Homeowners’ and condominium associations play a crucial role in maintaining the harmony and value of residential communities. A common question that arises is whether these associations can adopt amendments that change the leasing rights of owners within the community. Let’s delve into the specifics according to Florida law. Homeowners’ Associations and Leasing Amendments  Chapter 720 of the Florida Statutes is called the Florida Homeowners’ Association Act. This law was amended in 2021 to address amendments that regulate the leasing of “parcels” within a homeowners’ association. Typically, the parcel is the home and the land the home sits on, and usually other improved or unimproved portions of lots. A new Section 720.306(1)(h) was added, which says that any amendment to the homeowners’ association’s governing documents, adopted after July 1, 2021, that prohibits or regulates rental agreements, only applies to a parcel owner that acquires title to their parcel after the effective date of the amendment, or to a parcel owner who consents to the amendment. However, this restriction does not apply to amendments which regulate or prohibit rental agreements for terms of 6 months or less. Further, amendments that prohibit the rental of parcels for more than 3 times in a calendar year also apply to all parcel owners. Homeowners’ associations continue to have the ability to adopt amendments that regulate or prohibit leases of 6 months or less, and still have the ability to adopt amendments which prohibit leasing more than 3 times in a calendar year. Condominium Associations and Leasing Amendments  For condominiums, Section 718.110(13) of the Florida Condominium Act states that any amendment which prohibits a unit owner from leasing their unit, alters the duration of the rental term, or limits the number of times an owner may rent their unit during a specified period, only applies to those owners who take title after the effective date of the amendment, or those owners who consent to the amendment. There is no 6-month/3 times per year exception in the Condominium Act. Florida Senate Bill 280  During the 2024 Florida legislative session, CS/SB 280 was passed by the Florida Legislature. This...

Last year, there was a disturbing trend of confrontation – some of which even became violent between condominium owners or homeowners, and their association board members. From our own back yard to across the globe, there were several instances of multi-family housing residents whose disputes were bad enough to make the news. This should be unacceptable – and more importantly – avoidable. To prevent physical altercations like these from happening, we offer the following advice: Avoid Confrontation  Remember, you’re only a board member while you are attending a board meeting, and nowhere else. When you’re walking around the halls of the community or when you are at the pool, you are not. You are not conducting board business and therefore, you don't have any obligation to respond to questions or concerns. If you are confronted by an owner outside of a board meeting, we recommend acknowledging their concern, then asking them to submit it in writing to the property manager so it may be addressed at the next board meeting.  Conflict Resolution In a homeowner’s association, before most covenant disputes can be litigated in a court of law, the owner or the association must first make a written demand for pre-suit mediation. This requires both parties to agree to a mediator and to meet and discuss a formal resolution before it turns into an expensive and time-consuming lawsuit. The job of the mediator is to facilitate a resolution that each side can live with. Absent a meditated resolution, either party may then file suit in a court of law. As for condominiums, condo owners and the association have the right to either engage in pre-suit mediation for most covenant disputes or to demand non-binding arbitration, a process more akin to litigation that is heard before an arbitrator appointed by the state agency that governs condominiums. If a party is not satisfied with the arbitrator’s decision, they may timely file a lawsuit to have the matter litigated in a court of law. When there is a dispute in an HOA between an association and a resident, the association may file a demand that the homeowner...

From time to time, an association will be confronted with the need to go into or onto an owner’s property for the purpose of undertaking required maintenance as may be authorized by the governing documents. In some instances, the association, in order to prevent further damage to other property, may need to go into a unit to remediate mold or other water damage when the owner is unavailable or refuses to provide access to the association. In either situation, however, it is not uncommon to encounter owners who are not just uncooperative but some who threaten violence. What is an association to do? First, the association must understand what rights it may have. For homeowner association communities, the Homeowner Association Act, Unlike the Condominium Act, does not have any specific statutory language governing access. In such a situation, the Board of Directors and management must look to its governing documents which almost always (especially for townhome communities) have a provision that allow for reasonable access for the association to the property to fulfill maintenance obligations. As for condominiums, Fla. Stat. 718.111(5) provides the statutory right for access to units during reasonable hours, when necessary, for the maintenance, repair, or replacement of any common elements. The statute further provides guidance on the process an association must take to access an abandoned unit. Second, except when bona fide emergency access is needed, condominiums should give the owner written notice of its need to enter the unit. If the unit is abandoned, at least two (2) days’ notice is required. For units that are not abandoned, the statute is silent on the amount of notice to be given. Absent a provision in the Declaration of Condominium, you may, for guidance, review Fla. Stat. Section 83.53(2) of Florida’s Landlord-Tenant Act which defines reasonable notice as 12 hours prior to entering between 7:30am – 8:00pm. Homeowner associations should follow similar protocols unless the governing documents provide specific notification timeframes. Understanding that an association may have access rights does not guarantee that the owner will be cooperative. In such situations, a homeowners association may serve a pre-suit...

