Author: rembaumlaw

Florida law is patently clear. By December 31, 2016, a residential condominium association that is not in compliance with the requirements for a fire sprinkler system and that has not voted to forego retrofitting of such a system must initiate an application for a building permit for the required fire sprinkler system retrofit installation with their local government demonstrating that the association will become compliant by December 31, 2019. So, if your condominium association does not want to incur this expense, then the association must act now, before it is too late, by presenting an option to its members to opt-out of this requirement by the December 31, 2016 deadline which will be here before you know it.

Section 718.112(2)(l), Florida Statutes allows an association to vote to forego the retrofitting of the fire sprinkler system upon the approval of a majority of the entire membership (not a majority of a quorum). The vote may be undertaken at a duly-noticed membership meeting or by the written consent process in lieu of having a membership meeting. Voting by written consents or written agreements may be utilized by an association regardless of whether the bylaws or the declaration specifically permit voting by written consents or written agreements. On the other hand, if a membership meeting is held, fourteen (14) day advance written notice must be sent to the entire membership by mail or hand-delivery. If the vote is successful, then the vote to forego the retrofit is only considered effective when the certificate attesting to the vote is recorded in the public records of the county where the condominium is located.

In addition, if the vote to forego the retrofit is approved by the unit owners, the condominium association must also send written notice to the entire membership of the outcome within 30 days of the vote. Further still, the providing of this notice must be evidenced by an affidavit executed by the person sending the notice and kept with the condominium association’s official records. As the last step to this process to opt out of the need to retrofit, the condominium association must also report the results of the vote and recording of the certificate to the Division of Florida Condominiums, Timeshares, and Mobile Homes (the “Division”).

If by December 31, 2016, a majority of the members of the condominium association do not vote in favor of approving to forego the retrofit, the association must submit a building permit application with the applicable local governmental authorities on or before December 31, 2016 regarding its intent to comply with the applicable fire and life safety codes. Then, the retrofit of the condominium must be completed by December 31, 2019. In addition, if a condominium association undertakes retrofitting of its condominium, then the condominium association is also statutorily required to report the per-unit cost of the retrofit work to the Division.

In the event a condominium association has previously voted to forego the retrofit, and now wants to reverse that decision, the membership has the ability to vote to require the retrofit at a membership meeting. The affirmative vote of all of the members is needed in order to require the retrofit. The vote to require the retrofit may only be called once every three (3) years, and electronic transmission cannot be used to provide notice of the membership meeting.

In rendering your decision to retro fit or to not retrofit, ask yourself whether you would rather live in a condominium building with up-to-date life safety equipment. Even though it might be a costly project, in the rare circumstance it is needed, it is worth more than a billion dollars when your life is at stake. In fact, some might say that the decision to go ahead with the fire sprinkler retrofit is priceless.

When Florida’s legislature is in session, there is never a shortage of topics to write about. House Bill 1357 (“HB 1357”) is no exception. It is another overreaching piece of legislation that will only serve to make assessment debts harder to collect and will cause association assessments to increase in order to comply with its overreaching and micro-managing requirements. HB 1357 is inartfully conceived. There is no intent to criticize anyone that participated with HB 1357, but rather to point out the many problems that will be created should such an ill-conceived legislative effort be passed into law.

Statutorily Required Websites: Condominium associations with 500 or more units and homeowners’ associations with 7,500 or more parcels must create and maintain a legislatively required website which mandates stringent, onerous, and, quite candidly, obnoxious requirements as to what must be contained and continually updated therein. If a community desires to spend its assessment revenues in this manner, then that should be a decision for each individual community and not mandated by the State. Unnecessary litigation will ensue by every unhappy association member who believes that their association’s website does not contain the information as required by statute. This legislation will require associations to engage the service of yet another professional requiring significant payment for services rendered. In some instances, it could even require a full-time dedicated IT/website employee in order to maintain HB 1357’s ongoing posting requirements. If passed into law, it would only be a matter of time until some other legislature makes these requirements applicable to each and every community association in the State, regardless of their size.

