REMBAUM'S ASSOCIATION ROUNDUP | The Community Association Legal News You Can Use

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Webinar | Dollars and Sense | Milestone Inspections & Structural Integrity Reserve Studies

Dollars and Sense | Milestone Inspections & Structural Integrity Reserve Studies

Recorded while presented live on March 21, 2023.

Milestone Inspections and Structural Integrity Reserve Studies (SIRS) | Senate Bill 4-D…What’s Next: Today’s Requirements vs. Proposed Legislation. Our panel of experts and professionals answered your questions concerning the new condo reserve laws, proposed legislation, responsibilities and roles of those involved.

This webinar does not satisfy any requirements for manangers or board members, nor should it be considered legal advice.

(Written by Jeffrey Rembaum and reprinted with permission from the March 2023 edition of the “Florida Community Association Journal”.)

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Release of Liability and “Hold Harmless” Agreements

Release of Liability and "Hold Harmless" Agreements

If Your Association Requires One, Then You Must Read This…

Many communities offer a host of amenities for their residents and guests to enjoy, such as clubhouses, fitness centers, playgrounds, swimming pools, tot lots, tennis courts, etc. One of the upsides to providing such amenities is that the residents and their guests have a variety of activities to choose from, which enhances the quality of life within the community. However, one of the potential significant downsides to offering such benefits is that the association often incurs liability if a resident or guest is injured while using one of the amenities.

Accordingly, it has become commonplace for associations to require that residents and guests sign a document that releases the association from liability and holds the association harmless when a resident or guest uses the amenities. Although the title of the document may vary—“Hold Harmless,” “Indemnification Agreement,” “Release of Liability,” or “Waiver and Release”—there is usually language included within the document along the lines of the following:

“I, Mr. Owner, on my own behalf and on behalf of all other occupants and guests to my home, for and in consideration for use of the association’s facilities, equipment, etc. hereby release and hold harmless the association, its members, officers, directors, agents, etc. from any and all liability which may arise out of or in connection with my participation or use of the foregoing facilities, equipment, etc.”

This language is often referred to as an “exculpatory clause,” which is a clause that is designed to relieve a party from blame or liability. Such language has traditionally served to help prevent an association’s liability to an owner or guest when he or she is injured while using the amenities. It may have been a while since anyone has taken a good look at the specific language included in the association’s release, and it may be taken for granted that such language will automatically protect the association from liability. Many such form documents do not provide the protection you might think they should. A recent Florida appellate court case dealing with such exculpatory clauses highlights this potential issue and offers pause.

Specifically, The Estate of Nicholas Adam Blakely, By and Through Michele Wilson, as Personal Representative v. Stetson University, Inc., WL 17997526 (Fla. 5th DCA 2022), involved the tragic death of a young man who played football at Stetson University. As described in the written appellate opinion, the young man pulled himself out of an afternoon football practice complaining to an assistant athletic trainer that he felt dizzy and that his chest felt tight. Although the trainers continued to monitor his symptoms on the sidelines, after approximately 45 minutes the young man collapsed. Thereafter, university employees attempted various emergency medical procedures in an unsuccessful effort to revive him. The young man was transported to the hospital where, sadly, he died.

The trial court found that the two identical releases signed by the young man were sufficiently clear to bar claims brought against the university arising from his death after participating in the football practice. On appeal, however, one of the arguments focused on whether the language in the releases that the young man signed were sufficient to be enforceable. The appellate court determined it was not. Although the entirety of the written releases are unable to be reproduced here, the particular language that the court focused on is set out below. Specifically, the appellate court placed emphasis on the following:

I understand that the dangers and risks of playing or participating/practicing may include, but are not limited to: death…Because of the dangers and risks involved in participating in intercollegiate athletics, I recognize the importance of following the Coaches and Sports Medicine staff instructions regarding playing techniques, conditioning, rehabilitation/treatment recommendations and team rules, etc. and agree to obey such instructions…I hereby assume all risks associated with participation and agree to hold Stetson University…from any and all liability…of any kind or nature which may arise by or in connection with my participation in any activities related to the Stetson University athletic program. The terms hereof shall serve as a release and assumption of risk for myself, my heirs, estate, executor, administrator, assignees and for all members of  my family. The terms hereof shall serve as a complete release and waiver of liability for myself, my heirs, estate, executor, administrator, assignees, and for all members of my family.

On its face, it sounds complete. But is it? In its analysis of the language included in the releases, the appellate court began by expressing that

[A]n exculpatory clause purports to deny an injured party the right to recover damages from a person negligently causing his injury. They are disfavored in the law because they relieve one party of the obligation to use due care and shift the risk of injury to the party who is probably least equipped to take the necessary precautions to avoid the injury and bear the risk of loss. Such claims are strictly construed against the party seeking to be relieved of liability. Thus, exculpatory clauses are enforceable only where and to the extent that the intention to be relieved from liability is made clear and unequivocal. The wording must be clear and understandable that an ordinary and knowledgeable person will know what he is contracting away (quoting UCF Athletics Ass’n, v Plancher, 121 So. 3d 1097, 1101 [Fla. 5th DCA 2013]).

Unlike the trial court, the appellate court took issue with the language contained within the releases because the release forms

    1. failed to expressly inform the young man that he was contracting away his rights to sue the university for its own negligence,
    2. used language that could reasonably lead one to believe that the university would be supervising and training [him] properly such that the young man was only being asked to sign the exculpatory clause to cover injuries inherent in a sport, and
    3. used language suggesting that the terms of the releases were for the young man’s benefit.

Accordingly, the appellate court determined that the foregoing supported a determination that the releases were not clear and unambiguous. So, what does the appellate court’s decision mean for exculpatory clauses as related to an association’s release? It means that associations need to review the language in such exculpatory clauses with counsel to assist in aligning the language with the thinking of the court. For example:

    1. Is the language in the release clear, unambiguous, and written in such a way that an ordinary and knowledgeable person would know that he or she is contracting away his or her right to sue the association if an injury occurs?
    2. Is the language in the release free from any indication whatsoever that training and/or supervision is being provided by the association to avoid a mistaken belief by the owner or guest that he or she is merely signing away his or her right to sue for injuries inherent in a particular activity?
    3. Is it unequivocally clear that the individual is giving up all rights to litigate against the association in regard to any accident that may occur, even if the association was negligent?
    4. Are there terms in the release that would make it seem as though the release is for the benefit of the homeowner or guest and not the association?

If you are in doubt as to the exculpatory language included in your association’s release, do not wait until a homeowner or guest is injured, or possibly worse, to discover that the language is not appropriate for protecting the association from liability. In light of this most recent opinion, you should discuss with your association’s legal counsel when there would be a good opportunity to review and amend such release of liability and hold harmless agreements.

(Written by Jeffrey Rembaum and reprinted with permission from the March 2023 edition of the “Florida Community Association Journal”.)

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Kaye Bender Rembaum Voted as Diamond Winner for Best Law Firm for Ninth Consecutive Year

Kaye Bender Rembaum Voted as Diamond Winner for Best Law Firm for Ninth Consecutive Year

Florida Community Association Journal (FLCAJ) Magazine announced this week that the law firm of Kaye Bender Rembaum is a 2023 Diamond Level Readers’ Choice Winner in the Legal Services category. This marks the ninth consecutive year for Kaye Bender Rembaum; and tenth year overall.

