U.S. Supreme Court Bankruptcy Ruling Will Help Florida Community Associations

In Bankruptcy, community association liens are often times “stripped off” if the home is worth less than the amount of the mortgages that are securing it. The United States Supreme Court put an end to that practice as it relates to second mortgages which presumably would also apply to community association liens. Full article here

Florida Supreme Court Issues Ruling Regarding Property Managers

Charged with administering Florida’s laws regarding the Unauthorized Practice of Law, the Florida Supreme Court recently issued an opinion stating the following tasks must be performed by an attorney:

• draft a claim of lien and satisfaction of claim of lien;

• prepare a notice of commencement;

• determine the timing, method and form of giving notices of meetings;

• determine the votes necessary for certain actions by community associations;

• address questions asking for the application of a statute or rule;

• advise community associations whether a course of action is authorized by statute or rule;

• prepare a certificate of assessments due once a delinquent account is turned over to the association’s lawyer;

• prepare a certificate of assessments due once a foreclosure against the unit has commenced;

• prepare a certificate of assessments due once a member disputes in writing the amount owed;

• draft amendments (and certificates of amendment that are recorded in the official records) to declaration of covenants, bylaws and articles of incorporation when members have to vote on these documents;

• determine the number of days to be provided for statutory notice;

• modify limited-proxy forms promulgated by the state;

• prepare documents concerning the right of the association to approve new prospective owners;

• determine affirmative votes needed to pass a proposition or amendment to recorded documents;

• determine the number of owners’ votes needed to establish a quorum;

• draft pre-arbitration demand letters;

• prepare construction lien documents;

• prepare, review, draft and have substantial involvement in the preparation and execution of contracts, including construction, management and cable television contracts;

• identify, through the review of title instruments, the owners to receive pre-lien letters; and

• oversee any activity that requires statutory or case law analysis to reach a legal conclusion.

Full opinion available here sc13-889 .

 

 

New Proposed Federal Regulation: Amateur Radio Antennas & Towers Must Be Allowed in Your Community Association

Presently pending in the United States Congress, H.R. 1301 is a bill proposed to protect the installation and use of amateur radio antennas and towers in community associations.  According to the bill, “[t]here is a strong Federal interest in the effective performance of amateur radio stations established at the residences of licensees”.  In regard to a community association’s restrictive covenants, the bill applies existing FCC policy used when dealing with State restrictions on antennas and towers to community association declarations.  The bill would, among other things, require community association “to permit erection of a station antenna structure at heights and dimensions sufficient to accommodate amateur service communications.”   H.R. 1301 would also apply to private office parks and essentially any privately owned land with use restrictions related to amateur radio antennas and towers.

 

The full text of the bill is available here: HR Bill 1301, United States Congress, Amateur Antennas and Towers.

Hidden Dangers–10 Declaration Provisions Every Community Association Must Change

10 Declaration Provisions Every Community Association
Must Change

Click here to download the full report.

 

  1. The Magic Language Exception. Known as the “Magic Language Exception”, inserting the words “as amended from time to time” after a Declaration’s statement of adherence to Florida law allows the Declaration to automatically adapt to changes in Florida law. Failing to incorporate the Magic Language Exception into a Declaration often times results in the loss of income from, and the benefits of, changes in Florida’s law related to the collection of delinquent assessments. Coral Isles East Condominium Assoc. v. Snyder, 395 So. 2d 1204 1981.

 

  1. The percentage for passage of an amendment is too high. Many associations are stuck with damaging and confusing Governing Documents because the threshold of affirmative votes for an amendment is too high. Consider amending your Governing Documents to a lower threshold of affirmative votes needed to pass an amendment in the future.

 

  1. Requiring tenant approval without the authority to do so.  Many community associations require pre-approval of tenants without the authority to do so in their Governing Documents. Undertaking an action (and possibly collecting a fee to do so) without the requisite authority can result in an expensive lawsuit.

 

  1. Enforcing Outdated and Illegal Provisions. Banning solar panels, improper age restriction enforcement (16 instead of 18), banning satellite dishes or improper debt collection techniques are only a few of the many outdated provisions in the Governing Documents of many community associations. Lack of intent and ignorance of the law is not a defense if the association is sued. Guidance to the Board of Directors and the amendment of these provisions should be undertaken.

