Become our Member : JOIN SFPMA TODAY   LogIn / Register: LOGIN/REGISTER

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

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

THE FEDERAL CORPORATE TRANSPARENCY ACT REQUIREMENTS AFFECTING ALL COMMUNITY ASSOCIATIONS

THE FEDERAL CORPORATE TRANSPARENCY ACT REQUIREMENTS AFFECTING ALL COMMUNITY ASSOCIATIONS

What Every Board Member and Manager Must Know

In January 2021 the Corporate Transparency Act (CTA) was enacted by Congress. In 2024 its far-reaching requirements are planned to go into effect. The CTA was adopted by Congress to provide additional transparency in entity structures and ownership in an effort to combat tax fraud, money, laundering, and other illicit activities. It is designed to capture more information about the ownership of specific entities operating in or accessing the United States marketplace. A recent Small Business Administration reports over 27 million small businesses that are considered non-employer firms and thus have no employees. Learning of the beneficial ownership of these entities, Congress hopes to crack down on their misuse. The CTA is particularly targeted to these types of small businesses operating as so called “shell companies.”

By the time you are finished reading this article, each reader should be familiar with some new terms, such as, “FinCen,” and “beneficial owner,” to name just a couple. While the practical enforcement procedures of the CTA are currently unknown, the reason why you must be familiar with the registration and continuing reporting requirements of the CTA is because failure to comply with requirements of the CTA can lead to fines from $500–$10,000 per violation and jail time of up to two years.

While there is little doubt that community associations do not pose a threat for terrorist activity, tax evasion, money laundering, and other illegal activity that is the target of the CTA, sadly, community associations are not currently exempt from the initial registration and continual updating requirements of the CTA. While the CTA requirements for compliance are not particularly difficult, they are onerous and will reveal certain personal information about board members and possibly managers, too. Also, at the present time there does not appear to be any type of exemption from the requirements of the CTA for law enforcement personnel and others who may have gone to extra lengths to keep certain personal information private. However, the CTA does require that this information remains confidential and only used for its intended purposes.

The CTA, amongst its other requirements, requires domestic reporting companies such as corporations, limited liability partnerships, and any other entity, created by the filing of a document with the secretary of state, or any similar office under the laws of the state, to comply with its reporting requirements. This includes community associations as they are organized as a business entity (i.e., a not-for-profit corporation). In addition to providing the information regarding the entity (meaning the association), the CTA requires certain information regarding the association’s “beneficial owners.” A “beneficial owner” is defined, in part, as a person who exercises substantial control of the reporting entity.

Therefore, minimally, according to the CTA, the president and vice president are deemed to “exercise substantial control over the entity” thereby seemingly requiring certain personal information to be provided to the federal “Financial Crimes Enforcement Network” or “FinCen” for short. These beneficial owners must report their name, date of birth, address, unique identifier number, such as a Social Security number, possibly a driver’s license number or passport number, and a photocopy of the non-expired document that evidences such information, too. Whether other officers and directors will be required to similarly provide personal information remains to be seen but it is likely.

Those filing the requisite documents to assist an entity with its compliance with the CTA must provide similar information too. Those qualified to file such documents for corporate entities with FinCen are as follows either:

i) the individual who directly files the document that creates the entity (this could be the attorney that files the articles of incorporation with the state to create the community association corporation); or,

ii) the individual who is primarily responsible for directing or controlling the filing of the relevant document by another (this prong could refer to the authorized individual as directed by the board of directors, such as the attorney, accountant, or management company personnel to file the necessary documentation with FinCen to comply with the CTA).

In addition to the initial compliance requirements, which must be accomplished within 2024 for already existing corporations, reports must also be updated within 30 days of a change to the beneficial ownership, or within 30 days after becoming aware of or having reason to know of inaccurate information previously filed. Under a strict reading of these provisions, this means that every time there is a change in board members and officers, a report of the change must be made to FinCen within 30 days of the event. As mentioned above, failure to comply with requirements of the CTA can lead to fines from $500–$10,000 per violation and jail time of up to two years.

There are procedures set out in the CTA for information sharing among the federal governmental agencies when in relation to terrorist activity and money laundering as well as requirements for compliance with FinCen when it seeks additional information in regard to such matters. The Internal Revenue Service, the Customs and Border Protection agency, and FinCen can all issue summons for purposes of civil enforcement of the CTA. There are even rewards for persons who report on another that lead to recovery of a criminal fine, civil penalty, or forfeiture that exceeds $50,000 where the payment of the reward is limited to 25 percent of the net amount of the fine or $150,000, whichever is less.

