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NEW CDC ORDER – THE CHAOS NEVER ENDS.

NEW CDC ORDER – THE CHAOS NEVER ENDS.

  • Posted: Aug 09, 2021
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NEW CDC ORDER – THE CHAOS NEVER ENDS.

NEW CDC ORDER – THE CHAOS NEVER ENDS. Billions of dollars hung up and not being distributed. This could be fixed so easily. So few tenants are indeed delinquent but most of those that are have been scamming the system for months. Why bother having 3 Branches of government anymore? The Supreme Court ruled on this and now is completely being ignored.

 

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Make Your Waterbody A Focal Point by SOLitude

Make Your Waterbody A Focal Point by SOLitude

  • Posted: Jul 29, 2021
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Make Your Waterbody A Focal Point

Create a functional, beautiful pond your community can enjoy with four strategies that will surely impress local community members.

 

Without proper management, community ponds can develop invasive aquatic weeds, algal blooms, and foul odors, quickly becoming an eye-sore to residents…  Lakes and ponds offer a multitude of opportunities for recreation, fishing, sightseeing, and overall enjoyment of nature. Take advantage of your aquatic resource! Discover the four steps you can implement to create a beautiful, healthy waterbody that community members can appreciate.

 

How To Make Your Waterbody A Focal Point In Your Community

Written by: Greg Blackham, Aquatic Specialist

Many homeowners live on a lake or in a community association with several ponds and stormwater facilities. Without proper management, you may find these waterbodies covered in aquatic weeds and algae, or they could simply look like an uninspired waste of space. No matter the condition of your waterbody, one thing is for certain – it should be so much more!

Lakes and ponds provide a multitude of opportunities for recreation, sightseeing, and overall enjoyment of nature, so it can be sad for aquatic specialists when we see this potential go untapped. Luckily, it is never too late to cultivate a stellar focal point in your community. A professional can get you on the right track with innovative modifications and informed management techniques.

Introduce Floating Fountains

Introduce Floating Fountains

One of the first enhancements we recommend for both visual and functional enhancements is a floating fountain. There are two main fountain types: A decorative fountain is designed to spray water into the air in eye-catching spray patterns, though they are generally not relied on for water circulation. Many have brightly-colored (and customizable) lights that draw attention to the waterbody at night. An aerating fountain, on the other hand, is one that is designed primarily for functional purposes, but that doesn’t mean these devices aren’t aesthetically pleasing too. Some of the best-looking aerating fountains combine decorative vertical spray with lower tiers that provide horizontal spray dispersion to effectively circulate the water column below.

Aeration can have many compound benefits when fountain systems are professionally sized and spaced in the waterbody, and in certain instances, it may be beneficial to pair fountains with submersed aeration systems and oxygen saturation technologies. Water movement helps increase dissolved oxygen levels, which in turn helps stabilize pH and inhibits the nutrient pollution that contributes to aquatic weed, nuisance algae, and toxic cyanobacteria growth. Well-circulated and oxygenated water also help prevent mosquito reproduction while supporting healthy zooplankton – small aquatic animals that feed on algae and serve as food for fish and all types of wildlife.

Plant Beneficial Vegetation

Planting beneficial vegetation is a second improvement that should be considered. But before planting anything in or around the water it’s necessary to remove all the noxious and invasive vegetation first, such as cattails, Phragmites (common reed), and purple loosestrife. This helps reduce the risk of collateral damage to newly planted vegetation. It’s best to work with a professional to identify nuisance species and design a removal program, which can vary widely from species to species and might include hand-pulling, burning, or even herbicide applications by drone!

Decorative plants can be used in so many ways to enhance your waterbody. A well-vegetated buffer zone should include a variety of native wildflowers, grasses, and even shrubs that provide a beautiful frame or border around the water. Sometimes, just the contrast alone can make all the difference. There are many other creative ways to plant for color and vibrancy, and a professional lake manager can help assist in the strategic design. In addition to creating a beautiful backdrop, deep-rooted, flowering species can help filter trash and pollutants, protect the shoreline from erosion, and create a sanctuary for wildlife.

Beneficial aquatic plants should also be installed along with the shallow areas of the waterbody for added benefits like serving as a source of oxygen, balancing predator-prey relationships, and filtering nutrients from the water column so they cannot fuel undesirable weeds and algae. One creative installation method could be a floating island of plants and flowers. Floating islands are designed to add color on top and create beneficial bacterial col

Restore Depth and volume

Restore Depth And Volume

Another great solution for the almost immediate improvement of a lake or pond is the mechanical removal of polluted sediment, muck, and organic matter from the water. This may be accomplished by a full-on dredging project or through spot treatments via hydro-rake, which is essentially a floating barge equipped with a backhoe that scoops sediment onto the shoreline for disposal.

