Avoiding the Effects of the Latest HUD Foreclosure / Eviction Moratorium

            As many of you likely already know, the federal government, though the United States Department of Housing and Urban Development ("HUD") and the CARES Act issued moratoriums of mortgage foreclosures and evictions for non-payment of rent. On December 17, 2020, HUD issued its Mortgagee Letter 2020-43, which extended the foreclosure and eviction moratorium as a result of COVID-19. With this latest order the moratorium on residential foreclosures and evictions is extended until February 28, 2021.              There are, however, a couple of important caveats to this order. First, it is important to keep in mind that the moratorium does not prevent a condominium or homeowners association from seeking foreclosure for unpaid assessments. Accordingly, we have advised many of our clients to continue aggressively pursuing the collections of its assessments. In situations that associations may be hesitant to proceed with the filing of foreclosure because there is a bank foreclosure pending or imminent, we would recommend that the associations strongly consider proceeding with its own foreclosure action. The reason being, the longer the banks are delayed from proceeding, the more likely the chance that the association will be able to finish its own foreclosure action resulting in a foreclosure sale.             Second, the moratorium excludes vacant or abandoned properties. In other words, if the residents of the property have already vacated the subject property, the moratorium does not apply, and foreclosure and/or eviction may proceed in the ordinary course. This is important to keep in mind, because often the banks holding the mortgages do not have any idea on the status of the occupancy of the unit, and as a result will assume the property is occupied. This assumption will usually cause the banks to treat all properties as being affected by the moratorium summarily delaying the proceedings. Through close consultation with the associations where many of these properties exist, our office has been successful in opposing the bank's motions to cease proceedings by informing the courts that the moratorium is inapplicable to vacant properties. Such...

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Deficiency Judgements After a Foreclosure Sale

            As a result of the COVID-19 pandemic, the State of Florida-through Governor Ron DeSantis ­imposed a statewide foreclosure moratorium last year. On the federal level, last month the Acting United States Department of Housing and Urban Development ("HUD") Secretary announced an extension of foreclosure moratoriums on federally-backed single family mortgages through March 31, 2021. Despite these moratoriums, Florida has one of the highest foreclosure rates in the country. According to ATTOM Data Solutions, one in every 7,338 housing units in August 2020 had a foreclosure filing compared to one in every 13,791 housing units in the United States.             While many foreclosures are brought by lenders seeking to foreclose on mortgages, lien foreclosure lawsuits continue to be filed by condominium and homeowners' associations due to property owners' nonpayment of assessments. Under the Condominium Act, a foreclosure lawsuit must be filed within one year of the filing of the association's lien whereas the statute of limitations for homeowners' association foreclosures is five years. When a mortgage lender is not foreclosing, many of our association clients will proceed with a lien foreclosure lawsuit against an owner's property for non-payment of assessments even if the property may be underwater.             A final judgment of foreclosure will state the amounts due to the association, and, if the owner fails to timely pay the total sum owed to the association, a foreclosure sale will take place. Where the proceeds from the sale are insufficient to satisfy the association's judgment, there will be a deficiency. In 1996, Florida's Fourth District Court of Appeal, in Maya Marca Condominium Apart. Inc. v. 0 'Rourke, established that associations may obtain deficiency judgments against foreclosed owners in situations where acquiring an underwater property through foreclosure does not make the association whole. Upon acquiring an underwater property, an association should determine whether to pursue a deficiency judgment against the owner personally, which decision hinges upon whether or not the owner is or is likely in the future to be collectible. Associations should keep in mind that...

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Pending Legislation Which Would Limit Association Liability For Covid-Related Claims

            As many of you may know, the 2021 Florida legislative session recently began, and already several bills have been filed that relate to community associations. None, however, may be more important than House Bill 7, and its corresponding Senate Bill 72, which would act to protect associations from liability due to Covid-related claims. Under the law, a Covid-related claim would include any civil liability claim which arises from or is related to Covid-19, and includes any claim for damages, injury or death. Further, the legislation is applicable to all not-for-profit corporations, which would include all community associations and many country clubs.             Under the pending legislation, a plaintiff is required to plead their claim with particularity. Further, the plaintiff would be required to submit an affidavit, signed by a physician licensed in the State, which attests to the physician’s belief, within a reasonable degree of medical certainty, that the plaintiff’s Covid-related damages, injury or death occurred as a result of the defendant’s actions or omissions.             Presuming the plaintiff was able to do so, the court then would be required to determine, as a matter of law, whether the defendant made a good faith effort to substantially comply with the controlling governmental issued health standards or guidelines that were available at the time the cause of action arose. Admissible evidence would be limited to demonstrating whether or not the defendant made such a good faith effort.             If the court determined that the defendant made such a good faith effort, the defendant would be completely immune from civil liability. Further, if more than one set of standards or guidance was controlling or available at the time the cause of action arose, the defendant’s good faith effort to substantially comply with any one of such standards or guidelines would provide complete immunity from civil liability.             In addition, even if the court determined that the defendant did not make such a good faith effort, the proposed...

