SFPMA

Menu
Join SFPMA

SFPMA Industry Articles | news, legal updates, events & education! 

Find Blog Articles for Florida’s Condo, HOA and the Management Industry. 

Release of Liability and Hold Harmless Agreements by JEFFREY REMBAUM, ESQ., KAYE BENDER REMBAUM

Release of Liability and Hold Harmless Agreements by JEFFREY REMBAUM, ESQ., KAYE BENDER REMBAUM

Release of Liability and Hold Harmless Agreements

by JEFFREY REMBAUM, ESQ., KAYE BENDER REMBAUM

If Your Association Requires One, Then You Must Read This…

Many communities offer a host of amenities for their residents and guests to enjoy, such as clubhouses, fitness centers, playgrounds, swimming pools, tot lots, tennis courts, etc. One of the upsides to providing such amenities is that the residents and their guests have a variety of activities to choose from, which enhances the quality of life within the community. However, one of the potential significant downsides to offering such benefits is that the association often incurs liability if a resident or guest is injured while using one of the amenities.

Accordingly, it has become commonplace for associations to require that residents and guests sign a document that releases the association from liability and holds the association harmless when a resident or guest uses the amenities. Although the title of the document may vary—“Hold Harmless,” “Indemnification Agreement,” “Release of Liability,” or “Waiver and Release”—there is usually language included within the document along the lines of the following:

“I, Mr. Owner, on my own behalf and on behalf of all other occupants and guests to my home, for and in consideration for use of the association’s facilities, equipment, etc. hereby release and hold harmless the association, its members, officers, directors, agents, etc. from any and all liability which may arise out of or in connection with my participation or use of the foregoing facilities, equipment, etc.”

This language is often referred to as an “exculpatory clause,” which is a clause that is designed to relieve a party from blame or liability. Such language has traditionally served to help prevent an association’s liability to an owner or guest when he or she is injured while using the amenities. It may have been a while since anyone has taken a good look at the specific language included in the association’s release, and it may be taken for granted that such language will automatically protect the association from liability. Many such form documents do not provide the protection you might think they should. A recent Florida appellate court case dealing with such exculpatory clauses highlights this potential issue and offers pause.

Specifically, The Estate of Nicholas Adam Blakely, By and Through Michele Wilson, as Personal Representative v. Stetson University, Inc., WL 17997526 (Fla. 5th DCA 2022), involved the tragic death of a young man who played football at Stetson University. As described in the written appellate opinion, the young man pulled himself out of an afternoon football practice complaining to an assistant athletic trainer that he felt dizzy and that his chest felt tight. Although the trainers continued to monitor his symptoms on the sidelines, after approximately 45 minutes the young man collapsed. Thereafter, university employees attempted various emergency medical procedures in an unsuccessful effort to revive him. The young man was transported to the hospital where, sadly, he died.

The trial court found that the two identical releases signed by the young man were sufficiently clear to bar claims brought against the university arising from his death after participating in the football practice. On appeal, however, one of the arguments focused on whether the language in the releases that the young man signed were sufficient to be enforceable. The appellate court determined it was not. Although the entirety of the written releases are unable to be reproduced here, the particular language that the court focused on is set out below. Specifically, the appellate court placed emphasis on the following:

I understand that the dangers and risks of playing or participating/practicing may include, but are not limited to: death…Because of the dangers and risks involved in participating in intercollegiate athletics, I recognize the importance of following the Coaches and Sports Medicine staff instructions regarding playing techniques, conditioning, rehabilitation/treatment recommendations and team rules, etc. and agree to obey such instructions…I hereby assume all risks associated with participation and agree to hold Stetson University…from any and all liability…of any kind or nature which may arise by or in connection with my participation in any activities related to the Stetson University athletic program. The terms hereof shall serve as a release and assumption of risk for myself, my heirs, estate, executor, administrator, assignees and for all members of  my family. The terms hereof shall serve as a complete release and waiver of liability for myself, my heirs, estate, executor, administrator, assignees, and for all members of my family.

 

On its face, it sounds complete. But is it? In its analysis of the language included in the releases, the appellate court began by expressing that

[A]n exculpatory clause purports to deny an injured party the right to recover damages from a person negligently causing his injury. They are disfavored in the law because they relieve one party of the obligation to use due care and shift the risk of injury to the party who is probably least equipped to take the necessary precautions to avoid the injury and bear the risk of loss. Such claims are strictly construed against the party seeking to be relieved of liability. Thus, exculpatory clauses are enforceable only where and to the extent that the intention to be relieved from liability is made clear and unequivocal. The wording must be clear and understandable that an ordinary and knowledgeable person will know what he is contracting away (quoting UCF Athletics Ass’n, v Plancher, 121 So. 3d 1097, 1101 [Fla. 5th DCA 2013]).

 

Unlike the trial court, the appellate court took issue with the language contained within the releases because the release forms

  1. failed to expressly inform the young man that he was contracting away his rights to sue the university for its own negligence,
  2. used language that could reasonably lead one to believe that the university would be supervising and training [him] properly such that the young man was only being asked to sign the exculpatory clause to cover injuries inherent in a sport, and
  3. used language suggesting that the terms of the releases were for the young man’s benefit.

 

Accordingly, the appellate court determined that the foregoing supported a determination that the releases were not clear and unambiguous. So, what does the appellate court’s decision mean for exculpatory clauses as related to an association’s release? It means that associations need to review the language in such exculpatory clauses with counsel to assist in aligning the language with the thinking of the court. For example:

  1. Is the language in the release clear, unambiguous, and written in such a way that an ordinary and knowledgeable person would know that he or she is contracting away his or her right to sue the association if an injury occurs?
  2. Is the language in the release free from any indication whatsoever that training and/or supervision is being provided by the association to avoid a mistaken belief by the owner or guest that he or she is merely signing away his or her right to sue for injuries inherent in a particular activity?
  3. Is it unequivocally clear that the individual is giving up all rights to litigate against the association in regard to any accident that may occur, even if the association was negligent?
  4. Are there terms in the release that would make it seem as though the release is for the benefit of the homeowner or guest and not the association?
    If you are in doubt as to the exculpatory language included in your association’s release, do not wait until a homeowner or guest is injured, or possibly worse, to discover that the language is not appropriate for protecting the association from liability. In light of this most recent opinion, you should discuss with your association’s legal counsel when there would be a good opportunity to review and amend such release of liability and hold harmless agreements.
Jeffrey Rembaum, 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.
Tags: ,
A FEW BIG CHANGES IN THE LAW By Eric Glazer, Esq.

A FEW BIG CHANGES IN THE LAW By Eric Glazer, Esq.

A FEW BIG CHANGES IN THE LAW

By Eric Glazer, Esq.

Believe it or not, it’s getting harder to sue someone or to sue a business in the State of Florida.