Shortly after the disturbance has settled there is a significant improvement to water clarity and reduction in bad odors that may exist. More importantly, storage capacity increases. This is crucial for a well-functioning stormwater system that does not flood.

Final touches and consistent maintenance

Final Touches And Consistent Maintenance

There are many other improvements that can enhance the beauty of a waterbody without sacrificing functionality. The environmentally friendly blue and black dyes can change the color to a more desirable look, while also reducing available light for weeds and algae. Strategic birdhouses placed around a pond can help reduce midge and mosquito populations in the area while also adding a colorful dynamic to the ecosystem. Even installing a gazebo, a dock, or a small beach area can help break up the landscape and provide more ways for people to engage and interact with their amenities through fishing, kayaking, and birdwatching. Oftentimes, this extra community engagement can spark even larger momentum for creating a truly beautiful and immersive focal point, cherished by everyone that lives there!

Once these efforts have been implemented, they are best maintained through an annual management program, which prioritizes the three central pillars of health, beauty, and functionality. Long-term programs ensure a professional can keep an eye on the multitude of factors that support the ecological balance of the ecosystem, as well as the aesthetic components. Your local aquatic professional can help you design a plan that’s customized to your unique waterbody.

View the Original Website SOLitude blog post.

 

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2021 Legislative Update

2021 Legislative Update

  • Posted: Jul 20, 2021
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2021 Legislative Update

 

TABLE OF CONTENTS

To find the information relevant to your association click the appropriate title.  If it is not clickable for you, simply scroll down.  

Following are laws applicable to:

I. Condominium, Cooperative and Homeowners’ Associations

II. Condominium and Cooperative Associations

III. Condominium Associations

IV. Cooperative Associations

V. Homeowners’ Associations

VI. Other Bills of Interest

 

I. Condominium, Cooperative and Homeowners’ Associations

 

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

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

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

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

 

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

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

 

II. Condominium and Cooperative Associations

 

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

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

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

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

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

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

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

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

 

III. Condominium Associations

 

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

c) the failure of a governing body when required by Chapter 718, Fla. Stat., or an association document to (1) properly conduct elections, (2) give adequate notice of meetings or other actions, (3) properly conduct meetings, or (4) allow inspection of books and records; or

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

IV. Cooperative Associations

 

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

 

V. Homeowners’ Associations

 

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ii. As to leasing, any governing document, or amendment thereto, that is enacted after July 1, 2021, and that prohibits or regulates rental agreements applies only to (i) an owner who acquires title to a parcel after the effective date of the governing document or amendment, or (ii) an owner who consents, individually or through a representative, to the governing document or amendment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

VI. Other Bills of Interest

 

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

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

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

(c) Provides for legislative oversight and limitations on the duration of executive orders issued by the governor.

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

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

 

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

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

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

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

a) It must operate from residential property.

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

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

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

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

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

 

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

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

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

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

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

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

 

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

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

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

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

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

 

5) SB 60 pertains to code enforcement complaints.

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

 

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

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

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

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

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

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

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

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

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

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

 

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Is your community association indemnified from legal action resulting from collection activities? Don’t Get Sued, Get Axela!

Is your community association indemnified from legal action resulting from collection activities? Don’t Get Sued, Get Axela!

  • Posted: Jul 20, 2021
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Don’t Get Sued, Get Axela!

HOAs, Condominium Associations, Cooperatives, and other community associations are regularly adjusting how they do business based on new laws and updates to existing statutes that supersede their own governing documents. Lately, a barrage of new legislation has taken direct aim at how community associations handle the collection of delinquent fees from home and unit owners who have fallen behind on their fees and assessments. Failure to follow these laws can put an association, its management company, and even its attorney in danger of being sued.

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Legal Requirements

Axela Technologies has long been the leader in providing indemnification for HOAs, condominium associations, cooperatives and community association management firms by offering fully compliant third-party debt and delinquency collection services. We pride ourselves on keeping our business practices compliant with your state collection laws and are vigilant on newly passed legislation.

California’s Davis-Stirling Act, for example, outlines the “do’s and don’ts” for associations seeking to collect the fees that are owed to them from delinquent homeowners. Appropriately, each year the legislature has amended, revised and added numerous provisions of the Act. Requiring associations  to be aware of the latest requirements in order for the association to proceed with collection of delinquent assessments.

Now Florida has revised their own laws for collecting delinquent assessments, adding additional protections for homeowners that all condominium associations, HOAs, and association management firms must adhere to on top of all their existing workload.