 

  1. Failing to Rein in Rentals. Community associations, especially condominium associations, that do not limit renting in their communities may scare away lenders from lending to owners or may lose their FHA accreditation. Consider a Declaration amendment restricting new owners from renting until at least two years after their purchase.

 

  1. Releasing Homes Purchased at a Foreclosure Auction From Delinquent Assessments. Although Florida law limits a lender’s liability for past due assessments, the same restriction does not apply to third party purchasers at a foreclosure auction, unless otherwise stated in your association’s Governing Documents. Consider amending all provisions that release third party purchasers of a foreclosed home from payment of past due assessments.

 

  1. Borrowing limits. Many older community associations have bank borrowing limits set at amounts so low such loans would only be obtainable from a payday lender. Consider eliminating or increasing borrowing limits.

 

  1. Spending Limits. As a way to attract buyers in an era of “community association board’s waste money” many developers incorporated into their Governing Documents limits on the amount a Board of Directors can spend without owner approval. Unfortunately, the effects of inflation and increase costs have locked many of these community associations into unrealistic spending limits. Consider eliminating or increasing the amount your Board of Directors can spend without first obtaining owner approval by inserting an amendment that allows for a per year increase formula based on inflation.

 

  1. Unattainable Quorum. Florida law limits the percentage required for a members’ meeting quorum to 30% of the members. Nevertheless, many community associations are still unable to attain a quorum to conduct important business. Consider an amendment that lowers the required quorum for a member’s meeting below 30%.
  2. Regulating Guests. Associations with guests residing in units in the absence of an owner or approved tenant often find themselves ill prepared when a problem arises.  Declaration provisions relating to the use of homes by guests in the absence of an owner or approved tenant stops people from circumventing rental restrictions. Consider an amendment stating guests can only occupy a unit so many times per year. Another approach to dealing with long-term guests (e.g., guests staying for more than 30 days) is to require them to be screened in the same manner as tenants.

 

For a free analysis of your association’s community association Governing Documents please complete and fax the following to: (561) 750-8185 (no cover page needed) A representative from Gerstin & Association will contact you to set up your community association’s free Governing Document analysis.

 

Name: ____________________________

 

Association name: _____________________

 

Position at the association (director, property manager, etc.) _____________________

 

Email address: ______________________,

 

Telephone number: __________________

7 Deadly Sins of Collecting Delinquent Assessments

7 Deadly Sins of Collecting Delinquent Assessments

Click here to download the full report.

 

1.    Failing to follow the specific procedures in your community association’s Governing Documents such as written notice from the association of the delinquent debt. Often times such failures, when objected to by a delinquent owner, requires the entire collection process to be restarted. Sometimes, such failures lead to expensive lawsuits and a large payout to the delinquent owner.

 

2. Agreeing to payment plans that are not in writing. A payment plan that is not in writing, is not worth the paper it is written on. Secure all payment plans in writing.

 

3.  Extending grace periods and granting concessions to neighbors and friends but no one else. It is understandable you want to help a neighbor or friend that is having problems with paying your association’s assessments. However, each owner has to be treated in the same, uniform manner. Extending grace periods only to friends or neighbors exposes the entire community association to an expensive lawsuit from an aggrieved owner to whom a grace period was refused.

 

4. Publishing a list of delinquent owners.       Shaming debtors is not only insensitive, it violates the Federal Fair Debt Collection Practices Act and exposes the association to an expensive lawsuit.

 

5.     Failing to follow the specific collection deadlines in your community association’s Governing Documents. If the collection deadlines are too long or too short, have them amended. In the meantime, collections must proceed in accordance with the specific deadlines contained in your association’s Governing Documents. Failure to do so can easily lead to an expensive lawsuit and a large payout to the delinquent owner.

 

6.  Failing to add interest and late fees onto delinquent assessments. Many community associations are unaware of their ability to impose late fees or are unable to properly calculate interest. Foregoing late fees and interest can significantly undermine a community association’s financial stability.

 7. Failing to timely forward a delinquent account to your attorney for collection. Depending on whether it is a condominium or homeowners’ association, attorneys are required to wait between 60 and 90 days prior to the institution of foreclosure litigation. Banks are required to pay only 12 months of delinquent assessments. Sometimes, a bank will wait years before filing a foreclosure lawsuit.       Association’s that fail to act timely and foreclose upon a delinquent owner’s home and rent the home until the bank takes title, can cost an association a year or more of assessment payments.