First, it’s more risky now to sue your insurance company.  The typical case that comes to mind is the one where a condominium association sues its own insurance company for failing to pay for roof damage because the insurance company does not believe the storm caused all that damage.  Until now, there was no risk for the condominium association.  The attorney took the case on a contingency and, if the association won the case the association would be entitled to an award of attorney’s fees against the insurance company.  And, even if the association lost, the association did not have to pay attorney’s fees to the lawyers for the insurance company.  In other words, the risk of paying attorney’s fees only ran one way.  No longer.  Now the association has no right to collect attorney’s fees against their insurer even if the case is settled or won.  The association bears the risk of not having their fees paid by their carrier which should ultimately result in a smaller recovery.

Perhaps the biggest change to the law since I’m in practice went into effect last week.  The statute of limitations regarding negligence actions went from four (4) years to two (2) years.  That is a bombshell.

The law is primarily intended to go after personal injury lawyers and prevent personal injury cases from winding up in the courtroom.  From a condominium and HOA perspective the change in the law will also have major effects.  For example, all claims for damages to condominium or HOA property caused by someone else now have to be filed in two years and not four.  This could be damage caused by contractors the association hire, or unit owners who live or rent on the property.

There are some other bills of interest that may pass during the legislative session and if they do, I’ll let you know.

 

Tags:
THE FLORIDA LEGISLATURE – AFRAID TO PASS REQUIRED EDUCATION

THE FLORIDA LEGISLATURE – AFRAID TO PASS REQUIRED EDUCATION

THE FLORIDA LEGISLATURE – AFRAID TO PASS REQUIRED EDUCATION

DOES THE FLORIDA LEGISLATURE WANT YOU TO REMAIN DUMB?

By Eric Glazer, Esq.

For those of you who are intelligent and decided to come to a Board Certification class in the last few months and learn all about the new safety and reserve laws, I applaud you.  It was my honor meeting you and teaching you all over the state.

I love that look in your eyes and the groan that comes over the crowd when I tell you that you do not need to be here today.  You did not have to get certified by taking what I believe is both a board certification and a life safety class.  The Florida Legislature still allows Board members to get certified by signing a ridiculous form that says you have read your governing documents and you promise to enforce them.

Are the new safety and reserve laws found in your governing documents?  Of course not.  You have to be taught them to know what you are now required to do in order that another Champlain Towers disaster never happens again.  You don’t learn these laws by staying home in your pajamas, printing a form off the computer and signing it.  When the members of your Board can get certified by signing that self-serving form, lives are at risk.

It’s ironic that they placed language in the new laws requiring the directors to follow them or face breach of fiduciary duty charges.  So…..according to The Florida Legislature, you must apply these new laws in your condominium, you just don’t have to learn them and know what is actually required of you.

Every legislator I have ever spoken to about a mandatory educational course in order to get Board certified is in favor of it.  Yet, it remains a mystery why in the past it has been removed from the statute.  The classes are free and are even accessible via ZOOM.  This year, there are several condominium bills floating around at the moment.  Not a single one has any mention of mandatory education for Board members.

Back to the title “Does The Florida Legislature Want You To Remain Dumb?”  How else would you explain it?

Tags: , ,
Florida Condo Building Inspections (SB4d) It’s a confusing time for everyone affected, and we can all use some extra clarity.

Florida Condo Building Inspections (SB4d) It’s a confusing time for everyone affected, and we can all use some extra clarity.

Florida Condo Building Inspections (SB4d)

It’s a confusing time for everyone affected, and we can all use some extra clarity.

Florida state legislature took swift action to implement inspection reform to mitigate the risk of a similar tragedy in the future. As of May 27th, 2022, Florida passed several laws to keep building safer in the state by requiring specific inspections and funding mechanisms. These new Florida condo laws mean significant changes for building owners across Florida, all within a relatively short time.

 

  • Under the new legislation, a licensed engineer or architect must visually evaluate condominiums older than 30 years, or 25 years if the building is within 3 miles of the shore, and every 10 years thereafter.

 

  • A secondary inspection will be required if there is evidence of significant structural damage.

 

  • The new rule also mandates that condo organizations review their reserve money every ten years to ensure that they can cover substantial repairs.

 

This is a great Video to start your education on SB-4D

https://www.youtube.com/watch?v=0QdEqUgL1CM&t=51s

Milestone Inspections

Addition of F.S. 533.889 – Milestone Inspections

 

What buildings does this law affect, and what does the new law say? 

Structural inspections are now mandatory for condominium and cooperative buildings that are 3 stories or greater in height.

 

What do I have to do?

Have a Milestone Inspection performed when a building is 30 years old and every ten years after the initial inspection. If your building is within 3 miles of the coastline, a Milestone Inspection must be performed when the building is 25 years old and every ten years after the initial inspection.

 

What else do I need to know about this inspection? 

The purpose is to verify the safety and adequacy of the structural components of the building. There are two possible phases of this Milestone Inspection. If you pass the first, you don’t need the second. If you don’t pass the first, you’re required to have the second performed, which is much more extensive.

Phase 1is a visual examination and qualitative assessment. Ideally, this will be all you have to complete.

Phase 2is a full assessment of distress to determine if the building is structurally sound and safe for its intended use. The inspector is to recommend a program for complete evaluation and repair of distressed and damaged portions of the building.

On SFPMA.COM find the top rated engineers for your SB-4D Inspections.

A Florida Licensed Engineer or Architect must perform both phases of this Milestone Inspection.

Find the Top rated Engineers on our State of Florida Members Directory. Members are located all over Florida, Boards, Managers, Owners, Investors can view our open directory and find these companies to start the Inspections.

 

When is the deadline?

If your building is over 30 years old (or 25 if you’re within 3 miles of the coast), you must complete this inspection by December 31st, 2024.

 

We at SFPMA recommend you know about this new Florida condo law?

Don’t wait to get started on this. If you act now, you can likely avoid a Phase 2 inspection by correcting any items that might force you into a Phase 2, before the December 31st, 2024 date. Those who wait may be forced into a more expensive Phase 2 can’t make necessary repairs in time. (*If a building is less than 3 miles from the coastline, these inspections start at year 25). 

Tags: , ,
Federal Court Identifies Potential Collection Issue for Community Associations in Florida

Federal Court Identifies Potential Collection Issue for Community Associations in Florida

Federal Court Identifies Potential Collection Issue for Community Associations in Florida

Community association operations rely upon the timely and full payment of all assessments by all of the owners. One of the mechanisms that Florida law provides to put associations in a stronger position when an owner becomes delinquent is the “secured interest” of the association in the unpaid assessments by way of its ongoing lien against the unit or lot for the unpaid assessments. This secured interest puts the claim of the association at a higher priority than most other claims, other than a first mortgage or unpaid property taxes. However, a recent decision in the United States Bankruptcy Court for the Southern District of Florida, In re: Adam, Case No.: 22-10140-MAM, September 23, 2022, has cast a potential cloud on that secured interest.

