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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Would Assessment Amendments Benefit Your Association?

Located within most associations’ governing documents are provisions that benefit mortgage holders including, typically, provisions that make association liens inferior to first mortgage liens. Often these provisions state that foreclosure sale purchasers are not responsible for paying assessments that came due before such purchasers obtain title. In contrast, the Florida Statutes affecting both homeowners’ associations and condominium associations contain provisions that can be interpreted to hold foreclosure sale purchasers—including foreclosing lenders that obtain title—responsible for the payment of at least a portion of assessments which were not paid by a home’s previous owner. Ordinarily, when an association’s governing documents conflict with the state statutes, the statutes should be followed. However, an exception to this general rule applies when the governing documents have provided contractual rights which would be impaired if later-enacted statutes are followed. In such cases, the governing documents control and the statutes are not applied. In order to make sure that your association will be able to take advantage of statutory changes making purchasers responsible for the payment of assessments that were not paid by a home’s previous owner, associations are encouraged to review their governing documents with their legal counsel and to, where necessary, amend them to incorporate the assessment collection and lien rights found within Florida Statutes. Doing so is more important for homeowners’ associations than for condominium associations because, while the condominium statute (Chapter 718) has contained purchaser assessment liability provisions for decades, the homeowners’ association statute (Chapter 720) was silent on purchaser assessment liability until July 1, 2007. Accordingly, purchasers at mortgage foreclosure sales arising from mortgages given in homeowners’ associations before this date, including foreclosing lenders, have successfully argued that, in the absence of an amendment incorporating the statute, they are not responsible for paying assessment balances left over from a home’s previous owner. Several recent appellate cases have reviewed foreclosure purchaser liability issues in homeowners’ associations, and, notably, many of these cases have turned on whether or not the homeowners’ association involved had amended its governing documents to incorporate the assessment liability statutes that it was attempting to enforce. In contrast, condominium associations...

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