By: Joshua Gerstin, Esq.

At the time of my first article entitled Medically Necessary Pets, the Florida courts offered little guidance to community associations dealing with “medically necessary pet accommodation requests”. Without such guidance many community associations were inclined to permit an owner’s pet upon receipt of a doctor’s prescription, regardless of its merit.

In the recent case of Hawn v. Shoreline Towers Phase I Condominium Association, Inc. et. al., the United States District Court for the Northern District of Florida specified information it deemed reasonable for an association to seek from an owner that submitted a medically necessary pet accommodation. The facts of the Hawn case illustrates the issues many community associations deal with when a medically necessary pet accommodation request is submitted.

In Hawn, the Shoreline Towers Phase I Condominium Association had a long-standing no pets policy prior to Mr. Hawn’s purchase of his unit. Nevertheless, a year after moving in, Mr. Hawn adopted a puppy and requested the Board of Directors make a “reasonable accommodation” allowing his puppy to stay.  A letter from his psychologist (claiming the dog ameliorated severe panic attacks) and chiropractor (claiming the dog assisted with mobility issues) accompanied his request.

After meeting with Mr. Hawn the Board of Directors requested the following further information:

1. The qualifications of the two medical professionals that submitted letters to the association in support of his request.
2. Information specifically setting forth the manner in which the pet helps him deal with his disabilities.
3. Whether there were other corrective measures that could help the owner with his impairments.

The owner never responded to the association’s information request and his accommodation request for his pet was denied. Soon thereafter, Mr. Hawn filed a lawsuit.

During discovery the association realized Mr. Hawn first petitioned the Board to rescind its no-pet policy without mentioning his disability. It was also discovered that Mr. Hawn had only seen each of his pet prescribing doctors twice. In dismissing the owner’s case, the court held the initial information submitted by the owner was insufficient for the association to make a reasonable determination. Mr. Hawn’s subsequent refusal to respond to the Board’s information request was fatal to his case.

For the time being, the Hawn case offers guidance as to the information an association should review before bypassing its covenants and granting a medically necessary pet accommodation request. In particular:

1. the qualifications of the medical professionals that prescribed the pet and the specific nature of the owner’s disability and;
2. information specifically setting forth the manner in which the pet helps the owner deal with his disabilities;
3. is there a reasonable “other way” to assist the owner with his disabilities besides granting the pet accommodation request.

Of note,  a Board of Directors must take steps to keep an owner’s medical records and information protected from disclosure, including official record requests.

Over time, the proper course for an association to take when reviewing a medically necessary pet accommodation request will change as courts review different cases with  different facts. Therefore, prior to taking any action on an owner’s request for a medically necessary pet accommodation, consult your community association’s attorney.

Joshua Gerstin, Esq. is the Managing Partner of the Gerstin Associates law firm located at:  1499 West Palmetto Park Rd., Suite 412, Boca Raton, FL 33486. To submit a question to the Community Counselor, you can call, fax or email Joshua Gerstin, Esq. at:
Telephone: (561) 750-3456.

The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. All information on this website is not legal advice, legal counsel or a legal opinion. All information provided on this website is provided for general information purposes only and should not be relied upon. For legal questions or, before taking any action, please contact your attorney.

Call your United States Senator and make them aware of these issues. Considering many Congressman have openly admitted to not reading the “Stimulus Bill”, it’s doubtful they read the Helping Families Save Their Homes Act of 2009. To prevent mortgage foreclosures and enhance mortgage credit availability.. Call them now, the vote by the United States Senate is soon.

SEC. 103. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

Section 1322 of title 11, United States Code, is amended–

(1) in subsection (b)–

(A) by redesignating paragraph (11) as paragraph (12),

(B) in paragraph (10) by striking `and’ at the end, and

(C) by inserting after paragraph (10) the following:

`(11) notwithstanding paragraph (2), with respect to a claim for a loan originated before the effective date of this paragraph and secured by a security interest in the debtor’s principal residence that is the subject of a notice that a foreclosure may be commenced with respect to such loan, modify the rights of the holder of such claim (and the rights of the holder of any claim secured by a subordinate security interest in such residence)–

SEC. 104. COMBATING EXCESSIVE FEES.

Section 1322(c) of title 11, United States Code, is amended–

(1) in paragraph (1) by striking `and’ at the end,

(2) in paragraph (2) by striking the period at the end and inserting a semicolon, and

(3) by adding at the end the following:

`(3) the debtor, the debtor’s property, and property of the estate are not liable for a fee, cost, or charge that is incurred while the case is pending and arises from a debt that is secured by the debtor’s principal residence except to the extent that–

`(A) the holder of the claim for such debt files with the court and serves on the trustee, the debtor, and the debtor’s attorney (annually or, in order to permit filing consistent with clause (ii), at such more frequent periodicity as the court determines necessary) notice of such fee, cost, or charge before the earlier of–

`(i) 1 year after such fee, cost, or charge is incurred; or

`(ii) 60 days before the closing of the case; and

`(B) such fee, cost, or charge–

`(i) is lawful under applicable nonbankruptcy law, reasonable, and provided for in the applicable security agreement; and

`(ii) is secured by property the value of which is greater than the amount of such claim, including such fee, cost, or charge;

`(4) the failure of a party to give notice described in paragraph (3) shall be deemed a waiver of any claim for fees, costs, or charges described in paragraph (3) for all purposes, and any attempt to collect such fees, costs, or charges shall constitute a violation of section 524(a)(2) or, if the violation occurs before the date of discharge, of section 362(a); and

`(5) a plan may provide for the waiver of any prepayment penalty on a claim secured by the debtor’s principal residence.’.

