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“Fla. Construction Defect Bill Would Hurt Consumer Interests,” Law360 by Becker

“Fla. Construction Defect Bill Would Hurt Consumer Interests,” Law360 by Becker

  • Posted: Jan 21, 2022
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“Fla. Construction Defect Bill Would Hurt Consumer Interests,” Law360

Patrick C. Howell of Becker

Last year, Florida politicians attempted to weaponize Chapter 558 of the Florida Statutes and eviscerate the cause of action for violations of the Florida Building Code. Thankfully, that legislation died in committee and never saw the light of day.

Unfortunately, through H.B. 583 filed by Rep. Clay Yarborough, R-Jacksonville, and S.B. 736 filed by Sen. Travis Hutson, R-St. Augustine, developer-backed politicians are once again seeking to weaponize Chapter 558, and, this time, completely eliminate the tolling provisions in Section 95.11(3)(c) of the Florida Statutes for latent construction defects.

In their current iterations, Chapter 558 and Section 95.11(3)(c) are consumer- friendly provisions drafted and signed into law to protect Florida homeowners, homeowner associations and condominiums from defective construction, provide for the resolution of construction defect claims, and promote the settlement of claims without litigation.

Chapter 558 was passed by the Legislature years ago to assist with the resolution of claims outside of litigation. It requires that a party damaged by construction defects submit the claim to the at-fault developer or contractor, allows for inspections, and gives the developer or contractor an opportunity to settle the claim.

This process has worked effectively for many years and has resulted in countless settlements without expensive litigation. The changes proposed during this legislative session would severely damage Chapter 558 and the ability of homeowners, HOAs and condominiums to timely submit claims and foster settlements outside of court.

First, the proposed amendments take a heavy-handed approach with regard to owners, condos and HOAs versus developers and contractors. Under the changes proposed, if an owner, condo or HOA rejects a settlement offer, they must then prove that the offer wasn’t enough to address the repairs.

However, what is the penalty for a developer or contractor ignoring a properly served and documented Section 558 claim? Nothing. Just this one provision shows how anti-consumer and pro-developer this bill is.

Second, poison pill language has been worked into the bill that would require that a party receiving settlement funds (1) execute a contract to start repairs within 90 days; and (2) complete the repairs in one year.

Beyond the big government incursion into our day-to-day decisions, which is by itself disturbing, here’s the nightmare scenario this provision sets up: A condominium association has a multiparty claim against the developer, contractor, subcontractors and design professionals for a structure built with numerous defects to the roof, framing, stucco, foundations and windows.

The stucco subcontractor makes an offer to settle related to its scope of work. The owner accepts the offer. Under this bill, a contract to complete the repair to the stucco must be finalized within 90 days and the work must be completed within a year.

This is despite the fact that the owner has not settled with the contractor, developer, roofer, the window supplier or any of the other trades. So the work to the stucco gets completed, as mandated by this bill, and the claims continues against everyone else.

Two years later, the owner gets a verdict against the other parties and has the money to address the remaining defects. Unfortunately, the newly replaced stucco now has to be torn off to address the defective framing underneath the stucco, the windows installed in the stucco walls, and the roofs with kickouts and other elements adjacent to the stucco. It’s doubtful that anyone would ever accept a settlement offer under these circumstances.

This provision sets up for failure a claim made under Chapter 558, as well as the resulting settlement offer, at least for claims involving defects to more than one building element. As such, this amendment just won’t work for condominium towers, multifamily buildings, or homes constructed by dozens of different trades.

Third, the new proposed Section 558.0045 requires that the judge in a pending construction defect case appoint a third-party expert engineer, contractor or building code inspector to inspect the structures involved in litigation and issue a report 15 days later. The bill doesn’t detail how this appointed expert is to be paid beyond the statement that “the parties shall compensate the expert.”

So under this bill, each of the parties have the expenses of their own expert witnesses, plus now they have to share in the expense of an additional expert witness or witnesses. Wealthy developers will be easily able to foot the bill for these extra costs, but such will be a difficulty for an HOA, condominium or individual owner.

Despite the added expense required by this bill, the third-party expert does not have the ability to make any sort of decisions that bind any of the parties. So what really is the point? Also, it is unclear who would be the party contracting with the expert, and it’s hard to see any court signing off on such a contract. As such, what expert would expose themselves to the liability for these inspections without some contractual protection? Why would they?

Fourth, the new proposed Section 558.0046 requires that a claimant receiving compensation repair the defect. But why? If a defect renders a building uninhabitable and the plaintiff receives compensation for that loss, why shouldn’t they be able to demolish the building and use the settlement or verdict proceeds however they want?

The government should not be in the business of telling its citizens what to do with such proceeds.

Furthermore, settlements often occur because a plaintiff decides to take less than what they are owed, repair some defects and live with the others that don’t affect habitability. This provision would discourage such settlements, which goes against the very purpose behind Chapter 558.

As with last year’s disastrous bill, the proposed amendments to Chapter 558 also go so far as to insert big government into the relationship between a homeowner and their mortgage company. The amendments add a new subsection requiring that a homeowner with defects advise their mortgage company that they’ve asserted a construction defect claim as to the property and provide other details about the resolution of the claim.

