Become a Member: JOIN SFPMA TODAY LogIn / Register: LOGIN/REGISTER
Find Blog Articles for Florida’s Condo, HOA and the Management Industry.
sfpma want to thank Geri Bell for always providing us with the top Articles for our Industry.
Becker’s Lawyers are members of sfpma, can be found on our Directory, Sponsors many events and is one of the top firms for Condo, Hoa and Management professionals for our industry.
Thank You from all of us at SFPMA.Org
|
Many Floridians live within a community operated by an association of some kind, be it a community of single-family homes under the jurisdiction of a homeowner’s or property owner’s association, or a condominium building maintained by a condominium association. These owners should be well-aware that many aspects of life within these communities are subject to restrictions outlined in a set of governing documents, which include a declaration, articles of incorporation, bylaws, and rules and regulations. While the declaration, articles of incorporation, and bylaws are typically recorded among the public records of the county in which the community is located, the rules and regulations are typically not recorded.
Because rules and regulations are usually amendable by the approval of the board of directors only (as opposed to the additional approval of the membership), allowing rules and regulations to be unrecorded provides the board of directors with the flexibility to amend the rules and regulations as the need arises without the added expense and time required to record these rule amendments among the county’s official records. However, this option has changed for homeowner’s associations as a result of recent legislative changes which took effect on July 1, 2018.
How has this changed? Pursuant to new provisions set out in Section 720.306(1)(e) of F.S., “[a]n amendment to a governing document is effective when recorded in the public records of the county in which the community is located.” While this has certainly always been the case for a declaration, articles of incorporation, and bylaws, this is new as to rules and regulations of a homeowner’s association because they were added to the definition of the term “governing documents” as set out in Section 720.301(8), F.S. when the Statute was amended in 2015, effective on July 1st of that year.
Due to the fact that many homeowner’s associations have not recorded their rules and regulations in the public records of the county, consideration should be given to record the all of the rules and regulations, particularly if there are plans to amend them. Failing to record the rules and regulations prior to (or at the same time as) recording an amendment will possibly create what is termed a “wild” amendment, which is not connected in the public records to the document it is trying to amend. Additionally, if an amendment to the rules and regulations must be recorded in order to be effective, it is logical to conclude that the initial rules and regulations must also be recorded in order to be effective. Under Section 720.303 F.S., all governing documents are required to be recorded in the public records. Therefore, a homeowner’s association should record its rules and regulations in the public records in order to avoid this possible claim against the legal effectiveness of the rules when it becomes necessary for the association to enforce its rules against an owner.
As with any other amendment to a homeowner’s association’s governing documents, within thirty (30) days after recording an amendment to the governing documents, the homeowner’s association must provide either a copy of the recorded amendment to the members or, if a copy of the amendment was provided to the members before they approved it (for those communities with owner approval requirements for rules) and the amendment was not changed before the vote, a notice providing that the amendment was adopted, identifying the official book and page number or instrument number of the recorded amendment, and that a copy of the amendment is available at no charge to the member upon written request to the association.
While the consequences of this new legislation may have been unintended, it is the law until amended otherwise or an appellate court makes a contrary ruling. Although this will likely result in some minor additional costs to homeowner’s associations, this is a good opportunity for a board of directors to examine their existing rules and regulations and update them prior to recording them among the public records.
Board members of an association subject to Chapter 720, Florida Statutes, should discuss the implications created by this recent legislative change with their association’s lawyer. It is recommended that you have experienced association counsel review any existing rules and regulations prior to recording them to ensure that they are enforceable and do not unnecessarily expose the association to liability (e.g., Fair Housing violations). As to any proposed rules not yet adopted the same holds true. Experienced association counsel should review them to both ensure enforceability and to steer clear of unintended negative consequences.
Jeffrey Rembaum, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. He is a regular columnist for The Condo News, a biweekly publication and was inducted into the 2012, 2013 & 2014 Florida Super Lawyers. He can be reached at 561-241-4462.
Re Published with Permission: JR / KBR Legal
Tags: Condo and HOA Board of Directors, Condo and HOA Laws, Law and Legal, Management News
We know that this headline reads like a Florida-specific issue, but Florida is often used as a guideline for other state laws and courts. For this reason, we think it’s important for homeowners and condo associations in other states to take note.
In Accardi v. Regions Bank, Florida’s 4th District Court of Appeals reversed a lower court ruling that awarded the bank a deficiency judgment and remanded the circuit court to enter an amended final judgment to include attorney’s fees and taxable costs only. The bank was not able to recover its deficiency judgment.
This happened because of a Florida Statute that states “Actions other than the recovery of real property shall be commenced as follows … within one year” (of a certificate of title being issued or acceptance of a deed in lieu of foreclosure, that is):
“An action to enforce a claim of a deficiency related to a note secured by a mortgage against a residential property that is a one-family to four-family dwelling unit. The limitations period shall commence on the day after the certificate is issued by the clerk of court or the day after the mortgagee accepts a deed in lieu of foreclosure.”
That’s a lot of legal jargon that most simply translates to say that there is a one-year statute of limitations period for which a claim for a deficiency may be acted upon (not to be confused with the timeframe for enforcing a deficiency judgment that has already been entered) in order to avoid the deficiency claim from becoming time-barred.