 

For help with avoiding the 7 Deadly Sins of Collecting Delinquent Assessments, and for a free analysis of your association’s community association collections, please complete and fax the following to: (561) 750-8185. A representative from Gerstin & Association will contact you to set up your community association’s free collection analysis.

 

Name: ____________________________

Association name: _____________________

Position at the association (director, property manager, etc.) _____________________

Email address: ______________

Telephone number: _____________________

Pet Weight Limits Don’t Apply to Emotional Support Animals in Florida’s Community Associations

Another example of the expanding scope of the Fair Housing Act, is the recently decided case of Bhogaita v. Altamonte Heights Condo. Ass’n, Inc., No. 13-12625 (11th Cir. Aug. 27, 2014). In Bhogaita a jury was persuaded the Altamonte Heights Condominium Association discriminated against the Plaintiff when it enforced its pet weight policy and demanded a removal of the plaintiff’s emotional support dog. The jury awarded Bhogaita $5,000 in damages, and the district court awarded Bhogaita more than $100,000 in attorneys’ fees. The association appealed both the judgment entered on the jury’s verdict and lost the appeal. Click the link below for the full text of the case

Bhogaita v. Altamonte Heights Condo. Ass’n, Inc., No. 13-12625 (11th Cir. Aug. 27, 2014)–Fair Housing Act-disability provisions-pet weight limit for emotional support dog failed to accommodate disability

 

 

 

Community Association Collections, Be Wary About Notations on Checks From Delinquent Owners

Originally believed to be trumped by various Florida laws specifying the allocation of delinquent assessment payments, Accord and Satisfaction is back.  In the case of St. Croix Lane Trust v. St. Croix Pelican Marsh Condo. Association, Case No. 2D13-3636., FLA 2d DCA (2014) a delinquent owner tendered payment to the association accompanied by a letter from the owner’s attorney.  The attorneys’ letter stated in pertinent part:

At worst[,] my client only owes the pro rata first quarter assessment for the period of its ownership. However, in a good faith effort to resolve this matter I have enclosed herewith a check in the amount of $840.00 payable to your Trust Account for the full January 1, 2012 assessment. Be advised and warned, this check is tendered in full and final satisfaction of all claims made against the Trust and the property for the amounts demanded in your May 7, 2012 correspondence. Regardless of intent, negotiation of the enclosed check shall be deemed an acceptance of the offer of settlement made herein, and shall be in full and final satisfaction of all claims against the Trust and the property. . . as more particularly set forth in your May 7, 2012 correspondence.he was in doubt as to the amount owed and the amount tendered is.

Wrongfully assuming Florida law’s regarding payment allocation for delinquent assessments (Florida Statute Section 718.116(3) would bar the application of Accord and Satisfaction and the full amount remained due and owing, the Association’s attorney advised his client to deposit the partial payment.  Having deposited the owner’s partial payment, the Court found there were no further amounts owed by the delinquent owner.  The court reasoned Florida Statute Section 718.116(3) governs the application of payments, not the actual amount owed.  As such, a partial payment that meets all of the requirements for an Accord and Satisfaction extinguishes the obligation for future payments upon its depositing by the association.  The Court further held a restrictive endorsement on a check regarding the allocation of payments, in direct contrast to Florida Statute Section 718.116(3), would not be valid.

Collecting delinquent assessments from condominium or homeowner association members is fraught with costly legal minefields. Community associations hiring attorneys that are not experienced in this area can be very expensive.

2014 Florida Community Association and Real Estate Legislative Update

 2014 Florida Community Association and Real Estate Legislative Update
By: Joshua Gerstin, Esq.

Click here to download .pdf version

Approximately 200 bills were introduced in the Florida legislature in 2014, 264 bills were passed by the legislature and Governor Rick Scott signed 158 into law. Many of these new laws will directly impact the operations of Florida’s community associations and the ownership of real estate for years to come.

 

HB 7307

Condominiums and Homeowner Associations.

Contains significant changes to the services a CAM (Community Association Property Manager) can perform.  The newly expanded CAM duties include:

  • Collecting delinquent assessments prior to the filing of a civil action.
  • Completing forms related created by statute or by a state agency.
  • Drafting letters of intended action, calculating and preparing certificates of assessments.
  • Estoppel letters.