Impediments to Collection of Past Due Assessments: Regarding the collection of past due assessments by condominium and homeowners’ associations, the decision of the association to take legal action to collect unpaid assessments or to use a third-party to collect unpaid assessments should not be dependent upon whether the Association has complied with new statutory obligations that require newly written collection policies that mandate when payment plans can be considered, their terms, inclusive of a mandated six month payment plan. The entire scope of the association’s collection regime should be set out in its declaration and not by way of a separate statutorily required written collection policy. The ability of a community association to offer a payment plan is unique as to each request made by an association member. The association must have complete flexibility in terms of structuring such payment plans and the factors for consideration of such plans and should not be subject to stringent requirements as would be required by this legislation which clearly removes the ability of an association to have the necessary discretion needed to create flexible payment plans. In and of itself, this legislation will impede the ability of an association to readily collect past due debts and will increase every association’s legal fees by requiring the adoption of yet another collection policy. It will create significant impediment to the collection of past due assessments.

Conflicts of Interest: Regarding condominium and homeowners’ association director and officer conflicts of interest, all sorts of new disclosures and procedures are creating conflicts of interest that may occur when the association may hire an officer, director or other relative of a director or officer. The use of the term “relative of a director or officer” is fully undefined and most problematic. Does this mean that a board member’s wife’s fourth cousin once removed on her grandmother’s uncle’s side of the family is included within the scope of the term “relative”? In terms of the board’s ability to remove a director or officer who violates the conflict of interest legislation, HB 1357 provides the board the unquestionable and incontestable ability to remove a sitting board member without any avenue of redress for that board member to dispute the findings of the board. This will create an unjust, unfair result. It is only a matter of time until an a board of directors majority, unhappy with a fellow board member, makes false accusations against such board member and removes them using this legislation as a pretext to do so.

HOA Committee Meetings: This part of HB 1357 completely revamps the homeowner associations’ need to notice committee meetings. At present, the need to notice committee meetings is quite different for condominium versus homeowner associations. In short, all condominium association committee meetings must be noticed unless there’s an exemption in the bylaws. This is not so for homeowner associations where it is only necessary to notice committee meetings when final expenditure of association funds are considered or architectural decisions are made. This has provided great flexibility to homeowner associations to operate more efficiently. For example the condominium association has to notice its bake sale committee meetings, while the homeowners’ association bake sale committee does not similarly need to do so. This legislation will change this requirement so that homeowners’ association committee meetings of every nature must be noticed, minutes taken, etc. This is just another example of bad, ill-conceived legislation likely caused by one or two unique circumstances rather than looking at the good of the whole.

Safety on the Roadways: There should be no impediment to an association’s ability to create a safe environment for its members. Rarely is speeding within a homeowners’ association not problematic. Yet, HB 1357 makes it unlawful for a homeowners’ association to enforce and impose statutorily imposed traffic laws as provided in Chapter 316, Florida Statutes. The ability of a homeowners’ association to take measures to reduce speeding within the community should not be prohibited. Oftentimes, community association roads have speed limits posted below the minimum speed that would otherwise be allowed by law and therefore, lower than that as would be enforced by law enforcement. As a result, community associations with speed limits, such as 15 miles per hour, need the ability to adequately control speeding on their roadways. This legislative initiative will cause serious injury and likely death if passed into law… it is just a matter of time.

Leasing: Investors’ leasing rights should not be paramount to owners’ rights to protect their community from becoming a rental community. However, the legislature wants to create an unfair regime for homeowners’ associations, as it did for condominium associations to protect the investors. As to a member’s rental of their property within a homeowners’ association, HB 1357 makes effort to mirror existing condominium association legislation that requires all rental restrictions to be set out within the declaration of condominium. What the legislature does not seem to understand is that community associations are not rental communities but rather are first and foremost communities for owners to live in. Therefore, it is extremely important for community associations to easily amend their community’s rental requirements. The fact that investors choose to gobble up homes in a homeowners’ association is the unique individual decision of the investor, but the investor does so with the understanding and risk tolerance that the board of directors or members could later change the rental requirements. Complete flexibility is needed to protect the lifestyle for those members who live within the community. In other words, the rights of the members living in the association’s community should be paramount to offsite investor owners seeking rental income.

HB 1357 requires homeowners’ association voting to take place from 7 AM to 7 PM. It is ridiculous. It is also diametrically opposed to the absentee balloting process.

