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The Champlain Towers South Condominium Collapse: Initial Interim Lessons Learned From This Tragedy

The Champlain Towers South Condominium Collapse: Initial Interim Lessons Learned From This Tragedy

  • Posted: Sep 08, 2021
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The Champlain Towers South Condominium Collapse:

Initial Interim Lessons Learned From This Tragedy

Author’s note: The devastating tragedy in Surfside shocked and saddened all of us at Kaye Bender Rembaum. The following article was initially written in late June, shortly after the tragic Champlain Towers collapse occurred, for initial publication in the August edition of the Florida Communtiy Association Journal. Since that time, and just the other day, the City of Boca Raton has promulgated required building re-certifications similar to those in effect for Broward and Miami-Dade Counties. Other cities and counties are similarly preparing to do so. In addition, the Florida state legislature will likely be considering amendments to Chapter 718, the Condominimium Act, during its 2022 legislative session an effort to help prevent similar tragedies. 

 

Just after midnight on Thursday, June 24, 2021, tragedy struck Surfside, Florida, when 55 of 136 units of the 12-story Champlain Towers South Condominium tragically crumbled to the ground. Just prior, a sleepless sixth floor owner notices a two-finger-wide separation in her drywall and, fearing the worst, scrambles downstairs as the building begins to collapse around her. Miraculously, she barely escapes. So many others were not as fortunate. Today, as this article is being written on June 27, 2021, sadly there are nine confirmed dead and over 150 persons still listed as unaccounted for. (Author’s note: it was later confirmed that this tragedy was responsible for 98 deaths)

 

By way of background, a prior building collapse in 1973 led Miami-Dade and Broward Counties to institute a city ordinance requiring a 40-year residential building recertification. The 40-year-recertification requirement is the absolute maximum period of time for the association to inspect the building for structural, electrical, and other critical component failure posing a threat to life safety. Champlain Towers South, built in 1981, was in the process of complying with its building recertification when disaster struck. Likely, months from now the cause will be identified. Do not be surprised if it is discovered that there were multiple causes leading to a perfect storm type of event.

 

When concrete is subjected to moisture, it causes the steel rebar to rust, which causes further expansion of the concrete surrounding the rebar, which ultimately, if not treated, leads to failure. This is commonly referred to as “spalling.” In addition, when concrete is exposed to moisture, it causes the concrete to separate into its constituent parts, and it will leach lime [calcium-containing inorganics]. Many condominium balconies experience concrete spalling and require repair. So, too, do the support columns and other parts of the foundation responsible to bear and pass the building load on to other structural components. What we know so far, from multiple sources, follows:

 

An engineering report issued on October 8, 2018, by Morabito Consultants to Champlain Towers South Condominium Association, Inc., concluded in its Structural Field Survey Report that:

 

“[T]he waterproofing below the pool deck and entrance drive… is beyond its useful life and therefore it must be completely removed and replaced. The failed waterproofing is causing major structural damage to the concrete structural slab below these areas. Failure to replace the waterproofing in the near future will cause the extent of the concrete deterioration to expand exponentially… The main issue in this building structure is that the entrance drive, pool deck and planter waterproofing is laid on a flat surface. Since the reinforced concrete slab is not sloped to drain, the water sits on the waterproofing until it evaporates. This is a major error in the development of the original contract documents prepared by the [initial architects and engineers]… It is important to note that the replacement of the existing deck waterproofing will be extremely expensive as removal of the concrete topping slab to gain access to the waterproofing membrane will take time, be disruptive, and create a major disturbance to the occupants of this condominium building. Please note that the installation of deck waterproofing on a flat structure is a systemic issue for this building structure… Regarding the parking garage consultant’s review revealed signs of distress/fatigue as described below: abundant cracking and spalling of varying degrees was observed in the concrete columns, beams, and walls. Several sizable spalls were noted in both the top side of the entrance drive ramp and the underside of the pool/entrance drive/planter slabs, which included instances with exposed deteriorating rebar. Though some of the damage is minor, most of the concrete deterioration needs to be repaired in a timely fashion… Morabito Consultants is convinced that previously installed epoxy injection repairs were ineffective in properly repairing the existing cracked and spalled concrete slabs.”

 

(The entire 2018 Morabito Consultants report can be found at kbrlegal.com. Click “resources” at top of the page, then click “links” from the dropdown menu.)

 

Reports from local and national news indicated the following information. The swimming pool built atop a parking garage was leaking for an unknown period of time into the garage area below. Ocean water often intruded into the below-grade parking structure. At least one owner on the ninth floor was experiencing repeated pipe leaks. A report from the 1990s indicated the building was sinking approximately two millimeters per year. Significant roof repairs were underway for at least one month prior to the collapse. Lime was leaching out of the concrete deck causing damage to the cars in the parking garage below. Just south of the Champlain Towers South Condominium, a new building was being constructed that caused residents of the Champlain Towers South Condominium to complain about the constant shaking of their condominium building caused by blasting and digging activity. The concrete waterproofing associated with the foundation was failing as noted in the 2018 engineering report. Naturally, all of this combined could eventually lead to a weakened overall support structure.

 

Based on this information, ask yourself this important question: Was the Champlain Towers South Condominium collapse foreseeable? While some people, most especially with the benefit of hindsight, may believe that to be the case, bear in mind that there are also reports that the board had meetings with City of Surfside officials after the 2018 Morabito Consultants report was issued. If so, this may be very telling and bear on the board’s decision-making process. Details of such meetings are not presently known.  Are there other engineering reports not yet discovered that bear on this issue? All of this may be very telling and bear on the board’s decision-making process. In any event, it is too early to reach conclusions.

 

Notwithstanding this horrible tragedy, there are interim lessons that can be gleaned from this disaster that every board member and manager of a high-rise condominium should heed, as follows:

 

 

  1. If your county does not have a 40-year-recertification requirement, and even if it does, obtain a recertification engineering report every 25 to 40 years, anyway. Remember that the 40-year requirement set out in the Miami-Dade and Broward ordinances is a maximum period that the association can go without having complied with the re-certification process. The 40 years is not a minimum, meaning an association can certainly have the recertification-type studies performed as often as reasonably necessary under the circumstances.
  2. When it comes to building maintenance and repairs that are life-safety recommendations, should the association’s retained engineering expert make recommendations regarding the building’s foundation, implement them in a timely manner. Do not consider making temporary patch repairs in lieu of proper repair. In other words, do not be penny wise and pound foolish. Do not let the need to obtain unit owner votes to either approve the work and/or the needed assessments or loans to fund the project be a factor in any way. There is a long line of Florida appellate case law that supports the board’s right to effectuate repairs and take out loans when necessary for protection of life and property. Your association’s attorney will be a necessary component of this process to provide legal opinions based on the controlling appellate cases.
  3. Fund the reserves appropriately and make sure the association has a specific reserve for concrete repair and restoration. If the association is pooling reserves, be sure to include concrete repairs in the pooled reserve. Do not even consider waiving or reducing reserves until a considerable nest egg is saved up.
  4. Update the association’s reserve schedules at least every five years. It should be based on empirical and objective evidence.
  5. Do not be afraid or otherwise hesitant to special assess the membership for required maintenance and repairs. Remember, the units have more financial value when the building is properly maintained.

Oddly, Florida Statutes have three significant failures that could help prevent a residential building collapse similar to the Champlain Towers South Condominium.

 

 

  1. The relevant statutes do not specifically require condominium associations to have a concrete restoration reserve though it should be easily included as a required reserve pursuant to “catch all” language set out in §718.112 (2)(f)(2), Florida Statutes (see below).
  2. Despite what you may hear on the news, there is not a statewide mandatory residential building recertification required after a certain number of years.
  3. There is no statutory requirement to have a reserve study or engineering study performed on a regular basis.

Regarding reserves, §718.112 (2)(f)(2), Florida Statutes (2020), provides, in relevant part, that:

 

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. The amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. [Emphasis added.]

 

Remember, too, the board is absolutely required to pass the budget each year with reserves fully funded. Only then can the board decide to present to the owners the opportunity to waive or reduce reserves. Ask yourself, are our condominium association’s reserves properly funded?

 

As a result of this horrific tragedy, the 2022 Florida Legislature should consider requiring  a recertification engineering report  for all high-rise residential condominiums  every 30 years or so and should require all community associations to update the reserve schedules at least once every five years.

 

Also remember that each board member should exercise his or her own individual reasonable business judgment when rendering decisions, except for the purchase of insurance, where the much higher standard of “best efforts” is applied as required by §718.111(11), Florida Statutes (2020). With the reasonable business judgment standard in mind, ignoring advice of engineers and other requisite professionals could be considered by others to be negligent or even rise to a reckless act or an omission conducted with bad faith, with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property, any one of which can lead to exposure to liability. But, if the association received two different reports where the opinions drastically differ, then in that situation, each board member should use his or her reasonable business judgment to decide which report should be relied upon. The fact the board chose to follow one expert’s guidance over the other, whose guidance turned out in the end to be wrong, is not too likely to result in an award for damages as a result of legal challenge.