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Associations Have Tools to Push Mortgage Foreclosures to Completion

            April 5, 2021 marks the beginning of open COVID-19 vaccine eligibility for all adults in Florida, and, based upon the state’s progress battling the pandemic, courts are beginning to resume jury trials and in-person hearings after having suspended both for most of the past year.  While Florida’s foreclosure moratorium expired months ago, the President recently extended the foreclosure moratorium for federally guaranteed mortgages through June 30, 2021.  As the result of this extension, the majority of Florida mortgage foreclosure lawsuits will not proceed to conclusion for the next few months.  However, in this writer’s opinion, the moratorium affecting federally guaranteed mortgages is not likely to last in the United States beyond the summer.              Once all mortgage foreclosures may be resumed, courts, homeowners’ associations, and condominium associations will generally be interested in having the backlog of cases diligently prosecuted to conclusion.  As many associations learned during the recession that hit the housing market twelve years ago, it is often wasteful to pursue assessment collection activities against delinquent owners who are already involved in mortgage foreclosure cases and who will imminently be foreclosed by their lenders.  However, mortgage holders frequently take a deliberately slow approach to foreclosing, often to the chagrin of associations who bear witness to mounting assessment delinquencies as cases plod forward without urgency.              Therefore, associations are encouraged to file responsive pleadings in mortgage foreclosure lawsuits and to participate in cases as may be prudent to hasten their conclusion.  First mortgage holders suing to foreclose mortgages will join associations whose covenants impact the property being foreclosed, as defendants.  As a defendant to a mortgage foreclosure lawsuit, an association has the right and ability to participate in the case, to attempt to expediate its conclusion by taking actions including, but not limited to, setting motions for hearing, seeking defaults against parties who have not responded to the case, setting cases for trial after all parties have responded or been defaulted, objecting to extension requests, asking the judge for case management hearings, and requesting the setting or re-setting of foreclosure sales.  These are just some...

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New Executive Orders Suspend Local Emergency Orders on COVID-19

            On Monday, May 3rd, Governor DeSantis issued Executive Orders 21-101 & 21-102 immediately suspending and, as of July 1st, invalidating all local remaining COVID-related emergency orders, statewide. Importantly, the Governor did not cancel or end the State of Emergency, which as of this writing is scheduled to continue through June 26, 2021. However, the latest order extending the State of Emergency provides that Florida should prepare to resume non-emergency operations as of June 27th.              As a result, we are seeing a split in reaction to these latest events. On the one hand, some communities are eager to fully reopen and return to pre-COVID operations. On the other hand, some communities are concerned that they should maintain restrictions on the use of common elements, areas, and amenities, as the COVID pandemic has not ended. With this column, we aim to provide some general guidance in how to address each side’s concerns.             For those communities comfortable with reopening, we recommend a measured approach, taking into consideration the CDCs’ ongoing guidelines and protocols. Recently enacted Section 768.38, Florida Statutes, provides corporate immunity against COVID-related claims where there has been a good faith effort to substantially comply with government-issued health standards or guidance. Although the County’s COVID orders were suspended, the CDC’s COVID guidelines and protocols remain in effect. As such, we believe the reopening of amenities and/or lifting of other COVID-related restrictions should, as appropriate and practical, still take into consideration the CDC’s guidelines in order to help minimize potential COVID-related claims. For example, for amenities that are reopened, we recommend reducing seating and capacity limits; maintaining distance between tables; and limiting group sizes.             For those communities that believe it is necessary to keep amenities closed or with limited hours of operation, we believe both homeowners and condominium associations may continue to do so, as the statutory emergency powers remain in effect, and, we believe, will continue for a reasonable time following the end of the State of Emergency. If a...

