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Legislative Changes Opens the Door to New Options for Resolving “Disputes” In Condominium and Cooperative Associations By: Jennifer Horan, Esq.

Legislative Changes Opens the Door to New Options for Resolving “Disputes” In Condominium and Cooperative Associations By: Jennifer Horan, Esq.

  • Posted: Jun 14, 2022
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Legislative Changes Opens the Door to New Options for Resolving “Disputes” In Condominium and Cooperative Associations

By: Jennifer Horan, Esq. / Becker

Earlier this year, the Florida legislature passed changes to Florida’s Condominium Act (Chapter 718) the Cooperative Act (Chapter 719), and the Homeowners Association Act (Chapter 720), Florida Statute. These amendments went into effect on July 1, 2021 and opened the door to allow condominium and cooperative associations a new option for addressing disputes between unit owners and the association through presuit mediation. Previously, disputes between condominium associations and unit owners (or cooperatives and unit owners) were required to be submitted to arbitration through the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (the “Division”) before filing a lawsuit regarding any of the following issues:

 

(a) The authority of the board of directors, under this chapter or association document, to:

1. Require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto.

2. Alter or add to a common area or element.

(b) The failure of a governing body, when required by this chapter or an association document, to:

1. Properly conduct elections.

2. Give adequate notice of meetings or other actions.

3. Properly conduct meetings.

4. Allow inspection of books and records.

(c) A plan of termination.

 

Before the 2021 legislative changes, the parties to an arbitration could request a referral to mediation; however, the request for mediation came with a potential “cost.” If the parties attended mediation but were unable to resolve their dispute, unless all parties agreed in writing to continue the arbitration proceeding, the arbitration was dismissed. The parties were then forced decide whether to proceed with filing a lawsuit to resolve their dispute. However, with the new legislative changes, a party to a dispute in a condominium or cooperative association has the option of either petitioning the Division for nonbinding arbitration or initiating presuit mediation. Now that there are options to consider when it comes to alternative dispute resolution, it is important to know the difference between arbitration and mediation.

 

Mediation and arbitration are both forms of “alternative dispute resolution” or methods of resolving disputes outside of a courtroom. Despite what you may see on TV, lawsuits are often extremely time consuming and expensive; not all disputes can be resolved in a sixty-minute time slot like they are in Law & Order. As such, alternative dispute resolution can provide a more expedient and less costly option to formal litigation.

 

Mediation is a confidential process that is conducted with an independent, trained, neutral third-party mediator. The mediator does not give legal advice and does not make any decisions regarding the dispute. Instead, the mediator acts to facilitate discussion between the parties and assists them in reaching an agreed upon resolution. In reaching an agreement, the parties have some degree of flexibility and can come up with creative solutions that may not be available remedies in court. In mediation, the parties are in control of their own destiny; they cannot be forced to accept a resolution in mediation. However, if they are able to resolve their dispute, the parties will document their agreement in the form of a written settlement agreement which will be binding in the same manner as a contract.

 

Unlike mediation, arbitration is more similar to litigation. A case in arbitration begins with the filing of a petition for arbitration. The petition must cite, among other things, that the petitioner gave the respondent advance written notice of the specific nature of the dispute; a demand for relief, and a reasonable opportunity to comply; and a notice of intention to file an arbitration petition or other legal action in the absence of a resolution of a dispute. Once the petition is reviewed by the Division, a copy of the petition is served to all of the respondents. The arbitrator is typically required to conduct a hearing within thirty (30) days of the case being assigned unless a continuance is granted for good cause shown. You can call witnesses and present evidence at an arbitration hearing; however, the arbitration hearing typically has a less formal “feeling” than a trial. There will be a ruling where one party “prevails”, as determined by an arbitrator. An arbitration decision is then generally rendered within thirty (30) days after a final hearing. The arbitration decision is only final in those disputes in which the parties have agreed to be bound by the arbitrator’s decision. However, an arbitration decision can also become final if a complaint for a trial de novo is not filed in court within thirty (30) days of the arbitration decision.

 

Arbitration does not give parties the flexibility and control over the resolution process that is provided in mediation. However, arbitration does provide a forum for resolving disputes that is typically more efficient and more cost effective than litigation. If you find yourself involved in dispute that is subject to alternative dispute resolution under the Condominium Act (Chapter 718) or the Cooperative Act (Chapter 719), Florida Statutes, you should discuss with your association’s legal counsel whether arbitration or mediation provides a better forum to resolve your particular issue.

 

Jennifer Horan

Shareholder

Naples

 239.552.3200

 JHORAN@beckerlawyers.com

 

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Kaye Bender Rembaum is a full service commercial law firm dedicated to the representation of community associations throughout Florida.

Kaye Bender Rembaum is a full service commercial law firm dedicated to the representation of community associations throughout Florida.

  • Posted: May 05, 2022
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Kaye Bender Rembaum is a full service commercial law firm dedicated to the representation of 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 provides its clients with an unparalleled level of personalized and professional service regardless of their size and takes into account their individual needs and financial concerns. They have offices in Pompano Beach, Palm Beach Gardens and Tampa, and in Miami-Dade by appointment.

The associates of Kaye Bender Rembaum establish relationships with clients to understand their needs and goals. Kaye Bender Rembaum assists clients in all matters of Association representation including, but not limited to, collection of assessments, contract negotiation, covenant review and amendment, covenant enforcement and construction defect claims. Kaye Bender Rembaum also keeps clients up-to-date on new developments in the law and how they personally affect them. The firm provides prompt, effective, high quality, cost-efficient and understandable legal advice and services to a diverse client base. Associates strive to help clients operate and administer their communities better and to educate them on their responsibilities and duties under Florida law and their governing community documents. Robert Kaye, Michael Bender and Jeffrey Rembaum are industry leaders who are often sought out by public policy makers and the media for advice and commentary on community association law.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Thank you for your interest in Kaye Bender Rembaum.

Practice Areas

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. Our areas of concentration include:

  • Assessment Collections
  • Construction Defect Claims
  • Contract Drafting and Negotiation
  • Covenant Enforcement
  • Fair Housing
  • Land Use and Zoning
  • Litigation and Arbitration
  • Master / Sub Association Issues
  • Pre and Post Turnover Planning
  • Review and Amendments of Covenants

Contact Us

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Statutory Meeting Requirements by Becker

Statutory Meeting Requirements by Becker

  • Posted: May 04, 2022
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Statutory Meeting Requirements

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Many condominium and homeowners’ associations’ activities are required to have a certain amount of transparency. One way that association activities are made transparent is through statutory provisions requiring most kinds of meetings to be open and noticed to the membership. In fact, applicable laws governing the operation of condominium and homeowners’ associations allow board members to communicate by email but prohibits them from voting on issues by email.