The FLCAJ Readers’ Choice Awards is an annual, unique recognition program that shines a spotlight on the positive and productive contributions of community association service providers throughout Florida. Awards are presented to companies that demonstrate, through their commitment to the community associations they serve, an exemplary level of proficiency, reliability, fairness, and integrity.

The FLCAJ Readers’ Choice Awards debuted in 2014 with just 3,800 votes. In 2023 more than 290 service providers were nominated, with over 11,000 ballots cast!

For more information, please visit fcapgroup.com.

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Architectural Committees Formal Procedures, Published Standards, and Self Help

Architectural Committees Formal Procedures, Published Standards, and Self Help

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Formal Procedures

There are strict legal requirements that a homeowners’ association’s (HOA) architectural review committee (ARC) must follow, most especially if the ARC intends to deny an owner’s request. As this author has witnessed countless times, it is likely that many ARCs do not conduct their activities in conformity with Florida law such that an ARC denial may not withstand judicial scrutiny. If these legal requirements are not followed, and the ARC denies the owner’s architectural request, then it would be quite easy for the owner to challenge the ARC’s decision and prevail. Upon prevailing, the owner would be entitled to their prevailing party attorney’s fees and costs, as well. It is so easy to avoid this outcome, yet so few associations take the time to do it right.

Pursuant to §720.303(2), Florida Statutes, a meeting of the ARC is required to be open and noticed in the same manner as a meeting of the association’s board of directors. Notice of the ARC meeting must be posted in a conspicuous place in the community at least 48 hours in advance of the meeting, and the meeting must be open for all members to attend. Further, pursuant to §720.303(2)(c)(3), Florida Statutes, members of the ARC are not permitted to vote by proxy or secret ballot. Also, bare bone minutes should be taken to create a record of ARC decisions—especially denials.

We often hear from many HOAs that the ARC does not meet openly and does not notice their meetings. This leaves decisions made by the ARC vulnerable to challenge. If the ARC denies an application but fails to do so at a properly noticed board meeting, the owner can challenge the denial, claiming that it is not valid because the ARC did not follow proper procedure. In such cases, the ARC’s denial of an application is not valid because the ARC failed to comply with the procedural requirements for the meeting even if an application violates the declaration or other association-adopted architectural standards. However, by complying with the provisions of Chapter 720, Florida Statutes, your HOA can work to avoid this debacle.

Published Standards

Often a top priority for an HOA is ensuring that homes in the community maintain a harmonious architectural scheme in conformity with community standards and guidelines, and because the ARC is at the frontline of owners’ alterations and improvements to their homes, it is instrumental in ensuring that the community standards and guidelines are met. Pursuant to §720.3035(1), Florida Statutes, an HOA, or the ARC, “has the authority to review and approve plans and specifications only to the extent that the authority is specifically stated or reasonably inferred as to location, size, type, or appearance in the declaration or other published guidelines and standards.” But not every owner request is typically addressed in the declaration or other published guidelines and standards. If not, then the association may not be in a good position for proper denial. Therefore, the ARC is only as effective as the objective guidelines and standards (set forth in the declaration and other published guidelines and standards) are inclusive. So, what is the association to do when the ARC receives an owner’s application for an alteration to the home, but the association does not have any architectural guidelines or standards regulating the requested alteration?

While not court tested yet, a possible solution for this conundrum is to include a “catch-all” provision in the declaration to proactively address those ARC applications where a member may request a modification that is not directly addressed by the governing documents. Such a “catch-all” provision stands for the proposition that, if such a request is made, then the existing state of the community is the applicable standard by which the ARC application is to be judged. For example, imagine if an owner applies to the ARC to paint the owner’s house pink. If there are no architectural guidelines or standards that address what color a house must be, and there are no pink houses in the community, then the existing state of the community may provide a lawful basis for the ARC to deny the request because there are no existing pink houses in the community.

The Trouble With Self-Help Provisions

What if an owner refuses to maintain the owner’s property, such as pressure washing a dirty roof, despite the HOA sending demand letters, levying a fine, and perhaps even suspending the owner’s right to use the HOA’s recreational facilities? What is the HOA’s next step? Is it time to file a lawsuit to compel compliance? Well, Chapter 718 (governing condominiums), Chapter 719 (governing cooperatives), and Chapter 720 (governing HOAs) of the Florida Statutes authorize the association to bring an action at law or in equity to enforce the provisions of the declaration against the owner. Additionally, many declarations contain “self-help” language that authorizes the association to cure a violation on behalf of the owner and even, at times, assess the owner for the costs of doing so. These “self-help” provisions generally contain permissive language, meaning the association, may, but is not obligated to, cure the violation. Sadly, in this instance the word “may” means “shall,” and to find out why, read on.

There is a general legal principal that, if a claimant has a remedy at law (e.g., the ability to recover money damages under a contract), then it lacks the legal basis to pursue a remedy in equity (e.g., an action for injunctive relief). Remember, too, that an association’s declaration is a contract. In the context of an association, the legal remedy would be exercising the “self-help” authority granted in the declaration. An equitable remedy would be bringing an action seeking an injunction to compel an owner to take action to comply with the declaration. Generally, a court will only award an equitable remedy when the legal remedy is unavailable, insufficient, or inadequate.

Assume that the association’s declaration contains both the permissive “self-help” remedy and the right to seek an injunction from the court. Accordingly, it would appear the association has a decision to make—go to court to seek the injunction or enter onto the owner’s property, cure the violation, and assess the costs of same to the owner. However, recent Florida case law affirmed a complication to what should be a simple decision. In two cases decided ten years apart, Alorda v. Sutton Place Homeowners Association, Inc., 82 So.3d 1077 (Fla. 2nd DCA 2012) and Mauriello v. Property Owners Association of Lake Parker Estates, Inc., 337 So.3d 484 (Fla. 2nd DCA 2022), Florida’s Second District Court of Appeal decided that an association did not have the right to seek an injunction to compel an owner to comply with the declaration if the declaration provided the association the authority, but not the obligation, to engage in “self-help” to remedy the violation. Expressed simply, this is because the legal contractually based “self-help” remedy must be employed before one can rely upon equitable remedy of an injunction. Therefore, even though the declaration provided for an optional remedy of “self-help,” it must be used before seeking the equitable remedy of an injunction.

In Alorda, the owners failed to provide the association with proof of insurance required by the declaration. Although the declaration allowed the association to obtain the required insurance, the association filed a complaint against the owners seeking injunctive relief, asking the court to enter a permanent mandatory injunction requiring the owners to obtain the requested insurance. The owners successfully argued that even though they violated the declaration, the equitable remedy of an injunction was not available because the association already had an adequate legal remedy—the “self-help” option of purchasing the required insurance and assessing them for same. The Court agreed.

In Mauriello, the declaration contained similar language as in Alorda but involved the issue of the owners failing to keep their lawn and landscaping in good condition as required by the declaration. The association filed a complaint seeking a mandatory injunction ordering the owners to keep their lawn and landscaping in a neat condition. However, the facts were complicated by the sale of the home in the middle of the suit when the new owners voluntarily brought the home into compliance with the declaration. The parties continued to fight over who was entitled to prevailing party attorney’s fees with the association arguing it was entitled to same because the voluntary compliance was only obtained after the association was forced to commence legal action. The owners, citing Alorda, argued that the complaint should have been dismissed at the onset because the association sought an equitable remedy (injunction) when a legal remedy was already available—the exercise of its “self-help” authority. The Court considered the award of attorney’s fees after the dismissal of the association’s action for an injunction. Ultimately, the Court held that the owners were the prevailing party as the association could not seek the injunction because it already had an adequate remedy at law.

