Charging the Way: New Law Opens the Door for Electric Charging Stations in Condominiums

A recent amendment to Chapter 718, Florida’s Condominium Act, facilitates a unit owner’s ability to install and use an electric-vehicle charging station within their condominium. Section 718.113(8), Florida Statutes, which took effect on July 1, 2018, created a new provision stating that a declaration of a condominium or the board of administration of a condominium may not prohibit a unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area, under certain circumstances. A unit owner’s “right” to install a charging stating is not, however, without limits. An association may require that the unit owner comply with all safety requirements, applicable building codes or recognized safety standards for the protection of the association property and its members. An association may also require the unit owner to engage the services of a licensed and registered electrical contractor or an engineer that is familiar with the installation and requirements of an electric vehicle charging station. An owner wishing to install an electric vehicle charging station may also be required to comply with any reasonable architectural standards adopted by the association that govern the dimensions, placement or appearance of the electric vehicle charging station. However, such standards cannot substantially increase the cost of installation.

The new law also provides for additional safeguards for the association. For example, installation of an electric vehicle charging station may not cause irreparable damage to the condominium property. The electricity for the electric vehicle charging station must be separately metered and paid for by the unit owner making the installation. Cost of installation, operation, maintenance and repair of the electric vehicle charging station, including hazard and liability insurance, is the unit owner’s responsibility. Additionally, an association may require the unit owner to reimburse the association for the actual cost of any increased insurance premium attributable to the electric vehicle charging station. The law also shields condominium associations from construction liens resulting from the installation of electric vehicle charging stations by unit owners.

The new law does not, however, say anything about what happens if the association voluntarily opts to install “common” electric vehicle charging stations. In other words, if a condominium association opts to install these “common” electric vehicle charging stations (after complying with the necessary legal requirements) it does not mean that unit owners no longer have the right to install their own charging stations. The new law also does not address who is responsible for any costs associated with upgrading the condominium’s electrical system if an upgrade is necessary to handle the increased electrical usage.

Originally posted on floridacondohoalawblog.com and written by Jennifer Horan

Associations Can Require a Key

Q: I recently received an e-mail from my condominium association asking for a key to my unit. I have a problem with the board having a key to my unit. Am I required to provide a key? Can the association enter my unit at any time? (J.M. via e-mail)

A. Florida law gives your association the irrevocable right of access to your unit. However, this does not mean that the board can enter your at any time, for any reason. The association can access your unit during “reasonable hours” when it is necessary for the maintenance, repair or replacement of the common elements or of any portion of your unit that is required to be maintained by the association.

The right of access provide by the Condominium Act has been interpreted by the state agency which regulates condominiums to be broad enough to support a requirement that unit owners must provide keys to their unit to the association. Therefore, if your association’s declaration requires unit owners to provide keys to the association, I believe the provision is enforceable. If the requirement arises from a board action, there is more room for debate, but the prevailing view is that such rules are generally enforceable as well.

Unless there is an emergency, the association should provide reasonable notice to you before accessing your unit. The association’s acceptance of keys imposes a duty to handle the keys in a reasonable fashion. For associations that require owners to provide pass keys, it is a good idea for the board to establish policies addressing safety measures such as how the keys will be stored and who will have access to the keys.

Q: I live in a gated community that is governed by a homeowners’ association. I am a veteran and I often display my American flag outside my home. I intend to display the same flag for other holidays and days of remembrance. I recently received a letter from the board of directors of my association complaining about my “unapproved” flag. Can my association prevent me from displaying my flag on Labor Day? (L.F. via e-mail)

A: Section 720.304(2) of the Florida Homeowners’ Association Act states that any homeowner may display one portable, removable United States flag or official flag of Florida in a “respectful” manner, and one portable, removable official flag that is not larger than 4 ½ feet by 6 feet, which represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW MIA flag regardless of any covenants, restrictions, bylaws, rules or requirements of the association. A homeowner may also erect a freestanding flagpole not more than 20 feet high on any portion of the homeowner’s real property, regardless of any covenants, restrictions, bylaws, rules or requirements of the association as long as the flagpole does not obstruct sightlines at intersections and is not erected within or upon an easement.

