Community Association Counselor

Laura M. Manning

Michael E. Chapnick

Roberto C. Blanch


Last Updated 06/09/2017



Unit Owners Beware:

The Developer May Have Stacked the Board Against You

Condo & HOA Board Members May be Neglecting the Duties You are Owed

By Roberto C Blanch

Are you concerned that the developer of your condominium did not deliver on the promises made to you when you purchased your condominium unit? Are you concerned with the construction of the condominium in which you live? For most individuals the purchase of a condominium unit can be their most important investment. However, many of the decisions impacting this investment are not up to the owner of the unit, but rather they are left up to a board of directors controlling the association.

At a specified time, the developer of a condominium is required to relinquish control of the association’s board of directors in favor of the unit owners. The turnover of an association from developer to the unit owners presents the first opportunity for the association’s board to hire a lawyer, an accountant and an engineer to perform important and time-sensitive inspections of the condominium. These inspections will identify construction defects and other concerns that may exist. As such, it should not be surprising that a developer would want a "friendly" association board of directors following turnover. But imagine the havoc an unscrupulous developer could inflict if the association’s newly elected board – or the attorney and engineer working for the unit owners – have financial ties to the developer.

A recent Miami-Dade grand jury report found that there was extensive fraud, mismanagement, stacking of boards and conflicts of interest among condominium association boards. Such misconduct is not limited to Miami-Dade, however. Perhaps surprisingly, one of the largest public corruption cases set in the fast-paced, scheming neon desert notoriously dubbed "Sin City" did not involve the usual Las Vegas suspects, but rather a contractor, a lawyer, and a stacked board of condominium directors. In 2015, Leon Benzer, a construction company boss, was sentenced to 15 and a half years in federal prison for orchestrating a scheme to take control of association boards for the purpose of channeling construction defect repairs to Benzer’s company. Benzer’s scheme involved a network of recruited purchasers and real estate agents who would get elected to association boards, hire Benzer’s attorney, and award lucrative contracts to Benzer’s construction company. Through these unethical practices, these individuals violated the duties owed to the association and its unit owners.

Condominium unit owners are considered shareholders of the association, and act in a fiduciary relationship to each owner. In such relationships, the law demands a higher than ordinary degree of care from each director and officer, with Florida law specifically demanding directors to discharge their duties in good faith. Simply put, directors should act to protect the best interests of the association and its unit owners, rather than their personal interests or those of affiliated third parties. The actions of the board members in Benzer’s scheme were in complete disregard of the unit owners’ rights, as they participated in rigging elections and seeking only personal gain.

In order to avoid a Benzer-type scheme, it is critical for unit owners to exercise due diligence in selecting truly independent individuals to become board members to represent the best interests of all the unit owners at the time control of the association is transferred from the developer. Since Florida law permits condominium association boards to settle claims concerning sums owed from the developer and matters of common interest to the owners, including construction defect claims, it is even more vital to ensure that an association’s board, attorney and engineer are not being led by ill-intended individuals to unscrupulously settle claims for pennies of their real worth, accept cosmetic repairs that do not fully address the underlying defective condition, and waive association claims for latent defects.

In order to ensure that meritorious claims of unit owners are adequately protected, unit owners must get involved and confirm that independent board candidates without financial ties to the developer or contractor are seeking election to the association’s board. Additionally, steps should be taken to confirm that the association’s officers and directors hire independent knowledgeable attorneys and engineering firms, not attorneys and engineers affiliated with the developer or contractor.

Unit owners should be cautious when dealing with an attorney that was selected, hired and paid by the developer-controlled board prior to the unit owners taking control of the association. Unit owners must ask critical questions of management, those seeking election to the board, and the attorneys and engineers being interviewed to represent the association as to their involvement or affiliation with the developer or contractor that built the condominium. Protect your investment, and avoid a Benzer "stacked board."

For further information regarding the turnover process, self-dealing, conflicts of interest, and the duties of your board of directors, please submit your questions on our website at and get the information you need to make sure you are safeguarding your investment.




Association Pool Tips for Safe, Fun Summer Season

By Michael E. Chapnick

At the start of summer, associations should evaluate their pool rules and procedures in addition to con-ducting all of the necessary inspections of their pools, spas and related equipment.

With the help of qualified professionals, the inspections should include all pools and pool equipment as well as the surrounding amenities, including gates, fences, signs, locker rooms, etc.

Association pool rules should focus on health and safety, and should avoid focusing on classes of protected persons, particularly families with children. Making the activities of children the focus of prohibitory rules can substantially increase the potential that an association will receive a complaint alleging discriminatory conduct under federal, state and local fair housing laws. Even prohibiting something as seemingly innocuous as "pool toys" could be deemed discriminatory, if directed specifically at children, rather than at all persons.

Likewise, unless your community avails itself of the Housing for Older Persons exemption to the anti-discrimination provisions of the Fair Housing Amendments Act of 1988, designating "adults only" pools or use times may give rise to FHA violations. Furthermore, some courts have found that not permitting children access to pools and other amenities unless accompanied by parents could also give rise to FHA violations.

Some of the most common safety-related rules include:

• No running.

• No glass containers.

• No diving in shallow areas.

• No pushing, horseplay, roughhousing, or dunking.

• No smoking and/or tobacco products in the pool area.

If on-site staff is charged with monitoring association pools, these employees should receive proper training addressing the pool rules and their enforcement, safety procedures, and calls for emergency assistance.

By conducting all of the necessary annual inspections and implementing appropriate rules to address safety, associations can help to ensure that they avoid wading into any rough waters during the summer pool season.




Association Board

Meeting Do’s and Don’ts

By Laura M. Manning-Hudson

Often times we are called upon by our clients with questions regarding how to more efficiently run their board meetings and control the conduct of members during those meetings. Very often it seems that directors who are simply trying to be polite and respectful of owners by allowing them to express their opinions wind up losing control of the meeting and actually accomplish very little business. This trend of owners seemingly "hijacking" board meetings is not a new one, but it does seem to be fueled in recent months by the political climate we find ourselves living in now where all people want to be heard. Fortunately, the HOA and Condominium Acts provide board members with the tools they need to control their meetings while allowing all members to also have their "say."

Association board meetings are defined as any gathering for the purpose of conducting association business by the members of the board of directors at which a quorum is present. Unless the association’s by-laws or other governing documents provide for a longer period, notice of board meetings must generally be conspicuously posted within the community 48 hours in advance of the meeting. However, in certain circumstances (such as the adoption of assessments or some types of rules), written notice must be posted and provided to the members at least 14 days in advance of a board meeting.

In accordance with Florida law, an item of business that is not noticed may only be addressed on an emergency basis, such as situations involving sudden damage to the building, natural disasters and similar events. Emergency actions must be ratified or approved at the board’s next properly noticed board meeting at which a quorum of directors is attained.

The notice of the board meeting should list specific business items on the agenda. Boards and managers should make every effort to ensure that all reasonably anticipated topics of discussion are included. The more specific the agenda, the easier it will be for the board to control the pace and flow of the meeting. When agendas list broad topics without specific business items, boards leave themselves open to having to address issues brought up by members that would arguably "fit" under broad category headings. As such, the agenda should be comprised of specific open items from the previous meeting requiring action; specific owner items that may require board action; building maintenance items, as required; project information, updates, requests and actions; and seasonal information, such as annual and budget meeting information as well as hurricane preparation matters.

Some of the most common board meeting issues for associations include excessively long meetings that seemingly do not accomplish anything, disruptions by disgruntled owners, digressions from the agenda items, and the lack of clear direction and purpose for the meeting. Both the HOA and Condominium Acts allow associations to adopt rules regarding unit owner participation at board meetings. While both statutes provide that members are allowed to speak on all agenda items, adopting these types of rules regarding participation helps boards maintain control over the overall meeting.

Boards should consider adopting guidelines for owner participation at meetings, publishing these guidelines before the meeting, and reading them at the beginning of every meeting for those in attendance. Typical guidelines provide that an owner may speak for three minutes on any agenda item, no member may speak more than once until all owners wishing to speak for the first time have done so, and owners may speak only twice on a single agenda item, the second time for one and a half minutes. Once guidelines are established, enforcement of the rules is key even if it means using a stopwatch, timer or gavel (if necessary).

While neither statute addresses the specific time when owner discussion on agenda items should occur, allowing owners to comment before the board votes on the item allows the individual board members to take into account sometimes very meaningful opinions and comments when making their decision on how to vote. Limiting owner participation on agenda items until after the board action has been taken on the item defeats legislative intent and erodes meaningful opportunity for owners to address the board.

By closely adhering to the statutory requirements and following clear policies and procedures at board meetings, associations can help to ensure that all of their meetings are as effective as possible while disruptive elements are kept to a minimum.




Community Association Boards Should Spread the Load by Relying on Committees

By Roberto C. Blanch

Association board members are asked to do a great deal for the communities they serve. They give up a great deal of their time and lend their varying expertise to help their communities run as smoothly and effectively as possible. Given that so much is asked of the directors, it is important that they take appropriate steps to delegate responsibilities to committees comprised of association members.

For most community associations, the benefits of involving committees are extremely worthwhile. Not only do they create a forum for the implementation and enforcement of vital policies and decisions, they also serve as ideal incubators for prospective future board members.

By their very nature, committees comprised of volunteer owners and residents should have a good understanding of the best policies and practices for their community. They may be ideally suited to oversee matters that involve the collection of information from the owners and the subsequent assessing of the data in order to make strong recommendations for suggested solutions.

Association boards should take the time to closely consider the use of different types of committees and their intended roles and responsibilities. Most association governing documents will include provisions governing the establishment of volunteer committees and how their decisions will be enacted.

Some of the most popular types of committees are:

• Architectural Control Committee (ACC) – Especially for single-family home communities, an effective ACC plays a critical role in maintaining property values by helping to ensure that all of the owners maintain their properties in accordance with the community’s covenants, conditions and restrictions.

• Communications Committee – Communicating association news via e-mail, text messages, websites, blogs, social media, newsletters, on-site notices, mailers, etc., requires a great deal of planning and execution, which may be ideally overseen by a committee.

• Financial Committee – This committee helps to oversee the association’s finances, budget, reserves and investments.

• Special Committee – This committee is charged with enforcement hearings, implementing fines, and the enforcement of the community’s covenants and restrictions.

• Landscape and Maintenance Committee – Primarily for sprawling HOA communities, its members oversee the aesthetics, maintenance and environmental sustainability of the property’s landscaping.

• Social Committee – Getting to know one’s neighbors is always a worthwhile endeavor, and this committee plans events for association members including seasonal festivals, movie nights, barbecues and fundraisers.

By utilizing committees and working to see that they are consistently staffed by dedicated association members who are eager to take part, associations are able to help ensure that they operate as efficiently and effectively as possible while also avoiding overburdening their board members with too many issues and responsibilities. When first establishing committees, associations would be well advised to consult with highly qualified legal counsel to help ensure their proper establishment and operation.




Residents of Florida HOA Speak Out Against Association’s Use of Drones

By Michael Chapnick

The residents of the Concord Station community north of Tampa in Land O’Lakes, Fla. recently shared their complaints and confusion with a reporter from one of their local television stations over their HOA’s use of a drone equipped with a camera in their community.

The residents indicate in the station’s report that they received an online notice from their HOA alerting them that it would be flying the drone, which the association confirmed that it operated over the community in addition to a vehicle equipped with a mounted camera.

The residents who expressed their opposition to the HOA’s use of a drone were concerned about the invasion of their privacy, especially if the drone is recording video of their backyards. One of them indicates: "If the drone is flying above my property, I’m going to consider that a trespass to our property and we’re going to take appropriate measures to make sure that we protect our privacy rights."

The property management company for the association explains in the report that they are using the drone to chronicle all of the physical characteristics of the community in hopes of helping to avoid the possibility of homeowner hassles in the future. The video from the drone is being used for documentation of the state of the community, which is now transitioning from a developer-controlled association to one that is controlled by the unit owners. The company also noted that the aerial images and video could also be used for promotional and marketing purposes in the future.

While it is not uncommon for community associations and their property managers to contract for professional videotaping as part of the engineering and structural inspections that they undertake when the control of the association is turned over by the developer to the owners, the use of a drone appears to be a new wrinkle that some are now implementing. Depending on the costs, it could provide a cost-effective option for obtaining comprehensive and detailed images of the physical state of the property should any issues of latent defects ever arise.

However, due to the potential for concerns by the owners over the possibility of invasions of their privacy by the association’s use of a drone, boards of directors and property managers should use all of the means of communication that they would normally use in order to alert the owners and schedule the matter for discussion at a meeting that is open to all of the association’s members. They should be prepared to answer questions about the use of the drone and the benefits that would be achieved from having the images and video that it would capture, and they also must be prepared to address and respond to questions regarding the potential for invasions of privacy.

By being as open as possible about the use of a drone as part of an association’s property inspections during turnover, an HOA should be able to address any residents’ concerns that may arise and gain the understanding and approval of as many of the owners as possible.




Why Stopping SB 398 Should Be a Bigger Priority for Community Associations

By Laura M. Manning

Each year, our elected state representatives and senators meet in Tallahassee for a legislative session where they review and debate an extensive amount of proposed bills, only to send a few of those bills to the governor to be signed into law. For the third year in a row, our elected lawmakers will be discussing a bill that has once again resurfaced, and if passed, may have a significant impact on community associations’ wallets.

House Bill 483 — also known as Senate Bill 398 or "the home tax" bill — proposes to place a considerable amount of requirements relating to the issuance of estoppel certificates on the condominium, cooperative or homeowners association responsible for preparing them. If signed into law, community associations will need to be both financially and operationally prepared to abide by the stringent changes set forth in the bill.

An estoppel is a legally binding document prepared by a community association or its agent that discloses any liens, overdue assessments or any other money owed to the association, such as late fees and attorney’s fees. Estoppels are required by title companies in standard real estate transactions in order to inform the seller and buyer of any outstanding financial obligation(s) on the unit or parcel. If prepared incorrectly, the community association could be liable for miscalculated or incomplete balances, resulting in a loss for the association.

Contrary to some people’s beliefs, estoppels aren’t generated by the push of a button. They take time and precision to prepare, which is why a bill that shifts even more of the burden on the association could be detrimental.

One of the main components of this proposed bill is to mandate more rigorous deadlines for the preparation of estoppels. Currently, associations have 15 days to prepare and deliver an estoppel once it is requested. The bill would shorten this period to 10 business-days, which could be difficult for associations of varying sizes and levels of sophistication, as some will be anchored by antiquated bookkeeping or a lack of resources.

The bill also provides a template for required information to be included in the estoppel, including any existing rule violations, approval requirements for sale or lease, and utilities included with assessments. Additionally, under the proposed law, estoppel preparation fees will be capped at a set amount, leaving the owners of an association to pay the bill for any differences in costs for the creation of an estoppel. Eventually, this could lead to higher assessments being placed on those residing in the community in an effort to offset the additional expenses incurred in the preparation of extensive estoppels.

Rushing the estoppel preparation process can also contribute to miscalculations of the total sums owed, adding to the association’s financial responsibilities because any discrepancies would have to be written off by the association.

The most notable and harmful requirement, however, involves imposing that associations pre-pay estoppel costs when services are rendered. This would mean that associations will have to advance money from their own account, regardless of whether or not the transaction goes forward, and wait to be paid from the proceeds of the closing. However, should the sale not close, the association may either seek reimbursement from the seller or be forced to lose the money it advanced. This will inevitably lead to higher assessments in order to make up for these losses.

Despite the significant push from the interest groups funding this bill, lawmakers still have a duty to listen to their constituents. We encourage community association members to reach out to their state representatives and senators to voice their concerns regarding how this bill will negatively impact their communities.




Condominium Association Parking Restrictions and Enforcement

By Michael E. Chapnick

One of the most common problem areas for condominium associations and their property management is parking. Spaces are at a premium in most communities, and issues arise when unit owners and tenants fail to park in their designated spots. Associations and their property managers must be well prepared in order to effectively contend with parking violations.

Most condominium bylaws allow for the adoption of reasonable rules and regulations governing the use of the common elements, which typically include parking areas and spaces. Boards and management should determine whether the bylaws and/or rules are already adequately addressing parking in the community or if amendments to the governing documents and/or rules may be needed.

Some of the most typical issues addressed by parking rules are designated parking areas and spots for owners, guests and vendors, and spaces for commercial vehicles, boats on trailers, recreational vehicles, personal watercraft, campers, motorcycles and all-terrain vehicles. Some communities have restrictions on the number of vehicles that a unit owner is allowed to park onsite, and some have time limits for the parking of vehicles in certain areas.

Bear in mind that all parking rules and restrictions must comply with the Fair Housing Accessibility Guidelines developed by the Department of Housing and Urban Development (HUD) with respect to designating handicap parking.

Once clear rules and restrictions are in place, condominium boards should develop effective enforcement measures, which will typically include warnings, fines (typically using a graduated scale that increases commensurately with each violation, but consistent with statutory constraints), and towing. The bylaws or rules pertaining to towing should allow for the association to assess the costs to the corresponding unit owner, and towing notices and requirements must strictly comply with Florida law.

If parking violations persist with wanton disregard by an owner, associations may seek injunctive relief through mandatory non-binding arbitration conducted by the Florida Department of Business and Professional Regulation, and/or by going to court. Injunction actions to enforce an association’s governing documents allow the prevailing party to recover their attorney’s fees and costs. If a unit owner continues to violate the parking rules after an injunction has been granted by the court, it is possible that the owner can be found to be in contempt of court.

Keep in mind that disabled unit owners may be able to request a reasonable accommodation related to parking that would enable them to deviate from some of the related rules and restrictions. Also, when there are not enough designated handicap parking spaces to accommodate all of the disabled owners, an association could be required to designate additional spots. Given the wide range of claims related to parking accommodations under the Fair Housing Act, associations should always consult with highly experienced legal counsel regarding each specific request to assess whether the accommodation is reasonable and should be granted.

Parking is a limited and valuable commodity in all condominium communities, and as such there will always be issues that arise. By carefully reviewing their bylaws, rules and enforcement measures to help ensure that they adequately address parking restrictions and violations, associations can help to minimize the potential disruptions that may be caused by parking issues.




Florida Medical Marijuana Amendment’s Impact on Community Associations

By Michael E. Chapnick

With the approval of Amendment 2 last November to legalize the use of medical marijuana in Florida, the state legislature and Department of Health are now developing the rules and regulations that will govern the use of cannabis by those who suffer from a number of ailments listed in the new constitutional amendment. Likewise, now is also the time for associations to begin discussing and considering the implementation of their own rules and restrictions regarding the use of the drug by unit owners in their communities.

For most communities, the question of whether the use of medical marijuana should be allowed in the common areas will likely cause the most unease. Other concerns include the use of cannabis inside of the residences, especially in condominiums where the odor could permeate into the common elements or other residences, and some properties may wish to ban the drug from the community in its entirety.

It remains unclear whether the state’s lawmakers will attempt to ban the smoking of medical marijuana. If smoking marijuana is allowed under the laws that will be adopted in order to comply with the amendment, community associations will need to address whether they must make exceptions to their rules in order to allow residents with a doctor’s prescription to smoke medical marijuana.

The exact wording of the amendment sheds some light into the question of whether associations can ban the use of the drug in their common areas. It states that "[n]othing in this section shall require any accommodation of any onsite medical use of marijuana in any correctional institution or detention facility or place of employment or of smoking medical marijuana in any public place." If the common areas of an association are deemed to be a "public place," associations will be able to prohibit the smoking of medical marijuana in their common areas.

Because marijuana is still regulated as a Schedule I drug under the Federal Controlled Substances Act, many questions remain to be answered as to whether the Fair Housing Act will require associations to grant reasonable accommodations to patients who are prescribed the drug. Will the U.S. Department of Housing and Urban Development consider it a reasonable accommodation, given that the possession and use of cannabis remains a federal crime? The agency’s general counsel has previously gone on the record stating that an accommodation request for the use medical marijuana is not reasonable and does not have to be granted. However, accommodations may also be requested pursuant to state and local fair housing laws, and if such a request is made, a different rule of law may apply.

Given all of the questions that remain unanswered, community associations should tread carefully in their responses to requests for reasonable accommodations under the FHA by patients with prescriptions for medical cannabis. They will need to keep a close eye on the new rules and restrictions governing medical marijuana that will be implemented by the state legislature and take effect later this year, and they should consult with highly qualified legal counsel to chart the best course on this issue for their particular community.




Associations Need to Seek 

Ejectment Rather Than Eviction 

for Some "Tenants"

By Laura M. Manning

When the Condominium Act was amended several years ago to allow associations to demand and collect rent directly from the tenants of unit owners who were delinquent in the payment of their monthly fees, community associations thought it was an answer to their prayers. Associations were struggling to recover from the foreclosure crisis, and many homeowners made the decision to rent their units to make some money but, unfortunately, they also chose not to pay their associations.

However, utilization of this amendment has proven to be difficult and sometimes costly to enforce in cases in which de facto tenants and their landlords are able to demonstrate to the court that a tenancy under the letter of the law is not actually in place. How many times have we heard that the tenant is "family," that the tenant does not pay the landlord, and that there’s no lease in place?

A noteworthy example is found in a ruling last year by the Miami-Dade County Circuit Court Appellate Division in the case of Cecil Tavares v. Villa Doral Master Association. Tavares had conveyed his condominium unit via quit claim deed to a new owner, but he and his wife continued to live there. When the new owner went into arrears with the association, it attempted to collect the rent directly from Tavares and eventually filed for an eviction.

The county court granted default judgment in favor of the association and issued a writ of possession to enable it to move forward with the eviction, but Tavares appealed on the question of whether the court erred by defining him as a tenant based on the quit claim deed.

The appellate division court found no language in the quit claim deed indicating that the owner and the resident had created a legal tenancy (which requires either a written or oral agreement), and the association did not provide a copy of a residential lease agreement. It also found that there was no evidence that any kind of written or oral agreement existed, and ultimately concluded that it could not define the defendant as a tenant under the law.

As such, the court vacated the order of default judgment and remanded the case for further proceedings to determine if the defendant was a tenant under the law. If the county court finds that Tavares is not a defendant, the appellate court ruling directed it to transfer the case to the circuit court for ejectment proceedings, which are typically reserved for use against squatters and fall under the jurisdiction of circuit courts rather than county courts. The appellate division court also granted the defendant’s motion for attorney’s fees from the association because he was the prevailing party.

Ejectments are typically more complicated than evictions, especially if they are contested, and the process can often take quite a bit longer than an eviction to complete. It begins with the filing of a complaint for ejectment, which must provide 20 days for the defendant to file a response. A hearing will follow the defendant’s answer, and the plaintiff association will need to demonstrate to the court that it has a present right to possession of the unit under Florida law.

Other associations attempting to collect the rent directly from the tenants of delinquent owners have also encountered similar defenses in which the tenants and owners claim to be friends, relatives or coworkers, and indicate that no agreement is in place and no rent is being paid.

In cases such as these in which it becomes apparent that it will be difficult to establish that an actual tenancy is in place, the appropriate remedy may be an action for an ejectment in circuit court rather than pursuing an eviction in county court.




Community Associations Responding to Soaring Popularity of Drones

By Roberto C. Blanch

The growing use of drones by consumers across the U.S. is leading to the adoption of new rules and restrictions by the federal government, state governments and community associations. Questions regarding safety, property damage and privacy abound with drones, and associations are responding by establishing clear parameters for their use by unit owners.

Last year, the Federal Aviation Administration enacted new regulations for the use of unmanned aircraft systems, which are more commonly referred to as drones. For recreational users, the FAA now requires that drones must be properly registered and labeled with the registration number. They must only be flown below 400 feet and always within sight of the operator, and they are banned from use near other aircraft and airports as well as over groups of people, stadiums, sporting events, or emergency response efforts.

Privacy concerns over the use of drones with cameras were addressed by a new Florida law that was enacted last year. The law stipulates that drones with cameras may not be used to record images of privately owned properties or of the owners, tenants or occupants of properties in violation of their reasonable expectations of privacy without their written consent. Reasonable expectations of privacy are presumed if individuals are not observable by others located at ground level in a place where they have a legal right to be, regardless of whether they are observable from the air with the use of a drone.

For associations, the implementation of new rules and restrictions concerning drones should begin with a discussion that is open to all of the unit owners at a board meeting. This enables all of the members of an association to share their thoughts and concerns, which are then taken into account by the board in the development of new rules.

If an association concludes that it wishes to permit the operation of drones in the community, it should consider the adoption of rules and restrictions to help ensure safety. These include the establishment of designated take-off/landing sites, restricting their use to daylight hours, developing penalties for violations, and clarifying that the association is not liable for any property damage caused by these aircraft. Additionally, the association board or management should consult with its insurance agent or consultant to confirm that it is adequately insured with regard to the risks that may be presented as a result of the use of drones at the property governed by the association.

Once the rules are established and enacted, associations should communicate them to the membership via email, mail, posted notices, newsletters, and any other means that they typically use.

Sales of drones to consumers in the U.S. are expected to grow from 2.5 million drones in 2016 to 7 million in 2020, according to a report from the FAA. With the continued growth in their popularity and usage, now is the time for associations to work together with their members in order to develop and implement the rules and restrictions that make the most sense for their specific community.




HOA Bookkeeper Gets Booked for Embezzling $95K

By Laura M. Manning

For community association practitioners, it often seems that no matter how much we caution homeowners and condominium associations to take all of the necessary safeguards in order to prevent theft and embezzlement, new cases of blatant fraud always seem to crop up.

The latest example was chronicled in a recent article by the Palm Beach Post. The article focuses on the arrest of the bookkeeper for the master homeowners association of Cypress Lakes, a 1,000-home, 55-plus community off Haverhill Road in West Palm Beach. Kristine K. Moore, the bookkeeper, was charged with embezzling nearly $95,000 over the course of years from the association. Moore was paid $44,000 per year and had been employed by the association for more than six years.

According to a police affidavit, management reviewed the association’s credit card bills and called police in April 2014 after discovering about $10,700 in charges for personal purchases during the preceding several months. Additional review then uncovered much larger losses, including missing cash deposits that had been paid by homeowners.

The purchases included nearly $3,000 at Best Buy, $8,000 at Wal-Mart and, and thousands more from such places as Springhill Suites, Supercuts, Sprint Wireless, Publix, K Star Diamond & Jewelry, and Victoria’s Secret. They included hotel bills, perfume, 46 cell phone cases, a Louis Vuitton purse, and even an engagement ring.

The preliminary accounting review revealed that Moore had been using the association’s funds for personal expenditures since 2011. On March 26, 2014, she overheard the property manager in the office discussing the discovery of serious discrepancies in the association’s financial records. She then promptly picked up her belongings, left the property and never returned to work.

Cases such as this illustrate the importance for associations to put in place the most effective precautions and safeguards in order to help ensure that they do not become a victim. These include monthly reviews of all of its bank and credit card statements by at least two people, ideally including both a board member and management staff. There should also be annual audits by experienced and reputable independent accountants to carefully review and certify the validity of the financial records for all association accounts and payments.

By using these and other best practices for avoiding fraud and theft of association funds, HOAs and condo associations are able to greatly diminish the possibilities for larceny and uncover it as quickly as possible if it does occur. Visit to read the complete article in the newspaper’s website.




Bank Loans Offer Worthwhile Financing Option for Many Associations

By Michael E. Chapnick

While maintaining an adequate level of reserve funds for deferred maintenance, capital improvements and other major expenses is always recommended, community associations that find their reserves do not cover all of their needs have a worthwhile option other than special assessments that they should explore and consider.

