Author: trisha

For many of us, the cusp of a new year brings a time for reflection and resolution.  New Year’s resolutions come in all shape and sizes. Maybe you want to resolve to eat healthier, save for retirement, take that dream vacation you’ve been dreaming of, or even adopt a new pet to name just a few. But, why stop there? Community associations can make New Year’s resolutions, too.  The board’s adoption of New Years’ resolutions can be a great strategy to get things done. Maybe it’s time to amend and restate the governing documents, adopt new rules, become a 55 and over age restricted community, re-asphalt the roads, vote on installing windstorm protection for the entire condominium building and so much more. A New Year’s resolution is a plan for action (well, it can be anyway).

The New Year is a great time to resolve to stop smoking. Anyone who has quit smoking knows how hard it is to do. But, make no mistake about it, it can be done. There are no words that comfort a recent quitter going through nicotine withdrawal. Quitting smoking is more than just a decision… it’s a process, and the more support a smoker tying to quit can get, the better. Association’s can lend a hand in the process, too, by adopting no-smoking policies. An association can even consider amending its governing documents to prohibit smoking and become a smoke-free community.

The Florida Clean Indoor Air Act, section 386.204, Florida Statutes, already provides a smoking ban for all the indoor common elements such as hallways, entryways and conference rooms. However, smoking in the outside common elements would remain permissible, unless prohibited in the governing documents.

As to prohibiting smoking inside of the privately owned units,  Florida has not yet developed substantial case law on the subject. However, the Florida Supreme Court’s decision in the oft cited Woodside case stands for the proposition that the will of the associations’ members, through adoption of new restrictions, is not only permissible, but is judicially supported, too. So long as that holds true, the only question remaining is whether existing smokers would have a claim for being “grand-fathered.” Clearly, the board should discuss all of the pros and cons of creating a smoke-free community with the association’s lawyer.

In a 2009, Florida Division of Arbitration case, Belleair Palms Terrace Association v. Smalenberger, where a unit owner was alleged to have removed extensive portions of the common element drywall in his unit which facilitated the passage of cigarette smoke into adjoining units, the unit owner was ordered to restore all drywall in his unit and to cease smoking in the unit during the required installation of the drywall.

While County Court cases do not provide precedential value, they can at least provide some limited guidance. In one such Broward County Court Case, Merrill v. Bosser, the court found that excessive smoke gave rise to a claim for trespass.

In Massachusetts, where a resident brought a claim against their neighbor due to the noxious smoke, the court found that the second hand smoke was considered a breach of the “covenant of quiet enjoyment.”

Interestingly, as far back as 2006, a Colorado court ruled in favor of a no smoking amendment to a declaration of condominium. The court found that the passage of the amendment to the Declaration of Covenants, Conditions and Restrictions was proper, reasonable, made in good faith and not arbitrary and capricious. The plaintiffs who challenged the no-smoking ban were not able to establish that the newly adopted no-smoking amendment violated public policy or otherwise abrogated a constitutional right.

Consider taking a few minutes at your next board meeting to adopt a few resolutions for your community.  Then, tell all of the members, and make it happen.  Above all, have a great 2014 and HAPPY NEW YEAR!!!!!

Holiday cheer is in the air. Thanksgiving and Hanukkah have passed. Christmas is almost here. It’s time to decorate. You know what that means, right? Right! It’s time again to re-visit holiday decorations in the context of condominium and homeowners’ associations.  HOAs are indeed fortunate and good tidings are abundant because unless the HOA’s declaration provides to the contrary, the HOA’s board of directors decides matters pertaining to material alterations. Comparatively, for condominium associations, unless their declaration provides to the contrary, seventy-five percent of the members must approve material alterations. So, while an HOA can decorate their common areas to their heart’s content, it’s not always so easy for a condominium association to follow suit. Some condominium associations argue that since day one their holiday decorations are displayed from Thanksgiving through New Years and, therefore, the failure to display the decorations would also be a material alteration upon which a member vote would be required.

While some holiday decorations are of a secular nature, others are clearly religious symbols. A reader once asked, “If our community displays a Christmas tree and menorah, doesn’t the Board have to allow a Nativity scene and the Ten Commandments, too?” Interestingly, the answer is most likely, “no.” This result is due to the United States Supreme Court’s guidance as to which objects are “religious” and which items are not. Christmas trees and menorahs are considered “holiday symbols,” meaning secular. On the other hand, Nativity scenes and the Ten Commandments denote religious symbolism. If the association displays “holiday symbols” then most likely the board would be on solid footing to deny the member’s request. But, if the board is already displaying other religious symbols, then, to avoid a claim of religious discrimination, all members who request displaying their religious symbols should be allowed to do so as well.