Additionally, in 2005, Congress passed the Freedom to Display the American Flag Act to ensure that the right of an individual to display the United States flag on residential property not be abridged. The law generally provides that a condominium association, cooperative, or residential real estate management association may not adopt or enforce any policy that would restrict or prevent a member of the association from displaying the flag of the United States on residential property within the association. It is important to note, however, the law does permit associations to adopt reasonable restrictions pertaining to the time, place, or manner of displaying the flag of the United States necessary to protect a substantial interest of the association.

Originally posted on floridacondohoalawblog.com and written by Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. 

Weathering the Storm of Unexpected Community Association Financial Needs

In Florida, particularly in the summer months, a beautiful sunny day can suddenly morph into a torrential downpour. Similarly, an association with no obvious financial problems can suddenly find itself in the perfect storm that arises when restrictive financial language in governing documents, unexpected-yet-necessary repairs and a shortage of funds collide. There are various ways a community association can address these unexpected financial times as there is no one size fits all. Key however to every community is discussing the issue with its attorney, treasurer and accountant as the budget, fund availability and governing documents all come into play.

The Florida Condominium Act, Cooperative Act and Homeowner’s Association Act all address annual budgets. Generally, the annual budget should set out the estimated revenues and expenses for the year. In addition to annual operating expenses, a condominium association and a cooperative association is required to include reserve accounts for capital expenditures and deferred maintenances. These accounts must include roof replacement, building painting, and pavement resurfacing (regardless of the amount of the deferred maintenance expense or replacement cost), as well as for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. The budgets for Florida homeowner’s associations may include reserve accounts for capital expenditures and deferred maintenance for which the association is responsible, depending on whether the developer originally established them and/or if the membership affirmatively elects to do so.

In any event, statutory reserve funds are protected under Florida community association law, in that they may only be used for authorized reserve expenditures. Use of reserve funds for any other purpose must be approved by the membership. Further, even if the money is needed for repairs of items that are within the items specifically reserved for, if the reserve money is insufficient to cover the expense the association must seek the rest of the money from other sources.

The need for more money may result in additional assessments. Assessments that are levied above and beyond those derived from the budget are referred to as special assessments. However, Florida community association law does not specifically state that a community association has unfettered special assessment authority. This requires turning to the governing documents of the association for guidance. Some governing documents place restrictions on the right of the association to levy special assessments in terms of the amount of the special assessment or the need for member approval. Even in cases where the Board of Directors is empowered to levy a special assessment without membership approval, the statutes (and sometimes the governing documents) impose specific notice requirements for the meetings at which these assessments will be considered and notice requirements to advise owners of what their share is and when it is due. Finding out about the restrictions, notice requirements specifications and other legal requirements too late can hamper an association’s ability to timely begin collection of necessary funds.

Another option that is sometimes considered as a solution when funds are unexpectedly needed for a repair is a loan or line of credit. As with the special assessments referenced above, some association governing documents require a particular percentage of owner or other approval to authorize the association to borrow money. Further, loan documents can be complex and extensive and have a number of requirements that the association will have to meet before closing the loan. The association should consult with its legal counsel to assist with this and make sure it is not improperly providing collateral to the bank as part of the loan.

The words “unexpected financial needs,” by their very nature indicate the association does not know about them in advance. However, this does not mean that the association cannot prepare for the possibility of unexpected financial needs in advance. It can and it should. Prior to preparing the next year’s budget, community associations should meet with their accounting and legal professionals to discuss the benefits and detriments of the varying options available to the association for funding unexpected financial needs and the approval or procedures required in order to use any one of them. It may be that a revision to the proposed budget or reserves or amendments to the governing documents can be used to make the process less frustrating. Making it easier to weather the storm when it does strike.

Originally posted on floridacondohoalawblog.com and written by Lilliana Farinas-Sabogal

Some States are Protecting First Amendment Rights, Will the Sunshine State Follow Suite?

In 2012, the New Jersey Supreme Court ruled 5-1 that a condominium owner could place election signs on his front door and side window of his townhome over the objections of his association.