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Lou Caplan Foreclosures


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2015 Electronic Voting Association Changes

As many of you know, the 2015 legislative regular session has concluded. Several laws affecting condominiums, cooperatives and homeowners associations were passed this year, the most relevant and important to associations being HB 791. Over the course of the next several months, we will be discussing some of the relevant changes to association law which have been presented to the Governor and which are expected to be signed. If signed it will not be effective until July 1, 2015. Therefore, we will keep you apprised of any developments in the future. HB 791 PROPOSALS One of the most interesting proposals in HB 791 is to allow electronic voting for membership votes in condominium associations, cooperatives and homeowners associations. Section 718.128, Section 719.129 and Section 720.317 would all be created to allow electronic voting under certain circumstances. Associations would be allowed to conduct elections and other unit owner votes through an internet-based online voting system if a unit owner consents, in writing, to such online voting and if the following requirements are met. 1. Association must provide each unit owner with a method to authenticate the unit owner's identify to the online voting system and, for condominium and cooperative elections, a method to transmit an electronic ballot to the online voting system that insures the secrecy and integrity of each ballot. 2. For a homeowners association election, the system must provide each unit owner with a method that is consistent with the election and voting procedures in the association's bylaws. 3. The system must provide a method to confirm, at least 14 days before the voting deadline, that the unit owner's electronic device can successfully communicate with the online voting system. 4. Associations, under the proposed law, are required to use an online voting system that is able to authenticate the unit owners' identify, able to authenticate the validity of each electronic vote to insure that the vote is not altered, and able to transmit a receipt from the online voting system to each unit owner who casts an electronic vote. 5. For elections of the board of directors in a condominium...

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Benefits of Additional Insured Certificates Condo Associations

Whether at a condominium or homeowners’ association, managing contractors and vendors is an essential element of operating the community, whether those companies are working directly for the association, or doing work inside a lot or unit. You may have had your attorney advise you to not only get a certificate of insurance from the company, but to also have the association listed as an “additional insured” on their liability policy. What does being an “additional insured” actually do for your association, and should you consider it a requirement before any vendor works at the property? "ADDITIONAL INSURED" MISCONCEPTIONS There are many misconceptions about the importance of the “additional insured” designation. Some people think that the association is not protected unless they are an additional insured, but that is not true. A vendor’s liability insurance policy will have specific coverages and exclusions, and whether or not the association can make a claim against the policy will depend on that coverage. If an air conditioning vendor damages a condominium roof, and the liability policy does not cover roof damage, then insurance is not going to reimburse the association for the damage, whether or not the association is listed as an additional insured. As an analogy, consider what happens if you were to get into a car accident. If the driver of the other car is responsible, you can make a claim against his or her insurance—and that does not require you to be an additional insured under their policy. This is exactly the same in the case of contractor and vendor liability policies. ADDITIONAL INSURED ADVANTAGES Being listed as an additional insured, however, does have two important advantages. 1. When your association is listed as an additional insured, the insurance company is obligated to inform you if the policy is cancelled for non-payment of a premium. For example, assume that the association hires an electrical contractor, and they provide the association with a certificate of insurance—but the project is not scheduled to begin for a month. In that time period, the contractor could fail to pay its premium and have its insurance cancelled,...

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New Legislation Association Emergency Powers

As we are now in the midst of hurricane season, it is important to consider how an association may conduct business in the event that a state of emergency is declared. Several years ago, the Condominium Act was amended to give condominium boards certain emergency powers that could be used in the event that the Governor declared a state of emergency. However, at that time, neither the Cooperative Act or the Homeowners Association Act provided the same powers. As of July 1, 2014, that has changed, and now both Chapters 719 and 720 contain emergency powers for an association board when a state of emergency has been declared by the Governor. Pursuant to both Sections 720.316 and 719.128, Fla. Stats., and as previously provided in Section 718.1265, Fla. Stat., associations now have the following emergency powers when the Governor has declared a state of emergency: The board may conduct board or membership meetings after notice of the meetings has been provided in as practicable a manner as possible.Boards may cancel and reschedule association meetings.Boards may designate assistant officers who are not directors. If an executive officer is incapacitated or unavailable, the assistant officer will have the same authority during the state of emergency as the executive officer he or she assists.Boards may relocate the association's principal office or designate an alternate principal office.Boards may enter into agreements with counties and municipalities to assist with debris removal.Boards may implement a disaster plan before or immediately following the event for which the state of emergency is declared, which may include turning on or shutting off elevators, electricity, water, sewer or security systems or air conditioners for association buildings.Boards may determine, with the advice of emergency management officials or licensed professionals, that a portion of the association property is unavailable for entry or occupancy.Boards may determine whether or not to require evacuation of association property in the event of a mandatory evacuation order, provided that the association shall be immune from liability for any injury to persons or property arising from the failure of a unit owner or other occupant to evacuate the property.Boards...