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New Florida Laws

Among the most important changes in Florida law is Senate Bill 56: Community Association Assessment Notices (“SB 56”). The waiting period before notices can be sent to delinquent home or unit owners has been extended. HOAs already had to wait 45 days before notices that a lien was being sought against the debtor’s property could be sent. Additionally, a similar waiting period is needed for the post-lien notice of intent to foreclose.

Put simply, the new notice requirements will establish a 120-day period of collection efforts that associations must incur before proceeding with a foreclosure action. There will now be a mandatory 30-day courtesy notice of late assessment, a 45-day notice of intent to record a claim of lien, and a 45-day notice of intent to foreclose on that claim of lien. These changes take effect on July 1, 2021.

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The Attorneys’ Function

The largest portion of the remaining legislative changes refer specifically to the work performed by attorneys on behalf of the associations they represent. While attorneys are sometimes needed for filing liens and enforcing the security interests of the associations they represent, it is almost always a far better decision to engage with a third-party debt collection service to properly service both the association and the delinquent home or unit owner prior to getting an attorney involved. Axela complies with all state laws in every state that it services and fully indemnifies the association and assures full compliance with state and federal law as well as the individual association’s own governing documents.

Is your HOA, condominium association, cooperative, or association management firm struggling to keep up with the latest legislation and indemnification while simply trying to collect the money it is owed from delinquent home or unit owners? Even the simplest collection task can come under legal scrutiny. With our “no cost or risk to the association” assurance, engaging Axela Technologies for your delinquency collection needs may be one of the easiest business decisions you’ll make in this litigious environment. Get in touch today and let us show you how we can collect your money without putting your association or association management business at risk of violating the law.

 

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

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

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

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Reserve Accounts: A homeowners association only has restricted reserve accounts if initially created by the developer or voted on and approved by a majority of the entire membership. In a condominium association, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. Condominium boards and homeowners association boards with restricted reserves may propose lower or no reserves to the membership which is subject to approval by a majority of a quorum of the members. However, neither board is obligated to propose lower reserves. A condominium association board and a homeowners association board with restricted reserves must fully fund those reserves in the budget each year as must homeowners association boards whose association has adopted restricted reserves.

 

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

 

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

 

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

 

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

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

 

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Property Management Fees vs HOA Management Fees: How Different Are They?

Property Management Fees vs HOA Management Fees: How Different Are They?

  • Posted: Jul 16, 2021
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Property Management Fees vs HOA Management Fees: How Different Are They?

The Difference Between Property Management Fees and HOA Management Fees

Many people confuse property management and HOA management, but the two are starkly different. Property management is the daily supervision and management of a rental property — be it residential or commercial. HOA management, on the other hand, refers to the management of homeowners associations.

The tasks of property managers include but are not limited to the following:

  • Advertising vacant rental units
  • Conducting property showings
  • Overseeing tenant applications
  • Screening potential tenants
  • Handling the lease agreement
  • Ensuring compliance with lease terms
  • Collecting and depositing rent
  • Coordinating maintenance, cleaning, repairs
  • Resolving tenant complaints

The tasks of HOA managers include but are not limited to the following:

  • Ensuring the maintenance of common areas
  • Coordinating with vendors
  • Attending board meetings
  • Collecting dues
  • Helping with budget planning and execution
  • Sending notices on behalf of the board
  • Communicating with homeowners
  • Ensuring compliance with the law and governing documents
  • Advising the HOA board

That being said, the difference between property management fees and HOA management fees has to do with the service being paid for. Typical property management fees cover property management services, whereas HOA management fees cover HOA management services. Both types of services, though, can be performed by a company or an independent manager.

 

Factors That Affect Property Management Company Fees

Property management is not a one-size-fits-all type of service. When it comes to property management fee calculation, there are a number of factors that can increase or decrease the amount.

  • Location. A luxury apartment located in a high-end neighborhood will naturally command a higher rental rate. As such, a property manager may adjust their fees accordingly.
  • Size. It is harder to manage a large rental property, so the fee tends to be more expensive the bigger the place.
  • Type. Some companies or managers charge a different rate depending on the type of property — single-family home, commercial property, condo unit, apartment, etc.
  • Condition. Older properties usually require more maintenance and repairs, thus equating to a higher fee.
  • Services. Companies and managers offer a wide variety of services. If you only need select services, you may end up paying a lower fee. The reverse is true if you need a more comprehensive extent of services.

All of these factors, except maybe the condition of the property, can also affect HOA management fees. Homeowners association management can come in the form of full-service management, remote management, or simple consulting services. Obviously, full-service management is more expensive than the other two.