As many of you may be aware, Congress passed the Corporate Transparency Act in January 2021. The intent of this law is to assist in combatting financial crime and fraud. In connection therewith, the law requires “reporting companies” to report specific information about the owners and managers of their companies to the Financial Crimes Enforcement Network (FinCEN). There has been some debate as to whether or not Condominium and Homeowner Associations are governed by this Corporate Transparency Act. The prevailing view in the industry is that unless and until the law is clarified or changed, Condominiums and HOAs are considered “reporting companies” that must submit the required information to FinCEN. This information includes the legal name, address, state of formation and taxpayer identification number(s) for the company; and the legal names, dates of birth, residential addresses and government-issued identification numbers for all of the “beneficial owners” of the entity. The Act defines “beneficial owners” as those individuals who (i) directly or indirectly, exercise substantial control over the company; or (ii) own or control at least 25% of the company’s ownership interests. The Directors and Officers of your Community Association are presumably included under the control aspects of the definition. The reporting date under the Corporate Transparency Act began on January 1, 2024, and any Community Association that was formed prior to that date will have up until January 1, 2025, to file their initial report. Any Community Association that is formed after January 1, 2024, will be required to file their initial report within thirty (30) days of their formation date. Any time there is a change to the “beneficial owners” (e.g., a director resigns, a new director is elected, a director changes her/his address), the association has 30 days to report the change to FinCEN. The penalty for failing to timely submit required reporting information to FinCEN is $500.00 per day, up to $10,000. As such, in 2024, it will be very important for Community Associations (Condominiums and Homeowners Associations) to consult with legal counsel as to their requirements and obligations under the Corporate Transparency Act, in order to meet...

As we conclude 2023 and go into the new year, many Condominium Associations are consulting with legal counsel as to how to best address the changes in the law with regard to waiving reserves. After December 31, 2024, Condominiums with buildings of three (3) stories or higher will no longer be able to waive or reduce certain types of structural integrity reserves (SIRS) as enumerated under the new law. However, what is often overlooked is the fact that there are other changes to Chapter 718 ("Condominium Act") which affect all Condominium Associations, regardless of the height of the building.Specifically, under the new law which is currently effective, any Condominium Association which wishes to waive reserves that remain waivable (i.e., Condominiums under three (3) stories or for those Condominiums that are three (3) stories or higher, non-SIRS reserves), such reserves may now only be waived or reduced by a majority vote of the total voting interests of the Condominium. This is a major change from the previous statute which only required a majority of those in attendance in person or by proxy at a duly called meeting to waive reserves, as long as a quorum was established. Now, effective as of October of 2023, alI Condominium Associations attempting to waive reserves that remain waivable, will need to meet the higher threshold of obtaining a majority vote of the entire voting interests.As such, whether you are a Condominium of three (3) stories or higher, or not, it is important that you consult with legal counsel when attempting to waive or reduce reserves in the future. Additionally, it is likely that your voting materials may need to change and should also be reviewed by counsel accordingly.Steven G. Rappaport is an Equity Partner in the Community Associations Practice Group. Mr. Rappaport handles transactional matters for the firm’s community association clients, including drafting amendments to governing documents, attending Board meetings and elections, handling covenant enforcement disputes, and providing opinions on all aspects of association issues. Learn more about Steven including how to work with him here: https://ssclawfirm.com/steven-g-rappaport?view=employee&id=18