This requirement could jeopardize the homeowner’s loan and expose the homeowner to inordinate amounts of red tape. There is nothing in the description of the bill advising as to the goal of this proposed change or what wrong it proposes to right. Note that no banking institutions or mortgage lenders have even requested this change to Chapter 558.

As such, and considering the other proposed changes to Chapter 558, it is assumed this is just another barrier that is being erected to dissuade homeowners, HOAs and condominiums from pursuing otherwise legitimate claims for construction defects against developers and contractors.

The proposed bill also tinkers with Section 95.11(3)(c) of the Florida Statutes, which establishes a four- year statute of limitations for construction defect claims. To protect consumers, the same provision also includes a provision that the statute of limitations does not begin to run on latent defects until the defect is discovered or should have been discovered with the exercise of due diligence.

To then in turn protect developers and contractors, there is an absolute bar to such claims 10 years after the completion of construction. This time period was shortened from 15 years to 10 a few years back. This absolute bar is known as the statute of repose. When the statute of repose runs on a claim, the homeowner, HOA and condominium is then forever precluded from bringing a claim against the developer or contractor.

However, under the amendments proposed by this bill, the concept of latency is completely removed from Section 95.11(3)(c). As such, if this law passes, courts will be required to apply a hard four-year statute of limitations for construction defect actions, with the time running from the certificate of occupancy, completion of the contract, etc. What this would mean for consumers is that the 10-year period for bringing claims based on latent defects would be effectively shortened to four years.

Thus, a developer would be able to complete a community and then maintain control over the HOA for just four additional years to run out the statute of limitations.

This change also completely disregards the nature of construction. As a condominium tower, townhome building, or home is built, trades working on the structure naturally cover up the work of the trades that came before them. The framer covers up the completed concrete foundation, the stucco and roofing contractors cover up the framing, the painter covers up the stucco, and on and on.

Thus, it is easy to see how defects can be hidden and not noticed by the end user owner for several years to come. Careful inspections along the way can forestall mistakes, but careful inspections don’t always occur.

Allowing affected owners or associations to sue over defects that have been covered up by contractors and developers keeps contractors and developers accountable and results in better construction. Taking such a cause of action away will just result in shoddy construction, and owners and associations will have no way of rectifying dangerous conditions on their property.

The proposed changes included in S.B. 736 and H.B. 583 would weaken consumer protections, increase litigation costs and result in the settlement of fewer claims outside of litigation. The changes to Chapter 558 and Section 95.11(3)(c) should be vigorously opposed by anyone who supports consumer rights for homeowners, HOAs and condominiums.

To view the original Law360 article, please click here. (Subscription required.)

Reprinted with permission from Law360.

 


Patrick C. Howell

Office Managing Shareholder

 PHOWELL@beckerlawyers.com

 

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Repair Erosion for a Healthier Waterbody by SOLitude

Repair Erosion for a Healthier Waterbody by SOLitude

  • Posted: Jan 21, 2022
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Repair Erosion for a Healthier Waterbody

Shoreline erosion can be detrimental to the health of your waterbody as well as the safety and value of your property.

The Many Effects of Erosion on Florida Lakes

Most communities throughout Florida utilize lakes and ponds to enhance the aesthetics of homes and golf courses, as well as support recreational opportunities such as boating and fishing for residents. The majority of these waterbodies were man-made for practical and functional purposes, such as capturing stormwater to prevent flooding or storing water to use for irrigation. Unfortunately, natural erosion of the shoreline is inevitable. It is an issue that only gets worse over time and should be addressed immediately, followed by consistent monitoring.

Effects of Shoreline Erosion in Lakes

Shoreline erosion is a serious issue for waterbodies of all sizes and uses. It can degrade shoreline property, increase the risk of flooding, interfere with recreational opportunities, and threaten aesthetic appeal. In many cases, the deep cracks and gullies that appear can expose sprinkler systems, drainage pipes, and electrical cables, leading to costly repairs. Likewise, due to the effects of erosion, lakefront homeowners may find that their property decreases in size and value over time.

When slopes become too steep, the shoreline can also become unsafe for residents, children, pets, and recreationers. Steep slopes increase the risk of someone falling into the lake and being injured. The steepness of the slope can also make it hard for someone to get out of the lake when they fall in. This can pose a significant liability for HOAsgolf coursescommercial properties, and private homeowners.

What Causes Lake Shorelines to Erode

Erosion has many natural causes:

  • Changing water levels due to seasonal rains and other weather events
  • Strong winds that cause waves to pound into banks and reduce stability over time
  • Improper drainage systems that allow stormwater runoff to cause damage, especially when the shoreline is exposed due to low lake elevation

The presence of nuisance fish and wildlife such as invasive armored catfish and otters that burrow into banks and cause them to collapse

Erosion Caused by Humans

Although these causes are natural, human activities can also increase the rate of erosion:

  • Clear-cutting of beneficial buffers composed of native vegetation removes the natural erosion protection provided by complex root systems that hold soil in place
  • Gardening and lawn care can cause excess fertilizer and pesticides to enter a waterbody, disrupting its natural health and balance
  • When too much land is covered by pavement or asphalt, these hard surfaces can accelerate the stormwater that enters a lake or pond, rather than allowing natural absorption into the soil

 

How Lake Shoreline Erosion Can Be Prevented

Despite the best efforts of HOAs, golf course superintendents, and municipalities, all waterbodies will experience erosion to some degree. However, there are many strategies to control or mitigate erosion.