Bank loans and lines of credit for associations were very difficult to obtain during the height of the foreclosure crisis, but happily for many Florida communities those days are long gone. Now, there are a number of lenders that focus on loans for associations and offer highly competitive rates and terms.

Special assessments are typically the first option that associations consider to cover shortfalls in their reserves and take on important renovations or other unforeseen expenses. However, it may not be the preferred choice for many communities. Millions of U.S. homeowners are still recovering from the crash of the housing market and do not have the ability to secure a home equity line of credit in order to pay a special assessment. In addition, the implementation of a special assessment is viewed as a sign of financial distress in an association by lenders considering FHA-backed home loans for buyers in a community, and this can ultimately take a significant toll on sales and property values.

Most associations will begin their research into their financing options by first turning to the bank that maintains their operating and/or reserve accounts. While this is the obvious place to start, in the majority of cases they are also going to need to shop around.

Community association loans are significantly different than standard commercial loans because the collateral used to secure the loan is intangible. Lenders in the association context collateralize the debt by accepting an assignment of the association’s collection and lien rights for the current and future assessments paid by its members. Typically, the lenders that have a particular focus on association loans are best equipped to correctly ascertain their level of risk and exposure, and provide the best possible rates, terms and conditions.

Many lenders will require associations to move their operating and/or reserve accounts to the bank in order for it to grant the loan, and these deposits provide a commensurate level of leverage to help the association to secure a low interest rate.

In addition to a careful review of the association’s financial records, lenders considering these loans will also typically require an opinion letter issued by the association’s legal counsel confirming that they have reviewed the association’s governing documents and determined that it has the right to enter into a loan agreement and that, among other things, all conditions required to do so have been met. Experienced association counsel can also assist in reviewing and negotiating all of the terms and conditions of the loan to help ensure that the association’s interests are well protected.

When it comes to funding a major project, handling unforeseen expenses or even paying for annual insurance premiums, associations that do not have sufficient reserves or wish to adopt special assessments should consider their bank financing options. By shopping around and relying on highly experienced legal counsel to help negotiate favorable terms, associations may find that a commercial loan presents the best choice for their specific needs and circumstances.




Florida Supreme Court Decision

Represents Win for Residential 

Insurance Policyholders

By Laura M. Manning-Hudson

The Supreme Court of Florida recently issued a decision that represents a significant win for millions of Florida homeowners who rely on insurance to protect their residences.

The court’s decision in Sebo v. American Home Assurance Co. rejected the "efficient proximate cause doctrine" in favor of the "concurrent cause doctrine" for property insurance claims. The court determined that the appropriate theory of recovery for claims in which two or more perils contribute to a loss – but at least one of the perils is excluded from coverage – is the "concurrent cause doctrine." The ruling is significant because it means that when there are two or more perils that contribute to a loss, a carrier cannot deny coverage if one of the causes is covered. Prior to Sebo, if a claim was submitted where two perils contributed to the loss but one was excluded from coverage, the insurance carrier could deny coverage. Under Sebo, the carrier will have to provide coverage.

Policyholders should applaud this decision because under the efficient proximate cause theory, which the court rejected, when multiple perils caused a loss, if insurers were able to demonstrate that the efficient cause (the cause that sets the other in motion to which the loss is attributed) was excluded from coverage under the policy, they could deny the claim.

With this decision, insurers must now apply the concurrent cause doctrine, so they will be required to cover a loss even if the covered peril is the secondary cause of the loss that was concurrent with the primary or efficient cause.

Because many property losses in the state come as a result of hurricanes in which both wind and flood damage occur, concurrent causes are very common in Florida. If the lower court’s ruling in this case would have been allowed to stand, property claim litigation would have increased dramatically in order to determine the efficient proximate causes of losses.

Our firm’s other community association attorneys who also focus on insurance issues and I applaud this decision by the state’s highest court.




Firm’s Attorneys Discuss Ramifications of Thwarted Condominium Termination 

with Reporters from 

Daily Business Review, The Real Deal

By Michael F. Chapnick

Our firm’s Helio De La Torre and Lindsey Thurswell Lehr were interviewed recently by reporters from the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, and The Real Deal, one of South Florida’s leading sources for real estate news and analysis. They were asked by the journalists for their insights into the ramifications of a decision by the Third District Court of Appeal that has significant implications for the future of condominium terminations in Florida.

The case pitted the Tropicana Condominium Association against the developer of the neighboring Ritz-Carlton Residences in Sunny Isles Beach. The appellate court ruled in favor of the developer, which had ties to a group of five unit owners at the Tropicana, finding that the property’s bylaws required unanimous approval for a sale, despite the 80 percent threshold in the amended condominium termination legislation from 2007. It agreed that the five holdouts’ refusal to sell was enough to block the termination that was favored by the association because the property’s 1983 governing documents predate the legislative amendment and require all unit owners to approve termination.

The Third DCA ruled that the 2007 changes to the Florida statute don’t apply retroactively to condominium declarations from prior to 2007 unless they contain certain language that incorporates amendments to the state’s Condominium Act.

The appellate court said in its ruling that "when referencing Florida’s Condominium Act, the declaration [for Tropicana] did not contain the words ‘as amended from time to time.’ Absent this language in the declaration, changes by the legislature to the Condominium Act subsequent to the effective date of the declaration do not become part of the declaration automatically."

As Helio De La Torre explained in the article from The Real Deal that appeared on Nov. 18:

"The statute seemingly had language that suggested the intent was to make it retroactive," said law firm partner Helio De La Torre, who has represented condo associations in similar cases centering on termination of associations through votes by unit owners. He is a partner of Coral Gables-based Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A.

"We had communities where bulk purchasers were coming with 80 percent [of the units] and terminating," he told The Real Deal, "and the only chance we had to fight them was to make the argument that it shouldn’t have been approved with 80 percent, that we had more than 10 percent opposed. So, under the new statute we could fight them."

But De La Torre said the ruling in the Tropicana case made that argument less potent: "Now, this court knocks out that argument."

Lindsey Thurswell Lehr’s analysis was featured prominently in the article that appeared in the Daily Business Review on Nov. 23:

The ruling will affect attorneys like Lindsey Thurswell Lehr of Siegfried Rivera Hyman Lerner De La Torre Mars & Sobel in Coral Gables.

Although the minority owners triumphed in the Tropicana appeal, Thurswell Lehr said the ruling eliminates a key strategy for others that rely on the law’s prohibition of sales in cases where 10 percent of owners object. In the past, these attorneys pointed to the wording of the legislation to argue it covered all properties in the state.

"The argument we like to make is the termination statute offers this protection," Thurswell Lehr said. "But now you have an appellate court basically saying that the amended termination statute does not apply retroactively. You are bound by what’s in your declaration."

Our firm congratulates Helio and Lindsey for sharing their insights into the ramifications of this ruling with the readers of the Daily Business Review and The Real Deal.




Shortening the Board Member Learning Curve

By Roberto C. Blanch

For those who live in community associations, board membership should be viewed in the same vein as a civic duty. An effective board of directors is essential for the financial and administrative wherewithal and stability of every community association, so all unit owners who are able should volunteer to serve at least one term to contribute to their community’s overall success.

Some association members have the mistaken perception that the responsibilities of serving as a director are too complex and demanding for their capabilities and skill sets. While it is a serious commitment in terms of time and attention, board membership should not be viewed as being too daunting of an undertaking for the average unit owner.

The key to success for practically every board member lies in their use of the most effective professional and educational resources that are available. Of course, this should begin with relying on only the most experienced professionals such as attorneys, property managers, accountants, insurers, etc., but that is just the start.

The Florida Legislature, in its recognition of the importance for board members to become educated and gain access to vital informational resources, enacted a law several years ago requiring that new board members become certified within 90 days of their taking office. The law establishes that they may do so by attending an educational course that has been certified by the Florida Department of Business & Professional Regulation, such as the board member certification seminars that are offered by our firm on a regular basis, or by signing an affidavit certifying that they have read the respective Florida Statutes, along with their association’s declaration, articles of incorporation, bylaws, and rules and regulations.

Needless to say, the educational seminars are by far the superior option for board members to effectively gain a true understanding for everything that the position entails. They cover all of the basics of community association governance and the laws that are involved, and they also touch on many of the most common problem areas that boards typically encounter.

In addition to attending a certification seminar, board members also have countless online resources that are replete with all of the most vital information for associations. The Community Associations Institute, which is the largest organization representing community associations in the world, offers a great deal of helpful articles and guides at Also, our firm’s blog at is one of the leading sources for information for community associations in the state.

To stay abreast of new laws and concerns that affect a wide-range of community associations, board members should also attend expos and events that are aimed at community associations and their members, and they should read publications such as Condo News, Florida Community Association Journal and others.

A wise move for many of those who are considering board service is to first begin by taking part in their association’s meetings and perhaps serving on one of its committees before moving on to seeking election for a board seat.

By serving on their association’s board of directors, association members are answering the call of service to their community and their fellow neighbors. With the help of all of the most effective resources that are available to directors, they can do their part to help ensure the long-term financial and administrative wellbeing of their community.




TV News Report on Fate of South Florida’s "Condo Crime Family"

By Laura M Manning-Hudson

A recent report by investigative reporter Bob Norman of Local 10 News (ABC) in South Florida documented the ultimate day in court for the area’s so-called "Condo Crime Family."

Norman’s report chronicled the case of Robert and Rachel Dugger, a married couple, and their daughter Rachel Badilla, who were dubbed the Condo Crime Family by former state Rep. Julio Robaina. The lawmaker oversaw a state investigation into condo corruption, and he concluded that the Dugger family was the condo management team with the most complaints ever in the state of Florida.

The news report states that the family had accrued more than 30 complaints during its 20 years in business in managing South Florida condominiums. The allegations against them ranged from rigging elections to stealing funds.

In the report, Norman confronts the Duggers and Ms. Badilla with questions that they refused to answer at their court hearing, in which they pleaded guilty to grand theft from the Kennedy House condo in North Bay Village as well as conspiracy to commit grand theft from other Miami-Dade condominiums. Badilla had been charged with forging checks to herself from the association and stealing the money, along with using association keys to enter a vacant unit and strip it of its kitchen and other goods.

The trio were sentenced to five years probation and 300 community-service hours, and ordered to pay more than $500,000 in restitution and other costs. They were also ordered to surrender their condo-management licenses and cease all condo work in Florida.

According to Jorge Brito, a retired detective who helped spark the police investigations that nabbed the family, the Duggers "put a manual together on how to commit fraud in condominiums. This has been a nightmare."

To watch the report in the station’s website, visit




Contending with Apathy Towards Board Member Service in

Community Associations

By Roberto C. Blanch

Community association living has many advantages and desirable qualities. Residents share expenses in order to be able to enjoy relatively carefree maintenance of their property and the use of amenities such as pools, fitness centers, meeting rooms, and other appealing features. However, in exchange for enjoying benefits derived from community association living, such as the pooling of the financial burdens of an association via the monthly maintenance payments, members should be mindful of a vital commitment which contributes to the wellbeing of their community: serving on the association’s board of directors.

An effective board of directors is critical for the financial and administrative performance of a community and association. Boards, which are in charge of making very important decisions affecting all unit owners and residents, are comprised of volunteer owners who rise to the call of serving their community in order to make it the best that it can be for all of an association’s members.

Unfortunately, in many cases, we often find that unit owners become complacent when a community’s board of directors is doing its job effectively. Volunteering for board service is often perceived to be a daunting and thankless commitment by individuals who lead busy lives and do not wish to take on new responsibilities.

Effective remedies to tackle apathy towards board member service typically stem from implementing and maintaining long-term strategies to encourage serving. It should begin by encouraging all members of the association to attend and participate in the association meetings, motivating eligible attendees to consider serving on the board of directors in the future. Sharing informational resources on board service from industry groups, such as the Community Associations Institute ( and other reputable sources, may also stimulate owners to aspire to serve on the board.

Association members who are more likely to become board members are those who take part in the regularly scheduled meetings and wish to have their voices heard, so associations should consider scheduling meetings for the more convenient dates and times for all of the members to attend.

The use of committees may also be an effective tool for creating interest in association matters and board membership. Seeking a board seat may be perceived as too big of a step for many owners, but serving on an association’s budget, social, fining, architectural review or other committee is less intimidating, often serving as a natural incubator and stepping stone for future board members.

Associations having difficulty filling board seats should also consider using officers who are not board members, to the extent permitted by the association’s governing documents. Many associations do not require that all of the officers of the association must also be members of the board of directors. As an example, an owner with bookkeeping experience may be open to serving as association treasurer without serving as a member of the board.

Another option for associations is to consider the size of their board of directors. Five is the most typical size, and some communities operate very effectively with boards comprised of only three members. Obviously, the smaller the board, the easier it is to fill with willing and able directors.

Community association members should also bear in mind the consequences of not having a viable board of directors, as this would cost the association significant funds that would need to be recouped by increased fees and assessments. The ultimate doomsday scenario for community associations that are unable to establish a board of directors is for a judicially appointed independent third-party receiver to assume control. The receiver and all of the other professionals whom they would hire to serve in the capacities of officers of the association would receive compensation from association funds, which would probably necessitate a special assessment and/or increased monthly fees.




Community Associations

Suspending Use Rights 

for Common Elements, Amenities

By Roberto C. Blanch

In 2010, at the height of the recent foreclosure crisis, community associations in Florida gained an effective tool to aid them in their efforts to collect upon delinquent assessments. It was at that time that the legislature amended Florida law to authorize community associations to suspend the rights of unit owners and their tenants to use portions of the community’s common elements and amenities if the owner became delinquent by more than 90 days in their obligation to pay association monetary obligations, including assessments. Currently, the law also extends the association’s right to suspend such use rights in the event that the owner or their tenants should fail to comply with the association’s governing documents or rules.

Prior to then, associations had few practical remedies at their disposal to address violations of rules. For instance, associations had the options of filing costly and lengthy lawsuits or arbitration actions, or imposing nominal fines. As for collection of delinquent assessments, associations’ options were limited to placing liens on the homes or units owned by delinquent owners – a remedy with limited effectiveness during the foreclosure crisis due to the statutory safe harbor protections benefiting lenders in Florida.

However, since its implementation, some associations have found that suspending owner and tenants’ rights to use common elements or facilities may be an effective measure for contending with delinquencies as well as violations of rules and other restrictions.

If an owner is more than 90 days delinquent in paying a monetary obligation to the association, the rights of the owner and their tenant to use the common elements until the monetary obligation is paid in full may be suspended. In such cases, no written notice must be provided to the owner prior to suspending such rights. If the suspension is based on an owner/tenant’s failure to comply with the association’s governing documents or rules, then the board must provide a written notice and opportunity for a hearing at least 14 days in advance of the suspension.

The portions of elements and facilities typically subject to suspension include pools, fitness centers, recreational rooms, tennis courts, and others. Also, in addition to applying the bans to owners and their tenants, they also apply to their invited guests. Bear in mind that associations may not prohibit an owner or tenant from having vehicular or pedestrian access to a residence, so their parking rights may not be suspended, nor may an association suspend utility services or the use of the common areas and elevators that are used to access the unit.

The success of this type of remedy may depend upon various factors, including whether the community has the ability to enforce the suspension or the existence of facilities subject to suspension, the use of which are desired by owners or tenants. Also, when implementing the suspension, board members should work closely with property management and onsite staff to develop policies and procedures that may be required in order to successfully enforce it.

In light of the implications and procedural considerations related to the suspension of use rights, association board members and managers should work closely with highly qualified and experienced legal counsel in order to determine the best course of action for their community.




A Primer on Association Election Basics as Season is Set to Begin

With the holiday season approaching, now is the time that many condominium associations in Florida are gearing up for their annual meetings and board member elections. It is essential for the current board and property management to have a complete understanding of the condominium election process.

At least 60 days prior to date of the meeting and election, the association must mail, deliver or electronically transmit a first notice of the election to each unit owner. This first notice sets forth the date, time and location of the meeting. Those members who wish to be considered for board membership must then give written notice of their intent to run for the board to the association at least 40 days prior to the scheduled date of the election. Although not required, candidates have an additional five days to submit information sheets about themselves.

A second notice of the annual meeting and election together with an agenda for the meeting must then be mailed, delivered or electronically transmitted to all of the members together with a ballot that lists every candidate who submitted their names to run for board membership. Any information sheets submitted by the candidates must also be included with the distribution of the ballot – regardless of their content. Return envelopes that allow for owners to print and sign their names and include their unit numbers should also be included with this mail out.

In order to have a valid election, and be able to open envelopes and count votes, at least 20 percent of the eligible voters must cast a ballot. Unit owners are not permitted to allow any other person to vote using their ballot, and all of the ballot envelopes must be retained by the association for at least one year.

Within 90 days after the election is completed, each newly elected or appointed director must certify in writing to the secretary of the association that they have read the association’s declaration of condominium, articles of incorporation, bylaws and current written policies; they will work to uphold these documents and policies to the best of their ability; and they will faithfully discharge their fiduciary responsibilities to the association’s members. Otherwise, they must submit a certificate of having satisfactorily completed an educational curriculum administered by a division-approved condominium education provider (such as our law firm which regularly conducts board member certification seminars). Those who fail to timely file the written certification or educational certificate are suspended from service on the board until they comply.

The Florida Department of Business and Professional Regulation has published a helpful condominium election brochure covering most of the procedural aspects of condo elections. A PDF of the brochure is available at

Elections can sometimes prove to be extremely challenging and contentious for associations, and it is imperative to consult closely with highly qualified and experienced legal counsel in order to help ensure that they adhere to all of the statutory mandates.




South Florida Condo Association Files Class Action Lawsuit Against Makers of Pokémon Go

By Michael E. Chapnick

The South Florida condominium association that I wrote about in this column recently after it was featured in a local TV news report on its problems being caused by Pokémon Go players has now filed a class action lawsuit against the makers of the immensely popular game app.

As was documented in the recent report that appeared on Local 10 News (WPLG-ABC) in Miami-Dade and Broward, the oceanfront Villas of Positano in Hollywood, Fla. has essentially been besieged by crowds of people every night who are playing the "augmented reality" game. The 62-unit condominium tower has been designated as a PokéStop in the game, which the lawsuit alleges has led to "out of control crowds" behaving "like zombies, walking around bumping into things" where the property adjoins the public boardwalk along the beach.

The complaint, which was filed recently in the U.S. District Court for the Northern District of California, is one of several similar new lawsuits against San Francisco-based game developer Niantic and the two other companies behind the game.

The lawsuit states that players have been drawn to the Villas to capture rare Pokémon characters that are programmed to spawn when they are first released to the public at 3 a.m. EST.

The suit states that the Pokémon Go players linger for hours, litter, and many even use "the Villas’ landscaping as a toilet during their nightly incursions." It notes that the association has made multiple requests to Niantic for the property to be removed as a PokéStop but has only received form responses.

For now, the community has hired off-duty police officers to patrol the premises from 11 p.m. to 4 a.m.

Similar to the other lawsuits that were filed by a New Jersey homeowner and a Michigan couple, this lawsuit seeks to be certified as a class action on behalf of all U.S. real estate owners whose property lies on or near the GPS coordinates of a PokéStop or Pokémon Gym. The attorneys for the association have also noted that these in-game sites, where the players capture and feed Pokémon or fight virtual "battles" with other players, have been located in cemeteries and at the U.S. Holocaust Memorial Museum in Washington, D.C.

As I noted in my prior article, there are a number of measures that community association boards of directors are now considering and implementing to address the growing nuisance, safety and security issues being caused by the game’s players. Many are starting by issuing a bulletin to all of the owners, residents and staff reminding them that excessive noise in any of the common areas – including from Pokémon Go players – creates nuisances that are in violation of association rules, and building management/security should be contacted if any such nuisances arise so that immediate action may be taken.

Management, security and valet staff are also being tasked to maintain a high level of vigilance for nonresident players attempting to infiltrate communities as well as for residents and their guests creating disturbances while they are playing. Other considerations include restricting access to lobbies and common areas at night, and even adopting rules governing the times of day that the game (and others like it which are sure to come) can be played in the common areas.

To read the 19-page complaint, which includes screenshots of the Pokémon characters that are spawning at the property, visit




Associations Should Utilize Proper Vetting Protocols When Considering Service and Emotional Support Animal Requests

By Laura M Manning-Hudson

Disagreements over service animals have consistently ranked among the most prevalent types of disputes that arise between community associations and their residents. In South Florida alone we have witnessed numerous investigations concerning discrimination claims — many of which still serve as stark reminders of the severe implications of mishandling requests for service animal accommodations.

Most government investigations begin with a complaint from a resident indicating that their request for assistance animals had been denied or that they had refrained from requesting an assistance animal for fear of being evicted.

In light of the patterns we have seen throughout the years, associations should refrain from automatically denying requests for permission to keep service or emotional support animals without first requesting additional information from the resident. By law, associations are entitled to make inquiries in order to determine if the request is legitimate and whether a service or emotional support animal is a necessary accommodation in order for the resident to have an equal opportunity to use and enjoy their dwelling.

Associations are entitled to inquire about how the disability affects the resident’s major life activities (walking, breathing, working, seeing, hearing are examples of some defined major life activities), and how the animal assists the individual with any major life activity that is impaired by their disability when the disability or the need for the requested accommodation is not apparent. Associations may also request that the resident provide this information from their doctor.

The most difficult disabilities that associations grapple with are those that are relieved by emotional support animals as opposed to a service animal. However, just because the disability is not readily apparent, but rather psychological in nature, does not mean that the resident’s claim is bogus or deniable. If a resident is being treated for depression, especially if they have lost a spouse or loved one and are receiving psychiatric therapy as well as perhaps also medication, it is difficult to deny a doctor’s claim that the animal provides the emotional support that is necessary for them to perform the most basic major life activities such as going to work, buying the groceries and even simply just getting out of bed.

Associations must keep in mind that it is the resident’s burden to prove the disability and that the relief provided by the service animal is necessary to afford them an equal opportunity to use and enjoy the dwelling. However, associations and property managers should always engage in discussions with the resident by requesting and evaluating all of the necessary information so that they may make an informed decision.




TV News Report: Hollywood Condo Association Considers Lawsuit Against ‘Pokemon Go’

By Michael E. Chapnick

The recent report by Local 10 News (WPLG-ABC) in South Florida about a Hollywood, Fla. condominium association that is considering filing a lawsuit against the maker of the Pokémon Go game app came as no surprise to our firm’s community association attorneys. We are now starting to hear from many of our condominium and homeowners association clients about their distress regarding the nuisances and potential security and liability issues that are arising as a result of the game and its players.

The station reports that the condominium association for the Villas of Positano is considering legal action to combat the throngs of Pokémon Go players who flock to the beachside building in the early morning hours.

The issue for the property is that it is a "PokeStop" for the popular game, meaning that the virtual monsters which the players are trying to find can be found at the entrance to the property that adjoins the public boardwalk along the beach. Rare Pokémon monsters are released at midnight Pacific Time, so at 3 a.m. EST hundreds of players make their way to the condominium’s doorstep.

The property manager is quoted in the report indicating that the players urinate in the bushes in the property, litter and make a great deal of noise, which disturbs many of the residents.

The report indicates that Hollywood police are aware of the problem, but they have said that those who remain on the boardwalk and do not cause a disturbance are not breaking the law. However, unfortunately for the association, many of the players are infiltrating its property in their search for the virtual characters.

The association is considering joining a class-action lawsuit or filing one of its own because the game’s maker has yet to remove its location as a PokeStop.

In addition to the problems arising from nonresidents, our firm’s other attorneys and I have also been made aware that there are also issues arising caused by residents and their guests who are gallivanting through the hallways and common areas at all hours while playing. The game features "lure modules" and virtual gyms to encourage players to meet and wage battles with their Pokémon, so players are interrupting their searches to also congregate and play it together in the common areas.

Boards of directors are now beginning to address these issues. Many are starting by issuing a bulletin to all of the owners, residents and staff reminding them that excessive noise in any of the common areas – including from Pokémon Go players – creates nuisances that are in violation of association rules, and building management/security should be contacted if any such nuisances arise so that immediate action may be taken.

Management, security and valet staff are also being tasked to maintain a high level of vigilance for nonresident players attempting to infiltrate the property as well as for residents and their guests creating disturbances while they are playing. Other considerations include restricting access to lobbies and common areas during nighttime, checking to make sure the association has sufficient insurance coverage, and even adopting rules governing the times of day that the game (and others like it which are sure to come) can be played in the common areas.

The video of the recent report can be viewed on the station’s website at




New Monitoring Services Help Associations Catch Owners Conducting Unauthorized Airbnb Rentals

By Roberto C. Blanch

The problem of short-term rentals with the help of Airbnb and other similar websites in violation of community association rules has quickly become one of the most pressing issues facing associations today. Even though Airbnb, HomeAway and VRBO claim they prohibit their hosts from renting residences in communities with rules against short-term rentals, enforcement of this policy by the online home sharing providers is virtually nonexistent.

This makes it incumbent upon the associations and their property managers to proactively monitor and investigate for unauthorized rentals and their online listings, which can be extremely difficult. In most cases, the unit owners conducting the rentals know full well that they are violating their association’s rules, so they do what they can to avoid detection.

Their ploys, which typically include walking their new guests into the property and advising security that their visit is authorized, are enabling many rentals to go undetected by management and staff. The result can be very troubling for associations, as unfettered short-term rentals can create a revolving door for guests with none of the prior screening and background checks that are typically performed for new residents and tenants.

These guests can cause potentially serious nuisance, security and liability issues for associations, which are now beefing up their monitoring and enforcement policies to help eliminate these rentals. Many are developing and implementing new registration forms for guests and tenants along with written assurances and non-compensation statements indicating that they are not paying for their stays.

In addition to these and other measures, a number of new service providers have now sprouted up to help associations and other landlords to monitor and detect listings for rentals of their properties in all of the leading home sharing websites as well as Craigslist. These include STRMonitor, BNBShield,, and

These service providers use automated and proprietary search applications and algorithms to find and report listings in their clients’ communities and properties. Once the listings are identified, some offer additional investigation and enforcement services to help associations and landlords take the necessary steps in order to stop the rentals from taking place.

The growth of Airbnb and its competitors in today’s sharing economy appears to have no end in sight. By working with experienced association counsel and utilizing these new rental monitoring and prevention services as necessary, community associations will be able to effectively enforce their rules prohibiting short-term rentals.




Video of Furniture Being Blown Off Balconies at Miami Condo Tower During Recent Thunderstorm Makes Local, National News

By Laura M. Manning-Hudson

In case you missed it, the recent video of patio furniture being blown off of balconies at a downtown Miami condominium went viral and made local and national headlines. It shows what appears to be a significant number of chaise lounges, chairs and cushions flying extremely high into the air over the Miami streets and then plummeting down onto Biscayne Blvd. and Museum Park.

Needless to say, wind-blown debris from high-rises can be extremely dangerous, and this is not the first time that it has happened in Miami. National Weather Service science officer Kevin Scharfenberg, who works at the agency’s Miami office, told the Miami Herald that the last time a storm in the area blew furniture into the air was in March of last year.

In that incident, a glass tabletop was blown from the ninth floor of a building, hitting a maintenance worker who tragically later died at a nearby hospital as a result.

After viewing the recent video, Scharfenberg was quoted in the Miami Herald’s report indicating that he believes winds as high as 70 mph were present at the time the video was shot.

"It was certainly pretty astounding to see because one or two of those lounge chairs got thrown, and they went all the way across the street," he said. "It shows how dangerous it can be."

