Category: Legal Morsels

Although the 2015 Legislative Session was abbreviated when the House abruptly adjourned prior to the scheduled end of the Session, some new legislation affecting community associations was passed and subsequently signed into law by the Governor.  Of note is what is referred to as “House Bill 791″, which makes changes to Chapters 617, 718, 719 and 720 of Florida Statutes.  Also passed is “House Bill 779″ which provides certain protections for tenants of foreclosed properties.  “House Bill 643″ was also passed and makes changes to the Condominium Act relating to termination of condominiums.  “House Bill 87″ was passed, making changes to Chapter 558 F.S., involving construction defects.  House Bill 779 was made effective immediately upon being signed by the Governor (which has already occurred as of this writing), House Bill 643 was effective June 15, 2015, House Bill 87 is effective October 1, 2015, and all other changes are effective as of July 1, 2015.  (Below are highlights of changes that most affect the operations of community associations.  References to “718″ are to the Condominium Act; “719″ is to the Cooperative Act; and, “720″ is to Homeowners’ Association Act.)

 

HOUSE BILL 791 – GENERAL COMMUNITY ASSOCIATION BILL

ELECTRONIC VOTING

The most significant of the new legislation affecting community associations is in House Bill 791.  In our opinion, the most significant change in this House Bill is a procedure for electronic voting has been adopted and established for condominiums, cooperatives and homeowners associations.  New Sections 718.128, 719.129 and 720.317 F.S., have been added to the respective Statutes, entitled “Electronic voting”, which are essentially the same for all three.

Under these new provisions, an association may conduct its election and any other owner votes through an internet-based online voting system.  The new Statute requires the prior consent of an owner, in writing, to vote online.  Additionally, the association is required to provide (a) a method to authenticate the unit owner’s identity to the online voting system; (b) for elections of the board, a method to transmit an electronic ballot that ensures the secrecy and integrity of each ballot; and, (c) a method to confirm, at least 14 days before the voting deadline that the owner’s electronic device can successfully communicate with the online voting system.  Additionally, the online voting system must be able to authenticate the owner’s identity, and the validity of each electronic vote to ensure that the vote is not altered in transit.  A receipt for the vote received through the online voting system must be provided to the owner.  For elections to the board, the system must be able to permanently separate any authentication or identifying information from the electronic election ballot so that it is impossible to tie an election ballot to a specific owner.  The voting system must also be able to store and keep electronic votes accessible for recount, inspection and review purposes.

In order to use this voting procedure, the board of directors must adopt a resolution containing specific requirements, including notices to the unit owners of the option, requirement of their consent and opportunity to opt out.  If the resolution is to be considered at a board meeting, written notice of that meeting must be mailed, delivered or electronically transmitted to the owners and posted at the property.  If an owner consents to online voting, the consent is valid until the owner opts out.

PROXIES

Section 617.0721 F.S., which applies to all not-for-profit corporations, including community associations, is revised regarding voting by members of the association to allow a copy, facsimile transmission or other reliable reproduction of the original proxy to be used instead of the original proxy.  To do so, the copy must be a complete reproduction of the entire proxy.

INSURANCE

Section 718.111(11)(j) F.S., regarding insurance, has been amended to clarify that if there is no insurable casualty event that caused the damage, the maintenance provisions of the governing documents will provide for the determination of responsibility for the repairs.

OFFICIAL RECORDS

Section 718.111(12)(a)(15) F.S., relative to the “catch-all” provision of what is identified as the Official Records of a condominium association, open to inspection to owners or their authorized representatives, has been modified to add the word “written” regarding such records.

MEETING NOTICES

Sections 718.112(2)(d), 719.106(1)(d)(1)(b)(3) and 720.303(2)(c)(1)  F.S. have been modified to eliminate the need to have the authority in the bylaws of the association in order to use electronic mail (e-mail) for meeting notices.  As a result, all meeting notices,  including for board and committee meetings, may be provided by e-mail.  However, the requirement that owners provide written consent to receive notices by electronic mail remain.

ANNUAL BUDGET

Section 718.112(2)(f) F.S. regarding the annual budget has been revised to clarify that minimally, the items listed in Section 718.504(21) F.S. must be included in a proposed budget.  Subsection 2 has been split into two parts (a and b) to address reserves, with subsection (a) addressing the reserves in general, and subsection (b) addressing reserves before the turnover of control of the association by the developer to the non-developer owners.  Subsection (b) further clarifies the ability of the developer to vote its units to waive reserves.