The likely unintended consequence, yet very real occurrence, that will be created if this legislation is adopted will be significantly increased assessments for all association members in order to comply with the requirements of the legislation in terms of hiring requisite technology personnel to create and administer the association’s statutorily required websites and fees to legal counsel to create the necessary written collection policies for collection of assessments. Removing the ability of a community association to control speeding on its roadways is ill-conceived and, simply put, reckless.

Sometimes bizarre results occur from otherwise mundane laws. The arena of a lender’s mortgage foreclosure versus an association’s foreclosure of its assessment lien can certainly be characterized as one such example. Nothing is worse than a lender who refuses to take their foreclosure to final judgment and sale, or a litigious homeowner who knows how to use the legal system to stall the lender’s foreclosure case. In both cases, it is the association that suffers greatly because, more likely yet than not, the owner is not paying assessments during the pendency of the lender’s foreclosure action. Because of the owner’s failure to pay assessments, the association should be permitted to foreclose, especially when the lender’s foreclosure case is dragging on and on. Right? Well, not according to a few recent appellate cases.

As a prerequisite to filing a lawsuit over real property, a lis pendens is recorded in the county’s public records, the purpose of which is to place the public on notice of the pending litigation so that if the property is sold, the new owner knows that they have acquired the property subject to the outcome of the pre-existing litigation. According to section 48.23, Florida Statutes, once the lis pendens is recorded, any person with an unrecorded interest or lien against the property, must intervene in the lawsuit within 30 days of the recording of the lis pendens or else they are time barred from doing so. This can have a significant chilling effect on an association’s right to otherwise lawfully collect the past due assessments that accrued against the property through the date the lis pendens was recorded. Sadly, it gets worse.

The problem is not in the appellate court’s application of the law, but rather the problem lies within the law itself. As things stand today, if a lender forecloses and the association does not bring its assessment foreclosure case by intervening in the lender’s foreclosure within 30 days of the date of the lender’s filing of its lis pendens, then the association is barred from bringing its assessment foreclosure lawsuit that includes assessments due up to the time of the recording of the lender’s lis pendens.

Recall that an association must first send its intent to lien and intent to foreclosure letters to the non-paying owner before it can foreclose. What if the owner timely paid assessments right up until the commencement of the lender foreclosure? This means that the association cannot timely intervene in the lender’s foreclosure because it is statutorily prohibited from filing an assessment foreclosure until the time periods for both the intent to lien and intent to foreclose letters have fully run. The real world consequence of this “mishigas” (legal word for crazy nonsense) is that the association is left with no legal remedy, cannot foreclosure and must, at least for the time being, allow the dead-beat to remain in the association because it is legally prohibited from foreclosing the association’s assessment lien, unless it did so within 30 days of the lender’s recording of its lis pendens, which the association cannot do unless it sent both the intent to lien and foreclose letters and waited the statutory prescribed times by which time the 30 days in which to bring the association’s claim has expired.

In U.S. Bank National Association v. Quadomain Condominium Association Inc., decided in 2012 by Florida’s 4^th District Court of Appeals, the Court held that the lower court presiding over the lender’s foreclosure action which created the lis pendens had exclusive jurisdiction to adjudicate any interest in the subject property from the date the lis pendens is recorded to the date it enters final judgment. Therefore, to foreclose the association’s lien, the association was statutorily required to intervene in the lender’s foreclosure case within 30 days of the lender’s recording of the lis pendens and not by way of foreclosing in a different court. Since the association had foreclosed in a different court, its previous successful foreclosure was reversed.

On January 27, 2015 the 4^th DCA, in Jallali v. Knightsbridge Village HOA, Inc., again ruled against an association who did not move to intervene in a lender’s stalled foreclosure within 30 days of the lender’s recording of its lis pendens and reversed a different lower court’s judgment in favor of the association. That said, in this case, the association’s claims did not accrue for more than three years after the lis pendens was recorded, so how could the Association comply with the statutory requirement? Attorney Robert Kaye adds, “this is an unjust, inequitable result relative to innocent associations when lenders do not timely complete foreclosures.”