Wasim Khan, an oncologist who was a Democratic candidate for the Morris County Board of Freeholders, fought the Mazdabrook Commons HOA when they began fining him $25.00 a day for each day his election signs remained. That wasn’t the first time that Khan tangled with his association; they had previously fined him for his rose bush vines growing too high.

Khan was ecstatic over the Court’s ruling, saying “We won for the rights of a million fellow New Jerseyans and countless more across the U.S.”

Well, maybe not so fast here in Florida. Our State’s Supreme Court has not ruled on the issue of whether a private residential community’s governing documents can restrict signs without running afoul of the U.S. Constitution’s First Amendment protections which prohibit government from abridging the freedom of speech. Generally speaking, there would have to be some “tie in” between a private residential community and state action in order to have the First Amendment apply. Some people think that the fact that Florida condominiums are regulated by the State is sufficient to create that necessary state action but that theory has not yet been tested in our highest court.

In a Florida decision that arose from a Naples neighborhood, a homeowners association sued an owner who refused to remove a “For Sale” sign, which violated the restrictive covenants, from their front yard. The trial judge ruled in favor of the homeowner, finding the association’s rule to be an abridgment of free speech. Upon appeal, the appeals court sided with the association, finding that the association was not an arm of government, that there was therefore no “state action, and enforcement of the no-sign-in-the-yard rule did not violate free speech rights.  See Quail Creek Homeowners’ Association vs. Hunter.  Since the Quail Creek case involved what is called “commercial speech”, which is afforded less protection than pure “political speech”, it is perhaps debatable whether the same result would have happened if the test case was a political yard sign.

Meanwhile, the State of California has also taken steps to safeguard the rights of those living in common interest ownership communities to express themselves via signage. A 2011 law sponsored by Senator Christine Kehoe even went so far as to ensure that tenants in these communities could display political signs. There were some limitations on this right including the requirement that such signs be no larger than 6 square feet and that the signs not be installed more than 90 days prior to the election or vote and must be removed no later than 15 days after such election or vote. Moreover, the signage must relate to a specific election, referendum, recall or issue before a public body and not just contain a general political sentiment.

A ride through my own HOA last weekend revealed one brave soul who had installed a small sign for a local candidate near his mailbox. Our community’s covenants ban all signs except the statutorily-permitted security signs. Sure enough, the latest issue of our HOA Newsletter contains a bolded section reminding us all that signs are not permitted including political signs.

What are your thoughts about private covenants and political signs given the upcoming midterm elections in November? Do such restrictions save us all from visual clutter and our neighbors’ questionable political choices or do they abridge our freedom of speech? Will Florida follow the examples set by other states or are we still a long way off from that happening?

10 Fun Ways to Engage Your Residents

Building great relationships with your residents will lead to lease renewals, positive online reviews, referrals, and less angry phone calls. There are plenty of fun, cost-effective ways you can show your residents you care about them and their experience at your property. Here are our top 10 ideas to boost resident engagement without breaking the bank.

1. Complimentary Gift Wrapping Station

Have an unused corner of your lobby area? Create a handy little gift wrapping station that your residents will swoon over! It is a great opportunity to check in and connect with your residents while they are wrapping gifts. Also, because you’ll need to stock it with different wrapping paper and ribbons depending on the time of year, it will nicely complement your holiday lobby decor. This unique and thoughtful, low-cost amenity will set your property apart from the rest! The Home Depot has a helpful blog with tips and suggestions for creating your own gift wrapping station.

2. Community Garden

Community gardens tend to attract higher-income residents, Baby Boomers, and Traditionalists, so depending on the demographics of your community, a garden may be the perfect addition to your property. First, consult a professional landscaper to develop an accessible layout. Also, consider adding a compost bin to offset waste and enrich the soil naturally. Once your garden is up and running, host a “green thumb” contest, and post a picture of the winning plant, fruit, or vegetable on the community bulletin board, newsletter, and facebook page. Read this awesome MultifamilyBiz article for more info on starting your own community garden.

3. Trivia Night

Trivia nights are becoming increasingly popular at bars, restaurants, and now, multifamily communities! Find a location on your property that will fit a few tables and chairs (maybe your lobby, or lawn area) and grab some beers, sodas, pretzels, M&Ms, notepads, and pencils. Enlist your wittiest staff member as the emcee for the night and find your trivia questions online, from a board game, or a book. Here are a few sites with a bunch of fun questions you can use:

Free trivia questions and answers.

