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Sign Up for Our Premier Board Certification Classes @Dave and Busters in Hollywood FL.

Sign Up for Our Premier Board Certification Classes @Dave and Busters in Hollywood FL.

  • Posted: Dec 03, 2019
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Sign Up for Our Premier Board Certification Classes

@Dave and Busters in Hollywood FL.

If you would like to attend and get certified, please fill out the form below and click send. Dont forget to select the event you would like to attend!

http://www.condocrazeandhoas.com/multi-event.php

Condo Craze and HOA’s
Dave and Busters – Hollywood
December 5, 2019 – 5 pm
3000 Oakwood Blvd
Hollywood, FL 33020
(954) 923-5505

 

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Setting the Ground Rules for Community Association Committees

Setting the Ground Rules for Community Association Committees

  • Posted: Nov 29, 2019
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Setting the Ground Rules for Community Association Committees

Not enough community association boards make effective use of committees. Committees can be very useful when it comes to providing recommendations to the board and assisting the board with carrying out its duties and responsibilities. However, many associations do not take the time to establish committees or set parameters for their work so that committees may assist in the operation of the association.

Setting up committees is the responsibility of an association’s board of directors. The board must appoint the members of each committee at a properly noticed board meeting, during which the directors should provide instructions and set parameters for the scope of the committees’ responsibilities.

One of the best approaches is for boards of directors to use their annual meetings to establish various committees, appoint committee members and establish areas of purview for each. Each committee should have at least three members.

With the exception of the rules enforcement committee, board members may also serve as members on committees. Many associations choose to have a board member on each committee along with two non-director volunteers, as this enables the board member to keep their fellow directors abreast of the committee’s work and progress.

The only committee that is required by law for Florida community associations is the rules enforcement committee, which is also often referred to as the fining, violation or grievance committee. Associations that wish to levy fines and impose the suspension of use rights for violations must utilize such a committee to do so. Per Florida law, this committee cannot be comprised of board members or spouses or relatives of board members in order to maintain its independence from the board.

Fines or suspensions may only be imposed after the association provides at least 14-days written notice to the owner, occupant, licensee or invitee to be fined or suspended, and they must be provided an opportunity for a hearing before the rules enforcement committee. During these hearings, the committee should hear and evaluate the alleged violator’s side of the story behind the underlying fine. The hearing should be closed to all members except for the alleged violator and the corresponding unit owner, should the violator be their tenant. At its conclusion, the committee members should vote on whether to confirm or reject the fine or suspension levied by the board, which requires a majority vote to be imposed.

The other most common types of committees are the budget committee, which assists the board with creating the annual budget, and the architectural review committee, which is typically charged with reviewing any requests for construction, improvements or alterations taking place on association property or within a unit or exterior of a lot.

By utilizing committees and ensuring that they are staffed by dedicated volunteers, associations can facilitate their operations while also avoiding overburdening board members with too many issues and responsibilities. When first establishing committees, boards of directors would be well advised to consult with highly qualified association legal counsel regarding their creation and setting forth the scope of their responsibilities.

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Creating Quality Board Meeting Agendas and Minutes

Creating Quality Board Meeting Agendas and Minutes

  • Posted: Nov 29, 2019
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Creating Quality Board Meeting Agendas and Minutes

Board meeting agendas and meeting minutes are a key part of condominium associations’ official records. For unit owners not actively involved with the association, they are the primary way to follow along with the board’s activities. Given this, it is important that the board produce quality agendas and meeting minutes. Generally, these two documents should provide sufficient detail so that a unit owner with no previous knowledge of the property will understand what the board is considering and the reasoning behind board actions. Agendas and meeting minutes are also reviewed by the association’s CPA during audits, and are some of the primary documents the Department of Business and Professional Regulation (DBPR) examines to resolve complaints against associations. Lastly, new managers or board members use meeting minutes to obtain insight into past association issues. In sum, having detailed agendas and meeting minutes can prove invaluable.

