“All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” Read it in Forbes…
Mortgage Relief Tracker: Coronavirus (COVID-19) Relief for Homeowners
The federal government and states are implementing protections for homeowners and renters who can’t make payments due to COVID-19. Read it in Forbes
Renewal deadlines extended for all department-issued licenses, permits, registrations, or certificates
Governor DeSantis has directed Florida Dept. of Business and Professional Regulation Secretary Halsey Beshears to issue an emergency order suspending renewal deadlines for all department-issued licenses, permits, registrations or certificates set to expire in March and/or April (this includes CAM licenses).
If there are requirements that people have to complete continuing education hours to renew their professional licenses, those will also be suspended for 30 days from the existing renewal deadline.
More information on other department matters related to emergency actions, calendar changes for the board and department meetings, and other operational announcements during this state of emergency can be found at myfloridalicense.com/dbpr/emergency.
Special Coronavirus Emergency Powers Edition: Board Emergency Powers
For Condominium, Cooperative & Homeowners’ Associations
All board members and managers should take a few moments and brush up on emergency powers approved by the legislature and codified into Florida Statutes in Chapters 718, 719 and 720 for use during a “state of emergency.” Hopefully, your association will not need to use them. But just in case, now is the time to familiarize yourself with this important legislation.
No doubt the emergency powers granted by the Florida legislature to a condominium, cooperative and homeowners’ association board of directors for use during a “state of emergency” were intended for hurricanes and the like. Nevertheless, should circumstances warrant, they can be utilized during this state of emergency caused by the Coronavirus. However, use of these powers should be reasonably related to the threat at hand. In other words, there should be good reason for their exercise such that there is a nexus between the emergency action taken and the situation at your association as related to the Coronavirus.
Due to the Coronavirus, a myriad of other issues present themselves for consideration, too. Should board meetings be held and if so, how? Should the board learn of an infected member living in the association, what next? Should the infected person be identified to other members? What type of notice should be provided? Should an entire condominium be quarantined due to one case of coronavirus or should only those members who were in contact with the infected member be in quarantine? These are issues of first impression and the list goes on… Read the Rest (including the actual legislation)
ASK THE ATTORNEYS RETURNS FOR A 12th SEASON: KICKS OFF IN TAMARAC NOVEMBER 12th
Attorneys Robert Kaye and Michael Bender lead a spirited discussion about new legislation and other topics relating to condominiums, homeowners associations and cooperatives.
You determine the topics of discussion! Bring your community association-related questions to ‘Ask the Attorneys’. Free with refreshments!
LEGAL MORSEL: WHEN IS A MASTER ASSOCIATION SUBJECT TO CHAPTER 718 OF FLORIDA STATUTES?
Many communities throughout Florida were and continue to be developed with multiple layers of community associations. Often, such communities face legal questions that require a determination as to what statutory provisions should apply to their operation. Although it has seemed a fairly straight-forward proposition for over thirty (30) years, the issue of whether or not a recreation or master association is subject to the requirements of Chapter 718 of Florida Statutes (the “Condominium Act”) has recently become not as “black and white” as many would prefer.
In 1988, the 5th District Court of Appeal decided what had been considered the defining case on the topic, Downey v. Jungle Den Villas Recreation Association, Inc., 525 So. 2d 438 (Fla. 5th DCA 1988). The Jungle Den decision applied a “two-pronged test” when considering the qualifications of the recreation or master association. The first test, called “constituency”, considers whether the facilities are used exclusively by condominium unit owners. The second test, called “functionality”, reviews the activities performed by the association being considered and whether it involves condominium property. In 1991, in light of the Jungle Den decision, Section 718.103(2) F.S. was amended to include a definition of an “association” to be “any entity which operates or maintains other real property in which unit owner have use rights, where membership in the entity is composed exclusively of unit owners or their elected or appointed representatives and is a required condition of unit ownership.” The Statutory change took a portion of the Jungle Den decision and codified it. In other words, under the 1991 change to the Statute, if the members of a mandatory membership recreation or master association are exclusively condominium unit owners, the recreation or master association is subject to the Condominium Act. As a result, for many years, the constituency test was applied more weightily than the functionality test and often would be the only criteria considered to conclude that the association was subject to the Condominium Act.
However, in 2018, the 3rd District Court of Appeal was called upon to review a commercial complex made up of a master association and four (4) condominium associations in deciding a case involving this same issue in Dimitri v. Commercial Center of Miami Master Association, Inc., 253 So. 3d 715 (Fla. 3d DCA 2018). The association in Dimitri was formed in 1982 and operates the master association for a group of condominium buildings, each with its own sub-association. The master association is responsible to maintain or provide for the maintenance of all common property in the complex which is not owned and controlled by any of the sub-associations. The master association did not have any responsibility on any of the condominiums. The primary issue decided in Dimitri was whether the change in the Statute in 1991 applied to the association in the case. The Court also considered the two-prong test relative to the operation of the association, and whether it was subject to the Condominium Act.