In the In re Adam case, the Association previously obtained a judgment of foreclosure for over $76,000, which was considered as a secured interest by the Court. The Association was also claiming an additional $36,558 which came due after the judgment was entered. The owners were asking the Court to decide that the $36,000 was not secured and therefore uncollectible in the bankruptcy (or at least not fully collectible).

In deciding whether certain association claims were secured and collectible in the bankruptcy setting, the Court undertook an analysis of Florida law on the subject. The Court noted that both the Florida Condominium Act (Chapter 718 F.S.) and the Homeowner’s Association Act (Chapter 720 F.S.) currently contain express provisions that identify that the lien of the association is effective from the original recording of the declaration (with the added requirement in HOA’s that the declaration specifically expresses this lien right). However, the Court also points out that the Condominium Act was amended in 1992 to provide for this effective date. (The Homeowner’s Association Act was amended to provide for it in 2008.) Prior to these amendments, these Statutes provided for the effective date of the lien to be when it was recorded in the public records of the county. The analysis of the Court required it to consider whether the current version of the Statute applies to the situation or whether an earlier version of the Statute is the controlling authority. (This case involved a condominium so only the Condominium Act was considered in the decision.)

To make that determination, the Court applied the principles of the seminal case of Kaufman v. Shere, 347 So.2d 627 (Fla. 3d DCA 1977), which require declarations to contain the specific phrase “as amended from time to time” when identifying the Statute that governs the documents in order for the current version of the Statute to apply. This is because Statutes are not retroactive in their application unless the legislature expressly makes them so in the Statute itself. Both the U.S. and Florida Constitutions do not allow for the State to make a law that infringes upon the vested rights in an existing contract (which would be the declaration). As a result, the contract (declaration) would need to have the specific “as amended from time to time” language (often called “Kaufman” language) to automatically incorporate changes to the Statute that is not otherwise retroactive.

When the Court reviewed the governing documents, it noted that they were from 1987 and did not have the Kaufman language. As such, the Court held that the provisions of the declaration were the same as the Statute in 1987, which provided that the lien was effective only upon being recorded in the public records of the county. Since the Association did not file another lien for the amount being claimed subsequent to the foreclosure judgment, the Court concluded that this portion was not secured. In the bankruptcy setting, this meant that the Association would likely be unable to recover most, if not all of this claim from the Debtors, Mr. and Ms. Adam.

While this issue may be most relevant to associations when dealing with a case in bankruptcy, it is possible that it could also be raised in state court foreclosure cases under certain circumstances. It is also important to note that this Bankruptcy Court did not include a significant issue in the analysis regarding the Statute at issue, that being whether or not the statutory provision was “substantive” or “procedural”, as those terms apply to this situation, which could have led to a different result. (This portion of the legal analysis is quite technical and beyond the scope of this article.)

For communities whose declarations were recorded prior to the statutory changes described above, the first step in protecting the interests of the association is to review the documents to determine whether Kaufman language is already in them. If not, the board may wish to consider proposing an amendment to the owners to change the documents to include this language, if not for the entire declaration, then at least for the timing of the effectiveness of the lien of the association. Having qualified legal counsel review these issues in the documents is a strong business practice.

About Robert
Robert L. Kaye is Board Certified in Condominium and Planned Development Law. Mr. Kaye attended Michigan State University, graduating with a B.B.A. in General Business in 1976. In 1986, Mr. Kaye graduated from the Detroit College of Law, magna cum laude. Mr. Kaye initially practiced tax law for the firm of Raymond, Rupp, Weinberg, Stone & Zuckerman, P.C. in Troy, Michigan, before moving to South Florida in 1987, joining Becker & Poliakoff to concentrate in the area of community association representation. In 1991, Robert Kaye left that employ to start Kaye & Roger, P.A. He was the managing shareholder of the Firm from its inception, directing all legal operations and overseeing its growth to represent over 1,000 Communities in South Florida at the time of its name change to Robert Kaye & Associates, P.A. on January 1, 2003.
On January 1, 2009 Mr. Kaye joined with Michael Bender to form Kaye & Bender, now known as Kaye Bender Rembaum, after Jeffrey Rembaum joined in 2012. Mr. Kaye serves on the Florida Bar’s Grievance Committee, is a member of the Condominium Committee of the Real Property Section of The Florida Bar, and previously served on the Committee on the Unlicensed Practice of Law. He also lectures on Community Association law and is regularly published on the subject. Mr. Kaye hosts KBR’s appearances on the radio show, ‘Ask the Experts’, from 6pm to 7pm, the first Thursday of each month.
See his full bio HERE.

Tags: ,
IF THERE EVER WAS A TIME TO GET EDUCATED – Update

IF THERE EVER WAS A TIME TO GET EDUCATED – Update

Update:  Eric Glazer, Esq.
Published October 10, 2022

Rumors of my demise have been greatly exaggerated.

I just spent a week in the hospital — again with kidney stone issues.  This is I believe the 5th time I needed some sort of surgery for this never ending painful problem.  I left the hospital with a tube coming out of my right side.  I still need a lithotripsy procedure.  That’s the one where you lay down in water and they zap your kidney stones hoping to break them up.  I’m guessing I have another week or two of this insanity.

I want to apologize to the wonderful people at the L&L Condo and HOA Expos.  As all of you know, I always attend all of their shows all around the state and have the honor of kicking off the event by doing my board certification course.  Unfortunately I won’t be able to attend the events In Palm Beach and in Broward.  I am desperately hoping to attend the events in Orlando and Tampa.  I think all of you know that I love nothing more than being with all of you, teaching you, and answering your questions.  It’s simply my favorite part of being an attorney.  It’s killing me that I can’t teach the classes that so many of you attend each and every year.  However, L&L will be finding another well qualified attorney from another law firm to teach and certify you.  I urge you to attend and continue to make the L&L shows the success that they always are.

I’m taking two weeks off from the radio show.  I expect to do the show October 16th — with or without a tube coming out of my side.  BY THE WAY……THAT’S THE SAME DAY I WILL BE ON 60 MINUTES — AS THEY ARE DOING A SHOW ABOUT WHETHER OR NOT GRANDMA AND GRANDPA CAN STILL MOVE TO A FLORIDA CONDOMINIUM IF THEIR SOLE INCOME IS SOCIAL SECURITY.  I think we all know the answer.   This really should be an amazing show which shines the spotlight on Florida condominiums but truly needs to be watched by the entire country as every state better follow Florida’s lead when it comes to mandating safety.

In any event, I hope to be back at my desk in a week or two and look forward to speaking with all of you again.  In the mean time, please get in touch with Rich, Pennie or Paul if you need immediate help.