There is significant confusion around how agendas and meeting minutes should be formatted, and what information they must contain. The Florida Statutes provide little guidance on these topics, leaving it to the boards and their managers to determine what is appropriate. Many standard formats (i.e., Robert’s Rules of Order) are used and often the community’s bylaws will provide guidelines. The board is obligated to follow any agenda, meeting minutes or board meeting format requirements outlined in their governing documents. That being said, if your documents indicate that Robert’s Rules should be followed, the board should review these Rules and make reasonable decisions about how to apply them to a casual condominium board meeting. For example, there is no need to stand to make a motion and no need for the president to recognize a board member before they speak despite what Robert’s Rules tells us.

 

Agendas

Florida Statute 718.112(2)(c) provides the following agenda requirements:

  • All regular board meeting agendas must be posted visibly on the condominium property at least 48 hours in advance of a meeting. NOTE: Members’ meetings (e.g., annual meeting), budget meetings and certain other meetings require additional advanced notice.
  • If there is no condominium property available where notices may be posted, the board must mail or email (if electronic consent form has been received) the agenda to all unit owners 14 days in advance of the meeting.
  • The board must adopt an official location for posting agendas on property.
  • Any item that will be discussed by the board at a meeting must be listed on the agenda.
  • If 20% or more of a community’s members petition to have an item on the agenda, the board must add this item to an agenda within 60 days of receipt of the petition.
  • Board meetings held in the event of an emergency may be held without a previously posted agenda.
  • Items not listed on an agenda may be taken up at a meeting on an emergency basis by a vote of a majority plus one of the board members.

NOTE: The DBPR has reprimanded associations for holding “emergency” meetings and discussing “emergency” items that are not true emergencies. If the board can wait 48 hours for proper notice to be posted before discussing the item, then the board should do so.

The above Florida Statute requirements do not provide any guidance on how a meeting agenda should be structured. This is up to the board to decide.  I recommend that an agenda format be approved by the board and used consistently. To better inform the unit owners, I also recommend that the agenda include a brief sentence on the purpose of each agenda item. For example, an agenda may list “Landscaping” as one of the items but to a unit owner that may mean very little. An agenda item like this is much more informative: “Landscaping: the board is considering proposals to replace all plants surrounding the front fountain”. Most management companies have their own agenda formats but the board can certainly request changes to that format.

Below, I have listed the primary sections of a board meeting agenda with some guidance on each item. They are listed below in the order which I would recommend they be listed on the agenda and addressed at the meeting.

 

1.     Meeting Date, Time and Location:  This information must be included on every posted agenda.

2.     Call to Order, Proof of Quorum, Proof of Notice & Roll Call: This item should be the first item at every meeting and is primarily a formality. The president will call the meeting to order, specify the time, and confirm that the agenda was properly posted at least 48 hours in advance of the meeting. The board members present should state their names and positions to confirm a quorum has been obtained.

3.     Special Speakers or Guests: Sometimes boards will request special guests attend a meeting. For example, the association may request that its insurance broker come to a meeting to discuss insurance policy renewal. I generally recommend listing any agenda items relating to guests at the top of the agenda so that the guest may conduct their business and then leave without having to sit through a long meeting.

4.     Prior Meeting’s Minutes: Minutes from the previous board meeting should be reviewed and approved by the board. If your community follows Robert’s Rules, they are required to be read aloud. To avoid this, the board should receive and make changes to draft minutes in advance of the meeting. If done this way, they do not need to be read aloud. Getting draft minutes to the board for review within a few days of a meeting really helps with accuracy as the information is fresh in the members’ minds.

5.     Manager/ Board Member/ Committee Reports: If the manager, a board member (typically the president) or committee head wishes to provide an update on specific items, they should be listed on the agenda. Further, I would recommend a brief listing of the topics they will discuss. Just listing “President’s Report” could be used as a catch all agenda item during which the president/ board may talk about any association topic. In my opinion, this does not comply with the spirit of the Florida Statutes.

6.     Treasurer’s Report/ Financial Statements Review: The association’s most recent monthly (or quarterly) financial statements should be reviewed and approved at each meeting. Any items the board may need to vote on relating to collection efforts (e.g., a vote to lien a unit) should also be listed as an agenda item (specific unit numbers may be listed).