 

If you live in a high-rise condominium and are fearful of collapse due to the Champlain Towers South Condominium tragedy, please remember that this building’s failure was certainly not an everyday occurrence and is best described, for the time being, as a tragic anomaly.

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The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations Posted by rembaumlaw

The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations Posted by rembaumlaw

  • Posted: Aug 27, 2021
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Florida has created an abundance of legislation governing homeowners’ and condominium associations. You would think that, by now, laws affecting both types of communities would have more parity than they actually do. (Please note that that commercial condominiums are not addressed in this article.)

Perhaps the most appreciative difference between a homeowners association and a residential condominium association is that the homeowners association exists in common law, but the condominium only exists because of legislation adopted by the Florida Legislature. That said, homeowners associations are subject to Chapter 720, Florida Statutes, and condominium associations are subject to Chapter 718, Florida Statutes. There is both parity and significant differences between these two Acts, the latter of which are further addressed below. We begin by examining bidding.

Bidding: A homeowners association is only required to obtain bids if the aggregate cost of the project (referring to the materials, work, and/or services) exceeds 10 percent of the total budget including reserves, if any. On the other hand, condominium associations are required to obtain bids if the aggregate cost of the project exceeds 5 percent of the total budget including reserves, if any. Please note, there is no requirement in the legislation for a community association to obtain a definitive number of a bids. Therefore, at least two would be appropriate. Also remember, there are exceptions to the bidding requirement for professional services such as attorneys, accountants, and landscape architects.

Certified Written Inquiry: A condominium association owner has the right to send a certified written inquiry to the board, and the board is obligated to answer it within 30 days (or 60 days if the certified written inquiry is provided to the community association’s lawyer to respond to). A failure to respond means that if the owner files a legal action over the item for which certified written inquiry was provided and loses, the owner will not be responsible to pay for the association’s prevailing party attorneys’ fees. There is no similar provision for a homeowners association.

Common Areas: Common areas in a homeowners association are owned by the association itself. In other words, no owner can claim an ownership interest in a homeowner association’s common areas. However, as to condominiums, the equivalent of the homeowner association’s common area is referred to as “common elements”. All of the unit owners of the condominium association own an indivisible interest in the common elements.

Disputes: In a homeowners association, disputes between an association and a parcel owner regarding use of or changes to the parcel or the common areas and other covenant enforcement disputes, disputes regarding amendments to the association documents, disputes regarding meetings of the board and committees appointed by the board, membership meetings not including election meetings, and access to the official records of the association must be the subject of a demand for pre-suit mediation served by an aggrieved party before the dispute is filed in the local court. Before a homeowners association can commence litigation where the amount in controversy is in excess of $100,000, the approval of a majority of a quorum of the membership is required. There is no similar provision as applied to condominium associations.

In a condominium association, prior to the institution of court litigation, a party to a “dispute” (as such term is hereinafter defined) must petition the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation for non-binding arbitration or, as of July 1, 2021, avail themselves of the presuit mediation process as set out in Chapter 720.  “Disputes” subject to mandatory arbitration or presuit mediation include 1) the authority of the board of directors, under this chapter or association document to: i) require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto ii) alter or add to a common area or element; or 2) the failure of a governing body, when required by this chapter or an association document, to: i) properly conduct elections ii) give adequate notice of meetings or other actions iii) properly conduct meetings iv) allow inspection of books and records; and 3) a plan of termination pursuant to §718.117, Fla. Stat.

Elections: Elections in a homeowners association take place as per the bylaws, while elections for condominiums take place following the regime set out in chapter 718, Florida Statutes, more specifically §718.112, Fla. Stat., and the provisions of the Florida Administrative Code. In order to hold a homeowners association election, a quorum must be attained unless the bylaws provide otherwise. No quorum is required to hold a condominium election, but rather 20 percent of the eligible voters need to cast a ballot in order to hold the election. In a condominium association of more than 10 units, co-owners of a unit cannot serve on the board at the same time unless there are not enough candidates, or they own more than one unit. Commencing July 1, 2018, condominium association board members cannot serve more than eight consecutive years absent certain exceptions (note, this statute is not retroactive in its application). There is no similar co-owner prohibition and term limit restriction for homeowners associations.

Elections by acclimation: In a condominium association if the same number of candidates, or less, run for the board as the number of seats available, then there is no need to have the election. This is referred to as an “election by acclimation” which means, those candidates will comprise the present board upon the annual meeting. If the election is contested because there are more candidates than seats available and at least 20 percent of the eligible voters do not cast a ballot, then last year’s board rolls over.

As to homeowners associations, if the election process allows candidates to be nominated in advance of the meeting, the association is not required to allow nominations at the meeting. An election is not required unless more candidates are nominated than vacancies exist. If an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required pursuant to the statute or the bylaws and write-in nominations are not permitted, then the candidates who nominated themselves in advance shall commence service on the board of directors regardless of whether a quorum is attained at the annual meeting. Otherwise, if those conditions are not met and a quorum is not attained for a homeowners association’s election, then last year’s board rolls over to this year’s board.

Elections, Voting: Unless otherwise set out in the bylaws, homeowners association members vote in the election for the board by proxy and/or ballot. On the other hand, condominium association owners cannot vote for the election of directors by proxy but rather must vote themselves by secret absentee ballot using the the inner and outer envelope system. A homeowners association only needs to use the inner and outer envelope system when the bylaws call for secret absentee ballots.

Fines: A condominium association cannot levy a fine greater than $1,000 for any one violation and cannot lien and foreclose the fine under any circumstances. In a homeowners association, an association can foreclose to collect a fine if both i) the fine is $1,000 or more and ii) the authority to lien is set out in the declaration.

Frequently Asked Questions and Answers Sheet: As to condominium associations §718.504, Fla. Stat., requires that a “Frequently Asked Questions and Answers” sheet be made available to prospective purchasers and to owners who request it. It must be updated annually and must include the following questions along with the answers to these questions: 1) What are my voting rights in the condominium association? 2) What restrictions exist in the condominium documents on my right to use my unit? 3) How much are my assessments to the condominium association for my unit type, and when are they due? 4) Do I have to be a member in any other association? If so, what is the name of the association and what are my voting rights in this association? Also, how much are my assessments? 5) Am I required to pay rent or land use fees for recreational or other commonly used facilities? If so, how much am I obligated to pay annually? 6) Is the condominium association or any other mandatory membership association involved in any court cases in which it may face liability in excess of $100,000? If so, identify each such case. There is no similar provision or requirement for homeowners associations.

Leasing Restrictions: Effective July 1, 2021  as to HOA leasing restrictions, any restriction that prohibits or regulates rental agreements applies only to (i) an owner who acquires title to a parcel after the effective date of the governing document or amendment, or (ii) an owner who consents, individually or through a representative, to the governing document or amendment.  As to condominium associations, according to §718.110(13), Fla. Stat., an amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period, applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of the amendment.

Liens and Foreclosures: In a homeowners association, prior to recording a lien against a delinquent owner’s lot, the owner must be provided a statutorily compliant warning letter at least 45 days prior to recording the lien, warning the homeowner that if the assessment is not paid a lien may be recorded. Then, the owner must be provided a second letter at least 45 days prior to filing the foreclosure lawsuit warning that if the lien is not satisfied (paid-off), then a lawsuit to foreclose the lien may be filed anytime thereafter. For a condominium association the warning/waiting periods for both letters was 30 days. Effective July 1, 2021 this was changed to 45 days.

Material Alterations: Unless otherwise provided in the declaration of covenants and restrictions, a material alteration to a homeowners association’s common area is decided by the board. In condominium associations, material alterations require 75 percent approval of all unit owners unless the declaration provides otherwise.

Official Records Requests: In a homeowners association, official record requests must be made by certified U.S. mail to create the rebuttable presumption the association willfully failed to respond. There is no similar requirement for a condominium association. Every community association should adopt specific rules governing official records requests, how often they can be made, and where they must be delivered. If your association has not done so, you are urged to discuss this with the association‘s lawyer.

Quorums: A quorum of the membership for a homeowners association membership meeting consists of 30 percent of the entire membership unless a lower number is provided for in the bylaws. A quorum for a condominium association membership meeting occurs when there is a majority of the voting interests present unless a lower number is provided for in the bylaws.

Reserve Accounts: A homeowners association only has restricted reserve accounts if initially created by the developer or voted on and approved by a majority of the entire membership. In a condominium association, 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. Condominium boards and homeowners association boards with restricted reserves may propose lower or no reserves to the membership which is subject to approval by a majority of a quorum of the members. However, neither board is obligated to propose lower reserves. A condominium association board and a homeowners association board with restricted reserves must fully fund those reserves in the budget each year as must homeowners association boards whose association has adopted restricted reserves.