Conspicuously absent from the new law are provisions lessening or mitigating the association’s liability if a CAM violates the Fair Debt Collection Practices Act. Instead, associations remain ultimately responsible. HB 7307 also provides:

  • New professional liability standards for CAMS
  • CAM contracts can only require Association’s provide limited indemnification to a CAM.
  • Lists conduct a CAM cannot be indemnified for such as grossly negligent, reckless or the derivation of an improper personal benefit.
  • Creates new forms in Chapters 718, 719 and 720 for notifying delinquent unit owners of their past due assessment balances.

 

SB 1524 Condominiums and Homeowner Associations.

  • Information Protection Act. Imposes new requirements on businesses, including community associations, to protect customer/members records containing the following information:
    • names;
    • social security numbers;
    • medical histories ( ex. medically necessary pets) and;
    • other identification numbers
      • Security breach reporting to the Department of Legal Affairs is required
      • Limits required disclosure by businesses of a breach if proper reporting, and other procedures to rectify the situation, are followed

 

HB 807, Condominium and Homeowner Associations.

  • Outgoing Board Members Relinquishment. Outgoing Board or committee members are required to relinquish all of the Association’s Official Records in their possession within five days after an election.
    • No “lame duck” provision for prior director whose term expires more than five days after an election.
    • Allows for civil penalties to be imposed by the Division for willful violation.
  • Member Directories. Owners can consent to information other than contact information being printed in an ownership directory. Associations can print a directory containing the name, parcel address and telephone numbers for each parcel owner without obtaining the owners’ consent. Individual owners may exclude his or her telephone numbers from the directory.
  • Board or Committee Meetings. Board or committee members appearing by telephone, videoconferencing or other real time video counts towards a quorum. The absent board or committee member appearing by telephone or video can also vote as if actually present.

 

HB 807, Condominium Associations Only

  • Abandoned Units: in addition to the reasons set forth in F.S. §718.111(5)(a), in which a condominium association has the irrevocable right of access to each unit. This legislation created a new statute F.S. §718. 111(5)(b)(1).
    • At the sole discretion of a condominium association’s board of directors a board may, after tendering the required notice, enter an abandoned unit to:
      • inspect the unit and adjoining common elements;
      • make repairs to the unit or to the common elements serving the unit;
      • repair or remediate the due to the presence of mold or similar deterioration;
      • turn on the power for the unit;
      • to otherwise maintain, preserve or protect the unit and its adjoining common elements.
  • Condominium Insurance Clarification: if an item is not damaged by an insurable or casualty event, the items repair or replacement costs are governed by the association’s Governing Documents.
  • Email. Condominium Board or committee members may communicate, but are prohibited from voting, via email.
  • Delinquencies. Condominium association’s that obtain title to a foreclosed property, or via a deed in lieu of foreclosure, from a delinquent owner are not considered a “previous owner” liable for past due assessments. Allows condominium associations that own foreclosed properties to seek the past due assessments of the prior owner from a new owner (subject to the limits of bank foreclosure, Safe Harbor statutes).
  • Condominium Optional Termination. A failed condominium termination plan cannot be sought again by joinder and consent or proposed at a meeting for 180 days after the date the termination plan failed.

 

HB 807, Homeowner Associations Only

  • Emergency Powers for Homeowners’ Associations: The bill incorporates the current emergency powers provisions in the Condominium Act into the Homeowners’ Association Act.
  • Allows homeowner associations to provide notice of adopted amendments via email.
  • In lieu of providing an actual copy of an amendment that passed, homeowner association owners can be notified the amendment passed along with the Official Records Book and Page and a notice a copy of the amendment is available at no charge to the owners. Allowable only if an exact copy of the amendment was sent to the owners prior to its passage. Amends F.S. §720.306(1)(b).
  • Requires HOA board and owner meetings to be held at handicap accessible locations only if requested by a physically handicapped person entitled to attend the meeting. This law does not apply to condominium associations. Amends F.S. §720.303(2)(a) & 720.306(1)(a).
  • Marketable Records Title Act (“MRTA”). Clarifies existing law. Newspapers do not have to publish a MRTA notice.

