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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.

HURRICANE SEASON PREPAREDNESS

As with each year, we hope for a season with no hurricanes coming our way.  However, it is safe to expect that there may be at least one such event in the coming months and, at the start of the hurricane season, it is prudent to plan for that possibility.  Some of the planning steps that should be considered include the following:

  1. Create a Disaster Plan and establish off-site contact information and meeting points.
  2. Establish Evacuation Routes and conduct building or community evacuation drills in the weeks leading up to and once the hurricane season has begun.
  3. Verify Emergency Generators & Supplies operate and that fuel, flashlights, batteries, water and other necessities are available.
  4. Backup Computer Files and store information offsite, in case computers crash or systems fail.
  5. Secure the Premises – Make preparations for routine lockdown of the building(s) or other facilities as a storm approaches, so the building(s) is(are) secure during the storm and safe from vandalism or looting if a hurricane strikes.
  6. List of Owners & Employees – Have on hand a current, hard-copy reference list complete with the names of all property owners, emergency contact numbers and details of second residence addresses, as well as a list of all association employees, with full contact details.
  7. Photograph or Video Premises – Keep a visual record through video or photographs of premises, facilities and buildings to facilitate damage assessment and speed damage claims in a storm aftermath.  Consider having the premises evaluated by appropriate professionals to establish the conditions prior to any hurricane event. (see further details on this item below)
  8. Building and Facilities Plans – Make sure a complete set of building or community plans are readily available for consultation by first-responders, utilities workers and insurance adjusters following a storm.
  9. Insurance Policies & Agent Details – Be sure all insurance policies are current and coverage is adequate for community property, facilities and common areas and compliant with State Law; full contact details for insurance companies and agents should be readily available in the event of a storm.
  10. Bank Account Details & Signatories – Keep handy a list of all bank account numbers, branch locations and authorized association signatories, and make contingency plans for back-up signatories in case evacuation or relocation becomes necessary.
  11. Mitigation of Damages – In the immediate aftermath of a storm, take the necessary steps to mitigate damages – this includes “Drying-In,” which is the placement of tarps on openings in the roof and plywood over blown out doors and windows, and “Drying-Out,” which is the removal of wet carpet and drywall to prevent the growth of mold.
  12. Debris Removal – Have a plan for speedy removal of debris by maintenance staff, outside contractors or civic public works employees, should a hurricane topple trees and leave debris in its wake.

With respect to item 7 above, Kaye Bender Rembaum has become aware of at least one service provider that will bring in engineering professionals to make a physical inspection of the entire community to assess the conditions and establish a record for all such conditions prior to any storm.  The assessment will also identify conditions that may have resulted from Hurricane Irma from 2017, for which claims were not made or even found and may still be claimed.  In many instances, conditions of significant damage may not be readily apparent to the layperson, but to a qualified professional, very obvious.  Quite often, such an inspection can result in substantial additional insurance claims for the association to recover.  It is not unusual for an insurance carrier to reject initial claims following a major storm, citing to maintenance or pre-existing conditions as the basis for the denial.  The team of experts performing the assessment has assisted several communities overcome such rejections and ultimately receive additional settlement proceeds to make further repairs to the premises.  While there is no guaranty of such a result, without making such an assessment, the board will never know and certainly have no further recovery.  Most importantly, this inspection and assessment is undertaken at no charge to the association by this company, and with no obligation to the association!

If the Board desires additional information and contact information for obtaining the free inspection and analysis of the condition of the community, please contact Kaye Bender Rembaum.  The Firm wishes all a safe and peaceful hurricane season!

External Resource Links:

“Preparing for a Disaster” (Florida DPBR)

“Hurricane Safety Checklist” (American Red Cross)

Third District Court of Appeal Overturns Large Judgement Against Condominium Association

The Florida court system has been described as complex and confusing to the layperson and, while there is no requirement that an individual be represented by counsel in court, the recent holding of the Third District Court of Appeal demonstrates the importance of having not only attorney representation in court proceedings, but competent representation in the area involved.