Those who live and work in Florida know that there is no better place…anywhere.  However, every paradise must have its snake, and for us, that snake’s name is “windstorm.”  Hurricanes, tropical storms, cyclones, and the like are apt to occur anytime, but most particularly between the months of June and November.  Financial planning and budgeting for the ramifications of these disasters, including maintaining insurance, securing lines of credit, and maintaining reserves, can make the jobs of boards of directors that much more challenging.  Nevertheless, with proper planning, and open communication with the membership, associations can mitigate their damages and minimize surprise. Florida is the metaphorical “catcher’s mitt” for hurricanes and tropical storms, necessitating comprehensive property casualty insurance coverage. This includes protection for structural damage, common areas, and liability insurance.  For condominiums associations, the Florida Condominium Act (Chapter 718, Florida Statutes) requires that you must have full replacement coverage, which must be determined by an independent appraisal at least every 36 months.  However, as we all know, the number of insurance carriers authorized to do business in Florida continues to dwindle, and prices continue to soar.  Therefore, strategically the crux lies in choosing the right insurer. Selecting a reliable insurer is a pivotal decision. Condominium associations should prioritize "A" rated carriers for their financial stability and strong track record. Prominent carriers like Chubb, Allianz, and Travelers Insurance have earned their reputations in the Florida market.  If, as has happened to so many of us, you are cancelled and unable to find a replacement private carrier, we are fortunate to at least have Citizens Insurance as our carrier of last resort. Insurance premiums continue to rise with each windstorm.  In fact, while most associations experienced a significant increase last year, that increase did not include the calculation of damages caused by Hurricane Ian, and most experts anticipate even greater insurance costs during 2024.  Managing premium payments can pose a challenge. To alleviate the financial burden, associations may opt for installment plans or explore financing options. Additionally, implementing risk mitigation measures, such as storm-resistant building improvements, may help curtail long-term premium costs.  Consideration should...

Surplus funds are extra monies above the foreclosure judgment amount held by the Clerk of Court following a sale in a foreclosure case. The plaintiff in such cases (either the Bank or the Association) may only bid up to its judgment amount at the sale. If the winning bid is higher than the judgment amount, the difference between the winning bid and the judgment amount are the surplus funds.  For example, a Bank obtains a judgment for $300,000.00 representing the past-due principal, interest, late fees, attorney’s fees, and costs associated with the mortgage foreclosure lawsuit it filed. At a subsequent public sale, the Bank bids up to its $300,000.00 judgment but the property is so highly coveted that it attracts additional bidding by private parties. These third parties push the bidding well above $300,000.00 and the winning bid is ultimately, for example, $450,000.00 from third-party bidder, John Doe. In this scenario, the surplus funds are $150,000.00.  The Clerk will hold the $150,000.00 in surplus funds in the court registry until a court order instructs the Clerk as to how to distribute the money. A few weeks following the sale, the Clerk will issue the certificate of disbursement which itemizes how much money, if any, is held in the court registry from the foreclosure sale. All parties to the foreclosure case will receive a copy of the certificate of disbursement and will be put on notice of any surplus fund amounts.  If there’s no surplus funds, then the plaintiff Bank, in our example, is the winning bidder at the mortgage foreclosure sale.  Junior lienholders in such a mortgage foreclosure case such as second mortgages, and condominium and homeowners associations claiming unpaid assessments, may and should also file claims against the surplus funds.  The sooner a claim is filed, the sooner it may be set for hearing before the judge. Of course, often there may not be enough surplus funds to pay all junior lienholders in full, so time is of the essence. A junior lienholder who gets in front of the judge first may get paid on its claim if no other...

