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DEVELOPERS ARE ON THE PROWL

DEVELOPERS ARE ON THE PROWL

  • Posted: Dec 08, 2021
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DEVELOPERS ARE ON THE PROWL

by Condo craze @HOAs

I got a call this week from The Sun Sentinel.  They asked if I had heard about the prominent developer who approached the owners of the other Champlain Towers buildings that are still standing, offering to buy out all of their units.  I had not, but I’m not surprised in the least about it.  In fact, it’s going to be happening more and more.  Developers are going to be approaching lots of owners in condominiums that are distressed.

Why approach the owners in the remaining Champlain Towers condominiums?  I’m sure the developer is thinking that these owners may now have a hard time selling their condo units on the open market because there may not be many buyers interested in purchasing a unit in a condominium by that name.  The Champlain Towers will forever be remembered as the building that collapsed and where nearly a hundred innocent people died.  I think the developer is right.  It will be tough to sell your units in the remaining Champlain Towers condominiums.

The truth is……if that’s the case…and it is next to impossible to now sell your condo unit in these buildings, the developer can look like a knight in shining armor, if the price they offer is fair and reasonable.  It may very well make sense for the owners to seriously consider the developer’s offer.  At the remaining Champlain Towers buildings, the developer’s offer is contingent upon 95% of the owners agreeing to sell to the developer.  If less than 95% of the owners agree to sell, the deal is off the table.  That’s because if at least 5% of the owners vote against a plan of “termination” the developer’s plan to “terminate” the condominium, knock it down and build a more expensive one fails.  So, the developer needs to acquire at least 95% to ensure their plan succeeds.

We know that it’s about to get more expensive to live in a condominium because it looks like it will become more difficult to waive reserves and buildings will be undergoing more frequent inspections.  Repairs will be needed more than ever before which means money will be needed like never before.  When unit owners don’t have the money or don’t want to spend the money on a building that’s already old, rest assured that developers will be there ready to make an offer to everyone so that the property can be bought, knocked down, rebuilt and sold.

Over the last few years the law has made it more difficult to terminate a condominium.  As a result of the tragedy at The Champlain Towers I certainly expect the pendulum to swing back the other way.  Terminations will become easier.  Developers will use their eyes and airs searching for the most vulnerable properties, meaning the ones that will require the greatest cost to repair.  The laws regarding termination continue to evolve, but if I am a developer I may want to be cautious about buying units in a condominium that requires 100% of the owners to agree to termination and that does not have Kaufman language or “as amended from time to time” language.  In these types of condominiums, one owner who refuses to sell may wind up screwing up the developer’s grand plans.

 

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There is plenty of time to let the community members know what the new monthly assessments will be for the coming year.

There is plenty of time to let the community members know what the new monthly assessments will be for the coming year.

  • Posted: Dec 02, 2021
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Budgets: Boards How are you doing?

Most community associations have their budget meeting in the month of November for the upcoming year.  By doing it in November there is plenty of time to print new coupon books and let the community members know what the new monthly assessments will be for the coming year.

In terms of notice, in a condominium the budget must be sent to the owners at least 14 days before the budget meeting.  In an HOA, The association shall provide each member with a copy of the annual budget or a written notice that a copy of the budget is available upon request at no charge to the member.

Don’t forget that in a condominium, in addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000.

Condo boards need to be well aware of the reserve requirement.  To be clear, the Board MUST send out a budget that includes fully funded reserves.  That is all they are required to do.  However, if they want to, they can give the owners the opportunity to vote for an alternative budget such as a budget that contains no reserves or partially funded reserves.  Remember that if a majority of a quorum of owners does not vote for a budget that does not contain full reserves, fully funded reserves shall go into effect.

In a post Champlain Towers world, I think things may be a little different this year.  I think lots of Board members will want to have fully funded reserves in their budget.  They don’t want to be short millions of dollars when the time comes, and it will, for millions of dollars in repairs.