In the case of Lincoln Mews Condominium Association, Inc. v. Harris, Case No. 3D18-1379, May 1, 2019, the Appellate Court was asked to review a default judgment entered against the Condominium Association for over $500,000.  In its decision, the Court reviewed the procedural history of the case and described it as “bizarre”!

The case was originally brought by an attorney, on behalf of a unit owner, Stephanie Harris, and, purportedly, the Association, against President of the Association personally, and the Association itself.  According to the Appellate Court, the initial complaint contained claims that were not legally supported or even amounting to actual legal causes of action.  Shortly after the case was filed, the attorney who filed the case withdrew from representing the unit owner.

Then, Ms. Harris, continued for a time without an attorney.  On her own, she then filed two amended complaints, the first of which, among other odd things, dropped the Association as a party and, five days later, a second amended complaint was filed, attempting to re-add the Association back into the case, and which contained more what the Appellate court considered to be outlandish claims.  Moreover, the new pleadings were not even properly served on the Association, as is required under court rules and procedures.

Some months later, Ms. Harris hired a new attorney, who filed a third amended complaint, adding other parties and, again, included the Association.  Once again the Association was not properly served.  This newest complaint contained even more of what the Appellate Court called “colorful” claims.  Due to the failure to serve the Association with the third amended complaint, the Association did not respond to it.  As a result of there being no response from the Association filed with the Court, the owner’s new attorney filed a motion for a default against the Association, which was ultimately granted by the lower court.

Subsequently, even though Ms. Harris failed to properly establish a legal basis for her claims or provide any evidence, the lower court judge entered an order against the Association for $500,000.  The case then apparently sat dormant for some time.

Four years later, Ms. Harris hired yet another attorney (her third in this case) to pursue collection of the default judgment against the Association.  She even attempted to have a receiver appointed over the entire condominium.  Remarkably, even though the Association, which was finally made aware of the judgment against it and had filed appropriate pleadings to vacate the judgment, the lower court denied the Association motion to vacate the judgment, which resulted in the appeal to the Third DCA.

The Appellate Court correctly decided that by dropping the Association in the first amended complaint which Ms. Harris filed on her own, the court no longer had “personal” jurisdiction over the Association, which is required in order for a judgment to be entered against it.  To add the Association back into the case, it had to be properly served, as if the case was brand new, which did not happen here.  As a result, all subsequent proceedings against the Association were considered void.

It is gratifying that the Appellate Court in this case was able to get through all of the filings, which it also characterized as a “strange and protracted record”, and to make this proper procedural ruling.  The Appellate Court even recognized the injustice that had been created against this Association.

However, there is no guaranty that this decision will provide protection to an unwary association that finds itself caught up in the court system by an overly zealous unit owner.  It is a recommended business practice for associations to have its counsel periodically check local court records to see if the association has been named in a law suit of which it might not otherwise be aware.  The local courts have website access available for this purpose.  It is also recommended to have its counsel be listed as the Registered Agent of the association to ensure that when the attorney, as Registered Agent for the association, so that any new litigation, properly served on the association is timely addressed to best protect the interests of the association.

RECORDING RULES AND AMENDMENTS THERETO RECENT STATUTE CHANGE AFFECTING HOMEOWNERS’ ASSOCIATIONS

Many residents of Florida live within a community operated by an association of some kind, whether it be a community of single-family homes under the jurisdiction of a homeowners’ or property owner’s association, or a condominium building maintained by a condominium association.  All in such situations 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, rules and regulations are more often not recorded.

As 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 homeowners’ 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 homeowners’ 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 in July of that year.