ASSESSMENT PAYMENTS

Sections 718.116(3) and 719.108(3) F.S. have been revised to clarify that the application of payments made on a delinquent account are to be applied in the manner specified within the Florida Statutes, notwithstanding any purported “accord and satisfaction” or settlement agreement claimed by the payer by delivery of the payment.  This is in response to a recent case in which the court ruled in a manner contrary to the understood intent of the Statute since 1991 (see our Legal Morsel article on this case from August 14, 2014, which you can view online at:

https://hjq.a4f.myftpupload.com/appellate-court-decision-alters-23-years-collection-practices-condominium-associations/).  These provisions also state that they are intended to clarify existing law, which makes the application of the change retroactive.

BULK BUYERS

Section 718.707 F.S., relating to the bulk assignee or bulk purchaser of units, has been amended to extend the period of time for qualification from July 1, 2016 to July 1, 2018.

FINING AND SUSPENSION OF USE AND VOTING RIGHTS

Sections 718.303, 719.303 and 720.305 F.S. have been revised to clarify the proceedings for fining, which involve the board first levying a fine, and then a fining committee holding a hearing to approve or disapprove it.  It further clarified that the role of the fining committee is only to confirm or reject the fine proposed by the board.  Section 719.303(3)(b) F.S. has been modified regarding the qualifications for those who sit on the fining committee to mirror Section 718.303(3)(b), F.S. and be only “other owners who are neither board members nor persons residing in the board member’s household.  Sections 718.303(4) and 720.305(3) F.S. were  revised to clarify that the “monetary obligations” that qualify for suspension of use rights include a fee, fine or other monetary obligation.  Sections 718.303(5) and 720.305(4) F.S. have been revised to further clarify that when the voting rights of an owner are suspended, the total number of eligible units is reduced for the purpose of calculating the necessary percentage to pass a proposal.  A new subsection 718.303(7) and 720.305(6) F.S., have been added to clarify that any authorized suspension provided in the Statute applies not only to the member, but also to the tenants, guests, or invitees, and even if the delinquency or failure that resulted in the suspension arose from less than all of the multiple units owned by a member.  This means that if an owner owns 3 units and is delinquent more than 90 days on one of the units, the voting rights on all 3 units may be suspended.

MISCELLANEOUS HOA REVISIONS

Section 720.301 F.S. was amended to include the rules and regulations of the association under the definition of “governing documents”.

Section 720.3015 was created and added to the Statute to provide a title to Chapter 720 F.S. which is the “Homeowners’ Association Act.”

HOA BOARD MEMBER QUALIFICATIONS

Section 720.306(9) F.S. has been amended regarding qualification to serve on the board.  The revisions include that a person who is delinquent in the payment of any fee, fine or other monetary obligation to the association on the day that he or she could last nominate himself or herself or be nominated by another to the board may not seek election.  That person’s name should not be included on the ballot.  It further provides that any serving board member who becomes more than 90 days delinquent in the payment of any fee, fine or other monetary obligation to the association shall be automatically deemed to have abandoned the seat on the board.  If the board member owns more than one property, the delinquency on any parcel owned by that board member will disqualify him or her from serving on the board.

HOUSE BILL 779 – TENANT PROTECTION

House Bill 779 adopts changes to Chapter 83 of Florida Statutes, which is the landlord-tenant  statute.  A new Section 83.561 F.S. has been added, entitled “termination of rental agreement upon foreclosure.”  This new Statute creates certain rights and entitlements in tenants following the foreclosure sale.  There is no express distinction between a mortgage and association lien foreclosure in this new provision, which creates the presumption that it applies to an association foreclosure as well.  The tenant is allowed to remain in possession of the premises for a 30 day period following the date that the purchaser at the foreclosure sale delivers the 30-day notice of termination.  The Statute also provides a form of suggested language that the 30-day notice should include.  A writ of possession may only be applied for after the expiration of the 30-day period.  The new Statute does not apply to specified situations which include the tenant being the mortgagor in the subject foreclosure or is the child, spouse, or parent of the mortgagor in the subject foreclosure.  (This particular language can be interpreted to conclude that the Statute only applies to mortgage foreclosures since it does not reference the “former owner”.)  It shall also not apply if the tenant’s rental agreement is not the result of an “arm’s length transaction”, meaning that there is a special relationship with the former owner.  Additionally, it will not apply if the rental agreement allows the tenant to pay rent that is substantially less than the fair market rent, unless the rent is subsidized by a federal, state or local authority.

