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Robert L. Kaye, Esq., BCS | Legal Morsels
A large percentage of Florida residential property owners are subject to restrictive covenants on their property, be it by a declaration of condominium or declaration of covenants. In addition to these restrictions, Florida Statutes contain additional restrictions that apply to these properties, some of which involve use restrictions. For condominiums, the provisions of the statutes are of a heightened significance because but for the statutes, condominium ownership of property does not exist. However, for homeowners’ associations, restrictive covenants have been in use for centuries, well in advance of the existence of such statutes. As a result, certain statutory provisions may not apply to every homeowners’ association in Florida.
There is a restriction within both the U.S. and Florida Constitutions that limit the ability of the state to enact a law that will impair an existing contract or vested contractual right. Use restrictions contained in declarations of covenants have been identified by Florida courts as existing contracts between the property owner and the entity that operates the community under the governing documents (the association). There is also case law in Florida that addresses whether a change in the statute applies to the community based upon if a particular phrase is included in the governing documents (commonly referred to as Kaufman language).
If the governing documents include Kaufman language, any changes made by the legislature in a given year will automatically be incorporated into the governing documents and apply to that community. Conversely, if there is no Kaufman language, only what is referred to as “procedural” changes made by the legislature will apply to that community. An example of a procedural change would be a change in a notice requirement for elections. Statutory changes that are “substantive” would not apply in that instance to that community. An example of a substantive change would be requiring the association to take on all exterior maintenance of the residential dwellings (presuming the documents do not already provide for that obligation). Without the Kaufman language in the governing documents, this latter statutory change would not apply to that community, as such change would likely be considered unconstitutional.
During the legislative session in 2021, Section 720.306 of the Florida Statutes was amended to add subsection (h), which provides, in pertinent part, that any amendment to a governing document after July 1, 2021 that prohibits or regulates rental agreements applies only to a parcel owner who acquires title to the parcel after the effective date of the amendment or to a parcel owner who consents to the amendment (with specific exceptions relative to short term rentals and limiting rentals to up to 3 times a year). However, under the analysis discussed above, rental restrictions and the ability to amend governing documents are generally considered substantive vested rights. As such, this new statute appears to impair the existing contractual rights of many property owners in homeowner association communities.
The first step in considering whether this new rental restriction change applies to a particular homeowner association community is to check the governing documents for Kaufman language (this also assumes that the documents were not initially created on or after July 1, 2021). Typically, Kaufman language is not included in original documents by developers of communities, but many associations have added it by amendment after the developer was no longer involved. If the Kaufman language is in the documents, the new statutory rental restriction provisions apply. If, however, there is no Kaufman language, the new rental restriction statute would not be applicable to the community. In this instance, the membership could still amend the governing documents to prohibit or regulate rentals within the community, which should be enforceable against all current owners, regardless of whether or not they voted in favor of the amendment.
The issue of whether or not this new statutory change regarding rental restrictions violates the Federal and State Constitutions has not been tested in the Florida or Federal courts as of this writing. Before considering amending the governing document in a homeowner association community to create rental restrictions, it is recommended to consult with the association attorney as to the limitations that may apply.
The age of a CommunityAssociation opting not to fund reserves is coming to an end, and some homeowners could be facing a steep rise in assessments. Becker Shareholder Howard Perl surveys the landscape and offers a few suggestions of how to prepare.
After the Surfside tragedy, everyone wanted to know how such a tragedy could happen and what steps could be taken to avoid similar incidents in the future. What caused the collapse? Could it have been avoided? Why were repairs not made? Why did local governments allow repairs to drag on? Why were repairs not made in a timely fashion? Unfortunately, none of these questions can be answered quickly, and proper answers will require years of study and analysis.
The above questions, and attempts to enact legislative reform to address some of these questions, were a hot topic for the Florida legislature this year. Several counties and the Florida Bar convened task forces in the aftermath of the Surfside tragedy. Primary among the suggested legislative changes for multifamily buildings were periodic engineering inspections, reserve studies, and reserve funding mandates. While all agreed generally in regard to these reforms, at the end of the day, the Senate and House could not agree on the reserve funding issue and, as a result, nothing passed. Currently Florida law can allow for owners to opt to fund less than required reserves, or no reserves. Most legislative proposals included mandatory reserve funding of one type or another. The sticking point was how quickly to implement such mandatory reserves, without the option of owners being able to waive such requirements. Whether to implement immediately, effective in 2022, or over the next three or five years, to allow a gradual implementation, is ultimately what led to nothing being passed. Rather than compromise, which seems to be a forgotten word in Tallahassee these days, legislators could not, or refused, to come to an agreement for the benefit of all condominium and cooperative residents in Florida.