South Florida is prone to severe tropical thunderstorms that bring extremely strong winds, and these recent incidents and video serve as a reminder of the importance for condominium associations, especially high-rise buildings, to address this issue with their owners and residents. With the help of experienced association counsel and property management, association board members should consider appropriate rules and regulations concerning balconies, patios and terraces, including the placement and storage of patio furniture and other items on those areas, together with communications alerting members and residents of the dangers and potential liability caused by wind-blown debris.

The level of exposure to potential incidents such as these will vary greatly among South Florida condominiums. Association directors should take the property’s level of risk for these incidents into account in determining the measures and communications that should be implemented.

The video can be viewed at




What You Need to Know About the High-Rise Condominium Fire Sprinkler Requirement and Opt-Out Provisions

By Roberto C. Blanch

Many condominium associations are still unaware about an upcoming deadline that requires high-rise condominium towers to have automatic fire sprinkler or Engineered Life Safety Systems in place by December 31, 2019. However, it is imperative that both property managers and boards of directors familiarize themselves with the requirements established in the applicable sections of the Florida Fire Prevention Code (FFPC) in order to avoid having to pay hefty fines for not complying with the law.

The FFPC mandates that all buildings greater than 75 feet in height — measured from the lowest level of fire department access to the floor of the highest occupiable level — be protected throughout by an approved and supervised automatic sprinkler system no later than December 31, 2019, unless the building already has an approved Engineered Life Safety System (ELSS).

Though the Florida law requires an automatic fire sprinkler system or ELSS to be in place by the end of the year, the Florida Condominium Act includes an exception that allows condos the ability to "opt-out" of having to install a complete automatic fire sprinkler system. The act states that should a Florida condominium decide that its best option is to opt-out of the requirement, it must do so by December 31, 2016.

Keep in mind that in order to opt-out, a majority of the total voting interest of the association must vote in favor of doing so at a duly noticed meeting of the membership. However, it should be noted that even if a condominium association successfully opts-out, it may still be required to install an ELSS or take other safety measures as required by the fire department or municipality in which the condominium is located.

Should a condominium association board decide to install a complete automatic fire sprinkler system or should it not attain the majority of the votes needed to opt-out, it must submit permit drawings and apply for the permit by December 31, 2016, in anticipation of having the building fully sprinklered by the December 31, 2019 deadline.

It is imperative that condominium associations prepare themselves for these deadlines. It is likely that an engineer or other qualified expert will have to be retained by the association to inspect the property prior to determining what the best option is for the building. Our firm’s other community association attorneys and I are available to answer any questions from association directors and property managers regarding this requirement.




TV News Report on Orlando HOA Neglecting to Act Against Nuisance Resident

By Michael E. Chapnick

A recent news report by WFTV Channel 9 (ABC) in Orlando focused on the accounts of some of the residents of the Cypress Head at the Enclave gated community in Oviedo indicating that the HOA has neglected to take action against a homeowner whose tenants are creating an extreme nuisance.

A resident is quoted in the report indicating that the HOA has neglected to adequately address the problems being caused by his neighbors, who are University of Central Florida students. He claims that they urinate in his yard, where he has even found discarded condoms, and his photos and videos documenting the large piles of trash and vehicles parked on the sidewalks from their many "wild parties" are included in the report.

The resident indicates that he has attempted to resolve the matter via mediation with the homeowners association to no avail, and he has since received a letter from its attorney indicating that compliance has been met.

The resident’s attorney tells the reporter that they will be filing a lawsuit against the homeowner and the HOA, and judging from his clients’ photos and video showcased in the news report it appears that may have a strong case.

The takeaway from this episode for HOAs is that they would be wise to be very diligent in their efforts to effectively contend with residents who are creating a nuisance for their neighbors. In addition to the prospect of litigation, the HOA in this case was also hit with an extremely negative news report by one of its local TV stations, and such a report can adversely affect the community’s reputation and property values.

The report can be viewed on the station’s website at




Florida Community Associations Should Tread Carefully in Restricting Political Signs

By Laura M. Manning-Hudson

Every four years, as presidential elections heat up, con-dominium and homeowners association communities throughout Florida are faced with the issue of political signs being posted in front yards, on balconies, in windows and on and around the common areas. Association attorneys are often consulted, and most would advise associations to be extremely careful with how they create and enforce restrictions that prohibit political expression.

Most associations’ governing documents include restrictions that prohibit residents from posting signs anywhere on the unit or the property. Political signs, however, give rise to issues of freedom of speech, which is protected by the First Amendment.

The key for associations to remember is that restrictions on freedom of speech under the First Amendment apply only in governmental or public settings, so community associations, as private non-governmental entities, are allowed to restrict signage, including political signs, in accordance with their corresponding state law. Some states have enacted legislation specifically addressing the issue, but Florida has not and neither has the state’s Supreme Court addressed the issue specifically.

As a result, Florida’s associations are able to enact and/or enforce rules and restrictions governing the display of political signs by their members, but they are cautioned to do so very judiciously and under the watchful guidance of highly experienced association legal counsel.

The process should always begin by reviewing the association’s governing documents to understand the community’s current parameters concerning the posting of signs. If the board and its legal counsel determine that modifications to enhance the existing rules under the community’s governing documents are in order, it is advisable that they undertake the membership voting process for amending the documents with the new regulations rather than adopting the rule as an action of the board.

Boards should also consider adopting reasonable measures, such as the permissible sizes and locations for the signs, how long before or after an election they may be posted, and safety issues including vehicle lines of sight.

Once the regulations are established, enforcement must be fair and consistent. Any partiality by the association in its enforcement actions involving political signs could expose it to legal liability.

Associations should also bear in mind that the election season is relatively short-lived, so any extraordinary efforts that they may take to address this issue may end up only having a minimal impact. By keeping all of these considerations in perspective and working with highly qualified and experienced legal counsel, Florida associations can effectively implement and enforce rules and restrictions governing the displays of political signs in their communities.




New Ruling Strengthens Association’s Ability to Demand Homeowners Maintain Appearance of Their Residence

By Michael E. Chapnick

For most homeowners association communities, one of the primary functions for the associations in their enforcement of the community’s declaration is ensuring that all of the homeowners are maintaining the exterior appearance of their property. Poorly maintained homes detract from a community’s appeal and diminish its property values, and HOAs are charged with conducting all of the necessary enforcement actions in order to consistently and fairly ensure that all of the homeowners in their community are doing their part.

A ruling earlier this month by the Fourth District Court of Appeal reinforced an HOA’s ability to have its homeowners remedy a violation of the community’s declaration involving the appearance of their home.

In the case of Hibbs Grove Plantation Homeowners Association v. Avraham Aviv and Helen Aviv, the HOA notified the Avivs that their home was not in compliance with the community’s declaration due to their failure to remove mold/mildew from the exterior of their residence. The notice referenced the declaration’s caveat that "exterior surfaces and/or pavement, including, but not limited to, walks and drives, shall be pressure treated within thirty (30) days of notice by the ACC [Architectural Control Committee]."

The Avivs responded by hiring a company to pressure clean the exterior of their house and supplied the HOA with written proof that the job had been completed, but the association went on to file for injunctive relief.

The trial court then granted the homeowners’ motion for final summary judgment, finding that they fully complied with the association’s demand to pressure clean the exterior of their home. In its filing in opposition to the summary judgment, the association emphasized the deposition testimony of the Avivs in which they acknowledged that after the pressure cleaning some "stains" remained. The association argued that "the relief sought by way of injunction in this case has not been obtained since the marks and/or the stains remained after the filing of the complaint and/or continue to exist."

In its appeal before the Fourth DCA, the association argued that the trial court erred because it misconstrued the nature of the dispute and the relief which was sought. The appellate panel concurred, finding that the complaint clearly established that the Avivs were on notice that the stains on their exterior walls constituted a violation. It concluded that the fact that "the Association sought to compel Homeowners to pressure clean the exterior walls in its prayer for relief did not obviate the need to remediate the staining problem if pressure cleaning did not cure the violation."

While the association ultimately prevailed in this case, it may have been able to spare itself legal, court and administrative costs stemming from the appeal if it had used clearer language in its enforcement notice and communications with the homeowners. It should have clearly stated that the complete removal of the stains was required, and pressure cleaning was recommended but additional measures would be necessary if the stains persisted.

Associations should work very closely with qualified and experienced legal counsel for all of their communications to unit owners involving violations of their community’s declaration.




Ruling Reminds Associations of Significant

Consequences Resulting from Failure to 

Maintain Common Elements

By Roberto C. Blanch

Maintaining the common elements and areas is one of the primary functions and responsibilities of community associations. Last year’s ruling by the Seventh Judicial Circuit Court’s Appellate Division illustrates the potential consequences that may arise in the event an association does not adequately address complaints by unit owners regarding nuisances resulting from the improper maintenance of the common elements.

In the case of Harbor View Daytona Condominium Association v. Katherine Strachan and John F. Strachan, the Strachans had complained to the association for several years of drainage back-flow plumbing problems causing black, soapy water to back up into the toilets, showers and sinks of their first-floor unit.

One of the plumbers who performed work at the condominium building during its original construction testified in depositions that when Harbor View converted from rental apartments to a condominium, washing machines were added to the individual units. While most of these washing machines connect to a drainpipe dedicated exclusively to them, the washing machines on the eighth floor penthouse level drain into pipes to which kitchen sinks from lower units are also connected.

In this particular case, the washing machine from unit 808 is the only one that drains into the kitchen sink line that serves the Strachans’ unit. According to the plumber’s testimony, Harbor View’s plumbing system was not designed to accommodate new high-efficiency washing machines that discharge water at a higher rate of speed than older machines, and in his opinion, unit 808’s high-efficiency washing machine is causing the plumbing problem.

The plumber recommended that the association should either hire a mechanical engineer to evaluate the problem and make recommendations, re-pipe unit 808’s washing machine drainpipe and run it where it would tie into the sewer line, or install a laundry tub in unit 808 and have the washing machine drain into the laundry tub to slow down the water enough to prevent the backflow of water into unit 111.

The association had taken no apparent action to resolve the problem. The lower court entered an order granting summary judgment against the association, finding that the drainage problem constituted a nuisance that it had a duty to abate under Florida law and the community’s own declaration, further ordering the association "to diligently and permanently abate the plumbing nuisance harming Unit 111."

The lower court’s ruling was affirmed by the appellate panel, which concluded that the association failed to commit itself to finding a solution to the backups by following the plumber’s recommendations, and the Strachans had demonstrated the existence of a problem, the responsibility of the association to maintain the kitchen sink line, and the continuation of the backups over a period of years.

This ruling should serve to remind community associations about the consequences which they may face when they fail to comply with their responsibility to maintain and repair common elements, especially in cases in which the common elements are causing a nuisance to a unit owner. Community associations are reminded that they should seek the advice of qualified and experienced community association legal counsel when confronted with circumstances in which unit owners are demanding that certain steps be taken by the association with regard to the common elements.




A Review of the High-Rise Condominium Fire Sprinkler Retrofit Requirement and Opt-Out Provisions

By Roberto C. Blanch

Our firm’s other community association attorneys and I often receive questions from association members, directors and managers about the Florida law requiring that high-rise condominium towers must have automatic fire sprinkler or Engineered Life Safety systems in place by the end of 2019.

In order to answer some of the most often asked questions and provide a thorough overview of the requirements and opt-out provisions, partner Gary M. Mars with our firm’s Coral Gables office has developed a simple and brief backgrounder on the Florida Fire Prevention Code (FFPC) that is now posted in our firm’s website.

The three-page document explains that the FFPC defines "high-rise building" to mean a building that is greater than 75 feet in height, with the height being measured from the lowest level of fire department access to the floor of the highest occupiable level. It mandates that all such buildings other than those with an approved Engineered Life Safety System (ELSS) must be protected throughout by an approved and supervised automatic sprinkler system no later than December 31, 2019.

The primer goes on to discuss how the Florida Condominium Act includes an exception that allows condominiums to avoid having to install a complete automatic fire sprinkler system. It provides Florida condominiums with the ability to "opt-out" if a majority of the total voting interest of the association votes in favor of doing so at a duly called and noticed meeting of the membership.

If a Florida condominium wishes to "opt-out" it must do so by December 31, 2016. However, even if a condominium association successfully opts-out, the association may still be required to install an ELSS or take other safety measures as required by the municipality where the condominium is located.

Gary’s four-page overview is available in the "Published Works" page under the News section of our firm website at or via this direct link:




CAI Encourages Associations to File Complaints with the Consumer Financial Protection Bureau for "Zombie Foreclosures"

By Laura M. Manning-Hudson

The Community Associations Institute (CAI), the largest organization representing the interests of community associations in the country, has recently created an online guide to encourage and assist associations with the filing of complaints against mortgage lenders and servicers with the federal Consumer Financial Protection Bureau (CFPB) for "zombie foreclosures." Zombie foreclosures is the term given to those seemingly never-ending bank foreclosures that just sit in the judicial system with little to no activity, barely remaining open except for nominal filings by the attorney, prejudicing the rights of community associations and their homeowners throughout Florida.

The CFPB was established in 2010 to protect consumers from harmful financial products, and it is now responsible for enforcing most federal financial consumer protection laws. In addition to its oversight of checking accounts, credit cards, payday loans and other financial products, the federal agency also has significant authority over federal housing policy, mortgage lending standards and the home buying process.

In response to the continued problem of prolonged foreclosures that are not being processed in a timely manner, causing many properties to remain in limbo for months or even years, CAI is now encouraging associations to file complaints against the lenders and loan servicers behind these so-called zombie foreclosures with the CFPB. According to RealtyTrac, one out of every five homes currently in foreclosure is a zombie property, and in certain metro areas in states such as Florida and Nevada which were hit especially hard during the housing crisis, that number can be as high as one out of three. Mortgage lenders and servicers use these delay tactics in order to avoid paying association assessments and wait for local real estate markets to make complete recoveries.

CAI created an online guide to provide associations with background information and step-by-step instructions for the filing of these complaints.

To file the complaint, the respondent will be required to provide the address of the property in question and their contact information. In addition, CAI is requesting that complainants also send it an email at to notify the organization of the complaint.

The organization is encouraging complainants to describe how the lender or servicer’s delayed foreclosure action has negatively affected their community association. As residences sit vacant for years, condominium associations and HOAs see their community property values decline because they are unable to collect association assessments and the units fall into disrepair – both inside and out – sometimes causing damage to other units. Meanwhile, the other owners in the community are forced to pay higher assessments in order to keep the budget balanced and account for the bad debt caused by the vacant homes that are just sitting and rotting.

To learn more and use the step-by-step guide for the filing of a complaint, use the link




Roberto Blanch Authors Article in Miami Herald Op-Ed Page:

"Florida Must Improve Policing of Condo Fraud"

By Laura M. Manning-Hudson

Our firm and I would like to congratulate my fellow Condo News "Community Association Counselor" columnist Roberto Blanch, who wrote an article that appears in the op-ed "Opinions" page of the March 22nd edition of the Miami Herald. Roberto’s article was pegged to the ongoing investigative series by el Nuevo Herald on condominium association fraud in South Florida that is also being featured in the Herald. The article, which was titled "Florida Must Improve Policing of Condo Fraud," focuses on the need for changes in the state law enforcement and government’s collective mindset towards combating condominium association fraud.

Roberto’s article reads:

An investigative report in el Nuevo Herald chronicled the growing problem of election fraud at South Florida condominium associations. Based on the episodes of possible fraud uncovered by the reporters and the growing number of complaints by local condo associations, it has become apparent that it’s time to put teeth into Florida’s laws and enforcement actions addressing this type of fraud.

The report uncovered that at least 84 signatures were forged in fraudulent ballots submitted in the annual board member election last year at The Beach Club at Fontainebleau Park condominium in northwest Miami-Dade. It also describes how the election at the Los Sueños condo in Hialeah was anything but a dream when it resulted in an unprecedented voter turnout of 115 percent after the final vote tally exceeded the total voting pool.

The boards of directors control the purse strings for the communities they govern, and many communities have annual budgets of multiple millions of dollars that are used for a variety of lucrative service contracts. As such, condo association boards make for appealing targets for fraudsters who conspire to take over their control via annual elections.

In a recent case in Las Vegas, a U.S. Justice Department investigation revealed that 11 associations were defrauded of tens of millions of dollars in a board of directors takeover scheme from 2003 to 2009. Forty-one defendants were convicted of getting their straw unit buyers elected to the associations’ boards through tactics involving forgery, bribery, ballot stuffing and dirty tricks. The conspirators were found to have rigged the associations’ elections by traveling to Mexico to print phony ballots, using the master key at a condominium complex in order to remove ballots from mailboxes, and retrieving discarded ballots from condo dumpsters.

South Florida’s propensity for high-end luxury condos owned by investors who primarily reside elsewhere and do not participate in their annual board member elections make the area’s thousands of associations with massive operating budgets ideal targets for takeover schemes.

Even if special attention is given by association members to help ensure that all of the applicable laws are followed, it has become impossible to prevent the most brazen and savvy fraudsters from prevailing in their takeover schemes . . .

Roberto’s complete article is available in our blog post from March 22nd in our firm’s community association law blog at and in the "Opinions – Op-ed" section of the Herald’s website at On behalf of all of us at SRHL, I am very pleased to congratulate my co-columnist Roberto for sharing his insights into this important topic for South Florida community associations with the readers of the Herald.




Appellate Ruling Illustrates Importance of Proper Service of Process and Procedural Steps in Foreclosure Cases

By Roberto C. Blanch

Associations have been counseled for the last sev-eral years to move quickly to foreclose on units in cases of prolonged lender foreclosures so that they could utilize these residences to reap rental income while the bank cases languish. However, a recent ruling by the Fourth District Court of Appeal serves as a reminder of the pivotal importance of properly undertaking required procedural steps and executing service of process on all of the owners and other defendants in foreclosure cases prior to moving on to trials and judgments.

The appellate panel in the case of Frank Reilly v. U.S. Bank National Association found in favor of the defendant Reilly and reversed the lower court’s final judgment of foreclosure. It found that the case was not yet "at issue," meaning ready for disposition, when the Broward circuit court issued a final judgment for the lender because the lender had not obtained a default against Reilly nor had Reilly filed an answer. Accordingly, the final judgment as to Reilly was reversed, and the case was sent back to the circuit court for further proceedings.

The appellate court also confirmed that Reilly must be allowed to raise his service of process challenges against the lender because they had not been considered by the circuit court. His service of process challenge stemmed from the lender’s claims that it attempted to find him but he was dodging its process servers, so it served him by publication. Had these issues simply been presented to the circuit court in the original proceedings, the challenge by Reilly and associated delays may have been avoided.

The lesson here for associations and lenders pursuing foreclosure cases is that their judgments can be completely undone if they fail to undertake required procedural steps or cut corners in the servicing of process for owners or other defendants in these lawsuits. Associations must rely on qualified and highly experienced process servers to properly service foreclosure lawsuits to owners, who oftentimes do everything in their power to evade them and avoid being served with the suit. In some cases, this may require retaining the process servers to stake out an owner at their work or residence, and it may take several attempts before the process servers are able to serve a defendant with the lawsuit as prescribed under Florida law.

These expenses should be considered part of the cost of doing business in the prosecution of foreclosure actions by associations, which should take note of this and other similar appellate rulings and avoid cursory and unsuccessful service processing in favor of service by publication. Otherwise, they are risking the very real possibility of increased legal and administrative costs by having their foreclosure rulings overturned and remanded for further proceedings.




Arbitration Ruling Illustrates Associations Cannot Impose Certain Rules, Prerequisites for Owners to Access Official Records

By Laura M. Manning-Hudson

A recent arbitration decision involving an owner’s request to inspect a condominium’s official records should serve as a reminder to all Florida community associations that they cannot impose additional rules outside of the scope of what the statute allows in order to deny or circumvent an owner’s request to see records.

The arbitration case of August E. Hawkins v. Points West Condominium Association involved a denial by the association of the owner’s request to access the current roster and contact information for all of the unit owners. The association based its denial on a rule that was adopted by its board of directors stating that all association fees and debts must be current in order for unit owners to be granted access to its official records. The association claimed that Hawkins owed $600 in attorney fees to the association for its prior issuance of a demand letter.

The Hawkins arbitrator found that Florida law provides that associations "may adopt reasonable rules regarding the frequency, time, location, notice and manner of record inspections and copying" of official records, but that it may not create any other category of rules or prerequisites that owners must meet in order to gain access to the official records. The ruling concludes that there is no language in the Condominium Act which authorizes an association to institute debt collection procedures which interfere with an owner’s entitlement to access to official records. The arbitrator also found the association’s rule to be null and void and unenforceable, and the association’s failure to allow access to the records to be a willful violation of the law. The arbitrator concluded that the association must grant access to the records within 10 days of its decision and pay the unit owner statutory damages in the amount of $500 for the willful violation. In addition, Florida law provides that the prevailing party in these proceedings is entitled to have the losing party pay reasonable attorney’s fees and costs.

As such, associations that promulgate rules requiring unit owners to sign releases, pay fees, or comply with any other rule other than what is statutorily authorized before the owner may see records should be cognizant that they could be willfully violating the statute and subjecting the association to the payment of monetary damages and awards of attorney’s fees and costs if they are challenged.

Associations that seek to impose any sort of rule, regulation or prerequisite involving records requests by unit owners should bear this decision in mind and seek the guidance of qualified legal counsel.




Ruling Reminds Associations to Look to Their Declarations in Foreclosure Cases Involving Pre-July 2008 Mortgages

By Roberto C. Blanch

In Florida, not all foreclosure cases are the same for the state’s more than 47,000 community associations, as a recent ruling by the Fourth District Court of Appeal illustrated. The ruling served as a reminder that community associations must look to their own declaration and governing documents in cases involving the foreclosure of mortgages that were issued prior to July 1, 2008.

The ruling reversed the lower court’s decision and found that a lien by the homeowners association for the Pipers Landing community in Palm City, Florida, did not have priority over a mortgage issued by U.S. Bank. The appellate panel based its decision on the fact that the HOA’s declaration did not include the necessary language specifying that its liens take priority over mortgage liens and relate back to the date of the filing of the community’s declaration.

For mortgages such as the one in the case of U.S. Bank National Association v. Grant et al. that were issued prior to amendments to the Florida Condominium and HOA Acts which took effect on July 1, 2008, first mortgage liens are superior to association assessment liens unless the association’s declaration specifically states otherwise.

The Fourth DCA based its opinion on the ruling by the Supreme Court of Florida in Holly Lake Association v. Federal National Mortgage Association in 1995. That ruling held that "in order for a claim of lien recorded pursuant to a declaration of covenants to have priority over an intervening recorded mortgage, the declaration must contain specific language indicating that the lien relates back to the date of the filing of the declaration or that it otherwise takes priority over intervening mortgages."

Because Pipers Landing’s declaration did not contain any such language giving the association’s lien priority over that of the lender, the appellate panel reversed the lower court’s ruling.

Obviously, this ruling deals a blow to associations that may wish to attempt to assert lien priority in cases involving the foreclosure of older mortgages. The court’s opinion also reinforces the state law enacted in 2008 indicating that association liens relate back to the declaration except for first mortgage lenders.

However, the ruling does serve as an important reminder for associations and their legal counsel to double-check the language in an association’s original declaration for cases involving the foreclosure of mortgages issued prior to July of 2008, as it is possible that the declaration may contain the necessary language as required by the Holly Lake ruling for the lien to be found to be superior over the lender’s mortgage lien.




Turkeys Really Do Fly – In Planes!

By Laura M. Manning-Hudson

The myth that turkeys can’t fly was proven untrue after it was discovered that turkeys can actually soar up to 55 feet in the air. For longer flights, however, they fly like the rest of us – in coach or business class. Or at least emotional support turkeys do, anyway.

Media outlets across the country recently covered a story on a turkey that ruffled quite a few feathers on a Delta flight – and it wasn’t because passengers caught a glimpse of the flying fowl from their windows. The turkey – brought on the flight as a regular passenger with its own assigned seat and all – was allowed on the flight as an emotional support animal. The traveler who owned the bird was able to provide the airline with the proper documentation required, forcing Delta’s hand into printing a boarding pass for the poultry. But when is enough, enough?

The honest answer: who knows? Lately, it seems as if the use of emotional support animals is becoming more widespread. Community associations – which are commonly faced with this issue – have been fighting for stricter standards for years. In fact, communities with pet restrictions that have passionately fought against accommodating a domestic cat and dog are now having to battle against allowing animals such as pigs – and even snakes – from entering their communities. Unfortunately, the real crux of the matter is that as people get more and more creative with their requests, the law seems to stay silent on the issue.

The important thing to keep in mind is that there are certain steps community associations can take to evaluate the service/emotional support animal request to ensure its legitimacy. While we know that some residents will continue to thwart the system with bogus claims (which really is a disservice to those residents with legitimate disabilities), at least the association can take steps to protect itself and its members from claims by other residents of non-enforcement, selective enforcement and estoppel.

Remember, there is certain information an association can and cannot ask for, and wrongfully denying a request for a reasonable accommodation may result in a costly and protracted legal battle. When in doubt, seek the guidance of qualified legal counsel to guide you through the evaluation process in order to make sure you aren’t exposing your community to any liability – even if the end result means having a turkey as a neighbor.



Ruling Reminds Associations to Look to Their Declarations in Foreclosure Cases Involving Pre-July 2008 Mortgages

By Roberto C. Blanch

In Florida, not all foreclosure cases are the same for the state’s more than 47,000 community associations, as a recent ruling by the Fourth District Court of Appeal illustrated. The ruling served as a reminder that community associations must look to their own declaration and governing documents in cases involving the foreclosure of mortgages that were issued prior to July 1, 2008.

The ruling reversed the lower court’s decision and found that a lien by the homeowners association for the Pipers Landing community in Palm City, Florida, did not have priority over a mortgage issued by U.S. Bank. The appellate panel based its decision on the fact that the HOA’s declaration did not include the necessary language specifying that its liens take priority over mortgage liens and relate back to the date of the filing of the community’s declaration.

For mortgages such as the one in the case of U.S. Bank National Association v. Grant et al. that were issued prior to amendments to the Florida Condominium and HOA Acts which took effect on July 1, 2008, first mortgage liens are superior to association assessment liens unless the association’s declaration specifically states otherwise.

The Fourth DCA based its opinion on the ruling by the Supreme Court of Florida in Holly Lake Association v. Federal National Mortgage Association in 1995. That ruling held that "in order for a claim of lien recorded pursuant to a declaration of covenants to have priority over an intervening recorded mortgage, the declaration must contain specific language indicating that the lien relates back to the date of the filing of the declaration or that it otherwise takes priority over intervening mortgages."

Because Pipers Landing’s declaration did not contain any such language giving the association’s lien priority over that of the lender, the appellate panel reversed the lower court’s ruling.

Obviously, this ruling deals a blow to associations that may wish to attempt to assert lien priority in cases involving the foreclosure of older mortgages. The court’s opinion also reinforces the state law enacted in 2008 indicating that association liens relate back to the declaration except for first mortgage lenders.

However, the ruling does serve as an important reminder for associations and their legal counsel to double-check the language in an association’s original declaration for cases involving the foreclosure of mortgages issued prior to July of 2008, as it is possible that the declaration may contain the necessary language as required by the Holly Lake ruling for the lien to be found to be superior over the lender’s mortgage lien.




Important Considerations for Community Associations Involving Construction, Remodeling Contracts

By Laura M. Manning-Hudson

For community associations, construction contracts often represent some of the costliest expenses that they will ever have. Unfortunately, many boards decide to enter into these contracts without consulting qualified association counsel in advance, which oftentimes results in shoddy workmanship and delays – and no recourse for the association.