Companies also tend to charge a lower price if you have more properties for them to manage. This is because of how certain administrative tasks scale, allowing companies to charge a discounted price for 10 properties or more.

 

What Is the Average Property Management Fee for Rental Properties?

How much you ultimately pay each month for property management services will also depend on the company’s fee structure. Some companies or managers charge an ongoing flat fee, while others take a portion of the monthly rent.

 

Percentage of Rent

This is the most widely used structure among property management companies. In exchange for their services, a company will charge you a certain percentage of the rent. Average property management fees structured this way sit between 8 and 12 percent of the gross rent.

For instance, if the monthly rent for one rental property is $10,000 and the rate is 6 percent, then according to the property management fee calculator, the company gets to keep $600.

Of course, there is a difference between charging a percentage of the rent collected and rent due. Rent collected is the actual amount the company collected from tenants, while rent due is the monthly rent that tenants should pay. Your contract should specify that the fee is for rent collected. Otherwise, you would need to pay your property manager even if tenants fail to pay their rent.

 

Flat Fee

In contrast, there are some companies or managers that charge a flat rate. When you go with flat fee property management, you will need to pay a set amount every month. A single-family home may command $100 a month, though it will really depend on the extent of the services, the size of the property, and other factors.

 

Other Home or Condo Property Management Fees to Know

Apart from the actual management fee, companies and managers may also charge separate sums for extra services. Some will try to hide this breakdown from you and intentionally skirt the topic. Many homeowners only find out about these extra fees after they have signed the contract. Thus, it is essential to ask each candidate for their full property management price list.

Here are the other fees you should look out for:

 

Initial Setup Fees

Some companies will charge you an initial fee designed to cover the costs of setting up an account with them, inspecting the property, and notifying tenants of the change in management. You should expect to pay about $500 or less for the initial setup fee.

 

New Tenant Placement Fees

Tenant placement fees cover the costs of marketing your vacant property, screening tenants, constructing the lease agreement, and so on. As with the ongoing management fee, this can come in the form of a flat rate or a percentage of the rent — usually 50 to 100 percent.

 

Vacancy Fees

If you hire a property management company to manage a vacant unit, they may charge you a vacancy fee. This can range from $50 per unit to as much as an entire month’s rent.

 

Maintenance Fees

Some management companies have in-house workers who perform maintenance work. In that case, look out for a maintenance fee in your contract. This fee can cost you $20 to $45 per person, typically not including the cost of materials and supplies.

 

Eviction Fees

Evictions are common in the rental property realm. But, if you want the company or your manager to evict a tenant for you, it will cost you a few hundred dollars. That does not include any court expenses, too.

 

Early Termination Fees

Contracts have set lifespans. If you try to end your contract earlier than specified, the company may charge you an early termination fee. This can range from the cost of one month’s services to the cost of the services for the remainder of the contract. Some companies may even take legal action against you for breach of contract.

If you want to avoid such a situation, make sure to check your agreement thoroughly before signing it. See if you can negotiate your way out of an early termination fee. You should also consider shortening the length of your contract to one year. That way, you have the option of renewing it annually.

 

How Much Are HOA Management Fees?

If you plan on hiring an HOA management company, here are the fees you should keep in mind.

 

Initiation Fees

Similar to property management companies, an HOA management company may charge you an initiation fee to get the ball rolling. This can cost you a few thousand dollars up to a whopping $30,000. Of course, it really depends on the size of your association and the services you require.

 

Monthly Management Fees

Since managing associations usually means managing communities with numerous properties, monthly fees typically rely on a rate per unit. On average, an HOA management company will charge you $10 to $20 per unit per month. They may offer you a discounted price, though, if you meet a certain number of units.

 

Early Termination Fees

This works similarly to early termination fees in property management contracts. The key to avoiding having to pay this sum is to lock yourself into a shorter contract period. Instead of signing a management contract good for multiple years, start with one and renew from there.

 

Other Fees

Some companies don’t offer all-inclusive packages. This means they will charge a separate fee for certain services, such as a fixed amount for each time a manager attends a board meeting. There is also something called a transition fee, which covers the cost of transferring from one company to another.

 

Is Paying Property Management Fees Worth It?

Property management is certainly a difficult undertaking for many homeowners. As such, many choose to outsource the task to a professional. And, with professional services come professional fees. Property management fees may seem unaffordable to you now, but they can be worth it in the end.

As for HOA management, it can be an equally challenging endeavor. If your HOA board wants to seek expert help, start looking for an HOA management company in your area today. Use our comprehensive online directory for fast and accurate results!

 

 

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

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

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

by https://kbrlegal.com/

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

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

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

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

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

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

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

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

From these important cases, it can be gleaned that

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

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

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

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

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

 

I WARNED ABOUT THE DANGERS OF INADEQUATE RESERVES  By Eric Glazer, Esq.

