hot topics in community association law

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HOT TOPICS &

LEGISLATIVE UPDATE

IN COMMUNITY

ASSOCIATION LAW

.

Amanda K. Barritt, Esq. Shannon M. Puopolo, Esq.

HOT TOPICS & LEGISLATIVE UPDATE

•Recent Changes in Association Law

•Proposed Changes in Association Law

•Unique Issues for Associations

•New Electronic Voting Rules

•Associations’ Rights Following Bankruptcy of a Homeowner

•Support Animals

•Collection Issues/Bank Foreclosures

•Gate “Security”

RECENT CHANGES IN ASSOCIATION LAW

HB 791, Ch. 2015-97, Laws of Florida; HB 643, Ch. 2015-175, Laws of Florida

Effective July 1, 2015

I. Insurance (Condominiums)

II. Fines (Condos, Coops and HOAs)

III. Suspension of Voting Rights (Condos and HOAs)

IV. Official Records (Condos and Coops)(already in HOA)

V. Application of Payment (Condo and Coop)(already in HOA)


VI. Homeowners' Association Act

VII. HOA Amendments

VIII. HOA Elections/Delinquencies (already in Condo and Coop)

IX. Use of Technology

Proxies (Non-profit corporations)

Electronic Notices (Condo, Coop, HOA)

Electronic Voting (Condo, Coop, HOA)…

X. Condominium Terminations

XI. Property Taxes/Common Elements


CAM Activities/ Unlicensed Practice of Law

Supreme Court of FL adopted Proposed Advisory Opinion of the Standing Committee on Unlicensed Practice of Law regarding activities of community association managers

Activities that DO NOT constitute UPL:

Preparation of Certificates of Assessments

Modifications of Limited Proxy forms for ministerial matters

Determination of votes needed to establish a quorum which do not require interpretation of statutes or governing documents

Preparation of pre-arbitration demand letter

Searching public records to identify property owners


CAM Activities/ Unlicensed Practice of Law

Supreme Court of FL adopted Proposed Advisory Opinion of the Standing Committeeon Unlicensed Practice of Law regarding activities of Community Association Managers

Activities that DO constitute UPL:

Drafting documents which determine substantive legal rights

Preparation of Construction Lien documents

Preparation of Contracts

Any activity that requires statutory or case law analysis

PROPOSED CHANGES IN ASSOCIATION LAW

HB 667 A/K/A THE “COMMON INTEREST COMMUNITIES ACT”

Seeks to combine HOA statutes (720), condominium statutes (718) and cooperative statutes (719) into one body of law entitled the “Common Interest Communities Act.”

Repeals sections 719 & 720.

HB 665 A/K/A “AN ACT RELATING TO COMMUNITY ASSOCIATION MANAGERS”

Seeks to place stricter licensing requirements and disciplinary proceedings on property managers and property management companies.

Specifies that management firms applying for licensure must be registered with the Secretary of State.

Community associate manager licenses shall expire on September 30th of even numbered years and must be renewed every 2 years. An application for renewal shall be accompanied by the renewal of license fee as required by 468.435(10(d). Management firm licenses shall expire on September 30th of odd years.

HB 665 A/K/A “AN ACT RELATING TO COMMUNITY ASSOCIATION MANAGERS” CONT…

Licensure by Examination: licensure will now require knowledge of federal laws, in addition to state laws, relating to the operation of all types of community associations, corporations and nonprofit corporations. The proposed law also includes more areas of law that will be covered, including: the number of days required for statutory notices;

procedures for collections prior to filing a civil action;

drafting pre-arbitration demands;

determining the votes necessary for certain actions;

completing forms;

drafting proxy voting questions; and

drafting amendments to governing documents.

HB 665 CONT…

Continuing education: 20 hours of biennial continuing education is required instead of 10 annual hours.

“A COMMUNITY ASSOCIATION MANAGER IS LIABLE FOR DAMAGES INCURRED FROM OFFERING INCORRECT ADVICE.”

HB 1357/SB1716: REVISES CURRENT LAWS PERTAINING TO CONDOS AND HOAS

Retention of documents

Requires condos to retain copies of plans, permits and warranties related to improvements, bids for services, financial information, and physical copies of governing documents, available for inspection.

Requires HOAs to retain documents and items provided by the developer, a certified copy of the articles of incorporation, audits and reviews, ballots, sign-in sheets, voting proxies, and other voting documents for one year.

Maintaining a website

A condo with 500 or more units or HOA with 7,500 or more parcels must maintain an association website, which includes links to official records, annual budget and financial reports, lists of all contracts and transactions, notices of board meetings and agendas no later than 14 days in advance of the meeting. Protected information must be redacted before being posted to the website.

An association with fewer members “may” provide the listed documents on its website but is not required to do so.

HB 1357/SB1716 (CONT…) Conflict of interest

Transaction must be approved by 2/3 vote of directors at the meeting, and disclosed to the members, which can be cancelled by a majority vote of the members present at the meeting.

