Critical Condo Repairs Act of 2022 would let the U.S. Department of Housing and Urban Development’s Federal Housing Administration insure condominium association building rehabilitation loans issued by private lenders.

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Jonathan-Mofsky-2021-2-200x300The firm’s latest “Real Estate Counselor” column in today’s Miami Herald is authored by partner Jonathan M. Mofsky and titled “Ruling Shows Pitfalls of Associations Enacting Changes Without Required Votes.”  It focuses on a recent ruling by Florida’s Fifth District Court of Appeal that illustrates the potential consequences of associations that undergo alterations to their amenities and enact rule changes without the required vote and approval of their unit owners.  Jonathan’s article reads:

. . . The case initially stems from a filing for mandatory non-binding arbitration with the Division of Florida Condominiums, Timeshares and Mobile Homes under the Department of Business and Professional Regulation. Michelle and Kevin Flint, owners of several units at the Lexington Place condominium in Orlando, objected to the condo association’s elimination of a common element dog park and a court for wallyball (i.e., a sport similar to volleyball played on a racquetball court). They alleged the association performed these material alterations without a vote and majority approval of the unit owners in violation of its own declaration of condominium.

The Flints also challenged a board-enacted rule that prevented tenants from maintaining pets at the condominium, which they claimed violated the pet restrictions contained in the declaration.

JMofsky-Herald-clip-for-blog-7-31-22-103x300The couple prevailed in these proceedings on both issues. However, the association chose to escalate the matter by filing a lawsuit in Orange County circuit court based on the same arguments originally presented in arbitration.

The circuit court also ruled in favor of the Flints and affirmed the arbitrator’s decision. After considering the different provisions in the association’s declaration as well as the arguments of the parties, the court found that because the association’s declaration required approval by a majority vote of the unit owners prior to performing the alterations, the association’s board of directors alone lacked the authority to eliminate the community’s dog park and wallyball court.

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In South Florida, the pool is an extremely popular and widely used community amenity. While community pools can be a great source of joy and relaxation for residents and their guests, they can also sometimes become a focal point of strife and confrontations.

Given the propensity for certain issues to arise, and in hopes of preventing them, associations are well advised to establish and enforce pool-use rules for their communities. Such rules, which should be comprehensive and cover a wide array of use and operations matters related to the pool and the pool deck including opening/closing times, guest capacity, noise, horseplay, swimwear, diving, smoking, drink/food, and more, are truly essential for associations to maintain order and diminish potential legal liabilities.

With the help of qualified community association legal counsel, who will always begin by checking an association’s governing documents to ensure it follows the prescribed process for adopting enforceable pool rules, associations should develop fair and reasonable rules that are designed to promote the efficient and safe use of the amenity. comm-pool-300x200The goals and purposes behind every rule should be clearly evident from its very nature, and any changes and additions to the rules and their enforcement should be discussed with both experienced legal counsel and property management prior to implementation.

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Laura-Manning-Hudson-Gort-photo-200x300Firm partner Laura Manning-Hudson is quoted in an article on the rise in condominium terminations in South Florida, and the disputes that often arise in communities considering such buyouts of all the units by developers hoping to raze the building and raise a new one its place.  The article reads:

. . . The process is known in Florida as a condominium termination. In other states, it’s called a deconversion and it’s happening in cities like Chicago where apartment-to-condo conversions during the early 2000s haven’t succeeded as planned.

According to the Department of Business and Professional Regulation, terminations of 336 condominiums encompassing 24,761 units were approved by the state Division of Condominiums, Timeshares, and Mobile Homes over the decade beginning July 1, 2012. They ranged in size from two units to 544. Thirty-nine were in Broward County, 86 were in Miami-Dade County, and 24 were in Palm Beach County.

LManning-Sun-Sentinel-clip-for-blog-7-18-22-94x300Between 2013 and 2019, the annual number of terminations ranged from 32 to 43. During the pandemic, as eviction moratoriums were imposed, the number of terminations fell to 19 in 2020 and 22 in 2021. Eleven terminations have been approved by the division so far in 2022.

But real estate experts predict that terminations will increase in Florida as condo associations seek to avoid strict and costly requirements enacted in May in the wake of the Champlain Towers collapse last year in Surfside. The new laws require associations with buildings at least 30 years old and over three stories high to, before 2025, conduct structural inspections and amass enough money in their reserves to fund necessary structural repairs.