PS: The nurse told me that the epidural was not invented to relieve pain from child birth.  It was invented to relieve pain from kidney stones!

 

We know everyone is wishing Eric Glazer a full recovery and well wishes.  Ouch

 

In light of the tragedy at The Champlain Towers in Surfside last year, The Florida Legislature, to its credit, passed massive condominium reform regarding safety, inspections and reserves.  These laws are confusing to those who work in the industry every day, never mind to those who serve on condo Boards throughout the state.

 

Stay up to date with the new law -FLORIDA BUILDING INSPECTIONS (SB-4D)

Florida Condo Building Inspections (SB4d)

http://FLBuildingInspections.com  a division of SFPMA

The State of Florida Property Management Association with Legal & Engineering Members are here to help you understand the new laws and how to take the correct action now to ensure you are in full compliance. 

 

The Florida Legislature thought that it was so important for condo boards to enforce these laws that they included a provision which considers a breach of these laws a breach of the director’s fiduciary duty.  Imagine, personal liability can be imposed against a director who fails to enforce these new laws.

Once again, I drafted legislation which would require Board members to learn these new laws in order to get certified and once again this requirement was removed from the statute.  It’s hard to believe, but The Florida Legislature drafted a law which imposes personal liability against those directors who fail to follow these new laws yet removed the requirement to learn these new laws.  In any event, I will again try to make learning these new laws a condition of becoming certified in the next legislative session.

As far as condominium Board members go…….there can be no more important time than the present to learn these new laws.  They are designed to keep you and your fellow unit owners alive.

Don’t dare get certified by signing that dumb, silly form that says I read my governing docs and promise to enforce them.  Even if you read your governing documents from cover to cover, you still wouldn’t learn any of the new condo laws.  What a disgrace that you can still become certified this way.

I am teaching at the following times and locations this month.  It is more imperative than ever to attend an educational course.  In fact, if you don’t learn the new laws and don’t apply the new laws on your condo board, you can face personal liability.  Moreover, any condo Board member who can’t find a few hours to take an educational course is not worthy of a single vote.  So what do you say?  Please register for any of the free following Condo Craze and HOAs Board Certification Classes offered around the state

Find the Condo & HOA Event Dates

 

Tags: , , ,
Searching for Money: A Condominium Association’s Guide to Acquiring Financing by Becker

Searching for Money: A Condominium Association’s Guide to Acquiring Financing by Becker

  • Posted: Sep 21, 2022
  • By:
  • Comments: Comments Off on Searching for Money: A Condominium Association’s Guide to Acquiring Financing by Becker

Searching for Money: A Condominium Association’s Guide to Acquiring Financing

by Steven B. Lesser  of Becker

A Condominium Association enjoys broad powers based upon Chapter 718, Florida Statutes, otherwise known as “The Florida Condominium Act.” Despite the guidance provided by the statute and case law which interprets it, little has been written to guide Condominium Associations when borrowing funds to finance various projects.

Associations often borrow money to build capital improvements such as clubhouses; perform extensive remedial work and to buy out recreational leases. Associations must be careful to review its own condominium documents to evaluate whether limitations exist on the right to borrow. This article will discuss the practical considerations to be addressed by a Condominium Association when borrowing funds.

 

Review Of The Condominium Documents
The condominium documents including the Declaration of Condominium, Articles of Incorporation and By-laws dictate how money can be raised to fund certain projects. the procedure to be followed depends upon the purpose for raising such funds. To the extent that the Association desires to perform maintenance work to its own property or common elements, money can be raised by passing a special assessment on its unit owners pursuant to Section 718.116, Florida Statutes. Most condominium documents provide the Association with the authority to borrow funds for such purposes without acquiring unit owner consent. However, to the extent that the Association desires to buy out a recreation lease, build a clubhouse or otherwise perform material alterations or acquire substantial additions to the common elements or to Association property, unit owner approval is necessary. Section 718.113, Florida Statutes provides that if the Declaration of Condominium is silent on the percentage of unit owners required to approve such activities seventy-five (75%) percent shall govern.

 

Where To Seek Financing
Once the Association has determined the purpose in raising funds, a source of financing must be located. Financing is often sought when the Association is unable to raise sufficient funds through a special assessment of its members. In many instances, some or all members may not have the money to pay a large lump sum assessment. Typically, an Association will first attempt to look to acquire financing from the bank that handles its operating account. However, the Association should not view the bank as its only source. Often times, members of the Association’s Board of Directors or unit owners may have personal contacts with a lender that is able to provide more favorable rates and flexibility in terms of structure and cost of financing. In some circumstances, a willingness to shift the Association’s operating account to another lender will provide the Association with leverage to acquire the most favorable financing program.

 

Structuring The Deal
Once the Association has acquired authorization to borrow money and has located a lending institution, structuring the deal becomes the next significant step.

It is not unusual for an Association to borrow in excess of $ 1 Million to finance the purchase of recreational lands from a Developer or to perform significant renovation work to remedy structural defects such as those associated with balconies located in close proximity to the ocean. Lending institutions, with the assistance of counsel for the Association, can be creative in formulating a plan to achieve the financial goals of the Association. The most significant aspect is how the lending institution will secure its loan to the Association.

Unlike other private entities and individuals, a Condominium Association has the statutory right to raise money by a special assessment of its members. Under this scenario, a unit owner’s failure to pay a special assessment will constitute a lien on each condominium parcel for any unpaid assessments. The lien for unpaid assessments will also be subject to an award of interest and reasonable attorney’s fees incurred by the Association to collect or enforce the lien. This statutory right to pass and enforce a special assessment provides security to a lending institution that elects to lend money to an Association. Consequently, a lender will often accept an Assignment of the Association’s right, title and interest in and to all current and future assessments made by the Association against its unit owner members for the purposes of timely payment of all sums due to a lender. For example, an agreement for the purchase of a recreation lease and underlying property between an Association and lender will often include an Assignment which provides as follows:

“The Association hereby irrevocably and unconditionally assigns all of its right, title and interest in and to all special assessments now existing or hereinafter levied by the Association against its unit owner members which are made for the purposes of repayment of the loan or the payment of rent under any lease or lease on real property owned by the Association.”

The foregoing procedure provides the lender with assurance that the loan will be repaid. However, financing a special assessment is expensive when considering loan and interest charges. Certain unit owners may be opposed to being assessed finance charges when they are financially capable of paying the special assessment in a lump sum at the time the loan is acquired. Should a number of unit owners have the ability to pay the special assessment in a lump sum, this process would reduce the total amount of money to be borrowed by the Association along with incidental finance charges.

As a special assessment constitutes an encumbrance on property, the Association would negotiate elimination of any prepayment penalty charges should the loan in whole or in part be paid early. Consequently, elimination of a pre-payment penalty clause would enable the Association or a unit owner to avoid additional finance charges should they pay off the debt prior to the maturity date.