In a different case, the United States Supreme Court held that, “the determination of whether decorations are used for religious purposes, turns on whether the viewers would perceive the decoration(s) to be an endorsement or disapproval of individual religious choices.” Thus, the constitutionality of the decoration in question is judged according to the standard of the “reasonable observer.”

Even though Christmas trees once carried religious connotations, the Supreme Court found that a Christmas tree, by itself, is not a religious symbol. “[T]oday [Christmas trees] typify the secular celebration of Christmas,” the Supreme Court said. 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 Supreme 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 “recognizes that both Christmas and Hanukkah are part of the same winter holiday season, which has attained a secular status in our society.” We learn from their logic that a menorah display, without a Christmas tree nearby, is a religious object, but when displayed together, the menorah is secular.

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.  Remember, to avoid claims of religious discrimination, too. Once your community displays a religious symbol, it will need to allow other requested religious symbols. Use the guidance from the Supreme Court’s cases to differentiate between a secular symbol and a religious symbol. The rules of kindergarten work best: treat everyone fairly and treat them as you would want to be treated. In the meantime, please pass the latkes and eggnog.

HAPPY HOLIDAYS!

If you live in a community association, and most especially if you serve on the board of directors, you must have a basic understanding of Federal laws that provide certain established rights to persons with disabilities. These laws require housing providers, which includes community associations, to make reasonable accommodations for persons with disabilities. A reasonable accommodation is a change in rules, policies, practices, or services so that a person with a disability will have an equal opportunity to use and enjoy a dwelling unit or common space. The HUD.gov website explains that “a housing provider should do everything [it] can to assist…” However, this does not include an expectation that the housing provider pay for the requested reasonable accommodation unless the expense is of a de minimis nature.  Reasonable accommodations can be required at all stages of the housing process, and this includes the association’s application process for prospective owners.

The Federal Fair Housing Laws define a person with a disability as “‘[a]ny person who has a physical or mental impairment that substantially limits one or more major life activities; has a record of such impairment; or is regarded as having such an impairment.’ In general, a physical or mental impairment includes hearing, mobility and visual impairments, chronic alcoholism, chronic mental illness [such as depression], AIDS, AIDS Related Complex, and mental retardation that substantially limits one or more major life activities. Major life activities include walking, talking, hearing, seeing, breathing, learning, performing manual tasks, and caring for oneself.”

Requests for reasonable accommodations can vary greatly. To mention just a few: a request for a professional to “sign” at board meetings for a hearing impaired person, a request for a wheelchair ramp for the clubhouse, a request by a wheelchair bound person for a parking spot by the front door, a request for a hoist to lower and raise a disabled person into the pool, a request for a “service animal” (such as a guide dog for a visually impaired person); and a request for an “assistance animal” (most commonly, the emotional support happy dog (or other animal) for a person suffering from depression.

While future articles will address the similarities and differences between “service animals” and “assistance animals”, today’s focus is on an association’s owner’s reasonable accommodation request for an otherwise prohibited vehicle such as, in this instance, an ambulance converted for private transport. As reported on October 30, 2013 on the HUD.gov website, the Department of Housing and Urban Development announced settlement of a claim against a Las Vegas homeowners’ association where it was alleged the HOA refused to grant a reasonable accommodation to a family who purchased an ambulance to transport their disabled son who could only be transported in a prone (lying down) position:

The U.S. Department of Housing and Urban Development (HUD) announced that a Las Vegas homeowners association, its management company, and the owner of a rental property will pay $65,000 under a Conciliation Agreement resolving allegations that they violated the Fair Housing Act when they refused to grant a family’s request to park in the driveway of its home an ambulance that the family needed to transport its son, who has a disability, to and from medical appointments.

The Fair Housing Act prohibits discrimination based on disability and requires housing providers, including homeowners associations, to make reasonable accommodations in their rules, policies, practices or services when needed to provide persons with disabilities an equal opportunity to use or enjoy a dwelling.

“Homeowners associations must grant reasonable accommodations that enable residents to meet the needs of family members with disabilities,” said Bryan Greene, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity. “Homeowners associations have the same responsibility as housing providers to follow fair housing laws.”

The family filed a complaint with HUD alleging that, after it purchased an ambulance to transport its son to and from medical appointments, the homeowners association refused to permit the family to park the ambulance in the family’s driveway. The son’s disability makes it necessary to transport him in a prone position. The family alleged that, despite providing the homeowners association with a letter documenting the family’s need for the ambulance, the association and its property management company refused the family’s requests, citing association rules that do not allow residents to park commercial vehicles on their properties.

Under the terms of the conciliation agreement, Harbor Cove Homeowners Association, First Columbia Community Management, Inc., and HAE Investments, LTD, will pay $65,000 to the family and establish a reasonable accommodation policy for future requests. In addition, the parties agree to revise the management practices, rental agreements, and occupancy rules of Harbor Cove Homeowners Association to better accommodate the needs of persons with disabilities.