 

Native Plants

Planting deep-rooted grasses and flowering vegetation will help retain, hold and stabilize the soil. This ground cover also helps to deter nuisance and invasive species from entering the aquatic ecosystem. It is imperative to use native plants rather than exotic species that are known to damage the habitat that nurtures beneficial fish, birds, and other wildlife.

Bioengineered Shoreline Control

Bioengineered erosion control technology is an excellent tool to restore shorelines and mitigate future erosion. Knitted ShoreSOX® and DredgeSOX® repurpose eroded muck by anchoring it to the shoreline for lasting stability. SOX solutions integrate naturally into the landscape and can be planted directly with vegetation for further erosion protection.

Riprap and Root Trap

With riprap, rocks are placed over a filter blanket to keep the soil in place. Similar to riprap, root trap is achieved by covering the rocks with topsoil and installing native, deep-rooted plants that contain the sediment in place as they grow.

Bulkheads and Retaining Walls

Bulkheads and retaining walls can be effective at controlling the effects of erosion; however, if not installed correctly, they run the risk of falling into the water or eroding from underneath and becoming unsafe.

Erosion Control Blankets

Coir logs or fiber roll material can be installed to slow down the movement of the water or create a “pooling” effect that allows sediment to filter out. They can be made of natural or synthetic fibers or a blend of straw, coconut fiber, or polypropylene (plastic).

Contact Us to Protect Your Shoreline Against Erosion

Call us at 866-781-8904 or complete the form below to get connected with an aquatic management expert.

 

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“Are Fines for Speeding Legal?,” Naples Daily News by Becker

“Are Fines for Speeding Legal?,” Naples Daily News by Becker

  • Posted: Jan 20, 2022
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“Are Fines for Speeding Legal?,” Naples Daily News

David G. Muller | 01.18.2022
ArticlePublication Naples Daily News

Q: My community has set up various speed monitoring devices along the most travelled road. The board is now fining residents for speeding violations. Is this legal? What is the process for imposing a fine and can these fines result in a lien? D.V.

A: Fines can be levied for violations of the governing documents, including speeding violations. Whether a fine can be recovered by the recording and pursuit of a lien depends on several factors, including the amount of the fine and what type of community association you live in.

Condominium and cooperative fines are capped at one hundred dollars per day and one thousand in the aggregate for continuing or ongoing violations. Homeowners’ association fines are likewise capped at one hundred dollars per violation and one thousand dollars in the aggregate, with one important difference. The declaration, articles, or bylaws for a homeowners’ association can authorize higher fines (this option is not available to condominiums and cooperatives).

Fining is retroactive and can begin accruing from the first day/time a violation is alleged to have occurred. There is no legal requirement to give a warning letter or opportunity to correct a violation before a fine is levied, although many associations do so as a matter of policy, especially for minor or first-time violations.

The board typically initiates the fining process by placing the matter on the agenda for a regular or specially scheduled board meeting to consider levying a fine. A majority vote of the board at a meeting where a quorum is present would be required to levy the fine, which should be levied as a specific amount.

After levy by the board, a hearing must be offered. The hearing is conducted by an independent committee appointed by the board. The committee, sometimes called “fining committee” or “compliance committee,” must be comprised of at least three (3) members of the association who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee.

At the fining hearing, the committee must afford basic due process and allow the accused to be heard, state his or her case, and challenge evidence against him or her. Ongoing or continuing violations only require a single notice and opportunity for hearing before the committee.

The committee’s sole decision is to either “confirm” or “reject” the fine levied by the board. If the committee rejects the fine, the matter is concluded. If the committee confirms the fine, the fine is deemed to be imposed. The association must provide written notice of the fine by mail or hand delivery to the owner and, if applicable, to any tenant or invitee of the owner. The fine becomes due 5 days after written notice is given.

Unpaid fines cannot by law be secured by a lien for condominium or cooperatives. In homeowners’ associations, the statute provides that a fine of one thousand dollars or more may be subject to a lien. Some argue that the governing documents need to also include the authority to impose the lien for unpaid fines, some argue the contrary, there are no appellate court decisions on the topic. You might also be interested in knowing that there are already two Bills filed for the 2022 Florida Legislative Session that address HOA fines. One Bill (SB 1362) would state that homeowners’ association fines cannot be secured by a lien. The other (HB 6103) would remove the statutory authority of homeowners’ associations to fine altogether. It will be interesting to see what happens to these Bills during the upcoming 2022 Legislative Session.

Collection of fines typically requires a suit in small claims court, and the loser of the case would normally be responsible for the winner’s attorneys’ fees.

The provisions of your individual association’s governing documents and the application of current laws is also an important issue, which should be addressed with the association’s attorney. Likewise, if the matter is contested in court, the judge will likely require proof from the association that its speed monitoring devices are reliable and properly calibrated and maintained.

To read the original Naples Daily News article, please click here.