 

Typical Costs Associated With Financing
Should the Association elect to mortgage its property to acquire financing the following fees will be generated:

Bank loan fees, Bank counsel fees, corporate searches, Survey, Title insurance costs, accounting costs, Documentary stamps, Intangible documentary stamps on the amount of the note and mortgage, Environment assessment of property, Recording charges, The cost of amending the condominium documents if additional property is acquired by the Association.

The Association and its counsel should attempt to discuss and negotiate the above-listed fees with the lending institution prior to signing a commitment letter. The Association should never sign a commitment letter without first consulting with counsel. Once the commitment letter is signed, the Association may be obligated to pay a non-refundable fee. Moreover, attempting to re-negotiate the terms of the loan may delay the process as it would require reconsideration by the loan committee.

 

Conclusion
In closing, a condominium Association must identify its purpose in raising funds. The purpose of raising funds will dictate the procedure to be followed. If funds are to be raised for maintenance repairs, a special assessment can be passed without unit owner consent. Condominium documents typically authorize the Board of Directors of a Condominium Association to borrow funds without owner consent. However, certain condominium documents may require unit owner approval. To the extent that the Association elects to borrow funds to perform material alterations or to acquire a substantial addition to Association property, the condominium documents will govern the procedure to be followed. If the condominium documents are silent, seventy-five (75%) percent unit owner approval must first be acquired before a special assessment can be passed pursuant to Section 718.113 (2), Florida Statutes.

When attempting to acquire financing, look to the members of Association’s board of directors and its unit owners to identify lender’s that can provide the most favorable rate. The bank handling the Association’s operating account is often the best source of financing and may be willing to negotiate certain costs associated with financing. Likewise, conferring with an attorney that specializes in association work can often assist you in reducing the costs associated with obtaining a loan.

Most importantly, shop around and take advantage of the collective financial strength of the Association and its unit owner members.

Steven B. Lesser

Shareholder

Ft. Lauderdale

 954.987.7550

 SLESSER@beckerlawyers.com

 

Tags: , ,
Congratulations, Jeff Rembaum, Firm Members and Attnys at Kaye Bender Rembaum

Congratulations, Jeff Rembaum, Firm Members and Attnys at Kaye Bender Rembaum

Jeffrey A. Rembaum Once Again Named to Florida Trend’s Legal Elite

Only 1.4% of Florida’s lawyers appear among the exclusive Florida Legal Elite, and Kaye Bender Rembaum is proud to announce attorney Jeffrey A. Rembaum, BCS has once again been selected.

Now in its 19th year, Florida Legal Elite presents the state’s top licensed and practicing attorneys selected by their peers. Florida Trend invited all in-state members of the Florida Bar to name attorneys whom they highly regard or would recommend to others. The list of top vote recipients was examined using Florida Bar membership status and histories. A panel of previous Legal Elite honorees from across the state representing different practice areas reviewed the list of finalists. Congratulations, Jeffrey!

Allison L. Hertz Named Co-Chair of Condominium & Planned Development Committee of The Florida Bar’s RPPTL Section.

The Real Property, Probate and Trust Law (RPPTL) Section of the Florida Bar announced that attorney Allison L. Hertz, BCS of Kaye Bender Rembaum has been named Co-Chair of its Condominium & Planned Development Committee. Ms. Hertz, a Board Certified Specialist in Condominium and Planned Development Law, joins a long line of the most preeminent and respected attorneys in this field of law to have held this position.

“I am honored and proud to serve as Co-Chair for the Committee and will continue to provide input for the betterment of all Florida community associations”, said Allison Hertz. Jeffrey Rembaum added, “Ms. Hertz is extremely knowledgeable in this body of law, and will no doubt be a valuable asset to the RPPTL committee.”

Ms. Hertz is also the Vice-chair of the Condominium & Planned Development Law Certification Review Committee, and she recently served as Chair of the Condominium & Planned Development Committee’s Hurricane Protection Subcommittee, and was a member of the Committee’s Emergency Powers Task Force.

KBR Attorneys Elevated to Firm Members

Danielle M. Brennan, Esq., BCS has been elevated to Firm Member at Kaye Bender Rembaum, P.L in Palm Beach Gardens, FL and Emily E. Gannon, Esq. has been elevated to Firm Member at Kaye Bender Rembaum, P.L in Pompano Beach, FL.

Danielle M. Brennan (pictured top left) is a Board Certified Specialist in Condominium and Planned Development Law. Ms. Brennan joined Kaye Bender Rembaum as an Associate Attorney in the Firm’s community association department in the Palm Beach Gardens’ office in April 2013. Ms. Brennan assists clients on all aspects of community association operations and enjoys leading presentations for managers and board members.

 

Emily E. Gannon (pictured bottom left) joined Kaye Bender Rembaum in April 2012, and assists the Firm’s association clients on all aspects of community association operations. Emily is also a frequent lecturer on community association law, which includes leading seminars providing CEUs for property managers and certifications for board members.

Congratulations to each new Firm Member of the Kaye Bender Rembaum team!

KBR’s Jeffrey Green Attains Florida Bar’s

Board Certified Specialist in Construction Law

The Florida Bar has confirmed Firm Member Jeffrey D. Green, to be officially certified in Construction Law.

Board certification is the highest level of recognition by the Florida Bar and demonstrates an attorney’s significant competency and experience in a specialty field of law. Attorneys must meet stringent application criteria before officially becoming certified, including satisfactory peer review assessments as it relates to proficiency, character, ethics and professionalism, completing the certification area’s continuing legal education requirements and passing a rigorous written examination. Only attorneys who have earned the “board-certification” distinction are allowed to describe themselves as legal “specialists” or “experts” in a specific field.

“Board Certification is an achievement I’m very proud of, and I am excited to continue assisting our clients in construction-related matters and all other areas of association law,” said Jeffrey Green. Michael Bender added, “This is a career milestone for Jeffrey that warrants recognition. He’s an extremely knowledgeable and skilled attorney and we appreciate all he has done for the Firm and its clients.”

Congratulations to Jeffrey Green on this impressive achievement.