It is hard to fathom that the legislature intended this strange and financially devastating consequence, especially when both the Condominium Association Act and the Homeowners’ Association Acts, Chapters 718 and 720 of the Florida Statutes, respectively, provide for joint and several liability for the recovery of assessments against a new owner that were not paid by the predecessor owner. A simple solution to this complex problem can be found by excluding association assessment lien foreclosures from the requirements of section 48.23, Florida Statutes. When Florida’s legislature takes the time to enact this simple cure, then associations will have the lawful right to once again foreclose their assessment liens without regard to the lender’s stalled foreclosure action pending against the same property.

Florida, with its warm winters and sandy beaches, is a refuge from the bitter cold. It is one of our State’s best attributes and is so very welcoming to our Northerly neighbors. But when you combine the heat with levels of high humidity, unwelcome guests arrive in the form of mold – some of it toxic, too! The likelihood of mold is even more so for those units which have been abandoned. With no power being supplied to the unit, the air conditioning cannot run and thus, the overall wetness factor can increase dramatically. In this situation, the condominium association is often left with the burden of remediating and repairing the damages caused by the mold.

Property insurance policies differ in kind and scope from insurer to insurer with regard to whether or not mold damage is a covered peril under the policy. Without a specific mold rider, the chances are slim that mold would be a covered peril. Whether mold contamination is covered under your association’s policy will depend on the specific policy language, the cause or causes of the mold contamination, and the timelines of notification to the insurance company. Today’s mold policies typically require notice within 14 days of the onset of the mold, and not 14 days from when the association discovered the mold. Therefore, it is important that the board of directors carefully read and understand their association’s insurance policy obligations. Generally, most insurers attempt to exclude coverage for mold damage associated with long-term leaks, water intrusion from a construction defect, normal wear and tear, deferred maintenance, or poor repairs. As such, some insurers may deny a claim for mold damage arguing that the damage took place over a long period of time, meaning greater than two weeks, rather than damage from a sudden and accidental water damage event, meaning a leak that happened within two weeks.

This being the case, Floyd Nichols, Vice President at Insurance Office of America, recommends that condominium association boards check each of their condominium units which are abandoned or unoccupied for extended periods of time on a biweekly basis. This is not only so the condominium association can timely remediate any mold damage before the remediation becomes extensive but also in an effort to avoid the association’s insurer’s denial of a mold damage claim.

While mold might begin to grow in the unit, it will quickly spread to the common elements. The duty to repair the condominium’s common elements will fall to the association without regard to the owner who may have caused the problem. This is not to say that the association might not be able to subrogate its claim against the owner, but because the Florida legislature removed the requirement for all unit owners to have force placed insurance, subrogation on claim could prove quite problematic.

Because mold typically develops in areas which are likely the condominium association’s responsibility to maintain, repair, and replace (for example, drywall), the condominium association may use its irrevocable right of access to a unit, found in section 718.111(5)(a), Florida Statutes, to enter the unit during reasonable hours to conduct the necessary repair or replacement. Advance notice should be provided whenever possible.

A condominium association has additional rights regarding access to an abandoned unit under relatively new provisions set out in section 718.111(5)(b), Florida Statutes. Pursuant to this section, a condominium association can enter an abandoned unit to inspect the unit and the adjoining common elements, to make repairs as needed, to turn on the utilities to the unit and to otherwise maintain and protect the unit and adjoining common elements. A unit is considered abandoned under the following circumstances: (i) the unit is under foreclosure and no tenant appears to have lived at the unit for four consecutive weeks without prior written notice to the condominium association, or (ii) no tenant appears to have lived at the unit for two consecutive months without prior written notice to the condominium association and the condominium association is unable to contact the owner or determine the owner’s whereabouts after reasonable efforts. Prior to entering an abandoned unit, the condominium association must send two days’ notice of its intent to enter the unit to the owner at their last known address.

Any expense incurred by the association in inspecting the unit and the adjoining common elements, in making needed repairs, in turning on the utilities to the unit and in otherwise maintaining and protecting the abandoned unit and adjoining common elements are chargeable to the owner of the abandoned unit. These expenses are also assessable against the abandoned unit. What will prove very interesting is what effect the lender’s safe harbor assessment benefits as set out in section 718.116, Florida Statutes, or other legal arguments which limit assessment recovery will have on the condominium association’s ability to recover its expenditures. As a different tact, the condominium association can request that the court appoint a receiver to lease the abandoned unit. The rent collected is credited against the monies due to the association and the receiver.