Due to the fact that many homeowners’ associations have not recorded their rules and regulations in the public records of the county, consideration should be given to recording 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 homeowners’ 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 the governing documents for a homeowners’ association, within thirty (30) days after recording an amendment to the governing documents, the homeowners’ association must provide notice of the change to the Members. This is accomplished either by sending 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 homeowners’ 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.  It is also recommended that you have experienced Association counsel review any proposed rules and regulations prior to approving them to ensure that they are enforceable and do not unnecessarily expose the Association to liability (e.g., Fair Housing violations).

APPELLATE COURT CLARIFIES MATERIAL ALTERATION APPROVAL REQUIREMENTS FOR CONDOMINIUMS

As condominiums age, boards of directors choose to update and refurbish the common elements from time to time.  Quite often the updates involve changing the appearance and the materials being used, such as replacing carpeting with tile flooring.  Such changes frequently become what is called a “material alteration or substantial addition” to the common elements.

Whether or not the choice to undertake a significant change to the common elements of the condominium is that of the board of directors or must be put before the unit owners for a vote is always a concern that must be resolved before starting the project.  This is primarily due to the provisions of Section 718.113(2)(a) of Florida Statutes, which provides, in pertinent part, the following:

. . . there shall be no material alteration or substantial additions to the common elements or to real property which is association property, except in a manner provided in the declaration as originally recorded or as amended under the procedures provided therein. If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced. . .

The Fourth District Court of Appeal was faced with that issue in the recent case of Lenzi v. Regency Tower Association, Inc.,Case No. 4D17-2507, June 20, 2018.  The Firm of Kaye Bender Rembaum provided representation to the Association in this case, which prevailed in its position.

The Regency Tower Association, Inc. (“Association) had decided, by a vote of the Board of Directors, to alter certain common element flooring from marble to tile.  Unit owner Lenzi objected to the Board making that decision, claiming it was a material alteration, requiring a vote of the unit owner.  The Declaration of Condominium for Regency Tower expressly authorizes the Board of Directors to make “alterations or improvements” to the common property without requiring a vote of the unit owners.  Lenzi claimed that because the Declaration did use the phrase “alteration” over “material alteration” required a vote of the owners.  When the Board declined to accept Lenzi’s interpretation, Lenzi filed for arbitration with the Division of Condominium to challenge the decision of the Board.

In arbitration, the arbitrator sided with the Association, issuing a ruling that the language of the Declaration is sufficiently clear to encompass the limitations set forth in the Statute.  Lenzi was not satisfied with the decision of the arbitrator so he appealed the decision to the Circuit Court, which likewise decided that the documents clearly provide for the authority in the Board of Directors and that decision was in compliance with the Statute.  The Circuit Court further found that the term “alteration” includes material alterations.

In its recent decision, the Appellate Court agrees with these conclusions, ruling that words of common usage should be given their plain and ordinary meaning.  The Appellate Court expressly stated that it would not arbitrarily limit the word “alteration” to exclude material alterations, finding that the word included all alterations and concluded that the Board had the authority in accordance with the Statute to make the change to the common element.

Whenever a condominium association is considering making changes to the common elements, the governing documents should be reviewed to make certain that this issue is sufficiently addressed and consult with counsel before making the change.  It is important to also be mindful that with the changes to the Statute that are effective July 1, 2018, the vote of the unit owners is required to occur “before the material alterations or substantial additions are commenced.”  Unfortunately, this statutory change fails to include what might happen if the vote does not occur prior to the alterations being completed.

There is currently no similar provision in Chapter 720 F.S. regarding homeowner’s associations.  In these situations, the provisions of the governing documents will determine the issue.  If there is no limitation on the alteration of the common properties or requirement of a vote of the owners in such event, the decision will typically be that of the board.  Confirmation from qualified counsel is recommended.

Three Kaye Bender Rembaum Attorneys Receive New Florida Bar Certification as Specialists in Condominium and Planned Development Law

Kaye Bender Rembaum is pleased to announce that the Florida Bar has confirmed that three of its attorneys, founding and Managing Member Robert L. Kaye, Firm Member Andrew B. Black and Senior Associate Allison L. Hertz, are among the inaugural class of esteemed attorneys to be officially certified by the Florida Bar in the new area of Condominium and Planned Development Law. The new certification became effective as of June 1, 2018.