 

SB 440, Non-Residential Condominiums

  • Proxies can be used in voting for Board members of non-residential condominiums.
  • General proxies from owners in non-residential condominiums can now be used to vote on waiving or reducing the reserves, waiving financial reporting requirements or amending the Governing Documents.
  • Directors may now serve for an unlimited number of terms or years in a non-residential condominium.
  • If a unit is owned by more than one owner in a non-residential condominium, all owners can serve simultaneously on the board of directors.
  • Non residential condominiums directors do not have to take the “loyalty oath” certifying they are familiar with the Governing Documents and will discharge his/her duties in a fiduciary capacity.
  • Non-residential condominiums are excluded from the mandatory arbitration and mediation provision of Florida law.
  • Non-residential condominiums are excluded from the hurricane shutter provisions in the F.S. § 718.
  • Limitations on development phases meant to protect early purchasers of condominiums no longer apply to non-residential condominiums.

 

SB 356, Vacation Rentals.

  • The State of Florida reserved the exclusive right to regulate vacation rentals. Local municipalities can no longer pass ordinances that prohibit vacation rentals or that regulate the duration or frequency of vacation rentals. Applies only to ordinances adopted after June 1, 2011.

 

Real Estate.

  • Subsurface Mineral Rights. New disclosures are required when subsurface mineral rights are reserved by the Seller. Unwary buyers can now cancel contracts and statutory penalties exist for intentional violators.
  • Florida “GI Bill”. Tuition waivers veterans, military base upgrades and a multimillion-dollar marketing campaign, the Florida “GI Bill” intends to make Florida the most military-friendly state in the nation.

 

Insurance.

  • SB542 Flood Insurance.

o   Insurers may offer personal lines of residential flood insurance to residential customers (commercial condos or commercial residential excluded).

  • HB 1089 Citizen’s Insurance, Windstorm Coverage.

o   For wind only coverage for commercial lines residential condominiums, associations cannot have 50% of the units rented more than 8 times a year for less than 30 days.

  • SB 1672 Citizens Insurance.

o   Citizens Insurance may offer wind only policies and will discontinue certain multi-peril policies.

o   Insurance agents and public adjusters cannot obtain referral fees from an inspection company performing an insurance inspection for coverage.

o   Public adjusters cannot accept power of attorney that allows them to select the vendors and contractors to perform property repairs.

  • SB 708 Homeowner Insurance.

o   Insurers can no longer deny a claim for a misrepresentation in an insurance claim if the insurance policy has been in effect for 90 or more days.

o   A “Homeowners’ Claim Bill of Rights” was added enhancing protections afforded to personal line residential policyholders.

 

Service of Process HB 627.

  • Employer must permit service of process on employees.
  • $1000.00 fine on employer for not permitting service of process one employee.
  • Sheriff can rely on a levying creditor’s affidavit for the disbursement poof proceeds from the sale of levied property.

 

For information purposes only. For legal advice, please consult an attorney.

2014 Florida Community Association Legislative Update, Governor Scott signs HB 7037

Governor Scott signs HB 7307 containing significant changes to the services a CAM (property manager can perform).  HB7037 becomes effective July 1, 2014 and effects only Florida condominiums. The newly expanded CAM duties include:

  • Collecting delinquent assessments prior to the filing of a civil action.
  • Completing forms related created by statute or by a state agency.
  • Drafting letters of intended action, calculating and preparing certificates of assessments.
  • Estoppel letters.
  • Negotiating association contracts.
  • Drafting pre-arbitration demands.

The Bill also contains examples of new required forms.  The new forms are for use with collection of condominium association assessments. Conspicuously absent from the bill were provisions lessening or mitigating the common law liability if a CAM violates the Fair Debt Collection Practices Act. Instead condominium associations remain ultimately responsible .

The full text of the bill is available by clicking the following link: HB 7037-cam bill

Check back each day for more analysis as Governor Scott continues to sign or veto legislation affecting Florida’s community associations.

Deadline for Florida Homeowner Associations to Register is November 22, 2013

A recently passed amendment to Florida law requires all homeowner associations to register with the Division of Florida Condominiums, Timeshares, and Mobile Homes by November 22, 2013.   Directors or Licensed Community Association Property Managers can register on behalf of a homeowners’ association. Similar to the condominium association reporting requirements,  the homeowner association reporting requirements include the following:

  • Legal Name of homeowners’ association
  • Federal employer identification number
  • Mailing and physical addresses
  • Total number of parcels
  • Total amount of revenues and expenses from the association’s annual budget

For associations in which control of the association has not been transitioned to non-developer members, the following information must also be reported:

  • Legal Name of developer
  • Mailing address
  • Total number of parcels owned on the date of reporting

 

Click here to register your Homeowners’ Association