Don’t Want Your Association to Be the Next Rental Community? by KBRLegal

Posted: Nov 16, 2021
By: KBR Legal
Comments: Comments Off on Don’t Want Your Association to Be the Next Rental Community? by KBRLegal

Don’t Want Your Association to Be the Next Rental Community?

Many community associations throughout Florida struggle to deal with the increase in overnight and short-term rentals caused by the proliferation of online websites such as VRBO and Airbnb. As such, many communities fear being turned into “rental communities,” especially with so many large corporations buying homes in the South Florida area for the express purpose of renting them. These transient rentals can present nuisance and safety issues and can easily change the composition of your community. The good news, however, is that there are steps your association can take to help protect the community from becoming the next transient rental community by having the necessary language in the declaration of restrictions, as further discussed below.

There are two types of restrictions which work together to help achieve this goal. First, corporate (or business entity) ownership must be fully addressed. Second, specific criteria for approval of purchasers, tenants, and occupants residing in the community for longer than 30 days (or such other time period) must be adopted. Finally, a brief discussion regarding the applicability of the statutory provisions set out in Chapter 718 of the Florida Statutes, more commonly referred to as the Condominium Act, and Chapter 720 of the Florida Statutes, more commonly referred to as the Homeowners Association Act, is in order.

To avoid ownership for purely investment purposes, an amendment to the declaration that prohibits ownership by a corporation, limited liability company, partnership, trust, or other entity or company should be considered. However, certain carve-outs are recommended to ensure that the owners can use these types of entities for their estate planning purposes, to ensure that the rights of mortgagees are not adversely affected, and to ensure the association still has the authority to purchase units as a result of foreclosure or in other appropriate circumstances. In addition to restrictions on ownership, the association can consider adopting an amendment restricting the number of units that can be owned by a person or entity.

The association must ensure that its authority to approve transfers of title to lots and units is not an “unreasonable restraint on alienation.” In other words, the association must have the express authority to deny transfers of title, and the restrictions on such sales must be reasonable.

In Aquarian Foundation v. Sholom House, 448 So.2d 1166 (Fla. 3d DCA 1984), Florida’s Third District Court of Appeal considered the validity of a condominium association’s transfer restrictions. In its analysis, the court noted that “restrictions on a unit owner’s right to transfer his property are recognized as a valid means of insuring the association’s ability to control the composition of the condominium as a whole.” The court explained that while an association can adopt restrictions on transfers, that right must be balanced with the individual owner’s right to transfer his property. In Aquarian Foundation, the association had the right to deny a sale “arbitrarily, capriciously, and unreasonably” with no obligation to provide an alternate purchaser in the event of such denial. The court held that the association’s authority to deny for any reason whatsoever without the obligation to provide an alternate purchaser was an unreasonable restraint on alienation. However, the court explained that while a condominium association has “considerable latitude in withholding its consent to a unit owner’s transfer, the resulting restraint on alienation must be reasonable.” Therefore, we can glean from this case that a provision authorizing the association to approve or disapprove transfers is acceptable where the restraint is reasonable.

In 1993 Florida’s Fourth District Court of Appeal considered another challenge to an association’s approval authority. In Camino Gardens Association, Inc., v. McKim, 312 So.2d 636 (Fla. 4th DCA 1993), the declaration prohibited the sale, lease, or occupancy of any lot in the subdivision to anyone other than a duly admitted member in good standing of the association. The court held that because the restriction prohibited transfer to anyone except existing owners, the restriction was an unreasonable restraint on alienation and was invalid.

In Coquina Club v. Mantz, 342 So.2d 112 (Fla. 2d DCA 1977), Florida’s Second District Court of Appeal considered an age restriction contained in the declaration (which was lawful at the time). The applicant did not meet the age requirement and was therefore “facially disqualified.” The court held that, in light of the facial disqualification, the association did not have an obligation to provide the otherwise required substitute purchaser.

In light of the foregoing case law, any provision which grants the association limitless power of denial is likely invalid. If the association has the right to deny a purchaser, but the declaration is void of any standards by which such decisions should be made, the restriction can still be easily found to be invalid. However, if the declaration requires the association provide a substitute purchaser or allows for denial based on “good cause,” the provision is likely valid and enforceable. If an association has the right to deny “for good cause,” then to withstand judicial scrutiny, the governing documents, preferably the declaration, should provide standards as to what “for good cause” means.

As discussed above, the first step is to ensure that the declaration provides authority for the screening and approval process. The second step is to ensure there is meaningful written criteria by which to evaluate prospective purchasers, tenants, and even occupants residing for longer than 30 days (or other time period). If the declaration contains general language for purchaser and tenant approval but does not provide the standards and procedures necessary to make such a decision, then the association’s approval authority is vulnerable to judicial challenge and likely faces an uphill and expensive court battle. The association may be interested in adopting criteria, allowing rejection based on “good cause,” such as the following:

A record of financial irresponsibility
A guilty plea or conviction of a crime of moral turpitude
A history of being a “bad tenant”
A false statement on the application
Failure to comply with the request of the board of directors for a personal interview

(Please note this abbreviated list was provided for example purposes only and should not be utilized by any association without consultation with the association’s lawyer as additional language is necessary.)

Providing specific written criteria on which the association can base its denial of a proposed sale, lease, or other transfer helps protect the association from claims that it is not acting reasonably in denying a transfer. However, before disapproving a proposed sale or lease, the association should be sure that the disapproval does not run afoul of the provisions of the Fair Housing Act at the federal, state, and county levels. The federal Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status, and disability. State law and, sometimes, local ordinances provide additional protected classes.

While the authority to approve lessees is an important step, adopting additional leasing restrictions addressing the frequency and type of leases permitted in the community should also be included in the declaration if these issues are a concern for the community. Associations that would like to minimize the number of short-term leases might consider amendments to the declaration limiting leasing as follows:

No lot or unit may be rented or leased for a 12-month period (o longer) following the closing date (or date of recorded deed) of a sale of that lot or unit.
Owners are restricted to one rental or lease per calendar year.
After approval by the association, only entire lots or units can be rented, provided occupancy is only by the lessee and those individuals listed as occupants in the lease agreement.
No rooms may be rented, and no transient tenants may be accommodated.
No owner may list the owner’s lot or unit on any website (e.g., and without limitation, Airbnb, VRBO), print or online publication advertising the owner’s lot or unit for short-term rental
No lot or unit may be subleased.

Statutory provisions must be considered as well regarding whether a new lease restriction amendment will apply to all owners or only those who vote in favor of the amendment or who acquire title to their unit or home after the effective date of the amendment (these issues will need to be reviewed with association counsel). For instance, we note the following:

As to condominium associations, effective on October 1, 2004, the Florida legislature first adopted §718.110(13), which has since been amended, and this section provides that “n 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 that amendment.”

As to homeowners associations, effective on July 1, 2021, the Florida legislature adopted §720.306 (1)(h) which provides that, “xcept as otherwise provided in this paragraph, any governing document, or amendment to a governing document, that is enacted after July 1, 2021, and that prohibits or regulates rental agreements applies only to a parcel owner who acquires title to the parcel after the effective date of the governing document or amendment, or to a parcel owner who consents, individually or through a representative, to the governing document or amendment. …Notwithstanding… an association may amend its governing documents to prohibit or regulate rental agreements for a term of less than 6 months and may prohibit the rental of a parcel for more than three times in a calendar year, and such amendments shall apply to all parcel owners.”

As you have likely discerned, the leasing restrictions of the Homeowners Association Act are broader than those set out in the Condominium Association Act. However, the real issue is whether these provisions apply to all associations that are already in existence or only to those that have adopted “Kaufman language” into their declaration and those declarations that are recorded after the effective date of the statute.

Kaufman language refers to having a provision in the declaration that it is subject to the relevant Chapter “as it is amended from time to time.” If the declaration contains such language, then there is no question that the statutory leasing provisions do apply. On the other hand, if there is no Kaufman language set out in the declaration, then what? There are those who take the position that these statutory leasing provisions are “procedural;” if so, then they would apply to an existing declaration. But, if the statutory leasing provisions are changing existing “substantive rights,” then, absent Kaufman language, the statutory provisions likely do not apply to the declaration at issue. By way of an oversimplified explanation, this is because the declaration is a contract, and the legislation in effect at the time a contract is executed is the law to which the contract is subjected.

Thus, we must ask the question, are the statutory leasing provisions disturbing existing substantive rights? Likely so, though it may take an appellate court decision to bring needed clarity. Clearly, this is an issue which must be discussed with the association’s legal counsel.

To ensure your association is properly protected against unwanted transient rentals, you should consult with association’s legal counsel who can review the governing documents to ensure necessary language is included and make recommendations to better protect the association from the likes of VRBO, Airbnb, and other short-term rentals, and at the same time shore up the association’s approval powers over owners, tenants, and occupants.

