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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

  • Posted: Jul 20, 2021
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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 frauds, waiver, 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.

  • Posted: Jul 08, 2021
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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

Mitch Drimmer | 7 July, 2021

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.

Predatory HOA Collection 2

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.

A 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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Is It Time To Amend Your Condominium Declaration? by Becker

Is It Time To Amend Your Condominium Declaration? by Becker

  • Posted: Jul 07, 2021
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Is It Time To Amend Your Condominium Declaration?

BY   / Becker

 

Does your Declaration of Condominium still refer to Chapter 711 as the Florida Condominium Act? Well, maybe it is not that old, but perhaps it has been a decade since it has been revised. If that is the case, then it may be time to amend the governing documents to ensure that they include the most recent amendments to the Condominium Act and address changes in your community’s needs which have developed over time.

Section 718.110(1)(a), Florida Statute, provides that if a declaration fails to provide a method of amending the document, it may be amended, as to most matters, if the amendment is approved by owners of not less than two-thirds (2/3rd) of the units. There are two major exceptions, however. First, changing any appurtenances to the unit or changing an owner’s percentage share in the common expenses requires the approval of all owners and all lienholders, unless the original declaration provides otherwise. Second, an association cannot amend a declaration to create timeshares without the approval of the all owners and all lienholders, unless the original declaration provides otherwise.

Now that you know the basics of an amendment, lets discuss “why” in terms of a growing issue in Florida (i.e., short term rentals). If the goal is to amend the declaration to address the onslaught of short term rentals popping up with more and more frequency in condominiums, Section 718.110(13) must be considered. This statute provides that any amendment prohibiting owners from renting their units, altering the duration of the rental term, or limiting the number of times owners are entitled to rent will only apply to owners who agree to the amendment and to owners who purchase their unit after the effective date of the amendment. The amendment however limited it seems now, may be prudent today nonetheless. Why? Because it may take a bit for the new restrictions to apply to all owners and those short term rental investors while gaining momentum are still in the minority.

Amendments should not be taken lightly. If an amendment is done incorrectly, it will be deemed void or invalid. Once you have ideas as to what your Association needs in light of what the governing documents provide, it is important to meet with the Association’s attorney to discuss these. The attorney can then advise of those changes which would be permitted and craft language aimed at meeting the Association’s needs harmonizing those with the Condominium Act.

 

Robyn M. Severs

Shareholder / Orlando
904.423.5372
RSEVERS@beckerlawyers.com

 

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Can They Do That? Video Series by Becker

Can They Do That? Video Series by Becker

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Can They Do That? Video Series

Becker’s video series, tackles some of the unique problems that homeowners and renters face today. We answer questions, no matter how far-fetched they may seem. From service animals to nudists in your community, we get to the bottom of it and let you know – “Can They Do That?”

by Becker

 

Episode 24: New Budget That Includes a Contingency Fund

Our board wants to adopt a budget that includes a contingency fund. – “Can they do that?”
Aired 11/23/2020

Episode 23: Can Board Change the Way We Fund Reserves

Our board has proposed a budget in which they’re changing the way we’re funding reserves. – “Can They Do That?”
Aired 11/17/2020

Episode 22: Condominium Funding Reserves

Our condominium has never funded reserves, and yet, the board has proposed and adopted a budget that provides for full funding of reserves. – “Can They Do That?”
Aired 11/05/2020

Episode 21: Forbidding Political Signage

I put up a political sign for my favorite candidate. My HOA and the Board sent me a letter telling me to take it down. I have a right to free speech don’t I? – “Can they do that?”
Aired 10/09/2020

Episode 20: Association Hurricane Shutdowns

A hurricane is a few days away from landfall near my condominium. The association sent a notice that elevators and the building air conditioning will be shutdown for 36 hours before landfall. “Can they do that?”
Aired 9/22/2020

Episode 19: Unofficial Community Websites Causing Harm

I came across an unofficial community website that was using our official logo and name. The website included some damaging information about the association. “Can they do that?”
Aired 8/26/2020

Episode 18: City Notice That Property Is in Violation of Local Code

I received a notice that my property is in violation of local code and ordinances. The city wants to start imposing fines on my property. “Can they do that?”
Aired 7/28/2020

Episode 17: Insurance Company Litigating Local Claims Out of State

The insurance company wants to take my Florida claim and litigate in New York. “Can they do that?”
Aired 6/29/2020

Episode 16: Employer Mandated Quarantine After Traveling

I’m going to go on a trip right now. Prices are really low to travel, and I want to visit my family. My employer’s telling me that if I go on the trip I’m not able to come back to work. My employer is going to mandate that I quarantine myself for 14 days when I come back. “Can They Do That?”
Aired 5/27/2020
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New Requirements for Collection of Delinquent Assessments

New Requirements for Collection of Delinquent Assessments

  • Posted: Jul 07, 2021
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New Requirements for Collection of Delinquent Assessments

Robert Kaye, Managing member of Kaye Bender Rembaum, recently wrote an informative and telling article explaining the new collection procedures mandated to be in effect July 1, as a result of  the 2021 legislation. Every board member, manager, and developer needs to be aware of these important changes.