Transfer Fees: As per §689.28, Fla. Stat., transfer fees when buying and leasing a home in the state of Florida are prohibited. But, there are exceptions for both homeowners and condominium associations with this caveat. There is no cap, per se, that a homeowners association can charge a prospective member as a part of acquiring their property, but such fee must be authorized in the declaration (or other recorded document). However, as per §718.112 Fla. Stat., a condominium association can only charge up to $150 per applicant. A husband/wife or parent/dependent child are considered one applicant. A condominium association can only charge a transfer fee if it has the authority to approve transfers, and the authority for the transfer fee, specifically, must be set out in the declaration or bylaws (and as set forth above, as of July 1, 2021 it is presently limited to a maximum $150.00).

Warranties: A developer and general contractor of a condominium provides statutory warranties to buyers of units as further detailed in Chapter 718, Fla. Stat. There are no similar statutory warranties set out in Chapter 720, Fla. Stat., for buyers of a home within a homeowners association. A developer of a condominium, pursuant to relevant law, also provides an implied warranty of habitability. As to a homeowners association, §553.835, Fla. Stat., provides in relevant part that there is no such warranty for off-site improvements (i.e., the common areas) with a small exception for the shared components of a townhome type community.

Websites: A condominium association that has a condominium with 150 or more units must host an association website and post certain official records to it. Homeowners associations have no similar requirement.

If you have any questions in regard to these matters be sure to discuss them with an attorney of your choosing.

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The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations

The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations

  • Posted: Jul 20, 2021
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The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations

Florida has created an abundance of legislation governing homeowners’ and condominium associations. You would think that, by now, laws affecting both types of communities would have more parity than they actually do. (Please note that that commercial condominiums are not addressed in this article.)

Perhaps the most appreciative difference between a homeowners association and a residential condominium association is that the homeowners association exists in common law, but the condominium only exists because of legislation adopted by the Florida Legislature. That said, homeowners associations are subject to Chapter 720, Florida Statutes, and condominium associations are subject to Chapter 718, Florida Statutes. There is both parity and significant differences between these two Acts, the latter of which are further addressed below. We begin by examining bidding.

 

Bidding: A homeowners association is only required to obtain bids if the aggregate cost of the project (referring to the materials, work, and/or services) exceeds 10 percent of the total budget including reserves, if any. On the other hand, condominium associations are required to obtain bids if the aggregate cost of the project exceeds 5 percent of the total budget including reserves, if any. Please note, there is no requirement in the legislation for a community association to obtain a definitive number of a bids. Therefore, at least two would be appropriate. Also remember, there are exceptions to the bidding requirement for professional services such as attorneys, accountants, and landscape architects.

 

Certified Written Inquiry: A condominium association owner has the right to send a certified written inquiry to the board, and the board is obligated to answer it within 30 days (or 60 days if the certified written inquiry is provided to the community association’s lawyer to respond to). A failure to respond means that if the owner files a legal action over the item for which certified written inquiry was provided and loses, the owner will not be responsible to pay for the association’s prevailing party attorneys’ fees. There is no similar provision for a homeowners association.

 

Common Areas: Common areas in a homeowners association are owned by the association itself. In other words, no owner can claim an ownership interest in a homeowner association’s common areas. However, as to condominiums, the equivalent of the homeowner association’s common area is referred to as “common elements”. All of the unit owners of the condominium association own an indivisible interest in the common elements.

 

Disputes: In a homeowners association, disputes between an association and a parcel owner regarding use of or changes to the parcel or the common areas and other covenant enforcement disputes, disputes regarding amendments to the association documents, disputes regarding meetings of the board and committees appointed by the board, membership meetings not including election meetings, and access to the official records of the association must be the subject of a demand for pre-suit mediation served by an aggrieved party before the dispute is filed in the local court. Before a homeowners association can commence litigation where the amount in controversy is in excess of $100,000, the approval of a majority of a quorum of the membership is required. There is no similar provision as applied to condominium associations.

 

In a condominium association, prior to the institution of court litigation, a party to a “dispute” (as such term is hereinafter defined) must petition the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation for non-binding arbitration or, as of July 1, 2021, avail themselves of the presuit mediation process as set out in Chapter 720.  “Disputes” subject to mandatory arbitration or presuit mediation include 1) the authority of the board of directors, under this chapter or association document to: i) require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto ii) alter or add to a common area or element; or 2) the failure of a governing body, when required by this chapter or an association document, to: i) properly conduct elections ii) give adequate notice of meetings or other actions iii) properly conduct meetings iv) allow inspection of books and records; and 3) a plan of termination pursuant to §718.117, Fla. Stat.

 

Elections: Elections in a homeowners association take place as per the bylaws, while elections for condominiums take place following the regime set out in chapter 718, Florida Statutes, more specifically §718.112, Fla. Stat., and the provisions of the Florida Administrative Code. In order to hold a homeowners association election, a quorum must be attained unless the bylaws provide otherwise. No quorum is required to hold a condominium election, but rather 20 percent of the eligible voters need to cast a ballot in order to hold the election. In a condominium association of more than 10 units, co-owners of a unit cannot serve on the board at the same time unless there are not enough candidates, or they own more than one unit. Commencing July 1, 2018, condominium association board members cannot serve more than eight consecutive years absent certain exceptions (note, this statute is not retroactive in its application). There is no similar co-owner prohibition and term limit restriction for homeowners associations.

 

Elections by acclimation: In a condominium association if the same number of candidates, or less, run for the board as the number of seats available, then there is no need to have the election. This is referred to as an “election by acclimation” which means, those candidates will comprise the present board upon the annual meeting. If the election is contested because there are more candidates than seats available and at least 20 percent of the eligible voters do not cast a ballot, then last year’s board rolls over.

 

As to homeowners associations, if the election process allows candidates to be nominated in advance of the meeting, the association is not required to allow nominations at the meeting. An election is not required unless more candidates are nominated than vacancies exist. If an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required pursuant to the statute or the bylaws and write-in nominations are not permitted, then the candidates who nominated themselves in advance shall commence service on the board of directors regardless of whether a quorum is attained at the annual meeting. Otherwise, if those conditions are not met and a quorum is not attained for a homeowners association’s election, then last year’s board rolls over to this year’s board.

 

Elections, Voting: Unless otherwise set out in the bylaws, homeowners association members vote in the election for the board by proxy and/or ballot. On the other hand, condominium association owners cannot vote for the election of directors by proxy but rather must vote themselves by secret absentee ballot using the the inner and outer envelope system. A homeowners association only needs to use the inner and outer envelope system when the bylaws call for secret absentee ballots.

 

Fines: A condominium association cannot levy a fine greater than $1,000 for any one violation and cannot lien and foreclose the fine under any circumstances. In a homeowners association, an association can foreclose to collect a fine if both i) the fine is $1,000 or more and ii) the authority to lien is set out in the declaration.

 

Frequently Asked Questions and Answers Sheet: As to condominium associations §718.504, Fla. Stat., requires that a “Frequently Asked Questions and Answers” sheet be made available to prospective purchasers and to owners who request it. It must be updated annually and must include the following questions along with the answers to these questions: 1) What are my voting rights in the condominium association? 2) What restrictions exist in the condominium documents on my right to use my unit? 3) How much are my assessments to the condominium association for my unit type, and when are they due? 4) Do I have to be a member in any other association? If so, what is the name of the association and what are my voting rights in this association? Also, how much are my assessments? 5) Am I required to pay rent or land use fees for recreational or other commonly used facilities? If so, how much am I obligated to pay annually? 6) Is the condominium association or any other mandatory membership association involved in any court cases in which it may face liability in excess of $100,000? If so, identify each such case. There is no similar provision or requirement for homeowners associations.

 

Leasing Restrictions: Effective July 1, 2021  as to HOA leasing restrictions, any restriction that prohibits or regulates rental agreements applies only to (i) an owner who acquires title to a parcel after the effective date of the governing document or amendment, or (ii) an owner who consents, individually or through a representative, to the governing document or amendment.  As to condominium associations, according to §718.110(13), Fla. Stat., an amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period, applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of the amendment.

 

Liens and Foreclosures: In a homeowners association, prior to recording a lien against a delinquent owner’s lot, the owner must be provided a statutorily compliant warning letter at least 45 days prior to recording the lien, warning the homeowner that if the assessment is not paid a lien may be recorded. Then, the owner must be provided a second letter at least 45 days prior to filing the foreclosure lawsuit warning that if the lien is not satisfied (paid-off), then a lawsuit to foreclose the lien may be filed anytime thereafter. For a condominium association the warning/waiting periods for both letters was 30 days. Effective July 1, 2021 this was changed to 45 days.

 

Material Alterations: Unless otherwise provided in the declaration of covenants and restrictions, a material alteration to a homeowners association’s common area is decided by the board. In condominium associations, material alterations require 75 percent approval of all unit owners unless the declaration provides otherwise.