Welcome 2016! While the expression “out with the old and in with the new” comes to mind, remember, too, that this is a great time for review. Start off the new year by reviewing your association’s insurance policies to better understand the perils that it does, and does not, cover. Of particular concern to Florida’s community associations, especially condominium associations, is how casualties stemming from slow leaks and resulting mold are handled. Sadly, I see coverage denials for this type of damage as commonplace.

Absent a “rider,” mold damage is typically excluded from today’s property and casualty insurance policies. While limited coverage may be available in the form of a “rider,” they come with significant strings attached. Most mold riders provide for a strict period of time that if missed will forever bar the association’s recovery. More specifically, and according to insurance agent-broker, Floyd Nichols of the Insurance Office of America, commercial property insurance will not cover “continuous or repeated seepage or leakage of water or the presence or condensation of humidity, moisture, or vapor that occurs over a period of 14 days or more.” It’s important to note that notice must be provided to the insurance company within 14 days of the beginning of the leak and not within 14 days of its discovery.

According to Nichols, “on a regular basis we see claims that occur because the unit owner has been away from their property for a period of time that exceeds 14 days. On many occasions we will see a denial of coverage due to the 14 day provision. Most frequently we are seeing the issue arise on older properties because, even though we want to think our buildings will last forever, leaks do occur for a variety of reasons although the problem can happen in newer properties as well (think of a leaking ice maker line, a toilet that continues to run or broken washing machine hoses). What could be mitigated as a small claim will many times become a claim that can cost tens of thousands of dollars to repair. Additionally, the association might very well find itself responsible to mitigate and repair the problem without regard to who must bear the ultimate responsibility for the damages in order to protect other owners in the building from being exposed to mold, etc.” In addition, an association can be required to effectuate the repair as a requirement set out in its declaration, too.

Nichols recommends to his association clients that the board ask their unit owners, especially snow birds and those on extended vacations, to provide for inspection of their units on a regular basis to avoid the 14 day exclusion. Although the inspection will not guarantee that the claim will be paid by the carrier, timely inspections will hopefully eliminate the implementation of this exclusion and hopefully save all parties much expense in the way of dollars and time.

An association could even develop a regular inspection schedule. Florida Statutes, section 718.111(5), provides that “the association has the irrevocable right of access to each unit during reasonable hours, when necessary for the maintenance, repair, or replacement of any common elements or of any portion of a unit to be maintained by the association pursuant to the declaration or as necessary to prevent damage to the common elements or to a unit.” Condominium associations can even require keys to all units be provided, but the association has a responsibility to ensure the keys are properly secured. Whenever possible, an association should always provide advance notice prior to entering an owner’s unit and always have at least two persons conduct inspections.

Whenever a casualty is suffered, Nichols recommends that their insured associations contact his office immediately. “We believe it is an agent’s responsibility to provide assistance and direction to them. Most often, they are not used to dealing with these types of issues and this is the time for the agent to help. We can meet with the adjusters and contractors on site and have a better understanding of the claim when it is time to deal with the insurance company.” If you have a specific insurance coverage question, Floyd Nichols can be reached at 561-721-3771.

In Part 2 of this two part series, we will discuss how a condominium association can inspect abandoned units and obtain possession in order to lease them and collect rent in accordance with Chapter 718 of the Florida Statutes which governs Florida’s condominium associations.

In my homeowners’ association, we display an oversized, festive, gloriously secular, snowflake on our entry gates. It is quite charming and does not denote any type of religious connotation. Does your association display a secular holiday symbol, too or does it display a religious symbol? Are Christmas trees, menorahs, Nativity scenes, or the Kikombe Cha Umoja (The Unity Cup displayed during Kwanza) secular or religious symbols? How can you tell the difference?

Luckily, we have some guidance from the United States Supreme Court to help associations differentiate between secular and religious symbols. In 1989, in County of Allegheny v. American Civil Liberties Union, the Court held that the determination of whether decorations, including those used to commemorate holidays (which are or have been religious in nature), are religious or not, turns on whether viewers would perceive the decorations to be an endorsement or disapproval of their individual religious choices. The constitutionality of the object is judged according to the standard of a reasonable observer.