Federal community association lobbyists are seeking an amendment to the CTA so that community associations are expressly made exempt and not caught in its web. But, unless that happens, compliance with the CTA is required for Florida’s community associations. Whether such compliance will be performed by the community association‘s attorney, accountant, or manager remains to be seen, and hopefully additional guidance will be provided by the appropriate federal government agencies in the near future. Should you have the opportunity, please reach out to your federal legislators in regard to the need for an exception for community association compliance with the requirements of the CTA.

For those that would like to read up on the CTA, the starting point for the Act itself can be found at 31 U.S.C 5336. This is the CTA-enabling legislation passed by the United States Congress and signed into law by the President that provides lawful authority to executive departments and agencies of the federal government to both adopt and enact, after public notice and hearings, their own laws that have the same force and effect, as if our Congress enacted them. (As an aside in case you ever wondered how our country ended up with so many laws, it is because of this particular process.) Once 31 U.S.C 5336 was enacted into law, the requisite executive departments and agencies of the federal government went to work adopting all sorts of laws to carry out the intent of the enabling legislation. These laws are published in the Code of Federal Regulations (CFR).   The CTA is set out in section 1010 FCR 380 and is actually called “Reports of Beneficial Ownership Information;” however, its nickname is the “Corporate Transparency Act,” which has a better ring to it. The CTA can be cited to more fully as Part 1010 of the Code of Federal Regulations (CFR) Subpart C, section 380. It is a sub-part of CFR Title 31 titled “Money and Finance,” Subtitle B “Regulations Relating to Finance and Money,” Chapter X “Financial Crimes Enforcement Network Department of the Treasury.”

Due to the far reaching aspects of the CTA and its many nuances that could lead to many traps for the unwary, consultation with the association’s attorney and certified public accounting firm should be considered regarding any questions you may have in regard to the CTA, along with its registration and compliance requirements, too.

Read other great articles on:

REMBAUM’S ASSOCIATION ROUNDUP | The Community Association Legal News You Can Use

 

Tags:
FLORIDA’S NEW “LIVE LOCAL” ACT By Eric Glazer, Esq.

FLORIDA’S NEW “LIVE LOCAL” ACT By Eric Glazer, Esq.

FLORIDA’S NEW “LIVE LOCAL” ACT

By Eric Glazer, Esq.

Here’s a new law that is already causing chaos in our communities.  As many of us are unfortunately already learning, there is a lack of affordable housing in our state.  In order to combat this problem, The Florida Legislature passed a new law.

The Live Local Act is a new Florida law that was designed to increase affordable housing development. The nearly 100-page piece of legislation allocates up to $811 million for affordable housing programs. It also carves out a variety of tax incentives, land-use policies and other strategic initiatives to encourage developers to build more affordable housing in the state.  Among them is a provision that modifies the approval process for new housing developments by requiring local governments to relinquish control of several zoning and land-use regulations.

Although I have not had the time to review the new law, it appears that the major problem with the new rules is that apparently, local officials are preempted from weighing in on zoning, density and height restrictions for eligible developments. Qualifying projects are defined as any residential housing project on commercial, industrial or mixed-use land that allocates at least 40 percent of units to be affordable for residents earning up to 120% of the area median income.

Think about this for a moment.  Think about a piece of land in your community that is commercial, industrial or mixed use and that is only a story or two tall.  Think about the fact that your local zoning laws require the structure to remain only a story or two tall.  Now think about throwing those height restrictions in the garbage, and instead allowing a developer to build affordable housing that is 30 stories tall on all of these properties, and nobody in your community has the power to stop it.  That’s the position that developers are certainly taking.

All of your local laws regarding height and density would be pre-empted by this new law and affordable housing, as tall as can be, would be the new law of the land.  Cities like Doral and Miami Beach are already fighting back.  No doubt that the courts will have to weigh in on this one.

Should the State of Florida be allowed to make a law that pre-empts your local zoning code and instead allow affordable housing to be built on any commercial, industrial or mixed-use property, without any restriction regarding density or height?  Seems scary to me.

 

 

Tags: ,
Hurricane Preparedness and Recovery Guide by Becker and Association Adjusting

Hurricane Preparedness and Recovery Guide by Becker and Association Adjusting

Hurricane Preparedness and Recovery Guide

by Becker and Association Adjusting

The State of Florida is no stranger to hurricanes and other natural disasters.

Living in paradise doesn’t come without some risks associated with Mother Nature. The question is never just if our communities, homes and families will be impacted by a windstorm event, but when they will, and how we will prepare for and recover from that event.