Since the governing documents for the association in the Dimitri case were recorded in 1982, the Court concluded first that they pre-dated the Statutory definition and the facts would have to be reviewed further to determine whether the newer version of the Statute applied. The decision indicated that the declaration of covenants involved did not contain the specific “magic” phrase required to result in subsequent substantive changes in the Statute being automatically applied to the association at issue, that phrase being that the community is subject to particular laws “as they may be amended from time to time.” Since the documents here did not include this language, the Court determined that the change to the Statute in 1991 did not apply to the 1982 documents and, therefore, was inapplicable to that community. Additionally, as a general rule, statutes are not retroactive in nature. In order for a Statute to be retroactive in its application, the Statute must expressly so state. The Court in Dimitri concluded that Section 718.103(2) F.S. had no such express intent and, as a result, was not retroactive in its application. Only the prior definition in the Statute when the association was formed in 1982 would be applied to this complex, which did not result in the complex being subject to the Condominium Act.
In considering the two-prong test from Jungle Den, while the constituency of the Association was exclusively condominium unit owners, the Court further concluded that the association there did not administer and manage “condominium property” as it was defined in the Statute in place in 1982. As a result, it did not satisfy the second level of the test (functionality) and, consequently, was not subject to the Condominium Act.
For any condominium community in Florida that was developed with a master and/or recreation association, a thorough analysis should be undertaken by experienced community association counsel to make certain that the master and/or recreation association is following the correct law that applies to it. Likewise, the same analysis should be undertaken for any master and/or recreation association to ensure that it is operating in accordance with the appropriate Statute and to avoid potential claims of improper governance.
REMBAUM’S ASSOCIATION ROUNDUP: NEW RULES FOR FHA FINANCING – WHAT BOARD MEMBERS NEED TO KNOW
For some home buyers, financing the purchase of their new home can be a barrier to entry. Many home buyers need the benefit of an FHA backed loan for their lower interest rates. The Federal Housing Authority (FHA), a part of the Department of Housing and Urban Development (HUD), has provided mortgage insurance on loans made by FHA-approved lenders since its inception in 1934. Until a recent FHA rule change, any buyer interested in purchasing a condominium unit backed by an FHA loan faced the additional hurdle requiring that the condominium project itself must be FHA approved.
The FHA approval process for condominium projects can be complex and time-consuming. Prior to the recent FHA rule change, if the condominium project was not approved by the FHA, then prospective condominium purchasers could only obtain conventional loans, making it more difficult to secure financing. In fact, according to the FHA, only 6.5 percent of the country’s more than 150,000 condominium projects are approved to participate in the FHA’s mortgage insurance program. However, a new FHA rule that goes into effect on October 15, 2019 will change the approval process for condominium units and allow more buyers to receive approval for an FHA loan.
The new rule introduces several changes to the FHA approval process. The most notable is that the FHA will now allow an individual condominium unit owner to be eligible for an FHA backed mortgage even if the condominium project as a whole is not approved. However, the FHA will only approve a limited number of units in any condominium project. For projects with 10 or more units, no more than 10 percent of the individual units can be FHA-insured, and for projects with fewer than 10 units, no more than two individual units can be FHA-insured. Board members, owners, managers, and anyone else can access HUD’s database to find the number of FHA backed loans in a condominium project at https://entp.hud.gov/idapp/html/condo1.cfm.
The following are some of the essential requirements for a condominium project to be FHA approved, which have not been changed by the new rule:
- The condominium project must consist of two or more units
- No more than ten percent of the units can be owned by one investor or entity in a project with more than 10 units. In a project with 10 or fewer units, an investor may not own more than one unit. Unsold units are not considered investor-owned
- No more than fifteen percent of the total unit owners can be in arrears of association fees.
While the FHA allows limited restrictions on leasing, a condominium project will not be approved if the declaration or by-laws require that a prospective tenant be approved by the association. However, the association may require leases to be in writing and subject to the declaration and by-laws of the condominium, request a copy of any sublease and the name of all tenants who will occupy the unit, and establish a maximum allowable lease term and maximum number of rental units within the project. The FHA leasing requirements are the same for condominium and homeowners associations, but the new rule changes apply only to condominium associations.
The new FHA rule requires that approved condominium projects have a minimum of 50 percent of the units occupied by “owners” for most projects. In 2015, the FHA clarified that a condominium unit is considered to be owner-occupied provided that it is not: (i) tenant occupied, (ii) vacant and listed for rent, (iii) vacant and listed for sale, or (iv) under contract to a purchaser who does not intend to occupy the unit as a principal residence or secondary residence. For approved projects, the FHA will insure up to 50 percent of the units in the project.