Thus, the Court found that a Christmas tree, by itself, is not a religious symbol; although Christmas trees once carried religious connotations, “[t]oday they typify the secular celebration of Christmas,” the Court provided.  The Court also noted that numerous Americans place Christmas trees in their homes without subscribing to Christian religious beliefs and that Christmas trees are widely viewed as the preeminent secular symbol of the Christmas holiday season.

In contrast, the Court stated that a menorah is a religious symbol that serves to commemorate the miracle of the oil as described in the Talmud.  However, the Court continued that the menorah’s significance is not exclusively religious, as it is the primary visual symbol for a holiday that is both secular and religious.  When placed next to a Christmas tree, the Court found that the overall effect of the display to recognize Christmas and Chanukah as part of the same winter holiday season, has attained secular status in our society. Therefore, we can conclude that a Christmas tree and menorah, side by side, are of a secular nature.

As to the Ten Commandments, in a 1980 case, Stone v. Graham, the Supreme Court held that that the Ten Commandments are undeniably religious in nature and that no “recitation of a supposed secular purpose can blind us to that fact.” The Court stated that the Ten Commandments do not confine themselves to secular matters (such as honoring ones parents or prohibiting murder), but instead embrace the duties of religious observers.

If a member of your community wants to include their religious symbol in the association’s holiday display, remember to consider the types of symbols already being displayed by the association as compared to the member’s request. Once your community displays a religious symbol, then there is a good chance your community will need to allow other requested religious symbols to avoid a claim of religious discrimination. Use the guidance from the Supreme Court’s cases to differentiate between a secular symbol and a religious symbol. With that in mind, if an association allows a Christmas tree and menorah, the board of directors, far more likely than not, would not have to allow a members request to display a Nativity scene and Ten Commandments display, too. The rules of kindergarten work best: treat everyone fairly and treat them as you would want to be treated.

But for the abrupt ending of the 2015 legislative session, Florida’s government would already have caused another wrinkle in our free market economy by passing a law regulating the cost of goods in the stream of commerce. The worst bill to affect Florida’s community associations is back and could be become law unless you tell your legislators to “VOTE NO”. Florida’s House of Representatives and Senate seek to regulate both the cost and process of the issuance of the “association estoppel”. There are two bills at play: House Bill 203 and its companion, Senate Bill 722.

The “association estoppel” is a legally binding document that sets out the assessment monies that remain due and owing. There exists tremendous liability for its issuance. The buyer is only responsible for the monies set out as due in the estoppel letter. If completed incorrectly and a lesser amount due is stated, well, too bad. Apparently, lobbyists, title companies and other real estate professionals have just about convinced Florida’s legislators, albeit falsely, about the great harm being caused by Florida’s community associations, a state wide epidemic of disastrous consequence stemming from an association’s otherwise lawful right to create a process of issuance and to charge reasonable fee for providing its estoppel.

This atrocious legislation, that is expected to become law (unless you do something about it), dictates that the estoppel is due within ten business days of the request, no matter what. And, if it is issued after ten business days, no matter what the reason – good cause or otherwise – no fee may be charged! To make matters worse, the request for an estoppel can arrive via email. Based on a plain reading of these bills, rather than having to comply with standard procedures to ensure proper delivery of the request, the person requesting the estoppel can email a board member or manager at their personal email address to start the ten day clock.

According to the House version of the bill, the fee for the estoppel certificate may not exceed $200.00 if, on the date the certificate is issued, no delinquent amounts are owed to the association. If an estoppel certificate is requested on an expedited basis and delivered within three business days after the request, the association may charge an additional fee of $100.00. If delinquent amounts are owed to the association for the applicable unit, an additional fee for the estoppel certificate may not exceed $200.00. The Senate’s companion bill only mentions a reasonable fee.

In the past, an estoppel certificate only inured to the benefit of the party requesting it. Now, according to these bills, after issuance of the estoppel it is binding on every Tom, Dick or Harry who can be considered a successor or assign of the person who requested it. That means that Tom, Dick and Harry gets the benefit of the previously issued estoppel, and they do not even have to pay for it!