More free trivia questions and answers.

Trivia questions you can buy.

Don’t forget to announce your Trivia Night on your community board, newsletter, social media, and email blasts. Your residents will love testing their knowledge, getting to know their neighbors, and most importantly YOU for organizing a thoughtful and enjoyable event.

4. Ice Cream Social

This idea is so sweet and simple, but there are certainly ways to spice it up! Everyone loves ice cream, but you can kick it up a notch by bringing in a local gelato cart vendor, or setting up a banana split bar. Maybe consider moving away from the idea of ice cream completely, and host a build-your-own s’mores bar (especially if your property has a fire pit) with unique ingredients to add like Nutella, peanut butter, oreos, or chocolate chip cookies (to use instead of graham crackers). As with any event you organize, don’t forget to announce it on every community platform available so you get the most bang for your buck. Sweet treats are the best opportunity to connect with your residents, and show them some love.

5. Interior Design Consultations

Not everyone is Martha Stewart, some residents may need a little help in the creativity department. Encourage them to make their space feel like home by offering interior design consultations. Decorist is a popular startup that offers custom designs for $299 per room with no hidden costs. Laurel & Wolf and Havenly are similar platforms that offer room design services starting as low as $79 per space. Hiring an interior design service would be a great draw for new residents, or a sweet way to reward loyal ones who sign longer lease agreements.

6. Scavenger Hunt

There’s no better way to bring out your residents’ “inner-child” than a good old fashioned scavenger hunt. You can purchase a bunch of ping pong balls or plastic rings, or rubber duckies like Camden Living did and hide them all over your property. When your residents find them, they can turn them into the office to claim a prize. This gives you the chance to chat with them, and maybe hand out some branded gear. Some argue the best scavenger hunts involve riddles! If you go this route, each riddle they find leads them to another riddle until they finally reach a prize (hidden mimosa bar maybe?). Feel free to use the following riddles, and/or come up with your own!

 

Your managers work to get lots of things done

Applications and leases and all kinds of fun

They sometimes will sit at their desk in their chair

Low and behold, your next clue is there

Treasure hunt clue answer: Under your office chair

 

I’m stuck with articles, ads, and info

Lots of things that people want you to know

Papers and invites just hanging around

Somewhere up there the next clue can be found

Treasure hunt clue answer: Notice board

 

Fire me up and I’ll get nice and hot

During fun summer nights I’m a coveted spot

Wipe me down when you’re done and don’t be a slob

But enjoy your burgers and corn on the cob

Treasure hunt clue answer: BBQ

 

7. Doggie/Kitty Photo Contest

If your property is pet friendly, let your residents show off their fur babies and compete for a prize. You can create categories like, funniest pet photo, sleepiest pet photo, happiest pet photo, etc. Just have your residents post their entries on social media using your hashtag, and then re-post the winning photos on your social platforms. People are bound to connect with like-minded pet parents in your community and plan playdates. When your residents know and love their neighbors, the number of complaints will decrease and number of lease renewals will increase.

8. Hashtag Contest

If your community doesn’t allow pets, you can still run a successful UGC (user-generated content) hashtag contest. Do you have a current hashtag for your management company or property? Build brand awareness, and increase resident engagement by running a few social media contests throughout the year. Maybe during the holidays, ask your residents to post a picture of the wreath on their door using your hashtag, and the most creative wreath photo wins. Or if your property has a defining sign, gate, or water feature, encourage your residents to post fun pictures posing with that feature (and be sure to use your hashtag!). After your contest is over and prizes have been distributed to all of your winners, don’t forget to share and re-post. This will make your residents feel special and involved in the community; it also gives you great content for your social platforms.

9. Car Wash Service

Hire a local or mobile car wash company like Spiffy to come to your property and get your residents’ cars spic and span in the parking garage or parking lot if you have one. Set up a waiting area with beer and snacks for residents to enjoy and mingle with each other while their cars are detailed.

10. Leadership Lectures

If you have solid relationships with your residents, and know what they do for a living, ask if they would be interested in sharing their expertise with the rest of the community. Host a monthly or bi-annual lecture in your rec center, or common area. Do you have a CPA at your property? Ask them to share tips and best practices during tax season. Maybe there is a nurse or doctor would be willing to answer general health questions, and share new medical practices. They may be willing to speak for free, or incentivise them with a gift card, $100 off next month’s rent, etc.

Take a look at your budget, analyze your community demographics, and conclude what the most successful resident engagement event will be for your property. What will be a hit with your residents? Please let us know if you have any other tips for resident engagement, or if you attempted any of our suggestions, we want to hear how they turned out.

 

Originally posted on www.paylease.com written by Victoria Rees

New Term Limit Law Not Retroactive

Q: In one of your recent columns, you wrote about a new law that imposes term limits of eight years on condominium directors. Is this retroactive? (S.L. via e-mail)

A: In my opinion, no. Of course, lawyers’ opinions are just that, and what the courts have to say is what ultimately counts.

My interpretation is based on a long-standing rule of statutory construction. Florida courts have consistently held that condominium legislation is not to be retroactively applied, unless the legislatures evinces an intent that it be applied retroactively. There are certain exceptions to this rule for “procedural” and “remedial” changes to the statute.

If legislation is intended to be retroactively applied, then a second level of analysis needs to take place which largely focuses on constitutional issues. However, in the case of the new “term limit” law, there was no statement of retroactive application in the new law, so no need to consider constitutional implications.

Of further relevance is the fact that a similar law was enacted a couple of years ago (dealing with term limits on two-year terms) and most attorneys conversant in this field of law, as well as the state agency charged with enforcement of the law, took the position that it was likewise was not to be retroactively applied.

However, internal term limits contained in an association’s bylaws have been legal for a number of years, and would still be effective regardless of the recent statutory changes.

Q: My homeowners’ association recently hired a management company. While the decision to hire the management company was discussed at a series of board meetings, there was no vote by the membership for this significant cost to our association. Can the board simply hire a manager without a vote of the owners when we’ve never had one before? (J.C. via e-mail)

A: Generally, the decision to hire a management company is a decision for the board of directors. That is because the governing documents for most associations either grant this specific authority to the board, and/or provide that all corporate powers can be exercised by the board except where the statute or governing documents specifically require a members’ vote.

Typically, members are afforded the right to vote on amendments to the governing documents, election of the board of directors, the waiver or nonscheduled use of certain reserves funds, and other items as set forth in the statute or the community’s governing documents. Unless there is some specific contrary requirement in your governing documents, which would be unusual (though I do see it from time to time), the board of directors can retain or disengage a manager or management company, without a vote of the membership.

Q: My condominium association holds a number of social events throughout the year and in order to help pay for the cost of these events, our social committee holds various types of fundraisers including raffles and “50/50 drawings.” Some owners are now stating that these drawings are “illegal” and that someone could go to jail. Is this true? (D.G. via e-mail)

A: Your question is timely in light of recent news reports regarding a local political candidate facing allegations that they broke the law by running a “50/50 game” at a campaign event. While I am not familiar with the details of those allegations, and how the law may or may not apply there, it does present an opportunity for community associations to review the issue.

Chapter 849 of the Florida Statutes regulates gambling in Florida. Section 849.09 specifically prohibits a person from promoting or conducting any “lottery for money or anything of value.” This section of the law essentially prohibits all raffle-type games including “50/50 drawings.” While there are exceptions for raffles conducted by certain charitable organizations, these exceptions do not apply to community associations.

Violation of Chapter 849 by holding a raffle or lottery is a first degree misdemeanor for the first offense. Subsequent violations can result in felony criminal charges.

Originally posted on floridacondohoalawblog.com and written by Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. 

FL Division of Condos Proposes Greater Financial Penalties on Associations

Florida condominiums, cooperatives and, to a lesser degree, homeowners’ associations are subject to the imposition of fines and penalties by the Division of Florida Condominiums, Timeshare and Mobile Homes (“Division”) for a variety of mistakes and missteps.  The Division plans to pass sweeping changes to Chapter 61B-21 of the Florida Administrative Code which may go into effect in the coming weeks.

Why is this important for your Board to know?  Because many of the actions listed below occur on a regular basis in many associations that can otherwise be described as high functioning communities.

The category of minor violations has been narrowed while the category of more egregious violations has been expanded. The following violations are considered minor violations for which a Notice of Noncompliance will be issued:

  • Failing to disclose the beginning and ending dates of the period covered by the proposed budget.
  • Failing to disclose periodic assessments for each unit type in the proposed budget.
  • Distributing candidate information sheets consisting of more than one page.
  • Verifying the outer envelope information BEFORE the date of the election.
  • Failing to disclose the amount required to fully fund each reserve account as of the end of the fiscal period covered by the annual financial statements.
  • Failing to disclose the method of allocating income and expenses in the annual financial statements or turnover audit.

The following violations will result in a MINIMUM total penalty of $10-$30 PER UNIT or $1,000 whichever amount is greater. In a high rise with 350 units, a penalty for one of the following violations could cost $10,500.  As you can see, some of the violations below are much more egregious than others.

  • Failing to maintain complete accounting records.
  • Failing to maintain separate accounting records for each condominium.
  • Not passing assessments sufficient to meet expenses.
  • Collecting assessments less frequently than quarterly.
  • Not apportioning assessments correctly amongst multiple condominiums.
  • Failing to charge interest on past-due assessments.
  • Improperly excusing the developer or other owners from paying assessments.
  • Improperly amending the Declaration of Condominium to change the percentage by which the unit owners share the common expenses.
  • Imposing improper use fees.
  • Imposing late fees, transfer fees or security deposits without proper documentary authority to do so.
  • Failing to maintain adequate fidelity bonding.
  • Compensating board members or officers without proper documentary authority to do so.
  • Improperly allocating reserve requirements.
  • Failing to include a separate budget for each condominium operated by the Association as well as a budget for the Association.
  • Failing to obtain competitive bids fore each contract that exceeds 5% of the association’s budget.
  • Imposing fines and suspending use rights without proper notice and an opportunity for a hearing.
  • Allowing an ineligible person to fun for the Board.
  • Failing to adopt a budget each year.
  • Commingling reserve funds with operating funds.
  • Using Association funds for items other than proper common expenses.
  • Contracting with a service provider owned by a board member.
  • Using an association debit card for any association expenditure.
  • Failing to hold an annual election. The caveat here is that if you do not have more candidates running than open seats or if you do not have at least 20% of your eligible voters cast a ballot you will not have an election.
  • Failing to use ballots or voting machines.
  • Failing to provide space for the name, unit number or signature of the outer envelope used for elections.
  • Failing to provide timely first and second notices of the election.
  • Using improper nomination procedures in the election.
  • Holding the election at a time and place other than the annul meeting.
  • Failing to provide a candidate with a receipt for written notice of his or her candidacy.
  • Permitting ineligible candidates to be listed on the ballot.
  • Allowing members to rescind or change their previously cast election ballots.
  • Including comments from the board about election candidates in the Second Notice of Election and accompanying documents.
  • Not using an impartial committee to count the ballots.
  • Altering or editing candidate information sheets. The caveat here is that if a candidate submits a double-sided candidate information sheet or a candidate information sheet that is more than one page long, that candidate must be told that only one side of a page will be distributed.
  • Failing to place the inner envelope in a separate receptacle before being opened.
  • Not using uniform ballots.
  • Not checking the outer envelopes against a list of eligible voters.
  • Counting ineligible ballots
  • Failing to count properly cast ballots.
  • Opening outer envelopes prior to the election meeting or opening outer envelopes outside the presence of unit owners.
  • Failing to maintain official records.
  • Requiring a unit owner to pay a fee for access to association records.
  • Failing to timely provide access to records or failing to allow scanning or copying of records.
  • Improperly purchasing a unit at a foreclosure sale.

The foregoing list of violations is not inclusive and, in addition to the penalties established by the rule chapter, the Division may also seek to recover any other costs, penalties, attorney’s fees, court costs, service fees, collection costs and damages allowed by law. . There are a lot of other areas where a volunteer board can unknowingly go astray and wind up being monetarily penalized as a result. The changes being proposed by the Division to 61B-21.003 F.A.C reflect a shift in the Division’s focus from education to enforcement. While both are important, education helps boards avoid the types of infractions which result in fines and penalties.

The Division has posted notice of a Public Meeting/Workshop Hearing for Monday, August 13th from 9:30-11:30 am in Tallahassee. I realize that most of you reading this blog are not likely to make it up to Tallahassee for this hearing.  However, you can submit a comment regarding the proposed rules by sending an email to the following email address which has been set up for this purpose:

fctmh.rulehearing@myfloridalicense.com

The imposition of fines against associations will have a financial impact and may result in the community looking for ways to hold individual board members accountable for the costs to the association. Do not expect insurance to cover fines or penalties.  Given these new enforcement parameters, I am urging associations to consult with their management professionals and experienced legal counsel to ensure that they are operating within the requirements of the Statute and Administrative Code.  Particular attention should be paid to fiscal operations (budgeting, calculating and handling of reserves, collection of assessments), imposing fees of any kind other than assessments, elections and board member conduct and the awarding of contracts.  Serving on your board of directors is almost guaranteed to be a thankless job but you should try to avoid it also becoming a costly job!

 

Originally posted on communityassociationlawblog.com and written by Donna DiMaggio Berger

Putting the Puzzle Together Regarding Insurance Coverage and Exclusions

In those pages and pages of insurance documents detailing your available insurance coverage you’ll also find exclusions explaining what is not covered in your insurance policy. There might, however, be some exceptions to those exclusions that should keep the claim from being excluded under the policy. Confused yet?

That knotted paradigm is illustrated in a case that was decided by the Florida Supreme Court. In John Robert Sebo v. American Home Assurance Company, 208 So.3d 694 (Fla. 2016), the Florida Supreme Court was asked to determine whether coverage existed under an all-risk policy when multiple perils combined to create a loss and at least one of the perils was excluded by the terms of the policy. The court concluded that coverage did exist in such a scenario. In other words, the Florida Supreme Court decided that insurance companies should not deny coverage for property damage just because it had more than one cause so long as the policy covers at least one of the causes.

Let me explain. John Sebo, the insured homeowner, had an insurance policy that covered rain and hurricane damage but not damage from construction defects. His house was damaged during Hurricane Wilma. The investigation showed the damage was because of the rain andconstruction defects.

The Florida Supreme Court noted that it was “confronted with determining the appropriate theory of recovery to apply when two or more perils converge to cause a loss and at least one of the perils is excluded from an insurance policy.” Two competing theories had to be analyzed in reaching a final decision. The first, the efficient proximate cause (EPC) theory provides that the peril that set the other one in motion is the cause to which the loss is attributable. This meant that in Sebo a trial would have been required to determine which peril was set in motion first.

However, the Florida Supreme Court rejected the application of the EPC theory, preferring the application of the concurrent cause doctrine (CCD).  Under this theory, coverage may exist where an insured risk constitutes a concurrent cause to the loss even when it was not the prime cause for the loss.

Ultimately, the Court in Sebo concluded that there was no reasonable way to distinguish the probable cause of the property loss since the rain and construction defects acted in concert to create the destruction. The Court then looked at the plain language of the insurance policy and found that the policy’s plain language did not preclude recovery.

This confusing paradigm is also illustrated in the case of Bartram, LLC v Landmark American Insurance Comp., 864 F. Supp. 1229, (N.D. Fla. 2012).  That case centered on a dispute between an apartment complex and several insurance carriers. The apartment complex sustained significant water damage caused by faulty workmanship in the building’s construction. While the apartment owners acknowledged that the costs to repair the faulty workmanship itself was not covered, the water (a Covered Loss) that infiltrated and damaged the building should be covered because of the exception. Of course, the insurance companies disagreed and argued that the apartment owners were not entitled to coverage. Ultimately, the Court disagreed with the insurance companies and concluded that the apartment owners were entitled to insurance coverage.