I WARNED ABOUT THE DANGERS OF INADEQUATE RESERVES By Eric Glazer, Esq.

  • Posted: Jul 12, 2021
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I WARNED ABOUT THE DANGERS OF INADEQUATE RESERVES

By Eric Glazer, Esq.

In May of 2018, at about the same time the engineer was advising Champlain Towers South that their building need millions and millions of dollars in repairs, I wrote about the dangers facing condominiums all over the state because of the ability for owners to opt out of funding reserve accounts. I implored The Florida Legislature to get tough when it comes to reserves and make them at least partially mandatory. We know that as a result of the tragedy in Surfside, now The Florida Legislature will be forced to look long and hard for the first time at making condominium residents across our state put money away for major expensive repairs, or continue to allow many associations to ignore the necessary repairs and keep kicking the can down the road.

I can tell you right now that lobbyists who represent developers and contractors will try to prevent new laws requiring developers to fund reserve accounts before turnover, and even the residents after turnover. Why? Because it will make it harder to sell condominium units if reserves are mandatory. That means monthly assessments will be higher and units may not sell so quickly. They will make arguments like the government should be less intrusive into the lives of our Florida condominium residents and If the residents don’t want to fund reserves they know the risk. Right. And cigarettes don’t cause cancer.

Today, I’m simply going to reprint, verbatim, my blog written in May, 2018 below. Your thoughts are welcome.

 

SHOULD RESERVES BE MANDATORY?

 

I hate beating around the bush, so I want to get to the point. A financial crisis is coming and it’s going to be a big one. It’s also going to hit those that can least afford it. It’s going to result in massive amounts of foreclosures. It’s going to result in countless cases of elderly persons being displaced from their homes. The worst part is, it’s absolutely avoidable but I don’t believe any legislator would ever have the courage to float a bill to save the pending disaster.

 

My last 24 hours made it clear to me what’s on the way. I was at a meeting last night in a 55 and over condominium that is about 40 years old. Elderly unit owners were complaining that the pipes are getting old, there are occasional leaks, and they sometimes have to come out of pocket a few hundred bucks in order to clean up the mess in their unit and/or repair that broken pipe. They are complaining about bills for a few hundred bucks and find it difficult to pay them because their sole income is social security.

 

To state the obvious, there is no reserve account. There never will be. Generally, senior citizens don’t believe in reserving funds for repairs that may be necessary a decade or two from now because they believe they won’t be here anyway. So, year after year goes by, decade after decade goes by and there is never a reserve fund to fall back on should a major repair become necessary. As I write this column, the season’s first storm is forming in the Gulf, and it’s still May. We all know what just one storm can do to the community’s finances. Even if we are lucky to escape this year, next year and the next five years without a hurricane or tropical storm coming, there is another storm coming that is simply unavoidable and definitely on its way.

 

Think of how much building has gone on in the past 50 years. It is staggering. But the buildings are getting older. As the buildings start to approach the 40 year mark or more, things start to break down and repairs become unavoidable. Concrete restoration is incredibly expensive, and unavoidable. Replacement of pipes is incredibly expensive, and unavoidable. And the same goes for electrical renovations and roof replacements. All unavoidable. Yet, so many people, especially seniors, are rolling the dice thinking that none of these repairs will be necessary while they own the property. That may be true for now, but eventually, everyone rolls a 7.

 

If you roll a 7 at the craps table however, you get up and go home. If you roll a 7 at the condo and all these repairs are necessary while you’re the owner, you may lose your home because year after year after year you decided to waive the funding of reserves and now you have nothing to fall back on.

 

So what’s the answer? I know this is going to sound unpopular, but if action is not taken now it’s going to result in much bigger problems of people losing their homes later on. So, like it or not, some form of reserves should be mandatory and not subject to being waived. There, I said it. Let’s streamline the way reserves are calculated. Let’s get rid of the “life expectancy” formula the state says you should follow but nobody does. It’s a joke anyway. We all know the truth that the life expectancy of the roof somehow gets longer, the closer you get to the original estimate of how long it was going to last. Five years ago it had a five year life expectancy. Money is tight, so today it has a new 10 year life expectancy. Somehow, like fine wine, the roof got better with age. We all know that happens, and it happens every day. So how about we make things simple. Let’s just say every condominium must contribute 10% of its annual budget to reserves for roof, plumbing, electrical, structural and painting. It all goes into one pot and it can be used for any repair necessary for those categories. It can’t be waived. If however an association wants to contribute more, they can.