David Muller is board-certified in Condominium and Planned Development Law and regularly provides practical advice that ensures the fiscal success and legal compliance of both commercial and residential community associations. He has significant experience in drafting governing documents and amendments, negotiating contracts, dispute resolution, and more. For David’s complete bio, please click here.

 

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Triploid Grass Carp- Can They Help Control Weeds on my Lake? By: Allstate Resource Management

Triploid Grass Carp- Can They Help Control Weeds on my Lake? By: Allstate Resource Management

  • Posted: Jan 18, 2022
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Triploid Grass Carp- Can They Help Control Weeds on my Lake?

By: Allstate Resource Management

The grass carp has been introduced throughout the world for aquatic weed control. The grass carp was considered for introduction into the U.S. primarily because of its plant-eating diet, which was thought to have great potential for the control of aquatic weeds.

Wide-scale use of the grass carp in Florida and many other states from 1970 to 1984 was limited and closely regulated due to fears about its reproduction and negative impact on sport fish. Since the grass carp’s potential for causing such problems was evident, early research focused on developing a fish that would be non-reproductive but would retain the grass carp’s herbivorous diet.

Research with the grass carp resulted in the production of a sterile triploid grass carp, which has an extra set of chromosomes. The triploid grass carp is produced in the same way as the diploid, except that fertilized eggs are subjected to heat, cold, or pressure shock result in the formation of fish with an extra set of chromosomes for a total of 72. The extra chromosomes make these fish sterile.

The grass carp is primarily a “grazer”; it tends to feed on the surface and in shallow water. The ability of grass carp to consume and utilize aquatic plants depends on the size of both plants and fish. Additional factors which influence the feeding behavior of grass carp include their size, age, gender, and population density, and the species, abundance, and location of plants within a body of water.

In Florida, a permit is required by law for the use or possession of grass carp. Only grass carp certified as triploid can be used in an aquatic weed management program. Allstate Resource Management recommends triploid grass crap in combination with a lake management program.

Speak with a lake management specialist on how we can develop a management program for your lake or pond!

 

 Contact Allstate Resource Management
 954-382-9766
 info@allstatemanagement.com 

 

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THERE MAY BE LOTS OF NEW SHERIFFS IN TOWN IF THIS BILL PASSES  By Eric Glazer, Esq.

THERE MAY BE LOTS OF NEW SHERIFFS IN TOWN IF THIS BILL PASSES By Eric Glazer, Esq.

  • Posted: Jan 17, 2022
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THERE MAY BE LOTS OF NEW SHERIFFS IN TOWN IF THIS BILL PASSES

By Eric Glazer, Esq.

Senator Anna Maria Rodriguez filed our mandatory condo education bill in Florida’s Senate.  But if you think she’s done trying to change additional condominium laws, you would be very wrong.  She also filed Senate Bill 274 which creates the Condominium Fraud Investigation Pilot Program.

According to the bill itself, the purpose of the program is to investigate condominium-related fraud and corruption in Broward, Miami-Dade, and Monroe Counties. The DBPR may contract with a private entity that employs retired law enforcement officers who have subject matter expertise in financial fraud to achieve the purpose of the program. The DBPR shall hire five law enforcement officers to carry out the purpose of the program. If the DBPR does not contract with a private entity, the DBPR must hire three financial investigators, five investigators with previous law enforcement experience, and three clerical employees to staff the program.

A person may submit a complaint to the Office of the Condominium Ombudsman. The ombudsman shall review all complaints submitted to the office and determine which complaints to forward to the DBPR for additional analysis and investigation under the program. If a complaint submitted to the office does not contain allegations of fraud or corruption, the ombudsman must forward the complaint to the Division of Florida Condominiums, Timeshares, and Mobile Homes.

 The DBPR has the power to subpoena, audit, and investigate for the purposes of the program. The DBPR may administer oaths, subpoena witnesses, and compel the production of books, papers, or other records relevant to investigations it conducts. If, after reviewing a complaint under the program, the DBPR finds sufficient evidence for criminal prosecution, it must refer the case to the appropriate state attorney for prosecution.

The program must be funded annually from the Division of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund with funds specifically appropriated in the General  Appropriations Act.

This section is repealed October 2, 2027, unless reviewed and saved from repeal through reenactment by the Legislature.

 

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Security Tips for Managing the Association’s Bank Accounts Online  By: Sara K. Wilson, Esq. / Becker

Security Tips for Managing the Association’s Bank Accounts Online By: Sara K. Wilson, Esq. / Becker

  • Posted: Jan 14, 2022
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Security Tips for Managing the Association’s Bank Accounts Online

By: Sara K. Wilson, Esq.  Becker

Increasing numbers of people and small businesses, including community associations, have switched to managing their bank accounts exclusively over the internet.  Not surprisingly, these numbers surged even higher during the pandemic.  While online banking has become common place, so have incidents of cybercrime and fraud.  Banks of course use a variety of security measures to protect their customers’ accounts, but there are also steps that you as the customer should take to minimize risk.