Latest Videos with Kaye Bender Rembaum

Association Leadership S3:E12 | August 17, 2022 | SB-4D and more on Preparing your 2023 Budget

Lunch & Learn | Cyberstalking and Defamation in Community Associations

 

Tags: ,
Mandatory Condominium & Cooperative Building Inspections and Non-Waivable Reserve Requirement

Mandatory Condominium & Cooperative Building Inspections and Non-Waivable Reserve Requirement

Mandatory Condominium & Cooperative Building Inspections and Non-Waivable Reserve Requirement

The City of Surfside, Champlain Towers South Related Legislation Already in Effect

 

With home insurers leaving Florida in droves, and following pressure from members of both political parties in the legislature to actually do something about it, in May 2022, the governor called a special legislative session to address the problem. A very real concern to the insurers is the effect of both time and inclement weather on Florida’s aging high-rise buildings. Until now, and for the most part, Florida law largely ignored these concerns. Enter Senate Bill 4-D (SB 4-D), which already became effective upon being signed into law by Governor DeSantis on May 26, 2022. This new piece of legislation addresses condominium and cooperative building inspections and reserve requirements. (While this article primarily addresses these new laws in the context of condominium association application, they are equally applicable to cooperative associations.)

By way of background, during the regular legislative session, there were several bills introduced in the Florida House of Representatives and in the Florida Senate addressing building safety issues, but none of them were passed into law due to the inability to match the language of the bills in both the house and the senate which is a requirement for legislation to pass and go to the governor for consideration. As such, it was a little surprising to many observers that the legislature was able to approve SB 4-D in essentially a 48-hour window during the special session in May. The language used in SB 4-D was initially drafted into a proposed bill in November 2021. At that time and during the most recent legislative session, input was provided by many industry professional groups including engineers, reserve study providers, and association attorneys. Many of these industry professionals indicated that there were challenges with some of the language and concepts being proposed in SB 4-D during session.

Notwithstanding these challenges and in an effort to ensure some form of life safety legislation was passed this year, SB 4-D was unanimously approved in both the house and senate and signed by the governor. A plain reading of this well-intended, but in some instances not completely thought-out, legislation evidences these challenges. Some will say it is a good start that will need significant tweaking, which is expected in the 2023 legislative session. Others praise it, and, yet others say it is an overreach of governmental authority, such as an inability to waive or reduce certain categories of reserves. You be the judge. We begin by examining the mandatory inspection and reserve requirements of SB 4-D.

I. Milestone Inspections: Mandatory Structural Inspections For Condominium and Cooperative Buildings. (§553.899, Fla. Stat.)

You will not find these new milestone inspection requirements in Chapters 718 or 719 of the Florida Statutes, but rather in Chapter 553, Florida Statutes, as cited above.

Milestone Inspections

The term “milestone inspection” means a structural inspection of a building, including an inspection of load-bearing walls and the primary structural members and primary structural systems. The aforementioned terms are defined in §627.706, Florida Statutes, and are to be carried out by a licensed architect or engineer authorized to practice in this state for the purposes of attesting to the life safety and adequacy of the structural components of the building and, to the extent reasonably possible, determining the general structural condition of the building as it affects the safety of such building, including a determination of any necessary maintenance, repair, or replacement of any structural component of the building. The purpose of such an inspection is not to determine if the condition of an existing building is in compliance with the Florida Building Code or the fire safety code.

Substantial Structural Deterioration

The term “substantial structural deterioration” means substantial structural distress that negatively affects a building’s general structural condition and integrity. The term does not include surface imperfections such as cracks, distortion, sagging, deflections, misalignment, signs of leakage, or peeling of finishes, unless the licensed engineer or architect performing the phase one or phase two inspection determines that such surface imperfections are a sign of substantial structural deterioration.

Milestone Inspections For Buildings Three Stories or More In Height

A condominium association under Chapter 718 and a cooperative association under Chapter 719 must have a milestone inspection performed for each building that is three stories or more in height by December 31 of the year in which the building reaches 30 years of age, based on the date the certificate of occupancy for the building was issued, and every 10 years thereafter.

Within Three Miles of Coastline

If the building is three or more stories in height and is located within three miles of a coastline, the condominium association or cooperative association must have a milestone inspection performed by December 31 of the year in which the building reaches 25 years of age, based on the date the certificate of occupancy for the building was issued, and every 10 years thereafter.

The condominium association or cooperative association must arrange for the milestone inspection to be performed and is responsible for ensuring compliance.

The condominium association or cooperative association is responsible for all costs associated with the inspection.

If The Certificate of Occupancy was Issued Before July 1, 1992

If a milestone inspection is required under this statute and the building’s certificate of occupancy was issued on or before July 1, 1992, the building’s initial milestone inspection must be performed before December 31, 2024. If the date of issuance for the certificate of occupancy is not available, the date of issuance of the building’s certificate of occupancy shall be the date of occupancy evidenced in any record of the local building official. 

Upon determining that a building must have a milestone inspection, the local enforcement agency must provide written notice of such required inspection to the condominium association or cooperative association by certified mail, return receipt requested. 

Within 180 days after receiving the written notice, the condominium association or cooperative association must complete phase one of the milestone inspection. For purposes of this section, completion of phase one of the milestone inspection means the licensed engineer or architect who performed the phase one inspection submitted the inspection report by email, United States Postal Service, or commercial delivery service to the local enforcement agency.

A Milestone Inspection Consists of Two Phases

(a) PHASE 1—For phase one of the milestone inspection, a licensed architect or engineer authorized to practice in this state must perform a visual examination of habitable and non-habitable areas of a building, including the major structural components of a building, and provide a qualitative assessment of the structural conditions of the building. If the architect or engineer finds no signs of substantial structural deterioration to any building components under visual examination, phase two of the inspection (discussed below) is not required. An architect or engineer who completes a phase one milestone inspection shall prepare and submit an inspection report.

(b) PHASE 2—A phase two of the milestone inspection must be performed if any substantial structural deterioration is identified during phase one. A phase two inspection may involve destructive or nondestructive testing at the inspector’s direction. The inspection may be as extensive or as limited as necessary to fully assess areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use and to recommend a program for fully assessing and repairing distressed and damaged portions of the building. When determining testing locations, the inspector must give preference to locations that are the least disruptive and most easily repairable while still being representative of the structure. An inspector who completes a phase two milestone inspection must prepare and submit an inspection report.

Post-Milestone Inspection Requirements

Upon completion of a phase one or phase two milestone inspection, the architect or engineer who performed the inspection must submit a sealed copy of the inspection report with a separate summary of, at minimum, the material findings and recommendations in the inspection report to the condominium association or cooperative association, and to the building official of the local government which has jurisdiction. The inspection report must, at a minimum, meet all of the following criteria:

  1. Bear the seal and signature, or the electronic signature, of the licensed engineer or architect who performed the inspection.
  2. Indicate the manner and type of inspection forming the basis for the inspection report.
  3. Identify any substantial structural deterioration within a reasonable professional probability based on the scope of the inspection, describe the extent of such deterioration, and identify any recommended repairs for such deterioration.
  4. State whether unsafe or dangerous conditions, as those terms are defined in the Florida Building Code, were observed.
  5. Recommend any remedial or preventive repair for any items that are damaged but are not substantial structural deterioration.
  6. Identify and describe any items requiring further inspection.