This Accardi v. Regions Bank ruling got us all thinking. Clearly, it reflects a problem for banks and lenders who have had to foreclose and were left with a sale that did not satisfy the judgment amount at foreclosure, but that isn’t really the takeaway here. The takeaway is that, in theory, this same statute could potentially be used to prevent delayed collections for HOAs and condo associations when attempting to recover assessments post-foreclosure.
Is your community association trying to recover outstanding debt post-foreclosure? You should be.
If the association was the foreclosing party, and they recovered less than the amount owed as a result of the sale of the property, then that would give rise to pursuing a claim for a deficiency. So it would be very worthwhile to enforce a claim for a deficiency within a year of the certificate of title being issued.
Again, this statute of limitations is specific to Florida, so if your own state already has statutes that have different time restrictions, you need to follow those to the letter of the law. But doing this seemingly small task in the right time frame could be the difference between getting your deserved monies owed or leaving it all on the table due to a dickered-out semantic technicality.
Similarly, if an association has debt that is uncollectable from a subsequent owner due to superior lien foreclosure or tax sale, the association should act quickly to enforce its collection rights on this debt. While the fact pattern under this scenario is different from pursuing a deficiency claim created by virtue of the association’s own foreclosure sale, it would be wise to take action to collect on this debt sooner rather than later, to avoid any potential argument that would suggest it is a deficiency and that it is time-barred.
Collections delayed are collections denied.
No HOA or Condo association should stop trying to collect the money it is owed to them until said debt has been declared uncollectible by a collection professional, and that may not be your community association attorney. Don’t leave money on the table and don’t accept HOA and condo delinquency write-offs. Let a professional Condo and HOA collection company recover the money that is owed to your community association.
Axela Technologies, the nation’s leading collection company for community associations, does know the laws nationwide and we suggest that pursuing that debt at no cost and no risk is a good strategy. A great strategy, you must send the file to collections before it is too late. Perhaps a court will say that beyond one year is too late.
Don’t write off debt that could have been recovered. Call us for a free review and collection analysis. Not only can we collect from debtors who have been foreclosed on, but we can also collect from homeowners who are behind on their assessments, all at no cost to the association.
Find us on SFPMA Learn more about the services we provide.
Patrick C. Howell of Becker
Last year, Florida politicians attempted to weaponize Chapter 558 of the Florida Statutes and eviscerate the cause of action for violations of the Florida Building Code. Thankfully, that legislation died in committee and never saw the light of day.
Unfortunately, through H.B. 583 filed by Rep. Clay Yarborough, R-Jacksonville, and S.B. 736 filed by Sen. Travis Hutson, R-St. Augustine, developer-backed politicians are once again seeking to weaponize Chapter 558, and, this time, completely eliminate the tolling provisions in Section 95.11(3)(c) of the Florida Statutes for latent construction defects.
In their current iterations, Chapter 558 and Section 95.11(3)(c) are consumer- friendly provisions drafted and signed into law to protect Florida homeowners, homeowner associations and condominiums from defective construction, provide for the resolution of construction defect claims, and promote the settlement of claims without litigation.
Chapter 558 was passed by the Legislature years ago to assist with the resolution of claims outside of litigation. It requires that a party damaged by construction defects submit the claim to the at-fault developer or contractor, allows for inspections, and gives the developer or contractor an opportunity to settle the claim.
This process has worked effectively for many years and has resulted in countless settlements without expensive litigation. The changes proposed during this legislative session would severely damage Chapter 558 and the ability of homeowners, HOAs and condominiums to timely submit claims and foster settlements outside of court.
First, the proposed amendments take a heavy-handed approach with regard to owners, condos and HOAs versus developers and contractors. Under the changes proposed, if an owner, condo or HOA rejects a settlement offer, they must then prove that the offer wasn’t enough to address the repairs.
However, what is the penalty for a developer or contractor ignoring a properly served and documented Section 558 claim? Nothing. Just this one provision shows how anti-consumer and pro-developer this bill is.
Second, poison pill language has been worked into the bill that would require that a party receiving settlement funds (1) execute a contract to start repairs within 90 days; and (2) complete the repairs in one year.
Beyond the big government incursion into our day-to-day decisions, which is by itself disturbing, here’s the nightmare scenario this provision sets up: A condominium association has a multiparty claim against the developer, contractor, subcontractors and design professionals for a structure built with numerous defects to the roof, framing, stucco, foundations and windows.
The stucco subcontractor makes an offer to settle related to its scope of work. The owner accepts the offer. Under this bill, a contract to complete the repair to the stucco must be finalized within 90 days and the work must be completed within a year.
This is despite the fact that the owner has not settled with the contractor, developer, roofer, the window supplier or any of the other trades. So the work to the stucco gets completed, as mandated by this bill, and the claims continues against everyone else.
Two years later, the owner gets a verdict against the other parties and has the money to address the remaining defects. Unfortunately, the newly replaced stucco now has to be torn off to address the defective framing underneath the stucco, the windows installed in the stucco walls, and the roofs with kickouts and other elements adjacent to the stucco. It’s doubtful that anyone would ever accept a settlement offer under these circumstances.