Accordingly, if your association’s declaration contains a “self-help” provision, and your association desires to seek an injunction against an owner rather than pursue “self-help,” the board should discuss the issue in greater detail with the association’s legal counsel prior to proceeding. Also, remember that if the association wants to enforce architectural standards, then they must be published to the membership; and always remember to notice ARC meetings and take minutes.

(Reprinted with permission from the February 2023 edition of the “Florida Community Association Journal”.)

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New Legislation Needed for Required Maintenance Affecting Condominium Building Structural Integrity and Safety

New Legislation Needed for Required Maintenance Affecting Condominium Building Structural Integrity and Safety

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Material Alterations, Special Assessments, and Borrowing

As to the title of this article, anyone familiar with Senate Bill 4-D and the newly required milestone inspection reports and structural integrity reserve studies primarily applicable to condominium and cooperative buildings three stories and higher knows that material alterations, special assessments, and the authority to borrow funds are not mentioned in the legislation. So why write this article about those subjects? Because the milestone reports and structural integrity reserve studies will no doubt also lead to both expected and unexpected required repairs and replacements. In effectuating such repairs and replacements, an association’s board of directors needs i) the ability to approve material alterations under certain circumstances that sometimes arise in connection with such work, ii) the ability to levy special assessments to pay for the work, and iii) the authority to borrow money that is often needed to pay for such repairs and replacements so that the special assessment payments can be amortized over time, thereby lessening the financial strain on the owners.

     In the event the needed repairs and replacements require material alterations to the condominium common elements or cooperative property, an important question that arises is, is the approval of the members required? The relied-upon definition of what constitutes a “material alteration” comes from Sterling Village Condominium Inc. v. Breitenbach, 251 So. 2d 685 (Fla. 4th DCA 1971). It means to “palpably or perceptively vary or change the form, shape, elements, or specifications of the common elements in such a manner as to appreciably affect or influence its function, use, or appearance.”

Let’s first examine the relevant legislation concerning material alterations. As to condominium associations, §718.113, Fla. Stat., provides, in relevant part, that

Maintenance of the common elements is the responsibility of the association… Except as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements or to real property, which is association property, except in a manner provided in the declaration as originally recorded or as amended under the procedures provided therein. If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced….

As to cooperative associations, §719.1055, Fla. Stat., provides in relevant part that

unless a lower number is provided in the cooperative documents or unless such action is expressly prohibited by the articles of incorporation or bylaws of the cooperative, … material alterations or substantial additions to such property by the association shall not be deemed to constitute a material alteration or modification of the appurtenances to the unit if such action is approved by two-thirds of the total voting interests of the cooperative. [emphasis added]

With all of this in mind, what if the required repairs stemming from the milestone report or structural integrity reserve study include necessary (meaning not voluntary) material alterations? If the governing documents do not vest such decision making to the board of directors, which is relatively rare, is the vote of the membership required? The short answer is that it depends on the facts and circumstances at hand. It is patently clear that merely because the replacement product is less expensive than replacing the item with the same product, that does not justify obviating the membership vote when required. See George v. Beach Club Villas Condominium Assoc., 833 So. 2d 816 (Fla. 3rd DCA 2002). For example, replacing a cedar shake roof with asphalt shingles due to cost considerations is not a sufficient reason to not obtain membership approval when otherwise required.

However, under the right circumstances the board can rely on the “necessary maintenance exception,” which evolved from a series of cases further discussed below. Before explaining further, the board should always consult with the association’s legal counsel to ensure a concurrence of opinion before proceeding with the work based on this “necessary maintenance exception” legal theory. There is a balance in the analysis which must be undertaken in that the association is responsible for the maintenance of the common elements as compared against when such maintenance may require a vote of the membership due to a material alteration. Based on the “necessary maintenance exception,” when it is clear that the material alteration is needed to complete the required maintenance, the board likely has the authority to proceed with the work without membership approval. Therefore, in our view, it would be beneficial for the legislature to codify this extremely important “necessary maintenance exception” into the Florida Statutes.

Regarding material alterations, in Tiffany Plaza Condominium Association, Inc. v. Spencer, 416 So. 2d 823 (Fla. 2nd DCA 1982), without the required vote of the owners, the board of directors opted to construct a rock revetment wall in the sand between the condominium’s seawall and the mean high-tide line. The area in question was part of the association’s common elements. Owners who were unhappy with the decision of the board (including the assessment to fund this project) sued the association. The association defended itself on the basis that the rock revetment was not an alteration or improvement of a common element but rather was part of the required maintenance, repair, and replacement of a common element that the association had responsibility for under several provisions of the declaration, its bylaws, and statutes. While the trial court agreed with the plaintiff owners, the Second District Court of Appeal reversed the trial court decisions and held that

If, in the good business judgment of the association, such alteration or improvement is necessary or beneficial in the maintenance, repair, or replacement of the common elements, all unit owners should equally bear the costs as provided in the declaration, bylaws, and statutes.

Further, the court held that

from the cited provisions of the declaration, it is clear to us that the association could properly assess all unit owners for the replacement or repair of the beachfront common element if it was damaged by erosion or otherwise. Likewise, it seems to us that if, in the good business judgment of the association, alteration or improvement of the beachfront by addition of a rock revetment would protect the beach from damage and the necessity of subsequent repair or replacement then that cost should also be borne equally by all unit owners.

In Ralph v. Envoy Point Condominium Association, Inc., 455 So. 2d 454 (Fla. 2d DCA, 1984), condominium owners objected to an assessment passed by the board of directors for the purpose of constructing a vertical seawall extension. The court held that, in view of the competent evidence from which it could be determined that the vertical extension of the seawall was necessary to protect the common elements, the board of directors of the condominium association was authorized to construct the extension without the necessity of the vote of the condominium unit owners, which was required by the condominium documents for alterations or improvements.

Regarding special assessments, in yet another case, Cottrell v. Thornton, 449 So. 2d 1291 (Fla. 2d DCA, 1984), condominium owners brought suit against the president of a board of directors of a condominium association after the board assessed the members to pay for the cost of fixing problems with a canal system, roadway, and swimming pool. The court examined the authority of the board to make decisions when a vote of the members would otherwise be required. It is clear from reading this case that the court received evidence regarding the condition of the canals which were filling due to erosion, excess weed growth, and pollution from excess runoff; that lots were gradually crumbling away into the canals; that the swimming pool was built on soil which was not de-mucked prior to construction and then floated up; and there were cracks on the floor and side walls of the pool and its deck. In fact, the pool was closed to any type of pedestrian traffic due to the unsafe conditions. The roadways had large and severe potholes. There was testimony during the proceedings that the canal needed to be drained, scraped, de-mucked, and lined with sea bags to make the seawalls secure and that the roads needed to be resurfaced.

After the board put its plan into action and levied the assessment, the plaintiffs who sued claimed the repairs constituted material alterations of the common elements. The president of the board argued that only necessary repairs and replacements were authorized by the board. The issue presented on appeal was whether the proposed changes constituted substantial additions/alterations or were necessary repairs. Here, the appellate court relied on the findings of the trial court which found that

because necessary repairs were planned, not material alterations, the trial court found the board of directors was authorized to make assessments against the unit owners without holding a vote.