  1. Verify that your bank is using the latest security technology in step with banking industry standards.
  2. Have a dedicated computer for conducting the association’s online banking, and make sure that computer stays current with anti-virus protection and updates. If the dedicated computer is a laptop, never conduct online banking in public spaces or use public Wi-Fi.
  3. Choose passwords that are complex by using a combination of letters, numbers, and symbols, and institute a policy for changing passwords on a regular basis. Limit the number of people who know the password to only those who are managing the accounts.  Passwords should not be recorded on personal computers or mobile devices or accessible to other owners, family members, guests, etc.  Avoid automatic logins to prevent unauthorized persons from easily accessing the association’s accounts.
  4. Be on high alert for phishing scams. Phishing is a technique that cyber-criminals use to gain sensitive information, like bank account numbers and passwords, through fraudulent emails and texts.  Your bank will never ask for your password via email or text; so if you receive such an email or text, delete it. Also beware of any email requesting that you “update your account,” or of any email warning of dire consequences if you do not act immediately.  If you are not sure whether the email came from your bank, contact your banking institution to verify whether they sent the email.  Because phishing scams are so prevalent, it is important to provide information about phishing to anyone who will be managing the association’s accounts online so they know what to look for.
  5. Reconcile your bank accounts on a regular basis – ideally daily – to avoid an irregularity going unnoticed. Inquire whether your bank sends alerts for transactions over a certain amount or if your account drops below a certain amount for added protection.

These are just a few of the steps an association can take to decrease risks when managing its bank accounts online. Because a community association has a fiduciary responsibility to its members, it is imperative that it takes the necessary steps to minimize potential cyber threats to its bank accounts. While there is no guarantee that even a well-protected system won’t be hacked, by adopting and following online banking security policies, an association greatly lessens its chances of being an easy target for a potentially devastating cybercrime.

Sara K. Wilson

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Can my HOA Collect if the Homeowner Declares Bankruptcy? by Axela Tech.

Can my HOA Collect if the Homeowner Declares Bankruptcy? by Axela Tech.

  • Posted: Jan 14, 2022
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Can my HOA Collect if the Homeowner Declares Bankruptcy?

by Axela Tech. / Mitch Drimmer

Bankruptcy is one of the most perplexing issues community association managers must deal with. It is the most complicated issue involved in condo and HOA collections. So YES, a condo or HOA CAN collect if a homeowner declares bankruptcy. But you must know what you are doing and how to do it.

What Is Bankruptcy?

Bankruptcy is generally taken to mean that someone is out of money. But the actual meaning, and the legal proceeding of bankruptcy, are a little more complicated. Declaring bankruptcy isn’t as simple as someone saying, “Sorry, I have no more money left,” it’s a legally determined state of being unable to pay off debts owed.

The goal of filing for and declaring bankruptcy is to create a more positive economic situation for everyone. By declaring bankruptcy, the person in debt pays off a portion of the owed debts, and the remainder is discharged, giving both sides an opportunity to benefit from a bad situation.

Certain types of debts generally can’t be discharged through bankruptcy, such as child support, alimony, student loans, and some tax obligations. However, money owed to condos and HOAs is considered consumer debt and is dischargeable when a homeowner declares bankruptcy.

money owed to condos and HOAs is considered consumer debt and is dischargeable when a homeowner declares bankruptcy

What Happens When a Homeowner Declares Bankruptcy?

Bankruptcy cases are handled by federal courts, and federal law defines six different types. The two most common types used by individuals are Chapter 7 and Chapter 13, named after the sections of the federal bankruptcy code where they are described.

Chapter 7 bankruptcy, the type most individuals file, is also referred to as a straight bankruptcy or liquidation. A trustee appointed by the court can sell some of the homeowner’s property and use the proceeds to partially repay creditors, after which their debts are considered discharged. Some types of property can be exempt from liquidation, subject to certain limits. Those include vehicles, clothing, household goods, tools of the trade, pensions, and a portion of home equity. Homeowners list the property they are claiming as exempt when you file for bankruptcy.

Chapter 13 bankruptcy, on the other hand, results in a court-approved plan for the delinquent homeowner to repay all or part of their debts over a period of three to five years. Some of their debts may also be discharged. Because it does not require liquidating assets, a Chapter 13 bankruptcy can allow a homeowner to keep their home, as long as they continue to make the agreed-upon payments. Chapter 13 bankruptcy is the most common kind of bankruptcy filing by homeowners attempting to save their homes from foreclosure.

Chapter 13 bankruptcy is the most common kind of bankruptcy filing by homeowners attempting to save their home from foreclosure.

Collecting After Bankruptcy is Filed

In community associations, the registered agent (generally your manager or board president) will receive a notice that an owner has filed for bankruptcy and action must be taken. HOA and condo collections are serious business and if the association does not respond appropriately, you may not be in line to recover any delinquent assessments when the case is discharged by the bankruptcy court.

It’s incredibly important to remember that once you get notice of a bankruptcy filing, the management company CANNOT contact the owner to request payments. If you have sent the file to a collection agency or attorney, you need to notify them so that they too can stop all collections activity.

The association’s attorney will need to respond to the notice of bankruptcy with a ledger of all amounts due to the association. This is called a “pre-petition” ledger and it covers everything that was owed from the time the property owner went delinquent until the time he/she petitioned the court for protection under the bankruptcy laws. This ledger of delinquent condo or HOA dues is sometimes referred to as a ledger “in rem.”