These issues are certain to be re-examined next year. As such, your association should begin recognizing what is most likely coming down the pike and preparing the association and its residents now. Most likely the days are gone when owners will have an opportunity to fully waive reserves. I anticipate mandatory reserve funding of some type will be implemented. Whatever version is implemented, the result will be an increase in annual maintenance assessments. Depending on what is implemented and your association’s current reserve funding situation, some owners may be looking at a significant increase in your 2024 assessments (as the laws I am discussing would be passed in 2023, and most likely effective for the 2024 association budget).
The association should be anticipating and working on these items now. For example, some sort of reserve study requirement is most likely coming. Budget for one now. Get proposals now. Have the study done now. Once mandated by statute, demand will go up, availability will go down, and of course prices will go up. We are seeing exactly that scenario now in regard to structural engineers and 40/50-year recertifications.
In regard to reserve funding, take a good look at your reserve schedules. Get updated estimates of repair costs. Factor in inflation when projecting 10 and 20 year replacement items such as painting, roofing, etc. Any effort to increase your 2023 reserve balances will help lessen any blow of 2024 mandated reserves. Explain these issues to your residents now. Many associations are understandably involved with 40/50-year recertification requirements and other life-safety related issues. Obviously these issues need to be addressed immediately and on an expedited basis. But associations and their members should keep their eye on long-term remedial requirements as well. More oversight; more required inspections; more required repairs; and more required reserves. All of these are good things for 40–50-year-old buildings in a saltwater environment in Florida.
The outcome of the 2022 legislative session once again underscores the inherent problem when all community association ideas are placed in only one omnibus bill. Until our legislators acknowledge this problem and start using stand-alone bills for important proposals, there is always the risk that needed reforms will not pass.
Contact your legislators, tell them you welcome these types of reforms, but they need to be addressed as needed, not all under one take it or leave it omnibus bill. Work with your association leaders on the above discussed items. Don’t be surprised by increased annual assessments, special assessments, and other upcoming expenses. They are coming. Prepare now.
Howard Perl is a Shareholder in Becker’s Community Association practice and has been involved in all aspects of community association law, including transactional, collections, mediation, arbitration, construction defects and litigation. He is also Florida Bar Board Certified in Condominium & Planned Development Law.
Florida passed the statewide Condominium Safety Bill in Wake of the Surfside Building Collapse back in June of 2021. This is a major, positive change moving forward in the safety of the condominiums.
What does this bill entail?
The structural integrity reserve study at a minimum, must include:
Looking ahead:
The State of Florida Property Management Association (sfpma.com) and the many members are offering their services. On our members directory Condo & HOA’s all over the state can find the top rated companies to handle their buildings inspections, engineering, fire safety inspections, roofers, painting and waterproofing, plumbers and electricians for all of your Building Maintenance repairs.
On top of these are the Law Firms, that help with making sure your buildings are legaly ready for the changes.
We understand with all of these changes each condo and hoa will need help with funding the reserves into the future, so we did not forget this: Our industry members include the top financial companies, ie: Banks and Loan companies ready to help wth your investments. Act now start saving and growing your reserves, at times you will also need to get your accounting and bookkeeping with the added help from our collections members to make sure you cn get the funding to perform the many needed repairs.
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A bill has been sent to Florida’s governor that would require statewide recertification of condominiums over three stories tall, in response to the Surfside building collapse that killed 98 people
TALLAHASSEE, Fla. — Florida would require statewide recertification of condominiums over three stories tall under a bill sent Wednesday to Republican Gov. Ron DeSantis by lawmakers, their legislation a response to the Surfside building collapse that killed 98 people.
The House unanimously passed the bill during a special session originally called to address skyrocketing property insurance rates. The condominium safety bill was added to the agenda Tuesday after an agreement was reached between the House and Senate.
Recertification would be required after 30 years, or 25 years if the building is within 3 miles (5 kilometers) of the coast, and every 10 years thereafter. The Champlain Towers South was 40 years old and was going through the 40-year-recertification process required by Miami-Dade County when it collapsed last June.
At the time, Miami-Dade and Broward counties were the only two of the state’s 67 that had condominium recertification programs.
“We have actually made positive change knowing that condominiums will be safer moving forward,” said Republican Rep. Daniel Perez.
The bill would require that condominium associations have sufficient reserves to pay for major repairs and conduct a study of the reserves every decade. It would also require condominium associations to provide inspection reports to owners, and if structural repairs are needed, work must begin within a year of the report.
Similar legislation failed during the regular session that ended in March.