While there is no doubt as to legitimacy of the aggrieved family’s need for the ambulance to transport their disabled son, these events illustrate two areas of abuse, too. The first type of abuse occurred by the HOA’s board when it denied the requested transport vehicle. The second type of abuse is the type where a 6’4″, 370 pound mammoth of a man named “Bubba”, feigning a disability that was recognized only by a “social worker” with no medical training, makes a reasonable accommodation request for his “dually” truck (those big trucks with 4 rear tires that are great for towing other vehicles) followed by a request for his 7 pound designer malti-poo. Presently, doctors, PHD’s, social workers and other mental health professionals (whoever/whatever they are) can all substantiate the disability. But, until the Federal Laws are amended to require that only doctors and PHD’s are able to substantiate the disability, the potential for abuse will continue, and it may not be too long before “Bubba” lives in your community.

Wishing everyone a joyous Thanksgiving day and for those who celebrate Hanukkah, too, a very happy Thanksgivukkah!

If your association seeks to compel compliance with the maintenance provisions of its governing documents,
before filing a lawsuit the association first needs to ensure that there are clear and unambiguous standards and that the offending owner is not only informed of the violation, but also, informed of the specific steps that must be undertaken to bring the property into compliance.

In September 2013, the Fifth District Court of Appeals rendered its decision in Boyle v. Hernando Beach South Property Owners Association, Inc. (the “Association”) in regard to whether a homeowners’ association was entitled to an injunction against Boyle, a homeowner, for failing to properly maintain his lot. More specifically, it was alleged that his landscaping and trees needed to be trimmed and properly maintained and that the mold on the home needed to be cleaned or removed. The association had filed a lawsuit seeking an injunction to force the owner to comply with the covenants. The trial court agreed and issued an injunction.

The resulting specifically required defendant Boyle to “properly maintain[ ] and trim[ ] the landscaping and trees and clean[ ] or remov[e] the mold on the home.” The injunction further provided that “if Boyle fail[ed] to comply, the Association may enter and maintain the property and place a lien on the property that could be foreclosed if the costs incurred by the Association in bringing the property up to standard are not paid.”

The trial court case was resolved as a result of the “summary judgment” proceedings which are employed as a part of litigation, as we are reminded by the Fifth DCA, “to avoid the expense and delay of trials when all facts are admitted or when a party is unable to support by any competent evidence a contention of fact.” To prevail in such a motion, the moving party must prove that there are no genuine issues of material fact and that the moving party is entitled to judgment in their favor as a matter of law.

During the trial court’s motion for summary judgment hearing, the association presented “affidavits of five officers and directors of the Association stating that, based on their personal knowledge, Boyle ‘failed to properly maintain his lot… Specifically, the landscaping and trees need to be trimmed and properly maintained. Additionally, mold on the home needs to be cleaned/removed.’” The trial court agreed and granted the injunction compelling Boyle to properly maintain his landscaping and clean or remove the mold.

Then homeowner Boyle filed an appeal arguing that there were material issues of fact in dispute, and therefore, the trial court’s summary judgment order was inappropriate and “that the supporting affidavits were insufficient.” Boyle also contended that his affirmative defenses were not properly negated by the Association and “the pertinent part of the [covenants were] vague and ambiguous.” [emphasis added]

On appeal, Boyle argued that the summary judgment evidence in the record did not indicate “how he was in violation of the [covenants].” In regard to the landscaping and trees, the Fifth DCA agreed. In so doing, the Fifth DCA held that the affidavits submitted by the Association merely mirrored the allegations of the complaint filed by the Association reasserting that Boyle’s landscaping and trees were not properly trimmed and maintained. But there were no allegations and there was no evidence presented to show how the landscaping and trees had not been properly maintained and trimmed.

The Court held that given the lack of evidence presented by the Association to establish that Boyle’s landscaping and trees were not maintained “in a neat, clean and orderly condition,” it is unclear how Boyle had violated the covenants and what steps he needed to take to ensure that his landscaping and trees are in compliance.

Interestingly, the Court found that the mold on the house was another matter that did not suffer from the same infirmities as the issue regarding the landscaping and trees because the mold on the house was established by the statements made in the affidavits, which, in the eyes of the Court, left no room for speculation or conjecture. The existence of mold on the subject home was a readily observable fact to the five board members who swore to their personal knowledge, which was not refuted by counter-affidavit or other proof.

In the end, the Fifth DCA reversed the part of the trial court order regarding the landscaping and trees and upheld the part of trial court order regarding the mold. The reported decision of this case evidences that Boyle had refuted the landscaping claim against him, and Boyle had not similarly refuted the mold claim. Had Boyle done so, then perhaps the Fifth DCA would have also overturned that part of trial court’s order, too.