 

Official Records Requests: In a homeowners association, official record requests must be made by certified U.S. mail to create the rebuttable presumption the association willfully failed to respond. There is no similar requirement for a condominium association. Every community association should adopt specific rules governing official records requests, how often they can be made, and where they must be delivered. If your association has not done so, you are urged to discuss this with the association‘s lawyer.

 

Quorums: A quorum of the membership for a homeowners association membership meeting consists of 30 percent of the entire membership unless a lower number is provided for in the bylaws. A quorum for a condominium association membership meeting occurs when there is a majority of the voting interests present unless a lower number is provided for in the bylaws.

 

Reserve Accounts: A homeowners association only has restricted reserve accounts if initially created by the developer or voted on and approved by a majority of the entire membership. In a condominium association, 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. Condominium boards and homeowners association boards with restricted reserves may propose lower or no reserves to the membership which is subject to approval by a majority of a quorum of the members. However, neither board is obligated to propose lower reserves. A condominium association board and a homeowners association board with restricted reserves must fully fund those reserves in the budget each year as must homeowners association boards whose association has adopted restricted reserves.

 

Transfer Fees: As per §689.28, Fla. Stat., transfer fees when buying and leasing a home in the state of Florida are prohibited. But, there are exceptions for both homeowners and condominium associations with this caveat. There is no cap, per se, that a homeowners association can charge a prospective member as a part of acquiring their property, but such fee must be authorized in the declaration (or other recorded document). However, as per §718.112 Fla. Stat., a condominium association can only charge up to $150 per applicant. A husband/wife or parent/dependent child are considered one applicant. A condominium association can only charge a transfer fee if it has the authority to approve transfers, and the authority for the transfer fee, specifically, must be set out in the declaration or bylaws (and as set forth above, as of July 1, 2021 it is presently limited to a maximum $150.00).

 

Warranties: A developer and general contractor of a condominium provides statutory warranties to buyers of units as further detailed in Chapter 718, Fla. Stat. There are no similar statutory warranties set out in Chapter 720, Fla. Stat., for buyers of a home within a homeowners association. A developer of a condominium, pursuant to relevant law, also provides an implied warranty of habitability. As to a homeowners association, §553.835, Fla. Stat., provides in relevant part that there is no such warranty for off-site improvements (i.e., the common areas) with a small exception for the shared components of a townhome type community.

 

Websites: A condominium association that has a condominium with 150 or more units must host an association website and post certain official records to it. Homeowners associations have no similar requirement.

 

If you have any questions in regard to these matters be sure to discuss them with an attorney of your choosing.

(Reprinted with permission from the April 2021 edition of the Florida Community Association Journal and updated to reflect  recent legislation effective July 1, 2021)

 

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Selective Enforcement: A Grossly Misunderstood Concept in the entire body of community association law.

Selective Enforcement: A Grossly Misunderstood Concept in the entire body of community association law.

  • Posted: Jul 14, 2021
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Selective Enforcement: A Grossly Misunderstood Concept in the entire body of community association law.

by https://kbrlegal.com/

Without exception, the affirmative defense of “selective enforcement” is one of the most misunderstood concepts in the entire body of community association law. How often have you heard something like this: “The board has not enforced the fence height limitation, so it cannot enforce any other architectural rules”? Simply put, nothing could be further from the truth.

When a community association seeks to enforce its covenants and/or its board adopted rules and regulations, an owner can, under the right circumstances, assert an affirmative defense such as the affirmative defense of selective enforcement. An affirmative defense is a “yes I did it, but so what” type of defense. In civil lawsuits, affirmative defenses include the statute of limitations, the statute of frauds, waiver, and more. However, it’s just not as simple as that. For example, a fence height limitation is a very different restriction than a required set back. Under most if not all circumstances, the failure to enforce a  fence height requirement is very different from the failure to enforce a setback requirement. Ordinarily, the affirmative defense of selective enforcement will only apply if the violation or circumstances are comparable, such that one could reasonably rely upon the non-enforcement of a particular covenant, restriction, or rule with respect to their own conduct or action.

In the seminal case of Chattel Shipping and Investment Inc. v. Brickell Place Condominium Association Inc., 481 So.2d 29 (FLA. 3rd DCA 1986), 45 owners had improperly enclosed their balconies. Thereafter, the association informed all of the owners that it would thereafter take “no action with respect to existing enclosed balconies, but prohibit future balcony constructions and enforce the enclosure prohibition.” As you might have already predicted, nevertheless, thereafter an owner of a unit, Chattel Shipping, enclosed their unit; and the association secured a mandatory injunction in the trial court requiring the removal of the balcony enclosure erected without permission. The owner appealed. In the end, the appellate court disagreed with the owner who argued that the association decision to enforce the “no enclosure” requirement only on a prospective basis was both selective enforcement and arbitrary. The court held that the adoption and implementation of a uniform policy under which, for obvious reasons of practicality and economy, a given building restriction will be enforced only prospectively cannot be deemed “selective and arbitrary.”

In Laguna Tropical, A Condominium Association Inc. v. Barnave, 208 So. 3d 1262, (Fla. 3d DCA 2017), the court again used the purpose of the restriction in its determination of whether the association engaged in selective enforcement. In Laguna Tropical, a rule prohibited floor covering other than carpeting unless expressly permitted by the association. Additionally, the rule provided that owners must place padding between the flooring and the concrete slab so that the flooring would be adequately soundproof. In this case, an owner installed laminate flooring on her second floor unit and the neighbor below complained that the noise disturbed his occupancy. As a result of the complaint, the association demanded that the owner remove the laminate flooring. However, the owner argued selective enforcement because the association only enforced the carpeting restriction against the eleven exclusively upstairs units in the condominium. The court noted that the remaining units in the condominium were either downstairs units only, or were configured to include both first-floor and second-floor residential space within the same unit.

Again, the court looked to the purpose of the prohibition on floor coverings other than carpet and found that the prohibition was plainly intended to avoid noise complaints. Therefore, no selective enforcement was proven because no complaints were shown to have arisen regarding any units except the eleven exclusively upstairs units.

What about cats and dogs? In another case, Prisco v. Forest Villas Condominium Apartments Inc., 847 So. 2d 1012 (Fla. 4th DCA 2003), the Fourth District Court of Appeals heard an appeal alleging selective enforcement regarding the association’s pet restrictions. The association had a pet restriction which stated that other than fish and birds, “no pets whatsoever” shall be allowed. In this case, the association had allowed an owner to keep a cat in her unit, but refused to allow another owner to keep a dog. The association argued that there was a distinction between the dog and the cat. However, on appeal, the court found that the restriction was clear and unambiguous that all pets other than fish and birds were prohibited. Therefore, the court reasoned that the facts which make dogs different from cats did not matter because the clear purpose of the restriction was to prohibit all types of pets except fish and birds. In other words, the court held that the plain and obvious purpose of a restriction should govern any interpretation of whether the association engaged in selective enforcement.

If an association has a “no pets” rule and allows cats, must it allow dogs, too? There is a long line of arbitration cases that have distinguished dogs from cats and other pets for purposes of selective enforcement. For example, in Beachplace Association Inc. v. Hurwitz, Case no. 02-5940, a Department of Business and Professional Regulation Division of Florida Condominium Arbitration case, the arbitrator found, in response to an owner’s selective enforcement defense raised in response to the association’s demand for removal of a dog, that even though cats were allowed, that comparison of dogs to cats was not a comparative, like kind situation. Further the arbitrator found that cats and dogs had significant distinctions such as barking versus meowing, and therefore the owner’s attempted use of the selective enforcement argument failed.

But, in Hallmark of Hollywood Condominium Association Inc. v. Andrews, Case 2003-09-2380, another Department of Business and Professional Regulation Division of Florida Condominium Arbitration case, the learned arbitrator James Earl decided that because the association has a full blown “no pets of any kind”  requirement and since cats were allowed, then dogs must be allowed, too. In other words, the defendant owner’s waiver defense worked. But, the arbitrator wisely noted in a footnote as follows: “The undersigned notes that there is a long line of arbitration cases that have distinguished dogs from cats and other pets for purposes of selective enforcement. However, the fourth district court of appeal has ruled that where the condominium documents contain particular language prohibiting all pets, any dissimilarity between dogs and cats is irrelevant and both must be considered. See Prisco.” The distinction between the two arbitration cases could be explained because of timing in that the 4th DCA’s decision in Prisco was not yet published when Hurwitz was decided.

From these important cases, it can be gleaned that

(i) even if an association has ignored a particular rule or covenant, that by giving written notice to the entire community that it will be enforced prospectively, the rule or covenant can be reinvigorated and becomes fully enforceable once again (though of course, prior non-conforming situations may have to be grandfathered depending on the situation),

(ii) if an association or an owner is seeking an estoppel affirmative defense, they must be sure all of the necessary elements are pled,

(iii) at times a court will look to the purpose of the rule itself where it makes sense to do so, and

(iv) dogs and cats are different, but they are both considered “pets.”

