Avoiding an Election Do-Over, Understanding Florida Condominium Association Director Term Limits.

Having to Re-Do Your Condominium Association’s Election is Embarrassing, Costly and Avoidable (most of the times).

By: Joshua Gerstin, Esq.

(Click here for this article in .pdf)

 

As Florida’s condominium association election season nears, two distinct groups of condominium owners will emerge with each claiming a totally opposite meaning and application of Florida’s condominium director term limit statute (Florida Statute §718.111 (2)(d)2):

  1. Condominium associations struggling to attract candidates to serve on its board of directors will claim the statute does not apply retroactively. Therefore, candidates that have served the eight-year consecutive maximum can continue to serve.
  1. Condominium associations with boards stacked with so-called “lifers” will claim the statute applies retroactively and those that already served or are about to serve (if they win) more than eight consecutive years are prohibited.

Florida’s legislature provided little help when it amended Statute §718.111 (2)(d)2) without indicating whether the statute applies retroactively or proactively.  Ordinarily, unless a statute expressly states it is to be applied retroactively, the statute is applied only to circumstances arising after its enactment. However, Florida’s condominium laws are anything but ordinary and sometimes new statues are applied retroactively depending on whether the retroactive application impairs a “right”.  If so, the statute is only applied proactively.

This above calculation of a statute’s retroactive application versus impaired rights changes again if a condominium association declaration contains the magic language known as the “Kaufman language”.  The Kaufman language is verbiage in a condominium association’s declaration that automatically incorporates and retroactively applies new statutes by expressing the declaration follows Florida law as “it is amended from time to time”.

Recently, The State of Florida Department of Business and Professional Regulation, Division of Florida Condominiums, Timeshares and Mobile Homes (“Division”) somewhat clarified this issue with its arbitration decision in Glantz v. Hidden Lake of Manatee Owners’ Association, Inc. Case No.: 2019-01-5048 (click here for the case). In Glantz, the condominium association declaration did not have the magic Kaufman language. Without Kaufman language in its declaration the Division held the condominium association members were “. . . not subject in any way to the term limit provision in the 2018 amendment to Section 718.111 (2)(d)2. because the Declaration does not contain “Kaufman language”.

Whether the Division concludes a declaration actually containing the Kaufman language will cause the term limit statute to be retroactively applied, remains to be seen.  For now, condominium associations are advised to check their Declaration for the Kaufman language for a determination of a candidate’s eligibility (and consult with their attorney).

 

 

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FHA Issues New Condominium Approval Rule, Finally!

 

In an effort to promote affordable and sustainable home ownership, especially among credit-worthy first-time buyers, the Federal Housing Administration today published a long-awaited final regulation, and policy implementation guidance, establishing a new condominium approval process. Some of the highlights are (click here to download the new regulations):

  • A new single-unit approval process or individual condominium units to be eligible for FHA-insured financing;
  • The re-certification requirement for approved condominium projects is extended from two to three years;
  • More more mixed-use projects to be eligible for FHA insurance.

Single Family Policy Handbook Guidance

FHA’s new Single Family Handbook sections published today provide the additional requirements that lenders and other industry participants need in order to implement FHA’s new policy, including requirements for single-unit approvals, minimum owner occupancy requirements, and commercial/non-residential space limits.

Single-Unit Approvals

As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved. An individual unit may be eligible for Single-Unit Approval under the following conditions:

  • The individual condominium unit is located in a completed project that is not approved;
  • For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

Minimum Owner-Occupancy Requirements

FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.

FHA Insurance Concentration in Condominium Projects

FHA will only insure up to 50 percent of the total number of units in an approved condominium project.

Commercial/Nonresidential Space Limits

FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.

 

(click here to download the new regulations)