Thursday, April 19, 2018

2018 Legislative Update - Chapter 718 The Condominium Act

Here are the 2018 Legislative Updates to the Condominium Act, Chapter 718, with my comments in bold italics:

  1. FS 718.303(3)(b), which is the statute authorizing fines and suspensions for violations, has been revised to mirror Chapter 720, the Homeowner Association Act, and provides a fine cannot be imposed unless the unit owner is given at least fourteen (14) days notice a hearing will be conducted to impose a fine and the hearing will be conducted by a committee composed of no less than three (3) members who are not directors, officers or employees of the association or the parent, spouse, child, brother or sister of a director, officer or employee of the association.  The actions of the committee are limited to approving or rejecting the proposed fine and any imposed fine must be paid within five (5) days after the hearing.  The association must provide written notice to the unit owner of the fine or suspension.  Tenants, guests and invitees of the unit owner are allowed to attend the hearing.
  2. FS 718.111(12) has been amended to provide the condominium association to comply with a request to inspect the official records within ten (10) business days from the receipt of a request, mirroring the Homeowner Association Act.  The previous version required the request to be completed within five (5) days, but the penalty did not trigger until the 11th day.  This statute was also revised to require electronic records for electronic voting to be kept for one year.
  3. FS 718.112(c)(1) was amended to allow associations to post a meeting notices and agendas on the association's website and to email the notice to members with a link to the website for those members who consent to electronic notices.  This is in additional the other requirements for posting notices in common areas or mailing notices.  In addition, this statute was revised to require notices of meetings to discuss regular or special assessments must include provide a description of the purpose of the assessment and the estimated cost.
  4. FS 718.112(2)(c)(6) was amended to make owners who consent to email notices responsible for removing or disabling any email filters which might prevent the receipt of the notice.  In other words, if the owner does not receive the email because it was sent to a junk folder or deleted by the email server, the association is not responsible.
  5. FS 718.112(g) requires condominium associations with 150 units or more to post the official records on a website by January 1, 2019.  The requirement to post a summary of bids has been changed to allow the posting of actual bids and only those in excess of $500.  The requirement to post proposed financial reports to be discussed at meetings has been changed to monthly income/expense statements to be considered at a meeting.  Language has been added which would not invalidate any action or decision at a meeting for the failure to post the required information.
  6. FS 718.111(12)(b) has been amended to require certain documents be retained permanently, such as plans, permits, warranties, condo documents, rules, and meeting minutes.   Language was also added to exempt the association or its agents from liability for accidental disclosure of confidential information.  This means it is clear there is liability for intentional disclosure.
  7. FS 718.111(13)(e) provides a penalty if the association fails to deliver the annual financial report to the unit owner after a request is made and the Division of Condominiums also orders the association to deliver the report.  The penalty states the association may not waive the reporting requirement for the year of the request and the following fiscal year.
  8. FS 718.112(2)(a)(1) requires a condominium association with five (5)  or few units have at least three board members.
  9. FS 718.112(2)(d)(2) has been revised to allow board members to serve more than one (1) year terms if authorized by the bylaws or article of incorporation.  No board member can serve more than eight (8) consecutive years unless approved by two-thirds (2/3s) vote of all the unit owners casting votes.  Despite the overwhelming amount of discussion outlining the need to determine if the eight (8) year limit applies when the statute was enacted July 1, 2017 or is retroactive, the Florida Legislature failed to clarify this issue. The Division of Condominiums has indicated it would interpret the eight (8) year limit to start when the statute is enacted, but it has yet to be tested.
  10. FS 718.112(2)(d)(3) requires the board of directors to adopt a rule designating a specific place where meeting notices will be posted on condominium property.  Recent court rulings have required associations to record a resolution of the adopted rule in the county records and to mail a copy to owners within thirty (30) days of recording the rule.
  11. FS 718.112(2)(j) provides a board member's recall is effective immediately at the conclusion of the board meeting to certify or reject the recall if the recall is deemed facially valid and the recall certified.  The board member will have ten (10) days to turnover all association documents.  The same provisions are true used if the recall is by written agreement.  If the association fails to hold the board meeting within five (5) days of the unit owner recall meeting or the service of the written recall, or fails to certify the recall, the unit owner representative may file an arbitration petition with the Division of Condominiums challenging the board's failure to act or failure to certify the recall.  A board member who is recalled may file a petition to challenge the recall.  If the arbitrator reinstates the board member with a finding the recall was invalid, the petitioning board member is entitled to recover attorneys' fees and costs from the unit owners.  If the unit owners prevail and the arbitrator finds the board member's challenge to the recall was frivolous, the unit owners may recover attorneys' fees and costs from the petitioning board member.
  12. FS 718.113(2)(a) was revised to require unit owner approval be obtained before material alterations or substantial changes are made to common areas.
  13. FS 718.113(8) was added to allow the installation of electronic vehicle charging stations within the unit owners limited common element parking area as a matter of public policy. The unit owner may not cause irreparable damage to the condominium property and is responsible for installation and payment of a separate meter and the payment of the electricity as well as maintenance, repair and hazard and liability insurance for the charging station.  The unit owner is responsible for the removal of the charging station when it is no longer required.  The unit owner is also responsible to the association in any increased costs to its insurance for the use and installation of a charging station.  The statute does not address the right to a charging station if the unit owner does not have a limited common element parking area. 
  14. FS 718.3026 and 718.3027 were combined.  These were the statutes governing conflicts of interest, which created much confusion in 2017.  The only change to the combined statutes requires 2/3's of the board of directors to approve any contract or transaction between the director and the association and the director with the conflict must abstain from voting.