The trial court also held that the restoration was “necessary to prevent further damage to the common elements,” and, as such, the board had the authority to proceed without a vote of the owners. This ruling is in line with the “necessary maintenance” principle previously provided in the above-referenced cases.

It is extremely important when examining whether a vote of the membership is required to perform material alterations that each project be separated into its core constituent components so as to avoid an argument that a particular part of the project was in fact a material alteration requiring a vote of the membership. If part of a concrete restoration project included material alterations which were unavoidable under the circumstances, but a part of the project also included voluntary aesthetic changes, those aesthetic changes would likely require approval of the membership (subject, of course, to the provisions in the governing documents or relevant legislation) even though the other part of the project did not.

In Bailey v. Shelbourne Ocean Beach Hotel Condominium Association, Inc., et al., 307 So. 3d 74 (Fla. 3rd DCA 2020), the board of directors levied special assessments to the tune of 30 million dollars for two rounds of construction projects. The first round of construction included elevator modernization; exterior painting; repairs to the porte cochere, pool and lobby; installation of a sewage lift station; and installation of impact-resistant balcony doors. The second round of construction included window repairs, installation of safety railing, replacement of unit doors, pool paver repairs, hardening of the beach entrance, and reinforcement of the substructure beneath the townhomes.  Several condominium unit owners argued, among other things, that the association violated Chapter 718 F.S. by its failure to secure unit owner approval for the construction projects that amounted to a material alteration of the common elements and that a prior vote of the membership regarding a material alteration is required. The court held that regarding two particular parts of the project, the board of directors violated the Statute when it assessed unit owners for the cost of material alterations based on 75 percent  of unit owners ratifying the construction projects after completion because §718.113(2)(a), Fla. Stat., requires approval before beginning construction. The court further held that although the majority of items completed during construction constituted necessary maintenance, and thus were properly assessed by the board, there was a genuine issue of material fact as to whether pool pavers and reinforcement of substructure underneath the townhomes were necessary maintenance items.

As to a board’s authority to borrow money to fund necessary repairs or replacements, there is no Florida case law or other legal authority that directly stands for the proposition that a board of directors can borrow such funds when the governing documents would otherwise require a vote of the membership to do so. Therefore, this, too should be addressed in a future legislative bill.

A board should never consider relying on the theories of the aforementioned cases without first consulting with its legal counsel regarding the applicability of those cases to the facts at hand and to better understand the risks involved.

With all of this in mind, it would be extremely helpful for additional legislation to be adopted by the Florida legislature that clearly

    1. permits the association through board action alone to authorize material alterations as part of any necessary repair or replacement project when similar like-kind items are no longer available or not recommended due to safety etc.; and
    2. permits the association through board action alone to special assess the membership as part of any necessary repair or replacement project; and
    3. permits the association through board action alone to borrow money in connection with any necessary repair or replacement project.

(Reprinted with permission from the January 2023 edition of the “Florida Community Association Journal”.)

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Senate Bill 4-D Glitches That Must Be Addressed

Senate Bill 4-D Glitches That Must Be Addressed

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Milestone Report and Structural Integrity Reserve Study

Despite the Florida legislature’s best efforts, there nevertheless remains confusion with the interpretation of Senate Bill 4-D (SB 4-D), which provides for condominium and cooperative milestone inspections and structural integrity reserve studies. The purpose of this article is to draw attention to many of these glitches in hopes that the 2023 Florida legislature will address these issues by passing a glitch bill to provide needed and worthwhile clarity for Florida’s community association board members affected by this game-changing legislation. First, a couple of glitches applying to the entirety of SB 4-D are addressed, followed by the glitches related to the required milestone report, and then glitches related to the structural integrity reserve study requirements are addressed. This article does not go into detail explaining the requirements of SB 4-D as that was the subject of a prior article from August 2022 FLCAJ, which can be easily found and read HERE.

Glitches Related to the Entirety of SB 4-D

The term “common areas” is used throughout SB 4-D. While this is appropriate for cooperatives, it is not appropriate in the context of condominiums. Chapter 719, Florida Statutes, applicable to Florida’s cooperatives, defines “common areas” as the portions of the cooperative property not included in units. But, as to condominiums there is no similar definition. Rather, Chapter 718, Florida Statutes, applicable to condominiums, uses the term “common elements” to refer to portions of the condominium property not included in the units. This clarification should be made.

Is SB 4-D so very substantive in nature such that “Kaufman language” should be required for its provisions to apply? Obviously, the intent is that the entirety of SB 4-D should apply to all existing and future condominium and cooperative associations. (By way of oversimplification, “Kaufman language” refers to a provision set out in a declaration which makes patently clear that all legislation upon becoming effective, applies to the association. For example, in “This declaration is subject to Chapter 718, as it is amended from time to time, the italicized text is the “Kaufman language.”) There is language in SB 4-D which suggests that the milestone inspection is applicable regardless of Kaufman language. But, there is no equivalent in regard to the requirements of the structural integrity reserve study. In any event, additional clarity should be provided which makes it patently clear that regardless of Kaufman language, all of the requirements set out in SB 4-D apply.

Glitches Related to the Milestone Report

The milestone inspection applies to condominium and cooperative buildings that are three stories or higher, with a notable exception for single-family, two-family, or three-family dwellings with three or fewer above-ground habitable stories. Why does this exception only apply to the milestone report and not the structural integrity reserve study? Any resulting glitch bill should also include that single-family, two-family, or three-family dwellings with three or fewer above-ground habitable stories are exempted from the need for a structural integrity reserve study.

Also, what about commercial condominiums and cooperatives? If a condominium building is taller than three stories, let’s say a 50-story tower, and is a mixed-use building where there are both commercial components, residential components, and even components belonging to a master association; and as a part of the declaration of condominium, certain floors are exempted from the definition of the condominium at issue, then is the entire building subject to the milestone inspection or only those floors which are designated as part of the condominium as determined by a review of the declaration of condominium? Also, what if the condominium does not touch ground, as in a vertical subdivision where the condominium may not begin until the 10th floor of a building? Is the entire building subject to the milestone inspection or only those floors which are included within the condominium subdivision?

SB 4-D is patently clear that a milestone inspection must be performed within 180 days of receipt of notice from local government. But, what if the association already prepared its milestone report in conformity with the statutory deadlines, which are either 30 years from the date of the certificate of occupancy issuance; 25 years from the date of the issuance of the certificate of occupancy if the building is within three miles of a coastline; or by December 31, 2024, if the building is already 30 years past its issuance of the certificate of occupancy? Must that association have another milestone report completed or even expend association funds updating its existing report? In addition, why shouldn’t a condominium or cooperative building that is already 25 years past the issuance of its certificate of occupancy and is within three miles of the coastline also have its initial milestone report completed by December 31, 2024?

The milestone inspection requirements refer to “story” and “stories” without providing any meaningful guidance as to what it means. Is the below-grade parking structure to be included within the definition? How about an above-grade parking structure? Is the term “story” only to apply to habitable stories? Is the definition of the term “story” (i) a part of the building that comprises its different levels, which is situated above or below other levels; (ii) the space between a floor and a ceiling, or (iii) the definition of the term “story”  which is used in the Florida Building Code as follows: “that portion of a building included between the upper surface of a floor and the upper surface of the floor or roof next above”?