Board Certification is the highest level of recognition by the Florida Bar and recognizes attorneys’ special knowledge, skills and proficiency in various areas of law, and professionalism and ethics in practice. Only Certified attorneys may utilize terms such as “specialist”, “expert”, and/or “B.C.S.” (Board Certified Specialist) when referring to their legal credentials. Board Certified Florida Bar Members are rigorously evaluated for professionalism and tested for their expertise in their areas of law. According to the Florida Bar, certification is the highest evaluation of attorneys’ competency. Attorneys must meet stringent application criteria before officially becoming certified, including satisfactory peer review as it relates to character, ethics and professionalism, satisfying the certification area’s higher level of continuing legal education requirements and passing a rigorous examination.

Robert Kaye, Andrew Black and Allison Hertz are especially honored and proud to be among the Florida Bar’s inaugural class to receive this particular certification. The Firm is pleased to not only offer its clients the high quality legal services that they are accustomed to receive from all of its attorneys but to also have available board certified legal services with this designation in this area of law.

Those Certified account for less than one percent (1%) of nearly 118,000 Florida lawyers. Thus far, only 127 lawyers obtained this new Certification. The Florida Bar website maintains a free online directory of all Board Certified attorneys, categorized by specialty area. You may find it at FloridaBar.org/certification.

Broward County Revised Ordinances to Create New Protected Classifications in the Housing Arena

The Broward County Board of Commissioners has amended the County Ordinances regarding discrimination in housing within the County to add additional classifications of individuals who are protected from housing discrimination under the Code. Effective December 6, 2017, Sections 16½-2(a)(2), 16½-3(p) of the Broward Code added “veteran or service member status, lawful source of income, or being the victim of dating violence, domestic violence or stalking” to those who are protected in the sale and leasing of real property within the County.

Section 16½-3 provided further definitions of these classifications to be the following:

Lawful source of income – “the origin or cause of a legal gain or recurrent benefit, often measured in money or currency, including, but not limited to, income derived from social security, supplemental security income, child support, alimony, veteran’s benefits, disability benefits, unemployment, pension and retirement benefits, an annuity, a gift, an inheritance, the sale or pledge of or interest in property, or any form of federal, state, or local public or housing assistance or subsidy, including Housing Choice Voucher Program or ‘Section 8′ vouchers, whether such income is received directly or indirectly by the renter or purchaser and even if such income includes additional federal, state, or local requirements.”

Service member status – “the state of serving on active duty in the armed forces of the United States, including the Reserves and National Guard.”

Veteran status – “the state of having served in any branch of the armed forces of the United States, including the Reserves and National Guard, and having been discharged or released therefrom under conditions other than dishonorable as defined under federal law.”

Victim of dating violence – “a person who has been subjected to acts or threats of violence, not including acts of self-defense, during the course of a significant relationship of a romantic or intimate nature, committed by another person under the following circumstances:

(1)  The nature of the relationship was characterized by the expectation of affection or sexual involvement between the individuals; and

(2)  The frequency and type of interaction between the individuals was on a continuous basis during the course of the relationship.

This subsection does not include violence between individuals involved in a casual acquaintanceship or individuals who have engaged only in ordinary fraternization in a business or social context.”

Victim of domestic violence – “a family or household member who has been subjected to acts or threats of violence, not including acts of self-defense, by another family or household member. For purposes of this section, ‘family or household member’ includes:

(1) A current or former spouse of the victim;

(2) A person with whom the victim shares a child in common;

(3) A person who is cohabitating with or has cohabitated with the victim; or

(4) A person who is or has continually or at regular intervals lived in the same household as the victim.”