Condominium associations are required to obtain competitive bids for projects that exceed five percent of their total annual budget, including reserves. For HOAs, the threshold is 10 percent of the total annual budget with reserves. Prior to bidding, contractors should be asked to submit written bids in response to requests for bids from the association that may include specifications and drawings prepared by a licensed engineer or other design professional. Upon receipt of bids, the association should check the references at other properties where the contractor has performed similar projects.

Once a contractor is selected, the association’s attorney should obtain the correct legal name of the selected contractor and verify that the contractor is properly licensed to perform the work. The attorney can also search for any complaints filed against the contractor.

It is also critical for associations to require that the contractor maintain proper insurance coverage and limits, including worker’s compensation and commercial general liability insurance. The association should be named on the certificates of insurance reflecting that it is an additional insured and not merely a certificate holder. Both the attorney and the association’s insurance professionals may verify that the proper insurance provisions are included in the contract and the contractor has all of the proper coverages.

The contractor should also produce all of the necessary building department permits for the project to the association and its attorney. Under no circumstances should work be performed without having secured the proper permits.

In addition, to comply with the construction lien laws, the association must file a Notice of Commencement for any job over $2,500.

The payment schedule provided in the contract should be commensurate with the percentage of the work that is completed, and should also include a retainage (an amount held back) for each payment until the end of the job. The contractor should provide releases of liens and progress payment affidavits for all partial payments received, as well as releases from any subcontractors and suppliers who performed work on the contractor’s behalf. Before the final payment is made, the association’s engineer or design professional should conduct an inspection to verify that all of the work has been completed and all of the building permits have been closed.

Other aspects of the contract that associations should review with their attorneys are the possibility of obtaining payment and performance bonds, the use of indemnity clauses to protect the association from liability, and the use of termination and attorney’s fees provisions. With the proper due diligence by qualified legal counsel and professionals, associations can avoid costly mistakes and omissions for all of their construction and remodeling projects.




Important Considerations for Community Association Foreclosures

By Roberto C. Blanch

Completions of foreclosures by community associations against their delinquent unit owners were virtually unheard of 10 years ago, as lenders would almost always move quickly with their own foreclosures against these owners, and their first-mortgage liens are superior to those of associations. However, today the practice has become the prudent approach for cases involving lenders whose mortgage foreclosure cases seem to be placed into a holding pattern in hopes of the housing market making a complete recovery.

Many community association attorneys now counsel their clients to complete their own foreclosure actions in certain cases in advance of the banks for many reasons. One such reason includes enabling associations to acquire title to the units in foreclosure and subsequently rent the residences before the lenders’ foreclosures are finalized. With so many lenders taking years to complete their foreclosures, the revenues from these rentals have generated cash flow for associations and helped to relieve a great deal of the financial strains that some associations have faced.

Last year, the state legislature added some clarity to the law governing a foreclosing lender’s liabilities to associations for the prior owners’ association debts. The banks argued in a number of cases that associations which foreclose in advance of mortgage lenders have effectively put themselves in the position of the prior owner, which is not entitled to collect any past-due fees. An amendment to the law fixed this loophole, and now lenders are still held liable for the safe-harbor liability caps to associations that have completed their own foreclosures in advance of the lenders’ cases.

The question for associations facing lender foreclosure cases that appear to be dragging is: When should an association pull the trigger and foreclose its outstanding lien held on the property for unpaid past-due assessments? The answer requires qualified legal counsel to carefully review the case along with the property appraiser website, tax collector website, court dockets and official records. Considerations that always have to be taken into account include the amount that is owed under the first mortgage, if there is also a second mortgage on the property, the exact status of the mortgage foreclosure case, and the status of the tax records on the property.

In addition to these universal considerations, some cases may also include issues involving the deterioration of the unit itself. Associations will need to carefully consider their options involving residences that will require major renovations in order to prepare them for rental. This is very important, as associations cannot rely on third parties to purchase these properties via the foreclosure sales but rather they must prepare to take title to the units.

Another important aspect of these prolonged foreclosure cases is that they can set the tone for associations that wish to take a firm and uniform stance on their collections and payment-enforcement efforts. Sending a demand letter and recording a claim of lien but going no further – even when a foreclosure that should take only a few months to complete begins to approach the one-year mark – is probably not the ideal precedent for associations to set.

While it appears that lenders are now beginning to move their mortgage foreclosures a bit quicker, oftentimes they are still moving too slowly for associations that are being burdened by outstanding unpaid assessments. Together with qualified legal counsel, associations should carefully weigh all of the above-mentioned matters and considerations to determine whether to move forward with their own foreclosure actions in advance of lenders or to wait to enforce their liens.




Is Your Condo Going to the Dogs???

By Laura M. Manning-Hudson

If your condominium’s governing documents allow dogs and renters, my bet is there’s a large number of both in your community. We get a lot of questions from condominium boards asking how they can reduce the number of renters and dogs in their buildings because – in the words of one manager: "Our building is going to the dogs!"

Depending on the language in your governing documents, you may have to keep living with the dogs unless or until your membership votes to amend them. If your association’s declaration does do not expressly restrict tenants from having pets, then an amendment will be necessary since a rule cannot conflict with a recorded restriction.

Although the association is authorized to adopt and enforce reasonable rules and regulations governing the operation and use of the condominium property, under Florida law in order for such rules to be valid and enforceable they must not contradict a recorded restriction in the association’s governing documents. In general, provisions in the declaration take precedence over any conflicting language in the rules.

While the Division of Condominiums has upheld and enforced association rules that specifically differentiate between unit owners and tenants, in such cases the declaration contained express provisions to substantiate the rule. Specifically, the Division upheld a condominium association’s rule restricting tenants from maintaining pets on the premises but allowing pet ownership by unit owners. In Grove Isle Condominium Association, Inc. v. Levy, et al, the association’s declaration provided that "[n]o pets may be kept on the condominium property except for usual and ordinary domesticated pets weighing less than twenty-five (25) pounds which may be kept by unit owners . . ." Based upon that provision, the arbitrator held that the board-adopted rule prohibiting tenants from maintaining pets was valid and consistent with the association’s declaration, which specifically granted unit owners the right to own pets – but was silent on the issue of tenants’ rights regarding pet ownership.

Similarly, in the arbitration case of Quatraine Condominium II Association v. Bradley, the association’s declaration provided that original owners of the condominium were permitted to maintain pets in the condominium residences. The board adopted a rule which provided that lessees were not allowed to have any pets. The arbitrator held that differential treatment between owners and renters was valid.

As such, we recommend that before your board starts promulgating rules that could be unenforceable and, if challenged, subject your condominium to expensive legal fees, check first with qualified legal counsel with regard to the options in your community.




Supreme Court Ruling Applies

Additional Discrimination Standard for Community Associations

By Roberto C. Blanch

The federal Fair Housing Act (FHA) was enacted in 1968 to protect homebuyers and renters from discrimination by sellers and landlords. Ever since, community associations have heeded its prohibitions against discrimination based on race, color, religion, sex, national origin, disability, or familial status by working to ensure that their policies and board decisions do not result in any sort of discrimination against these classes.

Recently, the Supreme Court of the United States ruled on the case of the Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc. over the issue of whether the legal theory of "disparate impact" should be applied under the FHA.

Disparate impact allows a plaintiff to prove that they were discriminated against if they are able to demonstrate to the court that a rule, decision or action has a "disparate impact" on a protected class. Unlike all of the other standards for discrimination that require for a plaintiff to prove an intention to discriminate by a defendant, disparate impact has no such requirement.

The Supreme Court ruled that the Texas Department of Housing violated the FHA under the theory of disparate impact, but it also held that a plaintiff cannot prove disparate impact simply by demonstrating a mere statistical disparity. The rules and practices in question must be "artificial, arbitrary, and unnecessary barriers" in order to be found to be discriminatory under disparate impact.

The ruling also enables a defendant to offer a legitimate justification for its action, as they have tried to do in other disparate impact cases in the past. If a defendant argues that it had a legitimate business justification for its rule or action, then the plaintiff would be required to show that an "available alternative . . . practice that has less disparate impact and serves the legitimate needs" is available. The ruling also cautions the lower courts that remedial orders must focus on the elimination of any practices found to be discriminatory on the basis of disparate impact rather than on penalties or punitive sanctions.

For community associations, this decision sends a clear message that they need to avoid rules and practices that may have a disparate impact on any of the protected classes under the FHA. For example, association policies to prohibit HUD-subsidized rentals or to require a minimum down-payment percentage for buyers may be attacked for having a disparate impact on the poor, a high percentage of which are minorities.

The end result of this decision is that challengers to association rules and practices now have a new basis to litigate, one which does not require them to prove any discriminatory intent. Associations should work closely with qualified legal counsel to review their rules and practices in order to address the possibility of changes to any that may have a disparate impact on a protected class under the FHA and is not necessary to achieve a valid interest.




Your Association Is a Business – Run It Like One

By Laura M. Manning-Hudson

Running any type of business is no easy feat, and that is especially true for businesses that are operated by volunteer leadership. Nonetheless, by taking a business approach to running a community association, officers and board members can help to ensure that they have a successful operation.

A vital yet often overlooked fact that association leaders face is that their association is a corporation – with officers and directors who are elected by its membership to govern and run the business. Albeit categorized under the non-profit sector, associations are still responsible for preserving the association’s budgets and bank accounts. They are also accountable for maintaining and hiring vendors, management, and staff, increasing (or at least preserving) property values, and sustaining the community’s quality of life.

Since the operation of a community association is the operation of a business, cultivating a business plan to help elected officers and directors properly run their "business" might serve a more useful purpose than most people think.

Foster Great Leaders

Elected officers and board members have a fiduciary duty to prudently serve their community, while always acting in the best interests of their organization. This means that however board members decide to act on behalf of their association, they must make sure they are doing so in good faith and with due care.

Ultimately, this means that whoever is elected to undertake this role must never place their personal wants and desires over those of the community as a whole. They must comprehend and uphold the association’s articles of incorporation, bylaws, declaration, and rules and regulations, and must always make sure they are acting within the scope of their authority.

This leads to the importance of customer service. In any business, the customer service department plays a pivotal role in the reputation of the corporation. While board members should always enforce their association’s rules and should abide by them as well, they also need to take care of their "customers."

As such, consistency is the key. There should never be any inclination of "favoritism" when enforcing these rules. Initiatives such as publishing newsletters, sending emails and posting policies around the community’s common areas can serve as friendly reminders for those residents who are new to the community, or for owners who may have simply forgotten the rules. The golden rule that every successful business follows is: Treat others as you would like to be treated. When enforcing restrictions, make sure to stay polite. It is, after all, a business.

Like other diligent business executives, board members must also invest time in learning about legal, financial and other community association-related topics that might help them evolve into effective leaders. Those who volunteer to serve should always engage in continuous learning – whether that means collecting newsletters, attending seminars or participating in LinkedIn discussions. Board members should never stop seeking information that can assist them in doing their jobs properly.

Stay Fiscally Responsible

Every business needs money to survive – as does every association. Community associations should always be financially responsible and act within their means.

Carrying the proper insurance policies is an extremely important factor for the financial well-being of any association.

Due diligence and research of contractors prior to commencing repair projects can also help associations to be prudent. This does not mean cutting corners. Research can prevent associations from overpaying for shoddy construction work and avert costly payments for low-quality materials.

All businesses, including community associations, must develop a system of checks and balances within their organization in an effort to protect their corporation from becoming victims of fraud. Community associations should work with their legal counsel and accountants to set-up precautionary measures that will help keep the association’s money secure. Maintaining adequate reserves, accurately understanding the association’s expenses (i.e., staffing, landscaper fees, etc.), and knowing which incidentals are covered by the association versus those covered by the owners can also help in ensuring an association stays economically viable.

Establish relationships with quality vendors and professionals. Dependable vendors allow board members and property managers to focus their attention on time-sensitive matters, rather than having to micromanage every vendor that drives through their gates. Having a good rapport with CPAs, attorneys, management companies and other qualified professionals who serve the community association industry can save board members when they need to turn to an expert for advice. Knowledgeable and dependable resources are assets every association should try to cultivate.

All successful businesses rely on business plans and models to keep their corporations targeted on their respective goals. Treat your association as the business that it is, and develop and follow systems and procedures for operating that business. You will find that your association will thrive, and your "customers" will be happier.




Plan Early for Successful Annual Meeting, Election

The year-end holiday season is also the season in which most community associations celebrate their annual meetings and elections. But no matter when your community association celebrates its annual meeting and election, it is important to begin the planning and organizing process well in advance in order to help ensure the best possible outcome.

The work should begin with a thorough review of the roster of current owners for each of the residences. Ideally, it is best to organize the roster in numerical order by the unit numbers or addresses in order to facilitate the registration and ballot verification process.

While a title search of the county public records deed database is the most accurate means to verify ownership of the residences, a more economical approach would be to turn to the county’s property appraiser’s office to verify ownership. Once obtained, the records should be organized in a binder, together with copies of the deeds in the same order as the roster or sign-in sheet. Using dividers to separate each floor/street is also advisable, as it may help to facilitate the verification of ownership on the day of the meeting or election. For those communities that require voting certificates to be submitted on behalf of units owned by corporations, partnerships, other entities or by more than one individual (including for units owned by a married couple), it is important for the board or management to ensure that binders are well-organized with copies of the voting certificates that have been submitted to the association in the past – as such forms are typically valid until revoked, modified or rescinded and the votes for those units cannot be counted unless the association is in possession of the forms.

Proxies that are received prior to the meeting should be verified in order to help ensure that they are dated and signed by the owner or other qualified voting member. Verified proxies should be logged in on the sign-in sheet for the meeting, and a note should be included on the sheet indicating those who have been designated as the proxies for corresponding units in order to help ensure that the designated proxies sign-in on behalf of the appropriate residences. Proxies that are found to be questionable or incomplete during the validation process should be set aside for the association attorney to review, and the valid proxies should be organized in a folder in the same order as the sign-in sheet for reference at the time of the meeting.

For those associations that suspend the voting rights of owners delinquent in the payment of monetary obligations, well-documented records should be maintained to confirm that the voting rights were properly suspended and the association’s accounting records should be updated to ensure accurate records of the amounts owed by such owners.

In addition to closely adhering to all of the statutory notice requirements for the meeting, associations would be well advised to go beyond those minimum requirements in order to help maximize attendance and participation in the election. Telephone calls, emails, and door-to-door visits by the management staff are encouraged, as these efforts will help to ensure that all of the owners are made aware of the date and the importance of their making every effort to participate by voting in the election.

While applicable statutes may provide for the posting of the meeting notice at one designated location, some communities opt to post notices in a fairly prolific manner in order to broaden the opportunities for all of the owners to view it. For those communities, in addition to posting notices in the clubhouse and recreation rooms, communities should also consider posting them in the mail room, elevators, fitness center and any other appropriate spots through which the residents typically pass.

Another important strategy to maximize the attendance and participation of the membership is to include information on the importance of the annual meeting and election for the financial and administrative well-being of the association in all of the notices and communications.

My colleague Michael Chapnick with our firm’s West Palm Beach office recently posted a brief video in the "Community Chatter" page of our website about some of the best practices for associations to maximize the attendance and participation of their members. Visit our website at and click on the "Community Chatter" section to find Michael’s video.

By starting the planning early and working closely with qualified community association legal counsel in order to follow all of the prescribed protocols, associations can help to ensure that their annual meeting and election are a resounding success and in full compliance with Florida law.




Are Property Management Companies Required to Comply with The Fair Debt Collection Practices Act?

By Laura M. Manning-Hudson

Questions regarding compliance with the federal Fair Debt Collections Practices Act for the collection of condominium association assessments by property management companies have been a source of confusion in the industry for decades. Since the ruling in Harris v. Liberty Community Management, Inc., property management companies that fall within the exemption found in §1692a(6)(F)(i) of the FDCPA are not subject to the restrictions imposed by the Act.

Specifically, the Act provides an exemption for persons or entities "collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity is incidental to a bona fide fiduciary obligation." In Harris, Liberty Community Management, as the property management company for Little Suwanee Point Community, was hired to provide management services for the association, which included the right to contract for the regular maintenance, repair and operation of common areas and facilities of the association, contract for utility services, purchase insurance policies, and negotiate the collection of assessments from delinquent homeowners. Liberty was also authorized to request, demand, collect, receive and invoice for all charges and assessments due to the association.

Homeowners residing at Little Suwanee Point Community brought an action against Liberty claiming it was a debt collector which had engaged in unfair business practices when it sent late letters to homeowners who were delinquent in the payment of assessments.

After reviewing the facts presented and the exemptions set forth in the Act, the Eleventh Circuit Court of Appeals held that Liberty was exempt from the requirements of the Act since the collection of past-due assessments was incidental to its obligations to the association. Had the collection of assessments been central to Liberty’s fiduciary obligations to the association, it would be considered a debt collector as defined by the Act, subject to the requirements imposed therein.

Accordingly, whether a property management company meets the definition of "exempt" is a question of fact for each individual association based on the scope of its duties. If the collection of assessments is central to the association’s contract with its property management company, the company’s actions to collect the debt could fall within the meaning of term "debt collector," subjecting it to the requirements imposed therein. However, if the company is also contracted to perform other various management duties, then its "collection efforts" likely will remain in the exempt status.

As we have discussed in the past, with the upsurge in collections during the recession, many managers responded to their association’s needs by taking on the preparation of documents above and beyond sending late letters to delinquent homeowners, including preparing statutory demand letters and claims of lien. Accordingly, and in light of Harris, management companies should carefully consider any requests to take on additional document preparation in relation to past-due assessments and whether performing those responsibilities could render its business as being management as well as debt collector.




Theft, Fraud Schemes and How Community Associations Can Avoid Them

By Roberto C. Blanch

In our column that appeared in the last issue of Condo News, Laura Manning-Hudson wrote about the disturbing trend of increased cases of fraud, theft and embezzlement at Florida community associations that she and many other association attorneys have been seeing. The damage that can be inflicted on associations by unscrupulous managers, employees and board members is indeed very severe, and this column will focus on the types of schemes that appear to be most prevalent and some of the best practices for associations to employ in order to help to avoid becoming a victim.

One of the most elementary strategies that are used by fraudsters is the pilfering of cash received from owners for their monthly assessments, which can be easily concealed by destroying copies of the receipts. The more elaborate schemes often entail under-the-table payments, bribes or kickbacks involving vendors that are actually co-conspirators. This could take the form of overpayments to the vendors that are then returned directly to the employee or board member instead of to the association. Other times it may involve a simple kickback from the vendor as an ongoing reward for their inflated contract.

The association’s checking account tends to be the primary vehicle for the theft and embezzlement of funds. Forged signatures and counterfeit checks may be used, and some fraudsters create fictitious vendors and issue payments directly to themselves using a bogus company name. Association credit cards have also been used in a similar fashion.

Election fraud aimed at taking a majority voting control of an association’s board in order to gain control of its purse strings is also one of the ploys that is being used with considerable success. By tampering with the ballots, stuffing the ballot box with forged and counterfeit ballots, and destroying legitimate ballots, fraudsters have been able to gain control of association boards in order to hatch and execute elaborate schemes to filch thousands of dollars from their associations each month.

Some of the best practices associations may implement to avoid being victimized include employing a high level of vigilance for all assessment payments, including verifying that the account number on the back of all of the returned checks matches the association’s account.

It is also important to ensure the independence of your association’s accounting firm by having it be selected by a vote of the board as opposed to the property manager. These accounting firms are called on to complete comprehensive annual audits, including a thorough review of the files for every member and vendor, as opposed to relying solely on reports.

Associations should also consider requiring two board members to sign all association checks. It is never recommended that associations allow property managers or other non-directors to sign association checks.

A designated board member should also conduct monthly reviews of the bookkeeping with the property manager, and this should include any credit card statements. Bank statements should also be required to be sent to the designated board member as well as the manager. The monthly review of these statements should include a careful review of all the checks that were issued and the signatures for each.

It is also wise to rotate the board membership on a regular basis and avoid having the same individuals in charge of the board or finances for considerable lengths of time.

For any payments received in cash, it is best to use a three-part cash receipt book so that copies of the receipts go to the payer, one for the bank deposit records and one for the bookkeeper.

By using these and other precautionary measures, community associations can make it as difficult as possible for managers, employees and board members to deploy schemes aimed at defrauding associations.




New Embezzlement Case at S. Fla. Condo; Best Practices for Associations to Avoid Theft

By Laura M. Manning-Hudson

If it seems as if there have been more and more stories in the news recently about condominium association’s funds being stolen or misappropriated by either board members or property managers, it’s because it’s true. Many of the reports have been coming from Bob Norman of Local 10 News (WPLG), the ABC affiliate for Miami-Dade, Broward and the Keys.

Norman’s latest story aired on Aug. 28, and the video of his report is featured in my post from Sept. 10 in our firm’s community association law blog at The story discusses the arrest of the former property manager of The Waterway condominium in Hollywood, Fla., for the alleged embezzlement of $228,000 from the association.

The transcript of the report reads:

A condo manager who allegedly embezzled nearly a quarter of a million dollars from a Hollywood Beach homeowners association was in Broward County circuit court for the first time Friday after police said she fled across the state.

Kristin Glansen, 35, pleaded not guilty to the allegation that she stole $228,000 in an embezzlement scheme from The Waterway condominium on Hollywood Beach, where she was entrusted as manager. After her plea, she had no comment as she shielded her face from a Local 10 News camera on her way out of the courtroom.

With a grand theft warrant out for her arrest, Glansen moved across the state to Clearwater, where she rented a home in that city’s historic district. After just a couple days in her home, her landlord, who asked that she not be named, became suspicious. The landlord said she did a Google search of Glansen and saw a Local 10 story reporting that Glansen was wanted by police, so she promptly called authorities, who quickly made the arrest.

"I’m glad they caught her," condo resident Jorge Quiros said. "I just couldn’t believe that she was able to take the money so easily and disappear like that."

Glansen allegedly created a fake company called Willis Homes, which has a very similar name to the condo’s actual insurance company, Willis of Florida, and wrote multiple checks to the fake company while letting the condo association’s actual insurance lapse, according to court records.

"The scheme was even more troubling when one considers what could have happened in the event of a flood, fire or other disaster," wrote Hollywood police Detective Larry Van Dusseldorp in his probable cause affidavit, adding that there was "overwhelming factual evidence of her guilt."

The information uncovered by Norman for his report is similar to that of many other cases that he and other Florida journalists have chronicled over the last several years which appear to be a disturbing trend in condominium and homeowner associations. Board members should pay close attention to the business of the association in order to avoid becoming the next victim of an unscrupulous manager or director. As we have discussed in the past, a board member’s responsibility is not limited to simply showing up at meetings to vote. Recall that board members are charged with a fiduciary responsibility to protect the interests of the entire association and all of its members. This means being vigilant about the business of the association.

The association in this case broke one of the cardinal rules of association management by allowing the property manager to sign checks on its behalf. Board members should be the only individuals allowed to sign checks, and I typically recommend that at least two board member signatures be required. Looking at the supporting documentation, backup and invoices for those checks is also important.

In addition, associations should be diligent when hiring new managers including performing background checks and checking references. While individuals who have been convicted of a felony (whose residency rights have not been restored) cannot serve as directors, some associations even go so far as to run background searches on candidates or seated board members.

Associations should also request duplicate statements from their banks, and the statements should be sent to someone other than the person who is handling the bookkeeping. In addition, association accounts should be independently and professionally audited at least once per year.

By taking these and other precautions, associations can help to avoid becoming the victim of fraud, theft and embezzlement.




Reviewing and Updating Associations’ Governing Documents and Bylaws

By Roberto c. Blanch

For condominium associations and HOAs, effective governing documents are essential for their successful management and financial well-being. Association boards should regularly review their governing documents and bylaws to ensure their continued functionality and eliminate provisions that may have become archaic.

Deciding whether the documents and bylaws need to be amended can be difficult, and ratifying new amendments with the approval of the membership often presents significant challenges. Most governing documents include voting requirements for amendments stipulating that they must be approved by super majorities of two-thirds or three-fourths of the membership.

One of the best approaches for associations to take in reviewing and updating of their governing documents is for the board of directors to appoint a revision committee for the documents. The committee, which should work together with the association attorney, should review all of the bylaws and develop suggested changes as necessary.

Some of the most common provisions of the association documents which may benefit from updates include those pertaining to voting, collections, leasing and fining procedures. Many associations are implementing amendments to limit voting rights to members who are not delinquent in their financial obligations to the association, and some are addressing recent statutory amendments authorizing electronic voting. Other associations are incorporating amendments to maximize their ability to recover attorney’s fees incurred for collection efforts, ban short-term rentals using websites such as Airbnb and other online listing services, strengthen their ability to fine members who refuse to comply with the community’s rules, and address rules involving pets and the use of the community’s amenities by members who are in arrears to the association.

Once the committee has identified changes to the bylaws that it would like to propose, they should present them to the board of directors. If the board approves, the committee should then work on drafting the amendments with the association’s legal counsel to ensure their enforceability and the likelihood of their adoption.

Before the proposed amendments are put to the membership for a vote, they should be presented and discussed with the members during the association’s monthly meetings or in special meetings that are called expressly for the purpose of proposing and considering the changes.

In order to facilitate the adoption of proposed amendments, they should be scheduled for votes at times during which higher voter turnout is expected, such as during the annual meeting. The text of the proposed amendments should be included in the delivery of notice for the meeting and its agenda, and the use of limited proxies should be considered for those who cannot attend the meeting in person.

While the process for changing a community association’s governing documents can be difficult and tedious, it is unwise for associations to ignore outdated provisions in their bylaws or avoid implementing important changes that can provide significant benefits.




Reviewing and Updating Associations’ Governing Documents and Bylaws

By Roberto C. Blanch

For condominium associations and HOAs, effective governing documents are essential for their success-ful management and financial well being. Association boards should regularly review their governing documents and bylaws to ensure their continued functionality and eliminate provisions that may have become archaic.

Deciding whether the documents and bylaws need to be amended can be difficult, and ratifying new amendments with the approval of the membership often presents significant challenges. Most governing documents include voting requirements for amendments stipulating that they must be approved by super majorities of two-thirds or three-fourths of the membership.

One of the best approaches for associations to take in reviewing and updating of their governing documents is for the board of directors to appoint a revision committee for the documents. The committee, which should work together with the association attorney, should review all of the bylaws and develop suggested changes as necessary.

Some of the most common provisions of the association documents which may benefit from updates include those pertaining to voting, collections, leasing and fining procedures. Many associations are implementing amendments to limit voting rights to members who are not delinquent in their financial obligations to the association, and some are addressing recent statutory amendments authorizing electronic voting. Other associations are incorporating amendments to maximize their ability to recover attorney’s fees incurred for collection efforts, ban short-term rentals using websites such as Airbnb and other online listing services, strengthen their ability to fine members who refuse to comply with the community’s rules, and address rules involving pets and the use of the community’s amenities by members who are in arrears to the association.

Once the committee has identified changes to the bylaws that it would like to propose, they should present them to the board of directors. If the board approves, the committee should then work on drafting the amendments with the association’s legal counsel to ensure their enforceability and the likelihood of their adoption.

Before the proposed amendments are put to the membership for a vote, they should be presented and discussed with the members during the association’s monthly meetings or in special meetings that are called expressly for the purpose of proposing and considering the changes.

In order to facilitate the adoption of proposed amendments, they should be scheduled for votes at times during which higher voter turnout is expected, such as during the annual meeting. The text of the proposed amendments should be included in the delivery of notice for the meeting and its agenda, and the use of limited proxies should be considered for those who cannot attend the meeting in person.