What is a “coastline”? Section 376.031 of the Florida Statutes, as referred to in SB 4-D, defines a coastline as “the line of mean low water along the portion of the coast that is in direct contact with the open sea and the line marking the seaward limit of inland waters, as determined under the Convention on Territorial Seas and the Contiguous Zone.” If the statutory definition is applied, then many buildings likely intended to be subject to the 25-year requirement will be instead subject to the 30-year requirement.

Glitches Related to the Structural Integrity Reserve Study

The structural integrity reserve study, otherwise referred to as the “SIRS,” must be completed by all Florida condominiums and cooperatives with buildings that are three or more stories by December 31, 2024. With this in mind, if the association receives its SIRS after it adopts its 2025 annual budget, but prior to the December 31, 2024, deadline, it means that the SIRS reserves will not actually be funded until the association’s 2026 annual budget is implemented. This is not the likely intent of the legislation and should be clarified as to whether this is permissible. The Division of Florida Condominiums, Timeshares, and Mobile Homes (the Division) has intimated that it will require the SIRS reserves to be included in the association’s 2025 budget. If that is going to be the case, then this absolutely must be clarified in a future glitch bill. Governmental agencies cannot adopt laws in contravention to existing legislation. If they take such a stance, then they will have a significant uphill battle if later challenged in a court of law with regard to such a position. Hopefully, a glitch bill will address this issue.

If an association receives its SIRS prior to December 31, 2024, and includes the results in its 2025 budget, so long as the membership vote to waive or reduce the reserves is taken prior to the December 31, 2024, deadline, then ostensibly the 2025 required reserves could be waived or reduced. Is this an intended result of the legislation? It should be clarified.

The SIRS requirements apply to condominium and cooperative buildings three stories or higher. Once again, the definition of a “story” needs to be addressed to provide needed clarity.

The items required to be reserved for (if the SIRS requirement applies) include the following:

      1. Roof
      2. Load-bearing walls or other primary structural members
      3. Floor
      4. Foundation
      5. Fireproofing and fire protection systems
      6. Plumbing
      7. Electrical systems
      8. Waterproofing and exterior painting
      9. Windows
      10. Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed in subparagraphs a.-i., as determined by the licensed engineer or architect performing the visual inspection portion of the structural integrity reserve study.

Can the aforementioned items be “pooled” from the outset, or is a vote of the membership required to do so? (In short, pooling reserves assumes not all of the components will break at the same time and there will be sufficient funds on hand when needed for each of the components’ major repairs and/or replacement.) What if the association already has a reserve pool which includes the roof, paving, and painting and now desires to include that pool as a part of the new pool for the items listed above; is a vote of the membership needed to combine the pools? Not only is clarification needed in this regard, but the association needs to make sure there is a clear record of which components are in each pooled reserve. It is reported that the Division takes the position that the aforementioned reserves can be pooled in one or more pools. Perhaps they will clarify this when adopting administrative rules. However, such clarification would be better suited in a glitch bill.

Effective December 31, 2024, the members of a unit-owner controlled association may not determine to provide no reserves or less reserves for the aforementioned reserve items. With that in mind, consider the following: The board adopts the 2024 budget in November of 2023. Thereafter, on December 1, 2023, the unit owners vote to waive or otherwise reduce the required reserves. Will this be considered a violation? Sources indicate that it will not; however, this too should be addressed in a glitch bill.

While the likely intent of SB 4-D was to require fully funded reserves for the items listed above for buildings having three or more stories, SB 4-D provides that the members of a unit-owner controlled association cannot vote to waive or reduce reserves for those items set out above, without exception for buildings with fewer than three stories. This should be clarified in a glitch bill.

Whether intended or not, the requirement prohibiting the unit-owner controlled association from reducing or waiving the reserves for the items listed above applies to ALL condominiums and cooperatives, not just those three stories and higher. If this was not intended, then it should be clarified that condominium and cooperative associations that are not required to have the SIRS should be able to continue to waive and reduce reserves.

What does a “fully funded” reserve” mean, fully funded for the particular year or sufficient funds on hand for the cost of replacement? The answer to this question truly depends on whom you ask and in which state they reside. In Florida, as applied to condominium and cooperative associations, a fully funded reserve refers to whether the association is properly funding the right amount for the year in question. It does not refer to whether the reserve account has the total sum required for the component’s replacement. For example, assume the reserve item in question has a replacement cost of $100,000 and a life of 10 years. The association has been reserving $10,000 per year each year, and it is year seven. The budget denotes the $10,000 reserve for year seven, too. Therefore, this component is fully funded. A different example includes the same component that has a replacement cost of $100,000 and a life of 10 years. In this example, the association has never reserved for the item, and it is year seven, meaning there are three years left before the component will need to be replaced. With this in mind, the fully funded amount to be included in the budget would be $100,000.00 divided by the remaining three years, which is $33,333.33. Any amount less than that would mean the reserve item is not fully funded for that year. In any event, a definition for the term “fully funded” would provide some much-needed clarity.

Regarding the requirement to reserve for the foundation, exterior walls, flooring, and load bearing columns: will these items ever need replacing? It is doubtful. However, serious and expensive repairs may be incurred. SB 4-D should be clarified in this regard.

Regarding the requirement to reserve for windows: what if the unit owners are responsible for the windows and not the association? Why should the association have to reserve for window replacement if the association is not responsible for the windows? Therefore, clarity is needed.

The SIRS can be performed by any person qualified to perform such study. However, the visual inspection portion of the SIRS must be performed by a Florida licensed engineer or architect. The qualifications required to perform the non-visual portions of the SIRS needs to be addressed in a glitch bill.

SB 4-D does not require that the SIRS be provided to every owner. Shouldn’t it? This should be addressed in a glitch bill.

By no means are the above items all of the glitches contained within SB 4-D. However, by minimally addressing at least these items, the 2023 Florida Legislature will be doing the owners of Florida’s condominium and cooperative units a great service.

(Reprinted with permission from the December 2022 edition of the “Florida Community Association Journal”.)

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Holiday Displays | Why Board Members Need to Understand The Difference Between Religious and Secular Holiday Displays

Holiday Displays

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Why Board Members Need to Understand The Difference Between Religious and Secular Holiday Displays

If your community association installs a holiday display, is that holiday display considered religious or secular? Are Christmas trees, menorahs, Nativity scenes, or the Kikombe cha Umoja (the Unity Cup used during Kwanzaa celebrations) considered religious or secular? How can you tell the difference? Why is the difference so very important to understand? The reason it is important to understand the difference between a religious versus a secular display is that if your association does have a religious display, and a member makes a request to have a holiday display for their religion too, the association must honor the request in order to avoid a claim of religious discrimination. But, if the holiday display is secular, such obligation does not exist.

Fortunately, we have guidance from the United States Supreme Court to help associations differentiate between secular and religious symbols and displays. In the 1989 case of County of Allegheny v. American Civil Liberties Union Greater Pittsburgh Chapter, 492 U.S. 573 (1989), 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, “Today they typify the secular celebration of Christmas.” 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 (lasting eight days when it should have only lasted one day) 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 the 1980 case of Stone v. Graham, 449 U.S. 39 (1980), the Court held that that the Ten Commandments are undeniably religious in nature and that no “recitation of a supposed secular purpose can blind [the Court] to that fact.” The Court stated that the Ten Commandments do not confine themselves to secular matters (such as honoring one’s parents or prohibiting murder), but instead embrace the duties of religious observers.