7.     Amenities Use & Voting Rights Suspensions: As discussed in this post, boards must vote to suspend the amenities use rights or voting rights of unit owners in arrears. As such, this should be listed as an agenda item (specific unit numbers may be listed).

8.     Unit Owner Comments/ Questions/ Concerns: As discussed in our post on unit owner rights at board meeting, unit owners have the right to speak on any agenda item. I recommend listing an agenda item specifically for this purpose near the beginning of the meeting.

9.     Old and New Business: This section should include any business the board wishes to discuss. Keep in mind that the agenda should include all discussion items not just those that the board plans to take a final vote on at the meeting.

10.  Email Vote Ratification: While boards should try to avoid voting by email entirely (see this post for more information), if the board does vote via email I recommend that the item be included in the next meeting’s agenda and ratified at the meeting.

11.  Adjournment: Similar to #2 above, this is a formality. The time of adjournment should be specified.

 

 

Meeting Minutes

According to Florida Statute 718.111, meeting minutes must be taken for each board meeting. In my opinion this includes those meetings not open to unit owners (though minutes should be brief). Further, minutes must be retained for at least 7 years and must include how each board member voted on each item including if the board member abstained from voting. These are the only requirements for meeting minutes per Chapter 718. Robert’s Rules provide guidelines on preparation of meeting minutes but otherwise the style and content of the meeting minutes is up to the board.

We recommend the following as it relates to constructing meeting minutes:

  1. Use the meeting’s agenda as a base for the meeting minutes.

  2. Include meeting start and end times.

  3. List the board members, unit owner and other guests in attendance (including those present by phone)

  4. Record the meeting and listen to the tape while drafting the minutes to ensure accuracy. Tapes may be destroyed once meeting minutes are approved.

  5. Ensure the minutes are sufficiently thorough for a unit owner not present at the meeting to understand what actions were taken by the board and why.

  6. Transcribe the specific wording of each motion including who voted in favor of or against the motion.

  7. Include any identified board member or manager conflicts of interest.

  8. Briefly summarize any discussions the board had that did not end in a vote.

  9. Do not include board member quotes or the specific opinions of one board member (unless requested by the board member).

  10. If email votes were ratified at the meeting, Include copies of the email chain showing the vote with the meeting minutes.

The board of my association has begun attaching a “status update” document to our meeting minutes which I think is very helpful. This document specifies what actions have occurred on each agenda item from the time of the last meeting to the time of the current meeting. For example, if in last month’s meeting the board voted to re-landscape an area of the property, the “status update” document (which is provided to the board for review and approval at the current meeting along with the draft minutes of the prior meeting) would state something like: “Landscapers removed all old plants and have replaced all irrigation piping. New plants are scheduled to be installed next week”. This provides and straightforward way for unit owners to obtain updates on the status of past agenda items.

 

 

NOTE: This post reflects our opinions and ideas and should not be taken as legal advice or professional guidance. References to language in the Florida Statutes or Florida Administrative Code are based on our reading and laymen’s interpretation of these documents. As always, we strongly encourage you to consult with legal counsel regarding the interpretation of law.

 

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TAX RETURNS: HOAS, CONDOS & COOPS

TAX RETURNS: HOAS, CONDOS & COOPS

  • Posted: Nov 26, 2019
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TAX RETURNS: HOAS, CONDOS & COOPS

by Enrolled Agent Steven J. Weil, Ph.D., EA, LCAM,

Royale Management Services, Inc.

Homeowners associations, condominiums and cooperatives, whether or not they are incorporated, must all file annual federal and sometimes state income tax returns. When these returns are due and what type of return must be filed depends on whether you are a homeowners association, condominium or cooperative. Homeowners associations and condominiums can generally file either federal tax form 1120-H or form 1120. Which form is right for your association depends on number of factors.  Cooperatives must generally file federal form 1120-C.

If the association is a calendar-year association, the tax return is due by April 15. If you operate on a fiscal tax year, returns are due the 15th day of the fourth month after the end of your fiscal year.

A home owners association or condominium generally has two tax filing options available: Form 1120 or Form 1120-H.

