Part 2 of Understanding Changes to Florida Statutes for Condominiums,Cooperatives and HOAs: SB-154 Condominium and Coop Safety (Surfside Glitch Bill)

Steven G. Rappaport
Michael Ungerbuehler

Understanding SB 154 - Condominium and Coop Safety (Surfside Glitch Bill) Effective June 9, 2023, except as otherwise indicated herein This bill was passed in response to the surfside legislation passed last year, namely SB4D. This legislation clarifies many of the open issues and concerns that Associations were faced with after last year’s legislative session. Applies to Condominiums and Cooperatives. Milestone Inspections The legislature clarified that the requirements for the milestone inspections and structural integrity reserve studies apply only to residential Condominiums and Cooperatives, and not commercial Condominiums or Commercial Cooperatives. Note, the residential portion of a mixed use Condominium or mixed use Cooperative is subject to the milestone inspection and structural integrity reserve study requirements. The previous legislation differentiated between Condominiums and Cooperatives that were within three (3) miles of the coastline versus those that were not located within three (3) miles of a coastline. The coastline analysis has now been removed, and all condominium or cooperative buildings that are three (3) or more stories must conduct their milestone inspections within thirty (30) years of the building’s certificate of occupancy (the “30 Year Mark”), unless an earlier inspection (i.e., within twenty-five (25) years of certificate of occupancy) is justified by a local enforcement agency taking into account certain environmental factors, such as proximity to salt water. The legislature expanded who could perform the milestone inspection so that it could be performed by a “team of professionals,” with an engineer or licensed architect acting as the person responsible. The bill authorizes local enforcement agencies to extend the deadline for a building if it can be shown with good cause that the building has entered into a contract with an engineer or architect before the deadline but that the report cannot be reasonably completed prior to then. The bill specifies that the association must notify the membership of the deadline to complete a milestone inspection within 14 days of notice from the local enforcement agency that a milestone inspection is required. The bill further permits the local enforcement agency to accept a report issued by an engineer or architect that inspected the...

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Part 1 of Understanding Changes to Florida Statutes for Condominiums,Cooperatives and HOAs: HB-919 Homeowners Bill of Rights

Steven G. Rappaport
Michael Ungerbuehler

Understanding HB-919 - Homeowners Bill of Rights This law applies only to HOA’s and does not apply to Condominiums or Cooperatives.  This Act takes effect October 1, 2023. For all HOA notices of Board meetings, the notices now must specifically identify all agenda items for the meetings. The bill requires that where an Association collects a deposit from a member for any reason, including construction or a lease security deposit, or any other deposit, the Association must keep that deposit in a separate account from other Association funds.  Upon completion of the construction project or other reason for which the deposit was collected, the member may request an accounting from the Association, and the accounting must be provided within 7 days of the request.  Also, the Association must return any unused funds to the member within thirty (30) days after the construction project or other reason for the deposit has been completed. The bill provides that an owner’s designated mailing address is the member's property address unless the member has sent written notice to the association requesting that a different mailing address be used for all required notices. Similarly, a member's e-mail address is the e-mail address provided when the member consents in writing to receiving electronic notices unless the member has sent written notice to the association requesting that a different e-mail address be used for required notices. The bill provides that officers, directors or managers who knowingly accept a kickback or other items without consideration may be subject to monetary damages. It further provides for removal from office if charged or indicted for certain crimes such as forgery of ballots and envelopes, theft or embezzlement of Association funds, destruction of Association records, and obstruction of justice. If any such criminal charge is pending against an officer or director, such officer or director may not be appointed or elected to any position as an officer or director in any association, nor may have access to any official records of any association, except pursuant to Court Order. The bill requires developer-appointed officers and directors to annually disclose to the association their...

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The Importance of Involving Legal Counsel in the Review and Negotiation of Contracts With Vendors

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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...

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Your Fiduciary Duty

Michael Chapnick

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...