Notably, a gathering of a quorum of board members to conduct association business is considered a board meeting (whether taking place in person or by real-time electronic means) and is required to be noticed and open to association members. However, two important exceptions apply. Namely, meetings of the board or an association committee at which the association’s attorney is participating for the purpose of rendering advice upon proposed or pending litigation are not required to be open to association members. Similarly, board meetings held to discuss personnel matters are also not required to be open to association members.

Association members are entitled to speak at open meetings on “designated items” (HOA) or an item on the agenda in a condominium. However, the rights of members to speak at meetings is subject to any rules adopted by the association governing the frequency, duration, and manner of member statements. The right to attend open meetings includes the right to tape record or videotape them, as long as such recording activity is not disruptive. Furthermore, the Division of Florida Condominiums has adopted rules regarding recording condominium association meetings (found in Fla. Admin. Code Rule 61B-23.002(10)), and the Homeowners’ Association Act provides that homeowners’ associations may adopt their own pertaining to recording homeowners’ association meetings.

As such, there are statutory meeting requirements that must be followed for board meetings which must be kept in mind when an association is adopting or changing its procedures. Failing to follow the basic statutory requirements may result in problems. Questions about board meetings, committee meetings, which have their own set of requirements, and members’ meetings should be directed to legal counsel for guidance.

 

 

 

 

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.

 

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AMAZING PODCAST THAT DISCUSSES THE COLLAPSE IN SURFSIDE IN DETAIL AND FROM SO MANY DIFFERENT ANGLES.

AMAZING PODCAST THAT DISCUSSES THE COLLAPSE IN SURFSIDE IN DETAIL AND FROM SO MANY DIFFERENT ANGLES.

  • Posted: Apr 28, 2022
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THE MIAMI HERALD HAS PREPARED AN AMAZING PODCAST THAT DISCUSSES THE COLLAPSE IN SURFSIDE IN DETAIL AND FROM SO MANY DIFFERENT ANGLES.

IN TODAY’S MIAMI HERALD, ERIC GLAZER IS INTERVIEWED REGARDING THE LAWS THAT LED TO THE DISASTER AND HOW THE LEGISLATURE IGNORED PRIOR WARNINGS.

TO LISTEN TO THE PODCAST CLICK HERE

EPISODE 8: THE RULES ARE DIFFERENT HERE Almost a year after the tragic fall of Champlain Towers South in Surfside, the Florida Legislature has done nothing to prevent another disaster. It’s an approach often taken in Tallahassee: Miami-Dade County’s problems are its own to fix. But the flaws at Champlain South aren’t necessarily limited to Miami-Dade, or even Florida. They could be present in older waterfront buildings around the world.

Episode 8: The Rules Are Different Here of Collapse: Disaster in Surfside, a new podcast from Miami Herald/Treefort Media, shows listeners how the long-term consequences of the deadly accident are still up in the air — and explores how previous decades of inaction by lawmakers and the Champlain South condo board contributed to the collapse.

Listen to the Podcast and hear the interview with Eric Glazer.

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BOARD MEMBER to BOARD MEMBER EMAILS: ARE THEY OFFICIAL RECORDS?

BOARD MEMBER to BOARD MEMBER EMAILS: ARE THEY OFFICIAL RECORDS?

  • Posted: Apr 08, 2022
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BOARD MEMBER to BOARD MEMBER EMAILS: ARE THEY OFFICIAL RECORDS?

On January 6, 2022, the Department of Business and Professional Regulation (DBPR), through the Division of Florida Condominiums, Timeshares, and Mobile Homes (Division), entered a Final Order Granting Petition for Declaratory Statement in the matter of In re: Petition for Declaratory Statement, James Hanseman, Petitioner (the Hanesman Declaratory Statement). In this Final Order, the Division Director (Chevonne Christian) stated that all board member to board member emails are official records of the association. Unfortunately, this Order was entered i) without regard to who owns the device from which the email was sent;

ii) without regard to whether the manager was included in the email chain; iii) without regard to whether the email was sent to a minority or majority of board members; and iv) without regard to the board members’ constitutional right of privacy. The decision does not consider the sacrosanct requirement that a quorum of board members is needed to conduct business. If a board member can enter into a conversation with a minority of the board without triggering a required meeting notice, then a board member should also be able to communicate, by any means, with a minority of the board, including email, without it rising to the level of being considered an official record of the association. However, given the scope of the Order, this will likely require an act of the Florida legislature to accomplish.

In general, a petition for declaratory statement may be used to resolve questions or doubts as to how the statutes, rules, or orders may apply to the petitioner’s particular circumstances. These statements are only binding upon the parties who join in the proceeding. The Division issues “declaratory statements” when requested by parties who are unclear about the applicability of portions of the Condominium Act, Chapter 718, Florida Statutes. Declaratory statements are formal written positions taken by the Division on the laws and rules the Division is authorized to enforce and interpret. Importantly, with regard to the Hanesman Declaratory Statement’s precedential value, it has none whatsoever. It only applies to the parties named in the Hanesman Declaratory Statement, which includes the petitioner, Mr. Hanseman, and the Wildewood Springs II-B Condominium Association Inc. This decision is merely persuasive authority, at best. In fact, the Division does not even have to follow their own written precedent. Yet, it is predictive as to how the Division will rule should a similar fact pattern be presented. So, beware!

The Hanesman Declaratory Statement could stand for the broader proposition that all director emails are official records of the association, or perhaps it stands for the narrower proposition that board member emails are not automatically excluded as an official association record merely because the emails were sent from a director’s private email address and privately owned computer. Time will tell, I hope. In the meantime, applying its broadest interpretation means that the Division has now opined that all director-to-director emails are official records. This broad interpretation means such emails must be produced in response to a member’s official records request, unless later excluded from production due to matters of privilege. This broad interpretation also means that for all requests to inspect the official records of the association, directors will have to search their own hard drives and provide copies to the manager or whoever is coordinating the inspection. If this broad interpretation is to be applied, it is yet another burdensome requirement for board members and could be viewed as an extreme overreach of a governmental administrative agency. In light of this possible interpretation and obligation to turn over board member to board member emails, who will want to serve on the board, now?