In addition to our in-house legal services, Becker owns and operates Association Adjusting, a licensed and insured public adjusting firm led by Joseph “Joe Connelly (#E157037). Mr. Connelly has served as Executive Board Officer for the Florida Association of Public Adjusters (FAPIA).

Recognized as an authority in the community association industry, Association Adjusting has the expertise and experience to help community associations achieve the most favorable outcome possible. Our team of public adjusters, led by Mr. Connelly, provides clients with only the highest level of professionalism and excellence – whether you’re dealing with a claim that stems from hurricane damage, water damage, theft, fire, mold, roof leak, or any other type of calamity, our singular goal is to ensure your interests are always protected.

The first step toward developing and implementing a disaster plan is identifying the potential consequences of a disaster. The second step is to develop and implement a plan to mitigate the impact of a disaster to the fullest extent possible.

Click here to read more!

Disaster Resources & Links

Federal Emergency Management Agency for federal disaster response and recovery information

National Flood Insurance Program (NFIP) for information about federal flood insurance

Home Inventory Checklist

Information about Flood Insurance

Flood Insurance Writers

Flood Resources: National Flood Insurance Program (NFIP)
Contact Information: Phone: 1-888-FLOOD29 or 1-888-356-6329

Flood Claims Process

Filing a Flood Insurance Claim

Premium Discounts for Hurricane Loss Mitigation

Notice of Premium Discounts for Hurricane Loss Mitigation

Uniform Mitigation Verification Inspection Form

Homeowners insurance toolkit

Are you prepared for Hurricane Season?

Preparing for Natural Disasters, and Recovering from them

Disaster Preparedness at Home: Filter Out the Damage

Disaster Prep & Self Storage – What You Need to Know

PA DMV Emergency Driving Tips

Emergency Preparedness for People Requiring Special Assistance

Humane Society – Protect Your Pets

DISCLAIMER

Becker provides access to information on this website page as a public service. Although reasonable efforts have been made to ensure that all electronic information made available is current, complete and accurate, Becker does not warrant or represent that this information is current, complete and accurate. All information is subject to change on a regular basis, without notice. Becker assumes no responsibility for any errors in the information provided, nor assumes any liability for any damages incurred as a consequence, directly or indirectly, of the use and application of any of the contents of the website page. The inclusion of, or linking to, other website URLs does not imply our endorsement of, nor responsibility for, those web sites, but has been done as a convenience to our website visitors.

 

 

Tags: , , , , ,
NEW LAW MAKES IT CLEAR THE ASSOCIATION MUST MAKE THE REPAIRS. BUT SUPPOSE MONEY IS TIGHT AND THE DOCS ARE RESTRICTIVE?

NEW LAW MAKES IT CLEAR THE ASSOCIATION MUST MAKE THE REPAIRS. BUT SUPPOSE MONEY IS TIGHT AND THE DOCS ARE RESTRICTIVE?

  • Posted: Jul 27, 2023
  • By:
  • Comments: Comments Off on NEW LAW MAKES IT CLEAR THE ASSOCIATION MUST MAKE THE REPAIRS. BUT SUPPOSE MONEY IS TIGHT AND THE DOCS ARE RESTRICTIVE?

NEW LAW MAKES IT CLEAR THE ASSOCIATION MUST MAKE THE REPAIRS. BUT SUPPOSE MONEY IS TIGHT AND THE DOCS ARE RESTRICTIVE?

NEW CONDO LAW MAKES IT CLEAR THAT THE CONDO MUST MAKE THE REPAIR

By Eric Glazer, Esq.

I get so many calls and e-mails each week about whether the condominium or the unit owner is responsible to fix something that’s broken.  Florida Statute 718.113 was recently amended and here’s what it says:

 

(1)   Maintenance of the common elements is the responsibility of the association, except for any maintenance responsibility for limited common elements assigned to the unit owner by the declaration. The association shall provide for the maintenance, repair, and replacement of the condominium property for which it bears responsibility pursuant to the declaration of condominium.

 

That kind of clarifies it, doesn’t it?  The association shall provide for the maintenance, repair, and replacement of the condominium property for which it bears responsibility pursuant to the declaration of condominium.  Notice the word shall is used.  In simple terms, shall means must.  So there is no argument……if the declaration says the association is responsible, the association must repair it.

But suppose the association does not have money to make the repair?  Now what?  The association can certainly special assess right?  But suppose the docs place a limit on the amount of the special assessment or require a unit owner vote to approve a special assessment and the unit owners won’t vote in favor of it?  Now what can you do?