It’s incredibly important to remember that once you get notice of a bankruptcy filing, the management company CANNOT contact the owner to request payments.

Next, the association needs to start a new ledger which should be called the “post-petition” ledger which covers what is owed from the time the owner filed for bankruptcy going forward. The post-petition ledger has nothing to do with the bankruptcy proceedings and the delinquent owner should be paying their assessments as usual after the initial bankruptcy filing.

Many believe being in bankruptcy means nothing needs to be paid, but that is not accurate. If the association is not receiving post-petition payments, then when the bankruptcy is discharged, they need to immediately start collections activity.

If a homeowner declares bankruptcy and fails to pay the post-petition amounts (assessments and other debts owed to the association) the association can ask the bankruptcy court to lift the automatic stay and allow collection efforts to resume. If successful, the condo or HOA can continue pursuing the debt.

the delinquent owner should be paying their assessments as usual after the initial bankruptcy filing.

Monitoring After a Homeowner Declares Bankruptcy

Monitoring a bankruptcy is critically important. Axela Technologies does this for all files that are placed with us, whether they are already in bankruptcy or file during collections activity.

Often it happens that a bankruptcy has been discharged and the community association does not even know about it, so the debt keeps on piling up with no resolution in sight. Axela Technologies uses PACER which is a database of all bankruptcy cases in the United States. When a case is discharged, the association should know about it and Axela will move the file forward if the owner has not paid their post-petition amounts or does not adhere to the court’s settlement agreement.

Bankruptcy is there to help and protect people, but there are those who will game the system and will postpone payment or just completely default. These are files that need to be addressed and worked on without delay. Call Axela for a no-obligation review of our collection process and technology. Let us show you how the future collects!

 

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Why Condominium Associations Must Obtain Approval Before Work Begins and A Plea To The Florida Legislature For A Remedy by KBR Legal

Why Condominium Associations Must Obtain Approval Before Work Begins and A Plea To The Florida Legislature For A Remedy by KBR Legal

  • Posted: Jan 12, 2022
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Why Condominium Associations Must Obtain Approval Before Work Begins and A Plea To The Florida Legislature For A Remedy

 

When it comes to material alterations, some might say that homeowner associations have it easy compared to condominium associations. For a homeowners association, because Chapter 720, Florida Statutes is silent on the issue, unless otherwise provided in the governing documents, decisions regarding material alterations are made by the board. But, as to condominium associations, and as their board members should know, §718.113(2), Florida Statutes, requires advance membership approval for material alterations to the common elements and association real property. In this regard, there is no parity between the Condominium Act versus the Homeowners Association Act.

Before explaining further, a reminder of the Florida’s Fourth District Court of Appeal  definition of what constitutes a “material alteration” from the seminal case Sterling Village Condominium, Inc. v. Breitenbach,  251 so.2d 685, 4th DCA (1971) is in order. As explained in Sterling,  “as applied to buildings the term ‘material alteration or addition’ means to palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance.”

Prior to July 1, 2018, §718.113(2)(a), Florida Statutes, provided that no material alteration or substantial addition can be made to the common elements or association real property without the approval in the manner provided for in the declaration, or if the declaration is silent, then by 75 percent of the total voting interests of the association. As adopted by the 2018 Florida legislature, (effective July, 1, 2018), §718.113(2), Florida Statutes was amended to provide that approval of the material alteration or substantial addition must be obtained before the work commences.

 

The current language of §718.113(2)(a), Florida Statutes, provides as follows:

Except as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements or to real property which is association property, except in a manner provided in the declaration as originally recorded or as amended under the procedures provided therein. If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced. This paragraph is intended to clarify existing law and applies to associations existing on July 1, 2018. [Emphasis added]

Prior to the 2018 amendment, §718.113(2), Florida Statutes, did not expressly provide that the approval must be obtained before the material alteration or substantial addition was commenced. However, in a recent decision by the Third District Court of Appeal, the Court held that approval was required before the material alteration or substantial additions were commenced even before the language of §718.113(2), Florida Statutes, was amended to include the advance approval requirement!

In Bailey v. Shelborne Ocean Beach Hotel Condominium Association, Inc., Nos. 3D17-559, 3D17-01767 (Fla. 3d DCA July 15, 2020), unit owners brought a claim against their association alleging that the association violated §718.113(2), Florida Statutes, by failing to obtain the approval of the membership before commencing a large construction project which, they argued, constituted a material alteration to the common elements. Later, both parties agreed that all but two of the alleged “material alterations” actually constituted necessary maintenance that the association was authorized to commence without a vote of the membership.

The association alleged that the remaining two construction items were also necessary maintenance, which was an allegation the unit owners disputed. The trial court held that the remaining two alleged material alterations were valid notwithstanding whether they were necessary maintenance or material alterations because the association eventually obtained the approval of the membership (presumably after the fact). Therefore, the trial court reasoned it did not need to make a determination as to whether the two items were material alterations since the membership approved them, albeit in a tardy fashion.