While the process for changing a community association’s governing documents can be difficult and tedious, it is unwise for associations to ignore outdated provisions in their bylaws or avoid implementing important changes that can provide significant benefits.




Florida Condo Associations, HOAs Contending with Growing Wave of Rule Violating Airbnb Rentals

Guest Column by 

Michael Chapnick:

For this week’s edition of Condo News, I am pleased to offer a guest column by my colleague Michael E. Chapnick, who is also a partner with our law firm in our West Palm Beach office. Michael has focused on community association law since 1996, and his article is on the issues that are now arising at South Florida condominium associations involving short-term rentals via Airbnb and other similar websites:

A recent article in The Boston Globe chronicled the case of a condo owner who earned rave reviews as a host on the vacation rental website Airbnb. He went to great lengths to accommodate the needs and whims of his guests, but apparently his willingness to oblige did not extend to his condominium association and fellow neighbors.

The unit owner was fined $9,700 for violating his condominium association’s rules against short-term rentals via the increasingly popular website, which allows users to list their residences for short-term rentals aimed at guests who desire more homey accommodations. The owner has retained an attorney to try to negotiate a lower fine, and he is quoted as saying that he "didn’t expect, as an owner, having somebody else in my own home would be a problem."

Perhaps he should have known better, as most association’s covenants and rules prohibit short-term rentals, and some even include an application process with background checks for prospective tenants. Yet he and other unit owners are claiming ignorance of the rules after being hit with fines ranging anywhere from $100 to $1,000, depending on their associations’ bylaws, for each night that they have rented their units, according to the newspaper’s report.

With South Florida’s countless luxury waterfront condominiums replete with investor-owned units that sit idle during large swaths of the year, the growing popularity of Airbnb and its rivals HomeAway and VRBO represents a potentially significant new problem area that should receive the attention of many association boards throughout the region. The prospect of a revolving door of short-term guests presents security and nuisance concerns, especially for condominiums, and the boards of the state’s condo associations would be well advised to review and possibly strengthen their covenants to specifically ban these types of rentals as well as ensure adequate enforcement provisions and procedures.

For those associations which are already contending with owners who are utilizing these websites for short-term rentals or suspect that it is taking place, their rules enforcement actions should begin with thorough investigations. In a non-confrontational and courteous manner, the property manager or board member should inquire with the new guests in the residences that are suspected of being rented as to the nature of their agreement with the unit owner and how they discovered the property. They should document their findings, and they should also research the websites to find and save the offending listings.

Armed with this information, they can then move forward on two fronts: directly with the owner as well as with Airbnb or the website listing the unit. Airbnb includes in its terms and conditions for hosts that they must comply with the rules governing rentals in their communities, and the site reserves the right to purge any listings that it deems to be in violation of its terms. Presumably, the company and its rivals would be willing to consider the removal of listings by hosts that are in violation of community association rules, and one of my colleagues at our firm has learned of a case from a client in which Airbnb was contacted by the association and pulled a listing from its site after it learned of the rule violation.

In addition, associations should share the evidence that they have gathered of the rentals using these websites with their legal counsel, who can use the information to issue an immediate cease and desist letter to the unit owner and help the association to determine an appropriate enforcement mechanism. However, for unit owners who have already begun enjoying the rewards of their rentals, it is a safe bet that they will be reluctant to discontinue them.

For the ardent renters who will refuse to comply with these demands and continue to rent their residences, the association counsel should move quickly to file a Petition for Mandatory Non-Binding Arbitration on the rule violation with the state’s Division of Condominiums, Time Shares and Mobile Homes, administered under the Department of Business & Professional Regulation. The Division of Condominiums, through its Arbitration Division, is equipped to quickly and efficiently conduct arbitrations on disputes involving covenant and rule violations, and its final orders can involve both the issuance of injunctive relief (i.e., requiring someone to do or not do something), as well as requiring the non-prevailing party to pay the reasonable attorneys’ fees and costs of the prevailing party incurred in bringing the action to enforce the association’s covenants and rules.

In the new peer-to-peer sharing economy, Airbnb and the other websites enabling homeowners to rent their residences to short-term guests are here to stay and likely to enjoy continued growth in the years to come. The associations in Florida that wish to avoid these short-term rentals should act now in order to protect the interests of their members.




Three-Year Jail Term Begins for Former Condo Manager Convicted of Stealing Over $200,000 from Association

By Roberto C. Blanch

The recent news about the start of a three-year jail sentence for the former property manager of a Sarasota, Fla.-area condominium who was convicted of stealing more than $200,000 from the association she managed sent a resounding message about the severe repercussions that property managers and association directors can face for theft and fraud.

According to several news reports, Judy Paul, 51, was sentenced to three years in prison followed by 10 years of probation, and was ordered to pay $200,000 in restitution to the Sand Cay Condominium Association, following her conviction in July, 2013, on felony counts including grand theft and scheming to defraud more than $50,000. It was further reported that Paul was scheduled to surrender at a court hearing on July 1 but failed to appear. The reports state that when she subsequently appeared in court at a later date, she pleaded with the judge for mercy, claiming that she suffered from several medical conditions including uncontrollable bowels, post-traumatic stress disorder as a result of the conviction, and that she attempted to end her life two days before she was originally scheduled to surrender.

Paul’s case was the first to be brought to trial by the White Collar Crime Division of the State Attorney’s Office formed in 2013. Her fraud was discovered when a routine 2009 audit uncovered more than 50 checks that she had issued and cashed or deposited into her own bank accounts. Evidence presented at the trial revealed that she also purchased a Harley-Davidson motorcycle with association funds, and the unit owners were forced to cover the association’s shortfalls through assessments.

This case underscores the importance for association directors and property managers to implement procedures and policies aimed at avoiding the theft of association funds by those who are typically authorized to have access to them. These efforts may include requiring that at least two board members sign all checks and review documentation supporting the invoice or obligation to be paid, the requirement for background checks and screenings for managers and employees, the thorough review of all bank statements and financial records presented to directors and managers, the establishment of low limits on discretionary expense approvals by the property manager without board authorization, and a detailed review and understanding by directors of the association’s yearly financial audits performed by independent professionals. Directors should also coordinate with the association’s insurance agent to confirm that the association is adequately insured to best protect against such instances of fraud, theft and other types of employment dishonesty.

The severe prison sentence and financial restitution imposed in this case against the convicted former property manager should send a compelling message to unscrupulous managers and association directors who contemplate taking part in schemes to defraud and steal from their association.




Tenants’ Rights in Condominium Communities

By Laura M. Manning-Hudson

Our firm’s other community association attorneys and I are often asked by condominium association board members about the rights of tenants who are renting units in a condominium to use the common elements – as well as their ability to participate and vote in meetings and elections.

The Condominium Act provides that tenants who are leasing units in communities "shall have all use rights in the association property and those common elements otherwise readily available for use generally by unit owners." This means that associations must allow renters to have the same use rights as unit owners to the pool, fitness center, clubhouse, tennis court, etc. Renters may also use the parking spaces designated for their unit.

For unit owners who are leasing their residences, the law also provides that they "shall not have such rights except as a guest, unless such rights are waived in writing by the tenant." The law further provides: "The association shall have the right to adopt rules to prohibit dual usage by a unit owner and a tenant of association property and common elements otherwise readily available for use generally by unit owners." This means that owners who rent out their units may not also come by to swim in the pool whenever they want!

With regard to association meetings and voting, tenants do not typically have the right to attend meetings because they are not owners, however, tenants who are conferred with a Power of Attorney by their unit owners may attend and speak at the association meetings. Voting rights and requirements for board membership are generally document specific and can be found in the association’s bylaws.

Another issue that often arises is whether condominiums can prohibit tenants from having pets even if the governing documents allow unit owners to have pets. The issue turns on the exact language in an association’s governing documents. Many board members are surprised to learn that they may adopt rules that restrict tenants from having pets based on the language in their recorded documents – but this is not always the case. Many association documents require a unit owner vote to amend the documents in order to restrict tenants from having pets.

Finally, if a tenant or their landlord/unit owner violates the association’s rules and regulations or other governing documents, the Condominium Act has empowered the association to restrict the tenant’s ability to use the common elements. This also applies to the tenants of unit owners who become more than 90 days delinquent in the payment of their association dues.

With so many investor-owned units in South Florida condominium communities, significant percentages of tenants under short and long-term leases are likely to be a permanent characteristic. Associations should bear in mind that laws do exist to protect tenants’ rights in order to help ensure that associations avoid the possibility of unforeseen legal liabilities.




Barking up the Wrong Tree

By Roberto C. Blanch

Yogi Berra once said "it ain’t over ‘till it’s over." That statement perfectly describes the most recent decision to come out of Florida’s Fourth District Court of Appeal dealing with a unit owner’s request for a reasonable accommodation under the Fair Housing Amendment Act of 1988 (FHAA) to keep an emotional support animal despite her association’s restrictions.

The case of Carolyn Hoffman v. Leisure Village, Inc. of Stuart, Fla. actually involved two dogs. As to the first dog, Hoffman and her association ended up in litigation which resulted in a settlement agreement whereby the association allowed her to keep the dog, with the understanding that she would not get another dog after it passed away, and if she did get another one she would have to move from Leisure Village.

Upon the death of her dog in 2010, Hoffman was diagnosed with chronic depression and her psychiatrist recommended that she get another dog to support her emotionally. Her attorney made a request to Leisure Village for an accommodation under the FHAA, but the request was denied. She got the dog anyway.

The association then went back into court and asked the judge to enforce the settlement agreement. At the same time, Hoffman filed a complaint with the U.S. Department of Housing and Urban Development (HUD) claiming that she was wrongfully denied an accommodation of her disability under the FHAA, and her complaint was ultimately sent to the Florida Commission on Human Relations (FCHR) for investigation. Before FCHR could finish its investigation, the trial court ordered Hoffman to remove her dog from the association.

When FCHR completed its investigation three months later and found cause to believe that a fair housing violation had occurred, Hoffman first tried to file a claim in federal court, and then back in state court, claiming discrimination. The courts dismissed her case, saying that she had waived her right to bring a new claim and all of the issues had already been decided in the case relating to her first dog.

The Fourth DCA found that the trial court did not even have the authority to decide Hoffman’s discrimination claim because while she had started the process of filing complaints with HUD and FCHR, FCHR did not even complete its investigation of the claim until three months after the court dismissed her claims. The court examined the law and found that Hoffman was required to exhaust the administrative process (i.e., filing a discrimination claim with HUD and having that claim investigated to conclusion) before she was entitled to file a lawsuit. The appellate panel reversed the dismissal of her discrimination claim, thereby allowing her to pursue it back in the trial court.

The lesson to be learned from Hoffman and Leisure Village is even when it appears that a fair housing dispute has been resolved by agreement, it is not necessarily over . . . "until it’s over."




Florida Supreme Court Adds Clarity to Activities That Constitute the Unlicensed Practice of Law by Community Association Managers

By Laura M. Manning-Hudson

In 1996, the Florida Supreme Court issued an advisory opinion regarding the activities of licensed community association managers ("CAM") that would constitute the unlicensed practice of law. In 2013, The Florida Bar weighed in on the issue when its Standing Committee on Unlicensed Practice of Law submitted a report to the state’s highest court for its consideration. On May 14, 2015, the Court filed its final opinion based on the Bar’s submission.

The Court upheld its findings from the 1996 opinion and adopted all of the recommendations provided by the Bar in its 2013 report. The Court found that the following tasks performed by CAMs are not considered the unlicensed practice of law:

• Preparation of a certificate of assessments due once the delinquent account is turned over to the attorney for the association

• Preparation of a certificate of assessments due once foreclosure against the unit has commenced

• Preparation of a certificate of assessments due once the member disputes in writing to the association the amount alleged as owed

• Drafting pre-arbitration demand letters

The Court ruled that the following tasks performed by CAMs are considered the unlicensed practice of law:

• Drafting of amendments to the declaration, bylaws, and articles of incorporation that are recorded in the public records when such documents are to be voted on by the members

• Preparation of construction lien documents

• Preparation, review, drafting and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, and others

• Any activity that requires statutory or case law analysis to reach a legal conclusion

The Court found that the following tasks performed by CAMs may or may not be considered the unlicensed practice of law, depending upon the facts and circumstances involved in each case:

• Determination of the number of days to be provided for a statutory notice

• Modification of limited proxy forms

• Preparation of documents concerning the right of the association to approve new prospective owners and/or tenants

• Determination of affirmative votes needed to pass a proposition or amendment to recorded documents

• Determination of votes needed to establish a quorum

• Identifying, through the review of title instruments, the owners who are to receive pre-lien letters

The Court’s ruling includes examples that help to clarify whether or not these activities constitute the unlicensed practice of law. The complete ruling with the examples that are provided for each of these tasks is available at

With the upsurge in collections and the issuance of demand letters and claims of lien by associations, many CAMs have responded to their association’s needs by taking on the preparation of these documents rather than turning to the association attorney. This has led to cases in which demand letters and claims of lien have been invalidated due to mistakes in legal descriptions and recording errors. Association boards should bear in mind that the preparation of demand letters, claims of lien, Notices of Commencement and other legal documents do not typically incur significant attorney fees, but the ramifications of errors in these documents can prove to be very costly. If The Florida Bar determines that a property manager has engaged in the unlicensed practice of law, that manager could face the imposition of fines as well as the possibility of having their CAM license revoked or suspended. It is simply not worth the risk for associations or their managers to prepare these documents in order to avoid the relatively nominal legal fees, and thereby risk exposure to their managers of potential fines and license issues.




An Overview on Condominium and HOA Reserve Funds, Links to Key Informational Resources

By Roberto C. Blanch

For community associations, preserving the property and its common areas is one of the foremost duties of the association directors. Beyond the day-to-day maintenance responsibilities, association directors and managers are responsible to develop funding plans for the upkeep and replacement of common facilities such as elevators, roofs, heating/cooling systems, swimming pools, decks and balconies. These funding plans generally take the form of accumulated budgetary reserves to help spread the anticipated costs of deferred maintenance or capital expenditures for the associations’ common facilities or building components over the estimated remaining useful lives of the components. Maintaining well-funded reserves enables associations to avoid large annual assessment increases or special assessments that can create financial hardship for the unit owners at those times when raising funds is required to perform the necessary deferred maintenance or replacement.

For condominium associations, establishing and funding reserve funds is an obligation of the board, as reserves are statutorily required to be included in condominium association budgets that must be adopted each year. Specifically, condominium associations must maintain reserve funds for roof replacement, exterior paint, pavement resurfacing and all other items for which the replacement or deferred maintenance costs exceed $10,000. Additionally, depending upon certain circumstances, the boards of some homeowners associations may also be required to budget for reserves, depending upon whether it is required by the association’s governing documents as established by the developer or voted for by the association members. While the funding of reserves may be waived or reduced on an annual basis upon obtaining the appropriate membership vote, community association boards may not be automatically required to submit such a question for a vote of the membership.

In an effort to ensure the proper funding of reserves it is in the best interests of most associations to retain highly qualified and experienced consultants to prepare an objective reserve study for the association. These studies are used to assess the actual costs for the ongoing maintenance of all of common facilities and building components. They include a detailed analysis of the current condition of the major components as well as a financial breakdown for their expected maintenance, repair or replacement costs. The experts who prepare these studies use a formula that takes into account the estimated cost of deferred maintenance or replacement as well as the remaining useful life of the component.

In light of the higher costs typically associated with comprehensive reserve studies, some smaller associations have opted for a simpler analysis, such as a Five-Year Capital Plan that is prepared by experienced professionals. Such a plan may be used by the board to determine the level of reserves expected to be required.

In addition to properly establishing and maintaining reserve funding and preventing deficits thereof, association board members have a fiduciary duty to the unit owners to ensure that a community’s reserve funds are protected and invested properly. Risky investments are not appropriate for these funds, and it is highly recommended for associations to turn to qualified professionals for their investment and tax advice. It is also imperative for reserve funds to be accounted for appropriately and accurately in the financial statements, audit reports, budgets and other financial and administrative community association records.

For condominium associations and their directors, one of the most helpful informational resources related to reserves is available online from the Florida Department of Business and Professional Regulation, Division of Condominiums. The agency’s "Budgets and Reserve Schedules: A Self-Study Training Manual" is the state’s official training manual for condominium association directors and members on association budgets and reserves. Click here to read and print the manual:

Another very helpful resource for all types of community associations is the "Reserve Studies/Management Best Practices Report" issued by the Foundation for Community Association Research, which is available by clicking on the following link:

Community association board members must consider many factors in order to properly assess and fund their associations’ reserve accounts. With the proper guidance and planning, properly established and funded reserve accounts assist associations to avoid unexpected financial burdens for all of the unit owners.




Legislative Update: Estoppel Certificate Bill Dead, Bill to Make Administrative Changes To Association Practices Passes

By Roberto C. Blanch

The premature adjournment "sine die" of the recent session of the Florida House of Representatives spelled the demise of various bills that had not yet been passed. One such bill was HB 611, which was the subject of one of our recent columns and blog articles describing the various changes that were being proposed by the bill in connection with procedures and charges related to estoppels provided by community associations.

A bill that did pass both the House and Senate is HB 791, which soon will be sent to Gov. Scott for his final approval before it is enacted. This bill makes some important updates to the state’s laws governing community association practices and procedures and includes the following changes:

• The requirement for electronic notices to be authorized by association’s bylaws for some meetings of the board, membership and association committees is eliminated.

• Establishes that the role of the fining committee is to confirm or reject the fines levied by the board.

• Suspension of voting rights or right to use common elements will apply to members as well as their tenants and guests, regardless of the number of units owned by the member, even if the delinquency or failure that resulted in the suspension arose from less than all of the multiple units owned by a member.

• Proxies will be allowed to be submitted to the association via fax or email.

• When voting rights are suspended, the voting interest allocated to the unit will be subtracted from the total number of voting interests.

• Establishment of procedures for implementation of electronic online voting for elections and other unit owner votes.

• A clarification that partial payments may be applied to outstanding amounts.

• Extends the "Distressed Condominium Act" (i.e., the "bulk buyer" law) until 2018.

• Amends the official records "catch-all" provision to include "written" records, as already appears in the HOA Act.

• Names Chapter 720 the "Homeowners’ Association Act."

• Provides that the "governing documents" of an HOA include rules and regulations.

• The failure to provide notice of recording amendment in an HOA does not affect the validity of the amendment.

Most of the foregoing changes help to clarify and update the existing statutes in an effort to enable associations to overcome some problem areas arising in connection with the laws governing condominium, cooperatives and homeowners associations. However, a few of the changes included in the bill, such as the introduction of electronic online voting, are expected to cause considerable issues as directors, managers and their legal counsel work to navigate through the process related to the implementation of such measures.

Association members, directors and community association property managers should be mindful of these changes and work closely with their legal counsel to address any questions regarding these changes should they eventually become law.





New Florida Bill Presents Serious Concerns for Estoppel Certificates Issued by Community Associations

By Laura M. Manning-Hudson

A bill was recently introduced in the current session of the Florida Legislature that presents significant concerns for community associations. House Bill 611 (SB 736 in the Senate) aims to make major changes to the process, costs and effect of the estoppel certificates prepared by associations. Estoppel certificates are used by associations (and their attorneys and property managers) in order to provide owners with an accurate accounting of the amounts owed to an association as of a particular date. Prospective buyers and title companies rely on these estoppel certificates in order to bind the association to the exact amount stated in the certificate until the expiration date set forth in the certificate.

According to the current language, associations have the authority to charge a fee for the estoppel certificate which is payable by the requesting party upon preparation of the certificate. There is no set limit to this fee, except that it must be established by a written resolution of the board of directors or provided by a written management, bookkeeping or maintenance contract. However, the proposed bill intends to impose a maximum estoppel fee of $100 to $150, as opposed to a "reasonable fee." Since the preparation of estoppel certificates can be highly detailed and labor intensive for experienced professionals, the newly proposed fee range is severely inadequate and may lead to increased management and legal fees which would be passed on to associations. In fairness, these fees should only be borne by the requesting party.

The bill also aims to eliminate the ability of an association and its agents to collect an estoppel fee prior to the closing of the sale of the underlying property by requiring that the estoppel certificate be paid from the proceeds of the sale. In addition, the proposed bill provides for extremely limited recourse for the collection of the fee should the closing never occur. Ultimately, the association may become liable for any fees that go uncollected.

The bill further proposes the reduction in the number of days that associations have to respond to estoppel requests from 15 down to 10 days. In complex cases such as those that include fines levied against an account in addition to delinquent maintenance dues and/or litigation, the preparation of an estoppel certificate typically exceeds 10 days. According to the proposals found in the bill, associations that are unable or fail to meet the 10-day deadline will have effectively waived any claims for the amounts due that would have been provided in the estoppel certificate. This is an extreme measure that would seriously impact an association’s right to collect unpaid assessments.

Another important concern for associations is that the proposed bill requires all estoppel certificates to be valid for 30 days from their issuance, and prevents the association and its agents from collecting additional assessments or other costs that accrue within those 30 days. In the case where an estoppel certificate is being requested for a delinquent account in litigation, attorneys would either have to stay the case pending payment or would need to include additional attorney’s fees if there are pending matters to be addressed within the 30-day period from the issuance of the estoppel.

Lastly, the proposed bill requires waiver language to be included in the estoppel certificate preventing the association from collecting moneys in excess of the amount set forth in the estoppel certificate.

For professionals who prepare estoppel certificates for community associations on a regular basis, the measures that are being put forth in this bill appear to be draconian. As such, we are encouraging association directors, members and property managers to contact their local representatives to express their concerns and disapproval with this bill. The contact information for the legislators for every district in the state can be found at




A Review of Some Best Practices for Association Annual Meetings, Elections

By Roberto C. Blanch

As the season for annual meetings and elections at South Florida community associations comes to a close, our firm’s other association attorneys and I are reminded of the significance of following all of the necessary protocols to ensure that association meetings and elections run as smoothly as possible. This topic further serves as a priority to many of our community association clients, causing many of them to inquire about safeguarding their election procedures and other issues such as perceived discrepancies between statutory election guidelines and the related provisions of their associations’ governing documents.

Below is a recap of recommended best practices related to annual meeting and election procedures that have been discussed in articles in our firm’s blog at

First, in an effort to promote participation and ensure voting by the qualified individuals, it is advisable that association management take the steps to verify that the association’s roster of owners is current and includes a description of all the individuals on title to the home or unit. The roster should further be organized in numerical order by unit numbers or addresses to facilitate the registration and ballot verification process. While a search of the county public records deed database is the most accurate source to verify ownership of units or homes, a more economical approach is to verify the ownership from the county’s property appraiser’s office. Once obtained, these records should be placed in a binder, together with copies of the deeds organized in the same order as the roster or sign-in sheet. Consider organizing the binder with dividers separating each floor/street, as this step may further facilitate the verification of ownership on the day of the meeting or election.

Proxies received prior to the meeting should be verified so as to ensure that they are dated and signed by the owner or other qualified voting member. Once the proxies have been verified, they should be logged in on the sign-in sheet, and a note should be included on the sheet indicating who the proxy is for the corresponding unit in order to ensure that the designated proxy signs-in for the unit or home at the meeting. If a proxy has a deficiency or is found to be questionable during the validation process, it should be set aside for the association attorney to review.

Additionally, the period between the proxy verification process and the time of the meeting may be used to enable the unit owner to cure any defects or resolve problems that may have been identified with regard to the proxy form. The valid proxies should be organized in a folder in the same order as the sign-in sheet for reference at the time of the meeting.

Ballots received in advance of the election should be organized in the order of the roster. The board should further consider appointing an independent committee to validate that the outer ballot envelopes have been properly executed and signed by the qualified voter(s) prior to the scheduled time of the election. This process will serve to further streamline the ballot validation process, which would otherwise have to be performed at the time of the meeting. Bear in mind that outer ballot envelopes may not be opened prior to the meeting.

It is important to remember that unlike proxies, voting certificates do not expire unless they are rescinded or replaced by another voting certificate. As such, a voting certificate binder should be organized in numerical order by unit or lot number or by street address of the unit or lot. As the voting certificates tend to remain valid until rescinded or as otherwise specified above, those received for the scheduled meeting or election should be included in the binder as replacements for any voting certificates previously provided for corresponding units or lots. Voting certificates are typically required for all units owned by multiple individuals or by a corporation or other legal entity. However, we caution that many community association documents require that voting certificates be submitted for units owned by husband and wife as well.

The executed Proof of Notice Affidavit for the annual meeting should also be available at the meeting. In addition, be sure to have plenty of blank ballots, envelopes (inner and outer ballot envelopes) and voting certificates on hand at the election for use by any owner who has lost or misplaced their ballot or voting certificate and would like to cast a ballot in person at the election.

By adhering to these suggested best practices, working with qualified community association legal counsel and following all of the other prescribed protocols for the annual meeting and election, associations can help to ensure that their elections are in compliance with Florida law.




Miami Herald Guest Column by Jeffrey Berlowitz: Chapter 11 Bankruptcy is Viable Option for Condo Associations, HOAs

By Laura M. Manning-Hudson

Our firm’s Jeffrey S. Berlowitz wrote the following guest column, which appeared in the March 23 edition of The Miami Herald’s "Business Monday" section:

While the housing market in South Florida is continuing its recovery, many of the community associations in the region are still struggling with delinquencies by unit owners in the payment of their association dues. The shortfalls in the associations’ collections, which in some cases have also been exacerbated by gross mismanagement or even theft by members of association boards, are causing scores of South Florida condominium and homeowners associations to experience significant difficulties in satisfying their operational expenses.

For associations that are incapable of meeting all of their financial obligations, seeking relief through a Chapter 11 bankruptcy reorganization plan has now become a viable option in order to avoid forcing some unit owners to pay more than their proportionate share of the assessments.

While many typically think of financial reorganization under Chapter 11 as being reserved exclusively for large corporations, condominium and homeowners associations are also entitled by law to file for this form of bankruptcy relief. In fact, over the last few years, a couple of South Florida associations have already emerged through a successful Chapter 11 reorganization and regained their financial footing.

Chapter 11 is a designed financial reorganization program that is operated under bankruptcy court supervision, and it enables an association to restructure its debt with the protection of an "automatic stay," which halts creditor collection proceedings during the pendency of the bankruptcy case unless they are otherwise allowed by the court. An association in Chapter 11 has the opportunity to negotiate with its creditors, cancel or renegotiate onerous contracts and leases, and avoid the seizure of assets and garnishing of bank accounts by creditors holding judgments.

In South Florida, two recent cases of association bankruptcies highlight the potential benefits for financially strapped condominiums and HOAs. The first was The Spa at Sunset Isles, which is a 232-unit condominium in Palm Beach County that filed for Chapter 11 bankruptcy in 2010. Because the community’s financial strains were being caused by many units under foreclosure, the bankruptcy court issued an order requiring the lenders that were languishing in their foreclosure actions to begin paying monthly assessments to the association before taking title to the units and, at the same time, ordered them to complete their foreclosure actions. Given that certain of The Spa’s units were in foreclosure proceedings for more than three years, the bankruptcy court’s order provided immediate and substantial relief. Ultimately, the community confirmed its reorganization plan with substantial funds in its operating account resulting from the payments it received from the foreclosing lenders.

Another recent South Florida association bankruptcy was filed last November by the Bella Luna Condominium Association, which was facing court battles with creditors, a 25 percent delinquency rate among its residents, and a threat from the City of Hialeah to cut off its water due to significant arrears in the payment of its water and sewer bills. With the help of the bankruptcy court, the condominium was able to slash its unsecured debt by approximately 85 percent and restructure its remaining debt, paving the way for this community to regain its financial well-being.

