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

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

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

 

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

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

1200 Park Central Boulevard South, Pompano Beach, FL. Tel: 954.928.0680
9121 North Military Trail, Suite 200, Palm Beach Gardens, FL. Tel: 561.241.4462
1211 N. Westshore Boulevard, Suite 409, Tampa, FL. Tel: 813.375.0731

 

 

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

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

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

By Eric Glazer, Esq.

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

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

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

Here is what the Grand Jury said about that:

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

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

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

 

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

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

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

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

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

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

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

To view the actual Grand Jury report click here.

 

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

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

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

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

Subscribe to our YOU TUBE PAGE. 

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

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

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

 

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Selective Enforcement: A Grossly Misunderstood Concept by KBRLegal

Selective Enforcement: A Grossly Misunderstood Concept by KBRLegal

  • Posted: Jan 06, 2022
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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.

 

Kaye Bender Rembaum

We are dedicated to providing clients with an unparalleled level of personalized and professional service regardless of their size and takes into account their individual needs and financial concerns. Our areas of concentration include

1200 Park Central Boulevard South, Pompano Beach, FL. Tel: 954.928.0680
9121 North Military Trail, Suite 200, Palm Beach Gardens, FL. Tel: 561.241.4462
1211 N. Westshore Boulevard, Suite 409, Tampa, FL. Tel: 813.375.0731
  • Assessment collections
  • Construction defect claims
  • Contract drafting and negotiation
  • Cooperatives
  • Covenant enforcement
  • Fair Housing
  • Land Use and Zoning
  • Litigation and Arbitration
  • Master/ Sub Association Issues
  • Pre and Post Turnover Planning
  • Real Estate and Title Concerns
  • Review and amendment of covenants
Kaye Bender Rembaum is a full service commercial law firm devoted to the representation of more than 1000 community associations throughout Florida. Under the direction of attorneys Robert L. Kaye, Esq., Michael S. Bender, Esq., and Jeffrey A. Rembaum, Esq. Kaye Bender Rembaum is dedicated to providing clients with an unparalleled level of personalized and professional service regardless of their size and takes into account their individual needs and financial concerns.your interest in Kaye Bender Rembaum.

 

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Top 5 Community Update Articles of 2021 from Becker

Top 5 Community Update Articles of 2021 from Becker

  • Posted: Jan 04, 2022
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A new year means 365 new opportunities to be grateful.

Practicing gratitude has far reaching effects, from improving our mental health to boosting our relationships with others. Join the Becker Team as we share what we’re truly grateful for – our clients, community, coworkers, family, friends, health, happiness, and growth. From our Becker family to yours, we wish you all the best and look forward to being of service in 2022!       https://www.youtube.com/watch?v=w5MiiLJaCXM

Top 5 Community Update Articles of 2021

Before heading into the New Year, we look back at the year’s most popular reads. This month’s featured articles highlight the topics you found most interesting in 2021 – from fining committees to questions about remote meetings.

From all of us at Becker, we wish you a happy holiday and a joyous, healthy, and prosperous New Year!

 

1.

Of all enforcement options available to an association for violations of its governing documents, the imposition of fines is one that yields many questions due to the strict procedures required to impose a fine. Learn more in, “What is a “Fining Committee” and Who Can Be on It?”

2.

Although Florida’s Sunshine Laws don’t apply to community associations, the Condominium Act has its own set of “sunshine” requirements to be aware of. Karyan San Martano breaks down what the statute says in, “‘Sunshine Laws’ for Condominium Associations.”

3.

While Mother Nature may be hard to harness, community associations are often tasked with doing just that to protect both residents and property. In, “Responsibility for Tree Branches and Roots,” Elizabeth Lanham-Patrie explores how the law decides who needs to tackle this chore.

4.

As of July 1, 2021, associations are required to send delinquent owners a Notice of Late Assessments prior to turning the account over to collections. Learn best practices for sending this letter in, “A Guide to Sending the New Notice of Late Assessment.”

5.

“Can Remote Meetings Be Held Now That the State of Emergency Has Expired?” Yeline Goin discusses what meetings can be held remotely, in whole or in part.

 

 

CALLING ALL BOARD MEMBERS AND COMMUNITY MANAGERS

As leaders in Community Association Law, we not only helped write the law – we also teach it.