Let us examine the history of this important topic. On March 6, 2002, Sue Richardson, the Chief Assistant General Counsel of the DBPR, issued an opinion which provided that “[c]ondominium owners do have the right to inspect email correspondences between the board of directors and the property manager as long as the correspondence is related to the operation of the association and does not fall within the…statutorily protected exceptions…[The DBPR does not have] regulations expressly requiring archiving emails, but…if the email correspondence relates to the operation of the association property, it is required to be maintained by the association, whether on paper or electronically, under chapter 718, Florida Statutes.”

In Humphrey v. Carriage Park Condominium Association Inc. Arb. Case No. 2008-04-0230 (Final Order, March 30, 2009), the arbitrator of the Division ordered that

“…emails…existing…on the personal computers of individual directors…are not official records of the association…Even if directors communicate among themselves by email strings or chains, about the operation of the association, the status of the electronic communication on their personal computer would not change. Similarly, an email to an individual director or to all directors as a group, addressed only to their personal computers, is not a written communication to the association.”

The arbitrator reasoned that “[t]his must be so because there is no obligation to turn on [the] personal computer with any regularity, or to open and read emails before deleting them.”

Then, on July 1, 2014, the Florida Legislature amended s. 718.112(2)(c) to provide that board members may communicate via email. Just because the legislature clarified that directors may do so does not mean that such email communications should automatically be considered official records of the association. Board members are not publicly elected officials. Yet, the Division’s recent Hanseman Declaratory Statement creates a basis to conclude that the Division desires to hold a director’s email communications to the same standards.

A condominium association is a privately owned entity whose members elect representatives to effectuate the orderly operations of the association. Serving as a board member of a condominium association is not at all akin to holding public office, and in our opinion, board members should not be held to the same standard as that of elected officials. The last thing a community association board member needs is to be micromanaged by one or more cantankerous owners and the vocal minority.

In the Hanesman Declaratory Statement, Ms. Christian takes the position that because §718.111(12)(a), Fla. Stat., provides, in relevant part, that the “official records of the association” include “all of the written records of the association not specifically included in the foregoing which are related to the operation of the association,”

that nothing exempts records when created or transmitted with a board member owned device rather than association owned device.

She then applied what she referred to as the plain meaning of the term “writing,” referring to the definition of the term from Black’s Law Dictionary (11th ED. 2019), which provided “emails constitute a form of writing.”

In fact, had the Florida Legislature intended for emails from one board member to another to be considered official records subject to inspection, then when it amended Chapter 718.112, eff. July 1, 2018, to provide that “members of the board of administration may use email as a means of communication but may not cast a vote on an association matter via email,” the legislature could have clarified that such emails were considered a part of the official records. Obviously, the legislature did not do so. This can only mean that the legislature had no intent whatsoever for a director’s email sent from their personal computer to a minority of other board members to be considered an official record.

What is the end game of the Hanesman Declaratory Statement? The implications are far-reaching, indeed. Does this mean that text messages must be disclosed? What about communications on messaging apps such as WhatsApp and Signal? If not, why not? The logic is arguably the same. What about conversations held with a board member outside of a meeting—must the board member make a disclosure he or she had such conversation at the next noticed meeting? Where does it end?

It is rather common knowledge that there is already a mechanism in the law to acquire documents of every kind. It is called a “subpoena duces tecum” and is used in active litigation to compel production of documents. In this author’s opinion, that is the only circumstance in which a board member’s private emails must be produced, unless and until the Florida Legislature or an appellate court squarely addresses this issue.

As the phrase goes, “one step forward and two steps back.” In other words, while a board member can use email to communicate with a fellow board member, it may come with the steep price of later required disclosure. So, if you want to avoid email disclosure, you may want to consider using a phone to discuss matters. If you want to play it really safe, then be sure to only chat to a minority of board members, too. Until there is an appellate court decision or statutory law that squarely addresses email disclosure, please be sure to discuss these matters with your association’s attorney. In the meantime, perhaps consider using dedicated association-hosted email addresses for association-related emails.
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Attorney-Client Privilege: Are Litigation-Related Communications Between An Association, Attorney, and Management Protected?

Attorney-Client Privilege: Are Litigation-Related Communications Between An Association, Attorney, and Management Protected?

  • Posted: Mar 24, 2022
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Attorney-Client Privilege: Are Litigation-Related Communications Between An Association, Attorney, and Management Protected?

BY   / of Becker

The attorney-client privilege is one of the oldest and most respected privileges in the law. The purpose underlying this fundamental privilege is to ensure that clients receive accurate and competent legal advice by encouraging full disclosure to their lawyer without fear that the information will be revealed to others. The privilege covers written and oral communications and protects both individual and institutional clients including community associations.

However, the attorney-client privilege does not apply to every communication with an attorney and in certain circumstances can even be waived. For the privilege to exist, three requirements must be met: there must be a communication; the communication must have been intended to remain confidential; and the communication must have been made in the context of obtaining legal advice.

Pursuant to Florida’s Evidence Code, a communication between lawyer and client is “confidential” if it is not intended to be disclosed to third persons other than:

  1. Those to whom disclosure is in furtherance of the rendition of legal services to the client.
  2. Those reasonably necessary for the transmission of the communication.

Florida courts have stated that the second exception (i.e. those reasonably necessary for the transmission of the communication) applies to agents of the client. This is so because in Florida, all corporate powers are exercised by, or under the authority of, the association’s board of directors. Further, as an inanimate entity an association cannot speak directly to its lawyers and must instead act through agents.

A management company and its personnel are generally responsible for the day-to-day operations of the community, implementing directives of the board, and serving as a liaison between an association and its counsel. Although a reasonable interpretation of the Florida Evidence Code and case law implies that a property management company is likely an agent of the association, such a determination is not guaranteed.

However, there are steps that can be taken by the association and its counsel to support an assertion of privilege such as including language in their management contracts that expressly extends the attorney-client privilege from the association to include the manager. The association’s counsel can also prepare a general Board Resolution authorizing the management company and its employees to act as agents of the association where necessary to further communications with legal counsel.

Evidentiary privileges (such as the attorney-client privilege) are sacred protections in a court of law. It is imperative that proper measures are taken to ensure that said privileges are not compromised. If your association finds itself involved in a potential or pending litigation, the board needs to work closely with the association’s attorney to protect the privileges the law provides to keep confidential communications out of the hands of the wrong people.