Tuesday, April 17, 2018

2018 Legislative Update - Chapter 720 Homeowners' Association Act

Here are the updates to the Homeowners Association Act, with my comments in bold italics, which will go into effect July 1, 2018:

  1. FS 720.303(2)(c)(1) was revised to allow electronic notices by facsimile if the member consents to electronic notices.  Previously electronic notices were limited to email addresses only.
  2. FS 720.306(1)(e) was added to require the underline/strike-through method be used for proposed amendments to documents (Declarations, Bylaws, Articles of Incorporation, Rules & Regulations) to show what language is being added (underline) or deleted (strike-through).  If the amendments are so extensive the reader could be confused, the new language must be proceeded by the disclaimer "Substantial rewording. See governing documents for current text."  This statute also provides an amendment becomes effective when it is recorded in the county records.
  3. FS 720.306(1)(f) was to provide an immaterial error or omission in the amendment process will not invalidate an otherwise properly adopted amendment.  Without a definition of "immaterial" we can expect this to be a source of litigation.
  4. FS 720.306(9)(a) was revised to authorize HOAs to forgo an election if the number of vacancies for the board of directors equals or exceeds the number of candidates provided nominations from the floor are not required by statute or the bylaws and write-in candidates are not permitted. This allows the seating of candidates even if a quorum is not attained at the annual meeting.  Watch out for HOAs which have nominating committees without a provision in the bylaws authorizing nominations from the floor.  The HOA could control the outcome of the election by nominating only candidates they like and not nominating more candidates than vacancies.
  5. FS 720.3085(3)(B) has been revised to require HOAs to accept all payments from owners and allows the HOA to ignore any restrictive endorsements or letters accompanying the payment stating the amount tendered is payment in full.
  6. FS 720.305(2) was amended to provide fines are now due and payable within five (5) days after it is imposed. Watch out for HOAs claiming the payment was not timely received or not sending the notice before the fine is due! There is no language providing for a deadline to provide the notice.
  7. FS 720.303(2) has been amended to allow board members to discuss board business by email, but board members may not vote by email.

Additional updates for 2018 were made to the Marketable Record Title Act ("MRTA") which changes the procedures for preservation.  The required 2/3s vote of the board and the mailing of the notice of preservation to members has been deleted.  The failure to index the notice of preservation against the lots of the members will not affect its validity.  

Likewise the revitalization statute in FS 720.403-720.407 has been revised to remove the requirement a vote for revitalization is done at a meeting and allowing revitalization to be done in writing.  An owner has one year after expiration to file a court action exempting their property from the revitalization process.