Local Government Enforcement

A local enforcement agency may prescribe timelines and penalties with respect to compliance with the milestone inspection requirements.

A board of county commissioners may adopt an ordinance requiring that a condominium or cooperative association schedule or commence repairs for substantial structural deterioration within a specified timeframe after the local enforcement agency receives a phase two inspection report; however, such repairs must be commenced within 365 days after receiving such report. If an association fails to submit proof to the local enforcement agency that repairs have been scheduled or have commenced for substantial structural deterioration identified in a phase two inspection report within the required timeframe, the local enforcement agency must review and determine if the building is unsafe for human occupancy.

Board’s Duty After Obtaining The Milestone Report

Upon completion of a phase one or phase two milestone inspection and receipt of the inspector-prepared summary of the inspection report from the architect or engineer who performed the inspection, the association must distribute a copy of the inspector-prepared summary of the inspection report to each unit owner, regardless of the findings or recommendations in the report, by United States mail or personal delivery and by electronic transmission to unit owners who previously consented to receive notice by electronic transmission; must post a copy of the inspector-prepared summary in a conspicuous place on the condominium or cooperative property; and must publish the full report and inspector-prepared summary on the association’s website, if the association is required to have a website.

Who Pays for The Milestone Inspection?

Pursuant to §718.112, Florida Statutes, if an association is required to have a milestone inspection performed, the association must arrange for the milestone inspection to be performed and is responsible for ensuring compliance with all of the requirements thereof. The association is responsible for all costs associated with the inspection.

Failure to Obtain the Milestone Inspection

If the officers or directors of an association willfully and knowingly fail to have a milestone inspection performed pursuant to §553.899, Florida Statutes, such failure is a breach of the officers’ and directors’ fiduciary relationship to the unit owners.

Manager’s Duty

If a community association manager or a community association management firm has a contract with a community association that has a building on the association’s property that is subject to milestone inspection, the community association manager or the community association management firm must comply with the requirements of performing such inspection as directed by the board.

Exemptions

For clarity, the otherwise required milestone inspection does not apply to a single family, two-family, or three-family dwelling with three or fewer habitable stories above ground.

Florida Building Commission Requirements

The Florida Building Commission must review the milestone inspection requirements and make recommendations, if any, to the legislature to ensure inspections are sufficient to determine the structural integrity of a building. The commission must provide a written report of any recommendations to the governor, the president of the senate, and the speaker of the house of representatives by December 31, 2022. 

The Florida Building Commission must consult with the State Fire Marshal to provide recommendations to the legislature for the adoption of comprehensive structural and life safety standards for maintaining and inspecting all types of buildings and structures in this state that are three stories or more in height. The commission must provide a written report of its recommendations to the governor, the president of the senate and the speaker of the house of representatives by December 31, 2023.

II. Structural Integrity Reserve Studies and Mandatory Reserves:

The reserve legislation set out in §718.112 (f)(2)(a), Florida Statutes, is, for all intents and purposes, re-written. Prior to examining these most recent revisions, it is necessary to first examine the definitions set out in §718.103, Florida Statutes, where a brand-new term is added as follows: 

Structural integrity reserve study means a study of the reserve funds required for future major repairs and replacement of the common areas based on a visual inspection of the common areas applicable to all condominiums and cooperative buildings 3 stories or higher. 

Hereafter, the structural integrity reserve study is referred to as “SIRS.” Now we can turn our attention to the requirements of the SIRS as set out in §718.112 (f)(2)(a), Florida Statutes.

The Structural Integrity Reserve Study (required for all condominium and cooperative buildings three stories or higher regardless of date of certificate of occupancy):

An association must have a SIRS completed at least every 10 years after the condominium’s creation for each building on the condominium property that is three stories or higher in height which includes, at a minimum, a study of the following items as related to the structural integrity and safety of the building:

  1. Roof
  2. Load-bearing walls or other primary structural members
  3. Floor
  4. Foundation
  5. Fireproofing and fire protection systems
  6. Plumbing
  7. Electrical systems
  8. Waterproofing and exterior painting
  9. Windows
  10. Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed in subparagraphs a.-i., as determined by the licensed engineer or architect performing the visual inspection portion of the structural integrity reserve study.

The SIRS may be performed by any person qualified to perform such study. However, the visual inspection portion of the structural integrity reserve study must be performed by an engineer licensed under Chapter 471 or an architect licensed under Chapter 481. 

As further set out in the legislation, at a minimum, “a structural integrity reserve study must identify the common areas being visually inspected, state the estimated remaining useful life and the estimated replacement cost or deferred maintenance expense of the common areas being visually inspected, and provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense of each common area being visually inspected by the end of the estimated remaining useful life of each common area.”

The amount to be reserved for an item is determined by the association’s most recent structural integrity reserve study that must be completed by December 31, 2024. If the amount to be reserved for an item is not in the association’s initial or most recent structural integrity reserve study or the association has not completed a structural integrity reserve study, the amount must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item.

If the condominium building is less than three stories, then the legislation provides that “in addition to annual operating expenses, 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.” 

The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. 

If an association fails to complete a SIRS, such failure is a breach of an officer’s and director’s fiduciary relationship to the unit owners.

Non-Waivable and Waivable Reserves In The Unity Owner-Controlled Association

As to the SIRS, the legislation is patently clear that unit owners may not vote for no reserves or lesser reserves for items set forth in the SIRS report. There is ongoing debate among attorneys in regard to whether a condominium under three stories can waive or reduce reserves for any of the reserve items required to be in the SIRS that are included in the under- three-story condominium reserve—for example, roof and painting. (For those interested, examine lines 1029 to 1033 and 1050 to 1071 in SB 4-D.)

Mandatory Reserves In The Developer-Controlled Association

Before turnover of control of an association by a developer to unit owners other than a developer pursuant to §718.301, Florida Statutes, the developer-controlled association may not vote to waive the reserves or reduce the funding of the reserves. (Previously, a developer could fully waive all reserves for the first two years, meaning this is a monumental change.)

Pre-Turnover Developer Duty

Before a developer turns over control of an association to unit owners other than the developer, the developer must have a SIRS completed for each building on the condominium property that is three stories or higher in height.

III. Official Records

Official records of the condominium and cooperative association include structural integrity reserve studies, financial reports of the association or condominium, and a copy of the inspection reports and any other inspection report relating to a structural or life safety inspection of condominium or cooperative property. 

In addition to the right to inspect and copy the declaration, bylaws, and rules, renters have the right to inspect the milestone inspection report and structural integrity reserve study inspection reports as well.

Structural integrity reserve studies must be maintained for at least 15 years after the study is completed. In addition, inspection reports and any other inspection report relating to a structural or life safety inspection of condominium property must be maintained for 15 years after receipt of such report.