John Stratton

John handles business litigation and appellate matters representing individuals and corporations across an array of industries. He has significant and successful litigation experience in complex commercial, corporate, land use, and condominium litigation, contract disputes, commercial loan workouts, and civil appellate proceedings in both state and federal appellate courts.

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LAST SURFSIDE-INSPIRED BILL FAILS – A Perfect Opportunity Lost

LAST SURFSIDE-INSPIRED BILL FAILS – A Perfect Opportunity Lost

  • Posted: Mar 24, 2022
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As a result of the 2022 Florida legislative session, there will be no new statutes requiring mandated building/engineering inspections, no statutory changes to budgeting procedures, no mandated reserve study requirements, and no statutory changes to required disclosures.

While only a very few Florida counties have mandated in their code of ordinances that older condominium buildings have life-safety inspections, that does not mean required maintenance and proper planning can be otherwise avoided elsewhere. Board members must exercise their fiduciary duties with due care and due diligence. Voluntary engineering inspections and professional reserve studies should be considered to take place on a regular schedule. Maintenance, repairs, and replacements should be budgeted and funding sources properly identified.

As often explained by Board Certified attorney Lisa Magill, “is the law the only reason you stop at a red light? Probably not. You stop because there’s a likelihood a truck will smash into you from the side.” In other words, common sense should prevail. All condominium unit owners know that one day the roof, air conditioners, and water and cooling towers will need to replaced, the building will need to painted to ensure a water tight seal remains intact, the pool will need re-surfacing, and the parking areas and asphalt will need attention, too. Perhaps one of most expensive repairs, which is rarely discussed, let alone planned for and budgeted in advance, that even the Florida Statutes do not specifically mention it by name, is concrete restoration, which can cost tens of thousands of dollars, and often such repairs cost millions of dollars depending on the extent of the repairs. But, such repairs are a given. It is not a matter of “if” but rather only a matter of “when” these repairs will be required.

The only way to avoid a revolt of the membership when explaining the upcoming multi-million dollar assessment is to lessen the blow by having some, if not all, of the needed monies already saved in a reserve account. Section 718. 112(1)(f)(2)(a) provides that, “[i]n 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 amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. 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.”

While a majority of the quorum of the membership can vote to waive or reduce reserves, this can only occur if the board of directors provides the membership such opportunity. For example, when voting to reduce reserves the percentage by which the required reserve can be reduced is decided in advance by the board and then presented to the membership for the vote. In light of the Champlain Towers South disaster, boards of directors should put considerable thought into these decisions.

On March 12, Ann Greggis of Florida Politics reported that “the Legislature’s inability to pass any legislation updating condo regulations in the wake of last summer’s disaster that killed 98 people stunned observers…For this Session, nine bills sought to change rules regarding condominium associations…An estimated two million people live in 912,000 Florida condo units that are 30-years or older. Another 131,773 units are 20 to 30 years old, according to the Florida Engineering Society & American Council of Engineering Companies of Florida….The executive director of the engineering society and council called the failure to pass any legislation this year a ‘missed opportunity,’ according to a news release.”

On March 11, Jon Schuppe and Phil Prazan, NBC 6 South Florida reported that, “[i]n the nine months since 98 people died in the collapse of a Surfside, Florida, condominium, state lawmakers have pledged to pass measures that could help avoid a similar disaster.

On Friday, they failed.

Negotiations between the Florida Senate and House of Representatives, both controlled by Republicans, broke down, with the two sides unable to agree on a bill that would require inspections of aging condo buildings and mandate that condo boards conduct studies to determine how much they need to set aside for repairs. The talks were undone by a disagreement over how much flexibility to give condo owners in the funding of those reserves.”

Never has the term “sausage factory” been more appropriate to describe the 2022 team of Florida legislators who failed to pass meaningful legislation that could have helped thwart another Champlain Towers South disaster. But, just because the legislature failed in doing so (for this year), that does not mean, as a board member, that you can fail, too. Make a commitment to your condominium community to plan for the future. Adopt a board resolution, or even amend the condominium declaration, to have required building inspections and reserve studies. In addition, if your association is waiving reserves year after year, stop it and start saving for the future. You will be glad you did.

 

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LEGISLATIVE ALERT! DON’T LET MANDATORY CONDOMINIUM EDUCATION DIE!

LEGISLATIVE ALERT! DON’T LET MANDATORY CONDOMINIUM EDUCATION DIE!

  • Posted: Mar 20, 2022
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LEGISLATIVE ALERT!

DON’T LET MANDATORY CONDOMINIUM EDUCATION DIE!

 

AT THE MOMENT, THERE ARE TWO CONDO BILLS MAKING ITS WAY TO THE FINISH LINE THIS WEEK. ONLY ONE WILL GET THERE.
SB 1702 – CONTAINS THE LANGUAGE THAT I DRAFTED, SENATOR RODRIGUEZ FILED AND REPRESENTATIVE BORERRO FILED, REQUIRING THAT CONDOMINIUM BOARD MEMBERS TAKE AN EDUCATIONAL CLASS AND SIGN AN AFFIDAVIT STATING THEY READ THEIR GOVERNING DOCUMENTS.
HB 7069 – DOES NOT CONTAIN THE EDUCATIONAL REQUIREMENT AND BOARD MEMBERS CAN STILL GET CERTIFIED SIMPLY BY SIGNING THAT DUMB FORM STATING THAT THEY READ THEIR GOVERNING DOCUMENTS.
IN A POST SURFSIDE WORLD I CAN ASSURE YOU, EDUCATION OF CONDOMINIUM BOARD MEMBERS WILL SAVE LIVES. IF HB 7069 PASSES, THE STATE OF FLORIDA IS ABOUT TO PASS DOZENS OF NEW CONDOMINIUM LAWS RELATED TO SAFETY WITHOUT ANY BOARD MEMBER HAVING THE OBLIGATION TO LEARN ANY OF THESE NEW LAWS. HOW INSANE IS THIS?
PLEASE CONTACT THE PRESIDENT OF THE SENATE WILTON SIMPSON AND:
THE SPEAKER OF THE HOUSE CHRIS SPROWLS BY CLICKING ON THEIR NAMES AND TELLING THEM TO ENSURE THAT THE FLORDA LEGISLATURE PASS
SB- 1702 BECAUSE CONDO BOARD MEMBERS MUST BE REQUIRED TO BE EDUCATED IN A POST CHAMPLAIN TOWERS WORLD AND THAT EDUCATION WILL SAVE LIVES.
GUYS……..WE ARE RIGHT THERE……..ALMOST HOME.
BUT I NEED YOUR HELP TO GET THIS PAST THE FINISH LINE.
LET’S GET THIS DONE AND NOT TAKE NO FOR AN ANSWER.
WE WILL REMEMBER THOSE THAT VOTED AGAINST CONDO EDUCATION AND JEOPARDIZED .THE SAFETY OF FLORIDANS THROUGHOUT OUR STATE.
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3113 Stirling Road, Suite 201
Fort Lauderdale, FL 33312
954-983-1112
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Orlando, FL 32814
407-515-1060
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BORROWING TO BUY A CONDOMINIUM UNIT? Freddie Mac’s & Fannie Mae’s New Lending Requirements