Did you know Becker provides over 200 educational classes per year throughout the State of Florida on a variety of topics ranging from board member certification to compliance, and everything in between? Our most popular classes are now available online!

To view our entire class roster, visit:
beckerlawyers.com/classes

As a service to the community and industry, we are pleased to offer some of our most popular classes online for you to participate in from the comfort of your own home.

 

 

We have 2022 Sales for Members: Advertising in our Magazine and in the News Blast and on our website.

We have 2022 Sales for Members: Advertising in our Magazine and in the News Blast and on our website.

  • Posted: Dec 28, 2021
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Take advantage of our Advertising Sales.

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    Unpaid Fines Can Have Consequences,” News-Press by Joseph E. Adams of Becker

    Unpaid Fines Can Have Consequences,” News-Press by Joseph E. Adams of Becker

    • Posted: Dec 14, 2021
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    Unpaid Fines Can Have Consequences,”

    Joseph E. Adams | 12.13.2021

    Q: What happens is I refuse to pay a fine for violating the association’s governing documents? (R.N., via e-mail)

    A: A duly levied fine is due after a board appointed fining committee confirms, at a properly noticed fining hearing at which the accused can state his or her case, a fine proposed by the board. Pursuant to amendments to the statute enacted in 2021, the fine is due 5 days after notice is sent to the person who owes the fine.

    Assuming the procedures outlined under statute and the association’s governing documents are followed, the association may take action to collect the fine. The condominium and cooperative statutes prohibit unpaid fines from becoming a lien against a unit. The statute for homeowners’ associations, by comparison, provides that no fine of less than $1,000.00 can be secured by a lien against a parcel, presumably meaning that fines of $1,000.00 or more may become a lien against parcel, if authorized by the governing documents.

    In most cases, a lawsuit in small claims court is the proper venue to collect an unpaid fine. The statute for homeowners’ associations provides that in any legal action to collect a fine, the prevailing party is entitled to recovery of their attorneys’ fees from the non-prevailing party, as determined by the court. While the statutes for condominiums and cooperatives do not contain the same language, it is generally believed that the generic provisions of those statutes allow for the recovery of attorneys’ fees for legal actions brought under the statute.

    Fines are “monetary obligations” and, if left unpaid, can also result in the suspension of voting and common area use rights, and disqualification from board service. Unpaid fines can also be disclosed on the “estoppel certificate” that the association provides in connection with the sale of the unit, a process which is primarily aimed at ensuring that assessments and other charges applicable to the unit are properly calculated, accrued, and prorated between a buyer and seller, so that a “clean” and insurable title can be issued.

     

    Q: Can an association charge late fees on past due assessments? (B.K., via e-mail)

    A: Yes, if late fees are authorized by the documents governing your community.

    The respective laws governing Florida condominium, cooperative, and homeowners’ associations allow for an administrative late fee of up to the greater of $25 or five percent of each late assessment installment, if authorized by the declaration or the bylaws. Assessments and installments on assessments that are not timely paid also bear interest as provided in the declaration or bylaws. If the community documents do not provide an interest rate, interest accrues at the rate of 18 percent per annum.

    Payments on delinquent accounts received by the association must first be applied to any interest accrued, then to any administrative late fees, then to any costs and reasonable attorneys’ fees incurred in collection, and then to the delinquent assessment.

     

    Q: Our homeowners’ association board says that we cannot have an ice cream truck in the community because our governing documents prohibit solicitation in the community. Is that true? (K.S., via e-mail)

    A: It sounds like your board could use some good humor.

    “No solicitation” clauses are generally aimed at prohibiting door-to-door types of activities. The legally correct answer will depend on several factors, including whether your roads are private or public, whether the community is gated, and the easement language in your declaration of covenants.

    In the board’s defense, there is certainly reasonable cause for concern with children running up to the truck, potential accidents, and the like. If the association owns the roads, it would be a party to get sued in the event of a mishap or tragedy.

    Perhaps a reasonable compromise would be to permit the truck to park in a certain common area for a stated period of time, and allow the patrons to come and get their ice cream from the truck only while safely parked and the motor turned off.

     

    Joseph Adams is a Board Certified Specialist in Condominium and Planned Development Law, and an Office Managing Shareholder with Becker & Poliakoff. Please send your community association legal questions to jadams@beckerlawyers.com. Past editions of the Q&A may be viewed at floridacondohoalawblog.com.

