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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