IV. Association Websites

In addition to other positing requirements, the inspection reports described above and any other inspection report relating to a structural or life safety inspection of condominium property and the association’s most recent structural integrity reserve study must be posted to the website.

V. Jurisdiction of Division of Condominiums, Timeshares and Mobile Homes

Pre-turnover, the Division of Florida Condominiums, Timeshares, and Mobile Homes (Division) may enforce and ensure compliance with rules relating to the development, construction, sale, lease, ownership, operation, and management of residential condominium units, and complaints related to the procedural completion of milestone inspections. After turnover has occurred, the Division has jurisdiction to investigate complaints related only to financial issues, elections, and the maintenance of and unit owner access to association records, and the procedural completion of structural integrity reserve studies.

VI. New Reporting Requirements For All Condominium and Cooperative Associations

On or before January 1, 2023, condominium associations existing on or before July 1, 2022, must provide the following information to the Division in writing, by email, United States Postal Service, commercial delivery service, or hand delivery, at a physical address or email address provided by the division and on a form posted on the division’s website:

  1. The number of buildings on the condominium property that are three stories or higher in height.
  2. The total number of units in all such buildings.
  3. The addresses of all such buildings.
  4. The counties in which all such buildings are located.

An association must provide an update in writing to the division if there are any changes to the information in the list within six months after the change.

VII. Applicable To All Sellers of Units

As a part of the sales process, the seller of a condominium or cooperative unit and developers must provide to potential purchasers a copy of the inspector-prepared summary of the milestone inspection report and a copy of the association’s most recent structural integrity reserve study or a statement that the association has not completed a structural integrity reserve study.

VIII. Glitches

As with any new legislation of such a substantial nature, there often follow in subsequent years what are referred to as “glitch bills” which help provide additional clarity, remove ambiguity, and fix unintended errors. Some observe are (i) the term “common areas” is used in the legislation when in fact the correct term is “common element;” (ii) clarity needs to be provided regarding whether reserve items that are required to be in SIRS, but show up in the under-three-story reserves, such as paint and paving, can be waived or reduced by the membership; and (iii) for those buildings that are within three miles of the coastline, additional clarity could be provided to provide better guidance as to how to perform the measurement.

Tags: , , ,
WILL THE NEW LAWS BE DEVASTATING FINANCIALLY TO SOME FLORIDA RESIDENTS?

WILL THE NEW LAWS BE DEVASTATING FINANCIALLY TO SOME FLORIDA RESIDENTS?

  • Posted: Jul 14, 2022
  • By:
  • Comments: Comments Off on WILL THE NEW LAWS BE DEVASTATING FINANCIALLY TO SOME FLORIDA RESIDENTS?

WILL THE NEW LAWS BE DEVASTATING FINANCIALLY TO SOME FLORIDA RESIDENTS?

By Eric Glazer, Esq.

In a word — YES. Are all these new laws really necessary?  In a word –YES.  This is all happening due to a complete lack of foresight and planning by The Florida Legislature.  Mandatory Reserves and Mandatory Inspections should always have been the law.  I urged The Florida Legislature in May of 2018 to make reserves mandatory.  Instead they waited for a building to collapse and for 98 people to die before making these common sense laws.  Of course a building should require an inspection after 25 or 30 years.  Of course a building should be required to make necessary repairs to prevent a potential collapse.  Of course a building should be required to put away money each month for future repairs.  Of course that amount should be determined by a professional architect or engineer and not an unqualified board member who has a financial interest in the outcome of the reserve study. These laws should have been required thirty years ago, as building started to boom.  Instead however, The Florida Legislature always caved to the developer lobby in order to keep the cost of living in a condominium artificially cheap, and the sale of units flowing.  Now, because these laws were not in place thirty years ago, current condominium owners have a lot of catching up to do financially to pay for the sins of the past.

 

The days of a couple or a widower from up north retiring to a high rise condominium in Florida if their sole income is social security are done and over.  That cannot happen anymore.  They need to look for a condominium less than three stories in height that has some reserves put away.

 

If your condominium is at least 30 years old and is 6 stories or higher, has no fire sprinklers or  Engineered life safety system, has not yet undergone a Mandatory Phase One and Phase Two Inspection, has not made the repairs required by those inspections and has no reserves in the bank, you are now forced to either sell your condominium unit immediately or pay massive special assessments that you may not be able to afford, or even come close to affording it.

 

On the flip side, if your condominium is at least 30 years old and is 6 stories or higher, and already has fire sprinklers or  an Engineered life safety system, has already undergone a Mandatory Phase One and Phase Two Inspection, has already made the necessary repairs, and is fully funding reserves, you have little to nothing to worry about.  Your monthly assessments should remain where they are, give or take the increases in insurance that are simply astronomical.

 

Developers are waiting to pounce.  They are focusing their attention on those condominium at least 30 years old and are 6 stories or higher, but has no fire sprinklers or Engineered life safety system, has not yet undergone a Mandatory Phase One and Phase Two Inspection, and has not made the repairs that will be required by those inspections and has no reserves in the bank.  Developers will be approaching the Boards of these condominiums with offers to buy everyone’s unit for a certain price.  You will either consent to selling or have to pay the costs for all these inspections, repairs and funding of reserves.  For many there will be no choice at all.  They will have to sell and somehow find housing elsewhere.

 

Like everything else, the poor people or even the average workers who had saved up enough money for a down payment on their condo and proudly purchased their unit, they will get hit the hardest.  In reality, in upper class buildings, they were either putting reserve money aside all along, or worse comes to worse they can stroke a check for these increased costs.  They’re OK.

 

This will take years to sort out.  Some condos simply won’t be able to comply with the new laws and the owners will sell out to a developer.  Some condominiums will opt not to sell and pass massive special assessments and/or borrow the money from a bank.  Either way their expenses are going up.  Many associations will be foreclosing on many of their owners who can’t afford these special assessments.  I can tell you that even before these massive changes go into effect, foreclosures are already on the rise, simply due to nearly $6.00 per gallon of gasoline and out of control food prices.  These new laws will start what I believe will be a tremendous increase in foreclosures, perhaps as bad as 2007 and 2008.  Yet, all of it is necessary.  You can’t allow buildings not to get inspected, you can’t allow building not to get fixed, you can’t allow buildings not to have fire safety measures and you can’t allow buildings to deliberately waive a requirement to put funds away each month for future structural repairs.

 

The Band Aid was ripped off in one shot.  As a result, Florida condominiums and their owners will have some tough financial times ahead.  There will definitely be gentrification in some neighborhoods.  The look, feel and face of Florida will change going forward.  If only these measures were passed when these buildings were being built so people would not be forced out of their homes today.  There simply was no foresight and now the change won’t be smooth and gradual, but will be difficult and immediate.  And yet, there’s no other way to go.  A collapse like Champlain Towers can never happen again.

 

Tags: