Author: rembaumlaw

The use of automobiles in Florida can be a source of pure enjoyment, but often results in stress and frustration. This is especially true as you witness a neighbor speeding recklessly on the association roads. Safety should always be paramount. Unfortunately, not every driver operates their automobile in a responsible, safe manner leading to all sorts of dangers to pedestrians and property, alike. Local law enforcement can only enforce traffic laws within the public streets of its jurisdiction. So, how can your association be included in that jurisdiction?

When it comes to accessing roads within a community association, there are two types; communities with publicly dedicated roads and communities with private roads, which are commonly referred to as “gated communities”. Enforcement of traffic regulations in a community association with public roads falls under the same mandates for local law enforcement as any other public street of its jurisdiction. The more difficult situation is when a gated community association wants law enforcement to enforce traffic regulations within its private roads. Who has authority to enforce traffic safety? Does local law enforcement have an implied right to enforce traffic laws within the private roads of a gated community?

The Florida Attorney General, in advisory legal opinion AGO 2009-16, addressed whether local law enforcement has the authority to enforce traffic within the private roads of a gated community. The Florida Attorney General determined that local law enforcement has the authority to enforce speed limits and other traffic regulations in a gated private community as long as the association has entered into a traffic control agreement with the municipality pursuant to section 316.006(2), Florida Statutes.

As a quick summary, section 316.006(2), Florida Statutes, provides that a municipality may exercise jurisdiction over any private road located within its boundaries if the municipality and the parties owning or controlling such road enter into a written agreement that is also approved by the governing body of the local municipality. Pursuant to the traffic control agreement, the owner of the private road must agree to provide i) reimbursement for actual costs of traffic control and enforcement, ii) insurance and indemnification for liability, and iii) such other terms as are mutually agreeable. Because the traffic control agreement is an extension of the authority of the local municipality to enforce traffic, any traffic control agreement will also require traffic signage conforming to the Florida Department of Transportation’s specifications. In addition, however, there can be minimum speeds imposed by the Florida Department of Transportation’s traffic laws as well. For example, a gated community in Palm Beach County that wanted local law enforcement’s assistance with enforcing a speed restriction against leaded footed drivers was unsuccessful because its speed limit of 15 MPH was simply too slow for enforcement under state traffic laws. In any event, if all of the aforementioned are accomplished, then the Board, by majority vote, may elect to have state traffic laws enforced by local law enforcement agencies on the private roads controlled by the association.

In addition to the above requirements, Palm Beach County also requires an original certified traffic survey completed by a licensed consultant or engineering firm stating that all traffic and regulatory signs on the property comply with Florida Department of Transportation and Florida Statutes and that the speed limit (included on the survey) complies with Florida Statutes; a map of the subdivision; and an affidavit, executed by a director of the association, stating the association owns the roads.

As to the situation where a Palm Beach County gated community could not enter into such an agreement for local enforcement to enforce traffic regulations in their gated community, the association is not without relief. In that instance, the homeowners’ association could fine the speeding drivers by adopting the requisite rules and regulations and following the provisions set out in Florida’s fining laws, section 720.305, Florida Statutes. For more information on how to do so, please contact your association’s attorney.

With the ever-increasing urban development in Florida, especially in South Florida, we are sometimes reminded that we live in close proximity to a number of native and exotic invasive wild animals.

What can and should happen when your community association is confronted with that unexpected wild animal that causes a ruckus, or even worse, the wild animal has become a source of imminent danger to the members of the association or their guests? In the case of Hanrahan v. Hometown America, LLC, decided on June 20, 2012 by Florida’s Fourth District Court of Appeal, the personal representative of a deceased resident, Ms. Hanrahan (“Hanrahan”), sought damages for the negligent death of Mr. Hanrahan, who died from fire-ant bites sustained on the common areas of Pinelake Gardens and Estates, a mobile home park (“Pinelake Gardens”).

By way of background, Mr. Hanrahan was walking his dog in the common area of Pinelake Gardens known as the “Preserve”. Mr. Hanrahan claimed that he brushed up against a bush, at which point the fire-ants gained access to his body. Mr. Hanrahan attempted to wash the fire-ants off of his body but collapsed on the shower floor. He died two days later.
During the trial, the Pinelake Gardens community manager testified that she was not aware of any resident in Pinelake Gardens being attacked by fire-ants on the premises, nor was she aware of any fire-ants in the area of Pinelake Gardens where the incident allegedly occurred. She testified that Pinelake Gardens regularly contracted with an exterminator to spray insecticide, which included killing ants (not specifically fire-ants). She further testified that maintenance employees would treat observed ant mounds with granules and would contact the exterminator if there was anything out of the ordinary observed.

The trial court ruled in favor of Pinelake Gardens. The trial court determined that Pinelake Gardens was not on notice of a fire-ant infestation at the area of the alleged incident, and therefore did not have a duty to Mr. Hanrahan to guard against the fire-ants. As a result, Hanrahan appealed. On appeal, Hanrahan claimed that the trial court improperly determined whether Pinelake Gardens could foresee the specific injury that actually occurred, instead of, as Hanrahan claimed, whether Pinelake Gardens’ conduct created a foreseeable zone of risk.

The general rule in regard to wild animals in Florida, as explained by the appellate court citing to another case, Wamser v. City of St. Petersberg, provides, the law does not require the owner or possessor of land to anticipate the presence of, or guard, an invitee against harm from animals “ferare naturae” (which is a common law doctrine where wild animals are considered owned by no one specifically but by the people generally) unless such owner or possessor harbors such animals or has introduced wild animals to the premises which are not indigenous to the locality. Wamser involved a shark attack, in which the city did not have any knowledge of prior shark attacks and therefore did not have any foreseeability of shark attacks nor a duty to guard against shark attacks. As in Wamser, the appellate court ruled that there was no evidence in the record to show Pinelake Gardens had any knowledge of a “ferae naturae” attack in the alleged area.

The appellate court held that the presence of the fire-ants was not caused by any act of Pinelake Gardens and that Pinelake Gardens did not harbor or introduce them. Furthermore, Pinelake Gardens regularly attempted, by maintenance staff and exterminators, to treat the ant mounds and other manifestations of fire-ants.

To add a further caveat to its ruling, the appellate court added quoting to another case, “we do not say a landowner can never be negligent with regard to the indigenous wild animals found on its property. A premises owner could be negligent with regard to wild animals found in artificial structures or places where they are not normally found; that is, stores, hotels, apartment houses, or billboards, if the landowner knows or should know of the unreasonable risk of harm posed by an animal on its premises, and cannot expect patrons to realize the danger or guard against it.” The appellate court ruled that there was no evidence that Pinelake Gardens knew or should have known of the unreasonable risk of harm posed by the fire-ants.

Even though the Hanrahan case primarily concerned fire-ants, the case could be applied to any number of wild animals that you could encounter in your community association, with the most notorious wild animal being the alligator. If you believe an alligator poses a threat to people, pets or property you can call the Nuisance Alligator Hotline at 866-392-4286. Remember, the basic rule is that if the association is aware of a dangerous animal which is within, or may be within, the lands governed by the association, the association has a duty to act. If you have further questions please contact your association lawyer.

“A stitch in time saves nine”. This is a well known phrase which implies that a little work now, will save you from a lot of work, later. Remembering this phrase can go a long way in the management and operation of your community association. The Florida Legislature has amended numerous statutes affecting our community associations. This third article in our 2018 Legislative Update Series will address changes to Chapter 712, Florida Statues, a/k/a The Marketable Record Title Act and section 197.582, Florida Statutes, regarding surpluses resulting from tax deed sales.

The Marketable Record Title Act (“MRTA”):

If you live in a homeowner’s association that is nearing its thirtieth (30th) anniversary, then you should be aware of MRTA. It was created to help title examiners of real property determine which “interests, claims, estates, or other charges” were still effective against the property. MRTA is used to help eliminate restrictions recorded prior to what is referred to as the “root of title”. The “root of title” is determined by looking back at least 30 years to identify a deed or other muniment of title that meets certain statutory criteria set out in Chapter 712, Florida Statutes. In other words, MRTA operates to eliminate restrictions so as to prevent real property from being so overly burdened with covenants that the property is no longer marketable. MRTA also helps shorten the period of review a title examiner must examine during the conveyance of real property.

In a simplistic explanation, MRTA operates such that covenants recorded more than 30 years earlier can begin to expire on a lot by lot basis unless such covenants fit squarely into one of the exceptions to MRTA or unless action is otherwise taken to preserve the covenants from being extinguished. Under MRTA, the homeowner’s association would file the statutorily required notice and filings pursuant to section 712.06, Florida Statutes to preserve the HOAs’ declaration from MRTA’s negative effect.

Effective October 1, 2018, the Florida Legislature expands the methods for protection from the effects of MRTA pursuant to section 712.05(2)(b), Florida Statutes, to include instances in which the homeowner’s association records an amendment to the declaration of covenants and restrictions that is indexed under the legal name of the homeowner’s association and references the proper recording information of the covenant or restriction to be preserved. In other words, and in plain English, the new MRTA legislation allows extends the 30 year MRTA deadline with every amendment to the association’s declaration of covenants and restrictions. Therefore, the recording of an amendment to the association’s declaration serves the dual purpose of enacting the underlying amendment and also extends the life of the declaration. A homeowner’s association may also record a new, shorter notice of preservation, to preserve its covenants and restrictions. A copy of the notice must be included in the next notice of meeting or other mailing sent to all members.

I am also very pleased to report that for the first time ever, commercial property owner associations can also avail themselves of preserving and revitalizing their covenants and restrictions, too. While it took an army of people, several years and review of one draft Bill after another to get this accomplished, I am proud to have assisted in this worthwhile endeavor.
TAX DEED SURPLUS:

From time to time, community associations are served with a notice from the Clerk of Court that a unit or lot owner has not paid their property taxes and, as a result, the home will be sold at a sale with open bidding. By way of over simplification, delinquent tax obligations are auctioned to buyers that pay the delinquent tax on behalf of the owner and charge the owner interest. The buyers receive what is known as a tax certificate. After several years, the tax certificate holder can apply for a tax deed. The tax certificate holder can bid at the tax deed sale in the amount of the delinquent tax.

If the winning bid at the tax deed sale is in excess of the tax certificate holder’s bid amount, then any excess amount of surplus proceeds, after the tax certificate holder is made whole, will be held by the Clerk of Court. The Clerk of Courts must now issue, to all known lienholders, a notice to file a claim for the surplus. The Clerk of Court determines the priority of the claims based on the information provided by the claimants and pays out from the surplus accordingly. A new hard deadline of 120 days from the date of the Clerk of Court’s notice of surplus is now imposed to file a claim for surplus funds, except for claims by a property owner. (Believe it or not, there was no such deadline in the past.) The new requirement will apply to tax deed applications filed on or after October 1, 2018. Since many declarations impose a lien for assessments, it remains to be seen whether an association will need to record an assessment lien to ensure entitlement to surplus, or if the declaration itself will suffice for receiving notice of surplus.

Community associations have an interest in the safety and integrity of their communities. Generally speaking, boards of community associations would like to be reasonably certain that potential owners, renters and other occupants have the financial capability to meet their financial obligations. Also of concern are potential purchasers’ and tenants’ criminal backgrounds, if any, so as to avoid endangering the overall safety and welfare of the community.

To address these concerns, many associations have purchaser and tenant approval procedures set out in their governing documents, usually the declaration, which often authorize the association to obtain “consumer information reports” on all applicants as part of the screening process. This leads to the question of when and how a community association can utilize a background check that includes both a credit report and criminal history.

The first step is to determine if the governing documents provide for the approval process. The second step is to ensure there is meaningful criteria by which to evaluate the results of the consumer information report. The consumer information report (a/k/a the background check) is typically compiled by a consumer reporting agency or company, which is engaged in the business of gathering credit scores, reports on previous rental history, criminal background information, employer history, and verification of income amongst other information. The consumer information report cannot be used for any other purpose other than for the determination of approval. Importantly, it cannot be used in a discriminatory manner to reject housing based on race, color, religion, national origin, sex, disability, or familial status.

If the community association makes an unfavorable determination on the applicant’s status based on information contained in the consumer report, then the association MUST provide certain information to the applicant pursuant to the terms of the Federal Fair Credit Reporting Act.

1. The association must provide the applicant verbal or written notice that the applicant was denied based on the information supplied in the consumer report.
2. The verbal or written notice of adverse determination must include:
a) the name, address, and phone number of the consumer reporting company that supplied the report,
b) a statement that the company that supplied the report did not make the decision for the unfavorable action and cannot give reasons for the denial;
c) a notice of the applicant’s right to dispute the accuracy and completeness of the information in the credit report and that the applicant may request a free report from the credit reporting company within 60 days.

For the protection of the association, this notification should always be done in writing so as to provide proof positive of compliance with the Fair Credit Reporting Act. Additionally, there are local Broward and Miami-Dade County Ordinances requiring that a written notice be mailed to the rejected applicant which provides with some degree of specificity the basis for the disapproval, in addition to the notice required by the Federal Fair Credit Reporting Act.

The information that the association relied on in making the adverse determination CANNOT be released to the applicant, but the applicant may request from the credit reporting agency to see the information in the consumer information report and correct any inaccurate information. Even if the information provided a small role in the total determination of the application, the applicant must be provided the required notice by the association.

What is to be done with the consumer information report after a decision has been made? The general rule is that all information in the consumer report must be destroyed in such a manner that it cannot be reconstructed. But arguably, Florida law requires community associations to keep such records, as all written records of an association must generally be kept for seven years. Therefore, the association will want to store the consumer report in the applicant’s file, which will need to be designated as confidential with restricted access. It is NOT part of the official records open to inspection and, thus, not available upon a request to inspect the association’s official records.

If a declaration has general language providing for the purchaser and tenant approval but does not provide the standards and procedures necessary to make such a decision, then on all likelihood the association’s approval is on thin ice and subject to challenge. This is a good time to check your declaration and seek advice from the association’s lawyer as to whether your association’s declaration approval process needs to be updated.

A necessary duty of Florida’s community associations is to levy and collect assessments to ensure the upkeep of the community. In a perfect world, all owners would timely pay their assessments. Unfortunately, this is not always the case. When owners do not pay, their association often takes legal action including the filing of a lien and filing of an assessment foreclosure lawsuit.

In the case of Berg v. Bridle Path Homeowners Association, Inc., decided on January 20, 2002 by Florida’s Fourth District Court of Appeal, the association, Bridle Path Homeowners Association, Inc. (“Bridle Path”), sought to foreclose on Ms. Berg, the homeowner, for her failure to pay assessments since her acquisition of the property. In response, Berg asserted that Bridle Path did not comply with its own declaration of restrictive covenants or bylaws in the making and levying of the assessments.

By way of background, in 1993, Berg purchased two lots in Bridle Path. The lots were subject to the Declaration of Covenants, Conditions and Restrictions for Bridle Path and Bridle Path’s authority to make and collect assessments. In 1997, Bridle Path filed a lien foreclosure lawsuit against Berg, alleging Berg failed to pay the assessments levied against her two lots from the time of the 1993 purchase through the end of 1997.

Berg raised five affirmative defenses to the lien foreclosure lawsuit including: (1) that the property manager, and not the board, determined the budget, which act was inconsistent with the bylaws; (2) there was no evidence that board meetings were held where budgets and lot assessments were adopted; (3) there was no evidence that Berg received notice of the annual meetings; (4) there was no evidence that notice of the annual meetings were posted to the property; and (5) minutes of any meetings conducted were not kept in accordance with the bylaws. In plain English, an “affirmative defense” raised by a defendant in a civil lawsuit is a fact or set of facts other than those alleged by the plaintiff which, if proven by the defendant, defeats or mitigates the legal consequences of the allegations set forth in the complaint.

The trial court ruled in favor of Bridle Path. The trial court also determined that Berg did not prove her affirmative defenses that Bridle Path failed to comply with the recorded covenants, bylaws, and Florida Statutes. As a result, Berg appealed. On appeal, Berg claimed that the trial court erroneously shifted the burden of proof for the assertion of the proper levying of the assessments from the association, Bridle Path, to Berg. The appellate court noted that, although Berg framed her response to the complaint as affirmative defenses, those affirmative defenses were actually denials of the condition precedent that Bridle Path properly levied the assessments in accordance with the declaration.

The appellate court determined that Bridle Path was required to prove that the assessments were properly levied pursuant to the recorded covenants by a preponderance of the evidence and that Berg did not have to prove that association did not do so. In citing to another case, the appellate court noted that, “it is well-settled in Florida law that the plaintiff is required to prove every material allegation of its complaint which is denied by the party defending against the claim.”

The appellate court held that a homeowners’ association must show that it properly levied the assessment in accordance with the community’s declaration of restrictive covenants when the owner challenges the lack of compliance. This concept applies to all types of community associations. Furthermore, the appellate court also found that the trial court erred by requiring Berg to prove that Bridle Path did not comply with its governing documents rather than requiring Bridle Path that it did so comply. With that, the appellate court remanded (meaning, sent back) the case back to the trial court for a new trial consistent with the appellate court’s holding… meaning that Bridle Path would have to prove that it did, in fact, properly levy the assessments.
The general rule is that an association has the burden of proving it performed the required conditions precedent to enforce the provisions of the declaration of restrictive covenants. At any contested trial or hearing the association has to prove that it complied with all applicable provisions of its declaration. The owner being sued does not have to prove that the association did not do so. In this case, at a minimum, Bridle Path would need to prove that the board lawfully passed the budget(s) in accordance with the declaration and bylaws, that the board authorized the lawsuit to commence and that the 45 day intent to lien letter and 45 day intent to foreclose letters were sent.

The nugget of hidden gold in this case’s holding is that an association needs to keep accurate minutes and records of its activities. The minutes and records should be sufficient to show the business being conducted. The level of detail required depends on the scope of the activity the association is addressing. For instance, the minutes should at least minimally reflect that proper notice was provided, who made the motion and who seconded it, and the board’s ultimate decision on the issue at hand. This does not, however, mean that the association should be keeping overly detailed minutes such that the minutes would be a transcript of the meeting.

Golf course communities are a fact of life in south Florida. But what happens when the course becomes too expensive to maintain? Sometimes, what started out as a voluntary club membership becomes mandatory for new owners. This can have obvious negative effects on sales due to the added expenses of the mandatory club membership. To avoid that consequence, more than one golf course community has sold memberships to non-association members. Others sell the golf course to a developer for space to build new homes. This can have multiple positive effects on an association’s cash flow. It eliminates the ever increasing costs of maintaining the golf course, provides new members who will be paying assessments, and results in a huge cash infusion to the association when the sale closes. But, it’s not all a panacea as there are significant hurdles that must be first overcome. Avid golf club members might launch a legal fight to keep their club, despite the economic hurdles. Local zoning and development codes may have certain restrictions. Golf course communities may also have restrictive covenants preventing other uses for the golf course.

The average 18-hole golf course comprises at least 74 acres and many modern courses are built on 150 acres. At 5 homes per acre, this means the average 74 acre course can be used to build 370 new single family homes not including other infrastructure needs such as new roads, green-space, and retention ponds, etc. That said, it does not take a rocket scientist to see the profits that can be made.
In a recent case Victorville West Limited Partnership v. The Inverrary Association, Inc., decided August 23, 2017 by Florida’s Fourth District Court of Appeal, the developer, Victorville, sought to cancel a restrictive covenant because the golf course was no longer profitable. Victorville wanted to allow non-association members into the golf club. The restrictive covenant in force since 1971, provided that,
“The [Golf Course] shall henceforth be used solely for recreational purposes, including all sports as defined herein, and for the Facilities and amenities appurtenant thereto, such as clubhouses and recreational, maintenance, and storage facilities and equipment. For the purposes of this Declaration, the term “sports” shall be deemed to include, by way of illustration and not in limitation thereof, the following:  Golf, tennis, horseback riding, swimming and all such other recreational activities as may be appropriate and in keeping with the overall development of Inverrary․ … Developer agrees that… it will not at any such time offer, sell, or admit to golf membership any persons or families not then bona fide residents of Inverrary.”
In 2006, Victorville purchased the golf course “subject to all covenants listed in the Public Records of Broward County, Florida” which included this covenant. It asked the Association to hold a membership vote to cancel the covenant. The Association refused because, even though its members were not purchasing sufficient club memberships, its members liked the golf course, even if they did not have a membership, because it provided a tranquil view, prevented overcrowding, and preserved the nature of the community.
In 2012, Victorville filed a lawsuit against the Association and argued that the covenant was an economic hardship. The trial court found that Victorville’s claim was time-barred because the statute of limitations began to run when it purchased the golf course and it did not bring its claim within the five-year statutory limit. The trial court also held that, even if the statute of limitations had not run, Victorville was not entitled to vacate the restrictive covenant because the covenant remained beneficial to the surrounding community. As a result, Victorville appealed.

On appeal, Victorville argued that the trial court should have nullified the restrictive covenant due to a substantial change in circumstances that prevented the covenant’s original purpose from being carried out and the covenant was an unlawful restraint on alienation (meaningful and unlawful restraint on the transfer of real property). The appellate court reviewed the trial court’s findings of fact under what is called “the clearly erroneous standard of review” meaning that their review was “de novo”. A de novo review allows the appellate court to review all of the evidence anew and substitute its opinion for that of the trial court.
The appellate court noted that, “in an action to cancel a restrictive covenant the test is whether or not the covenant is valid on the basis that the original intention of the parties can be carried out despite alleged materially changed conditions or, on the other hand, whether the covenant is invalid because changed conditions have frustrated the object of the covenant without fault or neglect on the part of the party who seeks to be relieved from the restrictions…although few Inverrary residents have memberships at the golf course, the golf course preserves the character of the community and provides residents with a pleasant view. These are reasonable objectives of a restrictive covenant.” Therefore, the appellate court held that, “even if the golf course is failing financially, the covenant must be enforced because it remains a substantial value to the surrounding residences, the dominant estates.”

The appellate court noted that nothing in the covenant reflected an “intent for the golf course to be a profitable enterprise…. Victorville’s financial hardships do not support cancellation of the covenant because ‘the law does not permit cancellation of property restrictions for the purpose of accommodating the best or most profitable use of a particular piece of property affected by the restriction.’” In citing to another case, the appellate court also noted that “the law does not permit cancellation of property restrictions for the purpose of accommodating the best or most profitable use of a particular piece of property affected by the restriction.”

Victorville argued that the covenant was akin to a perpetual covenant because the two-thirds vote necessary to revoke the covenant could never be obtained. The appellate court found that “the duration of the covenant is significant though not perpetual because the covenant may be removed by a two-thirds vote of surrounding homeowners.”
The appellate court did, however, differ with the trial court’s opinion that the five-year statute of limitations had run and, in fact, found that this part of the trial court’s opinion was “error.” The appellate court did not agree that the statute of limitations began to run when Victorville acquired the property. Rather, the appellate court explained that “the statute of limitations begins to run when the action may be brought…. for the statute of limitations to have begun to run when Victorville purchased the golf course, a substantial change in circumstances would have had to have taken place before Victorville purchased the property.”

To recap, while the appellate court disagreed with the trial court’s statute of limitations rational, it still agreed with the trial court’s outcome because the covenant at issue remained a substantial benefit to the surrounding homeowners and was not an unlawful restraint on alienation.

Generally speaking, as a result of sections 720.3085 and 718.116, Florida Statutes, lenders who acquire property as a result of their own foreclosure of their first mortgage against their borrower only owe the association the lesser of 12 months back assessments or 1% of the initial mortgage, whichever is less. This is referred to as the lender’s “safe harbor” obligation. But, if the lender refuses to make timely payment to the association, is the lender also responsible for the costs and fees incurred by the association or is the lender only responsible for the “safe harbor” obligation? This was at issue in Emerald Estates Community Association v. U. S. Bank National Association, as decided by Florida’s Fourth District Court of Appeal on April 4, 2018.

Ultimately, U.S. Bank paid Emerald Estates Community Association the “safe harbor” monies it owed. Under protest, it also paid the costs and attorney’s fees incurred and demanded by the association for its collection efforts associated with the unpaid assessments. Then, U.S. Bank filed a lawsuit against the association. U.S. Bank asserted it was only required to pay the 12 months of unpaid assessments that accrued prior to the bank taking title and demanded reimbursement of the costs and attorney’s fees associated with the association’s collection efforts that were incurred due to the unpaid assessments that accrued after U.S. Bank acquired title. The trial court agreed with U.S. Bank and granted a summary judgment in its favor. (A trial court grants a “motion for summary judgement”, when there are no disputed material facts and the moving party is entitled to judgement as a matter of law.) In granting U.S. Bank’s motion for summary judgment, the trial court reasoned that the association was not permitted to charge for costs and attorney’s fees that accrued prior to U.S. Bank taking title. Thereafter, the association appealed the trial court’s decision.

While the appellate court agreed with the trial court’s aforementioned position, that the association was not permitted to charge for costs and attorney’s fees that accrued prior to U.S. Bank taking title, the appellate court also correctly noted that the association was claiming reimbursement for costs and attorney’s fees incurred in its collection efforts associated with the unpaid assessments which accrued after U.S. Bank acquired title.

The Fourth District Court of Appeal reasoned that when the motion for summary judgment decided in favor of U.S. Bank was granted by the trial court, a genuine issue of material fact did, in fact, exist as to whether the association’s requested costs and attorney’s fees associated with the unpaid assessments accrued before or after U.S. Bank acquired the property. Therefore, the appellate court reversed the entry of the trial court’s summary judgment and remanded the case back to the trial court so a determination could be made as to when the association incurred the costs and attorney’s fees it demanded U.S. Bank pay – before or after U.S. Bank took title.

What can be gleaned from the Fourth District Court of Appeal’s decision? If the appellate court did not believe that U.S. Bank could be responsible for the association’s attorney’s fees and costs that were incurred after U.S. Bank acquired title, then the appellate court would not have remanded the case back to the trial court. Sadly, the case does not address whether U.S. Bank, in addition to not paying its “safe harbor” obligation, also failed to pay the regular assessments that came due after U.S. Bank acquired ownership of the property. Nevertheless, without addressing it head on, this appellate court decision strongly infers that if a first mortgage lender acquires title as a result of its own foreclosure, and then the lender fails to timely pay its “safe harbor” obligation, and likely other assessments that came due after the lender acquired title, too, then the lender is responsible for the association’s attorney’s fees and costs incurred in its collection/foreclosure efforts against the lender.

In addition to House Bill 841, containing this year’s community association legislation, as discussed in prior articles, there are several other pieces of legislation that have made their way through the 2018 Florida legislative session and are now signed into law by Governor Scott that affect, or are of interest to, community associations. The following is a digest explanation of some of these newest laws:

MARKETABLE RECORD TITLE ACT
House Bill 617. Approved by Governor 3/21/2018. Effective 10/1/2018

It is clarified that Part III of Chapter 720, Florida Statutes, is intended to provide mechanisms for the revitalization of covenants or restrictions for all types of communities and property associations and is not solely limited to residential communities. In plain English, this means that commercial associations can both preserve and revitalize their covenants. As such, and as you will read below, the terms used in other statutory sections affected by this change are also changed. A new summary process to preserve the covenants is also included in the legislation.

Short Title – Chapter 712 of the Florida Statutes is given the short title, “Marketable Record Title Act.”

Definitions – Terms and definitions were added and revised to the Marketable Record Title Act.

The new term “community covenant or restriction” is defined to mean any agreement or limitation contained in a document recorded in the public records of the county in which a parcel is located which subjects the parcel to any use restriction that may be enforced by a property owners’ association or authorizes a property owners’ association to impose a charge or assessment against the parcel or the parcel owner.

The term “homeowners’ association” is replaced by the term “property owners’ association” which term also includes a corporation or other entity responsible for the operation of property in which the voting membership is made up of the owners of the property and/or their agents and membership is a mandatory condition of property ownership.

The definition for the term “parcel” is revised to remove the requirement that the real property be residential and be subject to exclusive ownership.

Finally, the definition for the term “covenant or restriction” was simplified to remove reference to enforcement of such covenant or restriction by a homeowners’ association or the Florida Department of Environmental Protection and authorization of a homeowners’ association to impose a charge or assessment against the parcel or the parcel owner.

Preservation of Covenants Process – Any person claiming an interest in land or other right subject to extinguishment under the Marketable Record Title Act will be able to preserve such right by filing a written notice in accordance with the Marketable Record Title Act at any time during the 30-year period immediately following the effective date of the root of title. As to a property owners’ association, preservation may be accomplished in one of three ways:

1. by filing a written notice in accordance with the Marketable Record Title Act, which is a process currently available;

2. by filing a summary notice in accordance with section 720.3032(2), Florida Statutes, (a new statute); or

3. by filing an amendment to a covenant or restriction indexed under the legal name of the property owners’ association which references the recording information of the covenant or restriction being preserved.

In the event a summary notice or amendment filing is not “indexed” to the current owners of the property affected by the preservation, the validity of the summary notice or the amendment to protect the covenants or restrictions is not affected.

An association is no longer required to mail a seven-day notice to the members providing the statement of marketable title action and the association’s board is no longer required to approve the preservation.

At the first board meeting, excluding the organizational meeting, which follows the annual meeting of the members, the board must consider the desirability of filing notices to preserve the covenants or restrictions affecting the community or association from extinguishment under the Marketable Record Title Act and to authorize and direct the appropriate officer to file notice in accordance with section 720.3032, Florida Statutes. This was added as a constant reminder to Boards to prevent inadvertent extinguishment of existing covenants.

As to the existing “notice” method to preserve, the requirements of what must be in the notice have been clarified and revised to reflect and accommodate the newly defined terms.

As to the new method of preservation by summary notice, a new section 720.3032(2), Florida Statutes, is created to provide for preservation by the recording of a summary notice containing the following information:

• The legal name of the association.

• The mailing and physical addresses of the association.

• The names of the affected subdivision plats and condominiums or, if not applicable, the common name of the community.

• The name, address, and telephone number for the current community association management company or community association manager, if any.

• Indication as to whether the association desires to preserve the covenants or restrictions affecting the community or association from extinguishment under the Marketable Record Title Act.

• A listing by name and recording information of those covenants or restrictions affecting the community which the association desires to be preserved from extinguishment.

• The legal description of the community affected by the covenants or restrictions, which may be satisfied by a reference to a recorded plat.

• The signature of a duly authorized officer of the association, acknowledged in the same manner as deeds are acknowledged for record.

This new section provides a form which satisfies the required information, as set out above. The originally executed notice must be recorded in the official records of the applicable circuit court clerk or county. A copy of the notice, as recorded, must be included with the next meeting notice or other mailing to all members.

Revitalization of Covenants – A new section 712.12 is added to the Marketable Record Title Act regarding the revitalization of covenants by parcel owners who are not subject to a homeowners’ association.

This new section sets out its own defined terms, including the term “parcel,” which, unlike for the preservation of covenants, is required to be residential and subject to exclusive ownership.

The term “covenant or restriction,” which is defined to mean any agreement or limitation imposed by a private party and not required by a governmental agency as a condition of a development permit which is contained in a document recorded in the public records of the county in which a parcel is located and which subjects the parcel to any use restriction that may be enforced by a parcel owner.

This new section allows for the revitalization of covenants by parcel owners who are not subject to a homeowners’ association by the same revitalization procedures as applicable to a homeowners’ association, except that there is no need to reference a homeowners’ association or articles of incorporation or bylaws of a homeowners’ association.

The approval necessary to revitalize must be in writing, and not at a meeting.

An organizing committee, as opposed to the president and secretary of a homeowners’ association, may execute the revitalized covenants or restrictions; and the community name in the covenants or restrictions are indexed as the grantee and the parcel owners are indexed as the grantors.

Newly created owner rights – The owner of a parcel that has ceased to be governed by covenants or restrictions as of October 1, 2018 may commence an action by October 1, 2019 for a judicial determination that the covenants or restrictions did not govern that parcel as of October 1, 2018 and that any revitalization of such covenants or restrictions as to that parcel would unconstitutionally deprive the parcel owner of rights or property. Revitalization of covenants or restrictions against the parcel after such judicial determination is not affective against the parcel, and the rights of the parcel owner so recognized may not be subsequently altered by revived covenants or restrictions without the consent of the affected parcel owner.

SURPLUS LANDS BEING SOLD BY WATER MANAGEMENT DISTRICT
House Bill 703. Approved by Governor 3/23/2018. Effective 7/1/2018.

Notice of Intention to Sell Surplus Land – In addition to providing newspaper notice of its intention to sell surplus land, a water management district must also publish such notice on its website. The first publication of the notice must occur at least 30 days, nor more than 360 days, before any sale is approved by the district.

Adjacent Property Owners – Certain surplus lands may be offered for sale to “adjacent land owners,” meaning, those owners whose property abuts the surplus lands. If the surplus lands are offered for sale to adjacent property owners, notice of the intention to sell need only be published once and must be sent to the adjacent property owners by certified mail and published on the district’s website. If the surplus lands are not sold to an adjacent property owner, the district may sell the lands at any time to the general public for the highest price obtainable.

House Bill 841 containing this year’s community association legislation (“HB 841” or “Bill”) has made its way through the 2018 Florida legislative session and was signed into law by Governor Scott on March 23rd. As the Bill is now signed into law, it becomes effective on July 1, 2018. The following is a digest explanation of these newest laws to affect Florida’s community associations:

Condominium Official Record-keeping: Certain official records must be permanently maintained from the inception of the association, including the following:

(i) a copy of the plans, permits, warranties, and other items provided by the developer;
(ii) a copy of the recorded declaration of condominium and all amendments thereto
(iii) a copy of the recorded bylaws and all amendments thereto;
(iv) a certified copy of the articles of incorporation and all amendments thereto;
(v) a copy of the current rules; and
(vi) all meeting minutes.

All other official records of the association must be maintained within the state for at least seven years, unless otherwise provided by general law. Notwithstanding, all election records, including electronic election records, must only be maintained for one year from the election.

Condominium Website: As a result of the 2017 legislative session, the website posting requirement applies to condominiums containing 150 or more non-timeshare units. The deadline to post digital copies of the governing documents, association contracts, budget, financial report, and other required documents on the association’s website is extended to January 1, 2019. Of the documents to be posted to the website, a list of bids received by the association within the past year for contracts entered into by the association and any monthly income and expense statement must also be posted. Notwithstanding this requirement, the failure to post these documents on the website does not, in and of itself, invalidate any action or decision of the association. Additionally, in complying with the posting requirement, there is no liability for disclosing information that is protected or restricted unless such disclosure was made with a knowing or intentional disregard of the protected or restricted nature of such information.

Condominium Financial Reporting: In the event an association fails to comply with an order by the Division of Florida Condominiums, Timeshares, and Mobile Homes to provide an owner with a copy of the financial report within a specified amount of days, then the association is prohibited from waiving the financial reporting requirement for the fiscal year in which the owner’s initial request for a copy was made and for the following fiscal year, too.

Condominium/Cooperative Board Meeting Notices: Notice of any board meeting in which regular or special assessments against unit owners are to be considered must specifically state that assessments will be considered and provide the estimated cost and description of the purposes for such assessments.

Condominium/Cooperative Meeting Notices: The association may adopt a rule for conspicuously posting meeting notices and agendas on the association’s website for at least the minimum period of time for which a notice of a meeting is also required to be physically posted on the condominium property. This rule must include a requirement that the association send an electronic notice in the same manner as a notice for a meeting of the members, including a hyperlink to the website where the notice is posted. (As yet, it is not patently clear whether this is in place of the existing “posting in a conspicuous place” requirement or in lieu of it. The safer course of action is to do both.)

Condominium Director Term: A director can serve a term longer than one year if permitted by the bylaws or articles of incorporation. However, a director cannot serve more than eight consecutive years, unless approved by two-thirds of all votes cast in the election or unless there are not enough eligible candidates to fill vacancies on the board. This part of the legislation replaces and fixes last year’s ridiculous new law that a director could not serve more than four consecutive two-year terms. (It appears that based on this year’s legislative changes, directors can serve any length of term so long as authorized by the articles or bylaws. At present, directors can only serve one or two year terms depending on the provisions of the articles and bylaws. Also, staggered terms remain permitted.)

Condominium/Cooperative Electronic Notice: A unit owner who consents to receiving notices by electronic transmission is solely responsible for removing or bypassing filters that block receipt of mass emails sent to members on behalf of the association in the course of giving electronic notices.

Condominium Director Recall: A recall is only effective if it is facially valid. (Of course, as what the term of art “facially valid” is intended to mean is left out of the legislation.) In any event, if the recall is determined to be facially invalid by the board, then the unit owner representative of the recall effort may file a petition challenging the board’s determination on facial validity. Similarly, a recalled board member may file a petition challenging the facial validity of the recall effort. If the arbitrator determines that the recall was invalid, the petitioning board member is immediately reinstated and the recall is null and void. In some instances, the arbitrator may award prevailing party attorney fees.

Condominium Material Alterations: In situations where the declaration as amended does not specify the procedure for approving material alterations or substantial additions to the common elements or association property, the already statutorily required approval of seventy-five percent of the total voting interests of the association must now be obtained before the material alterations or substantial additions to the common elements or association property are commenced. (Clearly then, if the declaration is silent as to the procedure for material alterations or substantial additions to common elements or association property, this new legislation implies that a curative vote of the members to approve the changes is a thing of the past. It does not make sense to force the association to restore the property to its prior condition where the members might vote to approve the change. Hopefully, this will be fixed in next year’s legislative proposals.)

Condominium Electric Vehicles: A declaration of condominium or restrictive covenant may not prohibit or be enforced so as to prohibit any unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area. Moreover, the board may not prohibit a unit owner from installing an electric vehicle charging station for an electric vehicle within the boundaries of his or her limited common element parking area. The unit owner is entirely responsible for the charging station, including its installation, maintenance, utilities charges (which must be separately metered), insurance, and removal if no longer needed. The association may impose certain requirements upon the installation and operation of the charging station, including, for example, that the unit owner comply with all safety requirements and building codes, that the unit owner comply with reasonable architectural standards adopted by the association governing charging stations, and that the unit owner use the services of a licensed and registered electrical contractor or engineer knowledgeable in charging stations. Labor performed on or materials furnished for the installation of a charging station may not be the basis for filing a construction lien against the association, but such a lien may be filed against the unit owner.

Condominium Director Conflicts of Interest: The process allowing a director to enter into a contract with the director’s association has become better organized. Disclosure requirements that were set out in section 718.3026(3), Florida Statutes were deleted from that location and relocated to section 718.3027, Florida Statutes. In brief, directors and officers of non-timeshare condominiums must disclose to the board any activity that could be reasonably considered a conflict of interest. A rebuttable presumption of such a conflict exists if:

i) directors or officers of the association (including their relatives) enter into a contract for goods or services with the association;

ii) directors or officers of the association (including their relatives) holds an interest in a corporation. Limited liability corporation, partnership or other business entity that conducts business with the association.

In the event of such a conflict, then the proposed activity and all relevant contracts must be attached to the meeting agenda and the requirements of section 617.0832, Florida Statutes must be adhered to, as well. The relevant provisions of section 617.0832, Florida Statutes follow:

“No contract or other transaction between a corporation and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest, because such director or directors are present at the meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction, or because his or her or their votes are counted for such purpose, if:

a) The fact of such relationship or interest is disclosed or known to the board of directors or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors;

b) The fact of such relationship or interest is disclosed or known to the members entitled to vote on such contract or transaction, if any, and they authorize, approve, or ratify it by vote or written consent; or

c) The contract or transaction is fair and reasonable as to the corporation at the time it is authorized by the board, a committee, or the members.”

In addition, section 718.3027, Florida Statutes, provides that the disclosures required by this section must be set out in the meeting minutes, and the contract must be approved by two-thirds of all of the directors present (excluding the conflicted director). At the next membership meeting, the existence of the contract must be disclosed to the members and then may be canceled by a majority vote of the members present. If the contract is canceled, the association is only liable for the reasonable value of the goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other form of penalty for such cancellation. Finally, in the event of a failure to disclose a conflict or potential conflict, the contract is voidable and terminates upon the filing of a written notice terminating the contract which contains at least 20 percent of the voting interests of the association. (Note that section 718.112(2)(p) Florida Statutes, pertaining to service provider contracts still provides that “an association, which is not a timeshare condominium association, may not employ or contract with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer. This paragraph does not apply to a service provider in which a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer, owns less than 1 percent of the equity shares.”)

Condominium/Cooperative Grievance Committee: The grievance committee appointed by the board to conduct hearings for fines and use right suspensions for violations of the governing documents must be comprised of at least three members who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee. (The restriction against not allowing someone living with the director from serving on the committee was removed.) The fine or suspension can only be imposed if approved by a majority of the committee. If a fine is approved, the fine payment is due five days after the date of the committee meeting at which the fine is approved. (This seems illogical in that the offending member may not have received the required written notice of the confirmation of the fine from the association.) The association must provide written notice of the approved fine or suspension by mail or hand delivery.

Cooperative Official Records: The official records must be made available to a unit owner within ten working days after receipt of written request by the board or its designee.

Cooperative Director/Officer Eligibility: In a residential cooperative association of more than ten units, co-owners of a unit may not serve as members of the board at the same time unless the co-owners own more than one unit or unless there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy.

Cooperative Director/Officer Financial Delinquency: A director or officer more than 90 days delinquent in the payment of any monetary obligation due to the association shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law.

Cooperative Bulk Communication Contracts: Cooperatives are now lawfully permitted to enter into bulk communication contracts which can include internet services and such expenses are deemed common expenses of the cooperative.

HOA/Cooperative Board Email Use: Members of the board may use email as a means of communication but may not cast a vote on an association matter via email.

HOA Fines: If a fine levied by the board is approved by the grievance committee, the fine payment is due five days after the date of the committee meeting at which the fine is approved. (This seems illogical in that the offending member may not have received the required notice of the confirmation of the fine from the association.)

HOA Amendments: A proposal to amend the governing documents must contain the full text of the provision to be amended with new language underlined and deleted language stricken. However, if the proposed change is so extensive that underlining and striking through language would hinder, rather than assist, the understanding of the proposed amendment, the following notation must be inserted immediately preceding the proposed amendment: “Substantial rewording. See governing documents for current text.” An immaterial error or omission in the amendment process does not invalidate an otherwise properly adopted amendment. (In other words, HOA proposed amendments must be presented in the same manner as proposed condominium amendments have been required to do for years and years.)

HOA Election by Acclamation: If an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required and write-in nominations are not permitted, then such qualified candidates shall commence service on the board of directors, regardless of whether a quorum is attained at the annual meeting. (This is a major change!)

HOA Application of Payments: The application of assessment payments received by the association is applicable regardless of any purported accord and satisfaction or any restrictive endorsement, designation, or instruction placed on or accompanying a payment.

The termination and transitioning from one laundry vending company to another can be a dirty job. Rarely do companies fight as hard as laundry vending machine companies. While community associations should always ensure that their laundry lease with a laundry vending company includes clear termination provisions and specific obligations of the parties upon termination, the scenario as occurred in the case of CSC ServiceWorks, Inc. v. Boca Bayou Condominium Association, Inc. and Commercial Laundries, Inc., recently decided by Florida’s Fourth District Court of Appeal in its March 7, 2018 published opinion, could happen to any association. The lessons learned from this case are equally relevant to many other contract situations, too.

In this case, Boca Bayou Condominium Association, Inc. (“Association”) had a laundry lease with the laundry vending company, CSC ServiceWorks, Inc. (“CSC”). Pursuant to the laundry lease, CSC was to install commercial washers and dryers in the Association’s 26 laundry rooms and maintain them for an initial term of seven years. The laundry lease also contained a seriously noxious and repugnant “right of first refusal” provision which gave CSC the option to again lease the Association’s laundry rooms before the Association is allowed to enter into a lease with a different laundry vending company.

Upon the expiration of the initial seven-year term, the Association and CSC extended the laundry lease for an additional seven years. After the expiration of the extended seven-year term, CSC continued to lease the Association’s laundry rooms and have its washers and dryers in the Association’s laundry rooms on a month-to-month basis for almost two years. Around that time, the Association began receiving complaints from the residents.

Spurred by the resident’s complaints, the Association sought lease offers from several laundry vending companies, including CSC and Commercial Laundries, Inc. The Association decided to go with Commercial Laundries. As such, the Association then sent CSC a letter terminating its laundry lease and inquiring as to when CSC would come to disconnect and remove its washers and dryers from the Association’s laundry rooms.

Just over a week prior to Commercial Laundries’ scheduled delivery and installation of its washers and dryers, CSC informed the Association and Commercial Laundries that it was exercising its right of first refusal. However, CSC’s right of first refusal was denied by the Association.

After several attempts by both the Association and Commercial Laundries to have CSC remove its washers and dryers, CSC failed to remove its washers and dryers in time for Commercial Laundries to install its washers and dryers. As a result, when Commercial Laundries arrived at the Association’s condominium with its washers and dryers in tow, Commercial Laundries disconnected CSC’s washers and dryers from the water and electric hook-ups and moved them to the side of the laundry rooms for CSC’s removal. None of CSC’s washers and dryers were damaged in the process or removed from the Association’s laundry rooms. Also, CSC was welcome to go to the Association’s laundry rooms, which remained unlocked, to remove their washers and dryers at any time.

Due to CSC’s continued failure to remove its washers and dryers, the Association sent CSC a pre-suit demand letter providing that if CSC did not remove its washers and dryers within 15 days, the Association, as landlord, would evict CSC from the Association’s laundry rooms. Although CSC ultimately removed its washers and dryers in compliance with the Association’s letter, it was merely the beginning of its aggressive fight which resulted in a lawsuit being filed by CSC against the Association and Commercial Laundries for breach of the laundry lease, tortious interference, conversion, and unlawful detainer, which was the subject of this case.

At trial, CSC argued that disconnecting its washers and dryers without legal process or CSC’s knowledge or consent was tantamount to being ousted from the Association’s laundry rooms. In the end, the case was decided by a jury. Yes, that’s right, CSC’s dispute went to the jury. As an aside, think of the tens of thousands of dollars expended in legal fees and costs just to get to that point. The jury ultimately decided in favor of the Association and Commercial Laundries. Then CSC appealed and lost. Thus the trial court’s jury decision was upheld by Florida’s Fourth District Court of Appeal.

On appeal, CSC again argued that disconnecting its washers and dryers without legal process or CSC’s knowledge or consent was tantamount to an “ouster” from the Association’s laundry rooms and wrongful repossession of the laundry rooms by the Association. In legal terms, that is referred to as “unlawful detainer.” In defense, the Association argued that the disconnecting was not ouster and repossession because CSC’s washers and dryers were never removed from the laundry rooms.

The Court provided that there are three factors in an unlawful detainer action: (1) the plaintiff (CSC) was in peaceful possession of the premises (the laundry rooms); (2) the plaintiff (CSC) was ousted of actual possession of the premises (the laundry rooms); and (3) the defendant (the Association and Commercial Laundries) withheld possession of the premises (the laundry rooms) from the plaintiff (CSC) without consent or legal process.

Because CSC’s washers and dryers were never removed from the laundry rooms, the Court held that the action of disconnecting CSC’s washers and dryers and moving them to the side of the laundry rooms did not amount to ouster of CSC from its actual possession of the laundry rooms as required by an action for unlawful detainer. While the disconnecting and relocation of the washers and dryers may be a form of what the Court refers to as “constructive or useful dispossession,” unlawful detainer actions require actual dispossession, which did not occur in this case.

Laundry leases, while often quite short, are also often written in tiny print whose terms can even give an experienced lawyer a run for the money as to the lease’s long-term implications. The laundry lease makes up for its brevity with obnoxious long-term effects and difficult concepts for a layman to understand. With that in mind, this case demonstrates the need for the association’s lawyer to review all of the association’s contracts. Just because the lease is two pages long, this does not mean its financial implications are not extremely far reaching.

In any event, it is great to the see an association prevail against the laundry machine vendor!