Legal Background:

Although many people cite the Americans with Disabilities Act (“ADA”) as the basis for their “anti-pet restriction” position, the ADA does not apply to community associations because they are not places of public accommodation. The law that does apply to Florida’s community associations is the Federal Fair Housing Amendments Act of 1988 (“Act”). This law prohibits discrimination on the basis of a “handicap”, which is broadly defined in the law to include most physical or mental maladies that impair a major life function. Florida has adopted the Act; therefore, references made to other Federal Court decisions from other states are binding on Florida. The Florida Committee on Human Relations and the Federal Department of Housing and Urban Development (“HUD”) enforce the Act.

The Act requires the association to make reasonable accommodations for disabled people to fully enjoy their premises. Such reasonable accommodations include, without a doubt, an association issuing a waiver of its pet restrictions. Recently, HUD updated (and although they deny it, I believe expanded) its regulations relating to the Act and animals that provide medically necessary support for their owner’s disabilities. Following are excerpts from public comments made by HUD in their public analysis of their updates to the ACT:

Under both the Fair Housing Act and Section 504, in order for a requested accommodation to qualify as a reasonable accommodation, the requester must have a disability, and the accommodation must be necessary to afford a person with a disability an equal opportunity to use and enjoy a dwelling. To show that a requested accommodation may be necessary, there must be an identifiable relationship, or nexus, between the requested accommodation and the person’s disability. Thus, in the case of assistance/service animals, an individual with a disability must demonstrate a nexus between his or her disability and the function the service animal provides. The Department’s position has been that animals necessary as a reasonable accommodation do not necessarily need to have specialized training. Some animals perform tasks that require training, and others provide assistance that does not require training. (Emphasis added).

Housing providers are entitled to verify the existence of the disability, and the need for the accommodation–if either is not readily apparent. Accordingly, persons who are seeking a reasonable accommodation for an emotional support animal may be required to provide documentation from a physician, psychiatrist, social worker, or other mental health professional that the animal provides support that alleviates at least one of the identified symptoms or effects of the existing disability. (Emphasis added).

. . .in order to qualify as a reasonable accommodation, the requester must have a disability, and there must be a relationship between the requested accommodation and that person’s disability. For example, the person with a disability who is requesting the assistance animal must demonstrate a disability-related need for the animal, such as service, or assistance, performing tasks for the benefit of a person with a disability, or providing emotional support that alleviates one or more identified symptoms or effects of a person’s disability. Examples of disability-related functions, include, but are not limited to, guiding individuals who are blind or have low vision, alerting individuals who are deaf or hard of hearing to sounds, providing rescue assistance, pulling a wheelchair, fetching items, alerting persons to impending seizures, or providing emotional support to persons with disabilities who have a disability-related need for such support. (Emphasis added).

Based on the above guidance from HUD “each case brought to the association should be a fact-intensive, case specific determination”. Janush v. Charities Hous. Dev. Corp., 159 F. Supp. 2d 1133 (N.D. Cal. 2000); Majors v. Hous. Auth. of the County of DeKalb, Ga., 652 F.2d 454, 457-58 (5th Cir. 1981). The Board’s duty of establishing that a “support animal” is necessary for an owner to use and enjoy their residence is critical. Courts have consistently held that an owner requesting an emotional support animal as a reasonable accommodation must demonstrate a relationship between his or her ability to function and the companionship of the animal. See, e.g., Majors v. Housing Authority of the County of Dekalb, 652 F.2d 454 (5th Cir. 1981); Housing Authority of the City of New London v. Tarrant, 1997 Conn. Super. LEXIS 120 (Conn. Super. Ct. Jan. 14, 1997); Whittier Terrace v. Hampshire, 532 N.E.2d 712 (Mass. App. Ct. 1989); Durkee v. Staszak, 636 N.Y.S.2d 880 (N.Y.App.Div. 1996); Crossroads Apartments v. LeBoo, 578 N.Y.S.2d 1004 (City Court of Rochester, N.Y. 1991).

Conclusion:

Each case has to be reviewed by the Board on its own merits based upon submissions from the owner and the owner’s doctor or similar professional. In conducting an analysis of a possible waiver of pet restrictions, the Board cannot share an owner’s submitted medical information to the members at large. Further, other than stating a waiver for “medical necessity” was granted, the Board should not discuss an owner’s condition with the members. Further, all evidence submitted by an owner should be kept in a separate file marked CONFIDENTIAL” and should not be released pursuant to any record requests from an owner. Violations can result in both State and Federal lawsuits.

Although a fool proof method to avoid being sued or upsetting at least one group of owners does not exist. Understanding the requirements and working with your community’s attorney for each owner submission will go a very long way in keeping the board out of the dog house!