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    It’s the Manager’s Fault…Or Is It? by rembaumlaw

    It’s the Manager’s Fault…Or Is It? by rembaumlaw

    • Posted: Dec 13, 2021
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    It’s the Manager’s Fault…Or Is It?

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    Few professions have more demands placed upon them than that of the Florida licensed community association manager (CAM). Depending on whom you ask, the CAM is the organizer, rules enforcer, keeper of secrets (meaning confidential and statutorily protected information not limited to the medical record of owners and attorney-client privileged information), best friend, the “bad guy” (a frequent misconstruction), and the first person in the line of fire when things go wrong; in other words, the one who takes all the blame and gets little credit when things go right.

    When things at the association go wrong, what comment is most likely heard? “It’s the manager’s fault!” But, is it? Unless the manager failed to carry out a lawful directive from the board, breached a management contract provision, or violated a Florida statute, then in all likelihood, the manager has no culpability. CAMs are licensed by the State of Florida pursuant to Part VIII of Chapter 468 of the Florida Statutes, and there are statutory standards by which CAMs must conduct themselves.

    Pursuant to §468.4334, Florida Statutes, “[a] community association manager or a community association management firm is deemed to act as agent on behalf of a community association as principal within the scope of authority authorized by a written contract or under this chapter. A community association manager and a community association management firm shall discharge duties performed on behalf of the association as authorized by this chapter loyally, skillfully, and diligently; dealing honestly and fairly; in good faith; with care and full disclosure to the community association; accounting for all funds; and not charging unreasonable or excessive fees.”

    As set forth herein, statutory standards provide guidance to CAMs as to how they should conduct themselves. They must discharge their duties with skill and care and in good faith. They must act with loyalty to their association employer and deal with the association both honestly and fairly. They must provide full disclosure, which can be interpreted as both keeping the board informed of current events and providing disclosures of any conflict of interests. They must be able to account for all funds, too, which means both assessment income and expenditures; in other words, they must mind the budget.

    Best practices for CAMs include becoming extremely familiar with the governing documents of the association (including the declaration, articles of incorporation, bylaws, and rules and regulations) and the financials of the association, walking the physical property, engaging with their team and residents, as well as providing weekly status updates to the board regarding all ongoing association business. If you are a CAM and do these things, then you have an opportunity to shine and stand head and shoulders above your peers and competition. This weekly status report is an excellent communication tool yet seems to be a rarity. CAMs should also make themselves available to owners. However, when an owner becomes offensive or insulting, the CAM should politely and firmly request that the owner communicate respectfully and in a professional manner. A CAM should always be financially transparent and should be extremely familiar with the management contract to fully understand her obligations and authority; for example, the limitation to spend association funds. Finally, the CAM should strive to keep a written record of her activities.

    The two most obvious and biggest ways to get in trouble include committing acts of gross misconduct or gross negligence in connection with the profession or contracting on behalf of an association with any entity in which the CAM has a financial interest that is not disclosed. Disciplinary actions against a CAM fall under the purview of the Florida Department of Business and Professional Regulation (DBPR). Section 455.227, Florida Statutes, governs grounds for discipline, penalties, and enforcement.

    For example, the following activities constitute grounds for which disciplinary actions may be taken by the DBPR (this list is not all inclusive):

    (i) making misleading, deceptive, or fraudulent representations in or related to the practice of the CAM’s profession; (ii) intentionally violating any rule adopted by the DBPR; (iii) being convicted or found guilty of, or entering a plea of guilty or nolo contendere (“I do not wish to contend”) to, a crime in any jurisdiction which relates to the practice of, or the ability to practice, a CAM’s profession; (iv) having been found liable in a civil proceeding for knowingly filing a false report or complaint with the DBPR against another CAM; (v) attempting to obtain, obtaining, or renewing a license to practice a profession by bribery, by fraudulent misrepresentation, or through an error of the DBPR; (vi) failing to report to the DBPR any person who the CAM knows is in violation of the laws regulating CAMs or the rules of the DBPR; (vii) aiding, assisting, procuring, employing, or advising any unlicensed person or entity to practice a profession contrary to law; (viii) failing to perform any statutory or legal obligation; (ix) making or filing a report which the licensee knows to be false; (x) making deceptive, untrue, or fraudulent representations in or related to the practice of a profession or employing a trick or scheme in or related to the practice of a profession; and  (xi) performing professional responsibilities the licensee knows, or has reason to know, the licensee is not competent to perform.