Wednesday, April 4, 2018

Winning the Assessment Game

A large majority of my practice involves clients who hire me to help them resolve their issues with past due assessments.  Most people do not realize you cannot withhold assessments for any reason, including financial hardship, divorce, death or being dissatisfied with the way the association is being managed.  Once an owner is past due in assessments, the debt snowballs into an amount which is difficult to pay and trying to get a payoff amount is a moving target with each phone call or email increasing the balance.  This is because state law favors the association and makes the owner responsible for all legal fees and costs to collect past due assessments.  It is a necessary evil.

So what do you do?  Simple answer:  pay your assessments in advance.  Pay them at least two installments in advance and check your account with the association on a regular basis to make sure you are current.  Most management companies now have online access for owners to check their balances.

Do not use an automatic draft from the management company which takes your money out of your account for you.  Use the bill paying services your bank offers to send money to creditors so you are in control of the funds.  At least one management company I will not name has expiration dates on the automatic draft documents they use and the automatic draft stops after one year, requiring the owner to renew it.  If the owner is not paying attention to the email notices advising them it is time to renew, the automatic drafts stop and the owner is quickly in collections.

If you mail in your payment, you run the risk of the mail not being delivered or management losing your payment, which the management company will deny.  It is the owner's responsibility to make sure payment is delivered.  This would mean sending it by certified mail to track delivery, which can be expensive.  If you pay in person make sure you get a receipt.

What you should not do?  Here's a list:

1. Do not withhold payment because you did not receive a notice or a coupon.  You purchased property in a community with an association and the law states that is your notice of a duty to pay assessments.  If you do not know the amount of the assessment, contact the management company or the board of directors and find out.  At the very least pay the amount of the last assessment, but be aware you will still incur interest and late fees if the full amount is not paid.

2. Do not try to pay the assessment only once it is past due.  Any payments are applied to interest and late fees first, attorneys' fees and costs next, with any leftover funds applied to assessments.  You will always be past due in assessments if you do not remit the full amount.

3. Do not try to avoid attorneys' fees by paying the association directly.  This will only increase your legal fees and delay posting the amount to your account because the association will send your payment to the attorney.  You are then billed by the attorney for processing partial payments.  Once you are in collections, deal with the attorney directly.

4. Do not call, write or email the attorney thinking you will increase legal fees for the association as a way to get even.  State law makes the owner liable for these communications.  You are increasing your own legal fees, not the association's.

What should you do if your in collections already?  Submit in writing, a request for a payment plan if you cannot afford to pay the amount in full.  The average payment plan is six months to a year, so do not ask for long-term payment plans.  Some associations will approve 18 months, but it's not the norm.  Be prepared to pay the legal fees for preparing the plan and for processing the payments.  If you cannot afford the payment plan, consult with a lawyer to advise you of your options, but do not ignore the collection letters.  An association can foreclose on your property much faster than a bank.

Thursday, March 1, 2018

Who Runs the Association -- Management or the Board of Directors?

That's an easy answer -- the Board of Directors!!

Strange how many boards or management companies do not understand this simple concept.

The management companies are agents of the association.  They are not the board of directors and they must follow the wishes of the board of directors, who make decisions by a majority vote.  The board of directors relies on the management companies for advice, but if you ask me that's often like asking a refrigerator repairman to fix your automobile.  Taking legal advice from a non-lawyer is definitely not a good idea and seeking the advice of an attorney is the best way for the board to protect themselves from personal liability.

Boards often give management companies the authority to make some decisions on their own, like obtaining services for repairs under $500, or sending out violation letters to homeowners after an inspection.  Management companies should not be making board decisions, such as hiring or firing vendors without board approval, sending out intent to lien notices unless a pre-approved policy is in place, or worse yet, sending an owner to the attorney for collections or violations without the approval of the board.

Some boards give the management companies full discretion to operate and manage the association as they see fit, but I know of at least one instance where that did not work out so well for the association in court. 

If the board members don't want to do their jobs, then turn the job over to someone else!  If the management company doesn't want to follow the board's direction, get a new management company. There are a lot of good ones out there, you just have to find them.

Saturday, February 24, 2018

House Bill 841. (2018)

Last year’s legislation attempting to give homeowners greater protections hit some bumpy roads when everyone tried to apply the law, most notably the recall statute revisions.  It was simply a case of laws with good intentions, but poor wording.