Joshua Gerstin, Esq.
www.gerstin.com

Gerstin & Associates is a challenging and inspiring place to advance your legal career and achieve your professional goals. We are dedicated to providing a challenging, inspirational and fun work environment.

For the foreseeable future, we plan on continuing to grow. Growth allows us to offer a high level of legal services to our clients. At the same time we can maximize our efficiencies which allows us to offer our employees competitive

salaries and benefits. If you are ambitious and want to work in an environment that fosters your personal and professional goals, please consider joining our team.

EMPLOYEE BENEFITS: 

• Very competitive salary, commensurate with your experience.
• Generous bonus structure.
• Free gym membership to a gym that is within walking distance of our firm.
• Employee/Incentive referral program.
• Full Vacation, Holiday and Sick Days.
• 401K pension plan with profit sharing component (we match what your contributions or we contribute a percentage of your salary).

JOB REQUIREMENTS:

• 5-7+ years of experience in commercial litigation and collections.
• Strong academic/ firm background and stable firm experience.
• Excellent interpersonal and communication skills.
• Organized, self-motivated, with ability to work independently.
• Excellent research, writing and oral advocacy skills.
• Common skill requirements include the use of Windows, MS Word, MS Outlook as well as a strong typing ability (speed and accuracy), including document editing and formatting.
• Ability to take direction and meet deadlines.
  

How to apply:

All candidates must complete your online confidential application.

No applications will be considered that are not sent through our online confidential application.

No fax, mailed or emailed applications will be accepted.

Click here for our online application

Thank you, we look forward to hearing from you.

Sincerely,
Gerstin & Associates
Joshua Gerstin, Esq.

Gerstin & Associates is proudly an Equal Opportunity Employer.

Click Here to Download Full Report

Presents:

1499 West Palmetto Park Rd, Suite 412, Boca Raton, FL 33486

Telephone: (561) 750-3456, Facsimile: (561) 750-8185

Web: www.Gerstin.com

The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. All of the information in this report is not legal advice, legal counsel or a legal opinion and should not be relied upon. For legal questions or, before taking any action, please contact your attorney.          Copyright 2008 Gerstin & Associates. All Rights Reserved.