Pursuant to these bills, an association cannot require the payment of any fees as a condition for the preparation or delivery of an estoppel. Imagine going to the grocery store, loading up your friend’s car with your groceries to get them home and not having to pay the store until you eat the food. If you don’t eat the food, then you don’t have to pay for the groceries. But, your friend, whose car delivered the groceries for you must pay in your stead. This is exactly how the new estoppel legislation works.

No one who requests the estoppel has to pay for it when they receive it. In other words, the person or company who does the work for the association by preparing the estoppel has no lawful right to get paid at the time of performing their service. Rather, this decade’s worst association related legislative initiative provides that the fee can only be paid from the proceeds of the closing. If the closing does not occur, the person who requested the estoppel has no liability whatsoever. But, the burden for payment then shifts to the seller. How many months will that take?

It is expected that the estoppel legislation will become the law of the land with an effective date of July 1, 2016. This situation is the perfect example of a series of laws being adopted to fix a problem that only exists in the minds of a select few and even then for an extremely short period of time. Back during the uptick of the prior real estate crisis, there were a few bad apples who charged way too much for the issuance of the estoppel. Rather than going after these bad apples, the bad acts of the very few are being used to create hysteria and to hurt Florida’s community associations to the very real benefit of Florida’s realtors and title companies. It is shameful how easy our legislators are being deceived to believe that they are fixing a problem that, in reality, doesn’t even exist. Once again, our legislature to the rescue. Ugh!

To learn more visit, “smashthehometax.com”

Providing community association management services to community associations is highly competitive. Because of this competitiveness and the substantial financial investment made by a community association management company in its managers, many community association management companies require their managers to sign non-compete agreements as a condition of their employment. Often, once signed, the non-compete agreement is not thought of again until the manager decides to work for a different community association management company.

Under Florida law, non-compete agreements may be enforced by the prior employer so long as they are reasonable in time, geographical, line of business and are in place to protect a legitimate business interest of the employer as defined by section 542.335, Florida Statutes. Typically, non-compete agreements lasting up to two years in duration and covering geographical areas where the employer actually conducts business will be considered enforceable by a court. Further, pursuant to section 542.335(g)1., Florida Statutes, in determining the enforceability of a non-compete agreement, a court cannot take into consideration “any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.”

However, this express prohibition against considering the hardship created on the former employee may be losing its sting based upon the unpublished August 27, 2015 opinion of the Eleventh Circuit Court in TransUnion Risk and Alternative Data Solutions, Inc. v. MacLachlan, No. 15-10985.

In the MacLachlan case, the employee, MacLachlan, signed a non-compete agreement which provided that MacLachlan could not engage in the same or any similar business for one year. MacLachan was recruited by a rival company and began employment with this rival company three days after issuing his resignation to TransUnion Risk and Alternative Data Solutions, Inc. (“TRADS”). In an effort to enforce the non-compete agreement, TRADS then filed an action with the court for an injunction to prohibit MacLachlan from working for its rival company. During litigation, MacLachlan argued, among other defenses, that TRADS was not entitled to receive an injunction because the harm of the injunction to MacLachlan would outweigh any damage to TRADS. On appeal, the Eleventh Circuit Court, a Federal court with jurisdiction over Alabama, Florida and Georgia, found in favor of MacLachlan.

In doing so, the Eleventh Circuit Court analyzed the construction of section 542.335, Florida Statutes. The Court found that the express prohibition against considering the hardship which might be caused to the former employee as set out in section 542.335(g)1., Florida Statutes, was only with regard to determining whether or not a non-compete agreement is enforceable, and not with regard to the enforcement of the non-compete clause.

Once a non-compete agreement is deemed enforceable, the statute then sets out certain rules for enforcement. Because TRADS was seeking enforcement of the non-compete agreement and not a determination of whether or not the non-compete agreement was enforceable, the Court determined that it was permitted to take the hardship caused to the former employee into consideration when determining the manner of enforcement of the non-compete agreement.

While the MacLachlan case is not exactly binding on Florida state courts because it is a Federal court ruling and is an unpublished decision, it can be used as persuasion in other cases where the non complete agreement creates a hardship on the prior employee. In other words, if successful, this means that courts may begin to consider the financial and other hardships caused to the former employee through strict enforcement of a non-compete agreement.  Whether this case will have significant impact on managers who sign non-compete agreements that prevent them from seeking employment with a competitor is something that only time will tell.