HOUSE BILL 643 – TERMINATION OF CONDOMINIUM

Changes are made to Section 718.117 F.S. involving the technical issues involving termination of condominiums, and is effective June 16, 2105.  The technical issues are byond the scope of this article and it is urged that any condominium association considering termination of all or part of the condominium consult with an attorney familiar with these issues.

HOUSE BILL 67 – CONSTRUCTION DEFECTS

Technical changes have been made to Chapter 558 F.S. involving construction defect claims, which are also very technical in nature.  As noted above, the changes are effective October 1, 2015.  It remains recommended for associations to consult with their attorney on the affects of this Chapter of Florida Statutes whenever entering into construction contracts or disputes over construction defects of any kind.

In recent years, legal issues have been raised by third party purchasers at a lender foreclosure sale following the changes in Chapter 720 of Florida Statutes governing homeowners associations, and in particular the provision which makes a new owner liable for a prior owner delinquency in assessments. A large majority of governing documents of homeowners associations contain provisions that exempt any purchaser at a lender foreclosure sale from liability for any prior delinquency on the property. After the changes to Section 720.3085 F.S. in 2007, associations considered such third party purchasers to owe all delinquencies based upon the provisions of the Statute in place at the time these purchasers acquired title to the property and the lower courts have regularly agreed with that conclusion when a challenge was raised. Many such investor-purchasers objected to these claims, suggesting that they should be covered by the exemption in the documents. On May 27, 2015, the Fourth District Court of Appeals answered this question in favor of the position of the third-party purchasers in Pudlit 2 Joint Venture, LLP v. Westwood Gardens Homeowners Association, Inc., Case No. 4D14-1385.

Pudlit 2 Joint Venture, LLP (“Pudlit”) purchased properties within the Westwood Gardens Community from lender foreclosure sales. As many homeowner associations have recently done, the Westwood Association demanded all unpaid assessments which predated the Certificate of Title on the properties, which Pudlit paid “under protest and with full reservation of all rights and remedies,” and then filed a law suit against the Association for a declaratory judgment. Of particular interest in this case was certain particular provisions of their declaration of covenants, which indicated specifically that “the personal obligation for delinquent assessments shall not pass to [a] successor in title unless expressly assumed by [such successor]” and, that in the event of a foreclosure sale, it “shall extinguish the lien of such assessments as to payments thereof which become due prior to such sale or transfer. . .” Pudlit claimed that the effect of these provisions in the declaration wiped out the Westwood claim against them. Westwood claimed that the Statute in place at the time of the foreclosure sale governed their rights and obligations, not the declaration.

The Trial court ruled in favor of the Association, which was appealed here. The Appellate Court reversed in favor of Pudlit, finding that a third party purchaser at a lender foreclosure sale is a “third party beneficiary” to the provisions of the governing documents of the Westwood Association that provided the exemption, notwithstanding the existing Statute on the date Pudlit took title. The Court decided that the Statute crossed the “constitutional” line and impaired the “existing” contract rights of Pudlit, making the Statute unenforceable. The Court further indicated its opinion that the Statute was not retroactive in its intent and, in order for any homeowner association that was in existence prior to the Statute being enacted in 2007 to recover similar claims against a third party purchaser, it must have language in its governing documents that incorporates the changes to the Statute and/or expressly incorporates the provisions of Section 720.3085 F.S. It was the conclusion of the Court that the Declaration of Covenants for the Westwood Gardens Community “expressly creates rights for successors in title,” such as a third party purchaser at a lender foreclosure sale.

The provisions of the governing documents in this case are substantially similar to a large percentage of existing declarations of covenants in Florida. It is recommended to have the association attorney review the current provisions of the governing documents for all homeowners associations and evaluate the exposure of the association to this type of defense and/or claim. To maximize the ability of the association to recover unpaid assessments from third party purchaser at a lender foreclosure sale, amendments to the governing documents should be undertaken by the association as quickly as possible. The amendments that are suggested would minimally include a provision that automatically incorporates changes to Florida Statutes as they are adopted by the Legislature. For greater protection, another amendment can be included which expressly incorporates the provisions of Section 720.3085 F.S., as it may be amended from time to time.

In its decision made in 1996, Florida Bar re: Advisory Opinion – Activities of Community Association Managers, the Florida Supreme Court issued an advisory opinion regarding whether or not certain activities of licensed Community Association Managers (CAMS) constitute the unlicensed practice of law.  In 2012, the Standing Committee on Unlicensed Practice of Law of the Florida Bar (the “Committee”) received a new petition to review these activities and some others, to clarify or update the decisions made in 1996 and advise the Supreme Court of its findings.  Public hearings were held and a report was submitted to the Court by the Committee in 2013.  The Court issued its updated ruling on these issues on May 14, 2015, in a similarly titled decision, Florida Bar re: Advisory Opinion – Activities of Community Association Managers, Case No. SC13-889.  In the decision, there is some clarification, but also unresolved questions on many tasks.