 

If we implemented this, I’m guessing the average monthly increase for most condominiums that are not already reserving funds would be anywhere from $25.00 to $75.00 per month. I know that for some that increase is not easy. However, it’s going to be a lot more expensive if any one of these inevitable repairs become necessary and it’s time to pass a special assessment because there are no reserve funds. God forbid two of these items need repair. Sorry, but it’s still easier for a person on a fixed income to pay an extra 30 or 40 dollars per month than it is to come up with a special assessment of a few grand.

 

Mandatory reserves, for even modest amounts, is a necessary evil. I say so because I see the hand writing on the wall. I see buildings getting older and unavoidable repairs coming on strong. I also see hurricane seasons becoming active with the potential to cause catastrophic results to our communities. I see fear in the faces of senior citizens now when faced with small special assessments. What I don’t see is sound financial planning for the inevitable, and I don’t want to see people, especially the elderly, losing their homes when they don’t have the money to pony up and fix up their homes when a special assessment comes their way.

 

This year The Florida Legislature looked into the future and envisioned that in the next decade or so, we will all be driving electric cars. So, they bravely passed an electric vehicle statute to deal with that issue right now, before the issue got out of hand a decade from now. I’m asking them to do the same thing now and protect people from losing their homes over the next decade or two by ensuring the condo has a piggy bank to shake lose when massive expensive repairs become unavoidably necessary. Mandatory reserves are needed now.

 

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Florida’s condominium laws will undergo a top-to-bottom review by a task force established by the Florida Bar Association after the deadly collapse of the Champlain Towers South condo building in Surfside.

Florida’s condominium laws will undergo a top-to-bottom review by a task force established by the Florida Bar Association after the deadly collapse of the Champlain Towers South condo building in Surfside.

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Florida’s condominium laws will undergo a top-to-bottom review by a task force established by the Florida Bar Association after the deadly collapse of the Champlain Towers South condo building in Surfside.

Members of the task force who confirmed its existence to The Washington Post on Tuesday said their goal is to review state laws and regulations that govern condo developments, board operations and maintenance rules, and recommend potential changes to the governor and the state legislature.

Condo regulations in Florida have come under close scrutiny since the tragedy in Surfside on June 24, with at least 46 people confirmed dead and 94 still unaccounted for as of midday Wednesday. While investigators warn it could be months before a cause of the collapse is known, attention has turned to the decisions made — or not made — by city officials, consultants, developers and the residents and board members of Champlain Towers South.

“What we’re looking at are specific changes to prevent that from happening again,” William Sklar, an adjunct faculty member of the University of Miami’s law school and task force chair told The Post. “We also want to be realistic relative to the needs of unit owners, and we don’t want to dissuade [board members] from service.” Navigating those competing interests, Sklar and others acknowledged, is a complex mission. What lures many to condos in the first place is precisely what can eventually undermine them: Shared responsibility for maintenance with the perks of private ownership.

‘I anticipate a lot of push-pull’

Despite the detailed, extensive condo laws in Florida, several real estate experts said the rules are often easy to manipulate or have toothless enforcement.

“Condos are so critical to our local economy, but the state does nothing to bring clarity to it because it’s a cash cow,” said Peter Zalewski, a Florida condo industry analyst. “No one wants to kill the market prices.”

Condo owners and developers aren’t the only ones who may be skittish of changes: Politicians eager to enact tougher oversight in the wake of Surfside are still responsive to the will of voters, said Peggy Rolando, a Miami-based real estate lawyer and co-chair of the Florida Bar Association’s Condominium and Planned Development Committee.

“In Florida, condo owners are a hugely powerful political force,” Rolando said. Board meetings of well-heeled condo associations warrant campaign stops, and some buildings are even large enough to be their own voting precinct, she said.

Even tightening regulations in the name of building safety is likely to face resistance. Experts agreed the current rules that give condo owners significant leeway to defer costly maintenance can lead to a worst-case scenario in which a building becomes too unsafe to inhabit and too expensive to repair.

At the same time, they recognized putting off pricey fixes is sometimes a matter of short-term economic survival. In a place like South Florida, affordable housing is scarce, and many residents are fixed-income retirees who can’t easily absorb sudden spikes in homeowner fees.

“I anticipate a lot of push-pull,” Rolando said. “There’s an expression in South Florida that ‘you’re throwing grandma off the balcony’: If you’re passing laws saying ‘you must fully fund reserves for the entire building’ and price people out of their homes, you’re going to have a very unhappy constituency.”

Scrutiny on volunteer condo boards

After the collapse in Surfside, attention — and blame — quickly settled on the Champlain Towers South Condominium Association.