Of course you may be able to borrow money.  Florida’s not for profit statute allows condominiums to borrow money.  So, the condo is in the clear right?  Not so fast.  Suppose the condo docs require a vote of the owners in order for the condo to borrow money and the owners won’t vote in favor of a loan?

 

How can the condominium make the repairs it is required by law to make if it can’t assess or borrow?

So here is this attorney’s opinion.  I don’t care about any language in a declaration that prevents an association from passing an assessment in order to make mandatory repairs.  The board can and must pass the assessment in order to comply with their statutory obligation to repair and maintain the common property.

On the other hand, if the governing documents do not prevent an association from borrowing money, the association certainly can.  However……if the governing documents will not allow the association to borrow money unless a certain number of the owners approve, the association cannot borrow unless the owners vote to approve.  No bank will approve a loan if the governing documents require the owners to vote in order to borrow, and the vote has not been obtained.  Get legal advice if you need money and you feel tied up by your docs.

 

Tags: ,
HOA Architectural Committees Required Statutory Procedures Requirement For Published Standards Required Self Help

HOA Architectural Committees Required Statutory Procedures Requirement For Published Standards Required Self Help

HOA Architectural Committees

Required Statutory Procedures, Requirement For Published Standards and Required Self Help.




REQUIREMENT OF FORMAL PROCEDURES

There are strict legal requirements that a homeowners’ association’s (HOA) architectural review committee (ARC) must follow, most especially if the ARC intends to deny an owner’s request. As this author has witnessed countless times, it is likely that many ARCs do not conduct their activities in conformity with Florida law such that an ARC denial may not withstand judicial scrutiny. If these legal requirements are not followed, and the ARC denies the owner’s architectural request, then it would be quite easy for the owner to challenge the ARC’s decision and prevail. Upon prevailing, the owner would be entitled to their prevailing party attorney’s fees and costs, as well. It is so easy to avoid this outcome, yet so few associations take the time to do it right.

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 meeting of the association’s board of directors. 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 all members to attend. Further, pursuant to §720.303(2)(c)(3), Florida Statutes, members of the ARC are not permitted to vote by proxy or secret ballot. Also, bare bone minutes should be taken to create a record of ARC decisions—especially denials.

We often hear from many HOAs that the ARC does not meet openly and does not notice their meetings. This leaves decisions made by the ARC vulnerable to challenge. If the ARC denies an application but fails to do so at a properly noticed board meeting, the owner can challenge the denial, claiming that it is not valid because the ARC did not follow proper procedure. In such cases, the ARC’s denial of an application is not valid because the ARC failed to comply with the procedural requirements for the meeting even if an application violates the declaration or other association-adopted architectural standards. However, by complying with the provisions of Chapter 720, Florida Statutes, your HOA can work to avoid this debacle.

PUBLISHED STANDARDS

Often a top priority for an HOA is ensuring that homes in the community maintain a harmonious architectural scheme in conformity with community standards and guidelines, and because the ARC is at the frontline of owners’ alterations and improvements to their homes, it is instrumental in ensuring that the community standards and guidelines are met. Pursuant to §720.3035(1), Florida Statutes, an HOA, 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.” But not every owner request is typically addressed in the declaration or other published guidelines and standards. If not, then the association may not be in a good position for proper denial. Therefore, the ARC is only as effective as the objective guidelines and standards (set forth in the declaration and other published guidelines and standards) are inclusive. So, what is the association to do when the ARC receives an owner’s application for an alteration to the home, but the association does not have any architectural guidelines or standards regulating the requested alteration?

While not court tested yet, a possible solution for this conundrum is to include a “catch-all” provision in the declaration to proactively address those ARC applications where a member may request a modification that is not directly addressed by the governing documents. Such a “catch-all” provision 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 ARC application is to be judged. For example, imagine if an owner applies to the ARC to paint the owner’s house pink. If there are no architectural guidelines or standards that address what color a house must be, and there are no pink houses in the community, then the existing state of the community may provide a lawful basis for the ARC to deny the request because there are no existing pink houses in the community.