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HOA Elections and the Nomination Process

Steven G. Rappaport

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...

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Covenant Enforcement

Michael Chapnick

Today, I’d like to discuss something called covenant enforcement. Covenant enforcement is when an association must enforce the rules, regulations and restrictive covenants that are contained in an association’s declaration, whether it's a declaration of condominium or a declaration of covenants and restrictions – and there are many ways of doing so. However, one of the biggest complaints that I've heard over the years is that associations have no teeth to enforce their documents, which is not true. Associations do have teeth – they do have the ability to enforce. The issue primarily is being willing to do what it takes to enforce the documents. Avenues to take include fining, suspending usage rights or potentially suspending voting rights. In extreme cases, you're talking about going to mandatory mediation, which is now required under the homeowner's association statute, Section 720.311 of the Florida Statutes. It's also one of your options under the condominium statute, Section 718.1255. So, you do have some options for covenant enforcement. What we always need to be mindful of when enforcing an association’s rules is that everybody must be treated the same under similar circumstances. You don't want to be in a position where you are trying to enforce your rules and regulations against a unit owner or an occupant, and they raise a defense of selective enforcement. Selective enforcement means that you have enforced the same covenant against one person but not another under similar circumstances. We always must compare apples to apples and oranges to oranges. Other defenses include waiver and estoppel (which are really two sides of the same coin).  For example, if approval was obtained for an architectural change, and the owner expended money and time and contractors in getting the work done, the association can’t come back and change its mind later. The approval has already been relied upon. We never want these kinds of valid defenses to be able to be raised, so we need to be mindful of what we're doing and how we're doing it. We always need to make sure that we're even handed, that we're consistent, and that...

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Mandatory Reserves for Condominiums and Cooperatives Three (3) Stories Or Higher Becomes Law

Len Wilder

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...

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3 Important Tips for Board Members of HOAs and Condo Associations

Brian T. Meanley

Whether you’re an existing board member or a new board member this year, as Community Association Law attorneys, we’d like to offer you some advice as you begin to fulfill your duties in 2023. Here are the 3 top tips for community association board members: 1. Know Your Governing Documents  Whether you're a Condominium Association under Chapter 718 or a Homeowners Association under Chapter 720, your Community Association has a set of governing documents, and the law imposes upon you a duty to know what those documents are as well as their function and purpose.  Both HOAs and condo associations have declarations of covenants and restrictions that impose a set of obligations or stipulations on owners (i.e. use restrictions, ownership restrictions, occupancy restrictions, etc.). Under the law, there is a certain hierarchy in governing documents in which the Declaration is the most important. The other two types of governing documents, the Articles of Incorporation and Bylaws, determine how your corporation runs i.e. eligibility requirements for the board, elections, annual meetings, etc.  Under law, a new board member of a community association – both in condos and HOAs – have an obligation within 90 days of commencing service on the board to certify in writing that they have read and understand all governing documents and agreed to, to the best of their ability, enforce those governing documents according to their provisions.  As community association law attorneys, we also recommend that you take a board certification course, especially if you have never served as a board member before. Along with a Certificate of Completion, you’ll receive valuable information and tips for being a successful board member. Our Community Association Attorneys at Sachs Sax Caplan frequently teach board member certification courses as well as continuing education courses for Florida Community Association Managers. To learn more and find out when our next class is, call 561-994-4499. 2. Treat Your Community Like a Business  As a board member, you have a fiduciary obligation to other members and owners in your community to serve objectively, responsibly, honestly and efficiently. I believe the best way to do that...