Homeowner Associations

______________________________________________

Condominiums

Before 2008 Changes								After 2008 Changes
Director Voting
718.111(1)(b). Allowed abstentions for conflicts of interest. Nothing stated about the meaning of an abstention								718.111(1)(b). A director who abstains from voting on any action taken on any corporate matter is presumed to have taken no position regarding the action.
Standard of Conduct for Directors
718.111(1)(d). No prior statutory provision.							718.111(1)(d). Officers, agents, and members of the board of directors of a condominium association are required to adhere to a good faith and reasonably prudent person standard and provides for monetary damages and criminal penalties for breach of this standard. Transactions from which the officer or director derived an improper personal benefit, either directly or indirectly; or constitutes recklessness or an act or omission that was in bad faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.
Official Records
718.111(12)(11). No prior statutory provision.							718.111(12)(11). Fines can be levied against individuals up to $5,000 for intentionally or knowingly defacing a condominium accounting record or failing to create or maintain such a record.
718.111(16)(b). No geographic limitations and no option to produce the records electronically.							718.111(16)(b). Official records of the condo association must be maintained for a period of seven years. The required inspection report is also now part of the official accounting records. Records must be within 45 miles from the condo complex or in the same county as the condo complex. Providing the records through the internet by posting on the web, if the documents can be downloaded and printed is a permissible alternative to document inspection at an office of the condominium or property manager.
718.111(12)(16)(4). No prior statutory provision.							718.111(12)(16)(4). The Social Security numbers, driver’s license and other personal identifying information of members’ are not accessible to unit owners.
718. 111(13). No prior statutory provision.							718. 111(13) The Division has been empowered to, but has yet, implemented rules regarding uniform accounting principles and standards for stating the disclosure of at least a summary of the reserves, including information as to whether such reserves are being funded at a level sufficient to prevent the need for a special assessment and, if not, the amount of assessments necessary to bring the reserves up to the level necessary to avoid a special assessment. The person preparing the financial reports shall be entitled to rely on an inspection report prepared for or provided to the association to meet the fiscal and fiduciary standards of this chapter.
Elections & Qualifications to Serve
718.112(2)(b)(2). No prior statutory provision.			718.112(2)(b)(2). Association owned units do not have voting rights or any consent allocated to them.
Before			After
718.112(2)(d). Previously only had a disqualification for felons wanting to serve on a condominium Board.			718.112(2)(d). Precludes members from serving as a director if the member is delinquent on the payment of his/her assessments, if they were suspended or removed by the Division in the past, co-owners in an association with more than ten units may not serve on the Board at the same time.
718.113(7). No prior statutory provision.			718.113(7). Regardless of restrictions in an association’s Governing Documents, unit owners are allowed to display religious decorations not to exceed 3 inches wide, 6 inches high, and 1.5 inches deep.
718.112(2)(d)(1). Board member terms expired at the election of their successors at the annual meeting.			718.112(2)(d)(1). The terms of all board members expire at the annual meeting and if not precluded by the Bylaws these members can stand for reelection.
718.112(2)(d)(1). No prior statutory provision. Condominium Elections Continued.			718.112(2)(d)(1). Board members can only be elected to annual (1-year) terms, coinciding with the annual meeting, or to no more than 2-year staggered terms, if authorized by the association’s Governing Documents. “If your association documents already provide for 2-year staggered terms, we recommend that your association reaffirm this by a new vote with approval from a majority of the voting interests in order to continue using two year staggered terms.” “If the association wants to adopt 2-year staggered terms as a new provision or your current association documents provide for staggered terms of 3 years or more, you must amend your documents accordingly. Staggered terms of 3 or more years are no longer allowed.”
			For upcoming elections, board members who are not up for election because they are in mid-term of a 3 year term may serve out the remainder of their term. If a board member’s 3 year term expires at the next (upcoming) election the newly elected member is limited to either a 1-year or 2-year staggered term depending on how your documents are amended and approved by a majority of the voting interests. This process will repeat itself in subsequent annual elections until all board members are serving either 1-year or 2-year staggered terms.
Board Candidates
718.112(2)(d)(1). No prior statutory provision.						718.112(2)(d)(1). If no one is interested in or demonstrates an intention to run for the position of a board member whose term has expired, such board member whose term has expired shall be automatically reappointed to the board of administration and need not stand for reelection.
718.112(2)(d)(3). No prior statutory provision.						718.112(2)(d)(3). Establishes a certification form, to be provided with the election notice to unit owner entitled to vote, for candidates for condominium association boards attesting that the candidate has read and understands, to the best of his/her ability, the governing documents of the association and the provisions of Chapter 718 and any applicable rules.
718.112(2)(m). No prior statutory provision.						718.112(2)(m). A director or officer more than 90 days delinquent in the payment of regular assessments shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law. 718.112(2)(n). Officers and directors who are charged with a felony theft or embezzlement offense shall be removed from office and cannot be appointed or elected as director or officer. Should the charges be resolved without a finding of guilt, the director or officer shall be reinstated for the remainder of the term of office.
Reserves
718.112(2)(F)(3). Waiving or reducing the funding of reserves below the statutory requirements can be performed by the majority votes of the owners.						718.112(2)(F)(3). Proxy voting relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended shall contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE RESERVE ITEMS.
Mandatory Inspections
718.113(6). No prior statutory provision.				718.113(6). As to any condominium building greater than three stories in height, at least every 5 years, and within 5 years if not available for inspection on October 1, 2008, the board shall have the condominium building inspected to provide a report under seal of an architect or engineer authorized to practice in this state attesting to required maintenance, useful life, and replacement costs of the common elements. However, if approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive this requirement. Such meeting and approval must occur prior to the end of the 5-year period and is effective only for that 5-year period.
Hurricane Shutters
718.113(5) and 718.115(1)(e) No prior statutory provision.						718.113(5) and 718.115(1)(e) Provides that Board can install hurricane protection that complies with or exceeds applicable building codes (in addition to hurricane shutters). A vote of the owners is not required if the hurricane protection to be installed is the maintenance, repair, and replacement responsibility of the association. The cost to install the hurricane protection is a common expense if the hurricane protection to be installed is the maintenance, repair, or replacement responsibility of the association. In such case, owners who have previously installed code compliant hurricane protection will receive a credit on the assessment.
Liens & Collections
718.115(1)(e) No prior statutory provision.						718.115(1)(e). No lien may be filed by the association against a condominium unit until 30 days after the date on which a notice of intent to file a lien has been delivered to the owner by certified mail, return receipt requested, and by first-class United States mail to the owner at his or her last known address as reflected in the records of the association.
Emergency Powers
718.1265. To the extent allowed by law and unless specifically prohibited by the declaration of condominium, the articles, or the bylaws of an association, and consistent with the provisions of s. 617.0830, the board of administration. In response to damage caused by an event for which a state of emergency is declared in the locale in which the condominium is located, may, but is not required to, exercise the following powers: (a) Conduct board meetings and membership meetings with notice given as is practicable. Such notice may be given in any practicable manner, including publication, radio, United States mail, the Internet, public service announcements, and conspicuous posting on the condominium property or any other means the board deems reasonable under the circumstances. Notice of board decisions may be communicated as provided in this paragraph. (b) Cancel and reschedule any association meeting. (c) Name as assistant officers persons who are not directors, which assistant officers shall have the same authority as the executive officers to whom they are assistants during the state of emergency to accommodate the incapacity or unavailability of any officer of the association. (d) Relocate the association’s principal office or designate alternative principal offices. (e) Enter into agreements with local counties and municipalities to assist counties and municipalities with debris removal. (f) Implement a disaster plan before or immediately following the event for which a state of emergency is declared which may include, but is not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners. (g) Based upon advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine any portion of the condominium property unavailable for entry or occupancy by unit (h) Require the evacuation of the condominium property in the event of a mandatory evacuation order in the locale in which the condominium is located. Should any unit owner or other occupant of a condominium fail or refuse to evacuate the condominium property where the board has required evacuation, the association shall be immune from liability or injury to persons or property arising from such failure or refusal. (i) Based upon advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine whether the condominium property can be safely inhabited or occupied. However, such determination is not conclusive as to any determination of habitability pursuant to the declaration. (j) Mitigate further damage, including taking action to contract for the removal of debris and to prevent or mitigate the spread of fungus, including, but not limited to, mold or mildew, by removing and disposing of wet drywall, insulation, carpet, cabinetry, or other fixtures on