    The Florida Administrative Code, in Rule 61E14-2.001, also provides standards for professional conduct which are deemed automatically incorporated as duties of all CAMs into any written or oral agreement for community association management services. A CAM must adhere to the following standards:

    1. comply with the requirements of the governing documents by which a community association is created or operated
    2. only deposit or disburse funds received by the CAM or management firm on behalf of the association for the specific purpose or purposes designated by the board, community association management contract, or the governing documents of the association
    3. perform all community association management services required by the CAM’s contract to professional standards and to the standards established by §468.4334(1), Florida Statutes
    4. in the event of a potential conflict of interest, provide full disclosure to the association and obtain authorization or approval; and
    5. respond to, or refer to the appropriate responsible party, a notice of violation or any similar notice from an agency seeking to impose a regulatory penalty upon the association within the timeframe specified in the notice.

    In addition, during the performance of community association management services pursuant to a contract with a community association, a CAM cannot withhold possession of the association’s official records or original books, records, accounts, funds, or other property of the association when requested in writing by the association to deliver the foregoing to the association upon reasonable notice. However, the CAM may retain those records necessary to complete an ending financial statement or report for up to 20 days after termination of the management contract. Additionally, a CAM cannot (i) deny or delay access to association official records to an owner, or his or her authorized representative, who is entitled to inspect and copy the association’s official records within the timeframe and under the applicable statutes governing the association; (ii) create false records or alter the official records of an association or of the CAM except in such cases where an alteration is permitted by law (e.g., the correction of minutes per direction given at a meeting at which the minutes are submitted for approval); or (iii) fail to maintain the records for a CAM, management firm, or the official records of the association as required by the applicable statutes governing the association.

    How do you know if your association requires a licensed community association manager? Pursuant to §468.431, Florida Statutes, if the association has 10 or more units or has a budget of $100,000 or more and the person is conducting one or more of the following activities in exchange for payment, the person must be a licensed CAM:

    1. controlling or disbursing funds of a community association
    2. preparing budgets or other financial documents for a community association
    3. assisting in the noticing or conduct of community association meetings
    4. determining the number of days required for statutory notices
    5. determining amounts due to the association
    6. collecting amounts due to the association before the filing of a civil action
    7. calculating the votes required for a quorum or to approve a proposition or amendment
    8. completing forms related to the management of a community association that have been created by statute or by a state agency
    9. drafting meeting notices and agendas
    10. calculating and preparing certificates of assessment and estoppel certificates
    11. responding to requests for certificates of assessment and estoppel certificates
    12. negotiating monetary or performance terms of a contract subject to approval by an association
    13. drafting pre-arbitration demands
    14. coordinating or performing maintenance for real or personal property and other related routine services involved in the operation of a community association, or
    15. complying with the association’s governing documents and the requirements of law as necessary to perform such practices.

    However, a person who performs clerical or ministerial functions under the direct supervision and control of a CAM or who is charged only with performing the maintenance of a community association and who does not assist in any of the management services described above is not required to be licensed.

    So, whose fault is it when things go awry? A CAM’s role is far different than that of a rental complex manager who often has decision-making authority. The CAM does not have that same type of decision-making authority. The CAM must take direction from the board and perform pursuant to the obligations set out in the management agreement and Florida law. It is the board of directors of the community association that actually makes the decisions. So, while the uninformed might blame the CAM, you now know that the buck stops with the board of directors. If you have further questions regarding a CAM’s responsibility, then please discuss this with your association’s lawyer.

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    Legal: Comcast of Florida LP v. L’Ambiance Beach Condominium Association, Inc.

    Legal: Comcast of Florida LP v. L’Ambiance Beach Condominium Association, Inc.

    • Posted: Dec 13, 2021
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    Comcast of Florida LP v. L’Ambiance Beach Condominium Association, Inc.

    17 So.3d 839 (Fla. 4th DCA 2009)

    By: Jay Roberts, Esq.

    The ability for condominium associations to terminate certain contracts using a statutory procedure is at the heart of THIS CASE. In 2002, Comcast of Florida, L.P. (“Comcast”) entered into an agreement with the condominium developer (on behalf of the Association) that granted Comcast an easement to install cables and offer cable television services to residents at a bulk-discount rate. Every unit owner received and paid for the cable service as part of a monthly maintenance fee. The termination provision in the agreement stated it would be subject to the conditions and regulations required under Chapter 718, Florida Statutes. Following turnover from the developer to the unit owners, the Association voted to terminate the agreement and sent written notice to Comcast in accordance with F.S. 718.302.