Victim of stalking – “a victim of acts that constitute or are deemed under state law to be willful, malicious, and repeated following, harassing, or cyberstalking of another person, or the making of a credible threat with the intent to place that victim in reasonable fear of death or bodily injury of the person, or the person’s child, sibling, spouse, parent, or dependent. The term ‘cyberstalking’ means engaging in a course of conduct to communicate, or to cause to be communicated, words, images, or language by or through the use of electronic mail or electronic communication, directed at a specific person, causing substantial emotional distress to that person and serving no legitimate purpose.”

Of particular note in all of the foregoing is the extension of a protected classification to recipients of Section 8 Housing vouchers. As “financial condition” and/or “source of income” has not previously been a protected classification (and is still not one under State and Federal laws), it now has such protection in Broward County. Board members in Broward County reviewing prospective leasing applications which were previously denied will need to be mindful of this change. If there is ever a question regarding the status of a protected classification, or whether or not the board may disapprove an application for sale or lease, the board should consult with its qualified counsel before making a decision.

Link

On Tuesday, September 12, 2017, the Federal Emergency Management Agency (FEMA) announced Hurricane Harvey and Irma claim handing process for buildings insured under the Standard Flood Insurance Policy (SFIP), specifically recognizing that catastrophic flooding from those storms demands “fast and accurate payments to all National Flood Insurance Program (NFIP) policyholders. The published guidance is an effort to facilitate prompt post-inspection advance payments to policyholders. The Fact Sheet attached outlines the steps associated with the claims process.  (Click the link for the Fact Sheet nfip_flood_claim_process-003 )

FEMA may authorize advance payments to policyholders before inspection by an adjuster in certain circumstances, emphasizing that advance payments are not available for additional living expenses such as temporary housing after the storm.

Policyholders have an obligation to minimize mold damages as much as possible, however coverage needs to be verified before engaging a mitigation contractor to perform water extraction. Kaye, Bender, Rembaum strongly advises against signing any open-ended or undefined contracts and all contracts should be reviewed by Association counsel before the Board signs off. For water extraction or emergency services in units, associations should ensure there are separate contracts for each unit with a clearly defined scope of work along with associated costs to submit to the owner’s carrier. Community association managers (CAMs) and/or board members must make an effort to contact owners before arranging to perform water extraction or removal of contents.

If possible require the owner to separately contract for these services. If that is not possible, make sure your contract contains limiting language indicating that the association is only signing as an agent for the owner under its emergency powers (§718.1265 and §720.316, Florida Statutes). Please note, however, emergency powers set forth in Florida Statutes are only available for the limited period of time reasonably necessary to protects the health, safety and welfare of those affected and to mitigate further damages or effectuate emergency repairs.

By now you should have already reported the claim if you have suffered a flood loss – it is important to file the claim with the carrier, not simply the agent, although in many cases the agent may submit the notice of claim on your behalf. The NFIP policies generally require policyholders to mitigate (or reduce potential) damages by separating damaged from undamaged property and retaining compromised materials after removal from the home for adjuster inspection. Photographs and video records are extremely helpful in establishing the scope of loss.

Additionally, FEMA reminds those impacted that:

FEMA does not authorize individual contractors to solicit on its behalf. Beware of any individual contractors contacting you directly on behalf of FEMA to sign you up for debris removal or remediation services.

If you have any concerns about individuals representing themselves as FEMA or would like to report fraud, please contact the National Center for Disaster Fraud at (866) 720-5721 or via email at disaster@leo.gov.

Federal and state workers never ask for, or accept money, and always carry identification badges

There is NO FEE required to apply for or to get disaster assistance from FEMA, the U.S. Small Business Administration or the state.