With the modest pace of the recovery in the housing market, many community associations are still facing significant financial distress, and Chapter 11 bankruptcy reorganization represents perhaps their best possible opportunity for a positive financial future. In fact, for associations that continue to face an exorbitant percentage of units in prolonged foreclosures, the ruling in the Palm Beach County case could set the tone for similar cases in the future. It has the potential to open the door for other associations to seek similar relief whereby lenders behind with their foreclosure actions are forced to begin paying assessments before they take title to the units, which will undoubtedly compel them to expedite their foreclosures.

In light of the two successful Chapter 11 bankruptcy reorganizations by South Florida community associations, the associations that currently find themselves in unsustainable financial straits may consider a bankruptcy reorganization filing as a viable option for a potentially solid financial future.




Magazine Article by Gary Mars: HOAs, Condo Associations Must Implement Safeguards to Prevent Election Fraud

By Laura M. Manning-Hudson


Our firm’s Gary M. Mars contributed the following guest column for the April issues of Our City Weston and Our City Davie magazines:

A recent case in Las Vegas has set a new bar for the heights to which criminals will go in their efforts to defraud condo associations and HOAs for contracts worth millions of dollars. A U.S. Justice Department investigation revealed that 11 homeowners and condominium associations in Las Vegas were defrauded of millions of dollars in a board of directors takeover scheme that took place from 2003 to 2009. Federal prosecutors are seeking jail time for the defendants in addition to approximately $25 million in restitution, and 37 defendants have taken plea agreements and are facing prison sentences while the remaining four defendants are awaiting trial.

The defendants are accused of getting their straw unit buyers elected to community associations’ boards of directors through forgery, bribery, ballot stuffing and dirty tricks, all with the help of a Kung Fu grandmaster to intimidate wary board members. As disclosed under his plea agreement, this martial arts expert admitted that the conspirators would rig the associations’ board of director elections by using stolen and forged ballots so that they could win a majority voting control of the boards in order to secure lucrative contracts once control of the board and association was obtained. Co-conspirators traveled to Mexico to print phony ballots, used the master key at a condominium complex in order to remove ballots from mailboxes, and retrieved discarded ballots from a condominium’s dumpsters.

Community association boards control the purse strings of the communities that they govern, and they have been long-standing targets for unscrupulous board members. For those who own residences in condo and HOA communities, this board takeover scheme underscores the level of involvement and vigilance that is necessary in order to help ensure that their community associations avoid this type of fraud.

Unit owners should make every effort to vote in all elections and submit their own ballots, as fraudsters will typically attempt to secure and utilize forged ballots from those who do not normally vote in the elections. They should also attend the election meeting and determine whether their ballot was counted or disallowed due to the submission of more than one ballot for their unit.

If association members believe that the integrity of their board of directors has been compromised, they should consult with highly experienced legal counsel in order to discuss and determine their next steps. Election recalls, court appointed receivers, and injunctions precluding boards from awarding contracts are among the measures that can be pursued, and criminal investigations by state and federal law enforcement are also possibilities that can come into play.




Florida’s HB 501 Seeks to Limit Construction Defect Claims to Seven Years from Date of Completion

By Roberto C. Blanche

In addition to Florida House Bill 87, which was the sub-ject of an article I recently authored in this publication, House Bill 501 also presents serious concerns for community associations, property owners and the general public. The bill seeks to reduce the statute of repose for construction-related claims from the current 10 years to just seven years – meaning that if the bill becomes law, those with claims related to construction defects will have only seven years from the date of the completion of construction to file their claims for the design, planning or construction of any improvement to real property.

Unlike the statute of limitations, which establishes a time limit within which an action must be brought from the time a cause of action accrues, the statute of repose bars a claim after the conclusion of the period of repose, even if the claim is for a concealed or latent defect that was not discovered until years after the completion of construction. It holds contractors, subcontractors, architects, engineers and other construction-industry professionals free from all liability after the set term of time expires. Under Florida law, the statute of limitations for construction defects expires four years after the defect is discovered or should have been discovered using due diligence, but the statute of repose currently expires (even if the statute of limitations has not run) ten years after the later of:

• the date of actual possession by the owner;

• the date of the issuance of a certificate of occupancy;

• the date of abandonment of construction if not completed; or

• the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer.

HB 501 seeks to reduce the period of repose from 10 to seven years, so after seven years any latent structural defects or other latent defects that have not manifested themselves beforehand would become solely the responsibility of the property owner. For community associations, this change would be particularly troublesome because, unlike the period for the statute of limitations, which does not begin to run until after turnover of control from the developer, the clock starts ticking for the period of repose at the completion of construction, which may often be years before the turnover. Thus, if the turnover of a property from the developer is delayed beyond the normal course for some reason, the period for a community association to bring any claims related to the construction of the property governed by the association could be quite short, as no extension is given to the association under the period of repose under current law or under the proposed bill.

Typically, construction defect claims for community associations are only brought after turnover has taken place, as the turnover process includes an independent engineering inspection of the structural and mechanical elements. Also, prior to the turnover, the unit owners will not be as informed and involved with the management and administration of the property while it is still being overseen by the developer. And, it would be cost-prohibitive and impractical for individual unit owners to commission an engineering inspection and report for the common areas on their own, and then file suit for the construction defects of the whole condominium on their own.

Shortening the statute of repose to seven years could also create an incentive for developers to limit their exposure to construction defect liability by delaying the turnover as long as possible, as the longer they wait to complete the turnover, the shorter the window becomes for the association to identify any defects and pursue a claim under the statute of repose.

Builders and their lobbyists supporting the bill argue that most construction defects become apparent within a few years of the completion of construction, but the fact is that some of the most costly and cumbersome defects to repair are concealed latent structural and mechanical defects that can take well over seven years to become evident. A well-known and oft-cited example of this took place years ago in Key West when one of the area’s largest concrete firms used salt water to mix its concrete. The residual salt in the concrete caused the reinforcing steel to corrode, but the defect did not become fully apparent until years after the completion of construction.

The current ten year statute of repose was already previously reduced from fifteen years in 2006, and the additional reduction to seven years that is being considered appears to be receiving mixed reviews by the lawmakers. Two civil engineers gave expert testimony against the bill before the House’s Civil Justice Subcommittee, which narrowly passed the bill by a vote of 7-6 and sent it on to the House Judiciary Committee.

Our firm encourages community association stakeholders, including directors, property owners and managers, to contact their state representatives and senators to share their concerns regarding HB 501 and HB 87.




Elections 101

By Laura M. Manning-Hudson

With the New Year comes new plans, new resolutions and . . . elections. For many community associations election season is well under way and, as easy as an election may seem (go out, get the votes, and count the ballots – right?), there are so many statutory nuances in the electoral process that, if handled improperly, can invalidate the entire election and cost the association both time and money. In an effort to assist association boards and hopefully avoid costly mistakes during the process, we have outlined the pertinent information that you need to know.

The Election Process:

o First notice of election

• The first notice must be mailed, emailed, or hand delivered to the membership at least 60 days prior to the annual meeting/election day.

• The notice must include:

1. The date, time and location of the meeting and election.

2. The number of seats that are open for election.

3. Details surrounding the information sheet that candidates must submit if they wish to run for the board.

o Receipt of intents to run for the board

• All eligible persons who wish to run for the board must submit their notice of intent to be a candidate for election no less than 40 days prior to the annual meeting/election.

• Notice of intent may be submitted via mail, email, or hand delivered statement.

• Any notices of intent received on the 39th day before the election (regardless of the day of the week that the 40th day falls on) – are deemed invalid and those names may not be placed on the ballot.

• Each eligible candidate then has an additional 5 days (35 days prior to the election) to submit an information sheet (resume) to the association which will be mailed out with the second meeting notice.

o Second notice of election

• The second notice of election must be mailed, emailed or hand delivered to the membership at least 14 days prior to the annual meeting/election.

• The Second Notice should include:

o Instructions for casting a ballot.

o The notice and agenda for the annual meeting (which will include the election).

o Any information sheets (resumés) submitted by eligible candidates.

o The ballot listing all of the eligible candidates’ names in alphabetical order.

o An inner envelope labeled "Ballot Only" and an outer envelope labeled with the address of the property manager or the association.

o Voting

• In order to be valid, the unit owner’s name must be printed on the outer envelope, together with the unit number, and the eligible voter’s signature.

• The eligible voter must select a candidate using the ballot included with the second notice and place it in the inner envelope.

o The inner envelope must then be placed in the outer envelope

• The outer envelope may then be mailed or hand delivered to association or property manager.

• The same process must be utilized (ballot, inner envelope and outer envelope) at the annual meeting up until the time that the inspectors of the election begin to open the outer envelopes.

While this process may seem tedious and time consuming, it is extremely important to remember that the process is in place to ensure a fair election. When casting your vote, keep in mind the importance of the board in your community. The board generally serves as the "people’s voice" and handles the day to day operations and decisions of the association and, in conjunction with the manager, ensures that the community runs smoothly. Annual meetings and elections are an extremely critical time for any community association, so it is important that they are treated as such.

Please be advised that you may contact your attorney to handle the election for your association, as they are able to monitor and assist with the process to ensure all steps are followed correctly.




Changes to Construction Defect Claims Process Being Considered by Florida Legislature Create Concerns for Associations, Property Owners

By Roberto C. Blanch

House Bill 87 aims to amend Chapter 558, Florida Statutes, in an effort to help contractors and design professionals avoid construction defect litigation. However, if enacted, the bill could present some problems for community associations and property owners. If enacted, HB 87 would require community associations or other property owners wishing to pursue a construction defect claim to meet additional procedural requirements which could require substantial expenditures on engineering fees before being able to file suit. The bill would also require property owners to produce potentially large amounts of documents to the contractor or design professional before being permitted to file suit without imposing a similarly broad requirement on the contractor or design professional, and it would impose monetary sanctions against property owners who file suit for construction defects in several circumstances, while not providing for any sanctions against contractors or design professionals in similar situations.

Some of the proposed changes under HB 87 include: Revising the definition of the term "Completion of a building or improvement" to include issuance of a temporary certificate of occupancy, which could potentially shorten the statute of limitations for a property owner to file suit for construction defects; Providing additional requirements for a notice of claim, including the identification of specific location(s) of each alleged construction defect, as well as the specific provisions of the building code, project plans, project drawings, project specifications, or other documentation, information, or authority that serve as the basis of the claim for each alleged construction defect; Revising the requirements for a response to a notice of claim to address monetary settlement offers; Providing that, if a claimant proceeds with an action that includes any claim previously resolved in accordance with Chapter 558, the associated portion of that action shall be deemed frivolous (the term "previously resolved" is not defined); Providing for sanctions for such frivolous claims, including attorneys’ fees; Revising the provisions relating to production of records requested under Chapter 558, to include a claimant’s maintenance records and other documents related to the discovery, investigation, causation, and extent of the alleged defects identified in the notice of claim and any resulting damages; Providing for sanctions for construction defect claims that were solely the fault of a claimant or its agents, including costs of investigation, testing, and attorneys’ fees. (No sanctions are provided against a defendant if the defect is deemed to be solely the defendant’s fault.)

The bill would require more detailed settlement proposals from contractors that wish to extend a settlement offer, but it provides no penalties for defendants that fail to comply with this requirement. However, the associations and property owners that file claims are subjected to several potential penalties if they do not comply with the requirements under the proposed modifications to Chapter 558.

As it now stands, HB 87 would cause significant obstacles and undue burdens on property owners and community associations that wish to pursue construction defect claims. Community association stakeholders are encouraged to become informed about this bill and its progress in Tallahassee, and to contact their district’s elected State Representative to oppose the adoption of House Bill 87. The bill has currently been assigned to the Civil Justice Subcommittee, the Business & Professions Subcommittee and the Judiciary Committee. It must pass those committees before being presented to the full Florida House of Representatives in the 60-day legislative session that begins March 3, 2015. If passed, the new law would take effect October 1, 2015.




New vs. Almost-New

By Roberto C. Blanch

Constant new development of residential and mixed-use towers can be seen all over South Florida, with new projects being announced constantly. The construction of these new towers evokes buyers to ask themselves: What is better, new or old? The answer to that question is triggering existing community associations to spruce up their communities by giving them a facelift in an effort to stay competitive.

With the intention of luring buyers to choose new over old, newer buildings are offering luxuries such as: sleek and polished designs, newer amenities, revolutionized living technology and the idea of being the first to live in a space that has not yet been inhabited. Add-ons such as state of the art fitness centers, exclusive resident spa services and five-star concierge and building services are making the choice of selecting new construction more appealing. However, this option commonly comes with a heavier price tag and some unexpected issues. A few draw-backs such as unforeseen construction delays and unknown kinks arising after construction are common issues owners face when selecting new construction. They also face the infamous turnover phase — a time that could be very difficult for newly established community associations if they lack the right experts to guide them through the process. These challenges have prompted older towers to improve their buildings with hopes of enticing these buyers to look their way.

Older buildings are using the risks buyers face when purchasing new construction to their benefit. Towers over three years old are labeling themselves "established," having already dealt with most, if not all, construction defects found after the developer turned over control. They also highlight the fact that their boards are more seasoned, helping buyers feel like they are placing their investment in knowledgeable hands. Also, construction delays would never be an issue since these units are all move-in ready. In addition to highlighting some of the benefits that come with moving into an established community, many older condo towers are also making the effort in renovating their spaces to update their design to match the designs offered in newer construction. Some have gone as far as converting racquetball courts into multi-purpose rooms, yoga rooms, arts and crafts rooms and additional fitness centers. Simply by turning something old into something almost-new, these towers are keeping up with newer condos and competing at a price level that tends to be much more affordable, while still offering a similar style of living. With this in mind, the boards of these older buildings should be cautioned that their association’s governing documents may prevent some of the proposed changes, and that many alterations and improvements must be approved by the association membership. Accordingly, it is advisable for community association counsel to be involved in the planning of any such changes.

It will be interesting to see what buyers will choose once most of these towers are finalized. Our firm’s community association attorneys have assisted numerous clients with redesign projects throughout the years. We write in this column as well as in our blog at about important legal and administrative issues affecting associations in Florida, and we encourage association directors, members and property managers to enter their email address in the subscription box in the blog in order to automatically receive all of our future articles.




Firm Prevails in Appellate Ruling: Bank’s Foreclosure Delays Exceeded Statute of Limitations, $1.4 Million Penthouse Goes to Miami Beach Condo Association

By Roberto C. Blanch

Our firm is very pleased to have prevailed on behalf of one of our community association clients before the Third District Court of Appeal in the opinion filed Wednesday, Dec. 17, in the case of Deutsche Bank Trust Company Americas v. Harry Beauvais et. al. The appellate panel affirmed the Miami-Dade Circuit Court’s summary judgment that we had secured earlier this year barring Deutsche Bank from foreclosing on its $1.43 million first-mortgage on a penthouse at the Aqua Condominium in Miami Beach which the association had acquired ownership of in 2011 through its own foreclosure action. Since the bank failed to file its foreclosure action within the five-year statute of limitations period, it was barred from seeking to collect the amounts due under the mortgage.

At the trial court level, we successfully argued that the bank had "started the clock" for the filing of its foreclosure action in January, 2007 when its loan servicer filed the initial foreclosure suit and accelerated the amounts due under the mortgage. The foreclosure was dismissed when the lender’s attorneys failed to appear at the initial case management conference in December, 2010. For unexplained reasons, the bank then waited until December, 2012 to file its second foreclosure action, nearly a full calendar year after the five-year statute of limitations had expired. The circuit court granted our motion for summary judgment declaring the first mortgage held by the lender unenforceable, null and void and discharged of record from the penthouse unit.

The bank appealed the circuit court’s judgment. Along with our co-counsel Todd Wallen, we successfully countered the bank’s contention before the appellate panel that its second filing represented a new foreclosure action. The Third DCA determined that the initial foreclosure suit triggered the commencement of the statute of limitations and, thus, the filing of the subsequent action, after expiration of the statute of limitations, was therefore barred. As a result, the Third DCA affirmed the circuit court’s order that the lender was barred from foreclosing on its mortgage, but it reversed the court’s finding that the bank’s mortgage was null and void. The end result is that although the mortgage remains on the property until its expiration, the lender is precluded from taking any action to collect the debt, thus allowing the association to continue to rent the unit without fear of an eventual foreclosure action by the lender.

This opinion is emblematic of the ultimate negative consequences that lenders are facing due to their failure to timely enforce their rights. After years of suffering due to the dilatory tactics of lenders, an association has finally caught a break and will benefit by this ruling. Every citizen of this state is bound by the applicable statute of limitations, and the Third DCA made it clear that banks are no exception. The ruling represents the first appellate opinion on a decision barring a lender from foreclosing on its mortgage due to the expiration of the statute of limitations, and it is likely to be considered by the Florida Supreme Court which is set to hear a similar case.




Don’t Get Scrooged By Your Neighbors During the Holidays

By Laura M. Manning-Hudson

Holidays are time for out of town visitors, lots of parties with family and friends, and the inevitable traffic that all of the festivities bring with them. Unfortunately, not all neighbors and communities welcome the season and all that it brings with open arms. Typical complaints that many boards deal with during the holiday season revolve around high traffic, high noise levels and violations of parking rules. However, by taking certain precautions ahead of time, residents can hopefully avoid being scrooged by their neighbors and having their holiday spirit deflated.

If you are hosting a party, a good rule of thumb is to plan ahead in terms of parking. Find out about the guest parking in your community – where spaces are located and how many spaces are available is a good starting point. If you live in a gated community, find out if visitors will be required to go through a security gate or obtain guest parking passes beforehand. Some communities require that a guest list be provided to security prior to the party so that guests can more easily be identified when entering the community and then directed to the appropriate parking locations. You may also want to ask around to see if any of your neighbors will be out of town and whether your guests can use their parking spot while they are away. If guest parking is limited or just not accessible, you may have to park visitors outside of the community and shuttle them in.

From the board’s perspective, make sure that your community is prepared to accommodate the increased traffic and parking during the holidays. The parking rules may differ from association to association, but the most important thing to consider is to keep the roads safe for other drivers and emergency vehicles. Gatehouses or guard gates should be well-staffed to ensure that visitors aren’t forced to wait long periods of time in order to be granted entry. Also, make sure that security follows your community’s protocol when allowing visitors access – you don’t want them bypassing security procedures in an effort to avoid long lines. If your community has roving security guards, make sure that officers are continuously moving through the property — extra security presence helps deter unruly behavior.

Since South Florida is notorious for its nightlife and parties, make sure to keep your noise levels in check when hosting your holiday gathering. Ask yourself at what point does sound become noise. Keep in mind that each county has noise ordinances that regulate the times of day that noise levels should be kept at a minimum. The most common times which counties allow loud music to play are Sunday through Thursday until 10 p.m., and Friday through Saturday until 11 p.m. If the designated noise restrictions are ignored, your neighbors may call the police with a nuisance complaint and your party may be over before you’ve been able to ring in the New Year. Officers will typically give a warning, but if the noise persists, you may receive a ticket or even be arrested for public nuisance.

Finally, parties and family gatherings often mean that our furry friends get booted to the garage, backyard, balcony, or confined to a crate indoors – and with that may come incessant barking, whining and howling. While neighbors and board members may not call animal control unless they have reason to believe the animal’s safety is in jeopardy, they do have a right to exercise what is legally referred to as "quiet enjoyment" of their residences. If you have already been warned about your animal’s disruptive behavior and the issue persists, you could face fines or other legal action.

While the holidays are a hectic time of year, communities that plan ahead are better served – as are their residents who know (and hopefully follow) the rules. We encourage association directors and members to review their community’s parking, party and security rules at board meetings leading up to the holiday season. Distribution of information to the membership is key with the ultimate goal to make the season merry and bright while not ruining the magic for those around you.




Know Your Association’s Rules before Hanging the Mistletoe

By Laura M. Manning-Hudson

'Tis the season to be jolly! Or is it? The time of year is near where holiday songs are being sung, and lights and other decorations are being hung. However, before you start decking the halls – you may want to check your association’s rules for spreading the holiday cheer. Not all communities are keen on holiday décor. In fact, some communities ban the use of inflatable snow globes and over excessive lights. The best way to know your community’s position on the matter is to start by asking if there are any rules or policies in place for holiday decorations. If your neighbors don’t know, find a board member or certainly the property manager can steer you in the right direction.

If your association allows decorations, the most common rule of thumb is to keep them on your property and keep them to a minimum. If there are no rules in place regarding holiday decorations, the association has the right to ask you to remove your decorations should they interfere with common elements, draw too much attention causing unnecessary traffic, or if the light and noise are disrupting those around you. In a condominium association, this applies to the outside of the unit including the front door (the exterior side is generally a common element). Something else to keep in mind is the amount of time that the decorations are displayed. It is recommended that decorations should be up no longer than thirty days prior to and thirty days after the end of holiday season – after all, the holidays should be celebrated during the month of the "main event."

Unfortunately, some communities can be rather "scrooge-like" and have rules against all decorations. While the Condominium Act prohibits associations from refusing to allow religious objects (not exceeding 3 inches wide, 6 inches high and 1.5 inches deep) from being attached to the mantel or frame of the door, there are some associations that prohibit the placement of any décor whatsoever. Your association may have penalties in place for those wanting to spread merry cheer with lights, nativities and dancing snowmen. Penalties may include a request to immediately remove decorations or may even come in the form of a fine (with notice and opportunity to be heard, of course); it all depends on the rules and regulations set forth in your association’s governing documents and bylaws.

If you are wondering whether there are any loopholes to the bah-humbug attitude, perhaps there are, but in order to find out you need to do your research. We recommend that you attend board meetings, check the state laws and review your association’s rules and regulations. And, before you storm into a board meeting fuming with frustration, keep in mind that even though your home is your property, you did agree to a specific set of rules and regulations when you joined the community. It is best to be well informed before you are asked to take down your décor or worse – asked to pay a fine for something as innocent as displaying some holiday spirit. If you are on the board at your community and there are no rules in place for holiday décor, you may want to suggest adopting a policy at the next board meeting, voting on the policy and then distributing the new rules to the membership.




Miami-Dade and Broward County Ordinances Require Community Associations to Provide Reasons for Denying Applicants for Rentals or Purchases; Will Palm Beach County Follow Suit?

By Roberto C. Blanch

A large number of community associations require applications from prospective buyers and tenants who wish to acquire or rent dwellings in their communities, and many of these communities further require background checks to be performed on the prospective residents as well. However, directors and management representatives of many Miami-Dade and Broward community associations are unaware of county ordinances requiring them to provide written notices or responses to applicants seeking to rent or purchase within such communities, including disclosing the specific reasons for applications that are rejected. While Palm Beach County and many other Florida counties have not yet adopted similar ordinances, it is difficult to imagine that such measures aimed at eliminating discrimination in housing would encounter significant resistance if proposed in the future.

Prior to the adoption of these ordinances, associations in Miami-Dade and Broward counties were not required to specify the reason for rejecting a prospective tenant or buyer, unless the notice requirement was included in their governing documents. Similarly, unless otherwise specified in its governing documents, such community associations were not obligated to reach decisions on whether to approve or disapprove such applications within any specific period of time.

These ordinances, adopted in 2013 in Broward and earlier this year in Miami-Dade, were aimed at prohibiting associations from declining prospective buyers or tenants based upon discriminatory reasons, and establish the following requirements:

1. Within 15 days after receipt of any incomplete or incorrectly completed application (or amended application) to purchase or rent a dwelling, the condominium association, homeowners’ association or cooperative association shall provide the applicant with written notice specifically identifying any and all items in the application that need to be completed or corrected.

2. Within 45 days after receipt of a correctly completed application, the condominium association, homeowners’ association, or cooperative association shall either reject or approve the application and shall provide the applicant with written notice of same. If the application is rejected, the written notice must state with specificity each reason for the rejection.

3. If the condominium association, homeowners’ association, or cooperative association fails to comply with [these] provisions, the [County Human Rights Section or Commission on Human Rights] may send a demand letter requesting that the condominium association, homeowners’ association, or cooperative association, within 10 days after the date of the demand letter, provide to the applicant and the Director or the Commission a written acknowledgement of application receipt, notice of approval or rejection of the application, and notice specifying each reason for the rejection (if applicable). The failure of the condominium association, homeowners’ association, or cooperative association to timely comply with this provision may be considered in determining whether reasonable cause exists to believe the association’s decision or action was discriminatory.

These ordinances make it imperative for Miami-Dade and Broward community association directors and managers to be mindful of deadlines established not only in the association’s governing documents but those that may be established in the ordinances as well. Further, these community association directors and managers must be sure to take the steps necessary to provide timely notice of deficient applications for approval without regard to whether such action was required pursuant to the associations’ governing documents. Directors and managers of community associations in Miami-Dade and Broward counties should have their governing documents reviewed and should possibly consider amending same in order to ensure that their approval and screening procedures comply with these requirements. Additionally, directors and managers of community associations located in other jurisdictions should consult their legal counsel to ascertain whether the local government governing their community has ordinances establishing similar restrictions. It is further important for directors and managers to consult with their community’s legal counsel to determine whether their governing documents permit the denial of prospective residents and, if so, upon what grounds the denial must be based.




Preparing for the Snowbird – the Unofficial State Bird of Florida

By Laura M. Manning-Hudson

Last winter was particularly brutal for many parts of the country, and it was among the coldest on record in large swaths of the midwest. For south Florida however, the weather was as mild and beautiful as ever. TV viewers across the country were often reminded of the spectacular south Florida weather on national television showing ubiquitous scenes of sunbathers on the beach during the nationally televised NBA playoffs.

South Florida’s mild winters have made the Snowbird, those part-time residents who flock here by the hundreds of thousands from December through March, the unofficial state bird of Florida. Many of these Snowbirds own units in condominiums and homeowners association communities, making it necessary for full time residents and managers to adjust to the influx of residents. In order to make the transition into the "season" run smoothly, community associations can take a few simple steps to prepare.

For full time residents, board members and managers, the return of the Snowbird is the ideal time to reconnect with friends and ensure that the association has all of their current contact information. Snowbirds should also be sure to change their mailing addresses for all association communications from their residences up north to their local address in the community.

A nice way to welcome Snowbirds back to their winter homes is with a special reception for all of the residents in the community clubhouse or pool area. Speaking of which, the association’s common areas (card rooms, meeting rooms, pool areas, and clubhouse) are also likely to see more engagement by residents hosting their own gatherings and events over the holidays. Anyone who may be considering reserving the common areas for private gatherings should be reminded to schedule ahead of time with management in order to ensure availability.

Boards of directors should also be prepared for increased attendance at meetings. There will certainly be more architectural review submissions from unit owners who are planning changes to their seasonal homes, so any architectural review committee should be prepared for the increased work load.

For condominiums, parking garages will be much fuller, and management should be prepared to promptly respond to any parking or security issues that may arise in order to avoid their escalation into disputes between residents. Residents who live in gated communities should also confirm that their access cards/fobs/transponders are active in order to avoid pileups of vehicles at community entrances.

By working closely together and planning ahead, association boards and their property managers can make the transition into the busy winter season run as smoothly as possible.




Right of Access to Personnel Evaluations, Background Screenings for Community Association Directors, Members

By Roberto C. Blanch

Our firm receives a great deal of questions about association matters from the readers of our blog and the listeners of our radio show on WIOD 610-AM every Sunday at noon. We try to provide specific responses to each and every inquiry that we receive. Recently, we received a question from a condominium association board member in Sarasota pertaining to a topic that we have not covered in quite some time and would like to revisit.