    Section 718.302, Fla. Stat. (2002), provided in part:

    (1) Any grant or reservation made by a declaration, lease, or other document, and any contract made by an association prior to assumption of control of the association by unit owners other than the developer, that provides for operation, maintenance, or management of a condominium association or property serving the unit owners of a condominium shall be fair and reasonable, and such grant, reservation, or contract may be canceled by unit owners other than the developer:
    (a) … the cancellation shall be by concurrence of the owners of not less than 75 percent of the voting interests other than the voting interests owned by the developer….

    After receiving notice of the termination, Comcast refused to open the distribution lock boxes. Ultimately, Comcast sued for declaratory and injunctive relief for breach of contract and trespass. Before a hearing was held, the Association hired another provider to rewire the building and provide services to all residential units. The trial court ruled in favor of the Association. On appeal, Comcast argued that F.S. 718.302 did not apply to Comcast’s services, because the contract was not one for operation, maintenance, or management of the condominium as required under the statutory language.

    On appeal the Fourth District Court of Appeal found that the agreement explicitly required Comcast to operate and maintain the wires and lock boxes it had installed. The Court also noted that under F.S. 718.115(1)(d), the cost of cable television service obtained pursuant to a bulk rate contract is deemed a common expense. In light of the fact that the agreement provided for a cable television service, and that the cost was part of a monthly maintenance fee, and that Comcast was required to service and maintain the cable television, the Court concluded that the agreement was one for “operation, maintenance, or management” subject to F.S. 718.302 (NOTE: the 2021 version of this statute is substantially the same as the 2002 version).

    So why does THIS CASE matter? The Florida Condominium Act provides various rights to condominium associations which become effective upon turnover of the association from developer-controlled to unit owner-controlled, including, but not limited to, the ability to terminate certain contracts. It is vital for associations which recently have undergone turnover to discuss the various rights which accrued on the date turnover with the association’s legal counsel.

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    Financial Screening of Purchasers: How Far Is Too Far? by KBRLegal

    Financial Screening of Purchasers: How Far Is Too Far? by KBRLegal

    • Posted: Dec 03, 2021
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    Financial Screening of Purchasers: How Far Is Too Far?

    A few months back a case came before the county court in the 20th Judicial Circuit for Collier County, wherein a prospective buyer challenged the validity of a board-adopted rule which required that all prospective buyers provide two years of tax returns with their application for ownership approval. This requirement was in addition to the background check and credit check that were also required. While this is only a county court case and, therefore, has no precedential value other than to the parties themselves, there are principles addressed of which associations and managers should be aware; even though many learned attorneys would opine that the conclusions of the court are legally flawed under the facts of the case and, if appealed, would likely be overturned. Nevertheless, there are still nuggets of knowledge that can be gleaned from this case.

    In this case, Mech v. Crescent Beach Condominium Association, Inc., Case No. 19-SC-3498, decided June 2020, the purchaser, who was the plaintiff, was seeking to buy a unit at Crescent Beach Condominium for $400,000, which was to be paid in cash. The purchaser purportedly had a clean background and a credit score of 800. Nonetheless, the board required that, like all other prospective purchasers at the condominium, this purchaser needed to produce his tax returns in order for the association to approve the transfer. The purchaser refused to provide his tax returns and cited his good credit score and clean background as evidence enough for approval. Eventually, an impasse was reached, and the purchaser canceled the contract. Then he brought the county court lawsuit challenging the requirement. (Generally speaking, typically under current Florida law, the purchaser would not have legal standing to even bring the claim against the association; but it does not appear that this legal infirmity was raised by the association, which allowed the case to proceed.)

    The purchaser challenged the rule, arguing that the rule was not within the scope of the association’s authority to adopt, nor did it reflect reasoned decision-making. (It is noteworthy to point out that, after the initiation of the lawsuit, the association amended its declaration of condominium to provide that the association may require tax returns in an application for approval of a sale. However, this is not relevant to the conclusions of the Court in this case since it occurred after the litigation was filed.)