APPELLATE COURT LIMITS ASSOCIATION ABILITY TO STOP OWNER POSTING OF NEGATIVE OPINIONS ON SOCIAL MEDIA

Many community associations throughout Florida have experienced an owner who opposes the board and is vocally negative toward the efforts of the association representatives. With the development of social media and the internet, many have also experienced these disgruntled owners posting their opinions on the internet through blogs, website and the like. Quite often these owners are not expressing accurate information regarding the association and boards look for help from their attorneys to stop what they consider to be abusive and harassing conduct. The Florida Fifth District Court of Appeal has recently issued a ruling that identifies some limits that court action can take in dealing with such disputes and leaving questions regarding other actions that can be taken unanswered.

In Fox. V. Hampton at Metro West Condominium Association, Inc., Case No. 5D16-1822 (July 21, 2017), the Appellate Court was presented the situation in which the Condominium Association had initially brought a legal action against the unit owner to obtain an injunction to stop the owner from what they claimed to be conduct that was harassing, intimidating and otherwise threatening to other owners, and for his on-going publishing of negative claims about the Association and/or the Board on the internet. No trial was held as the parties entered into a settlement agreement that was ultimately incorporated into a final judgment under which Fox agreed to stop certain actions. Soon thereafter, however, the conduct began again and the Association filed a motion for contempt and enforcement of the agreement, claiming that Fox had willfully and intentionally violated the terms of the agreement.

After holding a hearing, the trial court did find Fox in civil contempt for the violations of the agreement and, in addition to enforcing the provisions of the settlement agreement, also ordered Fox to stop posting, circulating, and publishing any pictures or personal information about current or future residents, board members, management, employees or personnel of the management company, vendors of the Association, or any other management company used by the Association, on any website, blog or social media. Fox was also ordered to take down what he had already posted on any of his websites or blogs. The trial court also prohibited Fox from starting any new blogs, website or social media website related to the Association. Fox was also told by the trial court that he could not respond to an inquiry about living at the Community online, but rather could only respond with a telephone call to the inquirer. Fox appealed the added requirements of the trial court that went beyond the original agreement and judgment, claiming that they violate his right to speak freely, and the appellate court agreed as to the added limitations.

In reaching it’s conclusion, the Appellate Court applied the Freedom of Speech provisions of the US and Florida Constitutions, noting that the “penalties” and additional limitations imposed by the trial court beyond the terms of the settlement agreement constituted what is termed “prior restraint” (or censorship) by the government, which is not allowed. This action by the trial court effectively was sufficient “State Action” to trigger the Constitutional protections for the unit owner.

While the Appellate Court notes that freedom of speech does not extend to obscenity, defamation, fraud, incitement, true threats and speech integral to criminal conduct, the conduct of Fox in this case did not reach any of these levels. The Court indicated that it is more legally appropriate to address the conduct of an owner posting or publishing allegedly false statements and/or other actionable statements after the fact rather than before it occurs. Consequently, the Appellate Court decided that the trial court made an error when it prohibited Fox from making any future statements whatsoever pertaining to the Community or the Association without conducting a proper constitutional inquiry first and reversed that part of the trial court decision. However, the Appellate Court did not reverse any aspect of the trial court’s enforcement of the original settlement agreement and final judgment. Only by it adding the “punishment” terms did the Appellate Court conclude that this particular trial court went too far.

This particular case is unusual in that Constitutional protections are being applied to a situation that traditionally has been considered one of private contract. Constitutional concerns apply to actions of the State or government and generally do not apply to private agreements or individuals. Time will tell whether this is a trend that may be starting among the courts or simply an anomaly decision limited to the facts of just this case. This is particularly so in light of the Appellate Court upholding the restraints on the speech of Fox that was set forth in the original settlement agreement and judgment, which also was enforced by the trial court, bringing State action into the situation as well. As with any case of this nature, much will depend upon the particular facts involved as to whether court action may be considered and/or worth pursuing.

2017 Legislative Changes

The 2017 Legislative Session was fairly active with respect to issues involving Community Associations. The following is a brief outline of some of the significant changes that became effective July 1, 2017.

Estoppel Certificates: Senate Bill 398: Applies to Condominium, Cooperative & Homeowners’ Associations.