Delinquencies are starting to pick up as well.  So, make sure you have a line item in your budget for “bad debt.”   For example, if your assessments are $6,000.00 per year and you’re pretty sure that 5 owners won’t pay  a dime, you should put $30,000.00 as an line item in your budget for bad debt.  That way you collect enough money to pay the bills.

Keep in mind that electricity prices are expected to rise 18%.  Also remember that some of your long term contracts may have clauses requiring automatic rate increases every single year.  F I still get the same question all the time…who passes the budget; the board or the unit owners? The answer is…the board and only the board.  Food prices are going up, the cost of materials are going up, electricity is going up, the cost of labor is going up, and worst of all, insurance rates for condominiums are simply skyrocketing, with some associations complaining that their rates have tripled.  So, all this means in no uncertain terms, that condo assessments are about to go up as well.  It also seems pretty clear that it will become extremely difficult if not impossible to waive reserves starting next year.  Yes, it’s about to get a lot more expensive to live in a condominium, especially if you were kicking the can down the road and always waiving reserves.  I don’t envy condo boards at their next budget meetings where they will be forced to tell the members of their community that their monthly assessments are about to go up, in fact way up.  Buckle up everyone in a condo, you’re in for a bumpy ride going forward.

 

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THANKSGIVING IS BECOMING A TOUGH HOLIDAY By Eric Glazer, Esq.

THANKSGIVING IS BECOMING A TOUGH HOLIDAY By Eric Glazer, Esq.

  • Posted: Nov 24, 2021
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THANKSGIVING IS BECOMING A TOUGH HOLIDAY

By Eric Glazer, Esq.

Who doesn’t love the tradition of Thanksgiving?  It starts off with The Macys Thanksgiving Day Parade from the morning to noon.  By noon the house starts to smell great, football comes on the tube, the family gets together, fights about politics break out and everyone eventually goes home both full and angry.  You gotta love Thanksgiving.

The last two years have been tough though.  Thanksgiving in 2020 kept almost all families apart because of the Covid 19 situation.  More families probably had Thanksgiving by ZOOM than they did in person.  It was sad, countless other families had an empty plate or two at the dinner table because of loved ones they lost due to the virus.  It really was a nightmare for almost all of us.

This year, while Covid certainly seems to be far less of a factor, we can’t help but think about the tragic loss of lives at the Champlain Towers in Surfside.  I had to see it for myself and I will tell you that the scene was indescribable.  I saw the 9-11 destruction in person and while certainly on a smaller scale, Champlain Towers was no less dramatic when you realized how many lost their lives in the rubble.  How many were simply unaccounted for.

So what will Thanksgiving 2022 be like in our condominium associations?  I don’t want to be a downer on the holidays, but for many, it’s not going to go well.  Of course we will still be happy that we are sitting with our families for another year.  If we have good health, we will be happy for that.  But I guarantee this, this time next year many Florida condominium unit owners may not be able to afford to make a turkey dinner in their homes.

As I said on the show last week, it’s as if a perfect storm is coming together all at once.  Food prices and gasoline are soaring, the price of insurance in our condominiums and the cost of labor are soaring.

Insurance in some condominiums is tripling in price resulting in incredible increases in monthly assessments.  And of course, by this time next year, rest assured that there will be laws in place making it impossible to waive reserve funding in your community at least for your roof, electrical and structural components.  In other words, besides the cost of insurance, the fact that you won’t be able to waive reserves will make your monthly assessments skyrocket even more.  Next Thanksgiving there are going to be many people sitting at their Thanksgiving tables wondering if this is the last Thanksgiving they will be spending in a condominium that they may have been living in for decades.  They’re simply getting out priced and won’t be able to afford it any longer.  And it’s sad.

But have no fear……we know how much Florida loves to treat its developers.  So look forward to laws that will allow developers to buy up units, kick out the old folks and build more buildings that people from mostly foreign countries can buy and put tenants in.

So to all of you and your families….I wish a happy and healthy Thanksgiving Holiday, and I hope it’s not the last one you get to spend in your current home.

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THANK YOU REPRESENTATIVE DAVID BORRERO! By Eric Glazer, Esq

THANK YOU REPRESENTATIVE DAVID BORRERO! By Eric Glazer, Esq

  • Posted: Nov 16, 2021
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THANK YOU REPRESENTATIVE DAVID BORRERO!

By Eric Glazer, Esq

A few weeks ago, I wrote a blog called  “It’s Time To Stop A True Florida Farce.”  I then wrote a blog thanking Senator Anna Maria Rodriguez for filing Senate Bill 394 which does away with the possibility of  members of community association boards of directors getting certified without taking an educational class.  Instead, they can sign a rather silly piece of paper that states they have read their governing documents and promise to enforce them.

We were half way there.  We now needed a member of Florida’s House of Representatives who would file a companion bill in Florida’s House, mirroring the bill filed by Senator Rodriguez.  I received a phone call from Representative Borerro about 2 weeks ago.  He grilled me as to why I thought my bill was so important.  The silliness of the form that directors can sign.  The fact that there is going to be lots of new laws passed by The Florida Legislature in regards to condominiums, but no requirement that directors have to learn these new laws.  And finally, the fact that mandatory education can and will save lives.

I am honored and now happy to report that Representative Borerro has now filed bill 547 in Florida’s House of Representatives.  It mirrors the bill filed by Senator Rodriguez.  There is no way I can thank Representative Borerro enough.

There is no doubt in my mind that mandatory education will save the lives, properties and money of the millions of people who live in condominiums throughout the state.  Florida would be the first and only state to require a board member to take an educational course.  That would be an amazing bright spot for our state and no doubt would lead other states to eventually adopt similar requirements.

Over the last few weeks, I had the pleasure of teaching my Condo Craze and HOAs Board Certification class in Broward, Miami, Tampa, Palm Beach and Orlando to so many people.  I taught the importance of having reserve accounts, having reserve studies done by qualified people and the danger in completely waiving the funding of reserve accounts year after year after year.  Interestingly enough, when I asked the crowd if they thought education for board members should be mandatory, everyone raised their hand.  Almost everyone said they would never vote for a director who refused to take an educational class.

      Anyone who won’t devote a few hours a year to learning the new condo laws does not deserve to be on the board in the first place.

In any event, we owe a debt of gratitude to Senator Rodriguez and now Representative Borerro for their efforts in taking this matter seriously.  Keep track of Senate Bill 394 and House Bill 547.  Urge your local House Member and Senator to please support them.  If I never get another piece of legislation passed, this is the one that is nearest and dearest to my heart.  This would really be my greatest honor and legacy.  Education is the key to running a safe community.

 

GET READY FOR SOME STICKER SHOCK By Eric Glazer, Esq.

GET READY FOR SOME STICKER SHOCK By Eric Glazer, Esq.

  • Posted: Nov 11, 2021
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GET READY FOR SOME STICKER SHOCK

By Eric Glazer, Esq.

In the last 24 hours I was told of two different association annual budgets going up massively for the coming year.  We are talking about over 35% increases in the budget.  Think about that.  If your assessments are already $600.00 per month, you probably can expect going to $850.00 per month.  If you’re already at $800.00 per month, you’re about to go over a thousand.

It’s actually worse though, on a smaller scale.  People that are only paying $400.00 per month will now be going to around $550.00 per month.  It’s going to hurt them the most.  It always hurts the poorer people the most.

Add this on to the rising costs of gasoline, food, utilities and insurance and we are looking at a real crisis coming up.  Just remember, we can also expect that The Florida Legislature will likely be passing laws this year making it impossible to completely waive the funding of your reserve accounts.  So, on top of everything we just mentioned, get ready for your assessments to go up even hire when you are forced to pay in advance for future repairs.

For those of you that have not started addressing your budget for next year yet, I would get busy immediately.  You’re fooling yourself if you think that by avoiding it, things won’t change.  They will.  Unfortunately, all of these causes are coming together like a perfect storm.  Thank heavens most people don’t have adjustable rate mortgages any longer because if they did and mortgage rates started going up, things would be even worse.

I’m telling you what’s definitely coming.  The question is…..are there any solutions to prevent these increases.  I don’t think there are.  What things can you cut from your budget to offset these increases?  What steps can you take to curb costs?  I’m open to suggestions but I just don’t see good things on the horizon.  I can tell you that at least in my office, it’s starting to feel like foreclosures and delinquencies are already on the rise.  How do we put the brakes on another foreclosure crisis?

 

 

 

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The association suddenly needs a lot of money. How do you get it? Which way makes sense?

The association suddenly needs a lot of money. How do you get it? Which way makes sense?

  • Posted: Oct 29, 2021
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The association suddenly needs a lot of money. How do you get it? Which way makes sense?

So many of our buildings are approaching the 40 year mark, requiring recertification in electrical and structural.  Many buildings are younger yet still need major repairs to the concrete, balconies, pool decks and other portions of the common elements.  The board is going to need a lot of money.  Assuming you don’t have enough in reserves, how do you get it?

Of course, one way is to simply pass a special assessment.  In effect, that means that you will have all the money necessary to pay for all the repairs, before the repairs are done.  The problem with a special assessment…………. Everyone has to come up with a lot of money relatively quickly, if not immediately.  Some people simply don’t have it.  If they don’t they face possible foreclosure by the association.

What is certainly becoming the more common way of coming up with money to make repairs to the common elements is for the association to borrow the money from a bank.  Rates are still very low and money is very cheap right now.  Typically, the bank gives the association a line of credit for one year that the association may draw upon to pay for the cost of repairs.  After one year, the funds borrowed from the line of credit are converted to a term loan, usually anywhere from three to seven years.

There are of course many advantages to borrowing rather than assessing.  First and foremost, the owners need not come up with their entire share of the special assessment immediately.  Instead, they get to pay off the bank loan over several years.  In addition, the board can establish payment schedules that would allow the owners to have a choice of paying their share of the loan off immediately and without interest.  Or, the board can allow the owners to pay off their share of the loan over time, with interest.

Before signing for the loan, the bank will always ask association’s counsel to review the governing documents and write an “opinion  of counsel” as to whether or not the association has the right to borrow money.  Under the Florida not for profit statutes, the association has the right to borrow.  However, the governing documents should be read carefully because sometimes it clearly states that the association cannot borrow money without a vote of the community.

In terms of collateral, the association is not signing a mortgage encumbering the common elements.  Remember, the common elements are owned by the owners and not the association.  Instead, the association will be signing a Collateral Assignment of Lien Rights which authorizes the bank to demand the monthly assessments directly from each unit owner, should the association default in its payment obligations to the bank.

If you have any additional questions about how the process works, give us a call.  By Eric Glazer, Esq  http://condocrazeandhoas.com/

 

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The more trouble your condo is in, the more developers may be interested in buying you out.

The more trouble your condo is in, the more developers may be interested in buying you out.

  • Posted: Oct 26, 2021
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The more trouble your condo is in, the more developers may be interested in buying you out.

 

DEVELOPERS ARE ON THE PROWL

By Eric Glazer, Esq.

I got a call this week from The Miami Herald.  They asked if I had heard about the prominent developer who approached the owners of the other Champlain Towers buildings that are still standing, offering to buy out all of their units.  I had not, but I’m not surprised in the least about it.  In fact, it’s going to be happening more and more.  Developers are going to be approaching lots of owners in condominiums that are distressed.

 

Why approach the owners in the remaining Champlain Towers condominiums?  I’m sure the developer is thinking that these owners may now have a hard time selling their condo units on the open market because there may not be many buyers interested in purchasing a unit in a condominium by that name.  The Champlain Towers will forever be remembered as the building that collapsed and where nearly a hundred innocent people died.  I think the developer is right.  It will be tough to sell your units in the remaining Champlain Towers condominiums.

 

The truth is……if that’s the case…and it is next to impossible to now sell your condo unit in these buildings, the developer can look like a knight in shining armor, if the price they offer is fair and reasonable.  It may very well make sense for the owners to seriously consider the developer’s offer.  At the remaining Champlain Towers buildings, the developer’s offer is contingent upon 95% of the owners agreeing to sell to the developer.  If less than 95% of the owners agree to sell, the deal is off the table.  That’s because if at least 5% of the owners vote against a plan of “termination” the developer’s plan to “terminate” the condominium, knock it down and build a more expensive one fails.  So, the developer needs to acquire at least 95% to ensure their plan succeeds.

 

We know that it’s about to get more expensive to live in a condominium because it looks like it will become more difficult to waive reserves and buildings will be undergoing more frequent inspections.  Repairs will be needed more than ever before which means money will be needed like never before.  When unit owners don’t have the money or don’t want to spend the money on a building that’s already old, rest assured that developers will be there ready to make an offer to everyone so that the property can be bought, knocked down, rebuilt and sold.

 

Over the last few years the law has made it more difficult to terminate a condominium.  As a result of the tragedy at The Champlain Towers I certainly expect the pendulum to swing back the other way.  Terminations will become easier.  Developers will use their eyes and airs searching for the most vulnerable properties, meaning the ones that will require the greatest cost to repair.  The laws regarding termination continue to evolve, but if I am a developer I may want to be cautious about buying units in a condominium that requires 100% of the owners to agree to termination and that does not have Kaufman language or “as amended from time to time” language.  In these types of condominiums, one owner who refuses to sell may wind up screwing up the developer’s grand plans.

 

 

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THANK YOU SENATOR ANNA MARIA RODRIGUEZ! By Eric Glazer, Esq.

THANK YOU SENATOR ANNA MARIA RODRIGUEZ! By Eric Glazer, Esq.

  • Posted: Oct 22, 2021
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THANK YOU SENATOR ANNA MARIA RODRIGUEZ!

By Eric Glazer, Esq.

A few weeks ago, I wrote a blog called  It’s Time To Stop A True Florida Farce.  The blog spoke about the fact that members of community association boards of directors can still get certified without taking an educational class.  Instead, they can sign a rather silly piece of paper that states they have read their governing documents and promise to enforce them.  What a joke.

I sent the column by e-mail to all Florida legislators, urging them to change the law and make certification through education mandatory.  Senator Anna Maria Rodriguez asked me to send her my proposed legislation.  I did.  I am happy and so proud to report that Senator Rodriguez filed Senate Bill 394 mirroring my proposed legislation.

 

There is no doubt that mandatory education will save the lives, properties and money of the millions of people who live in condominiums throughout the state.  Florida would be the first and only state to require a board member to take an educational course.  That would be an amazing bright spot for our state and no doubt would lead other states to eventually adopt similar requirements.

 

I had the pleasure of teaching my Condo Craze and HOAs Board Certification class last week in Miami and Palm Beach to so many people.  I taught the importance of having reserve accounts, having reserve studies done by qualified people and the danger in completely waiving the funding of reserve accounts year after year after year.  Interestingly enough, when I asked the crowd if the law should be changed to requiring at least some form of reserves and having the reserve study done by experts, EVERYONE RAISED THEIR HAND.  People want to be safe.  We learned a lot after the Champlain Towers disaster.

 

Think about this.  The Florida Legislature will no doubt make some massive changes to Florida law in this regard.  But if members of the Board are not required to attend an educational class, how in the world can they be expected to learn the new laws.  And by the way….I don’t want to hear the excused that these classes are burdensome.  They are offered on-line and they are offered for free.  Anyone who won’t devote a few hours a year to learning the new condo laws does not deserve to be on the board in the first place.

 

In any event, we owe a debt of gratitude to Senator Rodriguez for her efforts in taking this matter seriously.  Keep track of Senate Bill 394 and urge your local House Member and Senator to please support it.  If I never get another piece of legislation passed, this is the one that is nearest and dearest to my heart.  Education is the key to running a safe community.

 

Over a decade ago The Florida Legislature thought it was a good idea for members of condo and HOA boards to become “certified.”  Sounds like a good idea.  The problem is that the legislators  allowed for two ways to become certified. One way is by going over to your computer and printing a form that is on the DBPR’s website that basically says I read my governing documents and promise to enforce them.  You sign the form and you are now certified.  That’s it.  That’s all you have to do.  If you are a director of a condo, the form does not require you to acknowledge the existence of Florida Statute 718.  If you are a member of an HOA board the form does not require you to acknowledge the existence of Florida Statute 720.  The form is a joke.  The procedure is a joke and an embarrassment to The State of Florida.  In fact, many associations still have illegal provisions in their governing documents.  The current law actually allows you to become certified if you promise to enforce the illegal provisions in your governing documents.

 

As my kids go back to school today, I’m proud to say that the second way of becoming certified is by taking a course approved by the DBPR.  As so many of you now, I am most proud of the fact that I have certified over 20,000 board members throughout the state. Better yet, the attendees love it.  They learn about the requirement to fund reserves, Kaufman language, access to records, mandatory financial reporting, the role of the community association manager, legal ways for the board members to vote and hold meetings, preparation of budgets, the importance and hierarchy of your governing documents, rule making, actions of board members that constitute criminal conduct, ways directors can be removed from the board, the Marketable Record Title Act and the importance of preserving your governing documents in an HOA, obligations to maintain insurance, mandatory websites, material alterations, screening, approval and denial of occupants AND SO MUCH MORE.

 

It is an insult to every director who has been certified by taking a course to allow other directors the ability to get certified by signing a stupid self-serving form.  We are now repeatedly learning the hard way throughout our state that lack of knowledge can lead to catastrophic consequences in our communities.

 

MANDATORY EDUCATION FOR BOARD MEMBERS CAN SAVE LIVES. Florida has always led the way when it came to making community association laws that the rest of the country follows.  The State of Florida has the opportunity to become the first state in the country to require that directors become educated before assuming the incredible responsibilities that come with being in charge of our communities.  There is no excuse any longer for a Board member not to take an educational class.  Many law firms, like mine, teach the class on-line.  A board member never even has to leave his or her home in order to become certified.

 

I urge the members of The Florida Legislature to amend the condominium, co-op and HOA statutes to remove the ability to become “certified” by signing a form and instead require attendance at an educational course.  I already drafted the proposed legislation and it’s ready to be filed.  With all my heart, I believe lives can be saved, financial disasters can be avoided and it is in the best interest of the millions of Floridians who live in a community association.  Readers: please contact your legislators if you agree.

 

 

 

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WE’RE BACK LIVE AND IN THE STUDIO, AND WE’RE BACK TEACHING LIVE. by Eric Glazer

WE’RE BACK LIVE AND IN THE STUDIO, AND WE’RE BACK TEACHING LIVE. by Eric Glazer

  • Posted: Oct 15, 2021
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WE’RE BACK LIVE AND IN THE STUDIO. AND WE’RE BACK TEACHING LIVE.

This weeks topics: 

THE IMPORTANCE OF A WEBSITE FOR YOUR ASSOCIATION

EMOTIONAL SUPPORT ANIMALS IN A NO PET COMMUNITY. WHAT IS AN ASSOCIATION TO DO?

 

TAKING YOUR CALLS ON WHATEVER TOPIC YOU NEED ANSWERS TO OR WHATEVER YOU NEED TO GET OFF YOUR CHEST.

WE WILL TAKE YOUR CALLS AND ANSWER YOUR CONDO AND HOA QUESTIONS THROUGHOUT THE HOUR. CALL US AT 877-850-8585 DURING THE SHOW.
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