    The association argued that the tax returns are necessary because they provide more information than a credit report and could help ensure that the potential purchaser is “a good credit risk.” The Court, however, did not agree, calling the argument “nonsensical.” The Court goes on to identify what this judge considers to be the best indicator of a person’s financial history, and as a result, it is the only information the association is allowed to seek. (We note that this conclusion is also without a stated legal basis.)

    In the final judgment, some might argue that the Court goes way beyond what proper judicial consideration and conclusions typically contain and indicates that she could find “NO justification for the invasive requirement that a full, or even partial, return would be required when, in fact, the board already requires a full background check and credit check.” While no legal support for the conclusion was provided, the Court held that the request for tax returns was invasive and unnecessary and that the requirement was “shocking.”

    The Court objected to the blanket requirement that applied to every applicant regardless of the results of their background and credit checks. Had the tax returns only been required when an applicant’s credit history showed a history of financial instability or delinquencies, the rule may have been upheld by the Court. How-ever, the Court held that “to take a position that ‘every person’ who applies to be a member at [the association] is patently unreasonable and shall be stricken.” Lastly, also without a legal basis or ability, the Court ordered the association to strike all reference in its condominium documents which require potential purchasers to produce tax returns unless the association can show good cause to request the information.

    A brief discussion regarding the adoption of rules and regulations is necessary to highlight lessons that can be learned from this case. Generally, both condominium and homeowners association governing documents will typically provide that the board of the directors has the authority to adopt rules and regulations for the community. While some governing documents may contain restrictions requiring a membership vote to approve new rules, it is common for the governing documents to provide the board with the authority to adopt rules and regulations. (Careful review of the documentary authority for each community is recommended as some may limit the rule-making authority to common areas only and not to the residential property within the community.)  Although the board is generally authorized to adopt rules and regulations, those rules and regulations must not conflict with any provision expressly set out in the governing documents or reasonably inferred from them, and they must be reasonable. (This should be contrasted with covenants recorded in the County’s official records, which may be unreasonable and still be legally enforceable under long-standing Florida case law.)

    In Beachwood Villas Condominium v. Poor, et. al., a 1984 Fourth District Court of Appeal (4th DCA) case  in which several owners challenged rules enacted by their association’s board of directors, the Court noted that there could be two sources of use restrictions: (i) those set out in the declaration of condominium and (ii) those adopted by the board. As to the use restrictions set out in the declaration, the court held that such restrictions are “clothed with a very strong presumption of validity,” as initially provided in Hidden Harbor Estates v. Basso (a 1981 4th DCA case).

    In examining board-adopted rules, the court first must determine whether the board acted within its scope of authority—in other words, whether the board had the express authority in the documents to adopt the rule in the first place. If the answer is “yes,” the second question to determine is whether the rule conflicts with an express provision of the governing documents or one that is reasonably inferred. (If the documents are silent on an issue, the inference is that it is unrestricted. Adopting a rule to restrict a topic that the declaration is otherwise silent about would conflict with the inferred unrestricted use and therefore be unenforceable.)  If these first two issues are found to exist, the court will then determine if the rule is reasonable. The board’s exercise of its reasonable business judgment in adopting a rule is generally upheld so long as the rule is not “violative of any constitutional restrictions and does not exceed any specific limitations set out in the statutes or condominium documents.”

    In examining your own board-adopted rules, ask the following:

    • Did the board have the power to adopt the rule?
    • Is the rule in accord with with the declaration, articles of incorporation, or bylaws?
    • Is the rule reasonable under the circumstances? (While ultimately only a court can make this final determination, the board should use its best judgment, with assistance of its counsel, to reach this decision.)

    If the answer to these three questions is “yes,” then the rule should be found to be valid and enforceable by the court upon an owner challenge.

    Ultimately, what can be gleaned from Mech v. Crescent Beach Condominium Association Inc. is that even if the association acts reasonably when adopting rules and even when amending the declaration, a lower court judge can reach almost any decision it wishes. Had the provision at issue only required tax returns when the background or credit checks revealed that the prospective purchaser had a history of financial irresponsibility, the provision may have withstood judicial challenge by this particular judge. Additionally, had the provision requiring tax returns been set out in the declaration before the initiation of the lawsuit, the outcome may have been different under existing, well-established case law.

    Bottom line, whenever the board is considering new rules, it is recommended that the board consult with the association’s legal counsel before adopting them.

    (Reprinted with permission from KBR Legal)

    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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