THE TROUBLE WITH SELF-HELP PROVISIONS

What if an owner refuses to maintain the owner’s property, such as pressure washing a dirty roof, despite the HOA sending demand letters, levying a fine, and perhaps even suspending the owner’s right to use the HOA’s recreational facilities? What is the HOA’s next step? Is it time to file a lawsuit to compel compliance? Well, Chapter 718 (governing condominiums), Chapter 719 (governing cooperatives), and Chapter 720 (governing HOAs) of the Florida Statutes authorize the association to bring an action at law or in equity to enforce the provisions of the declaration against the owner. Additionally, many declarations contain “self-help” language that authorizes the association to cure a violation on behalf of the owner and even, at times, assess the owner for the costs of doing so. These “self-help” provisions generally contain permissive language, meaning the association, may, but is not obligated to, cure the violation. Sadly, in this instance the word “may” means “shall,” and to find out why, read on.

There is a general legal principal that, if a claimant has a remedy at law (e.g., the ability to recover money damages under a contract), then it lacks the legal basis to pursue a remedy in equity (e.g., an action for injunctive relief). Remember, too, that an association’s declaration is a contract. In the context of an association, the legal remedy would be exercising the “self-help” authority granted in the declaration. An equitable remedy would be bringing an action seeking an injunction to compel an owner to take action to comply with the declaration. Generally, a court will only award an equitable remedy when the legal remedy is unavailable, insufficient, or inadequate.

Assume that the association’s declaration contains both the permissive “self-help” remedy and the right to seek an injunction from the court. Accordingly, it would appear the association has a decision to make—go to court to seek the injunction or enter onto the owner’s property, cure the violation, and assess the costs of same to the owner. However, recent Florida case law affirmed a complication to what should be a simple decision. In two cases decided ten years apart, Alorda v. Sutton Place Homeowners Association, Inc., 82 So.3d 1077 (Fla. 2nd DCA 2012) and Mauriello v. Property Owners Association of Lake Parker Estates, Inc., 337 So.3d 484 (Fla. 2nd DCA 2022), Florida’s Second District Court of Appeal decided that an association did not have the right to seek an injunction to compel an owner to comply with the declaration if the declaration provided the association the authority, but not the obligation, to engage in “self-help” to remedy the violation. Expressed simply, this is because the legal contractually based “self-help” remedy must be employed before one can rely upon equitable remedy of an injunction. Therefore, even though the declaration provided for an optional remedy of “self-help,” it must be used before seeking the equitable remedy of an injunction.

In Alorda, the owners failed to provide the association with proof of insurance required by the declaration. Although the declaration allowed the association to obtain the required insurance, the association filed a complaint against the owners seeking injunctive relief, asking the court to enter a permanent mandatory injunction requiring the owners to obtain the requested insurance. The owners successfully argued that even though they violated the declaration, the equitable remedy of an injunction was not available because the association already had an adequate legal remedy—the “self-help” option of purchasing the required insurance and assessing them for same. The Court agreed.

In Mauriello, the declaration contained similar language as in Alorda but involved the issue of the owners failing to keep their lawn and landscaping in good condition as required by the declaration. The association filed a complaint seeking a mandatory injunction ordering the owners to keep their lawn and landscaping in a neat condition. However, the facts were complicated by the sale of the home in the middle of the suit when the new owners voluntarily brought the home into compliance with the declaration. The parties continued to fight over who was entitled to prevailing party attorney’s fees with the association arguing it was entitled to same because the voluntary compliance was only obtained after the association was forced to commence legal action. The owners, citing Alorda, argued that the complaint should have been dismissed at the onset because the association sought an equitable remedy (injunction) when a legal remedy was already available—the exercise of its “self-help” authority. The Court considered the award of attorney’s fees after the dismissal of the association’s action for an injunction. Ultimately, the Court held that the owners were the prevailing party as the association could not seek the injunction because it already had an adequate remedy at law.

Accordingly, if your association’s declaration contains a “self-help” provision, and your association desires to seek an injunction against an owner rather than pursue “self-help,” the board should discuss the issue in greater detail with the association’s legal counsel prior to proceeding. Also, remember that if the association wants to enforce architectural standards, then they must be published to the membership; and always remember to notice ARC meetings and take minutes.

Tags: , ,
Maus Law Firm is devoted to assisting people with insurance claims.

Maus Law Firm is devoted to assisting people with insurance claims.

  • Posted: Aug 31, 2022
  • By:
  • Comments: Comments Off on Maus Law Firm is devoted to assisting people with insurance claims.

Maus Law Firm is devoted to assisting people with insurance claims.

Our Fort Lauderdale attorneys handle claims involving accidents and injuries as well as property damage.

 

Homeowner Condo and Business, Property Damage Claims and Personal Injury Claims.