The reader explained that his association conducts an annual evaluation of the association’s property manager that includes an evaluation questionnaire. The evaluation meetings were conducted with the manager by each of the board members, and the evaluation questionnaire forms were collected by the manager who later delivered them to the board president. The reader asks if there are any Florida laws that govern the right of association board members to access these personnel evaluation forms as well as the results of the background screening that was used prior to the hiring of the property manager.

The laws related to community association official records and their accessibility to association members and directors specifically designate "personnel records" of the employees of associations as protected official records. The statutes for both condominiums and HOAs specifically stipulate that personnel records are not to be made accessible to unit owners. However, these and other types of protected official records must also be maintained by the association, and they must be made available to all board members. The members of the board of directors are fiduciaries of the association, and as such they are obligated to make important financial and administrative decisions for the association. In order to carry out their function in this role, they must have access to all of the protected official association records that are specifically barred from the unit owners who are not directors of the association. In addition, it should be noted that there may be other factors that must be considered with regard to the right of a director or association member to have access to such records. As such, we recommend that community association board members consult with legal counsel with inquiries they might have in connection with the specific circumstances of their community’s personnel records.

Our firm’s other HOA and condominium association attorneys and I work very closely with our clients to help them to avoid and detect theft and fraud in their communities. We write in this column as well as in our blog at about important legal and administrative issues affecting associations in Florida, and we encourage association directors, members and property managers to enter their email address in the subscription box in the blog in order to automatically receive all of our future articles.




Recent Arbitration Decision Offers Stern Warning to Associations Making Certain Alterations Without a Membership Vote

By Laura M. Manning-Hudson

An arbitration decision rendered earlier this year by the State of Florida Division of Condominiums involving a dispute over alterations approved by a condominium board without a prior meeting and vote of the unit owners did not surprise our firm’s community association attorneys. We often find ourselves reminding association directors and property managers that the changes they are considering – albeit seemingly minor in nature – could be among those changes that are considered "material alterations" requiring approval by the membership.

While what constitutes a "material" alteration is not always clear, the rule of thumb is that if it changes the color, form, shape, elements or specifications from the original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance, then it is material. And, while the additional costs and time commitments that the approval process entails can be considered a bit ponderous, this recent decision serves as an important reminder of the potentially significant economic repercussions of forgoing the vote.

The case involved alterations that were approved by the Nine Island Avenue Condominium Association board of directors, which included changes and improvements to the pool deck furniture including cushions and fixtures, trellis, observation deck, pool steps and ladder, landscaping, the color of the paint in the koi pond, and the removal of a water filtration system. After a hearing that took two full days and included a number of witnesses and experts for both the unit-owner petitioner, Ms. Jacqueline Simkin, and the association, the arbitrator found in favor of the unit owner and concluded that prior approval by the unit owners was required for practically every single alteration that had been made at the property.

The order concludes:

"Unless the alteration is approved by 66 2/3% of the unit owners, no later than December 31, 2014, the Association shall:

a. Return the color of the recreation deck waterways and curbing to the original light gray, and return the color scheme of the deck furnishings to original grey-blue, or something substantially similar;

b. Rebuild the trellises to the original footprint, design intent, appearance, and natural weathered wood finish, subject to current code requirements;

c. Return the gazebo to its original natural weathered wood finish;

d. Rebuild the wooden observation deck over the waterway;

e. Replace the pool egress ladders with ladders substantially similar to original, such that the steps extend farther down into the water and can be used as a means of egress from the pool by unit owners;

f. Return the entrance drive landscaping to its original, or substantially similar, condition; and

g. Repair or replace the building water filtration system with a comparable system utilizing current technology."

Depending on how the final vote of the members turns out, the association may be facing significant expenses in order to return some or all of these elements to their original condition prior to the alterations being completed. These expenses, not to mention the potentially contentious nature of the meetings that will lead up to the vote as a result of this significant lapse in judgment, will certainly prove to be more costly and difficult for the association than the vote that it should have undertaken prior to moving forward with the alterations. Not to mention the attorneys fees and costs incurred by the association in defending this proceeding – and the unit owner’s attorneys fees and costs which the association will be responsible to reimburse.

This costly lesson comes free of charge to all other Florida condominium association boards of directors that are considering moving forward with what potentially may be considered a "material alteration" without obtaining prior membership approval as required by the Condominium Act. Bypassing the approval process is simply not worth the financial risk, as this condominium association learned the hard way.




New Case of Theft, Fraud by a South Florida Homeowners Association President

By Roberto C. Blanch

Yet another case of theft and fraud inflicted on an association by an HOA president made local South Florida headlines recently. According to news reports, Michelle Changar-Coe, a former homeowners association president, has been arrested and stands accused of embezzling more than $180,000 from her Tamarac community. Police reports indicate that she forged dozens of checks totaling $181,441.85 which were deposited into her bank account. The authorities reported that the fraud and theft occurred at the Mainlands Section 7 homeowners association from January 2009 through December 2013. Changar-Coe, 44, forged the signatures of four persons without their consent between May 2011 and October 2013. While conducting an audit of financial records, a board member found several checks from community funds that appeared to be forged with his signature and reported it to police. He later found a check for $20,475 that he never recalled signing and had been made payable to a "Michel Chandar," a name that was later found to be bogus.

Changar-Coe is being accused of creating a fraudulent agreement for the association to pay a "city liaison" $2,575 per month for representation at City Hall. However, "no such position existed with the city of Tamarac, according to two city officials who provided sworn statements," reads the police report. She continued to invoice and collect from the association for the fake job from May 2011 to November 2013 using the name of Michelle Charger. Investigators found checks deposited into Changar-Coe’s personal bank account bearing the supposed city liaison’s name. She has been charged with first-degree grand theft of more than $100,000 and four counts of fraud.

An article by Tamarac Talk ( further details how the fraud was finally uncovered, detailing that "[r]resident Steve Soloff was suspicious, and informed the board that he had visited the City of Tamarac and spoke with City Clerk Pat Teufel" who had informed him ". . . that in her 10-year tenure with the city, she has never heard of any agreement by a homeowners association to hire a city liaison . . . " and that ". . . she knew of no person named Michelle A. Charger."

Apparently, key details of the fraud were uncovered as a result of a former director’s investigation of discrepancies uncovered in connection with the association’s finances in early 2012, when a fraudulent court document was presented demanding that such director and another director both resign immediately or face a $1 million lawsuit.

The above account underscores the importance for association directors and managers to implement procedures and policies aimed to avoid the victimization of the association and its members. These efforts may include requiring that at least two board members sign all checks, the requirement for background checks and screenings for managers and employees, the thorough review of all bank statements and financial records presented to directors and managers, the establishment of low limits on discretionary expense approvals without board authorization by the property manager, and a detailed review and understanding by directors of the association’s yearly financial audits performed by independent professionals.

Additionally, the foregoing story also highlights the relevance of what a thorough review of association records may reveal following a detailed inspection of official records by or on behalf of owners having reasonable suspicions of wrongful activity by directors or other association representatives. Lastly, this story suggests that in the event that directors have doubts or questions regarding suspicious activities or documents presented to the association, then such concerns should be promptly reported to association counsel for evaluation.

Our firm’s other HOA and condominium association attorneys and I work very closely with our clients to help them to avoid and detect theft and fraud in their communities. We write in this column as well as in our blog at about important legal and administrative issues affecting associations in Florida, and we encourage association directors, members and property managers to enter their email address in the subscription box in the blog in order to automatically receive all of our future articles.




Appellate Ruling Creates New Wrinkle Over Acceptance of Partial Payments That Are Endorsed as Full Payments

By Roberto c. Blanch

As if collections of delinquent accounts were not already difficult enough for condominium associations and HOAs in Florida as the state recovers from the foreclosure crisis, a recent ruling by the Second District Court of Appeal has unfortunately created a new wrinkle that will require community association managers, directors and their legal counsel to pay close attention when accepting partial payment of assessments from owners. The court’s ruling in the case of St. Croix Lane Trust v. St. Croix at Pelican Marsh Condominium Association essentially now makes it a necessity for associations to consult with experienced legal counsel when they receive checks that are in any way endorsed as representing the full and final payment of assessments owed by the owner on whose behalf the payment is made.

Prior to this ruling, associations and their attorneys were guided by the 2008 ruling by the Third District Court of Appeal in the case of Ocean Two Condominium Association v. Kliger which held that associations cannot refuse partial payments of assessments made by or on behalf of owners. In its opinion, the court in Ocean Two further suggested that its conclusion might even apply in the event that the partial payment included a restrictive endorsement such as "Paid in Full" or "Full and Final Payment."

However, in the St. Croix case, the unit owner’s attorney specifically wrote to the association attorney stating that the payment made by the owner in the amount of $840 was to be considered as the full and complete payment for the settlement of the account, which the association claimed was delinquent in excess of $38,000. While the association responded to the owner’s attorney by denying that the partial payment was the full and final payment of the amount owed, it accepted and deposited the check, applying the funds as a partial payment in accordance with Florida condominium law.

Despite the previous ruling in the Ocean Two case, the appellate panel in St. Croix reversed the trial court’s ruling, finding that the association’s depositing of the check containing the above-described restrictive endorsement operated as an "accord and satisfaction," resulting in a waiver of the association’s right to collect the remaining debt alleged to be owed by the owner.

This ruling appears to create a conflict with regard to the extent to which the appellate courts will consider the partial payment of assessments including restrictive endorsements to constitute an "accord and satisfaction" of a larger debt owed by the owner on whose behalf the partial payment is made. As such, it is possible that this conflict may ultimately be taken up for resolution by the Florida Supreme Court or may result in action by the state legislature.

In the meantime, associations should pay very close attention to any payments that are made with restrictive endorsements of any kind indicating that such payments reflect the complete and final payment of the amount owed to the association. Managers and directors presented with similar circumstances would be well advised to consult with experienced and qualified legal counsel before depositing such payments if they are not indeed for the full and final amount owed.

Our community association attorneys will continue to monitor and write about the consequences of this ruling as they relate to the handling of partial payments that are made with restrictive endorsements indicating such payments to be full payments. We encourage association directors and members as well as property managers to submit their email address in the subscription box at the top right of our blog at in order to automatically receive all of our future articles.




Foreclosed Homeowners Get Windfall From Surplus Money

By Laura M. Manning-Hudson

Would you be surprised to learn that an owner could walk away from his home, stop making mortgage payments, avoid all personal liability for debt on the property, and still make nearly $100,000 after the property is foreclosed upon by a mortgage lender? Well, it happened.

In a recent opinion released on July 23rd by the Third District Court of Appeal in Miami, the appellate court ordered approximately $99,500 in surplus funds to be returned to Miami residents Walter and Eider Pineda. The ruling reversed a trial court order which directed the funds to be applied as payment toward the balance owed to the first mortgage lender, instead of being disbursed to the Pinedas. A review of this interesting ruling reveals that it was more of a case of the foreclosure auction buyer (third-party purchaser) making mistaken assumptions – rather than a novel legal argument. Nonetheless, the result was a huge amount of money in the pocket of the foreclosed ex-owners of the property despite their non-payment of two mortgages.

Nocari Investment, LLC, was the high bidder at the foreclosure sale of the Pinedas’ property. Nocari’s bid was approximately $100,000 over the bank’s final judgment and Nocari took title to the property subject to a first mortgage that was still pending on the property. Nocari argued that the $100,000 surplus should be directed to the first mortgage bank in order to pay down what was owed on that mortgage by the Pinedas. Nocari also argued that it would be inequitable for the Pinedas to have the surplus funds since they had filed for bankruptcy protection and received a discharge of their debt to the first mortgage lender. While Nocari believed that the surplus funds would be refunded back to Nocari and applied as payment toward the superior lien on the property, the appellate court sympathetically disagreed. The opinion reads, in part, as follows:

While we are sympathetic to Nocari’s equitable argument, the fact remains that distribution of surplus foreclosure proceeds is governed by a plain and unambiguous statutory procedure which clearly provides that the owner of record is entitled to the surplus proceeds. Where the legislature has provided such a process, courts are not free to deviate from that process absent express authority.

Neither the statutes nor the case law governing distribution of surplus foreclosure sale proceeds provides a mechanism authorizing a third-party purchaser to obtain the surplus. The statute is clear: the owner of record at the time of the recording of the lis pendens is entitled to any surplus proceeds . . . Nocari was neither an "owner of record," an assignee of an owner, nor "subordinate lienholder," . . . and thus was not entitled to any surplus funds.

While there was no community association involved in this case, the ruling highlights some important lessons for associations, third-party purchasers and consumers in general as we all continue to endure the foreclosures of so many homes in South Florida. For community associations, the ruling should serve as a reminder of the importance of preserving their ability to collect surplus funds generated by foreclosure sales. Community associations are often named as subordinate lienholders in mortgage foreclosure cases, and they should engage counsel to closely monitor the status of such cases, file appropriate responses to protect their interests and entitlement to surplus generated by the foreclosure sale, and file timely motions with the court so they are not barred from collecting foreclosure surplus. For the third-party purchasers, the ruling illustrates the importance of due diligence and working with qualified legal counsel in order to act with certainty and understand the complete ramifications of their bids made at foreclosure auctions.

I, along with our firm’s other community association attorneys, work very closely with our clients on foreclosure cases and motions for surplus to ensure that their lien rights and ability to collect as subordinate lienholders are protected. We monitor and write about important legal and business issues affecting Florida community associations in our firm’s blog at, and we encourage association directors, members and property managers to submit their email addresses in the subscription box at the top right of the blog in order to automatically receive our future articles.




Court Ruling Finds Fannie Mae Does Not Qualify for Safe Harbor Protection from Liability for All Unpaid Assessments in Foreclosure Cases

By Laura M. Manning-Hudson

A recent ruling in Broward County Circuit Court could have significant implications for Fannie Mae and the community associations with units in various stages of bank foreclosure. In the case of Federal National Mortgage Association v. Park Place at Pompano Condominium, the court ruled that Fannie Mae was not entitled to the statutory "safe harbor" that limits the amount of assessments that first mortgagees must pay to associations when they take title to a unit through foreclosure.

Under Florida law, first mortgagees – or their successors or assigns – who acquire title to a unit through foreclosure or a deed in lieu of foreclosure are only responsible to condominium associations for payment of unpaid condo dues in an amount equal to 12 months of assessments or one percent of the original mortgage debt, whichever is less. In cases where owners have not paid their condo dues in years and the bank finally takes title to the unit, this usually amounts to just a couple of thousand dollars.

However, in the Park Place ruling, the court found that even though Fannie Mae bought the loan and had been the assignee of the first mortgagee’s right to bid at the foreclosure sale, Fannie Mae did not receive an assignment of the mortgage as is required by Florida law. When Fannie Mae filed an action against the condominium association to have the court determine whether it was entitled to the "safe harbor" amounts, the circuit court agreed with the association that an actual "assignment of mortgage" had to be executed in order for Fannie Mae to be considered an assignee of the first mortgagee and to receive the safe harbor protections afforded to lenders in foreclosure cases.

The ruling applied the provisions of Section 701.02, F.S. which provides that an assignment of a mortgage is ineffective in law or equity against creditors and subsequent purchasers "unless the assignment is contained in a document, that in its title, indicates an assignment of mortgage and is recorded according to law."

Prior to this ruling, Fannie Mae had consistently been able to cap its exposure for past due condominium assessments in Florida by claiming to be the equitable assignee of the first mortgagee. However, in light of the recent ruling in this case, Fannie Mae may now be treated like any other new owner acquiring title to a foreclosed property, meaning it may be found to be jointly and severally liable with the prior owner for all unpaid common expenses and assessments.

As this was a circuit court ruling, it remains to be seen whether other Florida circuit courts will follow along the same lines or whether they will continue to find that Fannie Mae is the equitable assignee of the first mortgagee. In addition, the federal mortgage agency may now decide to alter its procedures and go through the formalities of assigning the loan.

Our firm’s other community association attorneys and I will monitor the repercussions of this decision as it plays out in similar cases in the coming months, and we will provide updates for community associations and property managers as they become available in our blog at




Condo Associations’ Rights to Enter, Maintain and Rent Abandoned Units Expanded by New Florida Law

By Roberto C. Blanch

The Florida Legislature has enacted a number of new laws over the last several years that were in direct response to the foreclosure crisis and the meltdown in the housing market. The latest example of such a law was enacted during this year’s legislative session and deals with abandoned units in condominiums.

The new law, § 718.111(5)(b), essentially enhances certain rights of access to units. However, it also provides that condominium associations may now enter abandoned units in order to inspect, make repairs, remediate mold, restore utilities, or otherwise maintain and preserve the condominium property. The law defines abandoned units as one that is the subject of a foreclosure action and no tenant appears to have resided in the unit for at least four continuous weeks without prior written notice to the association, or when there is no foreclosure and no tenant appears to have resided in the unit for two consecutive months without prior written notice to the association and the association is unable to contact the owner.

The law stipulates that associations must provide at least 48 hours prior written notice of their intent to enter an abandoned unit to the owner at the last address reflected in the association’s records. In addition, if the owner has previously consented in writing to receiving email notifications, the association can email this notice to the owner.

Any expenses incurred by associations pertaining to abandoned units may be an assessment against the unit owner and enforceable as an assessment against the unit, meaning it can be subject to a lien and foreclosure if not paid. The new law also enables associations to obtain a court-appointed receiver in order to lease the abandoned unit and use the rental income to offset its costs and expenses as well as for unpaid assessments.

This new law should help to provide some clarity and relief for condominium associations that have been forced to contend with abandoned units in the aftermath of the foreclosure crisis. It will enable associations to move quickly in petitioning the courts to appoint a receiver and begin collecting rent for abandoned units in order to cover their expenses and assessments. While it might be advisable to pursue some of the remedies made available by this new law, questions remain regardng whether it will afford the intended relief envisioned by the legislature. Association directors and managers would be well advised to consult with their legal counsel prior to implementing steps in furtherance of pursuing remedies afforded by this law.




Pet Pig Dispute in Lake Worth Association Makes the Local News

By Laura M. Manning Hudson

One of the more memorable service animal disputes that my fellow community association attorneys at our law firm and I recall learning about was chronicled recently in a report by WPTV- NBC Channel 5 News in Palm Beach County. The station’s story had many of the most common elements found in service animal disputes: a pet owner insisting that her association must allow her to keep the family pet because the pet helps alleviate anxiety disorders, and an association that is demanding removal of the animal because it is expressly prohibited by the association’s governing documents. The key difference in this case is that Wilbur, the animal in question, is a 65 pound pot-bellied pig.

The dispute is taking place in a suburban Lake Worth community, and it appears to have all of the makings for one that will be headed for litigation due to the obstinacy being displayed by both sides.

"I didn’t know it was a problem until we got a violation letter," explains the owner, in the station’s report. She says that her association is trying to force her to get rid of her pig, and she vows that she "will fight, fight, fight with everything I have to keep this animal here."

She explains that she is determined to keep Wibur because of what he means to her two kids, and she has produced documents for the association demonstrating that both of her children have been previously diagnosed with ADHD and one of them with Asperger's Syndrome. The owner indicates that she has even had Wilbur trained and registered in an animal assisted therapy program at the Humane Society of Broward County. She insists that "he helps them come out of their shell."

The report goes on to explain that the association’s rules clearly state that "only common household pets" and "no livestock" are allowed in the community. It notes that lawyers representing the association said in a statement that they are trying to verify the medical conditions of the children in order to verify whether Wilbur qualifies as a service or emotional support animal.

"A pot-bellied pig is not a common animal, but it’s a lot more common than you think," says the owner. In fact, the Palm Beach County Commission has voted to no longer consider pot-bellied pigs as "livestock," but they also decided that it would be up to specific associations to determine whether they can be allowed as pets.

Pursuant to Florida’s Fair Housing Act, an association is required to make reasonable accommodations in its rules, policies, practices, or services, when such accommodations may be necessary to afford a disabled person an equal opportunity to use and enjoy a dwelling. The failure to make an accommodation when required could result in a discrimination complaint being filed against the association. However, while the Fair Housing Act requires that an association may have to allow a resident to keep what would otherwise be a prohibited pet, such pet cannot become a nuisance to other residents.

It will be interesting to see how this case turns out. Both sides appear to have strong arguments to support their respective positions, and there is no doubt that it would be reasonable for a court to find that pigs are not common household pets. However, because pot bellied pigs are becoming increasingly common as pets, perhaps the time has come for associations to consider amending their governing documents to specify the types of animals that are allowed. Otherwise, they too may one day face the possibility of difficult and costly litigation to determine the outcome of a pet pig as a service animal in their community.




HOA Takeover Case in Las Vegas Provides Lessons for Florida Community Associations Elections

By Roberto C. Blanch

Community association boards control the purse strings of the communities they govern, and as such they have been long-standing targets of individuals seeking to defraud associations. A recent case involving the takeover of a number of Las Vegas HOAs in a scheme to steer large construction contracts to a Nevada general contractor appears to have set a new bar for the heights to which individuals will go in their efforts to defraud HOAs for contracts worth millions of dollars.

The accounts of the Nevada case read as if they come directly from the pages of a novel about a wild and far-flung criminal enterprise, proving yet again the old adage that reality can be stranger than fiction. The U.S. Justice Department investigation revealed that 11 homeowners associations were defrauded of millions of dollars in the takeover scheme that took place from 2003 to 2009, and federal prosecutors are seeking jail time for the defendants in addition to approximately $25 million in restitution. The alleged mastermind behind the scheme has pleaded not guilty to conspiracy and fraud charges leveled against him and 10 others.

Besides conspiring to commit mortgage fraud in order to secure mortgages for straw buyers in the communities, the defendants are accused of getting their straw buyers elected to the boards through bribery, ballot stuffing, intimidation and dirty tricks. Once on the board of the HOAs, these directors would secure lucrative construction contracts benefiting the organizers of the fraud. Accounts tell of co-conspirators traveling to Mexico to print phony ballots and counting ballots in co-conspirators’ offices, and one co-conspirator used his master key at a condominium complex to remove ballots from mailboxes. Other tactics involved "dumpster diving" efforts to retrieve discarded ballots at a condominium complex that would be used to fix an election, and attending HOA board meetings in order to intimidate board members who were not friendly with the individuals involved in the scheme. It is also alleged by a co-conspirator that he regularly witnessed HOA board members come to the office of another co-conspirator to receive cash payments.

A total of 35 defendants have now pleaded guilty in the case, leaving the remaining defendants to stand trial on Oct. 14. The investigation into the scheme is considered to be the largest public corruption case ever brought by the Justice Department in Nevada.

This case serves as an important reminder for Florida community associations about the level of involvement and vigilance that is necessary in order to help avoid becoming a victim of this type of fraud. It is imperative for unit owners to monitor and participate in their association’s elections and meetings, and they should always be on alert for suspicious tactics by owners or other groups surrounding board member campaigns and elections. Owners should also ensure that they vote in all elections and submit their own ballots whenever possible, as fraudsters will typically attempt to secure and utilize ballots from those who do not normally vote in the elections or do not reside in the community or condominium. In addition, owners should determine whether their ballot was counted or disallowed at the election due to the submission of more than one ballot for their unit.

If association members believe that suspicious political activity has taken place and the integrity of their board of directors and their election has been compromised as part of a conspiracy to commit fraud, they should consult with highly experienced legal counsel in order to discuss and determine their next steps. Election recalls, court appointed receivers, and injunctive relief precluding boards from awarding contracts to conspiring vendors are among the measures that can be pursued in order to correct or avoid injustices that may have occurred or may be in the works. Additionally, experienced community association legal representation may aid in processes related to criminal investigations by state and federal law enforcement agencies in such cases.




Service Dog Dispute Costs South Florida Condo Association $300,000

By Laura M. Manning-Hudson

Several of my colleagues and I have written extensively in previous articles and in our firm’s blog at about the issues surrounding service dogs in communities that maintain strict restrictions against pets. We have discussed how many of these communities have been forced to contend with residents whose requests for exemptions for service dogs have been highly questionable and, in some cases, even complete shams. However, a recent case that was covered in an article in The Miami Herald illustrates the dangers that associations – and their board members – may face if they grossly miscalculate and overreact to a request for a service dog from an individual who is obviously disabled.

In Sabal Palm Condos of Pine Island Ridge Ass’n v. Fischer, unit owner Deborah Fischer suffered from multiple sclerosis and was confined to a wheelchair, so she acquired Sorenson, a trained service dog. The association’s pet policy only allowed for a cat or fish, or another pet weighing less than 20 pounds and only with prior permission of the board. Fischer asked the condominium association to accommodate her disability by allowing her to keep Sorenson, who weighs more than 20 pounds.

The association responded by requesting copies of Fischer’s medical records from all of her healthcare providers who diagnosed or treated her disability, which she claimed made a service dog necessary. Sabal Palm also requested that she provide "all documents relating to the nature, size and species of dog, as well as all documents regarding any training it received."

Fischer provided the association with a letter from Sorenson’s trainer describing the tasks he was trained to perform, and she enclosed a photo of herself in her wheelchair with Sorenson.

However, this was not good enough for the association, and Sabal Palm went on to request additional documentation, which Fischer provided, that made her disability and her need for a service dog extremely evident and clear.

Shockingly, the association responded by filing a lawsuit against Fischer and her husband seeking a declaratory judgment that it need not accommodate Fischer by allowing her to keep Sorenson based on the fact that the dog was over the 20 pound weight restriction. Fischer countersued claiming that the association and its president discriminated against her when it refused to accommodate her request to keep Sorenson.

The court found that Sabal Palm violated the federal Fair Housing Act (FHA). The judge’s 30-page order states that the defendant’s disability was so obvious and her need for a service dog had been so clearly established that the association failed to reasonably accommodate her disability as required by federal law.

"Sabal Palm got it exactly — and unreasonably — wrong," wrote U.S. District Judge Robert N. Scola, Jr. That the condo association "turned to the courts to resolve what should have been an easy decision is a sad commentary on the litigious nature of our society. And it does a disservice to people like Deborah who actually are disabled and have a legitimate need for a service dog as an accommodation under the FHA," Judge Scola concluded. In addition, the court also found that the association’s president was personally liable to Fischer, as "[i]ndividual board members or agents such as property managers can be held liable when they have personally committed or contributed to a Fair Housing Act violation."

After Scola ruled in the Fischers’ favor, their attorney negotiated a $300,000 settlement with Sabal Palm.

The lessons from this case should be very clear to associations and their directors. Residents who are obviously visibly disabled and establish that they need the assistance of a service animal should be accommodated. Unfortunately, abuse by individuals without disabilities masquerading the need for fake service animals has lead many associations to distrust applicants to the detriment of those who are truly disabled. However, associations that turn to the courts to confirm their decision to deny accommodations in such cases without using common sense or listening to the advice of highly qualified and experienced legal counsel can bring significant legal liabilities and expenses to their communities.



Preserving HOA Covenants and Restrictions Under the Florida Marketable Record Titles Act

By Roberto C. Blanch

Even though it has been in place for decades, many homeowners association directors are unaware of the requirements under the Florida Marketable Record Titles Act (MRTA) for HOAs to reaffirm and renew their covenants and restrictions 30 years after they were originally recorded in the local county records. MRTA was created to extinguish claims to property which are at least 30 years old in an effort to stabilize property law by clearing old defects from titles, limiting the period of record searches, and clearly defining marketability by extinguishing old interests of record. One of the unintended consequences of the Act is that the Declarations of Covenants, Conditions and Restrictions recorded for HOAs may be set to expire after 30 years of the date which they were recorded. However, MRTA provides a specific process for HOAs to renew and preserve their covenants and restrictions in order to keep them in place after the 30-year term. Keep in mind that for most HOAs, if the residents are no longer compelled to act in accordance with the community’s declaration, the results could be catastrophic for the association’s administration and finances.