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The Florida Legislature has revised the procedures for collecting delinquent assessments, which add additional steps and delays for the owner to pay before legal action can commence and/or attorney’s fees can be recovered. Senate Bill 56 has revised Sections 718.116 and 718.121 for condominiums; 719.108 for cooperatives; and, Section 720.3085 for homeowners’ associations. With these changes, the collection procedures for all of these types of communities will be substantially the same. The new laws are effective July 1, 2021.

Initially, the new provisions have revised the time for the notices sent by the association attorney for condominiums and cooperatives to 45 days for both the pre-lien first letter and the post-lien notice of intent to foreclose. (Homeowners’ associations were already at 45 days).

The most important and significant addition to this statutory change is the addition of a new notice requirement by associations before they may refer a matter to the association attorney for collection and recover the attorney’s fees involved. This written notice is required to be mailed by first class mail to the address of the owner on file with the association. If the address on file is not the unit or parcel address, a copy must be sent there as well. The association is also required to keep in its records a sworn affidavit attesting to the mailing. The new statute contains a form for that notice which is required to be substantially followed.

As the respective statutory provisions now indicate, associations must incur a minimum of 120 days of collection efforts before a foreclosure action can begin, with a total of three (3) separate required statutory notices. This includes the: (i) initial 30 day notice of the intent to refer the matter to the association attorney (for which no attorney’s fees can be charged to the owner); (ii) 45 days for the pre-lien notice period; and, (iii) 45 days for the pre-foreclosure lien period. As such, in order to best protect the interests of the association, it is recommended that the first 30-day notice be sent at the earliest possible date in the association collection process. This will typically be when the governing documents indicate the assessment to be “late”. Careful review of the governing documents by legal counsel should be undertaken to determine whether there is a specific “grace period” indicated in the documents before the assessment is considered late. Once that determination is made, the board should adopt a formal collection policy that incorporates these new statutory requirements, which will also need to be mailed to all owners. A new provision has also been added that begins with “If an association sends out an invoice for assessments. . .” to unit or parcel owners, such notice is to be sent by first class mail or electronic transmission (email) to the respective addresses for the owners that are in the association official records.

Moreover, if the association wishes to change the method of delivery of an invoice, the new Statute creates specific steps that must be followed precisely in order for the change to be effective. Specifically, a written notice must be delivered to the owner not less than 30 days before the change of delivery method will be implemented. The notice must be sent by first class mail to the address on file with the association. If the address on file is not the unit or parcel address, a copy must be sent there as well. In addition to the notice requirement, the owner must “affirmatively acknowledge” his or her understanding of the new delivery method. The written acknowledgment can be sent electronically or by mail, and must be maintained in the Official Records (although it is not available for inspection by other owners). However, without this acknowledgment, the association may not change the method of delivery. The Statute does not presently include a time frame for the owner to provide that acknowledgment or offer any remedy to the association if none is forthcoming. This can be particularly daunting or problematic when the association changes management companies, when the new company’s procedures differ from the prior company.Before the association attorney can commence any collection work for an association, it will be necessary for the association to provide all of the backup documentation of the compliance with each of these new statutory requirements, as well as the information previously required (such as a current account ledger). If any of the documentation is missing with the initial turnover information, there will be delays in the collection process, which can be detrimental to the association operation. It is therefore imperative that these new procedures are fully integrated into the association operation without delay. We recommend that you contact your Association counsel with any questions on the new procedural requirements to ensure compliance.

Jeffrey Rembaum’s, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. Mr. Rembaum is a Certified Specialist in Condominium and Planned Development Law. He is the creator of ‘Rembaum’s Association Roundup’, an e-magazine devoted to the education of community association board members, managers, developers and anyone involved with Florida’s community associations.  His column appears monthly in the Florida Community Association Journal. Every year since 2012, Mr. Rembaum has been selected to the Florida Super Lawyers list and was also named Legal Elite by Florida Trends Magazine. He can be reached at 561-241-4462.

 

 

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Now more than ever, condominium association boards are keenly focused on the structural integrity of their buildings.

Now more than ever, condominium association boards are keenly focused on the structural integrity of their buildings.

  • Posted: Jul 06, 2021
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Now more than ever, condominium association boards are keenly focused on the structural integrity of their buildings.

Sinisa Kolar, P.E. joins FirstService Residential for a virtual event, Ask the Experts: Condominium Structural Integrity, where our panel of experts will discuss:
• At-risk buildings
• Signs of structural stress
• Partnerships with licensed structural engineers
• Inspections and certifications
• Role of preventive maintenance
• And more!
RSVP today. This is an event you don’t want to miss!
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