BORROWING TO BUY A CONDOMINIUM UNIT? Freddie Mac’s & Fannie Mae’s New Lending Requirements

  • Posted: Mar 06, 2022
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BORROWING TO BUY A CONDOMINIUM UNIT?

Freddie Mac’s & Fannie Mae’s New Lending Requirements

by KBR Legal / RembaumsAssociationRoundup

Buying a bundle of home loans to later sell on the secondary market can be risky business. A lot can go wrong in the process. For example, the economy could tank, causing massive defaults; or even worse, as occurred recently in the case of Champlain Towers South, the building could collapse—where not only did many residents die, but also insurance proceeds are unlikely to be sufficient to satisfy all of the outstanding mortgage debt. This reality has a ripple effect on the mortgage-backed security, ultimately causing financial harm to the investors buying the bundled mortgages.

    The Federal Home Loan Mortgage Corporation, commonly referred to as “Freddie Mac,” and the Federal National Mortgage Association, commonly referred to as “Fannie Mae,” both compete on the secondary mortgage market, which is the market for the sale of securities or bonds collateralized by the value of mortgage loans. In short, they both package mortgages into mortgage-backed securities for sale to investors on the secondary mortgage market. Both Fannie Mae and Freddie Mac have requirements which must be met before they will buy a mortgage from a local lender, which they appropriately refer to as the “seller.” The Fannie Mae and Freddie Mac requirements placed on the seller (meaning, the local lender) trickle down to and then must be met by the association. The association’s compliance with these requirements is then analyzed by the local lender and likely further analyzed by Fannie Mae or Freddie Mac as a part of its bundled loan purchase.

    The mortgages they purchase help ensure that home buyers and investors who purchase property have a steady and stable supply of mortgage money. They broaden the likelihood of funds being made available for housing by attracting new secondary mortgage market investors through offering packaged mortgage-backed securities and guaranteeing the timely payment of principal and interest on the underlying mortgages. This makes secondary mortgage markets more liquid and can help lower interest rates paid by the actual mortgage borrowers (i.e., the property purchasers). It is reported that at times, together they finance up to 90 percent of all residential mortgages. Without Freddie Mac and Fannie Mae buying mortgages from lenders, the lenders would not be in a position to continue to offer loans. They need the funds from the Freddie Mac or Fannie Mae purchase to have available funds to make new loans. The bottom line is that if you expect purchasers in your condominium to be able to obtain a loan, then ultimately your association will have to abide by their requirements, including their demand for information about your condominium building’s condition and the condominium association’s finances, which are set out in their similar questionnaires.

    Congress created Fannie Mae in 1938 to provide accessible funding and more affordable housing. Freddie Mac, alternatively, started in 1970 as a public enterprise to further expand the secondary mortgage market. While there are many similarities between Fannie Mae and Freddie Mac, there are some key distinctions. The significant difference between Freddie Mac and Fannie Mae is where they acquire their mortgages. Fannie Mae purchases mortgages from larger, commercial banks, while Freddie Mac buys them from much smaller banks. While Fannie Mae and Freddie Mac programs have some differences in lending requirements, these requirements also appear more similar than different in so far as they assure the lender they will buy the loan.

    As a result of the Champlain Towers South collapse, Fannie Mae and Freddie Mac have imposed new temporary, additional requirements for mortgages obtained for condominiums and cooperative residential units. These new additional requirements will make it harder for existing condominium unit owners to refinance and for new buyers of condominium units to obtain mortgages.

    On October 13, 2021, Fannie Mae issued Lender Letter LL-2021-14 entitled “Temporary Requirements for Condo and Co-op Projects,” resulting with a new questionnaire effective January 1, 2022. In so doing, Fannie Mae suspended flexibility that allowed a lender to obtain a reserve study in lieu of meeting the 10 percent budget reserve requirement. Simply put, this means that if an association does not reserve at least 10 percent of its total annual budget for reserves, then any lender working with Fannie Mae will not be in a position to issue a loan to anyone purchasing a unit in that association’s condominium because doing so would make that loan ineligible for purchase by Fannie Mae, which ultimately hurts the local lender because it will have less funds to loan.

    Moreover, Fannie Mae will no longer issue project eligibility waivers for significant deferred maintenance or for projects subject to large special assessments. In other words, if the condominium association is not contributing at least 10 percent of its annual budget into the reserves, then Fannie Mae will not buy the loan from the local lender, meaning that the local lender will most likely not issue the loan to the buyer. In addition, and as part of its 10 percent reserve requirement, Fannie Mae no longer allows a borrower to rely on a reserve contribution provided in a reserve study in lieu of meeting the requirement that 10 percent of the annual assessments be contributed to reserves. Therefore, Freddie Mac-backed loans will become even more important to purchasers of condominium units and the developers who build them.

    Then, on December 15, 2021, Freddie Mac issued Bulletin 2021–38 entitled “Temporary Condominium and Cooperative Project Requirements and Topic 5600 Reorganization,” effective February 28, 2022 (the “Bulletin”). While Freddie Mac has strict requirements, too, it is not strictly requiring that 10 percent of the association’s budget be allocated to the association’s reserves.  The Bulletin begins with the following statement of fact:

In the aftermath of the collapse of the Champlain Towers South in Surfside, Florida, the risks of residential buildings with aging infrastructure and in need of Critical Repairs have been brought to the forefront of discussion throughout the nation.