An important function of a community association is to oversee essential services that vendors provide for the community such as landscaping, pest control, asphalt paving, and security.  These services require written contracts which should include important terms that protect the association, particularly in the event that the vendor does not perform its side of the bargain or causes damage to a person or property.  As further discussed, it is easier to prevent large costs and legal exposure to an association by sound contract language crafted or approved by an attorney at the start of a relationship with a vendor than to repair the damage that a poorly worded agreement that was simply signed on an association’s behalf without legal review has created. Legal counsel’s assistance with vendor, and other service, contracts can be important.  Contract disputes can be very expensive and time-consuming.  And, such disputes aren’t always incorporated into the association’s annual budget which could put a lot of financial strain on the association and lead to unpopular special assessments.  Also, the association can be stuck with a vendor that is doing a poor job.   Some examples of where an attorney’s advice is important include making sure the vendor is contractually obligated to provide sufficient insurance and that there are well worded indemnification provisions.  There are some nuances in Florida law regarding indemnity and all too often it seems that contracts created by vendors are one-sided and don’t protect the association in the event for example that a third party is injured as a result of the vendor’s services.  Also, contracts created by the vendor may be unclear or unfavorable to the association regarding the vendor’s responsibilities, the timeframe by which the work must be commenced and completed, payment terms, recourse for the vendor’s failure to perform, warranties, under what conditions the agreement can be terminated, and where litigation must be commenced if there is a dispute, to name just some possible provisions where an attorneys’ involvement in contract review can be very important.  I recall an instance where a national vendor puts in its standard contract that any lawsuit...

Leasing a home or office can be an overwhelming process. There are many factors a prospective tenant should take into consideration before signing a lease agreement. The following are some of the more important questions that you should consider before signing a lease agreement: #1 - What utilities or amenities are included or not included in the rent cost? In order to ensure that there are no unexpected additional costs, the lease should clearly define the responsibilities of the parties. For instance, clarify which party is covering amenities like parking, utilities, cable, lawn care, storage, exterminator fees, etc. #2 - How long is this lease term? Make sure the lease term is for the timeframe you expect to stay at the premises. However, in unforeseen circumstances, you may be forced to either cut short your stay or extend your stay. One solution may be to add a provision to the lease agreement allowing you to terminate your lease early upon the payment of an early termination fee (typically 2 months of rent). Another solution may be adding an extension right (at the same or similar base rent) allowing you to extend the term of the lease by another year. #3 – Is Subletting allowed? Subletting involves renting out your space temporarily to another person, while the lease still stays in your name. This is helpful if you want to avoid breaking the lease early, or if you are not going to be in your space for extended periods of time. #4 - What is allowed when it comes to making alterations? Make sure the lease includes your ability to perform minor alterations, such as hanging items on the walls, together with such other alterations that you may desire, such as painting the interior or changing the carpeting. #5 - When is a landlord allowed to enter the premises without an invitation? Except when there is an emergency, the lease should require a landlord to give at least 24 hours’ notice of their intent to enter the premises. It would also be helpful to restrict the landlord’s ability to enter to a...

Robert Kennedy once said, “It is the essence of responsibility to put the public good ahead of personal gain.” For Florida condominium and homeowners’ association officers and directors, this fiduciary responsibility to the members of your association is no different. You are not simply a figurehead! Rather, you are a leader, entrusted with the task of acting in the best interests of the association and its members. This means that you must exercise the utmost loyalty, good faith, and due care in carrying out your responsibilities. Loyalty means that you must put the interests of the association and its members before your own personal interests. This can be a difficult task, especially if you have close relationships with certain members, vendors or suppliers. However, you must always remember that your primary responsibility is to the association, and that any conflicts of interest must be disclosed and dealt with appropriately. Good faith means that you must act honestly and with integrity at all times. This includes making decisions based on what you believe is best for the association, rather than your own personal gain. You must also keep the interests of all members in mind, not just a select few. This can be challenging when you are faced with competing demands or limited resources. However, you must always strive to make decisions that are fair and reasonable, and that reflect the values and goals of the community at large. Due care means that you must exercise reasonable care and diligence in carrying out your responsibilities. This includes being informed about the issues facing the association, and seeking out expert advice when necessary. You must also be familiar with your association’s governing documents, rules and regulations, and applicable laws (Chapter 718, Chapter 720), in order to ensure that you are acting in accordance with their requirements. One of the most important aspects of your fiduciary duty as an officer and/or director of a community association is to maintain the financial health of the association. This means that you must ensure that the association is operating within its budget, and that all expenses are...