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South Florida Attorneys Peter and Maria Sachs Travel to Italy, to Speak to Law Students at Univ. of Naples Federico II

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BOCA RATON , FL, USA, September 19, 2022 https://www.einpresswire.com/article/591672087/south-florida-attorneys-peter-and-maria-sachs-travel-to-italy-to-speak-to-law-students-at-univ-of-naples-federico-ii-- Peter Sachs, Board Certified Attorney and Founding Partner of Sachs Sax Caplan, P.L., a Boca Raton based law firm, and Maria Sachs, Palm Beach County Commissioner, Former Florida State Senator, and Criminal Defense Attorney, were hosted by the American Studies Center of Naples earlier this month in Naples, Italy, where they jointly spoke with Law Students at the University of Naples Federico II in Naples, Italy. Established in 1224, the University of Naples Federico II is the oldest public nonsectarian university in the world, and among the largest three in Italy in terms of faculty.The Sachs’ presented on a range of topics including the role of law and lawyers in the United States; a historical perspective connecting Italian to United States law; Florida condo law (its origins being tied to ancient Roman law); criminal law and the influence of media; and the business of running a law firm. Both Peter and Maria Sachs also shared their personal journeys. Peter speaking on his background as a first-generation immigrant with origins in a refugee camp just after the Holocaust and his beginnings as an attorney, and Maria, with Neapolitan origins, beginning her career in the service of Janet Reno, who later became the first woman to hold the position of U.S. Attorney General.“It was an honor to have the opportunity to address an audience of young aspiring Italian lawyers and speak about my personal experience leading Sachs Sax Caplan, a firm I founded five decades ago, as well as being a pioneer in Condominium and Community Association Law in Florida,” said Peter Sachs. “Maria and I are committed to future collaborative efforts with the faculty and the students here at the University of Naples Federico II.”Maria Sachs added: “I have always thought that my Neapolitan origins have constituted an advantage in my forensic and political career. This meeting with the students at University of Naples Federico II confirmed it. In the eyes of the students, as well as in their questions and observations, I found that same intelligence and curiosity that is typical of Neapolitan...

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Surfside Collapse Leads to Additional Scrutiny & Due Diligence from Mortgage Companies to Condominium Associations

danny

As we pointed out in an earlier column, one of the direct side effects of the tragic Champlain South Tower collapse was the additional scrutiny and due diligence that mortgage companies were going to apply before issuing mortgages in condominiums. At that time, Federal National Mortgage Association (“Fannie Mae”) issued Lender Letter (LL-2021-14), titled Temporary Requirements for Condo and Co-op Projects, which imposed new “temporary” rules and restrictions pertaining to Fannie Mae’s purchase of loans from primary lenders on the secondary market. These new requirements went into effect on January 1, 2022. What has resulted since is the requirement that any mortgage servicer who wishes to write a mortgage that may eventually be sold on the secondary market must create robust questionnaires for associations to answer before a mortgage will be issued. The problem now is that condominium associations are receiving these questionnaires, and due to the breadth and scope of the questions, are unsure on how to answer. For example, the following examples may be found on questionnaires: Are there any conditions, project wide, regarding deferred maintenance (within the past 5 years) which may negatively impact the safety, structural soundness, habitability, or functional use of any individual unit or the project as a whole?If a unit is taken over in foreclosure, what is the maximum number of months of assessments for which the lender is responsible?What amount is currently in reserves?Is it anticipated that the project will have code enforcement violations in the future? andAre there any planned special assessments in the future? While we understand that the scope of these questions is based upon determining whether the structure of the building is sound, and that the association is in good financial footing, the reality is that many of these types of questions require a nuanced response. A response could impose significant liability to the association if answered incorrectly. §718.116(8), Florida Statutes contains the questions that an association is required to respond to for an estoppel certificate. These questions are more in the nature of, how much are the assessments, and how often are they paid, or is there a...