This provision sets up for failure a claim made under Chapter 558, as well as the resulting settlement offer, at least for claims involving defects to more than one building element. As such, this amendment just won’t work for condominium towers, multifamily buildings, or homes constructed by dozens of different trades.
Third, the new proposed Section 558.0045 requires that the judge in a pending construction defect case appoint a third-party expert engineer, contractor or building code inspector to inspect the structures involved in litigation and issue a report 15 days later. The bill doesn’t detail how this appointed expert is to be paid beyond the statement that “the parties shall compensate the expert.”
So under this bill, each of the parties have the expenses of their own expert witnesses, plus now they have to share in the expense of an additional expert witness or witnesses. Wealthy developers will be easily able to foot the bill for these extra costs, but such will be a difficulty for an HOA, condominium or individual owner.
Despite the added expense required by this bill, the third-party expert does not have the ability to make any sort of decisions that bind any of the parties. So what really is the point? Also, it is unclear who would be the party contracting with the expert, and it’s hard to see any court signing off on such a contract. As such, what expert would expose themselves to the liability for these inspections without some contractual protection? Why would they?
Fourth, the new proposed Section 558.0046 requires that a claimant receiving compensation repair the defect. But why? If a defect renders a building uninhabitable and the plaintiff receives compensation for that loss, why shouldn’t they be able to demolish the building and use the settlement or verdict proceeds however they want?
The government should not be in the business of telling its citizens what to do with such proceeds.
Furthermore, settlements often occur because a plaintiff decides to take less than what they are owed, repair some defects and live with the others that don’t affect habitability. This provision would discourage such settlements, which goes against the very purpose behind Chapter 558.
As with last year’s disastrous bill, the proposed amendments to Chapter 558 also go so far as to insert big government into the relationship between a homeowner and their mortgage company. The amendments add a new subsection requiring that a homeowner with defects advise their mortgage company that they’ve asserted a construction defect claim as to the property and provide other details about the resolution of the claim.
This requirement could jeopardize the homeowner’s loan and expose the homeowner to inordinate amounts of red tape. There is nothing in the description of the bill advising as to the goal of this proposed change or what wrong it proposes to right. Note that no banking institutions or mortgage lenders have even requested this change to Chapter 558.
As such, and considering the other proposed changes to Chapter 558, it is assumed this is just another barrier that is being erected to dissuade homeowners, HOAs and condominiums from pursuing otherwise legitimate claims for construction defects against developers and contractors.
The proposed bill also tinkers with Section 95.11(3)(c) of the Florida Statutes, which establishes a four- year statute of limitations for construction defect claims. To protect consumers, the same provision also includes a provision that the statute of limitations does not begin to run on latent defects until the defect is discovered or should have been discovered with the exercise of due diligence.
To then in turn protect developers and contractors, there is an absolute bar to such claims 10 years after the completion of construction. This time period was shortened from 15 years to 10 a few years back. This absolute bar is known as the statute of repose. When the statute of repose runs on a claim, the homeowner, HOA and condominium is then forever precluded from bringing a claim against the developer or contractor.
However, under the amendments proposed by this bill, the concept of latency is completely removed from Section 95.11(3)(c). As such, if this law passes, courts will be required to apply a hard four-year statute of limitations for construction defect actions, with the time running from the certificate of occupancy, completion of the contract, etc. What this would mean for consumers is that the 10-year period for bringing claims based on latent defects would be effectively shortened to four years.
Thus, a developer would be able to complete a community and then maintain control over the HOA for just four additional years to run out the statute of limitations.
This change also completely disregards the nature of construction. As a condominium tower, townhome building, or home is built, trades working on the structure naturally cover up the work of the trades that came before them. The framer covers up the completed concrete foundation, the stucco and roofing contractors cover up the framing, the painter covers up the stucco, and on and on.
Thus, it is easy to see how defects can be hidden and not noticed by the end user owner for several years to come. Careful inspections along the way can forestall mistakes, but careful inspections don’t always occur.
Allowing affected owners or associations to sue over defects that have been covered up by contractors and developers keeps contractors and developers accountable and results in better construction. Taking such a cause of action away will just result in shoddy construction, and owners and associations will have no way of rectifying dangerous conditions on their property.
The proposed changes included in S.B. 736 and H.B. 583 would weaken consumer protections, increase litigation costs and result in the settlement of fewer claims outside of litigation. The changes to Chapter 558 and Section 95.11(3)(c) should be vigorously opposed by anyone who supports consumer rights for homeowners, HOAs and condominiums.
To view the original Law360 article, please click here. (Subscription required.)
Reprinted with permission from Law360.