A home or office building is the most significant purchase most of us will make during our lifetime. Most of us buy insurance coverage – windstorm, liability, flood, homeowners, and business interruption – to protect our homes and businesses. Yet, today’s insurance policies are lengthy, complex contracts full of exceptions, exclusions, deductibles, and conditions that make the policy difficult to read, and sometimes even more difficult to recover from for your damage.

The Maus Law Firm has the best attorneys to handle property damage claims. These are just a few of the questions you may deal with after suffering a house water damage claim, plumbing backup, or a broken pipe above your condominium unit:

In addition to these questions, there are several different types of policies offered by homeowner insurance companies that contain various types of coverage. There is a policy used for owner occupied properties, one for properties that are rented out, and yet another type policy used for condo units. Where do you turn to get help?

The Maus Law Firm has been successfully handling insurance related claims since 1993. The Firm is “AV” rated by Martindale Hubbell, the highest ranking for legal ability and ethics. The Maus Law Firm has been recognized continuously since 2011 by Florida Trend Magazine’s “Legal Elite” ranking, and named a “SuperLawer” by West Thompson Publishing. The attorneys at The Maus Law Firm will competently and aggressively represent you in your homeowner property damage insurance claim, or commercial business insurance claim.

Tags: , , ,
At Cohen Law Group, It’s About Justice!

At Cohen Law Group, It’s About Justice!

At Cohen Law Group, It’s About Justice!

It is more than a slogan, it is our firm’s mantra. The motto, developed by our founder Harvey V. Cohen was derived from our mission statement. We are aggressive, zealous advocates for our client’s rights. Our commitment to our clients is evident by our prompt reply to all phone calls and our 24 hour availability through our phone answering service.

Make sure your legal rights are protected by seeking the legal advice of an experienced Attorney. Contact Cohen Law Group.

Call us today at 407-890-0405 to see how we can help your legal needs. Or click here to fill out a free case evaluation.

 

Contractor Insurance Claim Dispute

Cohen Law Group stands up to these insurance carriers in valid contractor insurance claim disputes. Contractors have a right to be paid, just as the policy holder they are working for has a right to have a valid insurance claim paid.

Homeowner Insurance Claim Attorney

Have you had an insurance claim denied, partially paid, or reduced? If so, we may be able to help. Cohen Law Group stands up to these insurance carriers in valid homeowner insurance claim disputes.

Business Owners Insurance Claims Dispute

Cohen Law Group stands up to these insurance carriers in valid business/property owner insurance claim disputes. We possesses the experience and resources necessary to effectively guide you through each and every aspect of your business/property owner insurance claim dispute.

Tags: , ,
VIOLATION REMEDIES: SELF-HELP vs. INJUNCTION – Which to Use?

VIOLATION REMEDIES: SELF-HELP vs. INJUNCTION – Which to Use?

VIOLATION REMEDIES: SELF-HELP vs. INJUNCTION

Which to Use

Imagine this scenario: you are on the board of directors of your association. The association has repeatedly requested that an owner pressure wash their dirty roof to bring it into compliance with the community standards, but the owner refuses to do so. The association has already sent a number of demand letters and even levied a fine and perhaps a suspension of use rights, too, but the owner still will not comply. What is the association’s next step?

  • Is it time to file a lawsuit to compel compliance? Chapters 718 (governing condominiums), 719 (governing cooperatives), a 720 (governing homeowners associations), Florida Statutes, authorize the association to bring an action at law or in equity to enforce the provisions of the declaration against the owner.

OR

  • Is it time for the association to use its “self-help” remedy? In fact, many declarations contain such “self-help” language, which authorizes the association to cure the violation on behalf of an owner and even, at times, assess the owner for the costs of doing so. These “self-help” provisions generally contain permissive language, meaning that the association may, but is not “obligated” to, cure the violation.

Assume that the association’s declaration contains both the permissive “self-help” remedy and the right to seek an injunction from the court that orders the owner to clean their roof or else be in contempt of court. Thus, it would appear the association has a decision to make: (i) go to court to seek the injunction; or (ii) enter onto the owner’s property, pressure clean the roof, and assess the costs to the owner. Not so fast! Recent case law from Florida’s Second District Court of Appeal affirmed a complication to what should be a simple decision, discussed in greater detail below.

In two cases decided 10 years apart, Florida’s Second District Court of Appeal decided that an association did not have the right to seek an injunction to compel an owner to comply with the declaration if the declaration provided the association the authority to engage in “self-help” to remedy the violation. Prior to a discussion of the cases, a brief explanation of legal and equitable remedies is necessary.