Another important holiday decoration issue concerns whether the decoration constitutes a material alteration of the common elements or common area. Generally, unless a homeowners association’s declaration provides to the contrary, the homeowners association’s board of directors decides matters pertaining to material alterations. On the other hand, as to a condominium association, unless the terms of the declaration of condominium provide otherwise, 75 percent of the unit owners must vote to approve material alterations of the common elements.

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 grant a member’s request to display a Nativity scene and the Ten Commandments. The rules of kindergarten work best: treat everyone fairly, and treat them as you would want to be treated.

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Condominium Unit Owner Insurance – The Risks of Not Purchasing Insurance for Your Unit

Condominium Unit Owner Insurance

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The risks of not purchasing insurance for your condominium unit

Do you think you do not need condominium insurance because your condominium association has it? You would be so very wrong if you do! It has happened more times than I can count—the supply line that feeds the toilet ruptures in the upstairs unit while the owner of the unit is out of town, the upstairs unit owner forgot that he or she started to fill the tub and it overflows, or the upstairs unit owner ignores a broken toilet, all of which result in water flowing down into the unit below. Next thing you know, the remediation workers arrive and start ripping out the soaked, damaged drywall in the units below and after cutting holes in the drywall use their industrial-sized blowers to dry things out to prevent mold.

Meanwhile, the downstairs unit owners want to have a “word” with the upstairs unit owner to discuss who is going to pay for the repairs. They demand a copy of the upstairs unit owner’s insurance policy. The owner of the upstairs unit where the leak occurred smiles and explains, “The condominium association has insurance. They’ll take care of it.” Right? Wrong! Even if the condominium association has the duty of repair to portions of the damaged property, typically the damaged common elements, the upstairs unit owner is not off the hook because both the condominium association and its insurance company can often “subrogate” their financial damages against the upstairs unit owner and so, too, can the downstairs unit owners and their insurance companies. At the end of the day, the upstairs owner who caused the damages could have significant financial liability. (In plain English, to “subrogate” a claim means that one party goes after the other for their financial damages for having caused the damage in the first place.)

So, now that I have your attention, most especially if you are a unit owner who does not have insurance for your unit—in the example described above, not only can the upstairs unit owner bear significant financial liability, but even their condominium unit is at risk of being foreclosed to satisfy a judgment against them—and there is no homestead protection! Because the upstairs unit owner decided not to purchase insurance, he could actually lose his unit in a foreclosure. The following explanation is why:

By way of oversimplification, the Condominium Act, more specifically, §718.111(11)(f), Florida Statutes, requires the condominium association to insure everything that the unit owner is not responsible to insure. The unit owner is responsible to insure

… all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit…  the association is not obligated to pay for any reconstruction or repair expenses due to property loss to any improvements installed by a current or former owner of the unit or by the developer if the improvement benefits only the unit for which it was installed and is not part of the standard improvements installed by the developer on all units as part of original construction, whether or not such improvement is located within the unit.

But, however, the unit owner’s insurance policy, typically referred to as an “HO-6 policy,” not only includes coverage for the items set forth above plus other personal items, but also includes liability coverage for having caused damages to the condominium property.

§718.111(11)(j)1–2, Florida Statutes, makes patently clear that

A unit owner is responsible for the costs of repair or replacement of any portion of the condominium property not paid by insurance proceeds if such damage is caused by intentional conduct, negligence, or failure to comply with the terms of the declaration or the rules of the association by a unit owner, the members of his or her family, unit occupants, tenants, guests, or invitees, without compromise of the subrogation rights of the insurer.

The provisions… regarding the financial responsibility of a unit owner for the costs of repairing or replacing other portions of the condominium property also apply to the costs of repair or replacement of personal property of other unit owners or the association, as well as other property, whether real or personal, which the unit owners are required to insure. (emphasis added.)

Furthermore, also pursuant to §718.111(11)(g)2, Florida Statutes,

…unit owners are responsible for the cost of reconstruction of any portions of the condominium property for which the unit owner is required to carry property insurance [set out above], or for which the unit owner is responsible, and the cost of any such reconstruction work undertaken by the association is chargeable to the unit owner and enforceable as an assessment and may be collected in the manner provided for the collection of assessments pursuant to § 718.116, Fla. Stat. (emphasis added.)

§718.116, Florida Statutes, is the unit fore-closure section of the Condominium Act which explains the steps necessary to foreclose against an owner’s unit for failing to pay assessments.

In condominium living, the general rule is that the party who has the duty of purchasing insurance for a particular portion of the condominium property also has the primary duty to repair the damages to such portion regardless of fault (unless the condominium association has opted out of that regime by a vote of the unit owners, which is a rarity). But, simply because the condominium association has insurance and may have that primary duty of repair after the insurable casualty event, that does not mean that the negligent unit owner that caused the damage will not be the primary target for reimbursement for expenses incurred by the condominium association’s insurance company or by the condominium association for its deductible and related expenses. The same concept applies for the downstairs unit owners, who could seek reimbursement from the upstairs unit owner for any necessary expense incurred because the upstairs unit owner was negligent.

There are typically two parts to the HO-6 insurance policy, the primary coverage for personal losses and the other for liability coverage. Condominium associations should consider amending their declaration to require every unit owner to have both personal and liability coverage, and at a minimum, liability coverage. Your condominium association should discuss this requirement with the condominium association’s insurance agent as well as review the possibility of amending the declaration of condominium with legal counsel.

Anytime a condominium association experiences a casualty event, in addition to reporting the claim to the insurance carrier, usually through the condominium association’s insurance agent, the condominium association should be in touch with its legal counsel to explore all the different aspects necessary to both repair and reimburse the condominium association for its financial losses. At the end of the day, owning a condominium unit and not having purchased insurance is similar to taking a rowboat out on a rough sea day without life preservers.

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Defibrillators | You Better Check Your Local Code of Ordinances!

DEFIBRILLATORS | You Better Check Your Local Code of Ordinances!

defibrillator

More and more, local governments are providing for additional requirements regarding automated external defibrillators (“AED”). An AED is a portable medical instrument that delivers an electrical impulse to the heart to disrupt and correct an otherwise fatal irregular heartbeat (arrhythmia) and allows a normal rhythm to resume. These local government requirements may mandate installation of an AED and other life-saving equipment, as well as additional requirements which must be followed.

Specifically, the Broward County Amendments to the Florida Fire Prevention Code (“FFPC”) now require community associations to purchase and install both an AED and Stop the Bleed Kits (SBKs) on every other floor, starting with the first floor if the residential building is five or more stories. According to the FFPC, a 10-story building must have these devices installed on the 1st, 3rd, 5th, 7th and 9th floors before October 24, 2023. Both AED and SBK devices must also be verified on an annual basis. The Broward County Amendments to the FFPC include other important regulations concerning placement, signage, housing, maintenance, mandatory periodic training and other requirements. Additionally, the person offering AED assistance must contact 9-1-1 immediately prior to or immediately upon use thereof.

To read these Broward County Amendment to the FFPC, CLICK HERE.