Electronic Board of Directors and Membership Meetings in a Post-Covid-19 World

Posted: Oct 26, 2021
By: KBR Legal
Comments: Comments Off on Electronic Board of Directors and Membership Meetings in a Post-Covid-19 World

Electronic Board of Directors and Membership Meetings in a Post-Covid-19 World

Well, it is not quite a post-COVID-19 world yet, but hopefully, it will be one day soon. We are, however, living in a post-governor-ordered-state-of-emergency world, meaning that the emergency powers granted to condominium, cooperative, and homeowners’ associations’ boards of directors by virtue of the governor’s emergency orders have come to an end, with this caveat: The emergency authority granted to community association boards of directors after the expiration of the governor’s emergency orders is, generally speaking, “limited to that time reasonably necessary to protect the health, safety, and welfare of the association and the owners and their family members, tenants, guests, agents, or invitees, and to mitigate further damage and make emergency repairs.” As such, each passing day diminishes the arguments supporting a board’s reasonable reliance on the utilization of these emergency powers. However, given the recent uptick in Covid cases plus ever evolving CDC guidance issued towards the end of July, 2021, some community associations may consider relying on the continuance of the emergency powers provision. If so, it is strongly recommended that such a community association receive proper guidance from its legal counsel.

Interestingly, until July 1, 2021, electronic meetings of community association members and boards of directors were not specifically addressed in the legislative grant of emergency powers which could be used during a governor-declared state of emergency. Rather, the emergency powers of days gone by provided that association boards of directors could conduct board meetings and membership meetings with notice given in as practicable a manner as possible, including publication, radio, United States mail, the Internet, public service announcements, and conspicuous posting on the common property or any other means the board deems reasonable under the circumstances. Notice of board decisions may be similarly communicated. In addition, the board could cancel and reschedule any association meeting. Under certain circumstances, decisions could be made on the spot, so to speak, without the need for a noticed meeting. The legislative emergency powers can be found in §718.1265, §719.128, and §720.316 of the Florida Statutes for condominium, cooperative, and homeowners’ associations, respectively. Nowhere in the pre-July 1, 2021 version of the emergency powers legislation did these powers set forth the clear right of the association to conduct solely electronic board and membership meetings, though due to life safety reasons, such power was inferred. However, it should be noted that effective July 1, 2021 the emergency powers legislation was significantly revised to provide for the use of electronic meetings during a governor declared state of emergency.

BOARD MEETINGS

With this as our backdrop, without a declared state of emergency can community associations continue to hold electronic board meetings via platforms such as zoom? Let us examine the relevant legislation that bears on this important inquiry. As to condominium board meetings,

board or committee member’s participation in a meeting via telephone, real-time videoconferencing, or similar real-time electronic or video communication counts toward a quorum, and such member may vote as if physically present. A speaker must be used so that the conversation of such members may be heard by the board or committee members attending in person as well as by any unit owners present at a meeting… Meetings of the board of administration at which a quorum of the members is present are open to all unit owners… The right to attend such meetings includes the right to speak at such meetings with reference to all designated agenda items… [§718.112(2), Fla. Stat. (2020), Emphasis added]. Note that similar provisions are provided for cooperative associations in §719.106), Fla. Stat. (2020).]

As to homeowners’ association board meetings,

meeting of the board of directors of an association occurs whenever a quorum of the board gathers to conduct association business. Meetings of the board must be open to all members, except for meetings between the board and its attorney with respect to proposed or pending litigation where the contents of the discussion would otherwise be governed by the attorney-client privilege. A meeting of the board must be held at a location that is accessible to a physically handicapped person if requested by a physically handicapped person who has a right to attend the meeting… Members have the right to attend all meetings of the board. The right to attend such meetings includes the right to speak at such meetings with reference to all designated items. [§720.303(2), Fla. Stat. (2020), Emphasis Added.]

In addition, the “Florida Not For Profit Corporation Act,” set out in Chapter 617, Florida Statutes, which applies, in large part, to condominium, cooperative, and homeowners’ associations, so long as not in conflict with Chapters 718, 719, and 720 of the Florida Statutes (and certain other exceptions not relevant to this analysis), provides that,

Unless the articles of incorporation or the bylaws provide otherwise, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. [§617.0820(4), Fla. Stat. (2020).]

Mixing all of these ingredients together so that they all have meaning clearly implies that the community association board can conduct its board meetings via electronic means, like Zoom. However, in our opinion, a more prudent approach is to also make on-site accommodations available to those who wish to attend in person. This can be easily accomplished by ensuring the meeting is noticed in a physical location where the non-board member owners can listen and participate through use of an on-site speaker phone or computer that is preferably provided or otherwise arranged for by the association. (Reminder that Zoom also has a call in feature for those who do not access to, or are not comfortable with, a computer).

MEMBERSHIP MEETINGS

As to all community association membership meetings, members have a right to speak at meetings of the membership. Pursuant to §718.112(2)(d)7 and §719.106(1)(d)4, Florida Statutes, members of condominium and cooperative associations, respectively, have the right to participate in meetings of the unit owners with reference to all designated agenda items. Pursuant to §720.306(6), Florida Statutes, members of a homeowners’ association have the right to speak with reference to all items opened for discussion or included on the agenda. During elections and other meetings where a vote of the membership is at issue, members should be able to observe the tallying of ballots.

As to condominium associations, membership meeting requirements include the following:

An annual meeting of the unit owners must be held at the location provided in the association bylaws and, if the bylaws are silent as to the location, the meeting must be held within 45 miles of the condominium property… [§718.112(2)(d)1, Fla. Stat. (2020).]

As to cooperative associations, membership meeting requirements include the following:

There shall be an annual meeting of the shareholders… The bylaws must provide the method for calling meetings, including annual meetings… [§719.106(1)(d), Fla. Stat. (2020).]

As to homeowners’ associations, membership meeting requirements include the following:

The association shall hold a meeting of its members annually for the transaction of any and all proper business at a time, date, and place stated in, or fixed in accordance with, the bylaws. The election of directors, if one is required to be held, must be held at, or in conjunction with, the annual meeting or as provided in the governing documents… [§720.306(2), Fla. Stat. (2020).]

Furthermore, and of great importance, there is the following provision from the Florida Not For Profit Corporation Act, a/k/a Chapter 617, Florida Statutes:

If authorized by the board of directors, and subject to such guidelines and procedures as the board of directors may adopt, members and proxy holders who are not physically present at a meeting may, by means of remote communication participate in the meeting and be deemed to be present in person and vote at the meeting if:

1) the corporation implements reasonable means to verify that each person deemed present and authorized to vote by means of remote communication is a member or proxy holder; and

2) the corporation implements reasonable measures to provide such members or proxy holders with a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members, including an opportunity to communicate and to read or hear the proceedings of the meeting substantially concurrent with the proceedings, and

3) if any member or proxy holder votes or takes other action by means of remote communication, a record of that member’s participation in the meeting must be maintained by the corporation in accordance with §617.1601.

[§617.0721(3), Fla. Stat. (2020); internal numbering, punctuation, capitalization, and formatting removed; emphasis added.]

Therefore, the members at a membership meeting can participate electronically so long as the board has authorized it and has adopted appropriate procedures. Consultation with the association’s attorney is strongly encouraged, most especially if there will be any “live” voting at the membership meeting.

How members vote at an electronic membership meeting when the member attends virtually is an interesting question. Presently, there is no definitive procedure set out in the law for the member to cast their vote “live” during a zoom meeting. Rather, §617.0721(3) Fla. Stat. (2020), places the burden on the board of directors to adopt procedures in this regard. Obviously, if your association has 400 members who all appear virtually at the membership meeting, live voting for all 400 members will prove to be logistically difficult, if not impossible. It may be far easier to have the members vote i) in advance by proxy, limited proxy, absentee ballot as the case may be, or, ii) if adopted by the association, vote electronically pursuant to the procedures as set out in §718.128, §719.129, or §720.317 (Fla. Stat. 2020). A hybrid approach could also be utilized where the association provides for electronic voting and proxy voting prior to the meeting and then only the remaining few voters who have yet to cast their ballot could cast their vote “live” during the meeting, subject to the requirements of §617.0721(3).

Practice tip 1: Remember, electronic voting can be used whenever a membership vote is needed, even if the meeting does not have a zoom type option for attendance so long as the association has followed the requirements to provide for electronic voting.

Practice tip 2 (For Homeowners’ Associations): If your association’s governing documents require or otherwise allow nominations from the floor of the election meeting, consider amending and removing this provision from the governing documents to clear the way for an electronic membership meeting and election.

IN SUMMARY

Perhaps the initial questions phrased above could be better asked as follows: Absent a declared state of emergency can a community association hold board and membership meetings exclusively via an electronic platform, such as Zoom? Unfortunately, this question has not been satisfactorily addressed by the legislature or the Florida Courts. However, in our opinion, the safer approach, and the one that will avoid the potential for a successful legal challenge by an owner, is to avoid holding meetings exclusively via Zoom when there is no declared state of emergency. Consider using the hybrid approach discussed above where both a physical location is provided along with an electronic component such as Zoom and where members are strongly encouraged to attend and participate electronically.

Can community association board meetings and membership meetings be both electronically and at a physical location for those that want to attend in person even if the business is primarily conducted electronically? The answer is “yes”, so long as certain procedural safeguards are put into place. e.g., the ability of the membership watching via Zoom to fully observe the counting of ballots.

Another approach is to consider amending the association’s bylaws to provide for electronic only board and membership meetings. However, doing so has not yet been legally tested in the Florida courts. Also, remember, too, that a homeowners’ association must provide for a physical location for its board meeting, if requested by a handicapped individual. Also, as these matters are not fully settled in the law, your association’s lawyer may have a different opinion and advise that the association may have electronic board and membership meetings without the need for a physical location.