Form 1120: This form is the regular corporation tax form and is required for commercial (non-residential) condominium associations. Although the tax rate is 21 percent on all of the taxable income, it is more difficult to prepare.  Filing this return may also subject the association to increased risk of tax audit.

Form 1120-H: This form was designed for condominium and homeowners associations. It applies to associations electing to be taxed under this method. This form requires the allocation of income and expenses between “exempt-function income” and “non-exempt-function income.”

Exempt-function income is the amount collected by the homeowners association or condominium from the dues paid by every homeowner. This income is not taxable.

Non-exempt-function income is income that comes from other sources (usually nonmembers), but it can also include income from members that is paid for the use of specific amenities. Some examples of non-exempt-function income are interest received on bank deposits, guest fees for the pool, laundry income, clubhouse-rental income, commendation awards and income received from the rental of association property.

Interest income and other non-exempt-function income is taxed at a rate of 30 percent. Basically, associations elect tax-exempt status for that portion of the association’s income that comes from assessments. Likewise, association income that does not fit the definition of exempt-function income is not tax-exempt.

Non-exempt-function income may be reduced by expenses directly connected to that income (such as state income taxes). In addition, other expenses may be allocated, such as management fees, tax-return preparation, insurance, bank fees, utilities, repairs and maintenance, and security and cleaning. Net non-exempt-function income is taxable, subject to a $100 deduction.

 

Under the IRS rules, the association must satisfy all of the following requirements to use Form 1120-H.

  • The homeowners association or condominium must be organized and operated to provide for the acquisition, construction, management, maintenance, and care of association property;
  • Substantially all (85 percent or more) of the units or property are used by individuals for residential and auxiliary residential purposes;
  • At least 60 percent of its gross income is derived from the membership dues, fees, or assessments of owners in the association;
  • At least 90 percent of its expenditures for the tax year are used for the acquisition, construction, management, maintenance and care of association property. This includes current expenses and reserve expenses;
  • No part of its net earnings may benefit any shareholder, owner or individual.

If the above tests do not qualify your association to file Form 1120-H, which is a very safe filing method and is the easiest to prepare, the association will be required to file the more complicated (and risky) Form 1120. We recommend that the majority of associations file Form 1120-H in order to avoid the tax audit risks of Form 1120.

Cooperatives must file the most complex of all association returns, an 1120-C.  This form requires allocations of patronage and non-patronage income and deductions.

In summary, the majority of association returns are filed using Form 1120-H despite the higher tax rate. Form 1120-H is less complex to prepare (that is, less expensive), virtually risk-free, and most associations do not have taxable income, making the difference in tax rates a nonissue. The association’s goal should be to minimize taxes and reduce risk.

For additional tax information call the tax experts at RMS Accounting. RMS Accounting is a division of Royale Management and has been providing tax consulting, preparation and representation services since 1984.

RMS Accounting

Steven J. Weil, Ph.D., EA, LCAM,

Find out more about RMS Accounting and how they can help your Condo and HOA

 

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Rental Property Expenses are deductible only in the year they are paid…

Rental Property Expenses are deductible only in the year they are paid…

  • Posted: Nov 26, 2019
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End of year Taxes for your property

While tax returns aren’t due until April, to minimize your tax burden the strategy of accelerating rental property expenses should be considered now, property owners, should start deducting these expenses this year could be more important than ever, especially if you’re affected by the new Affordable Healthcare Act tax.

Under the Act, if your modified adjusted income exceeds $250,000 (filing jointly) then you’ll pay an additional 3.8% tax on any rental income or other passive income above that amount. Rental property expenses are deductible only in the year they are paid, so December is your last chance to pay for any rental property-related expenses that you want to deduct this year. Additionally, you can pay your expenses in advance, so consider paying in December some expenses due next year (such as a mortgage payment, property taxes, or utility bills) to offset this year’s income.