On appeal to the Third District Court of Appeal, the unit owners challenged the trial court’s decision arguing that the statute required the association to obtain approval for material alterations before it commenced the work. Therefore, the plaintiff unit owners argued that the membership could not provide their consent and approval posthumously. As the construction project at issue took place between 2010 and 2016, the applicable version of §718.113(2) did not include the express requirement that approval be obtained before material alterations are commenced. However, the Court still held that the portions of a construction project that do not constitute necessary maintenance must be approved prior to commencement.

The court explained that “based on the structure of the statute, the 75 percent approval requirement is a condition necessary to overcome the statute’s clear prohibition, insofar as any of the construction work amounts to material alteration or substantial additions.” However, because the trial court did not rule on whether the two items at issue were material alterations or necessary maintenance, the Court was unable to determine whether a vote of the members was pre-required and remanded the case to the trial court for further proceeding to determine the nature of the two construction items.

Because the Court did not make a final determination whether the two construction items constituted necessary maintenance, the Court did not address the remedy for the association’s failure to obtain the advance approval of the membership. Additionally, the law fails to address the remedy when an association does not obtain membership approval before commencing a project.

In cases of material alterations already completed which required the advance approval of the membership, the present version of §718.113(2), Florida Statutes leaves no room whatsoever for the court to order an association to posthumously acquire the membership vote or put things back the way they were. Rather, the only remedy that appears available to the court would be to restore the common elements to its pre-existing state (or as close as can be accomplished under the circumstances), which explains why a legislative fix to §718.113(2), Florida Statutes, to provide for additional remedy would be helpful.

There is a very important lesson to be gleaned from the Bailey case. If your association is considering a material alteration of any kind, then the association would be wise to attain the required approval before commencing the project to avoid a successful legal challenge. If the association fails to obtain the required approvals before commencement of the project, in the event of a legal challenge, the association may well be required to undo whatever alterations were made to the common elements as Bailey suggests this was the case even before the relevant statute was amended. This can result in significant expense to the association, not to mention having to explain what happened to many irate unit owners.

 


Remember, prior to commencing any material alteration or substantial addition, be sure to consult your association’s attorney to ensure you comply with the requirements of the Florida law and your association’s governing documents.

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Wed Events: Jan 12, 2022  Take advantage of these Informative Webinars

Wed Events: Jan 12, 2022 Take advantage of these Informative Webinars

  • Posted: Jan 11, 2022
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ELECTIONS: CONDOS, HOAS AND CO-OPS 01/12/2022  11:00 am – 12:00 pm

WEBINAR Florida

ELECTIONS: CONDOS, HOAS AND CO-OPS  01/12/2022  11:00 am – 12:00 pm  https://us02web.zoom.us/webinar/register/WN_RzIt7aIQSDKZ9RYu7z9PBQ Course #: 9630571 | Provider # 0005092 | 1 CEU in HR or ELE Instructor: Allison L. Hertz, Esq., BCS RSVP HERE


SO YOU LIVE ON A LAKE?  by Allstate Resource Management

SO YOU LIVE ON A LAKE?  by Allstate Resource Management Thursday, January 12, 2022  11:30am-12:30pm 1 CEU – COURSE NUMBER: 9629011 One FREE OPP/ELE CEU for Property Managers Property managers will recognize the aquatic landscape and understand the importance of proper maintenance. Emphasis will be on the benefits of biological and chemical controls for long term lake management. Participants will become familiar why our “man-made” lakes are so important in South Florida. Participants will also learn contributing factors to algae occurrence and how it can be treated and controlled. They will become aware of invasive and exotic plant characteristics with examples. Call 954-382-9766 to register for this free educational course!


MANAGING YOUR ASSOCIATION – 20 Things to Know /Jan 12, 2022 Katzman Chandler

WEBINAR Florida

MANAGING YOUR ASSOCIATION – 20 Things to Know / Katzman Chandler Wednesday, January 12, 2022 from 1:00 PM to 2:00 PM EST Matrika Shepherd Katzman Chandler 954-486-7774 mshepherd@katzmanchandler.com Looking to hire a new manager or management company? What do you need to know? What pitfalls do you want to avoid? Come to this class and find out about Management contracts, authority, duties, and responsibilities.


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ANOTHER STUNNING GRAND JURY REPORT ABOUT FLORIDA CONDOMINIUMS  By Eric Glazer, Esq.

ANOTHER STUNNING GRAND JURY REPORT ABOUT FLORIDA CONDOMINIUMS By Eric Glazer, Esq.

  • Posted: Jan 11, 2022
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ANOTHER STUNNING GRAND JURY REPORT ABOUT FLORIDA CONDOMINIUMS

By Eric Glazer, Esq.

I’ll tell you something – I give a lot of credit to Kathy Fernandez Rundle, The State Attorney for Miami-Dade County.  She actually prosecutes cases of condo fraud, years ago she assembled a grand jury to make recommendations to the state legislature regarding condo crimes, kickbacks, conflicts of interest and the grand jury’s findings turned into legislation ———- and now, in light of the tragedy in Surfise at The Champlain Towers collapse where 98 innocent people lost their lives —– she assembled another fact finding grand jury, this time to investigate the laws regarding inspections of our buildings and how we waive  reserve funds.