Patrick C. HowellOffice Managing Shareholder
Tags: Board of Directors, Business Articles, Law and Legal, Members Articles
|
If your community association has engaged the services of a contractor, engineer, architect, or other construction or design professional to perform a maintenance, repair, replacement, or capital improvement project, you know the process can be overwhelming. No matter the mad rush to execute the contract as soon as possible, when beginning such projects, no matter how big or small, the board needs to ensure the contract adequately protects the association. Even the smallest of projects can have unexpected, disastrous consequences. A few of the more common provisions which every board member should understand follow. |
The Indemnity Provision |
|
In today’s extremely litigious world, it is important that your association does what it can to protect itself against unforeseen claims that can arise out of the contractor’s performance of the work. For example, assume a crane fell on the building being repaired, the contractor accidentally damaged the elevator shaft, or worse still, a life is lost. An indemnity provision provides that the contractor will indemnify, defend, and hold harmless the association from and against claims arising out of or resulting from the performance of the work by the contractor or any of its employees, subcontractors, suppliers, etc. Indemnification provisions can be tricky to understand. The general contractor, engineer, and design professionals (aka the architect) may seek to avoid and/or cap their overall liability. Even a small contract can have significant consequences if the negligence of the contractor causes significant damage or injury. Rarely does the inclusion of a single word have disastrous consequences; however, a recent trend we have seen in many contracts is the contractor requiring the indemnity obligation to be limited only to damage caused by the contractor’s “sole” negligence. As events which cause loss or damage rarely occur by the “sole” actions of an individual, this provision significantly diminishes the contractor’s responsibility to indemnify the association. The association should look out for any indemnity provision which provides that the contractor is only responsible to indemnify for its “sole” negligence. Without getting into too much complexity, Florida is a “contributory negligence” state. This means each party is responsible to satisfy a judgment against them in proportion to their responsibility for the blame. So, if the contractor is found to be 33 percent responsible for an accident, then it pays 33 percent of the final judgment award. But, if the contract indemnity provision required sole negligence, the contractor would pay nothing at all because the accident was not “solely” caused by the contractor. Youch! Another trend we see is the contractor limiting its liability to damage caused by its “gross negligence,” which by definition excludes “simple negligence.” As a brief explanation, simple negligence is when a person fails to take reasonable precautions that any prudent person would take in similar circumstances and their actions cause harm (for example, a driver who runs a stop sign and causes an accident). Gross negligence is extreme indifference or reckless disregard for the safety of others (for example, driving 100 mph in a parking lot and injuring a pedestrian). As any claims arising out of the work are likely to result from the contractor’s simple negligence, this heightened standard is not favorable to the association. If the contractor is insistent on limiting its liability, the association may consider limiting the contractor’s indemnification obligation to the maximum payable under the contractor’s insurance policy. This way, the contractor is not on the hook for unlimited liability, but the association has some decent protection as claims can be covered up to the maximum amount payable under the insurance policy. However, in the event of a catastrophic loss or casualty event, even the amount payable under the insurance policy may not be enough to protect the association. In addition to these limitations, “design professionals” have the added benefit of statutory authority to further limit their liability in a contract (they must have better lobbyists). Section 558.0035, Florida Statutes, provides a procedure by which a design professional can exclude any “individual liability” for damages resulting from negligence occurring within the course and scope of a professional services contract. In other words, the design professional will not be personally liable to the association for any negligence in its design if the contract includes a provision that excludes such personally liability. Section 558.002(7), Florida Statutes, defines a “design professional” as a person who is licensed in the state of Florida as an architect, landscape architect, engineer, surveyor, geologist, or a registered interior designer. Therefore, if your association is contracting with any of the foregoing design professionals, you will likely need to negotiate this provision. You should also be aware that disputes over the enforceability of the indemnification clause do not automatically include prevailing party attorneys’ fees unless the indemnification provision specifically provides that, in the event of a dispute concerning the applicability of the indemnification, the prevailing party must be indemnified for their attorneys’ fees, costs, and expenses incurred in enforcing their right to be indemnified. |
Insurance Provisions |
|
To ensure there are sufficient funds to satisfy an indemnity judgment in favor of the association, it is important that the association require the contractor to carry certain minimum insurance. Therefore, the contract should contain a clause which provides that the contractor will maintain such general liability insurance as will protect the contractor and the association from claims that may arise out of or result from the contractor’s operations under the contract documents in the amounts set out in the contract. Additionally, the association should ensure that the contractor obtains sufficient workers’ compensation coverage. There are a couple of terms with which you should be familiar:
Thus, the contract should not only require that the contractor carry insurance but also provide that the contractor is obligated to provide a certificate of insurance evidencing the insurance coverage and containing an endorsement listing the association as an “additional insured.” In addition to the insurance requirements for the contractor, your association may consider purchasing builder’s risk insurance for the project. Builder’s risk insurance is designed to protect the owner of a construction site from loss and damage. This should be further discussed with the association’s insurance agent. |
Paying the Contractor |
|