The new FHA rule has extended the allowable amount of commercial/non-residential space for an approved condominium from 25 percent to 35 percent of total floor space. It also extended the re-certification deadline for approved condominium projects from two years to three years. An approved condominium project may request renewal of its approval by submitting a request no earlier than six months prior to the expiration or no later than 6 months after expiration of the approval.
Getting your condominium project approved by the FHA allows more buyers the opportunity to purchase units in your community utilizing FHA backed loans. However, the approval process is complex, and may require that your declaration and by-laws be amended to conform with FHA requirements – most especially in regard to leasing. Each association will have to balance the benefit of FHA backed loans versus having lease approval powers. If an owner’s neighboring tenant turns out to be previously convicted of rape, murder, or other heinous crime, then there is a great probability that such owner would have preferred stringent lease approval requirements as compared against providing for FHA backed loans in the community. Your association’s legal counsel can be of great benefit in navigating issues concerning the FHA approval process.
REMBAUM’S ASSOCIATION ROUNDUP: YOU GET WHAT YOU PAY FOR – ASSISTANCE ANIMAL APPLICATION PACKAGES
The complaint heard often from condominium and HOA board members is in regard to the influx of assistance animals in their “no pet” or pet restricted communities. Few other topics within the body of community association law cause more consternation then the application of the Federal, State and local Fair Housing laws. In fact, one relatively minor misstep from a board member or manager can cost an association tens of thousands of dollars in damages, as well as attorney’s fees and costs. Not only that, but this is one of the very few areas where board members could potentially face individual liability for their actions. Under most circumstances, board members will have protection from liability under the “business judgment rule,” but this is not necessarily the case in the Fair Housing arena.
I have read applications for assistance animal requests, believed to be prepared by lawyers with knowledge in this field, which are used as a method to obtain new community association clients by selling the applications for a very low cost, even below several hundred dollars. Unfortunately, these application packages, while seemingly inexpensive, can expose the association to significant monetary penalties.
One such application package is a nightmare waiting to happen to an unsuspecting board because it requires the application to be completed in order for the board to review the matter. While Fair Housing laws encourage a uniform policy be implemented, an association’s assistance animal application package cannot be made a prerequisite. It can be suggested that providing a completed application will assist in expediting the review process, but it cannot be mandated to be considered for approval. Also, without good cause, an association cannot demand regularly updated medical information concerning a claimed disability, regardless of the use of an application created by an association demanding otherwise.
Recent decisions point out the legal exposure to an association when board members or other agents of the association attempt to curtail the rights of assistance animal owners in an apparent effort to placate the rest of the community.
In a recent Fair Housing consent order entered September 28, 2018 by and between an applicant for an assistance animal and Hudson Harbor Condominium Association, Inc., located in New Jersey, the association was ordered to pay $30,000 to the assistance animal applicant for failing to grant a reasonable accommodation to its policy of requiring the animal be carried in a crate or carrier in the common elements and that the owner of the animal only use a service door when accompanied by the animal.
In another case, Pekiun v. Tierra Del Mar Condominium Association, Inc., 2015 WL 8029840, the association’s motion for summary judgment was denied where the plaintiff’s estate sued the association due to its failure to allow an assistance animal and argued that the association caused the intentional infliction of emotional distress and violations of both Florida and Federal Fair Housing Acts. In this case, the association demanded an assistance animal be removed from the premises due to another individual’s allergies and required, not only that a specific application be completed by a particular time. After the assistance animal was approved, the association’s management company changed and the new management company required the owner to “recertify” his assistance animal. Later, the owner committed suicide. Had the Association not given the owner such a hard time, would the owner still have committed suicide? We will never know. The damage award could easily exceed six figures given these occurrences and resulting suicide.
Remember, when considering an assistance animal request, all that is necessary is that the applicant has a disability recognized by the Fair Housing laws and that the animal helps ameliorate the symptoms or effects of the disability. This information can come to the association from a doctor, psychiatrist, social worker, mental health worker or any other qualified individual.
If the association desires a uniform application for assistance animals to assist in trying to streamline request procedures, the board should be looking to work with an attorney/law firm familiar in this area of law, and not simply go for the low cost option.
Unless and until the Federal, State, and local laws are modified to address this ever-growing situation, when considering assistance animal applications, the association would be wise to seek legal counsel before taking any action. This is particularly true if the association is going to request additional information, implement limitations or restrictions on the owner or assistance animal within the community, or perhaps deny the request.