Continue reading “Florida Supreme Court Updates Activities Of A Community Association Manager That Constitute The Unlicensed Practice Of Law”

Recent changes to Florida Statutes have included provisions in the Fire Safety Code that requires condominiums to undertake installation and/or changes to certain fire/safety related devices within the condominiums.  Due to the significant expense typically required to retrofit a condominium in the manner contemplated in the Fire Safety Code, and in recognition of the significant burden this would place on the unit owners, changes to the Condominium Act (Chapter 718 of Florida Statutes) allows an association to vote to “opt-out” of the requirement to retrofit the fire sprinkler system that services the condominium, including the common elements, association property, and the units.

Continue reading “Retrofitting In Condominiums The Clock Is Ticking”

In recent months, formal requests to pet restricted communities for a reasonable accommodation to keep an emotional support animal has increased significantly.  Additionally, there have been new court decisions and other developments in the Fair Housing laws since our last article in Legal Morsels in 2011 (see https://hjq.a4f.myftpupload.com/how-community-associations-should-properly-handle-service-animal-requests/).  The following updates and supplements our prior posting on the topic.

Continue reading “Navigating Assistance Animal Requests”

Fall typically marks the beginning of the annual election process for community associations in Florida.  Florida Statutes provide for specific procedures to be followed which differ for the various types of community associations, and are more involved in some over others.

Continue reading “Election Processes”

In a somewhat surprise decision, the Florida 2^nd District Court of Appeal has ruled that, in certain circumstances, associations may not rely upon the provisions of Florida Statutes that relate to the collection of delinquent assessments when an owner makes a payment with a restrictive endorsement.  (A restrictive endorsement is a notation on a check or cover letter that limits the manner in which the funds may be used or applied.)  Chapter 718 of Florida Statutes (for condominiums) was amended in 1991 to provide that payments received by associations are to be applied in a specified manner and expressly notwithstanding any restrictive endorsement placed on the check or cover letter by the paying owner.  This was originally included in the Statute to make certain that an owner that was delinquent could not avoid paying the interest, late fees, attorney’s fees and costs incurred by the association in the collection process by placing a restrictive endorsement on the payment.  This has been routinely followed in condominiums for the past 23 years without issue (and incorporated into Chapter 720 F.S. in 2007 for homeowner associations).

Continue reading “Appellate Court Decision Alters 23 Years Of Collection Practices For Condominium Associations”

During the 2014 Legislative Session, a number of bills were adopted which will have an impact on community associations.  The three (3) bills which will likely have the most impact are outlined herein.

I.  GENERAL COMMUNITY ASSOCIATION BILL – House Bill 807:

Among the new legislation adopted by the 2014 Legislature is House Bill 807, which contains provisions affecting condominiums, cooperatives and homeowner’s associations.  The changes provided by this Bill will be effective July 1, 2014.

Timeshares v. Vacation Rentals: Revisions were made in Chapter 509 of Florida Statutes, relating to Public Lodging Establishments, removing or excluding timeshare projects from the restrictions relating to such establishments.

Continue reading “2014 Legislation Affecting Community Associations”

The topic of “reserves” in community associations is one which can be confusing.   Chapters 718 (governing condominiums), 719 (governing cooperatives) and 720 (governing homeowners associations) of Florida Statutes each contain provisions regarding reserves.  However, while similar in some respects, the statute for homeowner associations in particular have significant differences.

Continue reading “Reserves: An Overview For Community Associations”

Quite often boards of condominium associations desire to access units in the condominium for various reasons when the unit owner or approved occupant is not present.  There may be a water leak in a unit below and the association is looking for the source.  There may be insects that are infesting other units nearby.  Sometimes, the board just wants to see what is going on in the unit.  While Section 718.111(5) of Florida Statutes provides associations with the irrevocable right to access all units in the condominium, such right is not absolute.  The qualifying portions of the Statute are “when necessary”, “to perform maintenance, repair or replacement of common elements or of any portion of a unit to be maintained by the association”, and “to prevent damage to the common elements or to a unit or units”.  Occasionally, a board may be overzealous in its desire to access the unit and there can be consequences from doing so improperly.

Continue reading “Court Clarifies Limitations On Association Accessing A Condominium Unit When The Owner Is Not Present”