This journey into the foray of electronic meetings demonstrates a clear need for the Florida Legislature to adopt legislation to make clear that both board and membership meetings may take place electronically without the need to also simultaneously provide for a physical location, most especially so long as the association provides a communal device on association property for not-so-tech-savvy members to observe and participate in the meeting. After all we are blessed to be living in the 21st century. Let’s take advantage of it and add a few tech savvy legislative provisions to our laws governing community associations.

It is recommended you consult with your association legal counsel on the adoption of reasonable rules to ensure your virtual/electronic meetings run smoothly while also ensuring that they are in compliance with the association’s governing documents and Florida Statutes, and for further discussion regarding amending the governing documents of the association to provide clear authorization for electronic board and membership meetings.

The Kaye Bender Rembaum Team Remains Available To You and Your Community Association

Visit KBRLegal.com for awesome free resources, including 2021 Legislation, news with Legal Morsels and Rembaum’s Association Roundup, and our Event Calendar, including upcoming free classes.

Tags: Condo and HOA Laws, Management News, Members Articles

Is Your Association Prepared? Expect Supply Shortages – KBR Legal

Posted: Oct 16, 2021
By: KBR Legal
Comments: Comments Off on Is Your Association Prepared? Expect Supply Shortages – KBR Legal

Is Your Association Prepared?

Expect Supply Shortages

There’s news once again reporting food and product supply shortages are on the horizon, if not already here, due to what can only be described as a logistics disaster. This morning’s news reported that there are thousands of shipping crates snarled in a logistical nightmare waiting to be off loaded with no relief in sight. One news source reported 250,000 crates are waiting to off load. While no one is yelling “fire in a crowded theater,” (yet) it likely makes sense to get ahead of your association’s inventory needs. That said, hoarding is never a good idea. But, keeping extra inventory on hand may make sense until the supply chains are working correctly again.

Sources for the following include CBS News, the Wall Street Journal and Axios:

“American families are going to face a two-pronged assault:

1. Empty shelves at toy and grocery stores
2. Inflated prices on the toys and groceries that are available

At this very moment, there are 250,000 shipping containers stuck at sea off the east and west coasts, waiting to be unloaded and it could be months before they get to store shelves. But Biden is presiding over one of the biggest supply chain bottlenecks since WWII:

Ships cant dock because ports are full
Ports are full because there aren’t enough truck drivers to take the shipping containers away
When truckers do arrive, the ports are poorly staffed and they can’t offload fast enough, resulting in truck drivers who used to pick up 20 loads/week, now only able to take six
The cost of shipping a container from China to the U.S. is now $20,000, four times higher than this time last year.

It’s already begun: Stores across the country are already restricting supplies. Try not to have flashbacks to March 2020, but Costo and Walmart have announced they are limiting sales of toilet paper in some stores. And around the country, there are shortages of goods on shelves in Target, Costco, Home Depot, and Sears.

Warning about your Christmas feast: Axios is reporting that food supplies will also be impacted: “Grocery stores could have limited quantities of a number of products heading into the holidays after some of the country’s biggest food manufacturers say they’re short on supply.”

The Boy Scout motto “Be Prepared” comes to mind!

Rembaum’s Association Roundup

The community association legal news that you can use!

The free e-magazine for Community Association Managers, Board Members, Owners & Developers

Have an association related question? Find your answer at

RembaumsAssociationRoundup.com

Condo Board Member Certification via Zoom on October 22nd

Kaye Bender Rembaum offers free certification courses for homeowners’ association and condominium association board members. Please click here for more information!

Tags: Board of Directors, Florida Rising Magazine, Management News

New Requirements For Collection of Delinquent Assessments

Posted: Oct 08, 2021
By: KBR Legal
Comments: Comments Off on New Requirements For Collection of Delinquent Assessments

Requirements For Collection of Delinquent Assessments

Robert L. Kaye, Esq., BCS | Legal Morsels

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.

Tags: Condo and HOA Laws, Management News

It’s the Manager’s Fault, Or Is It? by KBR Legal

Posted: Oct 05, 2021
By: KBR Legal
Comments: Comments Off on It’s the Manager’s Fault, Or Is It? by KBR Legal

It’s the Manager’s Fault, Or Is It?

by KBR Legal

Few professions have more demands placed upon them than that of the Florida licensed community association manager (CAM). Depending on whom you ask, the CAM is the organizer, rules enforcer, keeper of secrets (meaning confidential and statutorily protected information not limited to the medical record of owners and attorney-client privileged information), best friend, the “bad guy” (a frequent misconstruction), and the first person in the line of fire when things go wrong; in other words, the one who takes all the blame and gets little credit when things go right.

When things at the association go wrong, what comment is most likely heard? “It’s the manager’s fault!” But, is it? Unless the manager failed to carry out a lawful directive from the board, breached a management contract provision, or violated a Florida statute, then in all likelihood, the manager has no culpability. CAMs are licensed by the State of Florida pursuant to Part VIII of Chapter 468 of the Florida Statutes, and there are statutory standards by which CAMs must conduct themselves.

Pursuant to §468.4334, Florida Statutes, “ community association manager or a community association management firm is deemed to act as agent on behalf of a community association as principal within the scope of authority authorized by a written contract or under this chapter. A community association manager and a community association management firm shall discharge duties performed on behalf of the association as authorized by this chapter loyally, skillfully, and diligently; dealing honestly and fairly; in good faith; with care and full disclosure to the community association; accounting for all funds; and not charging unreasonable or excessive fees.”

As set forth herein, statutory standards provide guidance to CAMs as to how they should conduct themselves. They must discharge their duties with skill and care and in good faith. They must act with loyalty to their association employer and deal with the association both honestly and fairly. They must provide full disclosure, which can be interpreted as both keeping the board informed of current events and providing disclosures of any conflict of interests. They must be able to account for all funds, too, which means both assessment income and expenditures; in other words, they must mind the budget.

Best practices for CAMs include becoming extremely familiar with the governing documents of the association (including the declaration, articles of incorporation, bylaws, and rules and regulations) and the financials of the association, walking the physical property, engaging with their team and residents, as well as providing weekly status updates to the board regarding all ongoing association business. If you are a CAM and do these things, then you have an opportunity to shine and stand head and shoulders above your peers and competition. This weekly status report is an excellent communication tool yet seems to be a rarity. CAMs should also make themselves available to owners. However, when an owner becomes offensive or insulting, the CAM should politely and firmly request that the owner communicate respectfully and in a professional manner. A CAM should always be financially transparent and should be extremely familiar with the management contract to fully understand her obligations and authority; for example, the limitation to spend association funds. Finally, the CAM should strive to keep a written record of her activities.

The two most obvious and biggest ways to get in trouble include committing acts of gross misconduct or gross negligence in connection with the profession or contracting on behalf of an association with any entity in which the CAM has a financial interest that is not disclosed. Disciplinary actions against a CAM fall under the purview of the Florida Department of Business and Professional Regulation (DBPR). Section 455.227, Florida Statutes, governs grounds for discipline, penalties, and enforcement.

For example, the following activities constitute grounds for which disciplinary actions may be taken by the DBPR (this list is not all inclusive): (i) making misleading, deceptive, or fraudulent representations in or related to the practice of the CAM’s profession; (ii) intentionally violating any rule adopted by the DBPR; (iii) being convicted or found guilty of, or entering a plea of guilty or nolo contendere (“I do not wish to contend”) to, a crime in any jurisdiction which relates to the practice of, or the ability to practice, a CAM’s profession; (iv) having been found liable in a civil proceeding for knowingly filing a false report or complaint with the DBPR against another CAM; (v) attempting to obtain, obtaining, or renewing a license to practice a profession by bribery, by fraudulent misrepresentation, or through an error of the DBPR; (vi) failing to report to the DBPR any person who the CAM knows is in violation of the laws regulating CAMs or the rules of the DBPR; (vii) aiding, assisting, procuring, employing, or advising any unlicensed person or entity to practice a profession contrary to law; (viii) failing to perform any statutory or legal obligation; (ix) making or filing a report which the licensee knows to be false; (x) making deceptive, untrue, or fraudulent representations in or related to the practice of a profession or employing a trick or scheme in or related to the practice of a profession; and (xi) performing professional responsibilities the licensee knows, or has reason to know, the licensee is not competent to perform.

The Florida Administrative Code, in Rule 61E14-2.001, also provides standards for professional conduct which are deemed automatically incorporated as duties of all CAMs into any written or oral agreement for community association management services. A CAM must adhere to the following standards:

comply with the requirements of the governing documents by which a community association is created or operated
only deposit or disburse funds received by the CAM or management firm on behalf of the association for the specific purpose or purposes designated by the board, community association management contract, or the governing documents of the association
perform all community association management services required by the CAM’s contract to professional standards and to the standards established by §468.4334(1), Florida Statutes
in the event of a potential conflict of interest, provide full disclosure to the association and obtain authorization or approval; and
respond to, or refer to the appropriate responsible party, a notice of violation or any similar notice from an agency seeking to impose a regulatory penalty upon the association within the timeframe specified in the notice.