Content and cost limits for estoppel certificates were issues attempted to be addressed several times in the past few years, but this year, SB 398 passed and substantially changed the content and procedure for responding to requests for information when a unit or property within the community is transferring, as well as setting up specific costs for the information. An “estoppel certificate” is defined to be a signed document establishing certain specific facts related to a particular transaction. In the past the estoppel certificate typically consisted of a basic statement of account, notifying the buyer/lender whether the account was current and identifying upcoming or ongoing financial obligations. The new law has the following affects: (a) reduces the time period for responding to a request for an estoppel certificate from 15 days to 10 business days, and if not delivered within 10 business days no fee can be charged for the estoppel; (b) the association’s website, if it exists, must contain the name and street address or e-mail address of the person to whom requests for estoppel certificates are to be sent; and, estoppel certificates must be delivered by hand, mail or e-mail on the date the estoppel is issued.

The estoppel must contain specific information, as follows:

Date of Issuance;
Name of the owner of the property to which the estoppel information pertains;
The property designation and address;
Any assigned parking or garage space;
Contact information for the association’s counsel if the account is in collection;
The amount of the fee for preparation of the estoppel; and,
Identify the person/entity requesting the information.

Assessment Information required to be included:

Payments required on a periodic basis for “regular” assessments, including the required frequency of payment;
Date through which payment has been received;
The date due and amount of the next “regular” payment;
Itemized list of any amounts currently due; and,
An itemization of the amounts to become due while the certificate is pending.

Other Information required:

Disclose the existence and amount of any capital contribution fee;
Whether there are any open violations;
Whether the governing documents require the buyer to be approved and if so, whether the buyer has been approved;
Whether the association has a right of first refusal and exercised it;
A list of and contact information for any other associations governing the property;
Contact information for insurance verification; and,
Contain the signature of an officer or authorized association agent (management, etc.).

An estoppel certificate is effective for 30 days (35 if delivered by regular mail). The fee for an estoppel certificate may not exceed $250 unless (a) the estoppel is requested on an expedited basis and is delivered within 3 days, in which case an additional fee of up to $100 is allowed, or (b) delinquent assessments are owed in which case an additional fee of up to $150 is allowed. The statutorily set fees shall be adjusted every 5 years based on the CPI.

Condominium Crime & Penalties: House Bill 1237: Applies to Condominium Associations

While portions of the bill have been criticized for “criminalizing” certain activities, these initiatives were largely in response to what has been considered as the scathing Miami-Dade grand jury report issued earlier in the year. The report found tremendous abuse associated with elections, conflicts of interest and association records. Records were purposely withheld in some cases and modified in others. The bill emphasizes that forgery of ballot envelopes or voting certificates is a crime punishable by law. Destruction of or the refusal to allow inspection or copying of an official record of a condominium association within the time periods required by law in furtherance of any crime is punishable as tampering with physical evidence or as obstruction of justice.

Kickbacks are specifically prohibited and could result in criminal penalties if accepted by condominium association officers, director and/or CAMs.

Condominium election ballot and voting certificate forgery could result in criminal penalties.

Theft of condominium funds, and destruction or refusal to allow access to official records of a condominium in furtherance of a crime are all subject to criminal penalties.

New conflict provisions are added. Under the new law the following is prohibited:

An association may not hire an attorney who represents the management company of the association.
A board member, manager, or management company may not purchase a unit foreclosed as a result of the association’s lien (or take title by deed in lieu of foreclosure).
The association cannot employ or contract with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer. (This does not apply if the board member or officer [or relative as described] owns less than 1 percent of the equity shares.)
An officer or board member of an association’s contract provider of maintenance or management services is likewise precluded from purchases a unit at the association’s lien foreclosure sale (or take title by deed in lieu).

Cancellation – Majority Ownership Contract
If 50 percent or more of the units in the condominium are owned by a party contracting to provide maintenance or management services to an association managing a residential condominium, (or an officer or board member of such), the contract may be cancelled by a majority vote of the non-interested unit owners.