The condominium measure was attached to a bill that would forbid insurers from automatically denying coverage because of a roof’s age if the roof is less than 15 years old. Homeowners with roofs 15 years or older would be allowed to get an inspection before insurers deny them coverage.
While some Democratic lawmakers complained that the special session on insurance didn’t go far enough to help relieve homeowners, they did praise the addition of the condominium safety legislation.
“This bill makes this trip worth it, at least for me,” said Democratic Rep. Michael Grieco, whose district borders Surfside. “I know folks who lost people in that building.”
The House sent the bill to Republican Gov. Ron DeSantis on Wednesday.
The House unanimously passed the legislation during a special session on skyrocketing property insurance rates.
Recertification would be required after 30 years — or 25 years if the building is within three miles of the coast — and every 10 years thereafter.
Nearly a year after the catastrophic collapse of Champlain Towers South in Surfside, Florida lawmakers on Wednesday gave final approval to legislation that will require condominium association boards to set aside money in reserves to cover future repairs starting in 2025. Current law allows them to waive the requirement.
“They are allowed to do that, and most of them are doing that today. They’re doing that because they are kicking the can down the road and not wanting the cost,” said state Rep. Danny Perez, R-Miami. “So moving forward, the structural integrity of a condominium will be reserved, they will be maintained, and they will be kept up to par so that future condominiums never have to worry about another Surfside taking place.”
The measure, which was approved by the House on a 110-0 vote and now heads to Gov. Ron DeSantis, would also require condo boards to conduct reserve studies every decade to make sure they have the resources to finance needed structural repairs. The proposal would also open up condo board members — many of them volunteers — to lawsuits if they ignore inspection requirements.
At play in Florida will be how to mandate reserves and maintenance to prevent tragedy and prepare associations who will need to make decisions that will likely cost homeowners more money.
“The compliance timeline is a few years away to afford an opportunity to smoothly transition,” the Senate sponsor of the bill, Sen. Jennifer Bradley, R-Fleming Island, said. “Additionally, the Legislature will remain engaged as condos and associations work to implement these changes.”
Bradley said she knows the changes to the state’s condo law will be a disruption to the status quo for many condos, but she says, “the safety of Floridians must come first.”
“The creation of a first-of-its-kind statewide system of milestone inspections for our aging condos and providing transparency and disclosure to local officials, unit owners, and renters are significant measures that will save lives,” Bradley said.
There would be two phases to inspections. If a visual inspection by a licensed architect or engineer authorized to practice in Florida reveals no signs of substantial structural deterioration, no further action is necessary until the next required inspection. If structural deterioration is detected, a second phase of testing is required to determine whether the building is structurally sound.
The changes to the state’s condo laws emerged on Tuesday afternoon during a special session that Gov. Ron DeSantis called to address Florida’s failing property insurance market. The deal came after months of negotiations between lawmakers.
On Wednesday, Perez said the reserves provision was “the most important” part of the bill. House Speaker Chris Sprowls, R-Palm Harbor, thanked him for standing his ground, telling him that “people in the state of Florida are safer because of your efforts.”
Whether you are an experienced board member or thinking about becoming one, having a foundation for effective community association board leadership is important.
By becoming a community association board member, you step up to take on positions of service and responsibility. You’re now expected to anticipate issues, solve problems, meet the expectations of residents, and protect property values.
Here are five important skills to possess as a board member:
Since the tragic Surfside condo collapse, residents are asking for more transparency from their elected board members. Board members can use Concierge Plus as a platform for keeping residents in the loop with regards to anything related to their community.
Below are few Concierge Plus features that can help you become a transparent board member:
Community association board members should serve with the best interests of their communities in mind. The law imposes a level of care and loyalty, owed by board members to their associations. It is vital that you receive proper education and training in order to understand your obligations and fulfill your fiduciary duty to the association.
Book a meeting with our experts today, and see for yourself how thousands of board members across North America have become more informed and effective using our platform.
Anyone trying to buy a home right now knows that the market is a mess and that investors are their only real competition. The Washington Post determined that outside investors purchased a record share of sold homes across 40 major metropolitan areas in the US last year (1 in 7 homes sold!) But this isn’t just hurting home buyers. That’s a huge number of absentee homeowners renting out space in condos and HOAs. A few long-term renters in your HOA or condo association aren’t a problem in the grand scheme of things, but rentals can get very out of hand very quickly if left unchecked.
Keeping investors out isn’t a simple, or even always desired task. Because investors are not inherently bad. Especially in coveted vacation destinations, everyday people want to own a sweet little slice of heaven that they can use as they please and then rent out for the other half of the year. But too many investor-owned properties in your condo or HOA can alter the nature and even purpose of a community association.