In addition, during the performance of community association management services pursuant to a contract with a community association, a CAM cannot withhold possession of the association’s official records or original books, records, accounts, funds, or other property of the association when requested in writing by the association to deliver the foregoing to the association upon reasonable notice. However, the CAM may retain those records necessary to complete an ending financial statement or report for up to 20 days after termination of the management contract. Additionally, a CAM cannot (i) deny or delay access to association official records to an owner, or his or her authorized representative, who is entitled to inspect and copy the association’s official records within the timeframe and under the applicable statutes governing the association; (ii) create false records or alter the official records of an association or of the CAM except in such cases where an alteration is permitted by law (e.g., the correction of minutes per direction given at a meeting at which the minutes are submitted for approval); or (iii) fail to maintain the records for a CAM, management firm, or the official records of the association as required by the applicable statutes governing the association.

How do you know if your association requires a licensed community association manager? Pursuant to §468.431, Florida Statutes, if the association has 10 or more units or has a budget of $100,000 or more and the person is conducting one or more of the following activities in exchange for payment, the person must be a licensed CAM:

controlling or disbursing funds of a community association
preparing budgets or other financial documents for a community association
assisting in the noticing or conduct of community association meetings
determining the number of days required for statutory notices
determining amounts due to the association
collecting amounts due to the association before the filing of a civil action
calculating the votes required for a quorum or to approve a proposition or amendment
completing forms related to the management of a community association that have been created by statute or by a state agency
drafting meeting notices and agendas
calculating and preparing certificates of assessment and estoppel certificates
responding to requests for certificates of assessment and estoppel certificates
negotiating monetary or performance terms of a contract subject to approval by an association
drafting pre-arbitration demands
coordinating or performing maintenance for real or personal property and other related routine services involved in the operation of a community association, or
complying with the association’s governing documents and the requirements of law as necessary to perform such practices.

However, a person who performs clerical or ministerial functions under the direct supervision and control of a CAM or who is charged only with performing the maintenance of a community association and who does not assist in any of the management services described above is not required to be licensed.

So, whose fault is it when things go awry? A CAM’s role is far different than that of a rental complex manager who often has decision-making authority. The CAM does not have that same type of decision-making authority. The CAM must take direction from the board and perform pursuant to the obligations set out in the management agreement and Florida law. It is the board of directors of the community association that actually makes the decisions. So, while the uninformed might blame the CAM, you now know that the buck stops with the board of directors. If you have further questions regarding a CAM’s responsibility, then please discuss this with your association’s lawyer.

Tags: Condo and HOA Laws, Management News

The 2021 Florida Legislature was busy indeed. This year’s new legislation brings tremendous clarifications of existing laws and new laws to Florida’s community associations.

Posted: Sep 27, 2021
By: KBR Legal
Comments: Comments Off on The 2021 Florida Legislature was busy indeed. This year’s new legislation brings tremendous clarifications of existing laws and new laws to Florida’s community associations.

The 2021 Florida Legislature was busy indeed. This year’s new legislation brings tremendous clarifications of existing laws and new laws to Florida’s community associations. All of the bills discussed herein were approved by the Governor, and are now in effect (unless otherwise noted). To view the bills that were passed into law, please visit kbrlegal.com and click on the “2021 Legislative Update” on our homepage. A printable version of this article is available HERE.

I. Condominium, Cooperative and Homeowners’ Associations

1) Senate Bill 602, effective May 7, 2021, provides additional clarification for already existing laws in Chapter 617, Fla. Stat., known as the Florida Not For Profit Corporation Act.

a) §617.0725, Fla. Stat., clarifies that amendments to the articles of incorporation and bylaws of condominium, cooperative, and homeowners associations which effect or impose a quorum or voting requirement greater than the general quorum or amendment vote requirement are not required to be approved by the greater quorum or voting requirement then in effect or proposed to be adopted when voting to lower the threshold.

b) §617.0825, Fla. Stat., adds organizing committees established under §720.405, Fla. Stat. (covenant revitalization), to the existing list of condominium, cooperative, and homeowners associations exceptions to the board committee and advisory committee requirements of §617.0825.

c) §617.1703, Fla. Stat., further clarifies existing law that in the event of conflict between the Florida Not For Profit Corporation Act and Chapter 718 (condominiums), Chapter 719 (cooperatives), Chapter 720 (homeowners associations), and Chapter 723 (mobile home parks), the provisions of those specific chapters apply over that of the Florida Not For Profit Corporation Act.

2) House Bill 463 provides an exemption for certain community associations from the requirements of Chapter 514, Fla. Stat., regulating public swimming pools.

(a) §514.0115, Fla. Stat., provides that “pools serving homeowners associations and other property associations which have no more than 32 units or parcels and are not operating as public lodging establishments are exempt from supervision” under Chapter 514 except for supervision necessary to ensure water quality and compliance with §514.0315 (required safety features), and are subject to §514.05 (denial, suspension, or revocation of permit and administrative fines) and §514.06 (injunctions).

II. Condominium and Cooperative Associations

1) House Bill 649 provides associations regulated by Chapters 718 and 719, Fla. Stat., certain rights and obligations as related to ad valorem tax assessment challenges.

(a) §194.011, Fla. Stat., pertains to ad valorem tax assessment challenges and is amended as follows:

i. Confirms the right of associations regulated by Chapters 718 and 719, Fla. Stat., to challenge ad valorem tax assessments.

ii. Requires that an association send a notice of its intent to petition the value adjustment board to all owners which notice must include a statement that by not opting out of the petition, the owner agrees that the association represents that owner in any related proceedings without the need for the owner to be named or joined as a party.

iii. Perfects the right of the association that has filed a single joint petition to seek judicial review or appeal a decision and continue to represent the owners in any related proceedings.

(b) §194.181, Fla. Stat., pertains to any tax assessment challenge and is amended as follows:

i. In any case brought by the property appraiser relating to a value adjustment board decision on a single joint petition filed by an association, the association is the only required party defendant (meaning, the individual owners are not required to be named as parties).

ii. Once the association receives a complaint filed by the property appraiser, it must provide notice to all owners that they may (i) elect to retain their own counsel, (ii) choose not to defend the appeal, or (iii) be represented by the association.

III. Condominium Associations

1) As to condominium associations, Senate Bill 56 provides the following changes:

(a) §718.111, Fla. Stat., is amended to add “all acknowledgments made pursuant to §718.121(4)(c)” (*see below) to the list of what consti- tutes official records. In short, this refers to an owner’s acknowledgement that the association will change its delivery method for providing invoices for assessments or statements of account. While the owner acknowledgement constitutes a part of the official records, it is not open to unit owner inspection and copying.

(b) §718.116, Fla. Stat., is revised to extend the timing, from 30 days to 45 days, of the statutorily required delinquent assessment notice (a/k/a, the intent to foreclose letter) that must be sent to delinquent owners informing them that a claim of lien has been filed against their property and that that the association will foreclose its lien if it remains unpaid. Thus, this notice must be given at least 45 days before the foreclosure action is filed. Failure to do so will preclude the association from recovery of its attorney fees and costs.

(c) §718.121, Fla. Stat., pertains to the association liens for delinquent assessments and is amended as follows:

i. “If an association sends out an invoice for assessments or a unit’s statement of account described in §718.111 (12)(a)11.b., Fla. Stat., they must be delivered to the unit owner by first-class United States mail or by electronic transmission to the unit owner’s email address maintained in the association’s official records. (§718.111(12)(a)11.b., Fla. Stat., refers to a current account and a monthly, bimonthly, or quarterly statement of the account for each unit designating the name of the unit owner, the due date and the amount of each assessment, the amount paid on the account, and the balance due.)

ii. “Before changing the method of delivery for an invoice for assessments or the statement of account, the association must deliver a writ- ten notice of such change to each unit owner at least 30 days before the association sends the invoice for assessments or the statement of account by the new delivery method. The notice must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, it must be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing. a)*A unit owner must affirmatively ac- knowledge, electronically or in writing, his or her understanding that the association will change its method of delivery of the invoice for assessments or the unit’s statement of account before the association may change the method of delivering an invoice for assessments or the statement of account.”

iii. New Notice of Late Assessment: “An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed to the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees. Additional collection action cannot be taken for 30 days from the date of the notice. The notice of late assessment must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, must also be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing.”

A rebuttable presumption that the association mailed a notice in accordance with this new law is established if a board member, officer, or agent of the association, or licensed community association manager provides a sworn affidavit attesting to such mailing. In addition, the notice must substantially follow the required statutory format which is provided in the legislation.

iv. The timing of the statutorily required notice of intent to record a claim of lien (a/k/a, the intent to lien letter) that must be sent to delinquent owners informing the owner that a claim of lien will be filed against their property if the delinquency remains unpaid has been changed from 30 days to 45 days.

2) As to condominium associations, Senate Bill 630 provides the following changes:

(a) §627.714, Fla. Stat., addresses residential condominium unit owner coverage and required loss assessment coverage. “If a condominium association’s insurance policy does not provide rights for subrogation against the unit owners in the association, an insurance policy issued to an individual unit owner in the association may not provide rights of subrogation against the condominium association.” “Subrogation” is a right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss. Whether this will cause an increase in insurance premiums is highly debatable, depending upon whom you ask. While only time will tell, it is this author’s personal belief that it will cause an increase in pre- miums because the insurance company responsible for the casualty may not have a manner by which they can recoup their losses from the party that caused the casualty. Additionally, it is important to note that this new “anti-subrogation” law only applies to residential condominiums.