During a major construction project, the association’s contractor will likely be working with several subcontractors to complete the work. The process for payments in such projects is set out in §713.13, Florida Statutes. (For a more detailed discussion on the construction payment process, you can read my prior article, “Construction Progress Payments: The Hidden Trap,” at rembaumsassociationroundup.com, originally published in the Florida Community Association Journal, February 2020 edition.) By way of brief explanation, when the project commences, the association records a “Notice of Commencement” identifying the contractor and the legal description of where the work is being performed. The purpose of the Notice of Commencement is to inform all subcontractors and suppliers that if they intend to provide goods and/or services to the property, and if they want to have proper legal standing to record a lien against the property in the event they are not paid, the subcontractor and/or supplier must serve a “Notice to Owner” to the association. The Notice to Owner informs the association of all subcontractors working under the general contractor and all suppliers who provide suppliers and materials to the job site. In exchange for payments to the general contractor, the general contractor provides the association with “partial payment affidavits” for each payment and a “final payment affidavit” upon conclusion of the work at hand. The subcontractors and suppliers provide the association “partial releases” for the payment received from the general contractor using the general contractor as the delivery conduit to deliver the partial release to the association. This method ensures that subcontractors and suppliers cannot later claim that they were not paid. However, in order to ensure this protection, it is important that the contract requires the contractor to provide the subcontractors’ and suppliers’ partial releases contemporaneously with the association’s progress payment. With the partial releases in hand, in the event the contractor does not pay the subcontractors and suppliers, the association is fully protected. Some general contractors insist on providing the association with the partial releases from the subcontractors and suppliers one payment behind. This should be a red flag to your association because it means if the contractor fails to pay the subcontractors and suppliers after receiving payment from the association, the association will still have to pay the subcontractors and suppliers. In such event, the association will end up having to pay twice for all or part of the same work. |
Prevailing Attorney’s Fees |
|
Another important consideration is the prevailing party attorneys’ fees provision of the contract. An attorneys’ fee provision generally provides that in the event of litigation to enforce the terms of the contract, the prevailing party is entitled to recover their attorneys’ fees. However, this provision must be carefully worded to ensure that your association will be able to recover its attorneys’ fees. |
Termination |
|
Most contracts provide that the association may terminate the contract for cause. The termination for cause provision should include examples of conduct by the contractor which would entitle the association to terminate the contract for cause. In addition to termination for cause, we recommend the inclusion of a “without cause” termination provision. This provision gives the association an out in the event the contractor is not working out, but the contractor’s conduct does not rise to the level which would allow dismissal for cause. Generally, if an association terminated an agreement without good cause, and unless otherwise spelled out in the contract, the contractor would likely be entitled to approximately 15 to 22 percent of the contract price for its anticipated lost profit and overhead. |
Payment and Performance Bonds |
|
Another way the association can protect itself is by requiring the contractor to obtain “payment and performance bonds,” which are most often purchased together as a set. While doing so typically adds three to five percent to the total contract price, it is well worth it. In addition, if the contractor is not able to provide such a bond because the bonding companies will not bond the contractor, it is very telling because not every contractor is bondable. A “performance bond” is a surety bond issued by a bonding company or bank to guarantee the satisfactory completion of the work by the contractor. It acts to protect the association in the event the contractor fails to complete its contractual obligations. A “payment bond” guarantees the contractor will pay all laborers, material suppliers, and subcontractors engaged by the contractor for the work. In the event the association pays the contractor, but the contractor fails to pay the laborers, material suppliers, and/or subcontractors, the surety will step in to pay same. |
Force Majeure |
|
Many contracts contain force majeure language which provides that the parties will not be responsible to the other if they are unable to fulfil the terms of the contract due to events beyond the control of the parties. Most often, a force majeure event adds delay to the targeted project completion date and avoids claims for breach of contract due to the delay. Such events may be acts of God, flood, fire, hurricanes, war, invasion, terrorist acts, government order or law, actions, embargoes, or blockades, etc. Of late, for reasons that need no explanation, pandemics are added to this list, too. The above discussion is not meant to be all inclusive. There are so many other important provisions to consider, but space is limited. To ensure your association is protected, the association should always rely on its legal counsel to review the association’s contracts and make the necessary revisions to assist in the protection of the association. |
We are dedicated to providing clients with an unparalleled level of personalized and professional service regardless of their size and takes into account their individual needs and financial concerns. Our areas of concentration include
THANKSGIVING IS BECOMING A TOUGH HOLIDAY
By Eric Glazer, Esq.
Who doesn’t love the tradition of Thanksgiving? It starts off with The Macys Thanksgiving Day Parade from the morning to noon. By noon the house starts to smell great, football comes on the tube, the family gets together, fights about politics break out and everyone eventually goes home both full and angry. You gotta love Thanksgiving.
The last two years have been tough though. Thanksgiving in 2020 kept almost all families apart because of the Covid 19 situation. More families probably had Thanksgiving by ZOOM than they did in person. It was sad, countless other families had an empty plate or two at the dinner table because of loved ones they lost due to the virus. It really was a nightmare for almost all of us.
This year, while Covid certainly seems to be far less of a factor, we can’t help but think about the tragic loss of lives at the Champlain Towers in Surfside. I had to see it for myself and I will tell you that the scene was indescribable. I saw the 9-11 destruction in person and while certainly on a smaller scale, Champlain Towers was no less dramatic when you realized how many lost their lives in the rubble. How many were simply unaccounted for.
So what will Thanksgiving 2022 be like in our condominium associations? I don’t want to be a downer on the holidays, but for many, it’s not going to go well. Of course we will still be happy that we are sitting with our families for another year. If we have good health, we will be happy for that. But I guarantee this, this time next year many Florida condominium unit owners may not be able to afford to make a turkey dinner in their homes.
As I said on the show last week, it’s as if a perfect storm is coming together all at once. Food prices and gasoline are soaring, the price of insurance in our condominiums and the cost of labor are soaring.