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Sachs Sax Caplan Announces Edward S. Hammel as Equity Partner

Edward S. Hammel

Edward S. Hammel was made Equity Partner at Sachs Sax Caplan in the Community Associations Group and is Board Certified in Condominium and Planned Development Law. Mr. Hammel represents a variety of homeowner and condominium associations, as well as private clubs, commercial and residential real estate developers, owners, and professional management organizations.Mr. Hammel received his B.S. in Political Science from Barry University and his J.D. from Western Michigan University - Cooley Law School. Mr. Hammel is a Past Member of the City of Coconut Creek Planning & Zoning Board and is a frequent volunteer with Coconut Creek Little League Baseball Club, Inc. Read more here: https://www.einpresswire.com/article/569579132/sachs-sax-caplan-announces-edward-s-hammel-as-equity-partner    

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Attorney Peter Sachs of Sachs Sax Caplan Awarded Lifetime Achievement Award by South Florida Business & Wealth (SFBW)

Lifetime Achievement Award SFBW

Board Certified Attorney Peter Sachs, who is founding partner and Chairman Emeritus of Sachs Sax Caplan, P.L., a Boca Raton based law firm, has been recognized by South Florida Business & Wealth (SFBW) with a Lifetime Achievement Award. Sachs received the award at SFBW’s annual Legal Awards, which were held at Fort Lauderdale’s Museum of Discovery and Science. The SFBW awards judge the nominee’s success, growth and professional accomplishments, as well as charitable and civic achievements.“As a child of survivors born in a refugee camp in Berlin, it was the goal of my parents to make sure I received a good education that had been denied to them,” said Sachs. “After graduating from Queens College, CUNY, performing military service and then graduating cum laude from Fordham Law School, I wanted to use my education and the opportunity it provided to help protect the freedoms and individual rights we enjoy in the best country in the world – the USA.”   "As a child of survivors born in a refugee camp in Berlin, it was the goal of my parents to make sure I received a good education that had been denied to them” - Peter Sachs of Sachs Sax Caplan, P.L. Sachs is a Founding Partner and Chairman Emeritus of Sachs Sax Caplan P.L. He is Board Certified in Condominium and Planned Development Law by the Florida Bar and through the years has handled a multitude of matters related to community associations (condominiums, cooperatives, homeowners, master and country clubs). He is one of the pioneers in the development of community association law and has earned a reputation as a staunch consumer rights advocate.Sachs received his B.A. from Queens College of the City University of New York and his J.D. from Fordham University School of Law. Sachs is Past Chair of the 15th Circuit Judicial Nominating Commission, Past President of the South Palm Beach County Bar Association, and a Past Member of the Board of Governors of The Florida Bar.He was a Gubernatorial Appointee to the Treasure Coast Regional Planning Council; Past President and Gubernatorial Appointee to the Florida Independent Living Council; Past Board...

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How to Enforce a Penalty for HOA Violations

brian

As community association attorneys, one of the problems we face quite often with our association clients is how to prevent violations of the governing documents and rules of the communities. How do we prevent the homeowner from painting their house pink? How do we prevent people from hanging towels outside on the common element rails and doing other things that really are violations of the rules and regulations and the governing documents? And what a lot of board members and managers don't realize is that associations are sort of mini-democracies. What does that mean, exactly? There's a certain level of “due process” that associations must follow if they're going to fine somebody or if they're going to suspend somebody’s right to use the pool, or their right to use the tennis court. And one of the things that's common among both the Condominium Act and the Homeowners Association Act, is the fact that an association must establish a committee of non-board member owners who will hear complaints that the board has imposed regarding violations of the governing documents. This group serves as an independent body that decides whether they're going to uphold or approve the board's actions and decisions in relation to imposing fines and suspensions. Furthermore, both Acts require that the owner who was in violation and subject to a board-levied fine or suspension be provided with at least 14 days’ notice as well as the opportunity to be heard before this committee to present their case. This gives the person in violation a chance to present their opinion and present their evidence of why they think that the fine and the suspension should not be imposed. Only then, when it's all said and done, can the committee ultimately decide whether to approve or reject the fine or suspension. What we often face as association lawyers are situations where perhaps that procedure wasn't followed, where a board or managers just decided that this person violated the governing documents, and the violating party all of a sudden has a $1,000 fine on their account. When they come to us to try...

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