There is a general legal principle that, if a claimant has a remedy at law (e.g., the ability to recover money damages under a contract), then it lacks the legal basis to pursue a remedy in equity (e.g., an action for injunctive relief). In the association context, a legal remedy would be to exercise the “self-help” authority granted in the association’s declaration. An equitable remedy would be to bring an action seeking an injunction to compel an owner to take action to comply with the declaration (e.g., compelling the owner to pressure wash their roof). A court will typically only award an equitable remedy when a legal remedy (such as “self-help”) is unavailable, insufficient, or inadequate.

This distinction is first illustrated in Alorda v. Sutton Place Homeowners Association, Inc., 82 So. 3d 1077 (Fla. 2d DCA 2012). In Alorda, the owners failed to provide the association with proof of insurance coverage as required by the declaration. The association sent multiple demand letters to the owners, but they failed to comply. The declaration provided, in pertinent part, that “he owner shall furnish proof of such insurance to the Association at the time of purchase of a lot and shall furnish proof of renewal of such insurance on each anniversary date. If the owner fails to provide such insurance the Association may obtain such insurance and shall assess the owner for the cost of the same in accordance with the provisions of this Declaration” (emphasis added). In accordance with the foregoing, the association had the option to purchase the insurance on behalf of the owners and assess them for the costs of same.

However, the association chose instead to file a complaint against the owners seeking the equitable remedy of injunctive relief, asking the court to enter a permanent mandatory injunction requiring the owners to obtain the required insurance coverage. The owners then filed a motion to dismiss the suit arguing that even though they had violated a provision of the declaration, the equitable remedy of an injunction is not available because the association had an adequate remedy at law. In other words, the owners argued that, because the association could have, pursuant to the declaration, undertaken the ”self-help” option by purchasing the required insurance and assessing it against the owners, they had an available legal remedy and, therefore, the equitable remedy sought (a mandatory injunction) was not available to the association. The court, citing to a different case, Shaw v. Tampa Electric Company, 949 So.2d 1006 (Fla. 2d DCA 2007), explained that a mandatory injunction is proper only where a clear right has been violated, irreparable harm has been threatened, and there is a lack of an adequate remedy at law. As the association had an adequate remedy at law (the authority to purchase the insurance on behalf of the owners), the third requirement was not met. Therefore, the court held that the association failed to state a cause of action and dismissed the case. (This case might be decided differently today as it appears the insurance marketplace will not permit an association to purchase insurance for a unit that it does not own, so the legal remedy presumed available to the association would be inadequate).

Similarly, in the recent case of Mauriello v. The Property Owners Association of Lake Parker Estates, Inc., Case No. 2D21-500 (Fla. 2d DCA 2022), Florida’s Second District Court of Appeal considered the award of attorneys’ fees after the dismissal of the association’s action for an injunction. Ultimately, the court held that the owners were the prevailing party as the association could not seek an injunction because the association had an adequate remedy at law. In Mauriello, the owners failed to maintain their lawn and landscaping in good condition as required by the declaration. As such, the association filed a complaint seeking a mandatory injunction ordering the owners to maintain the lawn and landscaping in a “neat condition.” The association’s declaration contained similar language to the declaration at issue in Alorda. The declaration provided that, if an owner failed to perform any maintenance required by the declaration, the association, after written notice, “may have such work performed, and the cost thereof shall be specifically assessed against such Lot which assessment shall be secured by the lien set forth in Section 9 of this Article VI” (emphasis added). In other words, the association had the permissive “self-help” authority pursuant to the declaration.

The facts of this case were complicated by the sale of the home in the middle of the suit. The new owners voluntarily brought the home into compliance with the declaration, and the case became moot. However, the parties continued to fight over who was entitled to prevailing party attorneys’ fees. The association argued it was entitled to prevailing party attorneys’ fees because the voluntary compliance was only obtained after the association was forced to commence legal action. The owners, citing Alorda, argued that they were entitled to prevailing party attorneys’ fees as the association’s complaint never stated a cause of action in the first place. They argued that the complaint should have been dismissed at the outset because the association sought an equitable remedy (mandatory injunction) when a legal remedy was available to the association (exercise of “self-help” authority).

Florida’s Second District Court of Appeal agreed with the owners that Alorda was controlling. The Court explained that, as in Alorda, “the association’s declaration gave it the option of remedying the alleged violation itself, assessing the owner for the cost, and if the owner failed to pay, placing a lien on the property and foreclosing if it remained unpaid.” As such, the association had an adequate remedy at law and could not seek the equitable remedy of an injunction, which was initially sought by the association. Because the mandatory injunction was not available to the association, the association’s complaint failed to state a proper cause of action and, thus, should have been dismissed by the trial court at the outset. Therefore, the association was not entitled to its sought-after prevailing party attorneys’ fee award, which is otherwise granted if a party comes into compliance after the lawsuit is served.