The association is the subject of at least 10 lawsuits filed since the building fell. In each of the complaints, residents detail what they say are oversights and failures of the condo board to act on crucial maintenance they argue contributed to the building’s structural instability.

But a Washington Post investigation found that while plans for repairs dragged on for years even as the building’s 40-year safety certification was coming due, dozens of unit owners in the condo balked at the estimated repair costs, which eventually tallied $15 million. In April 2019, dozens of owners signed a letter raising last-minute objections to the repair plans and asked for a lower assessment. A few months later, five of the seven board members quit.

The tension exhibited by the fallen tower’s condo association underscores why a condo building’s troubles don’t start and end with its board of directors, said Peter M. Dunbar, a longtime legal expert in Florida real estate who has written several reference books on Florida condominium law and management used by the state.

Florida condo board seats are volunteer roles in which elected members are not required to have any specialized training or vetting, even in buildings where board members are responsible for reserve accounts worth hundreds of thousands or even millions of dollars and approve maintenance for complex amenities like elevators and swimming pools.

New board members have 90 days to take an elective course approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes Complaints/​Investigations or simply file a statement saying they have read the condominium’s rules and legal documents and understand their duties as a board member, Dunbar said.

“The lack of knowledge is not often where I find the biggest concerns,” Dunbar said. “You may know what you’re supposed to be doing, but are you doing it in a timely fashion, and are you doing it to the extent it’s required? To me, that’s a bigger issue.”

Anyone who serves as a director of an association has what Florida law states is a “fiduciary duty” to the association, or an obligation to act in the association’s best interests where maintenance, finances, quality of life and property value are concerned. In other words, Dunbar said, board members don’t have to know how to fix everything; they just need to hire the right people to assess what needs fixing and then act on those recommendations.

“But because they’re elected, they also have the pressures of their constituents,” Dunbar said. “The difference for the volunteer board is, you can do your best, and a resident can still say, ‘I don’t want to pay,’ and recall you.”

Public battles over personal budgets

Condo board members face personal liability if they’re found to have acted negligently or criminally in an individual capacity. But most problems that befall condo associations are not from nefarious board members or tightfisted unit owners, said Rolando, the Florida Bar Association’s Condominium and Planned Development Committee co-chair.

More often, personal circumstances or simple human nature cloud decision-making.

“There are very, very few associations that have really extensive, comprehensive reserve structures,” she said. “But if you know your neighbor just lost their job, or just sent their kid off to college, what are you going to do? You have an obligation to do the right thing for the association. But you have people who don’t want to or can’t afford to do the right thing.”

Documents from the Champlain Towers South Condo Association revealed infighting among neighbors as building repairs grew more urgent and more costly; one neighbor recounted toxic board meetings that would devolve into “screaming and yelling.”

The tension can erode the quality of life in a building where board members and condo owners pass one another every day in the lobby, by the pool or walking the dog, Rolando said.

“I have a lot of sympathy for board members because I think it’s rewarding that you can do something that improves your community and has a direct impact,” she added. “But it’s also enormously demanding, unpaid and thankless. I guess it’s like being a mom or something.”

The Florida legislature requires condo associations to have financial reserves for painting, roof repair, paving and any item of deferred maintenance that exceeds $10,000, Rolando said.

Rolando said she sympathizes with unit owners who face unmanageable costs that can balloon from years of neglected or delayed maintenance.

“Mandatory reserves are probably the right thing to do fiscally. But when you’re dealing with human beings with myriad financial issues, do you want to force people into a situation where they can’t afford to pay and will have to sell their unit?” Rolando said. “There are no good answers.”

Transparency and tougher rules

Members of the new safety task force hinted that changes to safety certifications and inspection schedules are likely to meet the least resistance.

Sklar, the task force co-chair, suggested that South Florida’s 40-year safety recertification program could be significantly narrowed to 10, 25 or 30 years and that it could be applied uniformly statewide; right now, it applies only to Miami-Dade and Broward counties.

Other considerations include expanding inspections to include geological and hydrological factors affecting building stability and structure, and periodic and comprehensive reviews of specific building elements such as concrete, rebar and electrical.

Sklar said the law allowing condo owners to hold an annual vote and waive fully funding the association’s reserves will need to be re-examined as well.

The task force will also consider ways the government can help residents who can’t afford the reserves or maybe bought into a lower-cost building or live on a fixed income.

“We may review if there’s a low-cost, government-backed, subsidized financing available,” he told The Post.

Zalewski, the condo industry analyst, said he hopes the task force also considers making real estate transactions more transparent and favorable to buyers. Under Florida law, a prospective condo buyer has a 15-day right of rescission, or ability to pull out of a pending condo purchase, if they are buying directly from a developer; if the purchase is made from an existing condo owner, the period shrinks to three days.