As far as rental income is concerned, don’t be tempted to defer rental income for December rents to next year. The Internal Revenue Service matches 1099s for commercial leases, and they want to see rental income match up with 1099s. While residential rental owners don’t receive 1099s from their tenants, many audits that CAP’s have been involved in where the IRS examined residential lease agreements and had issues with the rental owner declaring less than a full twelve months of income if the unit was occupied for the entire year. But what if you were on vacation for all of December and didn’t check your mailbox until mid-January? That’s still income for December.

It’s important to not make assumptions about rental income losses–several clients get burned because they thought they could deduct these losses. The problem is that rental income losses fall under the “passive income rule” which can be a complicated beast. Rental income is considered passive income, and under the rule, passive income losses can only be offset against passive income, which means you need to have another rental property that makes money or some other passive income source. The rule is different if your adjusted gross income is less than $150,000. The passive income rules are very complex and everyone has a different situation, so it’s critical that you consult with your tax adviser before you act on any assumptions.

Checklist: Year-end Review
Review rental property insurance policies; update amounts if necessary.
If you don’t have an umbrella liability insurance policy, consider one.
Make sure that if you have converted your primary residence to a rental property, that you made that classification change with your insurance company.
Review local city or county ordinances for changes, such as registration requirements.
Review federal and state laws, including fair housing rules and your state landlord-tenant statute, for any changes.

 

 

We have Courses, Meetings and Seminars to help Managers, Board Members with Taxes.

RMS Accounting:  https://www.facebook.com/RMSAccounting/

 

 

Checklist: End of Year Taxes
Meet with your accountant to discuss end of year tax strategies.
Consider paying now expenses due next year to offset this year’s income.
Let your accountant know if you anticipate any rental losses next year, or if you’re planning on refinancing, buying, or selling rental property as these activities may have tax consequences that might be partially mitigated with informed planning.
If you formed an LLC or S-Corporation to hold your rental property, order 1099s now to send to your unincorporated vendors (to whom you paid more than $600) by January 31st–it can sneak up quickly.

 

Year-end reviews:

Revisiting and evaluating insurance policies and rental regulations and laws is key to protecting your rental property investment. We recommend that rental property owners set an annual calendar reminder to review their insurance policies for proper and adequate coverage and check on new local ordinances affecting landlords.

Insurance policies and their respective coverage amounts change frequently. We have seen many owners move out of their property and convert it to a rental but forget to call their insurance provider to make sure their policy is updated from a primary occupant policy to a landlord policy. If an owner does not make this policy change then it is very likely a future claim will be denied for the wrong policy classification. The classification change to a landlord policy will likely result in a premium increase but without the proper classification the property owner is not adequately insured which, in the end, will be a much bigger price to pay.

City ordinances can change quickly and are difficult for distant and even local landlords to be aware of. While a local professional property manager should be able to help you with local ordinances, It is ultimately the property owner’s responsibility to make sure rental property is compliant with local city and county ordinances.

In addition to local ordinances, make sure you understand federal and state laws that impact rental property, such as fair housing requirements and your state’s landlord-tenants laws. Your property manager, if you have one, will be an important resource here. If you self-manage your rental property, consider joining a state or local landlord association, as these groups often have attorneys provide updates on changing laws as well as provide other benefits. Property Managers can join forces with www.sfpma.com.

 

Planning for Next Year:

While it might be a slower time for year for landlords and property management companies, the winter, especially December, can nonetheless get busy because of the holidays. However, it’s important to have a game plan for the coming year. Schedule a planning meeting to meet with key people, including any co-owners of your rental property or your property manager, if you have one, to address these issues:

 

Checklist: Planning for Next Year
Confirm annual or six-month rental property inspections are scheduled.
Review lease agreement template.
Review policies or “house rules.” Consider adding a policy addressing space heater safety. Adding a Pet Policy, we see many more tenants and owners with pets, along with service animals.
Review rents and consider an increase.
Discuss whether any significant repairs, such as re-roofing, need to be undertaken in the coming year.

 

 

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Sponsorship for Our “Industry News Blog”

Sponsorship for Our “Industry News Blog”

  • Posted: Nov 19, 2019
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Starting today, We have 10 spots open for sponsors to advertise your company in our Email Blasts!

Weekly News Feed: Sent on Tuesday and Friday @9am

Our Offer:

– Your logo is placed on the Mailing linked to your website.