LEGAL MORSEL: FIRST DISTRICT COURT OF APPEAL CLARIFIES UNIT OWNER OBLIGATIONS ON PAST DUE ASSESSMENTS AND IDENTIFIES CONFLICT WITH THIRD DISTRICT CASE
In 2013, the world of Florida condominiums was thrown by what many considered to be the controversial decision of Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc., which, in effect, limited the obligation of an owner for unpaid assessments of prior owners. (See prior Legal Morsel articles discussing the Spiaggia cases here; and, for the follow-up case, here).
The main issue in Spiaggia addressed the limit of how far back into prior owners’ unpaid assessments a current owner will be held accountable. Section 718.116 of Florida Statutes provides that an owner is jointly and severally liable for sums due from the prior owner. Spiaggia limited that to one prior owner and for only sums unpaid during that ownership. Florida practitioners in this area of the law, including Kaye Bender Rembaum, overwhelmingly agree that the Spiaggia decision was not correct. The Florida Legislature also apparently thought so and amended Section 718.116 F. S. the following year in an effort to correct the misconception. On July 16, 2019, the Florida First District Court of Appeal issued its decision in Coastal Creek Condominium Association, Inc., v. Fla. Trust Services LLC, Case No. 1D18-1457, which expressly conflicts with the conclusions of Spiaggia as to what is owed by a current owner.
Coastal Creek Condominium Association, Inc. filed a foreclosure action to collect on unpaid maintenance assessments. The Appellate Court discusses the history of the ownership of the unit and indicates that Fla Trust Services, the defendant/current unit owner in this foreclosure, had taken title to the unit on July 26, 2016, from Homes HQ, which had purchased the property at a mortgage foreclosure sale, with title conveyed to it on June 13, 2016. The original owners in all of this, who were foreclosed upon by the lender in 2016, were Tracy Langley and Todd Levraea (called “Original Owners” by the Court). The foreclosure by Coastal Creek sought sums due from August 15, 2015, which pre-dated Homes HQ ownership and the mortgage foreclosure, when the unit was owned by the Original Owners. The lower court decided that Fla Trust owed assessments only from Home HQ’s ownership and not from the time of the Original Owners, relying upon the holding of Spiaggia. The Appellate Court disagreed with that conclusion, deciding that sums claimed by the Association from the Original Owner were owed by Fla Trust as well.
In reaching its decision, the Appellate Court reviewed the relevant portion of Section 718.116 F.S., and concluded that Spiaggia had not fully grasped the intent of the Statute, which was that a current owner is jointly and severally liable for all unpaid assessments from all prior owners, not just from the time the unit was owned by the immediately prior owner, as the Spiaggia court concluded. Home HQ was jointly and severally liable for all of the sums due from the owner prior to it, the Original Owners. As such, Fla Trust was likewise liable for these sums. As a result, the Court concluded that Fla Trust is required to pay for the assessments that were not paid by Home HQ and the Original Owners. (Fla Trust still has the ability to bring legal claims against Home HQ and/or the Original Owners for their portion of the unpaid assessments.)
As a result of this conflict between District Courts of Appeal, the First District Court has certified the conflict to the Florida Supreme Court to consider whether to resolve it. We will be monitoring the progress of that certification and report any news as it develops. However, until such time as the conflict is resolved, the effect of this conflicting decision in the First District Court of Appeal from the prior decision in the Third District depends upon where the property is located that is the subject of a condominium foreclosure. For property within the jurisdiction of the 3rd DCA (Miami-Dade and Monroe Counties), the Spiaggia decision remains the law that should be followed, and for properties located within the 1st DCA (the most northern and northwestern part of Florida, including Tallahassee and surrounding areas), the Coastal Creek decision is to be followed. For all other jurisdictions in Florida, lower level judges will choose between the two in reaching their decisions. This can result in inconsistent rulings on the same issue, even in the same courthouse, until the Supreme Court resolves the conflict.
Additionally, and equally important here, from the way this Appellate Court phrased its opinion, it may have clarified that the 2015 holding of the Fourth District Court of Appeal in Pudlit 2 Joint Venture, LLP v. Westwood Gardens Homeowners Association, Inc., only applies to homeowners associations and not to condominiums. (See Legal Morsel on the Pudlit decision published by Kaye Bender Rembaum, P.L. here.) The Pudlit decision limited the obligation of certain third party purchasers at a lender foreclosure sale in a homeowner association based upon provisions contained in the documents of that community rather than what is set forth in the Statute. Since Pudlit was published, there have been inconsistent rulings in the lower courts regarding whether or not that same limitation applies to condominiums. In Coast Creek, the Appellate Court expressly includes sums which came due prior to the lender foreclosure. Since the unit was purchased by a third party at the lender foreclosure sale, the Court holding here did not provide the third party an exemption from the obligation to pay for sums due prior to foreclosure, as many have argued in recent years. This may prove to be very helpful to condominium associations in Florida in the future.