Zalewski, who is critical of the three-day rescission period, said that amount of time does not give a prospective buyer an adequate period to do the research and inspections that could prevent them from buying into a condo building that has hidden costs lurking down the road.

“The three days doesn’t make sense if you’re worried about the buyer,” he said. “It would change the market overnight because it would force everyone to be on the up and up.”

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Beware of Predatory HOA Collection ‘Solutions’

Beware of Predatory HOA Collection ‘Solutions’

  • Posted: Jul 08, 2021
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Foreclosure Does Not Equal Fund Recovery

Every association should have an attorney who is charged with overseeing any legal work that arises. But is collections included in that ‘legal work’?

Attorneys continue to be the de-facto solution for collecting past due assessments, but this is only a viable option when an association has the unlikely goal of foreclosing and owning the homes of delinquent owners. Any association that seeks to recover money due to them while helping a homeowner back to financial stability should look for alternatives to the legal process to achieve that goal.

Attorneys do not do collections. It’s that simple. When an attorney is engaged to do collections work, their plan of action involves filing a lien and foreclosing on a home. During the process, they might see some successful collection events as a result of their actions. Attorneys seldom make outbound calls and do not provide owners with online tools to cure the delinquency.

Collection attorneys are inherently disincentivized to collect on the account. Why? Because their revenue is generated from fees that get charged throughout the process. The quicker they resolve a collections file, the fewer fees will be earned on the account.

Unfortunately, collection files are commonly referred to attorneys because it is the most convenient and familiar solution for an association. This widely accepted practice is extremely disadvantageous to associations and does not put money in the association’s bank account, which is the objective of collections efforts. In fact, associations are often on the hook for legal fees, regardless of the outcome, further increasing the burden and risk caused by the delinquent account.

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Predatory HOA Collection ‘Solutions’ Cause More Harm than Good

Given the growing size and scope of the community association industry, a handful of specialized service providers have appeared to provide collections and/or financing solutions. In non-judicial states, such as California, the foreclosure process does not require legal action, meaning non-attorney firms can handle the task. Much like attorneys, these companies have a fee schedule that highly incentivizes them to push for foreclosure proceedings as quickly as possible.

The longer a file stays delinquent, the further along the process it goes, ultimately ending in foreclosure which generates the most fees for the firm. Again, many of these actions are directly at odds with the desire of the association, which is to recover the money that is due to them, as quickly as possible.

During the last real estate meltdown, a handful of specialized finance companies introduced what was then hailed as an innovative solution designed to mitigate the damage caused by delinquencies. By buying or funding delinquent receivables, these companies promised a much-needed injection of capital to struggling associations. Unfortunately, because they charged exorbitant fees, small debts by delinquent owners would quickly balloon into enormous obligations that made it almost impossible for an owner to catch up.

Given the statutory applications of payments in many states, proceeds were first applied toward the fees charged by the finance companies; associations would often not receive any of the proceeds from successful collection events. This so-called ‘solution’ soon turned from an association lifesaver to an association’s nightmare.

Ultimately, this scheme has proven to be an unfavorable option for community associations.

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An HOA Collection Solution that Focuses on Recovering the Association’s Money

While there are a number of legal or alternative solutions that community managers have relied on in the past to enforce assessment collections, there is little evidence that these antiquated and/or predatory approaches will work to cure delinquencies in the future. Associations today can turn to specialized collection firms that effectively recover funds due to them, without facing the consequences of foreclosing.

Today’s owners face a different dynamic, as an overwhelming majority have equity in their homes, which they will not want to risk losing. For this reason, the best solution is one that incentivizes a quick resolution without burying the association and the owner in unnecessary fees.

Thanks to the introduction of credit reporting capabilities, an owner’s obligations to their association will be placed on the same level of importance as their credit cards, car payments, and mortgages. It is now a viable option to work with collection agencies in lieu of foreclosing and putting people out of their homes, which is the wrong path to take from both the financial and human sides of the equation.

These are times when a community can engage professionals to work out a reasonable means to get these owners back on track and up to date on their obligations. This is not the time to spend good money to foreclose on families and remove them from their residences.

Associations and management companies that embrace technology-based solutions like Axela’s to streamline and improve their collection protocols will find themselves in healthier financial standing and with happier homeowners residing within their communities.

 

Contact Axela Technologies today to learn how easy it is to implement a technology-based collections solution for your organization.

 

 

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

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

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

 

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

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

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

 

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

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

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

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

 

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

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

 

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

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

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

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

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

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

By Jon Schuppe and Phil Prazan, NBC 6 South Florida

 

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