Regarding the use of an AED in general, according to the American Heart Association, sudden cardiac arrest (“SCA”) is a leading cause of death in the United States. It is estimated that more than 350,000 lives are taken each year due to the abrupt loss of heart function. However, with technological advances, the number of deaths due to SCA have been lowered through the use of anAED.. Although AEDs have been credited with saving countless lives by making it possible for non-medical individuals to respond to a medical emergency, the question for your community association to ask is: “Is the liability worth the risk?”

The purchase and availability of AEDs is primarily controlled by state and federal laws and regulations, and as explained above, more and more local governments are enacting additional installation and compliance procedures. Pursuant to Florida law, AEDs are required to be installed in public schools, dental offices, and assisted living facilities. AEDs are optional in state parks and state owned or leased facilities. While generally, there is no requirement that community associations in Florida install AED devices on association property and/or association fitness facilities, that is not always the case, most especially for Broward County.

When installing AED devices, associations must ensure that all parties (i.e., property management, board of directors, residents, and any other authorized user) understand the potential liability associated with the use of an AED and the protections afforded to them under Florida law.

“The Cardiac Arrest Survival Act” (“Cardiac Act”), codified in section 768.1325 of the Florida Statutes, was enacted by the Legislature in order to encourage consumer purchase, placement, and use of AEDs. The Cardiac Act only applies to situations in which an AED is used to resuscitate an individual. In situations not involving an AED, the “Good Samaritan Act” codified in section 768.13 of the Florida Statutes applies. The Good Samaritan Act provides that:

“Any person, including those licensed to practice medicine, who gratuitously and in good faith renders emergency care or treatment…at the scene of an emergency outside of a hospital, doctor’s office, or other place having proper medical equipment, without objection of the injured victim[s], shall not be held liable for any civil damages… where the person acts as an ordinary reasonably prudent person would have acted under the same or similar circumstances.”

The Cardiac Act shields the AED’s owner and its operator who used it in an effort to render aide from liability in the event of a perceived medical emergency. A perceived medical emergency occurs when a reasonable person believes that an individual is experiencing a life-threatening medical condition involving the heart that requires an immediate medical response. Pursuant to the Cardiac Act, the user of an AED is immune from liability for any resulting harm from the use or attempted use on the victim if:

      1. There is a perceived medical emergency; and
      2. No objection is made by the victim against the use of the device on their person.

The Cardiac Act further extends immunity to community associations organized under Chapters 617, 718, 719, 720, 721, and 723 of the Florida Statutes. However, the shield of immunity afforded to community associations can be potentially pierced if the harm caused to the victim was due to the failure of the association to properly maintain and test the AED device. There could also be local government requirements which require proper adherence, too. Additionally, immunity will not be granted to the association if the harm was due to the association’s failure to provide appropriate training to the employee or agent of the association when the employee or agent was the person who actually used the device on the victim. However, training by the association will not be required if any of the following is met:

      1. The AED device is equipped with audible, visual, or written instructions on its use, including any such visual or written instructions posted on or adjacent to the device; OR
      2. The employee or agent was not an employee or agent who would have been reasonably expected to use the device; OR
      3. The period of time elapsing between the engagement of the person as an employee or agent and the occurrence of the harm, or between the acquisition of the device and the occurrence of the harm in any case in which the device was acquired after engagement of the employee or agent, was not a reasonably sufficient period in which to provide the training.

Even though training may not be required for one of the reasons set forth above, common sense dictates that any key personnel, such as the staff in charge of athletic activities and the manager, should be trained in the use of the AED device. In regard to where the AED should be installed, the Cardiac Act does not provide guidance. Again, common sense dictates it should be in a visible area. Also, an insurer cannot exclude damages resulting from the use of an AED from coverage under a general liability policy issued to the community association.

In relation to immunity extended to “the person,” the Cardiac Act further provides that the user will not be immune from liability if:

      1. The harm was caused by user’s willful or criminal misconduct, gross negligence, reckless disregard or misconduct, or a conscious, flagrant indifference to the rights or safety of the victim who was harmed; OR
      2. The person who used the AED on the victim is a licensed or certified health professional who used the AED device while acting within the scope of the license or certification of the professional and within the scope of the employment or agency of the professional; OR
      3. The person is a hospital, clinic, or other entity whose primary purpose is providing health care directly to patients, and the harm was caused by an employee or agent of the entity who used the device while acting within the scope of the employment or agency of the employee or agent; OR
      4. The person is an acquirer of the device who leased the device to a health care entity, or who otherwise provided the device to such entity for compensation without selling the device to the entity, and the harm was caused by an employee or agent of the entity who used the device while acting within the scope of the employment or agency of the employee or agent; OR
      5. The person is the manufacturer of the device.

If an association decides to proceed with placement of an AED device on association property, then the board should consider adopting sufficient policies which address the following: (1) the location of the AED device, (2) notification procedure should the AED be removed from its designated location to a secondary location on a temporary basis, (3) maintenance and testing of the AED, (4) authorized users, (5) training for the authorized users, (6) written instructions posted next to the device that provide a “how to” in case a trained user is not available, and (7) regular notice to the owners as to the AED device’s availability, location, and identification of trained staff and owners. Minimally, any association that provides athletic activities for its members should seriously consider owning an AED device.

Should you have any further questions about whether or not your local government requires installation of AED’s and other life-saving equipment please contact your association’s attorney.

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Crime Pays: HUD Takes More Action to Protect Some But Not All Felons

CRIME PAYS | HUD Takes More Action to Protect Some But Not All Felons

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What you need to know regarding owner and tenant applications

Imagine this: Harold Homeowner is selling his house located in your community association. Billy Buyer makes application to the board to purchase the unit. However, he is denied because he is a felon with a dark past. Next thing you know, your association is under federal investigation for Federal Fair Housing violations and exposed to tens, if not hundreds of thousands, of dollars of fines. If you think this can’t happen, think again!

Generally speaking, people with criminal records are not a protected class under the Fair Housing Act of 1968. The Act made it illegal to discriminate against people from renting or buying a home, securing a mortgage, or seeking housing assistance on the basis of race, color, national origin, religion, sex, disability, and familial status. On April 4, 2016, HUD’s Office of General Counsel published a memo titled “Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions.” Then, on March 31, 2022, President Biden declared April 2022 as Second Chance Month, emphasizing the importance of helping persons who have had criminal involvement reenter society, reunite with their families, and find stable and safe homes. Just days later on April 12, 2022, HUD Secretary Fudge issued a memorandum instituting an agency-wide effort to review HUD’s programs, its funding recipients, and program participants to ensure they “are as inclusive as possible in favor of individuals with criminal pasts.” Excerpts from the June 10, 2022, HUD memo follow:

“Disparities throughout the United States’ criminal justice system are well established and persistent. Blacks represent roughly 13 percent of the total U.S. population but account for roughly 27 percent of all arrests. In 2019, the incarceration rate of Black males was 5.7 times that of White non-Hispanic males, while the incarceration rate of Black females was 1.7 times the rate of White non-Hispanic females. A recent study also reflects that Hispanics are incarcerated in state prisons at a rate that is 1.3 times the incarceration rate of White non-Hispanics. In addition, updated data shows that individuals with disabilities are also disproportionately impacted by the criminal justice system. Research shows that these disparities cannot be simply attributed to certain groups committing more crimes and are better explained by biases in the criminal justice system. These disparities extend to housing. Housing providers frequently employ policies or practices that exclude individuals with criminal involvement from housing, which should raise red flags for investigators.” [emphasis added]

On April 4, 2016, HUD’s Office of General Counsel issued its Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions. This guidance described how to assess claims of illegal discrimination under the Federal Fair Housing Act. It applies to a wide range of entities covered by the Act, including private landlords, management companies, condominium associations or cooperatives, third-party screening companies, HUD-subsidized housing providers, and public entities that operate, administer, or fund housing or that enact ordinances that restrict access to housing based on criminal involvement. HUD advises that using criminal history to screen, deny lease renewal, evict, or otherwise exclude individuals from housing may be illegal under the Fair Housing Act under three different theories of liability:

i)   discriminatory intent, 
ii)  discriminatory effects, and
iii) refusal to make reasonable accommodations.