These cases (Sebo and Bartram) illustrate the importance of understanding not just your available insurance coverages but also your applicable exclusions. While you may have coverage for, say, property damage from a hurricane, the insurance company may argue that coverage does not exist as a result of some exclusion in your policy such as faulty workmanship or wear and tear. While the cases I’ve discussed here suggest that in a scenario like that you should be afforded coverage, the fact remains that your insurance company may deny coverage as a result of the exclusion contained in your policy and its “no” should not be readily accepted. Understanding what is and is not covered under a policy is key, as is having an attorney experienced in dealing with carriers in these situations.

Originally posted on floridacondohoalawblog.com and written by Hugo Alvearez ESQ

Board Must Allow Renewable Energy Devices

Q: I would like to install solar panels on the roof of my home, but I did not see any standards addressing this within my homeowners’ association’s documents or architectural review guidelines. Would I be allowed to install these in order to make my home greener? (K.L. via e-mail)

A: Probably. Under Section 163.04 of the Florida Statutes, homeowners’ association declarations may not prohibit owners from installing certain renewable energy devices on buildings located on lots or parcels that are subject to the declaration. These devices include “solar collectors, clotheslines, or other energy devices based on renewable resources.” In the event that an owner wishes to install solar collector devices on a roof, the statute allows the approving entity under the declaration (such as the architectural review committee) to determine the specific location where they may be installed, including positioning the solar collectors to the south or within 45 degrees east or west of due south, if this does not impair the effective operation of the solar collectors.
This law was first enacted in 1980, and the prevailing view is that covenants which predate the statute may still be enforced.

In the condominium context, the statute provides that owners may not be denied the ability to install the solar panels by the approving entity in the declaration, so long as the proposed installation is done within the unit boundaries. However, from a practical standpoint, these panels would rarely be located within the unit boundaries.
The Florida Condominium Act also allows the board of directors to install solar collectors, clotheslines, or other renewable energy devices upon or within the common elements or association property to benefit unit owners, without unit owner approval.

Q: My condominium association has historically had problems getting people to serve on the board. Two board members recently resigned and the remaining three board members cannot get volunteers to fill the vacancies. Some people in our community have suggested simply having the State come in and run the Association. Is that actually an option? (W.P. via e-mail)

A: Not really. The Florida Condominium Act does not provide a mechanism for the State to take over and handle the operation of the association. The Division of Condominiums, Timeshares, and Mobile Homes is the administrative agency in charge of regulating condominium associations. However, it does not have the authority to step in and run a condominium association.

You may be referring to the process of having a “receiver” appointed. Section 718.1124 of the Act provides that when an association fails to fill the vacancies on the board of administration sufficient to constitute a quorum, any unit owner can give notice of their intent to apply for a receiver to be appointed to manage the association’s affairs.

The statute outlines the process to have a court appoint a receiver, including providing notice to all owners, which must be given 30 days before filing the petition, in order to give the association sufficient time to constitute a quorum of the board of directors.

A receiver is typically a professional such as an attorney or an accountant who would run the association until such time as a quorum of the board can be sufficiently constituted. The association must pay the receiver’s salary, which could potentially be expensive. In my experience, appointing a receiver is not a desirable option for an association or your property values. Owners in your condominium need to step up and take their turn serving on the board. You should also look into professional management if your association does not currently use it.

Another option for the association would be to amend the bylaws to provide for a three-member board, which may make it easier to fill all the positions, and only requires two directors for a quorum.

Originally posted on floridacondohoalawblog.com and written by Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. 

Who is Responsible for Electrical Wiring and Plumbing Repairs?

Disputes over maintenance, repair and replacement responsibilities are common in community associations and a well drafted declaration or amendment to the declaration can help prevent disputes over who (owner or association) is responsible for a specific item of maintenance.

Regarding how to interpret your existing condominium documents, the unit boundaries will be defined within the declaration and sometimes within the site plan. Any item/component including electrical wires and plumbing located within the unit boundaries is the unit owner’s responsibility to maintain, repair and replace (unless the declaration states otherwise). In contrast, any item/component located outside the unit boundaries is a common element (or a limited common element) and the association is responsible to maintain, repair and replace the common elements unless a given item is identified in the declaration as a limited common element (benefiting the subject owner) and also identified as being the maintenance, repair and replacement responsibility of the unit owner.

Originally posted on floridacondohoalawblog.com and written by David G Muller