or within the condominium property, even if the unit owner is obligated by the declaration or law to insure or replace those fixtures and to remove personal property from a unit. (k) Contract, on behalf of any unit owner or owners, for items or services for which the owners are otherwise individually responsible for, but which are necessary to prevent further damage to the condominium property. In such event, the unit owner or owners on whose behalf the board has contracted are responsible for reimbursing the association for the actual costs of the items or services, and the association may use its lien authority provided by s. 718.116 to enforce collection of the charges. Without limitation, such items or services may include the drying of units, the boarding of broken windows or doors, and the replacement of damaged air conditioners or air handlers to provide climate control in the units or other portions of the property. (l) Regardless of any provision to the contrary and even if such authority does not specifically appear in the declaration of condominium, articles, or bylaws of the association, levy special assessments without a vote of the owners. (m) Without unit owners’ approval, borrow money and pledge association assets as collateral to fund emergency repairs and carry out the duties of the association when operating funds are insufficient. This paragraph does not limit the general authority of the association to borrow money, subject to such restrictions as are contained in the declaration of condominium, articles, or bylaws of the association. (2) The special powers authorized under subsection (1) shall be limited to that time reasonably necessary to protect the health, safety, and welfare of the association and the unit owners and the unit owners’ family members, tenants, guests, agents, or invitees and shall be reasonably necessary to mitigate further damage and make emergency repairs.
Developer Transition
718.301 (1)(p). No prior statutory provision.					718.301 (1)(p). Prior to transition the developer must obtain a report under seal of an architect or engineer authorized to practice in this state, attesting to required maintenance, useful life, and replacement costs of the following applicable common elements comprising a turnover inspection report: 1. Roof. 2. Structure. 3. Fireproofing and fire protection systems. 4. Elevators. 5. Heating and cooling systems. 6. Plumbing. 7. Electrical systems. 8. Swimming pool or spa and equipment. 9. Seawalls. 10. Pavement and parking areas. 11. Drainage systems. 12. Painting. 13. Irrigation systems.
The Division’s Role in a Transition
	718.501(1). In performing its duties, the division has complete jurisdiction to investigate complaints and enforce compliance with the provisions of this chapter with respect to associations that are still under developer control and complaints against developers involving improper turnover or failure to turnover. However, after turnover has occurred, the division shall only have jurisdiction to investigate complaints related to financial issues, elections, and unit owner access to association records.
Management Companies
Contracts and Bidding
718.3026 . Associations with 10 or fewer units may opt out of the provisions of the bidding requirements ( former threshold was 100 or fewer units) if two-thirds of the unit owners vote to do so. Can be a vote by proxy
718.3026 (1) All contracts as further described herein or any contract that is not to be fully performed within 1 year after the making thereof, for the purchase, lease, or renting of materials or equipment to be used by the association in accomplishing its purposes under this chapter, and all contracts for the provision of services, shall be in writing. If a contract for the purchase, lease, or renting of materials or equipment, or for the provision of services, requires payment by the association on behalf of any condominium operated by the association in the aggregate that exceeds 5 percent of the total annual budget of the association, including reserves, the association shall obtain competitive bids for the materials, equipment, or services. Nothing contained herein shall be construed to require the association to accept the lowest bid. Contracts with employees of the association, and contracts for attorney, accountant, architect, community association manager, timeshare management firm, engineering, and landscape architect services are not subject to these provisions.
Conflicts of Interest.
718.3026(3). No prior statutory provision.		718.3026(3). As to any contract or other transaction between an association and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested: (a) The association shall comply with the requirements of s. 617.0832. (b) The disclosures required by s. 617.0832 shall be entered into the written minutes of the meeting. (c) Approval of the contract or other transaction shall require an affirmative vote of two-thirds of the directors present. (d) At the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. Should the members cancel the contract, the association shall only be liable for the reasonable value of goods and services provided up to the time of cancellation and shall not be liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.
Fines
718.303 (3). No prior statutory provision.								718.303 (3). Defines the membership of the committee of unit owners that conduct the hearing to determine whether a unit owner is fined for violation of association rules or bylaws to exclude board members or persons residing in a board member’s household.
Insurance Overall: Based on the following new insurance laws, associations should now do the following: (1) Obtain an insurance appraisal every 36 months. (2) Vote on the deductible yearly at a properly noticed board meeting. The notice must state: the proposed deductible and the available funds and the assessment authority relied upon by the board and estimate any potential assessment amount against each unit. Requires 14 days notice by mail to the unit owners. The new law rewrites Section 718.111(11), Florida Statutes. Following is a summary of the changes:
• Adequate Insurance. Adequate hazard insurance shall be based upon the replacement cost of the property as determined by an independent insurance appraisal or update of a prior appraisal. The full insurable value must be determined at least once every 36 months. • Self-Insurance and Pooling. The provisions for self insurance and pooled insurance remain unchanged, but pooled insurance programs will now require the approval of the Office of Insurance Regulation. • Deductible. The deductible must be consistent with industry standards and prevailing practice for communities of similar size and age, and having similar construction and facilities in the locale where the condominium property is located. The Board must establish the amount of the deductible based upon the level of available funds and predetermined assessment authority at a meeting of the Board. Such meeting requires fourteen (14) days notice by mail to the owners and must be open to all unit owners. The notice must state the proposed deductible and the available funds and the assessment authority relied upon by the board and estimate any potential assessment amount against each unit. The Board meeting may be held in conjunction with budget meeting. • The Association insures: All portions of the condominium property as originally installed or replacement of like kind and quality, in accordance with the original plans and specifications; All alterations and additions made to the condominium property pursuant to 718.113(2) (which means that alterations installed by individual owners will be excluded from the Association’s coverage obligations.) Same as before (floor, wall and ceiling coverings, etc.) except the statute will no longer exclude air conditioning and heating equipment from the Association’s coverage obligations. • Unit Owner Insurance Responsibility. Unit owner coverage is still mandated, but the statute will also require individual unit owner policies to provide $2,000.00 of loss assessment coverage per occurrence. The unit owner is required to provide proof of hazard and liability insurance upon request, but not more than once per year. The new statute also requires that the Association be named as an additional insured and loss payee on all casualty policies issued to unit owners. The statute also provides that all improvements or additions to the Condominium Property that benefit fewer than all owners must be insured by the unit owners having the use thereof or may be insured by the Association at the cost and expense of the owners having the use thereof. This provision is subject to interpretation and could be interpreted to apply to limited common element parking spaces, storage lockers, and even balconies and patios but we do not believe that was the intent . • Reconstruction. All reconstruction is to be undertaken by the Association if the reconstruction work involves damages to portions of the property which the Association insures. The Association can authorize unit owners to undertake reconstruction work with the prior written consent of the board, but can condition such work upon the approval of the repair methods, qualifications of contractors, etc. Unit owners will be responsible for reconstruction of the property to the extent the damage pertains to portions of the property which the owners insure. If the Association undertakes reconstruction work for which the owners are responsible, the Association can charge the unit owner and lien the unit for the costs. Exceptions to Association Responsibility for Cost of Reconstruction. (1) The Association will not be responsible for reconstruction of unit owner alterations if the improvement benefits only the unit for which it was installed and is not part of the standard improvements installed by the developer on all units as part of original construction, whether or not located within the unit. (2) Damages caused by casualty loss but which are attributable to unit owner negligence or failure to comply with the requirements of the covenants will be repaired at the expense of the owner. (3) Casualty losses within the units which were known or should have been known to the owner and not reported to the Association in a timely manner, such that the claim was denied on that basis, will also be the financial responsibility of the unit owner.
Expanded Powers of the Division
The Division can now remove a person as an officer or from the board of administration and prohibit them from serving as an officer or board member for a period of time. Provides for Penalties against associations that fail to provide records access to unit owners are strengthened; grants subpoena powers to the Division; provides for records to be provided electronically.
Penalties against associations that fail to provide records access to unit owners are strengthened; grants subpoena powers to the Division; provides for records to be provided electronically
Granted the power to establish a governance form to be provided by the Division including various topics related to condominium education, rights and responsibilities that a seller must provide, at the seller’s expense, to a potential purchaser; identifies specific language noting that in the event of a conflict, the provisions of Chapter 718, FS, Division rules, and association documents prevail.