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LTLehr-2018-Siegfried-Rivera-200x300The firm’s latest “Real Estate Counselor” column in the Miami Herald appears in today’s newspaper and is again authored by partner Lindsey Thurswell Lehr.  Her column, which is titled “Condo Terminations Require Ample Consideration by Association Directors and Unit Owners,” focuses on the rise in South Florida in condominium terminations involving building-wide purchases of all the units by developers.  While such terminations may be inevitable for some buildings, Lindsey writes that they are typically contentious with some owners steadfastly opposed to the forced sale of their property.  Her column reads:

. . . Florida’s condominium termination statute is one of the most controversial aspects of the state’s condo laws. The current statute, which has seen several significant changes over the years, enables owners to work together in the bulk sale of their units to a developer hoping to demolish a condominium and build a new one in its place.

Currently, the statute allows for an optional termination with a vote of 80 percent of the unit owners, but it also enables five percent or more of the owners to block a termination from proceeding for a period of 24 months by rejecting it in writing or via a negative vote.

LLehr-Herald-clip-for-blog-7-17-22-300x217As my fellow firm partner Oscar Rivera wrote in this column in February, condominium developers are now setting their sights on many potential targets for termination bids in South Florida’s red-hot real estate market.

For aging properties that are now uncovering potential structural life-safety issues, the lessons from Surfside cannot be ignored. They must either immediately ratify a plan to fund and execute the necessary repairs and remediation, or they must work to secure the best possible condo termination exit strategy for all the unit owners as expeditiously as possible.

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Community association board meetings are where the rubber meets the road for practically all association administrative matters. The agendas for these meetings and the minutes that ensue form a vital record of all the matters that have come before the directors of an association over the course of the entire lifespan of a community. Given the significance of the meetings, it is imperative for effective notes or “meeting minutes” to be kept to document all of the pertinent information from each and every official assembly.

As a general rule, meeting minutes should be thorough, but concise. They are not intended to be a transcript of everything said at a meeting.

Instead, the best approach is to start by listing the date, time and place of the meeting; listing the board members present/absent and additional participants such as the association property manager or attorney; and including the name of the individual taking the minutes. meet-300x166A copy of the agenda and notice should be attached to the minutes.

Once all of that is out of the way, the minutes should include a list of all the issues and reports that were presented and discussed at the meeting. For each issue which resulted in a motion, the minutes should include the exact wording of the motion, the names of the directors who made the motion and seconded it, and whether the motion passed or failed.

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LTLehr-2018-Siegfried-Rivera-200x300The latest edition of the firm’s Miami Herald “Real Estate Counselor” column appears in today’s edition of the newspaper and is authored by Lindsey Thurswell Lehr.  The article, which is headlined “Community Associations Should Consider Amending Their Amendments Process,” focuses on the inability for many community associations to amend their governing documents, and it suggests a possible solution.  Lindsey’s article reads:

. . . Declarations, covenants and bylaws are recorded in the local court registry and provided to all buyers prior to their purchase, as they essentially set the terms of the contract and serve as mini constitutions setting forth the rights and duties between unit owners and their association.

These governing documents are originally codified by a community’s developer, and they often include dated and problematic provisions that are in dire need of updating as communities grow and owners’ goals change.

However, amendments to an association’s recorded governing documents often require a vote of the unit-owner membership, and sometimes the documents demand a minimum approval of two-thirds or even three-quarters of all the owners for an amendment to be ratified.

LLehr-Herald-clip-for-blog-7-3-22-103x300Such voting thresholds are extremely difficult for most communities to achieve. In fact, many Florida communities have difficulty achieving the legally mandated minimum voter-participation requirements to conduct valid board member elections or hold membership meetings.

Indeed, changing the recorded governing documents is often significantly more difficult than matters requiring only a simple vote of the board of directors, but communities with troublesome and outdated provisions should still take the challenge head on and make it a priority.