For many years, under HOA law (Chapter 720, Florida Statutes), there was a requirement that HOAs take nominations from the floor at their annual meeting. This put many people at disadvantage because if there was another nomination process prior to the annual meeting, people could put their name in advance and campaign for votes to the disadvantage of those who would later nominate themselves from the floor.  With condominium associations, as distinct from HOAs, you were not permitted to nominate yourself from the floor as the statute (Chapter 718, Florida Statutes) prohibits floor nominations. However, with HOAs, there was always a requirement to allow such nominations. Several years ago, Chapter 720 was amended to state that if an HOA’s election process took nominations prior to the annual meeting, you would not be required to take nominations from the floor on the date of the meeting (Section 720.306(9)(a)). The statute does not really define what it means by “election process”. Therefore, our interpretation up until recently had been that the board could adopt procedures or rules identifying an election process to take nominations prior to the annual meeting. Recently, some recent arbitration decisions ruled that the HOA’s election process must actually be spelled out in the HOA’s governing documents, such as the bylaws.  Therefore, if you are an HOA, and you wish to be able to have nominations taken prior to the annual meeting so that you are not required to take additional nominations from the floor, you must make sure that your bylaws or your governing documents spell that process out expressly, as opposed to only having board-adopted election procedures.  Since we are entering into the time of the year where many HOA’s are going through their elections, it is our recommendation that you consult with your HOA attorney to make sure that your governing documents and your election materials have a pre-call for candidates. If it is not, we recommend that you amend your documents to confirm that your election process is run in accordance with Chapter 720 and with your HOA documents moving forward. Steven G. Rappaport is a...

As written about extensively, last year Governor DeSantis signed legislation into law that requires condominiums and cooperatives, three (3) stories or higher: (i) to conduct milestone inspections, (ii) conduct a structural integrity reserve study, and (iii) based upon those studies, to implement and collect mandatory reserves from each unit owner.   These requirements become effective December 31, 2024.  The well-intended purpose of this legislation is to prevent another Surfside tragedy by forcing condominiums and cooperatives to collect reserves to address structural issues over time as opposed to waiving reserves and delaying the need for collection of funds to address repair problems in a timely manner.  While Florida’s Condominium and Cooperative Acts always required the Board of Directors to calculate reserves, members were allowed by majority vote to waive or reduce reserves which resulted in many associations not having the funds to  address expensive and necessary repairs when required.   As new legislation, there are some glitches that have caused confusion for those condominiums and cooperatives that are less than three stories.  Whereas the law is clear that effective December 31, 2024, condominiums, and cooperatives that are three (3) stories or higher must conduct inspections, obtain reserve studies, and implement and collect mandatory structural reserves, questions have arisen if the mandatory structural reserve requirements are applicable to condominiums and cooperatives that are less than three (3) stories, or if said reserves may be waived or reduced by its members.   Attorneys are somewhat divided on this issue.  Whereas some attorneys view the mandatory reserve requirement to only be applicable to condominiums and cooperatives that are three stories or higher; other attorneys believe that collection of mandatory reserves is required of all condominiums and cooperatives associations, irrespective of height.   The latter position is shared by the Department of Business and Professional Regulation, Division of Florida Condominiums, Timeshares and Mobile Homes, which regulates condominiums and cooperatives.  When asked about two (2) story condominiums, the Division took the position that the height of a condominium has no bearing on the requirement of collecting reserves or on its ability to waive reserves.   Until such time as the legislature or...

First and foremost, Sachs Sax Caplan would like to wish everyone a happy and healthy new year!  We know that this is a time for many people to make resolutions for the upcoming year ahead.  One resolution that many Associations may wish to make in 2023 is revisiting their rules and regulations.  Many Associations may have outdated rules and regulations that need to be updated and amended.  Other Associations may have been lax in their enforcement of rules and may need to republish their rules and restrictions, so that they may be properly enforced on a moving-forward basis. If you are an Association, whether a Condominium Association or Homeowners Association, that has not been uniformly enforcing your rules and regulations, Florida law allows you to go through a republication process whereby you send a letter to the community republishing the rule or restriction that has not been properly enforced which will allow you to enforce those rules on a moving-forward basis.  If you have any such restrictions, whether they are in your rules and regulations or in your Declaration of Covenants or Declaration of Condominium, it is important to avoid selective enforcement issues in the future, you republish this rule or restriction and “clean the slate” on a moving-forward basis.  You can send the rules and regulations or other restrictions out to the community with a cover letter stating that the Board of Directors, on a moving-forward basis, will be enforcing these restrictions.  Any pre-existing violations that were not enforced would likely need to be grandfathered, but at least this will allow the Associations to be in a better position to enforce these revitalized rules and regulations and other use restrictions. Also, this may be a good time for Associations to evaluate existing rules and regulations and to determine whether they need to be updated or amended.  It is important to remember that, while rules and regulations may be adopted by the Board without needing a membership vote (unless the documents specifically require a membership vote), if you are adopting or amending rules and regulations that regulate the use of Condominium...