– What you get is your companies logo is sent in the Blog “Industry News Blog”  2x each week to over 127,000 Emails.

– Pricing is: Paid yearly Act today and get this @$500.00 for the full year) save 200.00

-You will get to send us articles or announcements we will place in the blog news and send to everyone. these are articles we feature for all advertisers.

We Send every Tuesday and Friday @9am weekly.
There are only 12 spots open for this. Sent via our Mail Chimp Acct to our industry.

Call and lock your company in and sponsor these sent to our industry readers and subscribers:

561-756-3540
Email us: membership@sfpma.com

SFPMA

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We are Running a Florida Rising Magazine – Cover Picture Contest.

We are Running a Florida Rising Magazine – Cover Picture Contest.

  • Posted: Nov 13, 2019
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We are Running a Cover Picture Contest.

Submit to this page Florida Pictures for consideration. We will select the winner to be the DEC 2019 Cover

– If your picture is Selected We will Place your company on a Full Page ( With a Great Bio and Article, Letting our industry know more about You!)

  • Think of Pictures showing Condo & HOA along with Property Management In Florida!
  • With Voting Season coming – December we will learn more about Voting for Officers, How it is Accomplished, Some stories on how things go bad, and new companies ready to help with Voting for your Condo and HOA’s
  • Please include your Info: so we can contact you, most will be from a FB, LI or Email – we can IM you with our decision..

This closes on 27, November 2019. So we can have a few days to place the company information

You can also send the pictures in an Email: FloridaRising@sfpma.com

 

   

   

   

Best of Luck to the Winner..

SFPMA

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Thank you to the Veterans that have served our beautiful nation.

Thank you to the Veterans that have served our beautiful nation.

  • Posted: Nov 11, 2019
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Thank you to the Veterans that have served our beautiful nation.

Today and always we honor the men and women who served in the United States Armed Forces.

SFPMA is Thankful for our Veterans for Serving and Protecting Us.

 

 

Keep informed with SFPMA: Visit our Website and Read our industry information on our many pages.

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If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board?

If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board?

  • Posted: Nov 04, 2019
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If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board? The Answer May Surprise You…

As Condominium and HOA attorneys, we often receive questions from our clients dealing with all the issues that can get in the way of conducting a successful annual meeting. Most often, it is the issue of not being able to achieve a quorum of owners in attendance—which stymies the Association’s ability to hold Board member elections, approve the budget, and take other important actions to further the HOA’s business for the coming year.  So what happens if an Association’s Bylaws calls for annual board elections, but the Association does not hold elections for a number of years?  Is there a Board? Does the Board have any authority? A recent case addressed these issues, and the court’s findings might surprise you.

Keep up to date with articles and information on SFPMA.COM

Facts

In a 2019 case, a Condominium Association sued an owner for violating the governing documents.  The owner claimed that the Association’s Board, who initiated the lawsuit against him, lacked the authority to sue (and lacked the authority to do anything for the Association) because the Association had not held board elections in recent history.  Instead, the same directors had been in place for many years, despite the mandate in the Bylaws that board elections should be held each year at the annual meeting. The Association had not held annual meetings, and as a result, no Board elections had taken place.

Court Rulings

The trial court agreed with the homeowner defendant that the Association Board did not have any authority to act on behalf of the Association because they did not follow the Bylaws and hold annual elections.  The Association appealed, and the Court of Appeals reversed the trial court’s decision, finding in favor of the Association, holding that the Board members did have authority because they were still “in power.”  Why?  The secret was held within the language of the Bylaws, which stated that Board members serve until the earlier of (1) the next annual meeting of the Association or (2) such time as the Board members are replaced.  As the Association never held an annual meeting, and the Board members were not replaced, the Board members still legally served as the Board.

Find Upcoming Events all over Florida on our Calendar

Lesson

Board members, beware—or at least, take care!  If your Association does not or cannot hold its annual meeting due to quorum problems (for example) it is likely that you will remain on the Board until your successor is elected.  Unless you have formally resigned your Board position as set forth in your Bylaws, you are still a director, with all of the duties, obligations, and authority that come along with your position.