(b) §718.103, Fla. Stat., provides definitions of the terms used in Chapter 718, Fla. Stat., and is amended as follows:

i. The term “multicondominium” is amended from “a real estate development containing two or more condominiums, all of which are operated by the same association,” to “real property containing two or more condominiums, all of which are operated by the same association.”

ii. The term “operation” or “operation of the condominium” is amended to include administration and management of the condominium property “and the association.”

(c) §718.111, Fla. Stat., pertains to official records and is amended as follows:

i. Bids for work to be performed or for materials, equipment, or services must be maintained by the association “for at least 1 year after receipt of the bid.”

ii. In addition to the association’s bylaws and rules, a renter of a unit is now also entitled to inspect and copy the declaration of condominium.

iii. A condominium association “may not require a member to demonstrate any purpose or state any reason for the inspection” of the official records.

iv. An association managing a condominium with 150 or more units and which does not contain timeshare units is already required to post digital copies of certain official records on its website. As an alternative to posting on the website, the association can make the documents available through an application that can be downloaded on a mobile device (otherwise commonly referred to as an “app”).

v. The legislation clarifies the requirement that amendments to the articles of incorporation or other documents creating the association must be posted to the website or app.

(d) §718.112, Fla. Stat., is amended as follows:

i. A condominium association, through board action, may extinguish a discriminatory restriction as provided in §712.065, Fla. Stat.

ii. Board of director term limits are clarified to provide that “nly board service that occurs on or after July 1, 2018, may be used when calculating a board member’s term limit.”

iii. Notice provisions for annual meetings and other unit owner meetings are now separately provided and allow for posting of such notices on association property in addition to posting such notices on the condominium property.

iv. The second notice of election must be provided not less than 14 days nor more than 34 days before the date of the election.

v. Regarding transfer fees, “the association may not charge a fee in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Such fee may not exceed $150 per applicant” (an increase of $50). “For the purpose of calculating the fee, spouses or a parent or parents and any dependent children are considered one applicant. However, if the lease or sublease is a renewal of the lease or sublease with the same lessee or sublessee, a charge may not be made.” Such fees may be adjusted every five years in an amount equal to the total of the annual increases occurring in certain consumer indexes, with the Department of Business and Professional Regulation (the “Department”) periodically calculating the fee rounded to the nearest dollar and published on its website.

vi. Director recall challenges by the unit owner representative or by a recalled director may be made by filing a court action in addition to filing a petition for arbitration with the Division of Florida Condominiums, Timeshares, and Mobile Homes (the “Division”).

vii. A new provision for “alternative dispute resolution” is mandated to be provided in §718.1255, Fla. Stat., for any residential condominium (discussed below).

viii. A provision which prohibited a non-timeshare condominium association (a/k/a, a residential or commercial condominium association) from employing or contracting with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer is removed.

(e) §718.113, Fla. Stat., is amended as follows to add “natural gas fuel” vehicles to the provisions regarding electric vehicles:

i. The rights granted to those needing to charge electric vehicles are now extended to those having natural gas fuel vehicles, including the right to install a natural gas fueling station within the boundaries of the unit owner’s limited common element parking space or exclusively designated parking space and the obligation to pay the cost for the supply and storage of the natural gas fuel.

ii. “The unit owner installing, maintaining, or removing the electric vehicle charging station or natural gas fuel station is responsible for complying with all federal, state, or local laws and regulations applicable to such installation, maintenance, or removal.”

iii. The board of directors “may make available, install, or operate an electric vehicle charging station or a natural gas fuel station upon the common elements or association property and establish the charges or the manner of payments for the unit owners, residents, or guests to use the electric vehicle charging station or natural gas fuel station.” Importantly, this installation, repair, or maintenance of an electric vehicle charging station or natural gas fuel station “does not constitute a material alteration or substantial addition to the common elements or association property.”

(f) §718.117, Fla. Stat., previously provided that a unit owner or lienor may contest a plan of termination by initiating a petition for mandatory non-binding arbitration. Now, such contest must be brought in accordance with §718.1255, Fla. Stat. (further discussed below).

(g) §718.121, Fla. Stat., pertains to liens and is amended as follows:

i. Labor performed on or materials furnished for the installation of a natural gas fuel station, in addition to an electric vehicle charging station, cannot be the basis for the filing of a lien under Part I of Chapter 713, Fla. Stat., against the association, but such a lien may be filed against the unit owner.

ii. The notice of intent to record a claim of lien (a/k/a, the intent to lien letter) which must be provided to the unit owner prior to recording the lien is now deemed “to have been delivered upon mailing.”

(h) §718.1255, Fla. Stat., pertains to alternative dispute resolution and provides for significant changes such that non-binding arbitration for certain matters is no longer mandatory but rather is optional, and instead, the aggrieved party can use the mediation process set out in Chapter 720, Fla. Stat., rather than the aforementioned arbitration process as follows:

i. “Before the institution of court litigation, a party to a “dispute” (defined below), other than an election or recall dispute, must either petition the Division for nonbinding arbitration or initiate pre-suit mediation” in accordance with §720.311, Fla. Stat. Briefly explained, the pre-suit mediation process set out in §720.311, Fla. Stat., requires the aggrieved party to send to the responding party a statutorily required demand to participate in pre-suit mediation providing five mediator options. The responding party must select one of the five mediators within 20 days, and if not, then the aggrieved party may proceed to file their lawsuit and seek attorney’s fees and costs incurred in attempting to obtain mediation. If the responding party does appropriately respond, then mediation must take place within 90 days.

ii. For purposes of using either nonbinding arbitration or pre-suit mediation, a “dispute” refers to any disagreement between two or more parties that involve the following:

a) the authority of the board of directors to require any owner to take action or to not take action involving that owner’s unit or the appurtenances thereto;

b) the authority of the board of directors to alter or add to a common area or element;

c) the failure of a governing body when required by Chapter 718, Fla. Stat., or an association document to

(1) properly conduct elections

(2) give adequate notice of meetings or other actions

(3) properly conduct meetings, or (4) allow inspection of books and records; or

(4) a plan of termination pursuant to §718.117, Fla. Stat.

iii. The arbitration can be binding upon the parties, meaning not appealable in the local circuit court, if all parties in the arbitration agree to be bound in writing. If not, then within 30 days of conclusion of the arbitration, the arbitrator’s final order can be appealed in the local circuit court. Such appeal is heard de novo, meaning anew.

(i) §718.1265, Fla. Stat., pertains to emergency powers which are now updated to include situations such as COVID-19 and provide for new procedures which are essentially a codification of the procedures used during the COVID-19 pandemic.

i. Emergency powers are clarified and expanded such that they can be employed in response to damage or injury caused by or anticipated in connection with an emergency as defined in §252.34(4), Fla. Stat., for which a state of emergency is declared.

a) As defined in §252.34(4), Fla. Stat., an “emergency” means “any occurrence, or threat thereof, whether natural, technological, or manmade, in war or in peace, which results or may result in substantial injury or harm to the population or substantial damage to or loss of property.”

ii. In addition to being able to conduct board and membership meetings with notice given as practicable, committee meetings and elections may also be noticed in such manner, and all such meetings may be conducted, in whole or in part, by telephone, real-time video conferencing, or similar real-time electronic or video communication.

iii. In addition to implementation of disaster plans, emergency plans can now be implemented before, during, or following the event for which the state of emergency is declared which include, but are not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.

iv. In addition to making decisions regarding whether the property is available or unavailable for entry and occupancy by unit owners, family members, tenants, guests, agents, or invitees in order to protect the health, safety, or welfare of such persons upon advice of emergency management officials or licensed professionals retained by the board, such advice may also be provided by public health officials and other licensed professionals available to the board. This also includes decisions as to whether any portion of the property can be safely inhabited, accessed, or occupied, subject to certain exclusions, discussed below.

v. The mitigation authority is expanded to include mitigation of injury or contagions, in addition to mitigation of damage, and such authority includes taking action to contract for the removal of debris and to prevent or mitigate the spread of fungus or contagion.

vi. Contracting on behalf of any unit owner or owners for items or services for which the owners are otherwise individually responsible but which are necessary to prevent further damage to the condominium property or association property is expanded to include prevention of injury and contagion. In addition to drying out of units, replacing damaged air conditioners and air handlers to provide climate control, etc., specifically referenced is sanitizing of the condominium property or association property, as applicable.

vii. Notwithstanding the power of the board to prohibit access to the property, “an association may not prohibit unit owners, tenants, guests, agents, or invitees of a unit owner from accessing the unit, the common elements, and the limited common elements appurte- nant to the unit for the purpose of ingress to and egress from the unit and when necessary in connection with the sale, lease, or other transfer of a unit” or “with the habitability of the unit or for the health and safety of such person, unless a governmental order or determination, or a public health directive from the Centers for Disease Control and Prevention, has been issued prohibiting such access to the unit. Any such access is subject to reasonable restrictions adopted by the association.”