Warren Buffett once said, “Risk comes from not knowing what you’re doing.” As we approach the end of 2022, we thought it appropriate to see if we can reduce the risk surrounding the management and operation of condominium and homeowners’ associations by focusing on five (5) relatively recent advances in Association Law that may have a profound effect on how these communities operate.  These five (5) areas are: assessment collection letters, association registration, alternative dispute resolution, fining and/or suspension of use rights, and, last, but certainly not least, reserves. As to collections, Sections 718.121(5) and 720.3085(3)(d), Fla. Stat., now require that condominium and homeowners’ associations may not require the payment of attorneys’ fees related to a past due assessment unless the association (or its managing agent) provides the unit owner with a notice letter giving the owner thirty (30) days within which to make payment.  A rebuttable presumption that this letter has been sent is created by the execution of an affidavit by an officer, director, agent, or licensed community association manager attesting to the same.  Thus, if your association plans on attempting to recover its attorneys’ fees from a unit owner for collection of past due assessments, the thirty (30) day letter and affidavit are a necessity. As part of Senate Bill 4-D, all condominium and cooperative associations with buildings three (3) stories or higher are required to report certain information to the Division of Florida Condominiums, Timeshares, and Mobile Homes, on or before January 1, 2023.  The information that is required includes, among other things: the name of the association, the number of buildings that are three (3) stories or higher in height, and the total number of units in those buildings.  Condominium and cooperative associations may register at http://www.myfloridalicense.com/DBPR/condos-timeshares-mobile-homes/building-report/. Since 1992, when a disagreement arose between a condominium association and a unit owner as to an issue that met the statutory definition of “dispute,” they were required to submit to what is called mandatory non-binding arbitration with the Florida Department of Business and Professional Regulation.  Disagreements between associations and owners in homeowners’ associations, on the other hand, had...

More than a year after the tragic collapse of the Champlain Towers South condominium building in Surfside, Florida, condominium and cooperative associations throughout Florida now face a host of new legal requirements and restrictions imposed by SB 4D, which was passed unanimously by the Florida Legislature and signed into law by Governor DeSantis on May 26, 2022. The legislation is aimed at protecting the long-term structural safety and integrity of multi-story buildings in Florida and preventing similar tragedies. In previous columns, SSC has discussed the inspection and transparency requirements of the new law. However, although such legislation may be long overdue and well-intentioned, unit owners in condominium and cooperative associations throughout Florida are likely to find that in the short term the cost of living in such buildings will increase significantly, as a result of the requirement that associations collect mandatory reserves on an ongoing basis. In addition to requiring “milestone inspections” and imposing new reporting and transparency standards on matters relating to building structural safety and integrity, SB 4D creates strict new requirements for associations three (3) stories or taller regarding the calculation and funding of reserves for long-term maintenance and replacement of certain “structural” components of these buildings. Specifically, at least once every ten (10) years, associations must now complete a so-called Structural Integrity Reserve Study (“SIRS”) for each building in the condominium or cooperative that is three stories or taller. A SIRS is defined as “a study of reserve funds required for future major repairs and replacement of the common areas based upon a visual inspection of the common areas." Although the reserve study may be performed “by any person qualified to perform such study,” such as an accountant, the visual inspection portion of the SIRS must be performed by a licensed engineer or architect. At a minimum, the SIRS must identify and state the remaining useful life and replacement cost or deferred maintenance expense of the common areas being visually inspected and, based upon such visual inspection, provide a recommended annual reserve amount that should be included in the association’s annual budget for those common areas. Several...