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Gary-Mars-2021-2-200x300The firm’s latest Miami Herald “Real Estate Counselor” column by Gary M. Mars appears in today’s print edition of the newspaper and is titled “Community Associations Should Break Ties with Developer, Board Members During Turnover.”  The article focuses on the turnover process by which control of a community’s operations and management is transferred from its developer to the home/condo buyers.  Gary notes that this is one of the most critical junctures for the future administrative and financial wellbeing of all condominium and HOA communities, and those owners who have made the investment to be the charter members of their new association should always begin their takeover with the same vital step: breaking ties with the developers’ board members and experts.  His article reads:

. . . Turnover is when a new community’s unit owners get their opportunity to hire independent legal counsel, financial professionals, and engineers to conduct meticulous audits and inspections. A very careful review of all a community’s rules and business records, as well as the physical state of the entire property, is very much the order the day. The end goal is to hold the developer, as well as its contractor, suppliers and design professionals, accountable for any budget shortfalls and construction deficiencies.

GMars-Herald-clip-for-blog-6-20-22-300x230Given the nature of the task at hand, this work should always begin with the careful vetting of prospective advisor accountants, attorneys and engineers to ensure only independent and highly qualified professionals are retained by the new owner-controlled board, which must be expeditiously transitioned away from any directors and professionals appointed by the developer during its preceding control of the association, or with any ties to the developer.

The financial, engineering and legal experts retained by the new unit owner-controlled board of directors will be charged with representing the interests of all the owners by holding the developer, contractor, suppliers and design professionals to their warranty and financial obligations. They should also be tasked with changing any rules regulating community affairs, collections policies, and construction matters that were in place under the developer’s regime for its primary benefit.

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Given Florida’s nickname as the Sunshine State, it is only fitting that solar energy would be the state’s most popular and effective source of renewable energy. In fact, according to the U.S. Energy Information Administration, renewable energy fueled approximately five percent of Florida’s in-state electricity generation in 2020, and almost two-thirds of that came from solar.

It appears to be a sure bet that rooftop solar installations will be growing in popularity in the years to come for homeowners across the state. For those who own properties in communities with homeowners associations, internet searches will quickly reveal that Florida associations are prohibited by law from blanket denials of such installations. However, that does not mean that they do not have a significant say in the manner and form of solar panel installations in order to maintain the community’s aesthetic standards.

solar-panels-300x200The Florida Solar Rights Act protects homeowners who wish to install solar panels and other renewable energy devices on their property from outright bans. It provides that property owners may not be denied permission to install solar collectors and other renewable energy devices by HOAs or even local municipalities. The law expressly forbids binding agreements that limit access to renewable energy for dwellings.

However, the Act does allow for HOA architectural review boards and committees to determine the specific rooftop location where panels can be installed. Associations are therefore able to require homeowners to follow their set procedures for the prior review and approval of planned alterations and improvements. Review committees may request diagrams and information on the dimensions, location(s), and layout of proposed solar panels, including illustrations. They can also review and approve all the related wiring and electrical components, as well as the proposed height of the panels from the roof.

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RobertoBlanch_8016-200x300The firm’s latest Real Estate Counselor column in today’s Miami Herald is authored by Roberto C. Blanch and titled “Lawmakers Deliver Huge Milestone in Evolution of Florida’s Condo Laws.”  The article focuses on the state legislature’s passage of the most far-reaching condominium safety reforms in Florida since Hurricane Andrew.  It reads:

. . . The changes include many of the proposals from engineering, legal and community association industry task forces aimed at studying the perceived shortcomings that led to the Surfside catastrophe. They require inspections for buildings three stories or higher 30 years after completion and every 10 years thereafter. Buildings within three miles of the coast must be inspected at 25 years, then every 10 years. The first buildings impacted are slated to be those constructed before July 1, 1992, as they must complete their first structural inspections prior to Dec. 31, 2024.

The inspections are aimed at identifying any substantial structural deterioration that may present life-safety dangers, and whether remedial or preventive repairs are recommended. RBlanch-Herald-clip-for-blog-6-5-22-99x300The reports on their findings will be required to be distributed to association unit owners, prospective buyers and local building departments, which may then require the start of repairs within specified timeframes if substantial deficiencies are identified.

Associations will also be required to conduct reserve studies every 10 years for the funding of structural repairs and, most important, beginning by 2025 they will no longer be allowed to waive funding of many reserve components.

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