Stay informed with our newsletters, alerts and articles, free.

Please complete this form and fax it to our office at: (561) 750-8185 or

mail the completed form to our address below. Your information will

never be used, distributed or sold to any third party.

Name:___________________________________

Position:_________________________________

Community association name:____________________________

Mailing Address:____________________________________

E-mail address:____________________________________

Comments: _______________________________________

Thank you!

The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. All of the information in this report is not legal advice, legal counsel or a legal opinion and should not be relied upon. For legal questions or, before taking any action, please contact your attorney.  Copyright 2008 Gerstin & Associates. All Rights Reserved.

Gerstin & Associates

1499 West Palmetto Park Rd, Suite 412, Boca Raton, FL 33486
Telephone: (561) 750-3456, Facsimile: (561) 750-8185
Web: www.Gerstin.com

Click Here to Download Full Report

1

 Is your community association unnecessarily losing money when a bank
forecloses on a delinquent owner?
-Joshua Gerstin, Esq. & Kelly Blum, Esq.

 By now its “common knowledge”, residential bank foreclosures are on the rise and Florida in particular is leading the nation. If “the past is a predictor of the future”, Florida’s residential market will continue in this miserable condition for another two or three more years.  During this period of economic tightening, an uninformed community association Director can be very costly.

If your community association does not follow, or is uninformed about, the proper collection procedure to implement when a bank forecloses on a member’s home, your association is throwing away money. Continued over time, your community association will have to levy special assessments or increase assessments to cover shortfalls.