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Case to Allow Restrictive Endorsements on Payments

A new case out of Florida’s Second District Court of Appeal could have very significant consequences for Florida’s condominiums and homeowner’s associations, and the way they process payments from owners. The case deals with restrictive endorsements—messages on a check, or sent with a check, that purport to create a settlement of all debt owed to the Association. For example, placing the words “for deposit only” on the back of a check is a form of restrictive endorsement, because it limits the further negotiation of the instrument. Section 673.2061, Fla. Stat., limits the power of restrictive endorsements when on negotiable instruments, such as checks; but the case involved an entirely separate letter that was sent with a payment, and conditioned the acceptance of the payment on a full settlement of all amounts due to the association. In St. Croix Lane Trust & M.L. Shaprio, Trustee v. St. Croix at Pelican Marsh Condominium Association, Inc., Case No. 2D13-3636 (Fla. 2nd DCA, Aug. 8, 2014), the association made a demand against a new unit owner, a third-party purchaser at a foreclosure sale, for payment of delinquent assessments dating to before the foreclosure. The attorney for the unit owner sent the association a check for a small amount of the debt, along with a letter notifying the association that the check was provided in full satisfaction of all disputed amounts, and that, if the check was cashed, it would be deemed a full settlement. Despite this limitation, the association cashed the check, and then threatened to foreclose against the unit owner. The unit owner sued the association, and the lower court ruled in favor of the association, citing Section 718.116(3), which provides that an association must apply any payment first to interest accrued by the association, then to administrative late fees, then to attorney’s fees, and then to the delinquency, “notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment.” This language has long been thought to prohibit restrictive endorsements in the context of payments to a condominium association (note that identical language also appears in the HOA Act, at Section 720.3085(3)(b),...

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Membership Meetings & Official Records Legal Updates

As many of you are aware, there were a number of changes in the law adopted by the Florida Legislature in the 2014 session, some of which we have addressed in previous monthly columns. This column will address some of the more important changes in the law that relate to official records as well as those changes relating to both board and membership meetings for condominium and homeowners associations. First, with regard to the inspection of official records, both the Homeowners Association Act and the Condominium Act were amended to clarify that the Association may publish a directory containing “all” telephone numbers of each unit owner, and also specifically providing that a unit owner may consent in writing to the disclosure of other contact information. The reason for this clarification is that the previous statute stated that the association directory could contain each unit owner's telephone number. However, there was some confusion as to whether or not the association could publish multiple phone numbers, and the legislature has clarified this to allow an association to publish all known phone numbers in its directory. Additionally, both the Condominium Act and the Homeowners Association Act were amended to specifically require that an outgoing board member or committee member must relinquish all association official records or association property within five (5) days after the election. Any board or committee member who willfully or knowingly fails to relinquish such records and property can be subject to a civil penalty. As it relates to board meetings, Section 718.112, Fla. Stat., was amended to clarify that board members may meet via telephone, real time video conferencing or similar real time electronic or video communication and that such board members may be counted towards a quorum and may also vote as if physically present. Section 718.112, Fla. Stat., was also amended to provide that the members of the board may use email as a means of communication but may not cast a vote on an association matter via email. It is important to note that these changes were not also made in Chapter 720, Fla. Stat., the Homeowners...

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55 & Over Communities Requirements

Florida is home to hundreds, if not thousands, of 55 year old and over communities. A “55 and over” community is defined as housing that is intended and operated for occupancy by persons 55 years of age or older. As such, if a community meets specific requirements, as mandated under federal and state laws, it may restrict occupancy based upon age. Typically, the right to restrict occupancy based upon age is based upon precise wording contained within a community’s governing documents. It may have been originally drafted by the developer, or may have been added pursuant to an amendment voted in by the owners. 55 AND OVER COMMUNITY REQUIREMENTS Despite the fact that a Florida community may have the proper wording in its governing documents, there are numerous other requirements a community association must follow in order to continue to be deemed a “55 and over community.” 1. At least 80% of the homes/units must be occupied by at least one person 55 years of age or older. 2. The community must publish and adhere to policies and procedures that demonstrate its intent to be a provider of housing for those 55 and older. 3. The community must comply, no less than once every two years, with age verification rules and procedures established by the Department of Housing and Urban Development. 4. Pursuant to Florida law, a 55 and over community must also register with the Florida Commission on Human Relations. It is important to point out that the Federal and State laws only provide a minimum threshold for the number of units that must be occupied by at least one person 55 years of age or older. In other words, by virtue of the fact that the statute requires “at least” 80% of the homes/units to be occupied by at least one person 55 years of age or older, this leaves open the door to the possibility that an association can amend its documents to require 90% or 100% occupancy by at least one person 55 years of age or older. Further, it is important to point out that, where...