(j) §718.202, Fla. Stat., pertains to sales or reservations deposits prior to closing and is amended as follows:

i. Currently, so long as proper disclosures are provided, a developer may withdraw escrow funds in excess of 10 percent of the purchase price. The use of such funds is limited, as revised, to payment of “actual costs incurred,” including, but not limited to, expenditures for “demolition, site clearing, permit fees, impact fees, and utility reservation fees, as well as architectural, engineering, and surveying fees that directly relate to the construction and development of the condominium property.”

ii. In addition to existing prohibitions as to what these funds cannot be used for, such as salaries, commissions, and expenses of salespersons and advertising, the use of these funds for marketing or promotional purposes, loan fees and costs, principal and interest on loans, attorneys’ fees, accounting fees, or insurance costs is also prohibited.

(k) §718.303, Fla. Stat., clarifies that fines and use right suspensions are also applicable to tenants in addition to the already included unit owner, licensee, or invitee of the unit owner and that a fine is due five days after notice of the approved fine is provided to the violator.

(l) §718.405, Fla. Stat., is amended to provide that a multicondominium association is not prevented or restricted from “adopting a consolidated or combined declaration of condominium if such declaration complies with §718.104, Fla. Stat. (pertaining to creation of a condominium and contents of a declaration), and does not serve to merge the condominiums or change the legal descriptions of the condominium parcels as set forth in §718.109, Fla. Stat., unless accomplished in accordance with law.” The new provision is intended to clarify existing law and applies to associations existing on July 1, 2021.

(m) §718.501, Fla. Stat., pertains to the authority, responsibility, and duties of the Division and is amended as follows:

i. The Division has expanded jurisdiction to investigate complaints regarding “maintenance” of official records in addition to the existing authority to investigate complaints regarding “access” to official records.

ii. The Division is required to provide, upon request, a list of mediators to any association, unit owner, or other participant in alternative dispute resolution proceedings under §718.1255, Fla. Stat., requesting a copy of the list.

3) As to condominium associations, Senate Bill 1966 provides for the following changes to the board member eligibility requirements and budget process:

(a) §718.112, Fla. Stat., pertains to board member eligibility requirements and the budget adoption process and is amended as follows:

i. As to condominium board member eligibility, presently, if a candidate is delinquent in “any monetary obligation,” then the candidate is not eligible to run for the board. This is revised to further limit the delinquency which would render a candidate ineligible to run for the board to a delinquency merely in the payment of any “assessment obligation” in order to be disqualified.

a) For purposes of determining assessment delinquency, “a person is delinquent if the payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation. If a due date is not specifically identified in the declaration of condominium, bylaws, or articles of incorporation, the due date is the first day of the assessment period.”

ii. The board is required to adopt the annual budget “at least 14 days prior to the start of the association’s fiscal year. In the event the board fails to adopt the annual budget in a timely fashion a second time, it shall be deemed a minor violation, and the prior year’s budget shall continue in effect until the new budget is adopted.”

(b) §718.501, Fla. Stat., is amended to provide the Division with the authority to adopt rules regarding the submission of a complaint against an association.

(c) §718.5014, Fla. Stat., is amended to allow the Condominium Ombudsman the ability to relocate his or her principal office, presently required to be located in Leon County, to a place convenient to the offices of the Division.

IV. Cooperative Associations

1) As to cooperative associations, Senate Bill 56 provides the following changes:

(a) §719.104, Fla. Stat., is amended to add “all acknowledgments made pursuant to s. 719.108(3)(b)3” (*see below) to the list of what constitutes official records. In short, this refers to an owner’s acknowledgement that the association will change its delivery method for providing invoices for assessments or statements of account. While the owner acknowledgement constitutes a part of the official records, it is not open to unit owner inspection and copying.

(b) §719.108, Fla. Stat., pertains to association liens for delinquent assessments and is amended as follows:

i. “If an association sends out an invoice for assessments or a unit’s statement of account described in §719.104(2)(a)9.b., Fla. Stat., they must be delivered to the unit owner by first-class United States mail or by electronic transmission to the unit owner’s email address maintained in the association’s official records.” (§719.104(2)(a)9.b., Fla. Stat., refers to a current account and a monthly, bimonthly, or quarterly statement of the account for each unit designating the name of the unit owner, the due date and the amount of each assessment, the amount paid on the account, and the balance due.)

ii. “Before changing the method of delivery for an invoice for assessments or the statement of account, the association must deliver a written notice of such change to each unit owner at least 30 days before the association sends the invoice for assessments or the statement of account by the new delivery method. The notice must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, it must be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing.” “*A unit owner must affirmatively acknowledge, electronically or in writing, his or her understanding that the association will change its method of delivery of the invoice for assessments or the unit’s statement of account before the association may change the method of delivering an invoice for assessments or the statement of account.”

iii. New Notice of Late Assessment: “An association may not require payment of attorney fees related to a past due assessment without first delivering a writ- ten notice of late assessment to the unit owner which specifies the amount owed to the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees.” Additional collection action cannot be taken for 30 days from the date of the notice. “The notice of late assessment must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, must also be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing.” A rebuttable presumption that the association mailed a notice in accordance with this new law is established if a board member, officer, or agent of the association, or licensed community association manager provides a sworn affidavit attesting to such mailing. In addition, the notice must substantially follow the required statutory format which is provided in the legislation.

iv. Notice of Intent to Lien: The timing of the statutorily required notice of intent to record a claim of lien that must be sent to delinquent owners informing the owner that a claim of lien will be filed against their property if the delinquency remains unpaid has been changed from 30 days to 45 days.

v. Notice of Intent to Foreclose: The timing of the statutorily required delinquent assessment notice that must be sent to delinquent owners informing the owner that a claim of lien has been filed against their property and that the association will foreclose its lien if it remains unpaid has been changed from 30 days to 45 days. Thus, this notice must be given at least 45 days before the foreclosure action is filed. Failure to do so will preclude the association from recovery of its attorney fees and costs.

2) As to cooperative associations, Senate Bill 630 provides the following changes:

(a) §719.103, Fla. Stat., which sets forth the definition of the term “unit,” is amended to provide that “n interest in a unit is an interest in real property.” (This small tweak may be very helpful to cooperative shareholders in their attempts to enter into loans for their cooperative units subject to the proprietary lease.)

(b) §719.104, Fla. Stat., with regard to official records, is amended to provide that the cooperative association “may not require a member to demonstrate any purpose or state any reason for the inspection” of the official records

(c) §719.106, Fla. Stat., pertains to cooperative by-laws and is amended as follows:

i. “A board member or committee member participating in a meeting via telephone, real-time video conferencing, or similar real-time electronic or video communication counts toward a quorum, and such a member may vote as if physically present.”

ii. If the board determines not to certify a recall or fails to certify a recall, then the board must, within five business days, file a petition for arbitration with the Division or file a court action. The unit owners participating in the recall must be named as a party under the petition for arbitration or in a court action. If the arbitrator or court certifies the recall as to any director, the recall is effective upon mailing the final order of arbitration to the association or the final order of the court. If the association fails to comply with the order of the court or the arbitrator, the Division may take action pursuant to §719.501, Fla. Stat.

iii. Director recall challenges by the unit owner representative or by a recalled director may be made by filing a court action in addition to filing a petition with the Division.

iv. A new provision for “alternative dispute resolution” is mandated to be provided in §719.1255, Fla. Stat., for internal disputes arising from the operation of the cooperative.

v. A cooperative association, through board action, may extinguish a discriminatory restriction as provided in §712.065, Fla. Stat.

(d) §719.128, Fla. Stat., pertains to emergency powers which are now updated to include situations such as COVID-19 and provide for new procedures which are essentially a codification of the procedures used during the COVID-19 pandemic.

a) As defined in §252.34(4), Fla. Stat., an “emergency” means any occurrence, or threat thereof, whether natural, technological, or manmade, in war or in peace, which results or may result in substantial injury or harm to the population or substantial damage to or loss of property.

iii. In addition to implementation of disaster plans, emergency plans can now be implemented before, during, or following the event for which the state of emergency is declared which may include, but are not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.

v. In addition to requiring evacuation in the event of a mandatory evacuation order, the emergency powers now include the power to prohibit or restrict access to the cooperative property in the event of a public health threat.

vi. The mitigation authority is expanded to include mitigation of injury or contagions, in addition to mitigation of damage, and such authority includes taking action to contract for the removal of debris, to prevent or mitigate the spread of fungus, or to sanitize the cooperative property.

vii. Contracting on behalf of any unit owner or owners for items or services for which the owners are otherwise individually responsible but which are necessary to prevent further damage to the cooperative property is expanded to include prevention of injury and contagion. In addition to drying out of units, replacing damaged air conditioners and air handlers to provide climate control, etc., specifically referenced is sanitizing of the cooperative property.

viii. Notwithstanding the power of the board to prohibit access to the property, “an association may not prohibit unit owners, tenants, guests, agents, or invitees of a unit owner from accessing the unit, the common elements, and the limited common elements appurtenant to the unit for the purpose of ingress to and egress from the unit and when is necessary in connection with the sale, lease, or other transfer of a unit or with the habitability of the unit or for the health and safety of such person, unless a governmental order or determination, or a public health directive from the Centers for Disease Control and Prevention, has been issued prohibiting such access to the unit. Any such access is subject to reasonable restrictions adopted by the association.”