Insurance in some condominiums is tripling in price resulting in incredible increases in monthly assessments. And of course, by this time next year, rest assured that there will be laws in place making it impossible to waive reserve funding in your community at least for your roof, electrical and structural components. In other words, besides the cost of insurance, the fact that you won’t be able to waive reserves will make your monthly assessments skyrocket even more. Next Thanksgiving there are going to be many people sitting at their Thanksgiving tables wondering if this is the last Thanksgiving they will be spending in a condominium that they may have been living in for decades. They’re simply getting out priced and won’t be able to afford it any longer. And it’s sad.
But have no fear……we know how much Florida loves to treat its developers. So look forward to laws that will allow developers to buy up units, kick out the old folks and build more buildings that people from mostly foreign countries can buy and put tenants in.
So to all of you and your families….I wish a happy and healthy Thanksgiving Holiday, and I hope it’s not the last one you get to spend in your current home.
Tags: Law and Legal
by Ned Bassen, Jamie B. Dokovna of Becker Lawyers
Senate Bill 1532 amending §409.2576, Florida Statutes went into effect. Previously, only employers with 250 or more employees were required to report newly hired and re-hired individuals to Florida’s State Directory of New Hires within 20 days of hiring. Independent contractors were excluded. Now, as of October 1, any employer, regardless of the number of employees that is a “service recipient” defined as “a person engaged in a trade or business who pays an individual for services rendered in the course of such trade or business” must report all new hires and re-hires to the State’s database. Additionally, employers must report their independent contractors who are paid $600 or more during a calendar year.
The purpose of the statute is to provide information to the Florida Child Support Program to facilitate the collection and disbursement of child support payments and to monitor and enforce child support payments. The statute, however, is silent regarding penalties for failing to report. That said, employers with less than 250 employees should update their onboarding process to include the new reporting requirements and all employers regardless of size should determine whether reporting requirements exist for any independent contractor used by them, update onboarding policies to reflect the changes in the law and provide training for those who perform onboarding and payroll, so they are aware of these changes.
by Ned Bassen, Jamie B. Dokovna ( Learn more click our V Cards )
As we head into the new year, we are all setting our expectations for what we want and how we will accomplish our goals in 2021. New years resolutions are something most people start off with high expectations but can occasionally fall flat if they aren’t realistic goals. Similar to how all community associations are different, the expectations that your board or owners have for the new year can be different. Management companies can provide support but really understanding what your needs are and how can your community partners help meet those needs is important. Before you choose a new management company or even if you only want to evaluate your current company, start first with determining what items are most important to your community. How does the management company handle those tasks?
~sfpma
The first thing to do is set a meeting where everyone can get together to ask questions and understand what you expect of management duties. This should include the homeowners as well so they know what the management rules are.
In the age of quarantining and more social distancing, perhaps this means meeting virtually to discuss these matters. It’s easier than ever to do this nowadays, but everyone needs to understand what their responsibilities are. If you have some new responsibilities going beyond what property managers know, be sure to get it in writing.
Amending agreements should always be done when everyone is available to discuss them. Once everyone understands their roles, it becomes a new contract everyone should have available to refer to physically or digitally.
A lot of opinions are out there about what managers should do while working with your association. Consensus is they should focus on four areas:
In the case of legal requirements, it usually means the management company assures the board deals with taxes appropriately. And, of course, they have to make sure your association continues to operate legally, including living up to state civil codes and local statutes.
Financial decisions should involve complete transparency with your association to make sure money gets spent in the smartest possible ways.
The partnership angle means helping your board make sound decisions that benefit everyone involved. Because your board might change over time with new members, the management team should have all ability to adapt to those changes in communication.
Listening to suggestions from an experienced management team also needs top priority. They can suggest things your board overlooks based on dealing with past associations.
Your association and the management team want as many low vacancies as possible. Allow the management team to take this on since they have experience in this area. However, communicating to them that it’s their responsibility needs doing early.
One of those expectations is management knowledge on how to take on marketing for your properties, particularly on social media. No management team is worth working with if they never have experience doing digital marketing to attract tenants.
They should also handle rent applications, screening, and lease signing processes and Collections for the fees not paid by owners
Some things you and the management team have to work together on include maintenance and repair approval, management salary payments, property tax/utility payments, and insurance payments.
Other times, management teams think they have to take on things that are not their sole responsibility. Perhaps this relates to dealing with cars speeding down neighborhood streets, or solving crime issues. Those usually fall toward city responsibility, plus the police in the case of crime.
All these issues need addressing early so there never is confusion on which thing each group focuses on. Since the unexpected will always come up, everything needs mentioning in writing to avoid stalled communication issues when an emergency arises.
by Kimberly Sutherland Author
IF WE PREPARED THE LEASE FOR YOU, the attorneys’ fees for a residential eviction filing from the beginning until the Sheriff’s Deputy removes the tenant are $125 for conventional uncontested non-government subsidized evictions for non-payment of rent.
IF WE DID NOT PREPARE THE LEASE FOR YOU, the attorneys’ fees for a residential eviction filing from the beginning until the Sheriff’s Deputy removes the tenant are $250 for conventional uncontested non-government subsidized evictions for non-payment of rent.
We classify residential property managers as property management companies that manage single-family homes, duplexes and very small apartment communities.