Both condominium and homeowner associations can collect most, if not all, of the delinquent assessments owed from a member whose bank is foreclosing on his/her home. Payment of these delinquent assessments can come from the new owner who purchased the home (at a foreclosure auction or otherwise) or the bank itself if the bank owns the home (happens if the bank is unable to sell the home at auction).
Following are some tips to guide your community association through the laws and procedures that are used to collect delinquent assessments when a member’s home has been foreclosed upon by a bank. Please note these are general guidelines. Please consult with your attorney prior to undertaking any action.

General Guidelines for both Homeowner & Condominium Associations.

 “First Things First”.

 1.    Collection procedures at your community association must be uniformly applied to all members. This uniformity applies to all members, even those members whose homes are being foreclosed upon by their bank. Unless your Governing Documents allow your association to take extra measures because a member’s home is being foreclosed upon by a bank, do not use any extraordinary collection tactics (acceleration, asking for a deposit, etc.). Extraordinary collection tactics violates the various collection laws governing this subject, each of which allows for costly penalties for violators.

 2.    Is your association collecting late fees? If your association’s Governing Documents allow for the imposition of late fees (typically located in the Bylaws) the association should be charging late fees to delinquent owners. If your association’s Governing Documents do not allow the imposition of late fees, your association should consider amending its Governing Documents. In most instances an association’s Bylaws, with its lower threshold of required affirmative voters, is the proper (and easier) Governing Document to amend.

3.    The association should designate their attorney as the association’s Registered Agent. The Registered Agent is an individual that is required by law to be appointed by every Florida corporation (profit or non-profit). One of the statutory requirements of a Registered Agent is to accept service of process (lawsuits). When a bank forecloses on an owner, the association’s Registered Agent is usually served by the bank with the foreclosure lawsuit. If the Registered Agent is irresponsible, no longer involved with the association, moved but never updated his/her address, a former property manager that no longer cares, etc. the Association risks missing important deadlines or suffering costly delays that can result in a waiver of rights to claim surplus funds, if any, after a member’s home is sold at auction.

 4.    Community associations should have their attorney’s answer each foreclosure Complaint filed by a bank against an owner and served upon the association. The legal fees for such tasks should be minimal because the association does not “actively litigate” these cases. Instead, the association is an interested party that by filing its Answer is staking its claim to surplus funds that remain after a foreclosure sale. Without an Answer, the association cannot seek these surplus funds and misses a good opportunity to collect past due assessments.

 5.    If a community association learns of a foreclosure, but has not been served with a Complaint by the bank, the association’s attorney should review the public records, locate the lawsuit and then file a Motion to Intervene into the bank’s foreclosure lawsuit. As above, this filing is ministerial, but required, to allow a community association to make a claim on surplus funds from an auction.

 With a few simple steps and procedures, a community association can better position itself to collect delinquent assessments when a bank forecloses on a member’s home. Additionally, certain recently enacted and already existing Florida laws offer significant assistance to community associations that know how to use them. Divided by the applicable form of community association (H.O.A. or Condo.), following is an overview:

 
H.O.A. Only    

Until recently, homeowner associations did not have the ability to collect delinquent assessments from subsequent parcel owners, including a bank in possession, after a bank foreclosed on a member’s home. However, in its latest legislative session The Florida Legislature change course and passed laws granting the following powers to homeowner associations:

 (1).     A parcel owner, regardless of how his or her title to property has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable forall assessments that come due while he or she is the parcel owner. Click here to view the full text of Senate Bill that passed (SB 1986)(internet access is required).

 (2).     The present parcel owner (including a bank) is jointly and severally liable with the previous parcel owner for all unpaid assessments that came due up to the time of transfer of title, banks are limited to one year in past due assessments. Click here to view the full text of Senate Bill that passed (SB 1986)(internet access is required).

 There is an ongoing debate regarding whether The Florida Legislature forgot to place a cap on the amount of delinquent assessments that can be collected from the new owner, including the bank, after a foreclosure action. Until June of 2008 there was no cap on the amount of delinquent assessments that a homeowners’ association can collect from a new owner, including a bank, after a bank foreclosure action has completed and the new owner obtains title. Following is the recent legislative change limiting the association’s recovery against a bank to twelve (12) months of delinquent assessments or 1% (One Percent) of the mortgage amount that was foreclosed upon by the bank:

 •  Liens. A homeowners association, when authorized by the governing documents, has a lien on each parcel to secure the payment of assessments and other specified amounts. Such lien is effective from and relates back to the date the original declaration of the community was recorded. As to first mortgages of record, however, the lien is effective from and after a claim of lien is recorded in the public records. The legislation establishes requirements for the validity of a claim of lien and identifies the assessments and other amounts secured by the claim of lien.

 •  Notice of Contest of Lien. A parcel owner may record a notice of contest of lien, in substantially the form set forth in the statute, to require an association to enforce a recorded claim of lien against the parcel within ninety (90) days after service of the notice upon the association. The lien becomes void if the association fails to file an action to enforce the lien within such period, subject to extension for delays arising from the filing of a bankruptcy petition.