    Regarding reserves, local lenders may continue to rely on a working capital fund for new condominium projects or a reserve study for both established and new condominium projects when the project’s budget provides less than 10 percent replacement reserves. In other words, as so succinctly explained by a regular reader of Rembaum’s Association Roundup, Barry Subkow, Esq.,

Unlike Fannie Mae, if the contribution to reserves is less than 10% of the total annual assessments (e.g., 8%) and is based on the reserve contribution amount that is provided in a reserve study, Freddie Mac will allow the loan.

    These newest Freddie Mac temporary requirements apply to all mortgages secured by units in projects with five or more attached units and are in addition to, and do not supersede, any of the other existing current applicable requirements. As such, there are terms which every board member and manager should become familiar with as they are needed to complete the required questionnaires. For example, a loan given by a local lender to a buyer for a project in need of “critical repairs” (as defined below) is not eligible for sale to Freddie Mac. As a result, the local lender will not be inclined to make the loan if a governmental program entity, such as Freddie Mac, is not willing to buy the loan.

    Because Freddie Mac secured mortgages are likely to become even more important in today’s economy, there are four terms with which every board member and manager should be familiar:

  • Critical repairs
  • Material deficiencies
  • Significant deferred maintenance
  • Routine repairs and maintenance

    The term “critical repairs” refers to repairs and replacements that significantly impact the safety, soundness, structural integrity, or habitability of the project’s building(s) and/or that impact unit values, financial viability, or marketability of the project. These repairs and replacements include the following:

  • All life safety hazards
  • Violations of federal, state, or local law, ordinance, or code relating to zoning, subdivision and use, building, housing accessibility, health matters, or fire safety
  • Material deficiencies (see below for definition)
  • Significant deferred maintenance (see below for definition)

    The term “material deficiencies” is defined as unresolved problems that cannot reasonably be addressed by normal operation or routine maintenance and which include the following:

  • Deficiencies which, if left uncorrected, have the potential to result in or contribute to critical element or system failure within one year
  • Deficiencies that will likely result in a significant escalation of remedial cost related to any material building components that are approaching, have reached, or have exceeded their typical expected useful life or whose remaining useful life should not be relied upon in view of actual or effective age, abuse, excessive wear and tear, poor maintenance, and/or exposure to the elements
  • Any mold, water intrusions, or leaks that are potentially damaging to the project’s building(s)

    The term “significant deferred maintenance” is defined as the postponement of normal maintenance, which cannot reasonably be resolved by normal operations or routine maintenance, and which may result in any of the following:

  • Advanced physical deterioration
  • Lack of full operation or efficiency
  • Increased operating costs
  • Decline in property value

    The term “routine repairs and maintenance” is defined as repairs and maintenance that are expected to be completed by the project in the normal course of business and are nominal in cost. These repairs are not considered to be critical and include the following types of work:

  • Often preventive in nature
  • Accomplished within the project’s normal operating budget
  • Typically completed by onsite staff
  • Focused on keeping the project fully functioning and serviceable
  • Minor deficiencies with a cost of $3,000 or less per repair item that do not warrant immediate attention but that require repairs or replacements that should be undertaken within the next 12 months
  • Scheduled repairs and maintenance that are fully funded, may have a cost greater than $3,000, and will be undertaken within the next 12 months

    Any documentation used by the local lender to determine the eligibility of projects in need of critical repairs must be retained and provided to Freddie Mac upon request. Violations of state or local law, ordinance, or code, as referenced in the critical repairs definition, include failure by the association to schedule an inspection required by the applicable jurisdiction and any directive from a regulatory authority or inspection agency to make critical repairs. Projects in need of critical repairs remain ineligible until the required repairs and/or inspection report have been completed and documented. Sellers of the proposed loan (i.e., the local lender) must review an engineer’s report, or substantially similar document, to determine that the repairs resolved the building’s safety, soundness, structural integrity, or habitability concerns. Acceptable sources of documentation to determine if a project is in need of critical repairs may include but are not limited to the following:

  • Board meeting minutes
  • Engineer’s reports
  • Reserve studies
  • List of necessary repairs
  • Other substantially similar documentation

    The Freddie Mac restrictions on the purchase of loans from lenders does not apply to the following:

  • Routine repairs and maintenance, (as defined above) or
  • Damage or deferred maintenance to one or a few units in the project, provided that there is no impact to the overall safety, soundness, structural integrity, or habitability of the improvements

    When determining if a repair is a routine repair or maintenance, Freddie Mac reminds the local lender that its condominium project budget requirements include determining that appropriate assessments are established to manage the project and that there are appropriate allocations for line items pertinent to the type and status of the condominium project. Sellers (meaning, the local lender) should evaluate the line items on the budget, especially those for repairs and maintenance, and the amounts associated with those line items as part of the seller’s project review process.

    Regarding any current special assessment, even if paid in full for the subject unit, such special assessment must be reviewed to determine eligibility. This includes any special assessment that the board approved and, if required, owners approved, but the board has not initiated collection yet (e.g., a planned special assessment). The local lender must determine the following:

  • The reason for the special assessment
  • The total amount assessed
  • For current special assessments, that the total amount is an appropriate allocation or, for planned special assessments, there is adequate cash flow to fund the reason for the special assessment, and
  • For current special assessments, that the amount budgeted to be collected year-to-date has been collected

    To determine that the amount budgeted to be collected year-to-date (YTD) has been collected, the following criteria apply:

  • The seller must review an income statement or a substantially similar document which has YTD budgeted and actual amounts for the special assessment,
  • The document should be dated within 90 days of the project review date, and
  • Any shortfall between the budgeted and actual YTD amounts for the special assessment must not be more than five percent.

    Any documentation used to determine the eligibility of the special assessment, such as the income statement referenced above, must be retained by the local lender and provided to Freddie Mac upon request. In addition, special assessments with more than 10 monthly payments remaining must be included in the calculation of the monthly housing expense-to-income ratio and must be documented.

If a seller (the local lender) relies on a reserve study, then the seller must ensure the reserve study meets certain requirements, which include, but are not limited to the following:

  • A reserve study’s financial analysis must validate that the project has appropriately allocated the recommended reserve funds to provide the condominium project with sufficient financial protection comparable to Freddie Mac’s standard budget requirements for replacement reserves. (Note—This requirement must be discussed and is required as a part of any professional’s reserve report.)
  • The reserve study’s annual reserve funding plan, which details total costs identified for replacement components, must meet or exceed the study’s recommendation and conclusion.
  • The most current reserve study (or update) must be dated within 36 months of the seller’s determination that a condominium project is eligible.
  • The reserve study must be prepared by an independent expert skilled in performing such studies (such as a reserve study professional, a construction engineer, a certified public accountant who specializes in reserve studies, or any professional with demonstrated experience and knowledge in completing reserve studies).