A rebuttable presumption of a conflict exists if (1) the director of relative of a director enters into a contract for goods or services with the association; (2) the director holds an interest in a business that enters into such contract; or (3) the business otherwise influences the decisions made by the director.

If a director proposes to engage in activity that is a conflict of interest with the association, the activity must be placed on a meeting agenda and submitted to the board for vote. If the board votes against it, the director must either refrain from the activity or resign from the board. If the board determines a director violated the conflict of interest provisions, it must immediately remove the director from the board.

The board must provide notice at least 7 days in advance of any meeting on possible conflict of interest or related transactions.

HB 1357/SB1716: REVISES CURRENT LAWS RELATING TO CONDOS AND HOAS- CONT.

HOA Fines and Suspensions

Currently, Florida law authorizes HOAs to levy fines and suspend rights of a member to use certain common areas for failure to comply with governing documents. The HOA must provide the member with notice and a hearing. The current law does not limit the type of conduct that can be governed.

The proposed bill prohibits HOAs from enforcing, or including requirements in the governing documents, regarding compliance with traffic laws and state and federal criminal laws or from levying fines or suspending common area rights due to violations of such laws.

HB 1357/SB1716: REVISES CURRENT LAWS RELATING TO CONDOS AND HOAS- CONT.

Past Due Assessments and Liens

Prohibits third parties from taking legal action to collect unpaid assessments unless the association has adopted and follows a written collection policy governing the collection of unpaid assessments.

Requires the association to send a notice of delinquency at least 30 days before transferring to a third party for collections (including a law firm) or placing a lien on the property. The notice must include (1) the total amount due; (2) payment plan options; (3) the name and contact information to verify the amount past due; and (4) notice that failure to cure within 30 days may result in legal action.

Must make a good faith effort to set up a payment plan providing a period of at least 6 months to cure the arrearage.

Lien foreclosure may be pursued if: (1) the balance is equal to 6 months of common expense assessments; and (2) the board has voted in a recorded vote to authorize the action.

HB 1357/SB1716: REVISES CURRENT LAWS RELATING TO CONDOS AND HOAS- CONT. Rental limitations

An association cannot create a deed restriction, declaration or similar binding agreement that prohibits a homeowner from renting his/her home, alter the duration of a rental term, limit the number of times a homeowner may rent his/her home during a specified period, or limit the number of occupants in a home, without consent of the current homeowner.

UNIQUE ISSUES FOR ASSOCIATIONS

Electronic Voting

Florida Statutes 718.128, 719.129, 720.317

FAC Rules 61B-23.0021, 61B-23.00211 (Condos), & FAC Rule 61B-75.0050 (Coops)

ELECTRONIC VOTING

Elections and other votes may be conducted through an internet-based online voting system IF:

1. Owner consents in writing to online voting

2. Association must provide each owner with:

a. Method to authenticate owner's identity to the online voting system

b. For Board elections (Condo), method to transmit electronic ballot that ensures secrecy and integrity

c. (HOA) Method consistent with election and voting procedures of the Bylaws

d. Method to confirm at least 14 days before voting deadline that owners electronic device can successfully communicate with the online voting system

ELECTRONIC VOTING

The System must:

1. Be able to authenticate the owner's identity

2. Authenticate the validity of each electronic vote to ensure the vote is not altered during transit

3. Transmit a receipt to each owner who casts an electronic vote

Condos- Receipt must include:

Specific vote cast

Date and time of submission

User identification

4. For elections, must ensure secrecy if required

ELECTRONIC VOTING

The System must:

5. Store electronic votes accessible to election officials for recount, inspection and review purposes

Condominium Associations must keep all ballots, sign-in sheets, voting proxies and all other papers relating to voting by unit owners for 1 year from the date of the election, vote or meeting

(Condo) Electronic system must produce an official record that the Association must maintain which identifies:

Specific votes cast on each ballot

Date and time of receipt of the electronically submitted ballot

HOA- no limitation so falls within the 7 year requirement

ELECTRONIC VOTING

Online voting must be authorized by a Board Resolution providing:

All owners to receive notice of opportunity to vote through online voting system

Condo-Notice of opportunity to vote online must be included in notice of meeting requiring the vote

Note- 14 day verification requirement, so may need to send notices out early

Must establish reasonable procedures and deadlines for owners to consent and opt out in writing

Board meeting where Resolution is considered must be mailed, delivered or electronically transmitted and posted conspicuously on the property at least 14 days before the meeting

Owners' consent is valid until they opt out

ASSOCIATIONS’ RIGHTS FOLLOWING BANKRUPTCY OF A HOMEOWNER

Pre-petition vs. post-petition assessments

Pre-petition assessments should be included in a proof of claim. Payments may be disbursed by the Trustee for these amounts, and collection efforts for pre-petition assessments should cease against the Debtor.