Discriminatory Intent: Claims that a housing provider has used criminal records or other criminal history information to discriminate intentionally in violation of the Act should be investigated in a manner similar to other allegations of intentional discrimination. Criminal records or other criminal history information may be a pretext for unequal treatment of individuals because of race, color, national origin, disability, or another protected characteristic.

“Examples of evidence that would support a finding of reasonable cause to believe that disparate treatment occurred include (not an exhaustive list):

        • A housing provider routinely advises Native American applicants about a criminal records screening policy but does not advise White applicants about the policy.
        • A housing provider applied a criminal background screening policy to a Black applicant but did not apply the policy to a White applicant.
        • A housing provider rejected a Hispanic applicant based on his criminal record but rented to a White applicant with a comparable criminal record.
        • A property manager discouraged a Black applicant with a criminal record from applying, saying the individual’s record would likely lead to a rejection, but encouraged a White individual with a comparable criminal record to apply, saying that it was possible the record would not turn up and offering the White individual an application form.
        • A housing provider evicted a Black tenant who was convicted of a crime but did not evict a White tenant who was convicted of a similar crime.
        • After learning that an applicant was previously homeless and hospitalized for treatment of a mental health condition, a management company departed from its standard procedures and conducted a criminal background screening of the applicant.
        • A locality applies a crime-free ordinance requiring the eviction of criminally involved residents in a neighborhood with a significant Black or Hispanic population but does not apply the ordinance in neighborhoods that are predominantly populated by White households.”

DISCRIMINATORY EFFECT: [author’s note—These are disparate impact claims, meaning the housing provider did not mean to intentionally discriminate, but the effect of the decision resulted in discrimination.] Claims that a housing provider’s policy or practice concerning criminal background screening or other criminal history information creates an unjustified discriminatory effect in violation of the Act should be investigated using the analysis described in the 2016 Guidance. The three steps to a discriminatory effects analysis follow.

“Investigators must gather evidence regarding whether the challenged criminal history policy or practice actually or predictably results in a disparate impact on a protected class. This involves 1) identifying the housing provider’s relevant practices or policies, both written and in practice, and 2) identifying statistics which show whether the identified policies actually or predictably result in a disparate impact on a protected class.

If a policy denies tenancy to anyone with a felony arrest or conviction over the past 10 years, the investigator should focus on felony conviction and arrest data over the past 10 years for the relevant populations. For example, data showing that Hispanics consist of 20 percent of the respondent’s applicants but 70 percent of those excluded due to a criminal record policy is evidence that the criminal record screening policy has a disproportionate impact on Hispanic applicants. Data showing that Black individuals comprise 65 percent of the housing provider’s tenants, but 95 percent of those evicted under a policy to evict based on an arrest indicates that the policy to evict for an arrest has a disproportionate impact on Black tenants. If the policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest, investigators should gather information and analyze whether the same interest could be served by another practice that has a less discriminatory effect. If so, respondent’s defense fails.” [emphasis added]

Relevant individualized evidence might include the facts or circumstances surrounding the criminal conduct; the age of the individual at the time of the conduct; evidence that the individual has maintained a good tenant history before and/or after the conviction or conduct; and evidence of rehabilitation efforts.

FAILURE TO MAKE A REASONABLE ACCOMMODATION: “For example, a reasonable accommodation to a criminal background screening policy or practice may be required when there is evidence that the individual’s disability contributed to the criminal conduct at issue, and there are mitigating circumstances that eliminate or significantly reduce the risk of harm to others or property, such as improvements resulting from previous on ongoing therapy or treatment. (The Fair Housing Act provides that the current illegal use of controlled substances is not considered a disability under the Act. Additionally, the Act does not protect a person whose tenancy would constitute a “direct threat” to the health and safety of other individuals or result in substantial physical damage to the property of others, unless the threat can be eliminated or significantly reduced by reasonable accommodation.) The housing provider thus must have reliable, objective evidence that a person with a disability currently poses a direct threat that cannot be significantly reduced before excluding them from housing on that basis.”

Many questions result from this particular theory of liability. Is HUD saying that if the felon had a recognized disability under the Act that contributed to criminal behavior then the criminal behavior should be overlooked? At a minimum, it should be considered by the housing provider. The  June 10, 2022, HUD Memo concludes with “TIPS from HUD” as follows:

“PRIVATE HOUSING PROVIDERS SHOULD CONSIDER NOT USING CRIMINAL HISTORY TO SCREEN TENANTS FOR HOUSING. If housing providers choose to use criminal background screening policies or practices, they should consider taking the following steps to avoid potential violation of the Fair Housing Act:

        • Have a written criminal background screening policy that is made available to all applicants.
        • Ensure the housing provider can justify their policy with reliable evidence showing that it actually assists in protecting resident safety and/or property.
        • Ensure that any policy considers the nature, severity, and recency of criminal conduct.
        • Avoid the use of third-party screening companies that utilize algorithms.
        • Before making an adverse decision related to an applicant’s or tenant’s criminal involvement, provide the applicant or tenant with the criminal record, indicate which specific part of the record may form the basis of an adverse decision, and give the applicant or tenant the opportunity to correct inaccurate information or explain extenuating circumstances related to that record.
        • Conduct an individualized assessment that considers relevant mitigating information beyond that contained in an individual’s criminal record, as this is likely to have a less discriminatory effect than categorical exclusions that do not take such additional information into account. Relevant individualized evidence might include: the facts or circumstances surrounding the criminal conduct; the age of the individual at the time of the conduct; how long ago the criminal conduct occurred, evidence that the individual has maintained a good tenant history before and/or after the conviction or conduct; and evidence of rehabilitation efforts.
        • Housing providers must ensure that that they are not engaging in disparate treatment in any individualized review process. One study found that when housing providers used discretionary criminal record screening policies—or policies that evaluated prospective tenants on a “case by case” basis—they favored White applicants over similarly situated Black applicants 55 percent of the time.”

The memo concludes with this statement: “We will continue to work collaboratively to ensure that the Fair Housing Act’s protections are realized by all protected classes.” Thus, any reader of the HUD memo can only conclude that HUD clearly intends to protect the felon when such felon is already a member of a protected class, which includes race, color, national origin, religion, sex, disability, and familial status.

In light of this far-reaching HUD memo, condominium and homeowner associations would be well advised to check in with their association’s attorney prior to denying an applicant based on their criminal past and when revising application procedures, too. A copy of the June 10, 2022, HUD memo can be found at:

https://kbrlegal.com/wp-content/uploads/2022/07/hud_2022june10_memo-felons.pdf

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Kaye Bender Rembaum, P.L.