    Freddie Mac advises its sellers (the local lender) to evaluate the reserve study’s financial analysis. Sellers should compare, for the current fiscal year, the estimated beginning of the year (BOY) reserve fund balance in the reserve study to the actual BOY reserve fund balance. The reserve study’s recommended reserve allocation for the current fiscal year correlates to the project starting the year with that estimated reserve fund balance. If the project started the year with significantly less than what was estimated, then the project has likely failed to appropriately allocate the recommended reserve funds to provide the condominium project with sufficient financial protection.

    If your association is not Freddie Mac eligible under these terms, then a local lender can submit a project waiver request (PWR), which, however, has many other strict requirements that are not further discussed herein.

The Freddie Mac Bulletin can be found at:

https://guide.freddiemac.com/app/guide/bulletin/2021-38

The Fannie Mae Bulletin can be found at:

https://singlefamily.fanniemae.com/media/29411/display

    Each association will need to coordinate completion of the Freddie Mac and Fannie Mae questionnaires with its board members, manager, and, importantly, the association’s attorney. Practically speaking, the questionnaires will need to be updated as the scenario at your association changes. Just because an association is not eligible this year does not mean circumstances will not change leading to a later acceptance. As to the costs associated with the completion of the questionnaires (and while arguments may exist for the buyer who caused the need for the completion of the questionnaire to pay for it), since the questionnaire benefits the entire association by providing for a viable market for all new purchasers to acquire loans to purchase a unit, the expense should be deemed a common expense shared by all members of the association.

    Be sure to reach out to your association’s attorney to answer any questions you may have regarding Fannie Mae and Freddie Mac questionnaires and their local lender requirements because, remember, if Fannie Mae or Freddie Mac will not buy the loan from the local lender, the lender is not likely to make the loan.

Reprinted with permission from KBR Legal members of SFPMA.

 

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SFPMA: The reversal of wearing Masks. This is great news for many, now you do not have to put on the masks if you dont wish to.

SFPMA: The reversal of wearing Masks. This is great news for many, now you do not have to put on the masks if you dont wish to.

  • Posted: Mar 06, 2022
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SFPMA has been monitoring the COVID-19 & Omicron and its impact on our industry. Mask Mandates are Changing!

We are encouraging all members, Property Managers, Board Members for Condo and HOA’s and the industry in general to follow:

We understand that everyone has questions:

It is important to recognize we are not health care professionals. We have been looking to the experts. The CDC and other qualified health officials should continue to be the primary source of current information and guidance. Were offering general, precautionary guidance from officials and adding some common-sense guidelines for our industry.

Mask Mandates are changing!

Many States have already set as requirements for businesses, schools and Offices all over the US. The reversal of wearing Masks. This is great news for many, now you do not have to put on the masks if you dont wish to. As we go forward some that are at risk still will protect themselves, while others wont put them on. Dont get mad at them or start a problem…. You dont know what they are doing in Their Live! they might have a lower immune system in their bodies? they might take the stand that masks dont work? they even may believe in the Science or lack of?

Every person has the right to keep wearing a mask or not! so work with your group, community and management to find a solution you can adapt to keep everyone in your buildings safe. this could mean, in the common areas, with visitors and guests inside and outside your buildings. its best to have an open discussion with a group. find out what they think? and put in place rules to keep everyone safe.

Thank You, Be Safe. SFPMA

We know it’s a balancing act for community association leaders— and the desire to keep residents and guests safe as the face mask debate continues— even for the fully vaccinated. ( Part of this article copied from: Covid Masks) We are all working together for the safety for all.

As some local jurisdictions and/or states lift and others reinforce mask mandates, what does this mean for homeowners associations and condominium communities with shared spaces including—fitness centers, clubhouses, lobby areas, and mailrooms? We contacted CAI members, practicing common-interest law to share an update on face masks in common areas. From the outset of the pandemic, Edmund Allcock, a partner with Marcus, Errico, Emmer & Brooks in Braintree, Mass., and a fellow in CAI’s College of Community Association Lawyers (CCAL), encouraged community associations to follow recommendations from the Centers for Disease Control and Prevention, as well as state and local guidelines, to mitigate the spread of COVID-19.

“At the beginning of the pandemic, we recommended closure of (common areas),” says Allcock. “Since the development of the vaccine, everything seems to have reopened, so I do not see why the clubhouse, or the gym should be any different.”

In Washington, application of state and local health mandates to community associations have been inconsistent, notes Anthony L. Rafel, managing partner at Rafel Law Group in Seattle, and a CCAL fellow. “The governor’s proclamations and the state secretary of health’s orders requiring masks in indoor congregate spaces make no exception for community associations,” he explains. “We’ve advised our community association clients that the requirements are applicable to common areas.”

Meanwhile, the California Department of Public Health has clarified that “indoor public settings” applies to board and commission meetings, but there is some disagreement as to whether community associations have to follow the state’s mask mandate, says Nathan R. McGuire, managing partner at Adams Stirling in Northern California, and a CCAL fellow. McGuire notes that his firm is advising that community associations are not public. Therefore, the guidance does not technically apply to them.

When it comes to guidelines community associations should follow to minimize the spread of COVID-19, Rafel says to lean on the side of greater protection for residents and guests. “Masks should be worn in lobbies, hallways, gyms, clubhouses, and meeting spaces if required or recommended by federal, state, or local health officials,” he says.

McGuire also believes masks should be required in indoor common areas to mitigate the spread of the disease. “Another option is to require only those who are unvaccinated to mask indoors and allow them to self-attest to their vaccination status. Meaning that, if someone enters the indoor setting without a mask, the resident or guest is self-attesting that they are vaccinated,” he notes.

Find out more on our Industry Web Pages for Condo, HOA and Property Management.

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WILL THE ASSOCIATION’S DENIAL OF AN ARCHITECTURAL REQUEST WITHSTAND CHALLENGE? Many Won’t – Find Out Why

WILL THE ASSOCIATION’S DENIAL OF AN ARCHITECTURAL REQUEST WITHSTAND CHALLENGE? Many Won’t – Find Out Why

  • Posted: Feb 15, 2022
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WILL THE ASSOCIATION’S DENIAL OF AN ARCHITECTURAL REQUEST WITHSTAND CHALLENGE?