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Community Association Managers Legal Update

The 2014 Florida legislative session concluded last month with a number of new laws affecting community associations, including community association managers. One of the most highly discussed changes relates to Chapter 468, Fla. Stat., governing the types of activities that a community association manager or community association management firm may perform as part of its normal duties. Previous to the 2014 session, Section 468.431(2), Fla. Stat., provided that community association managers and management firms were empowered to control or disburse funds of a community association, prepare budgets or other financial documents for a community association, assist in the noticing of conduct of community association meetings, and coordinate maintenance for a residential development. As of July 1, 2014, in addition to the above items, community association managers and management firms will also be empowered to perform the following tasks: Determining the number of days required for statutory noticesDetermining amounts due to the associationCollecting amounts due to the Association before the filing of a civil actionCalculating the votes required for a quorum or to approve a proposition or amendmentCompleting forms relating to the management of a community association that has been created by statute or by a state agencyDrafting meeting notices and agendasCalculating and preparing certificates of assessment and estoppel certificatesResponding to requests for certificates of assessment and estoppel certificatesNegotiating monetary or performance terms of a contract subject to approval by the associationDrafting pre-arbitration demandsCoordinating or performing maintenance for real or personal property and other related routine services involved in the operation of a community association The new law also provides specific statutory forms that a manager or an association may use in order to record a claim of lien, release of lien, and a form demand letter for the payment of delinquent assessments. The statutory forms have been incorporated into the statutes governing condominiums, cooperatives and homeowners associations (Chapters 718, 719 and 720, Fla. Stat., respectively). However, it remains important for associations, managers and management firms to consult with legal counsel in determining what functions may properly be performed by a manager or management firm, and to determine whether or not and...

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Florida Homeowners Association Suspension Laws 2015

As discussed in last month's column Florida homeowners association suspension and fine laws have changed in 2015. The House Bill 791 (“HB 791") was signed by the Governor of Florida and will become effective July 1, 2015. HB 791 presents several changes to both the Condominium and Homeowners Association Acts, including changes relating to the levying of fines and suspensions. What Does HB 791 Change? HB 791 amends both Chapter 718 and Chapter 720 to clearly provide that the role of the fining (and suspension) committee is solely to approve or disapprove of a proposed fine or suspension levied by the Board. Remember that fines can only be approved by an independent committee of unit owners upon 14 days' notice and a hearing provided in front of such committee. Sometimes, associations allow their committee to reduce the amount of the fine or to even be involved in the investigative portion of the violation process. However, this statutory change makes it clear that the only role for the committee is to approve or disapprove of the fine or suspension that has been proposed and levied by the Board of Directors. Another portion of Florida's new law for condo and homeowner associations clarifies the effect of a suspension of voting rights. Specifically, the legislation provides that, where a voting right is suspended by the Board of Directors, the total number of voting interests in the association will be reduced by the number of suspended voting interests when calculating the total percentage or number of all voting interests available to take or approve any action. So, for example, if there are 100 votes in the association, and the vote being taken requires a majority vote of the entire membership for approval, if 10 voting rights were suspended, the action would now require 46 of the 90 remaining voting interests for approval rather than 51 of the original 100. It is important to point out that this is really not new, as has been a requirement for several years, but the legislation has added language to clarify the existing law. What Else Has Been Updated?...

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Importance of Contract Review

In the course of business, every corporation, including community associations, must enter into dozens of contracts for services and materials, some of which relate only to a single project, and some of which may continue for many years (bulk cable contracts being the most typical example). And, with so many contracts and providers, it’s inevitable that one or more of those relationships will sour. At that point, many associations will contact their attorneys, to determine what can be done to get them out of the agreement, or to recover funds already paid to a non-performing party. Unfortunately, trying to resolve a contract dispute at the time of a breach is far less efficient than paying the necessary funds to have an attorney draft and negotiate an agreement with appropriate protections for the association from the outset. In legal parlance, a contract is an agreement between two parties, where each party has certain obligations to the other, and where some “consideration,” or value, is exchanged. Typically, an association will offer to pay money to a vendor or contractor, in exchange for goods or services. The terms of the contract, which are usually in writing (in Florida, any contract for the sale of goods over $500, or where the services provided are not to be performed within the space of one year, must be in writing), govern the relationship between the parties. This is critical, because contracts are evaluated on their face, according to the plain language used, and external evidence of the parties intent may only be considered if the language is ambiguous or has multiple meanings. Otherwise, whatever a contract says is legally binding. So, for example, as attorneys we are often asked whether a client may terminate a contract because a vendor is performing poorly. The only way to determine the client’s rights to terminate is to look for a written termination provision, and to see, under what conditions, the contract may be voided. Often, contracts are silent as to termination rights, or provide that they may only be terminated “for cause,” and then only after providing notice of a...

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