Debtor remains liable for post-petition assessments until title is transferred. However, Debtor is relieved of any personal liability that arose pre-petition once discharge issues. But, assessments will continue to accrue after the bankruptcy is filed, and the discharge will not relieve the Debtor of post-petition liabilities.

ASSOCIATIONS’ RIGHTS FOLLOWING BANKRUPTCY OF A HOMEOWNER (CONT…) Filing a Claim of Lien

Filing claim of lien is crucial to maintaining lien priority in bankruptcy. Even if declaration gave clear notice that HOA’s lien for assessments would relate back to filing of declaration, association first had to record a claim of lien before having priority over competing mortgage. See In re Jimenez, 472 B.R. 106 (M.D. Fla. Bankr. 2012). If HOA fails to record a claim of lien, it may be placed behind the first mortgage, will be wholly unsecured, and will be stripped. See In re Buckner, 2013 WL 221993 (M.D. Fla. Bankr. January 17, 2013).

COLLECTION ISSUES/BANK FORECLOSURES APPLICATION OF SAFE HARBOR PROVISION

An association sought 100% of past due assessments from third party purchaser at foreclosure sale. Declaration stated that subsequent owners will not be liable for payment of assessments owed by prior owner. Purchaser paid under protest and later sued association. Court held the association must amend its declaration to specifically adopt §720.3085. The court reasoned the statute was not required to be adopted by associations, and should not be applied to supersede express terms of a declaration.

Pudlit 2 Joint Venture v. Westwood Homeowners Association, Inc., 169 So.3d 145 (Fla. 4th DCA 2015).

COLLECTION ISSUES/BANK FORECLOSURES (CONT…)

ATTORNEYS’ FEES AND COSTS

§718.116(1)(b) states: The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee's acquisition of title is limited to the lesser of:

a. The unit's unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or

b. One percent of the original mortgage debt.

UNITED STATES V. FOREST HILL GARDENS EAST CONDOMINIUM ASSOCIATION, INC., 990 F. SUPP. 2D 1344 (S.D. FLA. 2014).

Court held that first mortgagees are only liable for unpaid assessments, and may not be charged for interest, late fees, collection costs, and attorney fees.

The court reasoned that interest, late fees, collection costs, and attorneys’ fees that unit owners owed to the association before the first mortgagees took title were not “common expenses”, nor “regular periodic assessments”, for which first mortgagees were liable.

SUPPORT ANIMALS

Fair Housing Act provides it is illegal to discriminate based on handicap

Federal and Florida law say

Handicap- A physical or mental impairment which substantially limits one or more of a person's major life activities,

A record of having such impairment, or

Being regarded as having such an impairment

Florida also defines developmental disability

SUPPORT ANIMALS

Major life activities:

Caring for oneself

Performing manual tasks

Sleeping

Concentrating

Walking, seeing, hearing, speaking, breathing, learning, working

SUPPORT ANIMALS

Be careful in enforcing pet restrictions when a support animal accommodation is requested by an owner

Could lead to discrimination suit and/or complaint w/ HUD

Personal liability of directors is possible

Insurance may not step in in discrimination cases

SUPPORT ANIMALS

Request for accommodation can be written or verbal

Association must investigate and act reasonably quickly

Not entitled to medical records- Restrictions on when and what documents

May request additional information if documentation provided doesn't establish a disability

Letter does not necessarily have to be from a doctor

FHA -Animal does not have to be trained

Can be virtually any type of animal

SUPPORT ANIMALS

Association cannot

Limit the size, weight, or breed of the animal

Restrict where the animal may go (may need to balance competing disability claim, allergies or phobias, such as designating use of certain stairs or elevators- make sure to document the reasons)

Association may place some reasonable conditions on the approval, such as:

Prohibit nuisance such as barking

Require vaccination records

Cleaning up after animal or animals to be leashed outside unless disability does not make this possible

SUPPORT ANIMALS

Don't just deny accommodation requests:

Be Interactive and establish policies ahead of time for handling accommodation requests

HUD has stated an assistance animal is not a pet, so if you have a # of pets restriction, you may have to allow the support animal in addition to other "pets".

GATE “SECURITY”

Uptick in Negligent Cases for Gated Communities

Owners take security for granted. Criminals take advantage.

Associations are the “deep pockets”.

GATE “SECURITY”

Document, provide evidence, reduce potential liability by:

Regular notices (letters, newsletters, announcements at meetings, mailings, email blasts, etc) to owners that:1. Gate provides access control/deterrent only

2. Gate is not intended for security purposes (check governing documents to determine if any language otherwise could be relied on)

3. Refer to "guards" as "Access Control Personnel"

4. Remind owners and occupants it is the personal responsibility of themselves, guests, tenants, employees, to use reasonable security/safety measures to protect themselves from crimes:

Lock doors

Install alarms

Adequate lighting/motion sensors

GATE “SECURITY”

Keep copies of such notices with date and time sent, or in minutes

Distribute the reminders as suggested above, NOT on signs or public displays so as not to alert the criminals

Ask landlords of rentals to post such warnings inside the home