Many Won’t – Find Out Why

For many homeowners associations, a top priority is ensuring that the homes in the community are maintained in conformity with the “community-wide standard.” But, what is this subjective standard? How is compliance measured? What is the process to be judged when a request to the association’s architectural review committee (ARC) is made? The ARC is instrumental in ensuring that the community-wide standard is met. However, your association may run into a problem if the ARC denies a request from a homeowner if the association has not adopted specific, objective criteria and guidelines on which the ARC can rely.

    Sometimes applications to the ARC are denied because the proposed modifications were not “in harmony” with the other homes in the community or did not conform with the “community-wide standard.” However, such a limitation is vague, and a denial based on whether a particular modification is “harmonious” is subjective. Thus, the members are entitled to specific guidelines regarding what is allowed and what is not allowed, and in fact, this is required by law.

    The association’s ARC can only be as effective as the objective guidelines and standards drafted into the declaration and board-adopted rules. If your ARC is relying on aesthetics or other subjective criteria that are simply “personal preferences” rather than written, adopted, and published objective standards and guidelines, any disapproval is vulnerable to a successful challenge. In fact, in the seminal case regarding approval of architectural modifications, Young v. Tortoise Island Homeowner’s Ass’n, Inc., 511 So.2d 381 (Fla. 5th DCA 1987), the court held that where the governing documents were silent as to the modification at issue, a denial could not be based on the architectural control board’s opinion regarding “aesthetics, harmony and balance—admittedly very personal and vague concepts.”

    In Young, the owners submitted an application to build a flat roof on their home. The homes immediately surrounding the home were all peaked roofs. Nothing in the governing documents prohibited an owner from building a flat roof, and the requested roof complied with all of the specific requirements set out in the governing documents. However, the architectural control board denied the owners’ request because there was a “very strong feeling” that the flat roof would not be “architecturally compatible with the other homes.” In the end, the Youngs built the flat roof despite the association’s disapproval, arguing that the architectural control board had no authority to impose a prohibition against flat roofs. The court agreed with the Youngs, holding that

            “In the absence of an existing pattern or scheme of type of architecture which puts a prospective purchaser on notice that only one kind of style is allowed, either in the recorded restrictions or de facto from the unified building scheme built on the subdivision, such a board does not have the power or discretion to impose only one style over another based purely on ‘aesthetic concepts.’”

    The flat roof violated no recorded restrictions, no objective rule adopted by the association, and no de facto common existing building style in the community. Therefore, the court held that it was beyond the power of the architectural review board to prohibit the flat roof.

    The concept in Young was further codified in 2007 in §720.3035(1), Florida Statutes, which provides that an association or the ARC has the authority to review and approve plans and specifications only to the extent that the authority is specifically stated or reasonably inferred as to location, size, type, or appearance in the declaration or other published guidelines and standards. More specifically §720.3035(1), Florida Statutes, provides that the authority of an association or any architectural, construction improvement, or other such similar committee of an association to review and approve plans and specifications for the location, size, type, or appearance of any structure or other improvement on a parcel, or to enforce standards for the external appearance of any structure or improvement located on a parcel, shall be permitted only to the extent that the authority is specifically stated or reasonably inferred as to such location, size, type, or appearance in the declaration of covenants or other published guidelines and standards authorized by the declaration of covenants.

    In other words, the ARC can only approve or deny requested modifications based on objective standards with specificity as to location, size, type, or appearance that are set out in the declaration or other published guidelines and standards. Without specific, objective standards to rely upon, the ARC is at risk of making arbitrary decisions regarding approval. Basing ARC denials on concepts like “aesthetics, harmony, and balance” will land the association in hot water if an owner challenges such denial. It is far safer to base approval or denial on objective standards as set out in the declaration or as adopted by the board.

    Creative drafting by an association’s attorney is critical in order to capture those ARC applications where a member may request a modification that is not squarely addressed by the governing documents. In plain English, a “catchall” amendment to the declaration can be artfully drafted that stands for the proposition that, if such a request is made, then the existing state of the community is the applicable standard by which the application is to be judged. For example, if the Tortoise Island Homeowner’s Association had had such a provision in its declaration, then given that there were no flat roofs in the community, the existing state of the community may have provided a lawful basis for the ARC to deny the request, thus possibly leading to a whole different result in the case.

    On a related note, there are strict procedural requirements that your association must follow, most especially if the ARC intends to deny an ARC request. It is likely many ARCs do not conduct their activities in conformity with Florida law such that a denial could withstand judicial scrutiny. Pursuant to §720.303(2), Florida Statutes, a meeting of the ARC is required to be open and noticed in the same manner as a board meeting. In other words, notice of the ARC meeting must be posted in a conspicuous place in the community at least 48 hours in advance of the meeting, and the meeting must be open for the members to attend. In addition, pursuant to §720.303(2)(c)3., members of the ARC are not permitted to vote by proxy or secret ballot. Bare bone minutes should be taken as well to create a record of ARC committee decisions, most especially denials.

    We hear from many associations that the ARC does not meet openly or notice their meetings. This leaves any decision made by the ARC vulnerable to challenge. If the ARC denies an application but fails to do so at a properly noticed meeting, the owner can challenge the denial claiming that it is not valid as the ARC did not follow proper procedures. Many declarations contain language which provides that if an ARC application is not approved or denied within a certain period of time, the application is deemed approved. In that case, if the ARC’s denial of an application is not valid because the ARC failed to comply with the procedural requirements for the meeting, an application which violates the declaration or the ARC standards may be deemed approved by operation of the declaration! By complying with the provisions of Chapter 720, Florida Statues, your association can avoid that disaster.

    Practice tip: Remember that notice of any board meeting at which the board will consider a rule which restricts what an owner can do on their parcel must be mailed, delivered, or electronically transmitted to the members and posted conspicuously on the property not less than 14 days before the meeting.

    If your association has not adopted objective ARC standards and guidelines including the “catchall” provision discussed above, now is the time to start! We recommend that you contact your association’s counsel prior to drafting such rules to ensure that the association is in compliance with the requirements of the governing documents and Chapter 720, Florida Statutes.

 

Jeffrey Rembaum’s, Esq.

legal practice consists of representation of condominium, homeowners, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. Mr. Rembaum is a Board Certified Specialist in Condominium and Planned Development Law and is a Florida Supreme Court Certified Circuit Civil Mediator. 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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