Remember to always discuss the complexities of re-enforcement of covenants and rules and regulations that were not enforced for some time with your association’s legal counsel in an effort to mitigate negative outcomes. The process (commonly referred to as “republication”) can restore the viability of a covenant or rule that may have been waived due to the lack of uniform and timely enforcement.

 

If a 2008 Florida law that required condos to plan for repairs had still been in place, “this never would have happened,” said the legislator who sponsored the law.

If a 2008 Florida law that required condos to plan for repairs had still been in place, “this never would have happened,” said the legislator who sponsored the law.

  • Posted: Jul 08, 2021
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If a 2008 Florida law that required condos to plan for repairs had still been in place, “this never would have happened,” said the legislator who sponsored the law.

 

SURFSIDE, Fla. — Late last year, after years of delays and disputes, the Champlain Towers South Condominium Association began a desperate search for $16.2 million to fix major structural damage that was slowly threatening the Surfside high-rise — and that may have contributed to the building’s partial collapse June 24.

The obvious place to look was the building’s reserve fund — extra money socked away to cover the cost of future repairs. But the account held just $777,000, according to condo board documents — nowhere near enough to soften the blow.

The collapse, which killed at least 64 people and left 76 others missing, occurred before the condo board could collect the needed money from residents and begin repairs. The cause of the collapse is unknown, and investigators, experts and advocates are trying to determine whether the uncompleted repairs played a role, whether the board could have seen the problem coming earlier — and whether a Florida law regulating condo repairs that was repealed a decade ago could have made a difference.

 

One way to keep track of needed repairs is a “reserve study,” in which condo boards bring in experts like engineers or certified specialists every few years to inspect buildings and estimate how much the boards should collect from residents to prepare for future fixes. The building’s financial documents, obtained by NBC News and NBC 6 South Florida, show that Champlain Towers South had not done a professional reserve study since at least 2016. That decision was legal, but it meant that planning was left to the board, a shifting group of volunteers with little training in building maintenance.

“If the owners would have had a reserve study, if the board was proactive and had funded its reserves, this never would have happened,” said Julio Robaina, a former Republican state legislator.

Robaina sponsored a 2008 law requiring condo associations to hire engineers or architects to submit reports every five years about how much it would cost to keep up with repairs.

The law lasted just two years before it was repealed in 2010, after Robaina left office. Robaina blamed pushback from real estate lawyers and property managers, who he said claimed that the law was too burdensome for condo owners. The legislator who sponsored the repeal, former state Rep. Gary Aubuchon, a Republican real estate broker and homebuilder, did not reply to messages seeking comment.

 

The repeal left Florida’s condo residents less protected than those in nine states that legally require reserve studies, according to the Community Associations Institute, a nonprofit organization that advocates for condo associations. Thirty-one other states, including Florida, regulate reserves in some way — although Florida is one of three states with loopholes that enable owners to opt out of requirements, the nonprofit said. Ten states have no regulations about reserves at all.

“One of the steps that should be taken by a building, especially an aging building, is having adequate funds available so that when you have to face significant cost challenges there’s an appropriate amount of money available,” said Gary Mars, a South Florida lawyer who represents condo associations.

A survey last year by the Community Associations Institute found that most homeowners associations are hesitant to increase residents’ fees, anticipating opposition, and therefore fail to plan for long-term infrastructure fixes.

“In postponing inspections, reserve studies, and — ultimately — complete repairs or renovations, boards often end up facing an exponentially more comprehensive and expensive project in the long run,” the report said.

 

Maxwell Marcucci, a spokesman for the Champlain Towers South Condominium Association, declined to comment on reserve studies. In a previous statement to NBC News, he said the condo board was doing its best to ensure the building was safe. “They are not engineers and not building safety experts,” Marcucci said. “They hired experts, trusted experts, and at no point did the experts indicate that there was a threat of imminent collapse.”

The lack of a professional reserve study is a departure from what many experts say is best practice for condominiums, particularly older ones on the coast — like Champlain Towers South, built in 1981 — that have been exposed for decades to corrosive salt and water.

Robaina, who co-owns a property management company, said maintaining healthy reserves “is the single most important action that a condominium board needs to take.”

Florida law requires condo boards to maintain reserves for repairs over $10,000, but it does not say exactly how much to set aside. That means condo boards have some flexibility in avoiding saving for repairs that do not need to be made right away.

In addition, the law allows condo buildings to waive the reserve requirement altogether. Once it has passed its annual budget, a condo board can give residents the opportunity to opt out of collecting reserves by a vote of a majority of unit owners. The votes are common in Florida condo buildings, condo lawyers say.

That is what it appears Champlain Towers South did, lawyers and reserve experts said.

The experts pointed to the board’s reliance on special assessments — additional fees on top of residents’ normal monthly payments — to fund needed repairs. The board imposed a $1 million special assessment in 2016 for hallway renovations and a $350,000 special assessment in 2019 for work on a generator, a fuel pump and a fuel tank. Such lump-sum levies are indicative of a building whose owners have decided not to set aside enough reserves through regular monthly fees, choosing instead to wait until a big-ticket repair is needed to ask residents to pay for it, experts said. Many associations make that choice by repeatedly voting to waive or reduce the funding of their reserves.

“I can’t help but think that the building did that for years and years, which is why there was not enough funds available,” said Matthew Kuisle, Southeast regional director for Reserve Advisors, which prepares reserve studies. “Why would they do that? So they have lower fees. But in the long run, the fees are a small price to pay.”

The shortcomings of that approach started to become clear in 2018, when the board began inspecting the building before a checkup mandated by Miami-Dade County for buildings that reach 40 years old. In an October 2018 report, engineer Frank Morabito alerted the board to “major structural damage” to concrete slabs underneath the building’s pool deck and its entrance drive. He blamed a “major error” in the building’s construction and years of corrosion. He estimated the cost of repairs at $9 million.

Reeling from sticker shock, the board invited a Surfside building official to its November 2018 meeting. The official told the board that the building was “in very good shape,” according to minutes of the meeting. Some residents have said that led them to believe the situation was not dire.

Even so, the board began trying to find a way to repair the damage — and to pay for it.

Disagreements over the costs frustrated board members. Five members quit over two weeks in fall 2019. The condo association has had four presidents since 2018.

 

By late last year, the board had accepted that there was no safe way forward without doing the massive reconstruction Morabito recommended, along with repairs to a deteriorating roof. Morabito began preliminary work and found that the damage discovered in 2018 had gotten worse. The bill rose to more than $16 million.

The board scrambled for money. It found $707,000 left over from the previous special assessments and $777,000 more in reserves. But a quarter of the reserves were designated for insurance deductibles, leaving $556,000. The board chose not to tap the reserves just in case there was another emergency. That meant the building was short by $15.5 million, which the board voted in April to raise through a special assessment. The cost to residents would be $80,000 to $360,000 per unit.

“A lot of this work could have been done or planned for in years gone by. But this is where we are now,” board President Jean Wodnicki wrote to residents before the vote.

By last month, the board had started work on the roof, and it put other repairs out for bid. Responses were due July 7. Two weeks before the deadline, the building partly collapsed.

The board’s nearly three-year struggle to start work on the concrete replacement project has loomed over the catastrophe’s aftermath. Investigators have not determined what caused the failure; the deteriorating supports are among the possibilities.

Experts say the extent of disrepair documented in the 2018 report raises questions about how the damage went unnoticed previously.

“I read the report, and I wondered how long the building looked that way,” said Robert Nordlund, founder and CEO of Association Reserves, a reserve study firm based in California. “Did it look that way in 1998? 2008? Because clearly there was some significant deterioration in that 2018 report.”

 

Documents reviewed by NBC News and NBC 6 South Florida, including audits, budgets, financial statements and board meeting minutes, do not indicate when the structural issues noted by Morabito started, though the board did pay to replace leaking pipes in the building’s parking garage in 2016. But the documents do show that the board did not perform professional reserve studies and instead relied on board members to determine how much to set aside for repairs. In 2016, an accountant performing a year-end audit noted that “an independent study has not been conducted to determine the adequacy of the current funding” and that “the estimates for future replacement costs are based upon estimates provided by the budget committee.”

Audits conducted by the same accountant in 2017, 2018 and 2019 included the same language. Last year, a different accountant provided a similar disclaimer.

Mars, the lawyer who represents condo associations, said he believes that the note was “the CPA saying, ‘We don’t have any official documentation to rely on.'”

The accountants who conducted the audits did not respond to messages seeking comment.

 

Jeffrey Rembaum, another lawyer for condo associations, pointed to figures in the audits that showed that from 2016 to 2020, the board did not update the amount of money needed to replace balconies and concrete. Each year, the board estimated needing $320,000 for the work, even after Morabito’s report found that much more extensive and costly repairs were needed.

“We know the building had millions in concrete repairs on the horizon,” Rembaum said. “So how did it come up with $320,000 for their current needs? If they’d had a reserve study and an engineer looked at what they had, they would have come up with a higher number. That suggests the board wasn’t regularly updating it.”

He added: “This is the effect of the Florida Legislature not requiring a reserve study by qualified people.”

More than a decade since his short-lived law on reserve studies was repealed, Robaina said he hopes lawmakers will change course and reimpose the mandate.

“This is a window of opportunity,” he said, “and unfortunately it took a tragedy that could have been prevented.”

Jon Schuppe reported from New York; Phil Prazan reported from Surfside, Florida

By Jon Schuppe and Phil Prazan, NBC 6 South Florida

 

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New Requirements for Collection of Delinquent Assessments

New Requirements for Collection of Delinquent Assessments

  • Posted: Jul 07, 2021
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New Requirements for Collection of Delinquent Assessments

Robert Kaye, Managing member of Kaye Bender Rembaum, recently wrote an informative and telling article explaining the new collection procedures mandated to be in effect July 1, as a result of  the 2021 legislation. Every board member, manager, and developer needs to be aware of these important changes.

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The Florida Legislature has revised the procedures for collecting delinquent assessments, which add additional steps and delays for the owner to pay before legal action can commence and/or attorney’s fees can be recovered. Senate Bill 56 has revised Sections 718.116 and 718.121 for condominiums; 719.108 for cooperatives; and, Section 720.3085 for homeowners’ associations. With these changes, the collection procedures for all of these types of communities will be substantially the same. The new laws are effective July 1, 2021.

Initially, the new provisions have revised the time for the notices sent by the association attorney for condominiums and cooperatives to 45 days for both the pre-lien first letter and the post-lien notice of intent to foreclose. (Homeowners’ associations were already at 45 days).

The most important and significant addition to this statutory change is the addition of a new notice requirement by associations before they may refer a matter to the association attorney for collection and recover the attorney’s fees involved. This written notice is required to be mailed by first class mail to the address of the owner on file with the association. If the address on file is not the unit or parcel address, a copy must be sent there as well. The association is also required to keep in its records a sworn affidavit attesting to the mailing. The new statute contains a form for that notice which is required to be substantially followed.

As the respective statutory provisions now indicate, associations must incur a minimum of 120 days of collection efforts before a foreclosure action can begin, with a total of three (3) separate required statutory notices. This includes the: (i) initial 30 day notice of the intent to refer the matter to the association attorney (for which no attorney’s fees can be charged to the owner); (ii) 45 days for the pre-lien notice period; and, (iii) 45 days for the pre-foreclosure lien period. As such, in order to best protect the interests of the association, it is recommended that the first 30-day notice be sent at the earliest possible date in the association collection process. This will typically be when the governing documents indicate the assessment to be “late”. Careful review of the governing documents by legal counsel should be undertaken to determine whether there is a specific “grace period” indicated in the documents before the assessment is considered late. Once that determination is made, the board should adopt a formal collection policy that incorporates these new statutory requirements, which will also need to be mailed to all owners. A new provision has also been added that begins with “If an association sends out an invoice for assessments. . .” to unit or parcel owners, such notice is to be sent by first class mail or electronic transmission (email) to the respective addresses for the owners that are in the association official records.

Moreover, if the association wishes to change the method of delivery of an invoice, the new Statute creates specific steps that must be followed precisely in order for the change to be effective. Specifically, a written notice must be delivered to the owner not less than 30 days before the change of delivery method will be implemented. The notice must be sent by first class mail to the address on file with the association. If the address on file is not the unit or parcel address, a copy must be sent there as well. In addition to the notice requirement, the owner must “affirmatively acknowledge” his or her understanding of the new delivery method. The written acknowledgment can be sent electronically or by mail, and must be maintained in the Official Records (although it is not available for inspection by other owners). However, without this acknowledgment, the association may not change the method of delivery. The Statute does not presently include a time frame for the owner to provide that acknowledgment or offer any remedy to the association if none is forthcoming. This can be particularly daunting or problematic when the association changes management companies, when the new company’s procedures differ from the prior company.Before the association attorney can commence any collection work for an association, it will be necessary for the association to provide all of the backup documentation of the compliance with each of these new statutory requirements, as well as the information previously required (such as a current account ledger). If any of the documentation is missing with the initial turnover information, there will be delays in the collection process, which can be detrimental to the association operation. It is therefore imperative that these new procedures are fully integrated into the association operation without delay. We recommend that you contact your Association counsel with any questions on the new procedural requirements to ensure compliance.

Jeffrey Rembaum’s, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. Mr. Rembaum is a Certified Specialist in Condominium and Planned Development Law. He is the creator of ‘Rembaum’s Association Roundup’, an e-magazine devoted to the education of community association board members, managers, developers and anyone involved with Florida’s community associations.  His column appears monthly in the Florida Community Association Journal. Every year since 2012, Mr. Rembaum has been selected to the Florida Super Lawyers list and was also named Legal Elite by Florida Trends Magazine. He can be reached at 561-241-4462.

 

 

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Should Emails Between Board Members & Managers Be Considered Official Records Subject to Member Inspection?

Should Emails Between Board Members & Managers Be Considered Official Records Subject to Member Inspection?

  • Posted: Jun 28, 2021
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Should Emails Between Board Members & Managers Be Considered Official Records Subject to Member Inspection?

 

In today’s instant world, email allows us to express our thoughts anytime, anywhere. So often, emails serve as a substitute for making phone calls. If a phone call is made from a board member to a manager, absent a deposition of either party or a

contemporaneous note documenting the conversation, the content of the communication remains private. But, if the board member sends an email rather than calling the manager, that email is considered a written record of the association and is required to be produced as a part of a member’s official record request, with limited exception as discussed below.

 

With the sheer volume of emails received by a manager from owners, board members, purchasers, contractors, and lawyers, etc., there is no practical method of separating the emails which must remain confidential. This includes emails with respect to attorney-client privileged matters, personnel matters, information obtained in connection with a sale or lease, social security numbers, and medical information, etc., and separating these emails cannot occur without the manager or hired professional spending hours and hours and hours preparing such records for a member’s requested official record inspection primarily at the association’s expense. Moreover, if an outside professional is needed to prepare the emails for inspection, then the association will not be able to recoup the expenditure. While a condominium association cannot charge any amount to prepare for the inspection, a homeowners’ association is limited to $20.00 per hour for administrative time expended to retrieve requested records. Clearly, this needs a legislative remedy!

 

Generally speaking, for an association’s needs to be met, there must be solid communication between the board and the manager. However, requiring all but privileged and confidential emails to be official records subject to membership inspection stifles that free flow of communication. That said, it is understandable that some emails should be subject to a member’s inspection request, such as with regards to a bid package or contract.

 

More often than not, the emails to and from the manager are actually the property of the management company by whom the manager is employed. Absent discovery that takes place during litigation, typically a company’s emails are the private property of the company. A shareholder of General Mills’ stock cannot demand to see the president’s emails to its manager, so why should the community association president’s email to the manager be required to be produced? After all, overwhelmingly, community associations are “not-for-profit” corporations. At the end of the day, the need for transparency needs to be balanced against the practicality and costs of producing the emails.

 

There is limited guidance from the State of Florida Office of the Attorney General and the Division of Florida Condominiums, Timeshares, and Mobile Homes regarding the production of such emails. Let’s take a look at the limited guidance we do have.

 

On March 6, 2002, the then-Chief Assistant General Counsel of the Department of Business and Professional Regulation (“DBPR”) issued an opinion that “[c]ondominium owners do have the right to inspect e-mail correspondences between the board of directors and the property manager as long as the correspondence is related to the operation of the association and does not fall within the… statutorily protected exceptions… [The DBPR does not have] regulations expressly requiring archiving e-mails, but… if the e-mail correspondence relates to the operation of the association property, it is required to be maintained by the association, whether on paper or electronically, under Chapter 718, Florida Statutes.”

 

In Humphrey v. Carriage Park Condominium Association, Inc., Arb. Case No. 2008-04-0230 (Final Order / Campbell / March 30, 2009), an arbitrator of the Division of Florida Condominiums, Timeshares, and Mobile Homes held that “…e-mails… existing… on the personal computers of individual directors… are not official records of the association… Even if directors communicate among themselves by e-mail strings or chains about the operation of the association, the status of the electronic communication on their personal computer would not change. Similarly, an e-mail to an individual director or to all directors as a group, addressed only to their personal computers, is not written communication to the association.” The arbitrator reasoned that “[t]his must be so because there is no obligation to turn on [the] personal computer with any regularity, or to open and read emails before deleting them.”

 

In Harbage v. Covered Bridge Condominium Association, Inc., Arb. Case No. 19-03-6413 (Emails Are Written Records of Association Order Re-Framing Affirmative Defenses / Simms / January 2, 2020), an owner challenged an association’s failure to provide records requested pursuant to §718.111(12), Florida Statutes. The owner requested to inspect emails between the association and its property manager from 2017–2019. The association refused to provide the records, arguing that the emails were not written records subject to disclosure nor were they written records that are printed in the ordinary course of business. The arbitrator in the case dismissed the association’s argument that the emails were not written records, citing Black’s Law Dictionary, 11th Edition (2019), which explicitly includes emails in the definition of a “writing.” Additionally, the arbitrator pointed to the fact that emails are accepted in litigation as records of regularly conducted business activity pursuant to §90.803(6)(a), Florida Statutes, to dismiss the association’s claim that the emails are not subject to inspection because they are not printed in the ordinary course of business. The arbitrator held that the association’s position was “untenable on both counts,” finding that “emails are a written record subject to disclosure to unit owners.”

 

Simply stated, if one were to rely on the guidance cited herein, then emails solely between board members, even a board majority, are not part of the official records, but emails between a board member(s) and the manager are part of the official records and subject to member inspection unless containing information that is otherwise privileged or confidential. All other emails not protected by privilege or other duty of confidentiality are also subject to member inspection.

 

Where does it end? What about text messages and WhatsApp? Will they, too, one day be subject to inspection? Why one without the other? Better still, if text messages are not subject to member inspection, why should emails be subject to inspection? If emails remain subject to inspection, should not phone calls between board members and managers be statutorily required to be recorded? Why not? Because such a requirement is absurd.

 

In addition, what is missing from today’s legislation are laws protecting the free flow of communication between board members and the manager. Also patently missing from today’s legislation is the ability of the association to require the member requesting the record inspection to prepay for the actual time and cost necessary to prepare the records for inspection.

 

So, while it may make sense for certain vendor emails to remain as records of the association subject to member inspection, it is this author’s opinion that emails between the board and the association’s manager should remain private property of the sender and recipient, most especially if the manager’s computer is provided by the management company and not the association. However, if emails between board members and managers are going to remain as records which must be produced, absent privilege and confidentiality requirements, then at a minimum the association should at least be allowed to fully recover its expenses incurred in the record inspection. Perhaps a present or future Florida legislator will sponsor a long overdue bill to provide the association the lawful right to do so.  

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Ever wondered how some associations got their sweet bulk cable or internet deals?

Ever wondered how some associations got their sweet bulk cable or internet deals?

  • Posted: Jun 05, 2021
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Ever wondered how some associations got their sweet bulk cable or internet deal? Well, now you can learn about it with this awesome, free webinar on June 11th.

Andrew Black, Esq., BCS from KBR joins Hotwire Communications for ‘How to Negotiate Telecommunications Contracts’.

Click the link to RSVP for free: https://zoom.us/webinar/register/WN_KHffyhMCRR6VYBimTy0BFw

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Vaccination ID’s To Require Or Not To Require, That Is The Question by KBR Legal

Vaccination ID’s To Require Or Not To Require, That Is The Question by KBR Legal

  • Posted: Apr 07, 2021
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Vaccination ID’s

To Require Or Not To Require, That Is The Question

 

Florida’s community association board members are wrestling with many amenity re-opening decisions these days. One such decision is whether or not to open the community clubhouse including the card rooms, bingo, and even off-Broadway like shows. As a part of that decision making process, board members may be considering requiring proof of vaccination as a pre-requisite to such use.

 

While ultimately a decision within the business judgment of the board, requiring proof of vaccination prior to allowing use of an association amenity is not recommended. Do you remember the ol’ adage, “no good deed goes unpunished?” Well, requiring proof of vaccination from the members prior to allowing use of the clubhouse, no matter how well intended, could likely lead to significant and costly problems for the association who fails to heed the warnings set out in this article.

 

When acquiring medical information of members, the board’s duty, pursuant to relevant law, is to keep such acquired medical information confidential. Requiring proof of vaccination to use amenities will no doubt lead to a significant breach of that duty.

 

Another reason not to require proof of vaccination is that doing so will lead to creating two classes of members. The vaccinated members who are allowed to use the amenities and the unvaccinated members who are not allowed to use the amenities. Yet, all members pay for access to use the amenities in proportion to their assessment obligation. Therefore, this practice could expose the association to adverse litigation from the upset unvaccinated members.

 

If the aforementioned two reasons are not sufficient to dissuade you, then consider this: A member may choose not to be vaccinated for religious reasons. In this situation, by requiring proof of vaccination the association will be exposing itself to a claim of religious discrimination.

 

If the association opens an amenity, then the amenity should be available to all members for use without consideration of vaccination. If that is a concern, then perhaps waiting a short while longer to open the clubhouse or other amenity makes the most sense. Remember, too, that when you do re-open to adhere to CDC protocols as may be appropriate for your community such as mask wearing, social distancing, and sanitizing. As a part of the re-opening procedure, please consult with your association’s attorney regarding the do’s and don’ts.

 

 

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The 2021 Florida Legislative Preview As Related to Community Associations The Good, The Bad and The Ugly

The 2021 Florida Legislative Preview As Related to Community Associations The Good, The Bad and The Ugly

  • Posted: Mar 22, 2021
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Welcome to Rembaum’s Association Roundup’s 2021 legislative preview. The 2021 legislative session began on March 2 and ends April 30. Not only are all of the Bills discussed below subject to multiple changes, but whether any of the Bills discussed below will become the law of the land remains to be seen. Unless otherwise clarified, the proposed legislation discussed below applies to condominium, cooperative, and homeowners’ associations.

 

House Bill 7 provides for relief from liability for Covid -19 related claims. This Bill provides protection from claims for damages, injuries, or death. While community associations are not specifically named in the legislation, corporations not- for- profit are included as are for profit business entities and charitable organizations. Corporations not- for- profit include the overwhelming majority of Florida’s community associations. At the time a plaintiff files a lawsuit at the courthouse, the plaintiff must also submit an affidavit signed by a physician actively licensed in the state of Florida which attests to the physician’s belief, within a reasonable degree of medical certainty, that the plaintiff’s Covid – 19 related damages, injury or death occurred as a result of the defendant’s acts or omissions. At this very early stage of the proceedings, admissible evidence is limited to the evidence demonstrating whether the defendant made a good faith effort to substantially comply with authoritative or controlling government issued health standards for guidance at the time the cause of action accrued. If the court determines that the defendant made such a good faith effort, then the defendant is immune from civil liability. If the court determines that the defendant did not make such a good faith effort, then the plaintiff’s case may proceed. However, absent at least gross negligence proven by clear and convincing evidence, the defendant is not liable for any act or omission relating to a Covid – 19 related claim (a very difficult burden for the plaintiff to accomplish).

 

Senate Bill 1638 provides for a new condominium fraud investigation pilot program to be created within the Florida Division of Condominium, Timeshares and Mobile Homes of the Department of Business and Professional Regulation. The pilot program’s purpose is to facilitate the Division’s investigation of condominium related to fraud and corruption and is being initially tested only in Broward, Miami-Dade, and Monroe Counties. As a part of the legislation, the Division will be required to hire three financial investigators, five investigators with law enforcement experience and three clerical employees. For the purposes of the pilot program all monies are to be made available from the Division’s existing funds. From this writer’s point of view, the Division already needs additional funding to carry out its current duties and responsibilities. This Bill, while no doubt well intended, creates additional financial burdens on the Division with no clear funding source available.

 

Senate Bill 56 provides for yet another opportunity for a delinquent owner to bring their delinquent account current and avoid having to pay attorney’s fees. If the association sends out a statement of account, the association is required to provide a statement of account that designates the name of the owner, the due date and amount of each assessment, the amount paid on the account, and the balance due. In essence, this Bill adds additional financial burdens on the rest of the association’s membership who timely pay their assessments. A careful reading of this legislation suggests that while attorneys’ fees cannot be collected for sending such a letter, management companies may be able to do so because they are specifically not precluded in the legislation from doing so.

 

This particular legislation is somewhat surprising because everyone who lives in an association is aware that assessments are due for the overwhelmingly most part, either monthly or quarterly. As a matter of course, management companies routinely send out late notices as well. This legislation accomplishes nothing more than creating additional legislative and financial hurdles prior to the Assocation being able to proceed in collections against delinquent owners.  The only members who benefit from this legislation are the delinquent owners while it punishes those who timely pay their assessments.

 

Senate Bill 1998 provides for additional rights of owners pertaining to value adjustment board decisions and disputes with the Association.  Should the association initiate such a challenge, by way of this legislation, the affected association members are not necessarily considered indispensable parties to the action. This is important protection so as to protect the association from unfair dismissals of such actions when all members are not names in the litigation.

 

This Bill also makes patently clear that any officer director or manager who knowingly solicits, offers to accept or except anything or service of value or kickback commits a felony of the 3rd degree which is punishable by up to five years in jail.

 

To the itemized list of what comprises the “official records” of the association, this Bill adds all bank statements, cancel checks and credit card statements, all invoices transaction receipts, deposit slips or other underlying documentation that substantiate any receipt or expenditure of funds by the association. In addition, this legislation provides that all official records must be maintained in a manner and format prescribed by Division rule so that they are easily accessible for inspection.

 

Presently, even if electronic records are stored on the website of the association, in the event of a member request for official records, pointing the requesting person to the records on the association’s website does not satisfy the current requirements making records available to owners. Senate Bill 1998 changes this to provide that the association may fulfill its obligations of providing access to the official records by directing the individual to the  website of the association’s so long as the records are posted on the website.

 

Of great concern is this next item set out in Senate Bill 1998 that will consume an inordinate amount of the manager’s (or a board member’s) time as related to each and every record request. In short, in response to a statutorily compliant written request to inspect records, the association must simultaneously provide an itemized list to the requester of all records made available for inspection and copying and provide a sworn affidavit in which the person facilitating the association’s compliance with the request attest to the veracity of the itemized list. The itemized list must also identify any of the associations records not made available. This list must be maintained by the association for seven years. The delivery by the Association of such an itemized list and affidavit creates a rebuttable presumption that the association complied with these requirements. As if it were not hard enough to find qualified board members to hold office, if this Bill passes into law, any director or member of the board or manager who knowingly, willfully, and repeatedly violates the aforementioned requirements will commit a misdemeanor of the second- degree. Repeatedly means two or more violations within a 12 month period. Moreover, any person who willfully and knowingly refuses to release or otherwise produce Association records with the intent to avoid or escape detection, arrest, trial or punishment for the commission of a crime or to assist another person with such avoidance or escape commits a felony of the 3rd degree punishable by up to five years in jail.

 

Senate Bill 630 primarily refers to condominium associations though, in a few instances it also references both cooperative and homeowners’ associations, too. This bill revises residential condominium unit owner insurance requirements by providing that if the condominium association’s insurance policy does not provide for rights of subrogation against the unit owner responsible for a casualty event, then the unit owner’s insurance policy MUST not contain subrogation rights against the association. There are those who believe that at present unit owners can subrogate claims against the condominium’s insurance policy   which then results in higher insurance fees to all owners. On the other hand, it can be argued that this particular piece of legislation will drive up the cost of insurance for all residential condominium unit owners because in many instances, they will not be in a position to subrogate their insurance claims against those actually responsible for having caused the damage.

 

The fee charged by a condominium association as related to the transfer of a unit will increase from a maximum of $100 to $150 and future increases in the fee that can be charged are now tied to the Consumer Price Index. This may offer some relief to Associations although it would be preferred that the bill allow the Association to charge the actual cost of the background check so as to ensure the Association is not out any money to conduct the background check.

 

In addition to making provision for electric vehicles, natural gas fuel vehicles are now included too. This Bill provides rights of owners to not only have a electric charging stations, but also natural gas charging stations.

 

Other than election and recall disputes, prior to institution of court litigation a party to a dispute must either petition the Division for non-binding arbitration or initiate a new process, pre-suit mediation. Arbitration is binding on the parties only if all the parties to the arbitration agree to be bound to it, in writing. A new mediation process will be available for parties in dispute to present the parties with an opportunity to resolve the underlying dispute in good faith and with a minimum expenditure of time and resources. The mediation proceedings must generally be conducted in accordance with the Florida Rules of Civil Procedure and can be used in lieu of the otherwise required mandatory non-binding arbitration process. This new type of pre-suit condominium mediation process follows the process set out in the homeowners’ association act. Remember, however, election and recall disputes are not available for mediation as those disputes have to be arbitrated by the Division or are subject to being heard in a local court of competent jurisdiction.

 

As to cooperative associations, a cooperative association may not require a member to demonstrate any purpose or state any reason for an official record request. A cooperative board member or committee member participating in a meeting via telephone, real time video conferencing or similar real time electronica or video communication counts toward quorum and such member may vote as it physically present.

 

As to homeowners’ associations, in addition to any of the authorized means of providing notice of a board meeting, the association may, by rule, adopt a procedure for conspicuously posting the meeting notice and agenda on the association’s website or an application (meaning an “app”) that could be downloaded on a mobile device. The meeting notice is also required to be physically posted on the Association property. Any rule adopted must in addition to other matters, must include a requirement that the association send an electronic notice to the members whose email addresses are included in the association’s official records (meaning the member opted in to receive their official notices from the association via email). The homeowners’ association ballots, sign in sheets voting proxies, all other papers, and electronic records relating to voting by partial owners must be maintained for at least one year after the date of the election, vote, or meeting. In addition, the homeowners‘ association must include in it with its official records, information the association obtains in a gated community in connection with guests visits to parcel owners or any other residence in the community.

 

Of interest, is a change in the manner in which a homeowners’ association can create restricted reserve accounts. The only method available will require the affirmative vote and approval of a majority of the total voting interests of the association. No longer included is the possibility that a developer could have initially created restricted reserves.

 

Also, as related to homeowners associations, should Senate Bill 630 become law, then any amendment to a governing document, rule or regulation which prohibits a parcel owner from renting his or her parcel, alters the authorized duration of a rental term, or specifies or limits the number of times the partial owner may rent his or her partial during a specified period, applies only to the parcel owner who consents, individually or through a representative, to the amendment, or a new parcel owner acquires title to the parcel after the effective date of the amendment. Notwithstanding, an association may amend its governing documents to prohibit or regulate rental durations that are for terms of less than six months and to prohibit a parcel owner from renting his or her parcel more than three times in a calendar year which amendments would apply to all parcel owners. In addition, none of the aforementioned would apply if the association has 15 or fewer parcels.

 

Recall actions for condominium, cooperative, and homeowner associations can be brought either to the Division of Condominium, or a court of competent jurisdiction.

 

As to emergency powers, as related to condominium, cooperative, and homeowners’ associations, the emergency powers are clarified to apply to a broader range of events such as the present Covid – 19 pandemic. In addition to board meetings, committee meetings, elections and membership meetings can be conducted in whole or in part by telephone, real time video conferencing or similar real time electronica or video communications. Associations can implement a disaster plan or emergency plan before, during or following the event village the state of emergency is declared. In addition to the advice of emergency management officials, now, associations can rely on advice from public health officials to determine whether the association property can be safely inhabited, accessed or occupied. In addition to taking action to mitigate further damages, the board can take action to mitigate further injury or contagion. Additional clarification is provided that during the state of emergency, the association cannot prohibit owners, their guests and agents or invitees from accessing a unit or the common elements for the purpose of ingress to an egress from the unit and when necessary in connection with the sale, lease or other transfer of title to a unit or for the health and safety of such person unless a governmental order or determination or public health directive from the centers for disease control and prevention has been issued prohibiting such access to the unit.

 

House Bill 21 provides that a person or party may not bring a cause of action for a material violation that exists within a completed building structure or facility which may reasonably result or has resulted in physical harm to a person or significant damage to the performance of a building or a system unless the party has submitted a claim for the alleged material violation under an applicable warranty and the warranty provider denies the claim or offers a remedy that is unsatisfactory to the person for a party within the time limit provided for in the warranty.

 

Senate Bill 1966 would effectuate a change to qualifications to be a board member. Presently, if a potential candidate is delinquent in a monetary obligation, they are not qualified to be a candidate. If this bill becomes a law, then being delinquent in any monetary obligation is no longer relevant. Rather, the potential candidate would have to be delinquent in the payment of an “assessment”. In addition, in an effort to describe when an owner is actually delinquent, if payment is not made by the due date as specifically identified in the declaration of condominium bylaws or articles, then the payment is delinquent however if it due date is not specified then, the due date is the first day of the assessment period. On a different note, the condominium association’s annual budget must be proposed to the unit owners and adopted by the Board of Directors no later than 30 days before the beginning of the fiscal year.

 

Senate Bill 1490 is perhaps the most risky piece of legislation this entire legislative session, in this author’s sole opinion, in that it allows condominium associations, through a vote of the owners, the ability to invest the otherwise sacrosanct restricted reserve accounts with an investment advisor. While the legislation attempts to minimize risk by requiring the association to adopt a written investment policy annually, it nevertheless allows the investment advisor to invest funds not deposited into depository accounts. While the investment advisor is held to the high standard of being a “fiduciary” nevertheless the reserve monies will be at a much higher risk of loss.

 

Stay tuned to learn if these Bills become law. Remember, there is a lot of time left in the legislative session to further turn these Bills into legislative sausage.

Robert Kaye is back live, this evening at 6pm Eastern on ‘Ask the Experts’. Call in with your community association-related questions during the show!

Robert Kaye is back live, this evening at 6pm Eastern on ‘Ask the Experts’. Call in with your community association-related questions during the show!

  • Posted: Mar 04, 2021
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Robert Kaye is back live, this evening at 6pm Eastern on ‘Ask the Experts’. Call in with your community association-related questions during the show!

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