Channel View East Condominium Association, Inc. v. Ferguson, 2019 WL 2865987 (Ct. App. Michigan).

By Lydia Chartre

 

 

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Statutory Limitation on Condominium Transfer Fees

Statutory Limitation on Condominium Transfer Fees

Statutory Limitation on Condominium Transfer Fees

A Reminder that the Limit is the Limit

Transfer fees are those fees an association may charge in connection with the sale or lease of a unit. There are significant differences between allowable transfer fees for homeowners’ associations as compared against condominium associations. When it comes to transfer fees for condominium associations, Florida law is patently clear – in no event may such a fee exceed $100 per applicant. In spite of this clear limitation, some condominium associations charge more than the statutory maximum, and doing so is not without significant consequence.

 

In fact, unit owners of a condominium association recently brought a successful class action lawsuit in Miami-Dade County against their condominium association that charged transfer fees beyond the statutory limit. That association now faces a significant financial impact from the suit. Not only must the association return the money charged over the statutory limit to each member of the class, the settlement stipulated that the association must pay $95,000.00 in attorney fees to the law firm representing the residents. The class period was from 2014 to 2019, and the association may end up paying over $200,000.00 to satisfy all the claims in the class. Yikes!

 

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Specifically, section 718.112(2)(i), Florida Statutes, provides that “no charge shall be made by a condominium association in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless i) the association is required to approve such transfer and ii) a fee for such approval is provided for in the declaration. In no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant.” The law does allow the association to require a prospective lessee place a security deposit, not to exceed the equivalent of one month’s rent, into an escrow account maintained by the association.

 

It is important to note that the statute requires that the condominium’s declaration provide authority to the association to approve a transfer and to impose the transfer fee. If these powers are not granted in your declaration of condominium, the condominium association may not charge any transfer fee. If the declaration of condominium does provide for a transfer fee, then the association must abide by the statutory maximum.

 

It is not unheard of for more than one condominium association to attempt to circumvent the statutory limitation by changing the name of the fee. Some may call the charges “screening fees” or “move in fees,” but that does not change the fact that the fees are still legally considered transfer fees. Remember, the limit is the limit, regardless of whether the condominium association’s expenses in obtaining credit and criminal history reports exceeds the $100.00 limitation. Any condominium association charging more than the statutory maximum is violating the statute and opens itself up to liability. With the award of attorney fees, there is an incentive for attorneys to bring more cases challenging any transfer fees that violate the statute. Your condominium association could be liable for hundreds of thousands of dollars for charging improper transfer fees.

 

On the other hand, there is good news for homeowners’ associations, these statutory maximums only apply to condominium associations. However, homeowners’ associations are not without some statutory limitation. Section 689.28, Florida Statutes, declares that transfer fee covenants violate public policy by impairing marketability of real property. However, section 689.28(2)(c)7., Florida Statutes, does allow a homeowners’, condominium, cooperative, mobile home, or property owners’ association to charge a fee if the declaration allows such a charge. So, a homeowners’ association may only charge a transfer fee if the authority is granted to the association in the declaration. Just keep in mind, if your declaration specifies a set fee, your association is limited to the fee provided in the declaration.

 

Now is a good time for all board members to review their community’s governing documents and seek advice from the association’s lawyer as to whether any existing transfer fee complies with the statutory requirements. A simple check now can help your association avoid costly litigation in the future.

Article written by Jeff Rembaum of KBRLegal.com 
with permission for SFPMA to republish for our industry.

 

Kaye Bender Rembaum, Attorneys at Law

The law firm of Kaye Bender Rembaum, with its 19 lawyers and offices in Broward, Palm Beach and Hillsborough Counties, is a full service law firm devoted to the representation of more than 1,200 community and commercial associations, developers, and their members throughout the State of Florida. Under the direction of attorneys Robert L. Kaye, Michael S. Bender and Jeffrey A. Rembaum, the law firm of Kaye Bender Rembaum strives to provide its clients with an unparalleled level of personalized and professional service that takes into account their clients’ individual needs and financial concerns.

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