The problem with investment properties becoming a significant percentage of your community association’s roster boils down to a potential lack of accountability. It’s kind of like one of those word problems you used to have in math class:
Let’s say you inherit a large garden space, and you are a watermelon lover. You share 500 garden plots with friends and neighbors so you can all grow watermelons to enjoy this summer. In the first year, you all grow delicious, beautiful watermelons, and life is good. But if the following year, 300 of the plot owners start letting people come in and use their soil however they like, the remaining 200 are stuck dealing with the potential consequences. One guy went and planted thistle, and the guy two plots away is planting lavender, and someone else planted cotton which would probably have been fine but now there’s a bull weevil infestation. Now the entire garden is suffering. If all 500 original gardeners were collectively responsible, it wouldn’t be such a challenge to face. But contacting absent gardeners to resolve the messes made by their amateur gardening buddies grows slimmer as the numbers climb– it’s just too much work for too few people.
In the story, your community is the garden, and the 200 who got stuck are the homeowners who are living in their own homes in the community. They are the ones left holding the bag when absentee investors do not respect the rules or engage with their community.
Homeowner apathy has long been a thorn in the backside of HOAs and condo associations. From dismal meeting attendance to push-back on necessary assessment increases, condos and HOAs struggle when it comes to engaging with their residents. Now imagine half or more of your community’s homes aren’t owner-occupied or even human-owned if a business or conglomerate has bought them as an investment! Getting the votes to amend community documents, raising assessments, implementing special assessments–all of it becomes much harder, if not impossible, to accomplish. If homeowner delinquency reaches dangerous levels, coming back from those losses will be even more difficult to do successfully.
Especially when dealing with large, well-funded corporate investment entities, keeping your community, well, a community, becomes increasingly difficult. To a company, your community is a stream of revenue–it’s business! And that isn’t a bad thing on its own, but it can deeply impact everything that goes into creating a harmonious living space. Now it isn’t just about the maintenances that can’t get approved or the special assessments that are needed. Any changes to the community that help improve general camaraderie or success are likely to be shot down by those who are more concerned about their bottom lines than the welfare of families.
This is not a scare tactic or an “only in the right circumstances” situation we’re talking about–certain state laws, like Arizona’s Condo Act, include language that allows for Termination of Condominium in the event that a specified percentage of the units (80% in AZ) agree to terminate the community association. For investors, this means they could dissolve a community and force the remaining homeowners to sell their homes at “fair market value,” to be determined by an appraiser hired by the 80% calling for dissolution.
Keeping your community healthy is a necessity. Sometimes the best option is to stop potential nonsense before it has a chance to get out of hand. HOAs and condos have some options when it comes to weeding out the bad-faith investors and identifying the good ones that will contribute to your healthy community.
Implementing rental minimums can be a huge help in staving off corporate investors. One popular option is imposing a minimum length for a lease. Dictating that leases must be over a certain number of days (30, for example) keeps away anyone trying to make a quick buck on pricey weekender rentals. You could also set a restriction on WHEN a tenant is allowed to begin leasing their units. Seven months is a common bar–it’s not so long that it turns away owners looking to have a winter or summer vacation property, but it’s longer than many corporate investors are willing to wait to begin renting a unit, especially when flips these days take so little time.
Setting a bar on the maximum rental occupancy for the whole community is a brilliant way to stop investor encroachment. Limiting the rental percentage well below that 80% threshold we talked about is the simplest way to avoid investors taking over and dissolving your community out from underneath you and your homeowners. By setting a realistic, healthy rental percentage (which will vary by community size and location), boards can minimize the number of investors interested in buying property in the community.
Your authority as the trustees of the community is likely the strongest asset you have when it comes to combatting absentee homeownership. Requiring board approval of all future tenants are one way of slowing short-term rentals. Requiring background checks on potential renters is another tool to utilize. They help protect the community, but also cost the landlord a nominal fee that really starts to add up the more tenants they bring in. And proper enforcement of your CC&Rs, like trash cans being left out too long or damages to community property, will make investors think twice about bringing in a high volume of unpredictable tenants.
Outside investors are here to stay, for better or for worse. Sooner or later, they will have a space in your community, and when that happens, it’s important to consider what that means, and have plans in place to keep them in check. That includes a plan for community collections because even major corporate entities can fall behind on monthly assessments. Axela Technologies can help with any collections efforts your HOA or condo association has, including collecting from corporate investors. Call us today for your no-risk, no-cost consultation.
SFPMA works throughout the State of Florida, we are a multi-member organization for the Condo, HOA and Property Management industry. Through knowledge based Articles, Events and our Members Directory, Clients find the right information to make an informed decisions for their Florida properties.