3) As to cooperative associations, Senate Bill 1966 provides the following changes to the budget process:

(a) §719.106, Fla. Stat., is amended to provide that the board is required to adopt the annual budget “at least 14 days prior to the start of the association’s fiscal year. In the event the board fails to adopt the annual budget in a timely manner a second time, it shall be deemed a minor violation, and the prior year’s budget shall continue in effect until the new budget is adopted.”

V. Homeowners’ Associations

1) As to homeowners associations, Senate Bill 56 provides the following changes:

(a) §720.303, Fla. Stat., is amended to add “all acknowledgments made pursuant to s. 720.3085(3) (c)3” (*see below) to the list of what constitutes official records. In short, this refers to an owner’s acknowledgement that the association will change its delivery method for providing invoices for assessments or statements of account. While the owner acknowledgement constitutes a part of the official records, it is not open to owner inspection and copying

(b) §720.3085, Fla. Stat., pertains to association liens for delinquent assessments and is amended as follows:

i. “If an association sends out an invoice for assessments or a parcel’s statement of account described in §720.303(4)(j)2., Fla. Stat., they must be delivered to the owner by first-class United States mail or by electronic transmission to the owner’s email address maintained in the association’s official records.” (§720.303 (4)(j)2., Fla. Stat., refers to a current account and a periodic statement of the account for each member, designating the name and current address of each member obligated to pay assessments, the due date and amount of each assessment or other charge against the member, the date and amount of each payment on the account, and the balance due.)

ii. Before changing the method of delivery for an invoice for assessments or the statement of account, the association must deliver a written notice of such change to each owner at least 30 days before the association sends the invoice for assessments or the statement of account by the new delivery method “The notice must be sent by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the parcel address, it must be sent by first-class United States mail to the parcel address. Notice is deemed to have been delivered upon mailing.” “*A parcel owner must affirmatively acknowledge, electronically or in writing, his or her understanding that the association will change its method of delivery of the invoice for assessments or the parcel’s statement of account before the association may change the method of delivering an invoice for assessments or the statement of account.”

iii. New Notice of Late Assessment: “An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the owner which specifies the amount owed to the association and provides the owner an opportunity to pay the amount owed without the assessment of attorney fees.” Additional collection action cannot be taken for 30 days from the date of the notice. “The notice of late assessment must be sent by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the parcel address, must also be sent by first-class United States mail to the parcel address. Notice is deemed to have been delivered upon mailing. A rebuttable presumption that the association mailed a notice in accordance with this new law is established if a board member, officer, or agent of the association, or licensed community association manager provides a sworn affidavit attesting to such mailing.” In addition, the notice must substantially follow the required statutory format which is provided in the legislation.

2) As to homeowners associations, Senate Bill 630 provides the following changes:

(a) §720.301(8), Fla. Stat., setting forth the definition of the term “governing documents,” is revised to remove adopted rules and regulations therefrom.

(b) §720.303, Fla. Stat., pertains to board meetings, official records, budgets, financial reports, association funds, and recalls and is amended as follows:

i. “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 (an app) that can be downloaded on a mobile device for at least the minimum period of time for which a meeting notice is also required to be physically posted on the association property. Any rule adopted must, in addition to other matters, include a requirement that the association send electronic notice to members whose email addresses are included in the association’s official records in the same manner as is required for notice of a meeting of the members. Such notice must include a hyperlink to the website or such mobile application on which the meeting notice is posted.”

ii. “Ballots, sign-in sheets, voting proxies, and all other papers and electronic records relating to voting by owners” are added to the list of official records which must be maintained by the association, and they must be maintained for at least one year after the date of the election, vote, or meeting.

iii. Although comprising a part of the association’s official records, “nformation an association obtains in a gated community in connection with guests’ visits to parcel owners or community residents” is added to the list of official records which are not subject to member inspection and copying.

iv. If the budget does not include reserve accounts created in accordance with §720.303(6)(d), Fla. Stat., or the declaration, articles, or bylaws do not obligate the developer to create reserves, and the association is responsible for the repair and maintenance of capital improvements that may result in a special assessment if reserves are not provided or not fully funded, each financial report for the pre- ceding fiscal year must contain a statutorily provided statement warning of such consequence in conspicuous type.

v. While a developer is in control of a homeowners association, the developer may, but is not required to, include reserves in the budget. If the developer includes reserves in the budget, the developer may determine the amount of reserves included.

vi. The developer is not obligated to pay for “contributions to reserve accounts for capital expenditures and deferred maintenance, as well as any other reserves the homeowners association or developer may be required to fund pursuant to any state, municipal, county, or other governmental statute or ordinance.”

vii. The developer is also not obligated to pay for operating expenses. In reading this new provision together with other developer funding obligations, this author interprets this provision to mean that the developer is not obligated to pay for operating expenses beyond its parcel assessment obligations if the developer is paying assessments on its parcels as opposed to deficit funding.

viii. The developer is not obligated to pay for “any other assessments related to the developer’s parcels for any period of time for which the developer has provided in the declaration that in lieu of paying any assessments imposed on any parcel owned by the developer, the developer need only pay the deficit, if any, in any fiscal year of the association, between the total amount of assessments receivable from other members plus any other association income and the lesser of the budget or actual expenses incurred by the association during such fiscal year.”

ix. If the board determines not to certify a recall or fails to certify a recall, then the board must, within five business days, file a petition for arbitration with the Department or file a court action. The owners participating in the recall must be named as a party under the petition for arbitration or in a court action. If the arbitrator or court certifies the recall as to any director, the recall is effective upon mailing the final order of arbitration to the association or the final order of the court.

x. Director recall challenges by the owner representative or by a recalled director may be made by filing a court action in addition to filing a petition under §718.1255, Fla. Stat.

(c) §720.305, Fla. Stat., clarifies that a fine is due five days after notice of the approved fine is provided to the owner and, if applicable, to any occupant, licensee, or invitee of the owner.

(d) §720.306, Fla. Stat., pertains to meetings of members, voting and election procedures, and amendments to the governing documents.

i. “A notice required under this section must be mailed or delivered to the address identified as the owner’s mailing address in the official records of the association as required under §720.303(4), Fla. Stat.”

ii. As to leasing, any governing document, or amendment thereto, that is enacted after July 1, 2021, and 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.

a) Notwithstanding, an association may amend its governing documents to prohibit or regulate rental agreements for a term of less than six months and may prohibit the rental of a parcel for more than three times in a calendar year, and such amendments shall apply to all owners.

b) For the purposes of these rental amendment restrictions, a change of ownership does not occur when a parcel owner conveys the parcel to an “affiliated entity,” when beneficial ownership of the parcel does not change, or when an heir becomes the owner.

c) An “affiliated entity” means “an entity that controls, is controlled by, or is under common control with, the owner or that becomes a parent or successor entity by reason of transfer, merger, consolidation, public offering, reorganization, dissolution or sale of stock, or transfer of membership partnership interests.”

d) “For a conveyance to be recognized as one made to an affiliated entity, the entity must furnish to the association a document certifying that the exclusion applies and provide any organizational documents for the owner and affiliated entity which support the representations in the certificate, as requested by the association.”

e) For the purposes of these rental amendment restrictions, “a change of ownership does occur when, with respect to an owner that is a business entity, every person that owned an interest in the real property at the time of the enactment of the amend- ment or rule conveys their interest in the real property to an unaffiliated entity.”

f) These rental amendment restrictions do not apply to associations with 15 or fewer owners.

iii. Election and recall disputes between a member and an association must be submitted to either binding arbitration with the Division or filed with a court of competent jurisdiction. (This amendment is also reflected in §720.311, Fla. Stat.)

(e) §720.3075, Fla. Stat., is amended to provide that a homeowners association, through board action, may extinguish a discriminatory restriction as provided in §712.065, Fla. Stat.

(f) §720.316, Fla. Stat., pertains to emergency powers which are now updated to include situations such as COVID-19 and provide for new procedures which are essentially a codification of the procedures used during the COVID-19 pandemic.

ii. In addition to being able to conduct board and membership meetings with notice given as practicable, committee meetings and elections may also be noticed in such manner, and all such meetings may be conducted, in whole or in part, by telephone, real-time video conferencing, or similar real-time electronic or video communication. Notice of decisions may also be communicated as provided in this paragraph.

iii. In addition to implementation of disaster plans, emergency plans can now be implemented “before, during, or following the event for which the state of emergency is declared which may include, but are not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.”

iv. In addition to making decisions regarding whether the property is available or unavailable for entry and occupancy by owners, family members, tenants, guests, agents, or invitees in order to protect the health, safety, or welfare of such persons upon advice of emergency management officials or licensed professionals retained by the board, such advice may also be provided by public health officials and other licensed professionals available to the board. This also includes decisions as to whether any portion of the property can be safely inhabited, accessed, or occupied, subject to certain exclusions, discussed below.

v. The mitigation authority is expanded to include mitigation of injury or contagions, in addition to mitigation of damage, and such authority includes taking action to contract for the removal of debris, to prevent or mitigate the spread of fungus, or to sanitize the common areas or facilities.

vi. Notwithstanding the power of the board to prohibit access to the property, “an association may not prohibit owners, tenants, guests, agents, or invitees of an owner from accessing the common areas and facilities for the purpose of ingress to and egress from the parcel and when necessary in connection with the sale, lease, or other transfer of a parcel or with the habitability of the parcel or for the health and safety of such person, unless a governmental order or determination, or a public health directive from the Centers for Disease Control and Prevention, has been issued prohibiting such access to the parcel. Any such access is subject to reasonable restrictions adopted by the association.”