Costs are additional and vary by county. Costs consist of the county filing fees, the costs of the sheriff or private process server to serve the summons and complaint and if necessary, the cost for the Sheriff’s deputy to remove the tenant from the premises.
In the event the case is contested or the tenant files a counter claim, the attorney’s fees and costs may increase.
The Law Offices of Heist, Weisse and Wolk strives to keep your costs to a bare minimum and no additional charges will be incurred by the client unless the client is advised and agrees to authorize further legal work. The vast majority of evictions are uncontested.
Occasionally a routine court appearance is required for which we typically charge an additional $150.00. Phone, office consultations and advice by email is always at no charge.
There is never a charge for postage or copies.
Initial Interim Lessons Learned From This Tragedy
Author’s note: The devastating tragedy in Surfside shocked and saddened all of us at Kaye Bender Rembaum. The following article was initially written in late June, shortly after the tragic Champlain Towers collapse occurred, for initial publication in the August edition of the Florida Communtiy Association Journal. Since that time, and just the other day, the City of Boca Raton has promulgated required building re-certifications similar to those in effect for Broward and Miami-Dade Counties. Other cities and counties are similarly preparing to do so. In addition, the Florida state legislature will likely be considering amendments to Chapter 718, the Condominimium Act, during its 2022 legislative session an effort to help prevent similar tragedies.
Just after midnight on Thursday, June 24, 2021, tragedy struck Surfside, Florida, when 55 of 136 units of the 12-story Champlain Towers South Condominium tragically crumbled to the ground. Just prior, a sleepless sixth floor owner notices a two-finger-wide separation in her drywall and, fearing the worst, scrambles downstairs as the building begins to collapse around her. Miraculously, she barely escapes. So many others were not as fortunate. Today, as this article is being written on June 27, 2021, sadly there are nine confirmed dead and over 150 persons still listed as unaccounted for. (Author’s note: it was later confirmed that this tragedy was responsible for 98 deaths)
By way of background, a prior building collapse in 1973 led Miami-Dade and Broward Counties to institute a city ordinance requiring a 40-year residential building recertification. The 40-year-recertification requirement is the absolute maximum period of time for the association to inspect the building for structural, electrical, and other critical component failure posing a threat to life safety. Champlain Towers South, built in 1981, was in the process of complying with its building recertification when disaster struck. Likely, months from now the cause will be identified. Do not be surprised if it is discovered that there were multiple causes leading to a perfect storm type of event.
When concrete is subjected to moisture, it causes the steel rebar to rust, which causes further expansion of the concrete surrounding the rebar, which ultimately, if not treated, leads to failure. This is commonly referred to as “spalling.” In addition, when concrete is exposed to moisture, it causes the concrete to separate into its constituent parts, and it will leach lime [calcium-containing inorganics]. Many condominium balconies experience concrete spalling and require repair. So, too, do the support columns and other parts of the foundation responsible to bear and pass the building load on to other structural components. What we know so far, from multiple sources, follows:
An engineering report issued on October 8, 2018, by Morabito Consultants to Champlain Towers South Condominium Association, Inc., concluded in its Structural Field Survey Report that:
“[T]he waterproofing below the pool deck and entrance drive… is beyond its useful life and therefore it must be completely removed and replaced. The failed waterproofing is causing major structural damage to the concrete structural slab below these areas. Failure to replace the waterproofing in the near future will cause the extent of the concrete deterioration to expand exponentially… The main issue in this building structure is that the entrance drive, pool deck and planter waterproofing is laid on a flat surface. Since the reinforced concrete slab is not sloped to drain, the water sits on the waterproofing until it evaporates. This is a major error in the development of the original contract documents prepared by the [initial architects and engineers]… It is important to note that the replacement of the existing deck waterproofing will be extremely expensive as removal of the concrete topping slab to gain access to the waterproofing membrane will take time, be disruptive, and create a major disturbance to the occupants of this condominium building. Please note that the installation of deck waterproofing on a flat structure is a systemic issue for this building structure… Regarding the parking garage consultant’s review revealed signs of distress/fatigue as described below: abundant cracking and spalling of varying degrees was observed in the concrete columns, beams, and walls. Several sizable spalls were noted in both the top side of the entrance drive ramp and the underside of the pool/entrance drive/planter slabs, which included instances with exposed deteriorating rebar. Though some of the damage is minor, most of the concrete deterioration needs to be repaired in a timely fashion… Morabito Consultants is convinced that previously installed epoxy injection repairs were ineffective in properly repairing the existing cracked and spalled concrete slabs.”
(The entire 2018 Morabito Consultants report can be found at kbrlegal.com. Click “resources” at top of the page, then click “links” from the dropdown menu.)
Reports from local and national news indicated the following information. The swimming pool built atop a parking garage was leaking for an unknown period of time into the garage area below. Ocean water often intruded into the below-grade parking structure. At least one owner on the ninth floor was experiencing repeated pipe leaks. A report from the 1990s indicated the building was sinking approximately two millimeters per year. Significant roof repairs were underway for at least one month prior to the collapse. Lime was leaching out of the concrete deck causing damage to the cars in the parking garage below. Just south of the Champlain Towers South Condominium, a new building was being constructed that caused residents of the Champlain Towers South Condominium to complain about the constant shaking of their condominium building caused by blasting and digging activity. The concrete waterproofing associated with the foundation was failing as noted in the 2018 engineering report. Naturally, all of this combined could eventually lead to a weakened overall support structure.