 •  Foreclosure of Lien. An association may foreclose a lien for assessments in the same manner in which a mortgage of real property is foreclosed. Further, an association may recover a money judgment for unpaid assessments, as well as reasonable attorney’s fees incurred in the action.

 •  Rent. The court may require a parcel owner who remains in possession of a parcel after entry of a foreclosure judgment to pay reasonable rent. If a parcel is leased during the pendency of a foreclosure action, a receiver may be appointed to collect rent, with the expenses of such receiver to be paid by the party who does not prevail in the action.

 •  First Mortgagees. The legislation limits the liability of a first mortgagee, or its successors or assigns, that acquires title to a parcel by foreclosure or deed in lieu of foreclosure for the unpaid assessments that became due prior to such acquisition to the lesser of the unpaid common expenses and assessments that accrued during the 12 months immediately preceding the acquisition of title or 1% of the original mortgage debt. This limitation applies only if the first mortgagee initially joined the association as a defendant in the foreclosure action filed against the parcel owner, subject to certain exceptions.

 •  Notice. The association is required to make written demand upon the parcel owner for payment of unpaid assessments before it may file a lien. The demand for payment must give the parcel owner 45 days following the date the demand is deposited in the mail to make payments for amounts due. Further, an association may not file an action to foreclose a lien until 45 days after the association has given the parcel owner written notice of its intent to foreclose the lien. Such notice may not be provided to the parcel owner until the passage of the 45-day period after mailing of written demand for payment. These time limitations do not apply if the parcel is subject to a foreclosure action or forced sale by another party or if the owner of the parcel is a debtor in a bankruptcy proceeding.

 •  Qualifying Offers. The legislation provides an additional limitation on when a parcel owner may make a qualifying offer to an association and specifies circumstances in which a qualifying offer may become void. In addition, a qualifying offer must be in substantially the written form set forth in the legislation.

Condominiums Only

Although the following statutes have been in effect for years, many condominium associations did not need to utilize them until now. Even worse, some condominium associations do not know they exist. Following are the Florida condominium laws related to collecting delinquent assessments when a bank forecloses on a member’s unit;

 (1).    Unit owners are jointly and severally liable with the prior owner for all unpaid assessments up to the time title is transferred to the new owner. This means you can  choose to collect against the new owner only or, against both the prior and new owner.

 (2).    First Mortgagees (usually a bank) that obtains title to a Unit by foreclosure or deed in     lieu of a foreclosure, are ONLY LIABLE for unpaid assessments up to the lesser of:

      (a). The Unit’s unpaid assessments that came due in the Six (6) months before the mortgagee took title by foreclosure or deed in lieu of foreclosure or, One Percent (1%) of the original mortgage (debt) or;

        (b). One Percent (1%) of the original mortgage amount.

Click here to view the above referenced statutes (internet access is required) .

 Exceptions:

(a).    A first Mortgagee is exempt from liability for unpaid assessments if the previous   owner’s mortgage was recorded before April 1, 1992.

 (b).    None of the above applies if a lien to collect unpaid assessments was recorded BEFORE the mortgage was recorded. In such an event, the full amount owed can be collected by the association.

 Hopefully this article made you aware of the various tools available to your community association to assist in maximizing the collection of delinquent assessments when a bank forecloses upon a member’s home. The above information is only a summary. Each community association should consult their attorney for legal advice before proceeding. Due to the time sensitive nature inherent in the above information, association’s that need assistance in implementing these collection procedures should consult their attorney immediately.
By understanding the legal framework of collecting delinquent assessments, along with the guidance of good legal counsel, many community associations can avoid having to specially assess their members just to “keep the lights on”.

–Joshua Gerstin, Esq. & Kelly Blum, Esq.

1. Not requiring two Board member signatures on all checks needlessly exposes an association to potential problems ranging from theft to fraud.

2. Allowing somebody other than a Board member to sign checks, such as a property manager.

3. Insurance, Insurance, Insurance. Failing to maintain “Officers and Directors Insurance” is a costly mistake.

4. Posting or publicly mentioning the names of homeowners whose assessments are delinquent needlessly exposes an association to lawsuits for violations of the various federal and State of Florida collections laws.

5. For condominiums, not maintaining a key to every unit for entry during emergencies can be very costly.

6. Officers and Directors that do not use a separate email address for their association business are making a costly and possibly embarrassing mistake. A director’s emails that contain information regarding association business are considered part of the association’s “Official Records”. Upon written request an owner can review these emails.

7. Officers and Directors that have a separate email address but still use their personal email addresses for association business, are needlessly exposing themselves to having their personal emails reviewed by an owner (see #6 above).

8. Adding late fees and/or administrative charges onto the delinquent account of owners, without confirming the association’s Governing Documents allow the imposition of these charges, needlessly exposes the association to a potential lawsuit.

9. If a quorum of board members meets anywhere and association business is discussed, an open meeting in which owners are required to get notice and are allowed to attend has occurred. “Workshop Meetings” are no exception.

10. The laws governing community associations are constantly changing. Board members that do not stay up to date with these changes risk unintentionally violating the law.

There are certainly many other examples of liability traps. However, by reviewing the above and implementing necessary changes after consultation with an attorney, your association will have a head-start.