Any hope at fixing these laws to make them more useful and enforceable is being undermined by House Bill 841.  Jan Bergemann of CyberCitizens for Justice took me on a road trip with him to Tallahassee to meet with our elected officials.  The sponsor of HB 841 didn’t have time to meet with us (fair enough since we didn’t have an appointment, not so fair since others without appointments seemed to get face time), but we did get to meet with the legislative aide.  We spoke passionately about our concerns, but our words fell on deaf ears, as we later learned.

The full story is in Jan’s blog at

Please help in defeating this not-so-owner-friendly bill by writing to the politicians.  Remember this from a famous comedian - poly means many and ticks means bloodsuckers.

Wednesday, September 6, 2017

Recalls After House Bill 1237

Recently our firm had the experience of representing clients in the first recall arbitration after HB 1237 revised Fla. Stat. 718.112(2)(j), which are the laws governing recalls.

Unfortunately, the Florida Statutes conflict with the Florida Administrative Code and since the Department of Business and Professional Regulation (DBPR) operates under the Florida Administrative Code (FAC), DBPR declined jurisdiction to hear the case. Even though lawyers are taught in law school the statutes overrule the FAC, the head arbitrator, James Earl, explained he does not have the authority to declare the FAC is invalid and it will be approximately six (6) months before they update the FAC.  

The next step would be to file a state court action for declaratory relief to have a judge rule the FAC is invalid and certify the recall or to challenge the FAC and DBPR in an administrative hearing before the Department of Administrative Hearings. Another option is to file for emergency injunctive relief. While we are fully prepared to do so, there is an election coming up in a couple of months and the issue would be moot.

This leaves homeowners with a recall process which is completely ineffective if the recalled board members refuse to recognize the recall is "effective immediately" and step down.

Thursday, July 13, 2017

Revisions to Florida Laws Regarding Estoppels!

It’s that time of year and the Florida Legislature has pass several important revisions to the state laws governing community associations. We will review each of the bills enacted, which were effective July 1, 2017.
Our first review is of the changes to the estoppel statutes, Fla. Stat. 718.116 (condominiums) and 720.30851 (homeowner associations).
The big changes are the requirement to designate a person to receive estoppels, through an adopted resolution, and post it on the association’s website as well as to respond to any estoppel request within ten (10) days of receipt and a cap on the fees charged to prepare estoppel certificates. The revisions create some confusions because it now requires associations to have a mandatory website even though it does not out right state this (how can you post it on the website unless you have the website). In fact, Chapter 718 now requires condominium associations to have a website by July 1, 2018, but requires the associations to post the contact information on the website by July 1, 2017. Hmmm…..
Previously, estoppel requests were to be completed within fifteen (15) days, but the response time is now reduced to ten (10) days. Additionally, estoppel certificates must be valid for at least thirty (30) days if submitted electronically and thirty-five (35) days if mailed.
With the revisions come a whole new set of requirements such as providing the unit or lot number in addition to the property address, parking or garage space numbers (for condominiums), the name and address of the association attorney if the account is delinquent, the fee for preparing the estoppel certificate, the amount of the assessments and frequency of payments, an itemized list of all monies owed (assessments, special assessments and other monetary obligations), whether or not there are capital contributions, transfer fees, resale fees or any other type of fee charged for transferring ownership, if there has been any notice to the owner of violations, if board approval is required for the transfer of the property, if there is any right of first refusal, a list of any other associations with contact information which the property is a member, and the name and contact information for any insurance maintained by the association.
The revisions also clarify no fee can be charged if the association discovers an error in the estoppel certificate and needs to amend it.
Rounding off the revisions is a cap on the fees allowed to be charged for preparing estoppel certificates, which are limited to $250.00 if there are no delinquencies and $400.00 if there are delinquencies. The association may also charge an extra $100.00 for an expedited estoppel. There is also a sliding scale of caps for estoppel requests for multiple units owned by one person or entity.
The last important revision is the right to damages and attorneys’ fees if the buyer requests a refund because the closing did not occur and the association fails to refund the estoppel fee within thirty (30) days.