Based on this information, ask yourself this important question: Was the Champlain Towers South Condominium collapse foreseeable? While some people, most especially with the benefit of hindsight, may believe that to be the case, bear in mind that there are also reports that the board had meetings with City of Surfside officials after the 2018 Morabito Consultants report was issued. If so, this may be very telling and bear on the board’s decision-making process. Details of such meetings are not presently known. Are there other engineering reports not yet discovered that bear on this issue? All of this may be very telling and bear on the board’s decision-making process. In any event, it is too early to reach conclusions.
Notwithstanding this horrible tragedy, there are interim lessons that can be gleaned from this disaster that every board member and manager of a high-rise condominium should heed, as follows:
Oddly, Florida Statutes have three significant failures that could help prevent a residential building collapse similar to the Champlain Towers South Condominium.
Regarding reserves, §718.112 (2)(f)(2), Florida Statutes (2020), provides, in relevant part, that:
In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. The 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. [Emphasis added.]
Remember, too, the board is absolutely required to pass the budget each year with reserves fully funded. Only then can the board decide to present to the owners the opportunity to waive or reduce reserves. Ask yourself, are our condominium association’s reserves properly funded?
As a result of this horrific tragedy, the 2022 Florida Legislature should consider requiring a recertification engineering report for all high-rise residential condominiums every 30 years or so and should require all community associations to update the reserve schedules at least once every five years.
Also remember that each board member should exercise his or her own individual reasonable business judgment when rendering decisions, except for the purchase of insurance, where the much higher standard of “best efforts” is applied as required by §718.111(11), Florida Statutes (2020). With the reasonable business judgment standard in mind, ignoring advice of engineers and other requisite professionals could be considered by others to be negligent or even rise to a reckless act or an omission conducted with bad faith, with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property, any one of which can lead to exposure to liability. But, if the association received two different reports where the opinions drastically differ, then in that situation, each board member should use his or her reasonable business judgment to decide which report should be relied upon. The fact the board chose to follow one expert’s guidance over the other, whose guidance turned out in the end to be wrong, is not too likely to result in an award for damages as a result of legal challenge.
If you live in a high-rise condominium and are fearful of collapse due to the Champlain Towers South Condominium tragedy, please remember that this building’s failure was certainly not an everyday occurrence and is best described, for the time being, as a tragic anomaly.
Tags: Law and Legal, Management News
No doubt some changes are on the way for condominiums as a result of the Surfside tragedy. The changes are long overdue. Here’s another long overdue change that is necessary..the condominium insurance statutes.
Suppose I told you that under Florida law, there is no absolute requirement that your condominium association insure the building(s). Sounds crazy right? Yet, here is what the law actually says:
d) An association controlled by unit owners operating as a residential condominium shall use its best efforts to obtain and maintain adequate property insurance to protect the association, the association property, the common elements, and the condominium property that must be insured by the association pursuant to this subsection.
What in the world does “best efforts” mean? Does it mean that “We made a few calls…..the premiums were too high…..so we forgot about getting insurance?” Is that using best efforts? Have you ever read such a contradictory statute? On the one hand it says the board must use its best efforts. On the other hand, the same statute says that the condominium property “must be insured.” Which is it?
Think for a second if Champlain Towers was not insured? The very thought of it sounds impossible, but it isn’t.
But wait…..it gets worse. Even if the property is insured the statute says:
The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.
So, let’s say your condominium property is insured, but you did not purchase a separate HO-6 policy for your unit. All you get back is your four walls. That’s right, basically a shell.
What about flood insurance? Is that mandatory in Florida for your condominium? No, it isn’t. The association “may” purchase it.
Just to make things crystal clear for our esteemed legislators, at the moment there is absolutely no requirement to fund reserve accounts so that the money is there should major life threatening repairs become necessary. And to make matters worse, if a tragedy does befall the property and the owners, there’s not even a requirement that the building was to be insured.
This would almost be comical if it weren’t so sad. We live in a state that:
1. Every year gets hit with tropical storms and hurricanes;
2. Suffers sinkhole collapses;
3. Has thousands of buildings lining our coasts and the buildings take a beating from the salt water;
4. Does not require unit owners in a condominium to put away reserve funds should major repairs be necessary
5. Does not require associations to purchase insurance, but only use their “best efforts” which is undefined;
6. Is home to more senior citizens on fixed incomes than almost any other state in the country.
You do the math. When the special assessments start coming as a result of massive repairs that are required on our aging buildings, associations will look to save money elsewhere. Yes, many boards believe it or not will take the position that insurance is not necessary, or that despite their “best efforts” it is simply unaffordable. I have met boards like that already.
In the upcoming legislative session, The Florida Legislature has a real tough job on their hands. Passing laws that reflect the true cost of actually living in a condominium, and no longer giving unit owners and board members enough rope to hang themselves with.
SFPMA works throughout the State of Florida, we are a multi-member organization for the Condo, HOA and Property Management industry. Through knowledge based Articles, Events and our Members Directory, Clients find the right information to make an informed decisions for their Florida properties.