The statute requires that a "Notice to Preserve" must be filed in the public records of the county where the property is located prior to the expiration of the 30-year period. This Notice must be approved by at least two-thirds of the members of the board of directors, and the notice of the meeting regarding the ratification of the Notice to Preserve must be provided at least seven days prior using the statutorily required meeting notice procedures.

For associations seeking to revive declarations that have already expired, MRTA also provides procedures.

The statute includes guidelines as to the substance of the Declaration of Covenants, Conditions and Restrictions that is being submitted for revival, and it establishes that "the proposal to revive a declaration . . . shall be initiated by an organizing committee consisting of not less than three parcel owners located in the community . . . and no later than 60 days after the date the proposed revived declaration and other governing documents are approved by the affected parcel owners, the organizing committee or its designee must submit the . . . . materials to the Department of Community Affairs for review.

HOA declarations enable the associations to impose fees, file liens, collect assessments and implement other protocols that provide for the administration and financial viability of the community. It is imperative that HOAs preserve or revive and maintain their covenants and restrictions under MRTA in order to avoid potentially severe consequences, including the possibility of challenges by lot owners arguing that the covenants and restrictions with respect to their lot have been extinguished. Our firm’s other community association attorneys and I strongly advise HOAs to check the recording date for their declarations and work with experienced legal counsel in order to avoid the expiration of their governing documents under MRTA.




Legislature Passes Bill to Allow Some Legal Work Performed by Community Association Managers

By Laura M. Manning-Hudson

With the ending of the most recent legislative session on May 2, 2014, the Florida Legislature ad-dressed the issue of what many attorneys in Florida have considered the unlicensed practice of law by community association managers. House Bill 7037 was adopted this term and expands the role that CAMs play in the associations that they administrate. Effective July 1, 2014, community association managers will now have a much broader scope of powers and duties, including the ability calculate the votes required for a quorum or to approve an amendment, to negotiate financial terms of contracts (subject to approval by the association), determine amounts due to the association before the filing of a civil action, draft pre-arbitration demands, meeting notices and agendas, and calculate and prepare assessment and estoppel certificates.

However, many of the recent amendments to a community association manager’s responsibilities are directly contradictory to the opinion of The Florida Bar, which has taken this issue to the Florida Supreme Court. Pursuant to the state’s constitution, the Supreme Court has exclusive jurisdiction to define the practice of law and regulate the unlicensed practice of law in the state.

As I wrote in this column in October of 2012, the Supreme Court previously adopted an advisory opinion that found that managers would be engaging in the unauthorized practice of law if they should prepare claims of lien and satisfactions of claims of lien documents, as these documents require legal descriptions of the property and establish the lien rights of community associations. The opinion also provided that the drafting of a notice of commencement form would also constitute the practice of law, as would determining the timing, method and form of giving notices of meetings, and determining the votes necessary to take certain actions – because such determinations necessitate an interpretation of Florida law and the association’s governing documents. In addition, responding to the association’s questions regarding the application of the law to specific matters being considered and advising the association that a specific course of action may or may not be authorized under the law would also constitute the practice of law by a CAM.

While many associations believe that they will be able to avoid additional expenses in legal fees if managers perform these tasks, there are a number of legal decisions that illustrate the complications that can arise when managers take on legal responsibilities. Compliance with a statute is critical when it comes to demand letters, claims of lien and pre-arbitration notices. In many cases, associations have ended up incurring more in legal fees to correct mistakes than they likely would have had to spend had they originally used their attorney.

Association boards should bear in mind that the preparation of claims of lien, notices of commencement and other legal documents do not typically result in significant attorney fees, but the ramifications of errors in these documents and forms can prove to be very costly. It is simply not worth the risk for associations or their managers to prepare these documents in order to avoid the relatively nominal legal fees.




Community Association Boards Need to Know and Understand the Exclusions and Requirements in their Association Insurance Policies 

By Roberto C. Blanch

Community associations maintain a number of different types of insurance policies to cover various risks, including physical damage, bodily injury, and employee or director dishonesty. Association boards typically rely on their insurance agents to help them shop the major insurance carriers for the most competitive premiums and coverage. Ultimately, policies are acquired by associations, often times with little thought about their provisions other than the costs of the premiums related to the coverage. However, recent experiences with two of our firm’s community association clients have served as reminders pertaining to the importance for board members and property managers to understand the provisions of their insurance policies, including the exclusions and conditions of such coverage.

The first case involved a lawsuit filed against a community association wherein a unit owner claimed that he sustained property damage due to water leaking from a fire sprinkler discharged within the unit located above his unit. The owner alleged that the association was negligent in its hiring of a contractor engaged to perform annual evaluations of the building’s fire sprinkler system. During one of the inspections, a sprinkler pipe burst causing major water damage to the claimant’s residence and other portions of the common elements and units located below. When the association filed its insurance claim related to the damage caused by the leak, the insurance carrier denied coverage indicating that the association failed to meet some of the complex conditions for defense and coverage to be afforded. Specifically, the policy in question required that tedious steps be taken to ensure that the association was named as an additional insured under the contractor’s policies, and it also stipulated that the contracts with such contractors include an indemnification clause to protect the association.

The second example involves a dispute regarding a request for a service animal accommodation at a condominium. After the association responded to the request with specific inquiries regarding the nature of the accommodation and disability, the unit owner filed a lawsuit against the association alleging that its requests are discriminatory. The association filed a claim under its "directors and officers" insurance policy to cover its legal costs and defense, but the carrier immediately responded by pointing out that the policy specifically excluded coverage for any claims related to assistance animals.

In both of the above examples, the respective association board members and property managers claimed that they were unaware of the exclusions or coverage conditions, despite the costly consequence to the associations related to the associations’ failure to comply. While the above-described exclusions or coverage conditions may be rare or may not be found in all community association insurance policies, these cases illustrate the need for managers and directors to be informed as to the critical terms of their insurance policies. In an effort to avoid encountering costly experiences such as these, it is vital for association boards and property managers to have a detailed discussion with their insurance agents and legal counsel in order to gain a comprehensive understanding about the exclusions of their associations’ insurance policies and the conditions with which associations must comply to ensure that they are obtaining the coverage for which they are under the impression they have paid.




Appellate Court Once Again Restricts Condo Association’s Collections After Association Takes Ownership of Foreclosure Unit

By Roberto C. Blanch

Last year, several of our firm’s community association attorneys wrote in our blog at about the Third District Court of Appeal’s decision in the case of Spiaggia Ocean Condominium Association Inc. v. Aventura Management LLC that has since caused many Florida condominium associations to reconsider their collections strategy. In its 2013 split decision, the appellate panel ruled that when the association obtained title to a unit through its own foreclosure action, it lost its ability to collect assessments from the third-party purchaser at the bank’s foreclosure sale. The appellate court reversed the order from the Miami-Dade trial court and remanded the case back to the trial court. However, on remand the trial court again ruled in favor of the association, and the third-party purchaser appealed again to the Third DCA. Instead, this time the appellate court reversed the trial court ruling and remanded the case back to the trial court with specific instructions to enter judgment in favor of the third-party purchaser.

The new unanimous appellate panel found that the trial court misinterpreted the appellate court’s original majority opinion last year, but Judge Leslie B. Rothenberg wrote for the panel that the previous 2-1 split decision was "somewhat ambiguous" and "could have been clearer."

In the 2013 majority opinion, the appellate court found that Florida law clearly provides that "the previous owner is jointly and severally liable" together with the new owner for all unpaid assessments that come due up to the time of the transfer of title. "The plain language of the Statute does not state or suggest that an exception is to be made when the previous owner is the condominium association." Therefore, by positioning itself as the "previous owner," the majority held that the condominium association became liable for the unpaid assessments and could not then impose that liability solely onto the eventual new owner.

After the case was remanded back to the trial court, the trial court ruled that all three parties were jointly and severally liable for the unpaid assessments, but that the association as the creditor could collect in full from any of the three parties it chose. The trial court ruled that the third-party purchaser was required to pay the full amount of unpaid assessments, and that its only remedy was to seek contribution from the prior owners: the association and the original owner.

The new appellate ruling concludes that the trial court "erred in holding Aventura Management jointly and severally liable with the prior two owners," the association and the original owner who went into foreclosure. The new appellate opinion finds that the third-party purchaser "cannot be held liable for the unpaid assessments of the original owner." The third-party purchaser could only be held liable for the unpaid assessments of the immediate prior owner, the association.

The Third DCA’s recent ruling in this case sends a clear message to Florida condominium associations that when they take title to a unit, they will be unable to collect prior owners’ past-due assessments from the subsequent third-party purchaser at the bank’s foreclosure sale. The Florida legislature remedied this loophole for homeowners associations last year by amending the law to exclude homeowners associations, under Florida Statutes Chapter 720 governing HOAs, from being considered as the previous owner under the statute when HOAs take ownership of foreclosure units prior to banks’ foreclosures. We will have to wait and see whether the Florida legislature will take similar action in 2014 in order to remedy this issue for condominium associations under Chapter 718, Florida Statutes.




Enforcing Rules by Imposing Fines

By Laura Manning-Hudson

One of the most common topics that our firm’s other community association attorneys and I are asked about is how to enforce association rules against residents who purposefully and repeatedly violate them. First and foremost, it is important that rules and regulations, and other requirements set forth in an association’s governing documents, be enforced uniformly to every member, director and resident, lest they be rendered meaningless and unenforceable over time. For repeat violators who appear to have no intention of complying and living by the rules, one of the most effective weapons for an association to use is the imposition of fines.

Florida law allows both HOAs and condominium associations to impose fines against members, tenants, guests and invitees who violate the community’s declaration, articles of incorporation, bylaws or any rules adopted by the association. For both HOAs and condominiums, fines may not exceed $100 per violation, and the fines may be imposed for each day that the violation continues, with a statutory cap that the fines cannot exceed $1,000 per violation.

In both HOAs and condominiums, it is important to follow the statutory procedures for the imposition of fines in order to enforce them at a later date. In order to impose a fine, the association must create a "fining committee" – some call it the "violations committee" or the "covenants committee," but whatever your community decides to call it, the committee must be comprised of three unit owners who are NOT on the association’s board of directors – or are NOT the spouse or family member of a director. Once a violation is committed, the offending resident (owners and tenants alike) must be given 14-days notice of a hearing before the committee, which, after hearing all of the facts, decides whether a fine should be imposed. Interestingly (and importantly), if the committee decides that a fine should not be imposed, then the board of directors must accept that decision and the fine may not be imposed. However, if the committee decides that a fine should be imposed, then the board of directors has the option to (1) set the fine amount or (2) waive the fine altogether.

Once fines are imposed, the next question is always "how do we collect them?" While condominiums may not convert fines into liens, the HOA statute does provide that if the fine exceeds $1,000, then the fine can be converted into a lien against the homeowner’s property. Certainly the fine can be collected in the event an estoppel is issued for a sale of the unit, and all associations have the ability to file legal actions to recover fines, in which case the prevailing party is also entitled to recover its reasonable attorneys’ fees and costs in the matter.

Ultimately, if the fining process does not result in compliance and the rule violations and non-payment continue, condominium associations may file petitions for arbitration with the Division of Condominiums, and HOAs may file suit in county or circuit court to enforce the violations and the fines. For cases in which the rule breaker has clearly demonstrated that they will continue to refuse to comply with the rule and pay the fine imposed by the association, pursuing legal action against the violator is typically highly effective.



Florida Legislature Considering Bill to Shop Condominium Policies From Citizens Property Insurance to New Private Companies

By Laura M. Manning-Hudson

For the last several years, the state of Florida has been pursuing major efforts to shrink the size of the state-run Citizens Property Insurance, and the company’s policy count has reached its lowest level since 2006. Now the legislature is considering expanding these efforts to Citizens’ insurance policies for condominiums and apartments. Senate Bill 7062 would increase rates for new master condo policies and allow unregulated "surplus lines" insurers to pull existing condominium and apartment policies away from Citizens. However, in an election year when Gov. Rick Scott has expressed concerns about any measures that would increase rates, the bill faces a difficult uphill climb.

Recently, the Senate’s Banking and Insurance Committee, which is now considering and shaping the bill, voted to eliminate a measure that would have allowed rate hikes of up to 15 percent for commercial-residential policies instead of the current 10 percent maximum. An amendment to the bill stipulates that "prominent notice" must be given stating that surplus lines policies are not protected by the Florida Insurance Guarantee Association and their rates are not controlled by the Florida Office of Insurance Regulation. The amendment also allows Citizens policyholders to reject offers from surplus lines companies, and it states that those who opt to switch from Citizens to a surplus lines carrier will be allowed to switch back to Citizens if they so choose.

The lawmakers in the committee did not debate a provision in the bill that eliminates a discount for master condo policies which bundle hurricane coverage with other perils such as fire and plumbing leaks (which is what condominiums purchase now). The bill would preclude Citizens from selling these "multi-peril" bundled policies, so condo associations would be required to purchase separate hurricane and "all other perils" policies at very likely a higher cost. This provision would only apply to new policies issued after June 30, 2014.

Currently, there are few insurers that are actively involved in the commercial-residential market. Citizens underwrites 43 percent of the market, representing nearly $93 billion in insured value. American Coastal Insurance Co., QBE Insurance Corp. and American Capital Assurance Corp. represent another 40 percent, and the remaining 20 percent is shared among a handful of other insurers. There are also very few insurance agents who specialize in the commercial-residential market for condominium policies.

Citizen Property Insurance has issued statements indicating that it would take 18 months to develop the commercial business clearinghouse, but even then it would have to be different than the personal-residential clearinghouse because of the complex nature of these policies for condos and apartments. According to Citizens, the number of commercial-residential policies only represents two percent of its overall policy count, but that two percent accounts for 20 percent of the insurer’s probable maximum loss from a hurricane.

Our firm’s other community association attorneys and I will continue to monitor the status of this bill, and we will post updates as they become available in our blog at




Are Owner Email Addresses, Telephone and Fax Numbers Exempt from Disclosure Requirements to Unit Owners?

By Roberto C. Blanch

Florida community association attorneys are often asked whether unit owner fax numbers, telephone numbers and email addresses are condominium official records, and if so, whether they must be made available to unit owners requesting such information pursuant to a request to inspect association official records.

The answer to this issue is found in Section 718.111(12)(c)(5), Florida Statutes, which specifies certain condominium association records which are exempt from disclosure to unit owners. Specifically, the law provides that the association’s official records do include unit owner fax numbers, telephone numbers and email addresses, but an owner’s right to inspect association official records does not extend to other owners’ social security numbers, driver’s license numbers, credit card numbers, email addresses, telephone numbers, facsimile numbers, emergency contact information, addresses "… other than as provided to fulfill the association’s notice requirements…"

Based upon this provision, email addresses and fax numbers are exempt from disclosure unless an owner has provided consent to receive notices by electronic transmission. The law does, however, go on to provide that an association may print and distribute to parcel owners a directory containing the name, parcel address and telephone number of each parcel owner, but the owners may exclude their telephone numbers from the directory by so requesting in writing to the association. As such, associations should consult with legal counsel for an opinion on procedural recommendations prior to developing and circulating such a directory.

While the association’s main roster may include telephone numbers, these telephone numbers are not published to other unit owners. The only information that is subject to disclosure are the names, unit designations, mailing addresses, property addresses and, as stated in the statute, email addresses and fax numbers only if provided to the association for notice purposes. While such information may not be accessible to unit owners, there may be exceptions for unit owners who are board members of the association. Additionally, while the law establishes parameters sought to protect against the disclosure of unit owners’ sensitive information, it establishes that the association is not liable for the inadvertent disclosure of information that is protected by the statute if the information is included in an official record of the association and is voluntarily provided by an owner and not requested by the association.

The foregoing illustrates yet one more facet of the issues involved in the administration of community associations. Seeking the assistance of qualified and experienced community association legal counsel may further serve to ensure that community association directors and managers steer clear of the pitfalls that may arise due to their failure to adhere to complex community association laws.




Lenders Win Another Decision Barring Community Associations from Collecting Interest, Costs and Fees in Addition to Assessments

By Laura M. Manning-Hudson

The recent decision in the case of United States of America v. Forest Hill Gardens East Condominium Association, Inc. and Forest Hill Gardens Property Owners’ Association, Inc. serves to clarify an issue that many community associations have faced in years past. That is: Are foreclosing lenders responsible for costs, late fees, interest and attorneys fees in addition to the 12 months or one percent of past due assessments? Many law firms attempted to collect these fees on behalf of their community association clients and, for many years, banks paid. However, in recent years, the banks have started challenging the demand for payment of anything other than the statutory safe harbor amounts that they legally owe. The summary judgment issued by the federal district court in Forest Hill Gardens sends a strong warning to associations that are considering making these demands in the future.

The decision came in early January with the court issuing a partial summary judgment in favor of the federal government and its Housing and Urban Development agency (HUD), which as a result of bank foreclosures had become the successor and assignee to the mortgages issued on two units at the Forest Hill Gardens East condominium in West Palm Beach. The ruling found that HUD was not liable for interest and attorney fees as well as other collections costs against the units during the twelve-month period prior to foreclosure. The court found the statutory provision stipulating that foreclosing lenders are liable to community associations only for the "safe harbor" amounts of the last 12 months of assessments or one percent of the mortgage, whichever is less, to mean exactly what it says. The court also found that the association’s demands for additional funds for interest, collections costs and attorney fees had no legal basis.

To make matters worse for the condominium association – which had attempted to argue that a provision of its declaration of condominium was invalid – the court agreed with HUD that not only was the association’s declaration of condominium still valid, but that the provision at issue – which provided that foreclosing lenders will not be liable for any assessments which were due prior to taking title to a unit – applied in this case. The court found that HUD had no liability whatsoever to the association for the unpaid assessments that accrued prior to its taking title to each of the two units. Nada. Zero.

Further, potentially exacerbating the results of this disastrous ruling for the association in this case, the court may determine that the association must pay HUD’s attorney fees for the defense that it mounted to counter the association’s demands for sums that exceeded the safe harbor maximums. In a similar case issued last year, the Third District Court of Appeal in Miami ruled that a foreclosing lender was entitled to collect its attorney fees from an association.

While this ruling does not set a legally binding precedent for future rulings on this issue in state courts in Florida, the message that it and similar rulings in the state and appellate courts are sending to community associations appears to be very clear. Florida community associations would be well advised to avoid seeking sums from foreclosing lenders that exceed the safe harbor maximums, as more and more decisions are finding in favor of lenders. In addition, associations that pursue these "other" costs risk the possibility of having to pay lenders’ legal fees and costs, and they may also end up receiving nothing from the lenders for past-due assessments based on antiquated provisions from the associations’ own governing documents.




Progressive Condo Associations Working to Accommodate Electric Cars

By Laura M. Manning-Hudson

With the spike in gasoline prices over the last five years, plug-in electric vehicles (PEV) are becoming increasingly popular, and auto industry analysts predict that Florida will be among the leading states in the country for PEVs. For those who reside in a single-family home, plugging in these vehicles for overnight charging presents little difficulty, however the challenges of charging them overnight can be significant for someone who lives in a condominium. Our firm has already had several condominium association clients inquire about their responsibilities and options for accommodating these cars, and their approaches toward finding a solution can vary a great deal.

There are three different levels of PEV charging stations. A level one charging station requires a standard 110-volt household outlet and takes anywhere from 12 to 20 hours for a full charge. A level two charging station uses a 220-volt outlet – such as those that are used for large kitchen appliances, water heaters and washer/dryers – and is two to four times faster than a level 1. A level 3 charging station is the most expensive type of charging station costing in the range of $50,000 and therefore not likely to be considered by most associations.

Due to the abundance of standard 110-volt outlets coupled with the low cost of installation, a level one charging station would seem to be the easiest to deploy and use, and many condominiums may be able to accommodate PEVs simply by using existing outlets or installing new ones in the parking garage.

As PEVs become more and more popular however, associations may want to consider installing a level 2 charging station in order to make the property more appealing to their current and future unit owners with electric cars. The installation cost for level 2 charging stations averages around $2,000 for basic models and, in addition to the faster charge times of four to eight hours for a full charge, some of the more advanced level 2 charging stations also feature retractable or suspended cords, usage tracking and billing capabilities, and the ability to charge up to four cars at once.

There are several challenges for condominium associations when dealing with these charging stations. First, as we know, parking spaces are hot commodities in condominiums. Therefore, determining the most beneficial location for installing a level 2 charging station could present an issue for a condominium, as could a request for the installation of additional level 1 outlets throughout a parking garage. Generally, there is nothing in a condominium’s governing documents that would obligate an association to equip a parking space with a separate electrical outlet. However, because most board’s are empowered to approve an owner’s request to install one (since residential unit owners cannot usually make any additions, alterations or improvements in or to the common elements without the prior consent of the board), the next issue is overcoming the location. Are there any common element areas where a station could be installed? Will the association have to ask owners to transfer, swap or relocate parking spaces? Does the association have the power to require owners to swap or transfer their parking spaces? These are all questions that must be answered before a condominium can make a determination as to what type of charger to install and where to put it.

Additionally, associations should be advised that utility costs incurred by an individual owner through the use of the electrical outlet would not constitute a common expense for which the association and, therefore, all the unit owners would be responsible. Therefore, associations should require that the utility costs for the electrical outlet be separately metered and billed directly to the unit owner. FPL can add sub-meters for these outlets in order for the association to bill the PEV owners for the electricity that their vehicles consume. FPL estimates that electric bills will go up by approximately $34 per month in order to charge a PEV enough to drive 1,000 miles per month. The company offers some excellent information and resources for condominium associations that are considering their options for accommodating PEVs at, and questions can also be sent to

Again, while the location of such a station in the parking garage and the allocation of parking spaces around it for PEVs present certain obstacles for associations, the added benefit and marketability of the property to PEV owners could easily outweigh these financial and administrative burdens. And, as the usage of PEVs continues to grow, progressive-minded associations that embrace this new technology could gain a significant marketing edge by helping their unit owners to go green and drive electric.




Community-Wide Smoking Bans Are Sparking Up Debate at Condo Associations and HOAs

By Roberto C. Blanch

The Miami Herald and the South Florida Sun Sentinel featured articles in recent weeks about communities that are implementing community-wide smoking bans, including inside of the private dwellings of the residents. The Florida Clean Indoor Air Act already prohibits smoking inside of public buildings, which is interpreted to include the indoor common areas of condominium developments, but there are no laws regulating smokers’ rights to smoke inside of their units or in their private balconies, porches and yards. As smoking rates continue to decline due to the adverse health problems associated with smoking and secondhand smoke, the question of whether community associations can impose community-wide smoking bans, including inside of owners’ residences, is becoming a very hot topic with associations across the country.

The associations and boards that take up this issue and seek to implement such a ban may face significant challenges. New developments, such as the AquaVita Las Olas condominium which was featured in the Sun Sentinel article and will open later this year in Fort Lauderdale, are instituting smoking bans in their original declaration of covenants and condominium documents, so buyers are aware of the restrictions prior to their purchase. However, for existing communities which seek to institute such a ban on their current and future owners, their ability to amend their declaration of covenants with these new restrictions may ultimately be challenged, and the enforcement of such a ban may present serious difficulties.

Existing communities wishing to implement the bans by a new amendment to their governing documents would be wise to consider several measures to make the new restrictions more practical and enforceable. Chief among these would be to create a "grandfather exception" to allow existing owners who are smokers to continue to smoke inside of their residences but to ban any new owners from doing so after the amendment has been ratified. Another suggestion would be to allow owners and their guests to smoke in the private balconies of condominium residences but to ban smoking inside of the units, as the complaints about secondhand smoke typically come from neighboring residents who indicate that the smoke and odor seeps through air vents and walls from adjoining units. In addition, the enforcement of the new smoking restrictions will become difficult if not impossible, as association boards and property managers will be unable to determine whether violations are taking place if they are denied access to the residences of owners who are suspected of smoking.

Given these considerations, condominium associations and HOAs that are adamant about implementing these smoking bans should consult with their attorneys and work with their owners, including both the proponents of the new bans as well as the smokers who wish to maintain the status quo. By using grandfather exceptions, allowing smoking in the balconies and only seeking bans for the residences of new owners who are informed of the smoking restrictions prior to their purchases, these restrictions may stand a better chance of becoming viable solutions for communities wishing to ban smoking within their properties as widely as possible.




Parking Spaces = Hot Commodities

By Laura M. Manning-Hudson

What is it about a parking space that gets people so worked up? Have you ever pulled in to your parking lot and found that a random car was parked in your assigned space? Has your condominium’s board ever re-assigned the parking spaces in your building? For some folks, these situations would raise their blood pressure through the roof. But why? Because, parking spaces are hot commodities if you live in a condominium.

When residents purchase their condominium units from a developer, they are generally assigned one parking space and may have the option of purchasing a second or third parking space for monetary value. In most condominiums however, after the developer has turned over control of the association to the owners, any parking spaces that were not assigned to a unit become common elements of the association – or guest parking spaces. Translation – there are no more parking spaces available for sale.

Therefore, if you are an owner who purchased long after turnover, when it comes to the parking space(s) assigned to your unit, basically, you get what you get. Or do you? In a condominium, parking spaces are generally identified as limited common elements (common elements that are for the exclusive use of one unit) that are appurtenant to the unit to which they are assigned. In the past, limited common elements could not be transferred away from the unit that they were originally assigned to by the developer. However, after many court cases involving unit owners’ attempts to transfer parking and storage spaces, the Florida Condominium Act now provides a mechanism for unit owners to legally transfer limited common elements to other unit owners. Section 718.106(2)(b), Florida Statutes, provides that the right to transfer [the exclusive right to use] a limited common element [such as a parking space] is allowed so long as the declaration of condominium as originally recorded, or as amended, authorizes such a transfer – and the transfer is completed according to the requirements set forth in the declaration.

In some condominiums, parking spaces are worth upwards of $10,000 to $15,000. Where parking is limited, some owners are willing to pay high dollar amounts in order to obtain extra parking spaces for their unit. However, it is imperative that if you are a condominium owner looking to purchase (or sell) a parking space that you first look to your condominium’s declaration in order to determine if transferring is allowable; and if so, find out what the requirements are for effectuating such a transfer. If the transfer is not done in strict compliance with the requirements set forth in the declaration, a dispute will inevitably arise over the ownership and use of the parking space. And while the "seller" may be long gone, we have seen many disputes over parking spaces escalate into court cases costing the owners thousands of dollars in legal fees.




Laura Manning-Hudson is a partner with Siegfried, Rivera, Hyman, Lerner, De La Torre & Sobel in the firm’s West Palm Beach office. She focuses on community association law and earned her law degree from the University of Miami and bachelor’s degree from Florida State University. She can be reached at (561) 296-5444 or via e-mail at

Michael E. Chapnick is a partner with the South Florida law firm of Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A. who has focused on community association law since 1996. He is based at the firm’s office in West Palm Beach, and the firm also maintains offices in Miami-Dade and Broward counties and represents more than 800 associations throughout Florida. He may be reached at

Roberto C. Blanch is a shareholder at the law firm of Siegfried Rivera Hyman Lerner De La Torre Mars and Sobel P.A. and practices in the firm’s community association law department. Mr. Blanch works at the firm’s main office located in Coral Gables, FL and may be reached by telephone at (305) 442-3334 or by email at

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