Disclosure and Termination of Contract
Includes new conflict of interest provisions for directors and officers, and their relatives. Any activity that may reasonably be construed to be a conflict of interest must be disclosed.

A rebuttable presumption of a conflict of interest exists if any of the following occurs without prior notice:

A director or officer, or a relative, enters into a contract for goods and services with the association; or,
A director or an officer, or a relative that holds an interest in a corporation, limited liability corporation, partnership, limited liability partnership, or other business entity that conducts business with the association or proposes to enter into a contract or other transaction with the association.

A proposal for any service in which a director or officer, or a relative to the association must be clearly disclosed on all contracts and transactional documents and those actual documents must be attached to the meeting agenda.

If the board votes against the contract or service, the interested party must notify the board in writing that he/they will not continue to pursue the relationship, failing which the interested director must withdraw from office. If the board finds that an officer or a director has violated this provision, they are automatically removed from office.

Any contract, agreement or other relationship that has not been properly disclosed, is voidable and terminates after written notice from the board of directors supported by the consent (petition) of at least 20 percent of the voting interests of the association.
(For purposes of the conflict of interest provisions, the term “relative” means a relative within the third degree of consanguinity by blood or marriage.)

Records Access – Renters are now permitted access to certain records.

Website for Condominiums with 150 or more Units – Condominium associations with more than 150 units will be required to post (upload) copies of a whole host of documents on websites created for this purpose. The website must requires updating throughout each year. Condominium associations without websites or use of websites, web portals or web pages will need to create them or hire third-parties to do so. Among other documents, the website must contain:

The recorded declaration with all amendments;
The recorded bylaws with all amendments;
The articles of incorporation with all amendments and current rules;
All management contracts, leases or other contracts where the association is a party of which unit owners have obligations;
Summaries of bids for materials, equipment or services;
The adopted annual budget and any proposed budget to be considered at the annual meeting;
The year-end financial reports required by statute;
Each director’s self-certification or evidence of participation in a Division approved educational program;
All contracts or transactions between the association and any director, officer, corporation, firm or any other entity in which an association director is financially interested;
Conflict of interest disclosures; and,
Notices and agendas for both membership and board meetings.

Condominium associations that operate fewer than 50 units and homeowners associations of less than 50 parcels must comply with the financial reporting requirements based upon the total revenues of the association (although another bill permits the members to waive financial reporting requirements).

Annual condominium financial reports must be provided within 5 days of request by a unit owner, and specific remedies and enforcement by the Division are provided for failure to meet this requirement.

A condominium association, its officers, directors, employees, and agents may not use a debit card issued in the name of the association or billed directly to the association for payment of any association expense. Doing so can be prosecuted as credit card fraud.

A board member of a condominium association may not serve for more than 4 consecutive two-year terms unless approved by an affirmative vote of two-thirds of the total voting interests of the association, or there are not enough eligible candidates to fill the vacancies. (The new law does not contain limitations if directors serve one year terms.)

The recall provisions have been substantially revised – the board will no longer have the obligation or opportunity to vote whether or not to certify the recall. Recalled board members are immediately removed and could challenge the recall by filing a petition for arbitration at their personal expense.

Associations must furnish the Division of Florida Condominiums, Timeshares and Mobile Homes with the names of all financial institutions with which it maintains and accounts on an annual basis.

The right of a condominium association to suspend voting rights of an owner for non-payment of a monetary obligation to the association is limited to a monetary obligation of more than $1,000, and proof of such non-payment must be provided to the unit owner at least 30 days before such suspension takes effect.

Arbitrator qualifications have been strengthened as well as an intent to speed up the arbitration process.

The foregoing is general in nature, not intended to be an exhaustive and complete rendition of all of the legislative changes for 2017, nor should it be considered legal advice. If you have any specific questions regarding any of the items set forth herein, as well as any other legislative change, please contact this office.