Sections 718.303 (as to condominiums), 719.303 (as to cooperatives), and 720.305 (as to homeowners associations), Florida Statutes, contain similar language that specifically authorizes the association to bring actions at law or in equity, or both, in the event an owner fails to comply with the governing documents of the association. However, neither the Court in Alorda nor the Court in Mauriello addressed the association’s statutory authority to bring an injunction against an owner who fails to comply with the requirements of the declaration, but rather found that the association must use the “self-help” remedy since it was available to cure the violation.

Notwithstanding the Alorda and Mauriello decisions rendered by Florida’s Second District Court of Appeal, past appellate court decisions from other appellate jurisdictions in Florida have permitted community associations to pursue claims for injunctive relief against violating owners so long as a violation of the restrictive covenant is alleged in the complaint. As such, the Alorda and Mauriello cases appear to be departures from the established principle. Additionally, as both decisions came from Florida’s Second District Court of Appeal, the decisions are certainly binding on those associations within the jurisdiction of the Second District, but there has been no indication that other districts will follow suit. However, there is risk that other appellate district courts may be persuaded by the holdings of Alorda and Mauriello.

As such, if your association’s declaration contains a “self-help” provision, and your association chooses to seek an injunction against an owner rather than pursue “self-help,” the board should definitely discuss the issue in greater detail with the association’s legal counsel prior to proceeding.

The Kaye Bender Rembaum Team Remains Available To You and Your Community Association

 

Tags: ,
What is an Estoppel Certificate and Why do you need one when buying a Condo or Home in an HOA?

What is an Estoppel Certificate and Why do you need one when buying a Condo or Home in an HOA?

  • Posted: Jul 20, 2022
  • By:
  • Comments: Comments Off on What is an Estoppel Certificate and Why do you need one when buying a Condo or Home in an HOA?

Estoppel – Why it costs money to figure out how much money you might owe

  by Evan Bradley, CFO, Campbell Property Management 

The word this week is Estoppel.

Generic legal definition that you should IGNORE: A legal principle that bars a party from denying or alleging a certain fact owing to that party’s previous conduct, allegation, or denial.

Layman’s description (not a legal description) of what estoppel means in a condo or homeowners association: an estoppel certificate is a document which describes outstanding fees that an owner owes to his/her association as of a certain date.

When a home is sold, the new owner and the old owner are “jointly and severally liable” for any amounts owed to the association. What this means in practice, is that any debt to the association stays with the property when a title transfers. These debts include: maintenance dues, late fees, fines, interest, legal fees and special assessments outstanding at the time of the transfer.

If the new owner does not obtain an estoppel certificate they will not be aware of any amounts owed to the association by the prior owner and they may be inheriting a huge debt which they are responsible for. This is why it is necessary to make sure any outstanding debt (or acknowledgement that no money is owed) is properly disclosed, via an estoppel certificate as a protection to the new owner. Often the title company will request an estoppel certificate on the owner’s behalf and any amounts owed will be paid off at closing.

Why does it cost money to get an estoppel? Someone has to take the time to do the research and prepare the certificate for the sale to happen. It is critical that the information is correct since the estoppel is legal proof of the amount owed. The owner (not the association) has to pay for this document, which is typically prepared by the management company, association staff, association attorney or bookkeeping company.

Estoppels are rarely as simple as providing an amount owed. In addition to listing any amounts owed to the association, the estoppel often contains other critical information such as:

  • Are there any outstanding violations on the property?
  • In addition to the regular maintenance, is there a special assessment ongoing?
  • Are there any pending special assessments that may not have been billed yet?
  • Is a capital contribution required?
  • Are there any other associations this property owner may owe money to?

These are just a few of the dozens of questions that are often asked by title companies on estoppel requests, which can become very time consuming.

Here is a short article that describes the law around estoppels.

Legal disclaimer: I am not an attorney. This should not be considered legal advice.

Thank You to Campbell Property Management

 

If you need help with an Estoppel Certificate and or Collection of outstanding Monies owed by an Owner for a Condo and or HOA:

Search our Directory: SFPMA Members Directory over 70 categories for everything you will need for your Florida properties.   Attorneys HOA Condo Associations   Accountants & Collections

 

Tags: , , ,