The last Miami Dade Grand Jury wrote a scathing report regarding condo crime, saying it was rampant — and people get on the board just to divert the condo’s business to their relatives or even their own companies.  Well, this Grand Jury pulled no punches either.

As you know, the current law allows all condos the opportunity to waive the full funding of reserve accounts for major repairs or replacements.  All it takes is a lousy vote of a majority of a quorum of the owners who attend a meeting.  So, if in your 100 unit condo, a quorum of owners is typically 50 or less.  So, if 50 or more people show up either in person or by proxy, a majority of them can change the budget to completely exclude reserves, and as we know it’s typically done year after year after year.

Here is what the Grand Jury said about that:

“We Are At A Loss To Understand Why Such Language Would Even Be Included In The Florida Condominium Act.”  They eventually said that at a minimum, it should at least require a 70% vote of the owners to waive reserves.  So, you can rest assured that this one finding by the grand jury will work its way into new condo legislation in the next 2 months as the Florida Legislature is now in session. It’s going to become real difficult real soon, to completely refuse to fund your reserve account.  Surprisingly,  the grand jury didn’t say a word about requiring properly licensed personnel to do the reserve  account analysis each year., instead of joe the butcher, fred the cab driver and joan the teacher, each of whom are not qualified to do the reserve analysis.

In terms of the 40 year certification process for Dade and Broward, The Grand Jury recommended that buildings should be given a  2 year advanced notice to perform the 40 year inspection.  And of course 40 years is way too long for the first inspection.   The first inspection and certification should be 10 – 15 years after the building is constructed , and the condominium inspection should be updated every 10 years.  I think you can rest assured  that The Florida Legislature will probably make this a law throughout the state, not only in d\Dade and Broward counties.  In fact, a bill has already been filed in the senate that would require the inspection of all condos in the state over 3 stories, after 30 years and every ten years thereafter.

As the law stands right now in Dade and Broward —- for the 40 year certification — the inspection only involves the structural and electrical issues.  Well, you can throw that right out the window according to this grand jury.  going forward,

 

The Grand Jury recommends that all of the following components must pass inspection:

roof, structure, fireproofing and fire protection systems, elevators, heating and cooling systems, plumbing, electrical systems, swimming pool or spa and equipment, seawalls, pavement and parking areas, drainage systems, painting, irrigation systems.  This is a much more comprehensive and much more expensive inspection report than what we have now.   Condos better get ready to put these costs into their budgets if this legislation passes.

Even the qualifications of the people doing the certifying would change.    The Grand Jury wants any engineer certifying a building in connection with an inspection —— must have previously designed and inspected at least 3 buildings of the same or greater height as the building to which is to be recertified.

The Grand Jury opined that building officials must require proof of waterproofing and painting every 10 years.  They specifically found that ” a failure of condo boards to implement much needed repairs and maintenance has led to unsafe building structures throughout South Florida.  They reminded everyone that associations who don’t comply with the insurance company’s requirement of routine maintenance may result in a denial of the claim.”

They even recommended that building officials should check to see if the condominium is performing routine maintenance and condo boards should be required to file a document certifying that regular routine maintenance has been conducted in the last 12 months.

And thankfully, The Grand Jury believes that the education requirement for board members be expanded.  As you know, I drafted Senate Bill 394 filed by Anna Maria Rodriguez and House Bill 547 filed by Representative David Borerro, The bill would require board members to get certified by taking an educational class rather than getting certified by signing a silly form.  Florida would be the first state in the country to require that.  That would be my legacy and I have my fingers crossed.

All I can say is……when you factor in the insane rise in the price of insurance, and the changes we know are coming in this legislative session, it’s about to get a lot more expensive to live in your condominium.  Get ready to buckle up and hold on.  It’s going to be a bumpy ride.

To view the actual Grand Jury report click here.

 

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Condo Craze and HOAs Radio Show on 850 WFTL every Sunday 11am – 12pm  Is now live on YouTube!

Condo Craze and HOAs Radio Show on 850 WFTL every Sunday 11am – 12pm  Is now live on YouTube!

  • Posted: Jan 10, 2022
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Condo Craze and HOAs Radio Show on 850 WFTL every Sunday 11am – 12pm  Is now live on YouTube!

Condo and HOA Boards and Owners you can now watch the show ask questions.  Each Sunday morning we will bring to you topics and discussions for out industry.

Subscribe to our YOU TUBE PAGE. 

Condo Craze and HOAs In 2009, Eric began a career in radio, starting and hosting the weekly Condo Craze and HOAs Radio Show on 850 WFTL. Eric answers questions from the callers week in and week out and the show has become incredibly popular throughout the state. For more information, and to listen to past shows.

Eric M. Glazer is a native of Brooklyn, New York Mr. Glazer obtained his B.A. in Political Science at New York University. While at N.Y.U., Mr. Glazer was employed in the Kings County District Attorney’s Office. Mr. Glazer obtained his Juris Doctorate at the University of Miami School of Law. In 1994 he established Glazer and Associates, P.A. and has focused his career on representation of community associations and their members.

Visit our Website: https://www.condocrazeandhoas.com Board Certification Classes Eric has certified over 12,000 board members in the State of Florida, who are now eligible to serve on either a condominium or homeowner association board.

 

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