VI. Other Bills of Interest

1) Senate Bill 2006 amends various Florida Statutes as relates to emergency management that govern emergency preparations, orders, and disaster recovery as follows:

(a) Prohibits a business entity or a governmental entity from requiring customers to verify COVID-19 vaccination, which includes community associations.

(b) Expands emergency powers for use during public health emergencies.

(d) Provides for limitations on the duration of emergency orders issued by a political subdivision, including the ability of the governor to invalidate local orders if the governor determines that the order unnecessarily restricts individual rights or liberties.

(e) Provides that an executive order imposing business restrictions or closure of, or restricted in-person attendance at, K-12 public schools must specifically state the reasons for the restrictions or closure.

2) House Bill 403 provides restrictions on local government’s ability to regulate home businesses.

(a) §559.995, Fla. Stat., pertaining to home-based businesses and local government restrictions, is added as follows:

i. Local governments may not enact or enforce any ordinance, regulation, or policy or take any action to license or otherwise regulate a home-based business.

ii. A home-based business must meet the following criteria in order to be considered a home-based business:

a) It must operate from residential property.

b) Employees of the business who work at the residential dwelling must also reside there, except that there may be up to two other employees or independent contractors who do not reside at the residential dwelling who may work at the business. In addition, there can be other remote employees that do not work at the residential dwelling.

c) Parking related to the business activity may not be greater in volume than would normally be expected by similar residents where no business is conducted and must comply with local zoning requirements, along with other compliance requirements.

d) As viewed from the street, the use of the residential property must be consistent with the uses of the residential areas that surround the property.

e) The activities of the home-based business must be secondary to the property’s use as a residential dwelling. The business activities must comply with all relevant local and state regulations. There can be no excessive fumes, noxious odors, vibration, noise, etc.

iii. Provides that the application of these new laws does not supersede any current or future declaration adopted pursuant to Chapter 718 (condominiums), Chapter 719 (cooperatives), and Chapter 720 (homeowners associations).

3) House Bill 421 & House Bill 1101 (effective 10/1/2021) provide revisions to the Bert J. Harris, Jr., Private Property Rights Protection Act, set out in Chapter 70, Fla. Stat. This Act provides relief to private landowners when a law, regulation, or ordinance inordinately burdens, restricts, or limits private property without amounting to a taking under the U.S. Constitution.

(a) §70.001, Fla. Stat., is amended as follows:

i. Provides that the prior owner maintains their Bert Harris claim so long as they filed their claim while they were the property owner.

ii. Clarifies that the term “real property” includes “surface, subsurface, and mineral estates” in addition to appurtenances and improvements to the land, including any other relevant interest in the real property in which the property owner has a relevant interest. However, the term includes only parcels that are the subject of and directly impacted by the action of a governmental entity.

iii. Allows the property owner the right to forgo a jury trial and to elect that the court determine the award of compensation.

iv. Provides for what amounts to a one-year statute of limitations to bring the claim from the time of the governmental notice which brought about the diminution of value.

4) SB 72 was signed into law on March 29, 2021, and, in pertinent part, grants liability protection to businesses and entities from lawsuits related to COVID-19 exposure.

(a) §768.38, Fla. Stat., was created and grants civil liability immunity to business entities and institutions, including, but not limited to, religious institutions and community associations. However, limited liability companies are excluded.

i. To be afforded the immunity, the association (or other business entity) must make a good faith effort to substantially comply with authoritative or controlling federal, state, and local public health standards or guidelines at the time the cause of action accrued. If more than one source or set of standards or guidance was authoritative or controlling at the time, the association’s good faith effort to substantially comply with any one of these sources or sets of standards or guidance will confer immunity from civil liability.

ii. If the court determines the defendant did not make a good faith effort to comply, the plaintiff may proceed with an action against the defendant. To establish liability, the defendant must have acted with gross negligence or intentional conduct, and the foregoing must be proven by clear and convincing evidence (rather than a mere preponderance of the evidence).

iii. There is a shortened one-year statute of limitations within which to bring the claim.

5) SB 60 pertains to code enforcement complaints.

(a) §§125.69, 162.06, 162.21, 166.0415, Fla. Stat., were amended to provide that a code inspector or code enforcement officer may not initiate an investigation of a potential violation of a duly enacted code or ordinance by way of an anonymous complaint unless the code inspector or code enforcement officer has reason to believe the violation presents an imminent threat to public health, safety, or welfare or imminent destruction of habitat or sensitive resources.

6) SB 76 pertains, in pertinent part, to contractors and provides for prohibition of solicitation.

(a) §489.147, Fla. Stat., pertaining to prohibited solicitations regarding roof damage is added as follows:

i. A contractor may not directly or indirectly engage in any of the following practices:

a) Soliciting a residential property owner by means of a “prohibited advertisement.” The term “prohibited advertisement” means “any written or electronic communication by a contractor that encourages, instructs, or induces a consumer to contact the contractor or public adjuster for the purpose of making an insurance claim for roof damage. The term includes, but is not limited to, door hangers, business cards, magnets, flyers, pamphlets, and emails.”

b) “Offering to a residential property owner a rebate, gift, gift card, cash, coupon, waiver of any insurance deductible, or any other thing of value in exchange for the following: 1) Allowing the contractor to conduct an inspection of the residential property owner’s roof; or 2) Making an insurance claim for damage to the residential property owner’s roof.

c) Offering, delivering, receiving, or accepting any compensation, inducement, or reward for the referral of any services for which property insurance proceeds are payable.

d) Interpreting insurance policy provisions or advising an insured regarding coverage or duties under the insurance property insurance policy.

e) Providing an insured with an agreement authorizing repairs without providing a good faith estimate of the itemized and detailed cost of services and materials for repairs undertaken pursuant to an insurance claim; however, a contractor is not in violation if the actual cost of repairs differs from the initial estimate.”

ii. A contractor or unlicensed person who violates this section is subject to disciplinary proceedings and may receive up to a $10,000 fine for each violation.

iii. A contractor may not execute a contract with an owner to repair or replace a roof without including a notice that the contractor may not engage in the practices set forth above. If the contractor does not include such notice, the owner may void the contract within 10 days after execution.

Tags: Condo and HOA Laws, Management News, SFPMA Members

“2022 Legal Update” educational webinar with Michael Bender from Kaye Bender Rembaum

Posted: Sep 23, 2021
By: KBR Legal
Comments: Comments Off on “2022 Legal Update” educational webinar with Michael Bender from Kaye Bender Rembaum

“2022 Legal Update” educational webinar with Michael Bender from Kaye Bender Rembaum to discuss recent legislation.

The webinar covered:

Senate Bill 602: Business Organizations (3:33)
Senate Bill 56: Assessment Notices (8:04)
Senate Bill 630: Community Associations (22:57)
Senate Bill 1966: Department of Business and Professional Regulation (1:28.29)
and More!

Click here to watch the recorded webinar or Watch it below now.

https://www.youtube.com/watch?v=OYek0k9Per0

Tags: Board of Directors, Condo and HOA Laws, Management News

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

Posted: Sep 08, 2021
By: KBR Legal
Comments: Comments Off on 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

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 . 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:

“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 … 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:

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.
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.
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.
Update the association’s reserve schedules at least every five years. It should be based on empirical and objective evidence.
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.

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).
Despite what you may hear on the news, there is not a statewide mandatory residential building recertification required after a certain number of years.
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.

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.

Tags: Law and Legal, Management News

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

Posted: Aug 27, 2021
By: KBR Legal
Comments: Comments Off on The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations Posted by rembaumlaw

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.

Tags: Condo and HOA Laws, Management News, Members Articles

SFPMA Industry Articles | news, legal updates, events & education!

Don’t Want Your Association to Be the Next Rental Community? by KBRLegal

Don’t Want Your Association to Be the Next Rental Community?

Electronic Board of Directors and Membership Meetings in a Post-Covid-19 World

Electronic Board of Directors and Membership Meetings in a Post-Covid-19 World

Is Your Association Prepared? Expect Supply Shortages – KBR Legal

Is Your Association Prepared?

Expect Supply Shortages

New Requirements For Collection of Delinquent Assessments

Requirements For Collection of Delinquent Assessments

It’s the Manager’s Fault, Or Is It? by KBR Legal

It’s the Manager’s Fault, Or Is It?

by KBR Legal

The 2021 Florida Legislature was busy indeed. This year’s new legislation brings tremendous clarifications of existing laws and new laws to Florida’s community associations.

I. Condominium, Cooperative and Homeowners’ Associations

II. Condominium and Cooperative Associations

III. Condominium Associations

IV. Cooperative Associations

V. Homeowners’ Associations

VI. Other Bills of Interest

“2022 Legal Update” educational webinar with Michael Bender from Kaye Bender Rembaum

“2022 Legal Update” educational webinar with Michael Bender from Kaye Bender Rembaum to discuss recent legislation.

Click here to watch the recorded webinar or Watch it below now.

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

The Champlain Towers South Condominium Collapse:

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

Learn More...

Industry Articles:

Industry Events

Please click here to add your email!