In any event, there is nugget to be gleaned from this case. If an association is going to seek a court order to compel compliance with the governing documents, it first had better ensure there clear standards and that the offending homeowner is informed of the steps that must be taken to bring their property into compliance.

This week, Palm Beach Post writer, Jan Musgrave, reported on yet another community association security debacle that tragically led to a shooting and near fatality. Of course, everyone is familiar with George Zimmerman and the senseless death of Trayvon Martin. The tragedy at the center of this story, while only recently concluded, began in 2010.

On September 25, 2013, The Palm Beach Post (the “Post”) reported that the Northlake Villa Condominium was ordered to pay $1.5 million dollars to the victim of a shooting where the assailant, Jack Abrams, was the associations “deputized” security guard and who wasn’t even an owner, but was the live-in boyfriend of a board member. Because Abrams had been appointed by the association’s board to enforce the condominium’s rules and regulations, a Palm Beach County jury last week found that the association was liable for Abrams’s inexplicable fit of anger.

The Post reported that, in 2010, Abrams “lost it” when a woman left the condominium’s laundry room door open. Abrams vented his displeasure loudly. The woman’s boyfriend, wondering what the commotion was, ventured into the hallway where Abrams proceeded to shoot him three times leading to, as reported, 24 blood transfusions, 12 surgeries, and more to come. During the trial, the Post reported that the following facts were presented:

• When the board appointed Abrams, no background checks were done.
• Abrams received an “other than honorable discharge” in 2000 from the U.S. Marines Corps for drug use and other character flaws.
• A psychiatrist and psychologist who examined Abrams, as part of the criminal case, agreed he suffered from post-traumatic stress disorder and paranoia.
• When North Palm Beach police searched his apartment, they discovered an arsenal of weapons including five guns, seven combat knives, and 1,400 rounds of ammunition.
• Others testified about Abrams’s increasingly erratic behavior. It was reported that he accosted people in the parking lot if they didn’t park their cars between the lines.
• The day before he shot the victim, he told one resident: “I’m getting so sick and tired of this laundry room. I’m going to kill someone over it.”

… Sadly, that is exactly what he did. Abrams shot the owner’s boyfriend “due to a mixture of rage and intoxication”. While a security expert testified during trial that such “poor decision-making by neighborhood and condo associations is becoming increasingly common”, it was not poor decision making that led to the judgment against the condominium. Rather, it was that the board failed to act. By failing to act, the board conducted itself with reckless abandon.

The “standard” by which association board members should conduct themselves is referred to as “reasonable business judgment”. In plain English, this does not mean a board must always be right in their decision making. Rather, they must act reasonably under the circumstances. So, when a board defies the requirements of its own governing documents by deputizing a non-owner as a defacto committee chair of security, turns a blind eye to reports of its residents as to Abrams’s erratic behavior, and fails to conduct even a simple background check before appointing individuals to the neighborhood watch committee, it’s not likely anyone would believe the board acted reasonably. Rather, the board acted with a reckless and wonton abandon endangering the life of every owner, tenant, and guest.

It can be difficult to determine the fine line between acting with reckless abandon as compared against making, what may turn out to be, a really dumb decision. The Northlake Villa Condominium learned the hard way that there is such a line. Will George Zimmerman’s community association bear financial liability for the death of Trayvon Martin? Did his association’s board act with reckless abandon and fail to fulfill its duty by exercise of its reasonable business judgment?

Interestingly, the State of Georgia’s appellate courts have held that a condominium association, being a purely legislative created form of ownership (similar to Florida’s condominium regime) does not owe a duty to provide security in the common areas where it previously disclaimed such responsibility in its declaration of condominium. Likely, this would be true in Florida, too.

However, when a board fails to act when it should have, there are very real consequences. The Abrams case teaches us that where an association creates a neighborhood watch committee, the board should take “reasonable” (there is that word again) measures during the appointment process, such as running background checks and ensuring those appointed to office meet any requirements set out in the governing documents.

To the reader who asked whether an association member who owns a concealed weapon permit is allowed to bring their weapon into the “no weapons allowed” clubhouse, the answer is “yes, they are.” However, to the extent the member makes it known that he or she is carrying a concealed weapon, they are likely in violation of state laws, as the weapon is not concealed if its owner chooses to waive concealment by blabbing about it.

The association’s “declaration of covenants and restrictions” is a contract between the association and its members. Amongst other things, it provides for the rights and obligations of both parties. Until recently, lawyers often debated the statute of limitations applicable to a community association member’s legal challenge of their association’s member approved amendment(s). Generally speaking, section 95.11, Florida Statutes, provides that a legal action based on a contract dispute must be brought within five years from the time the aggrieved party knew, or should have known, of the matter that is the subject of the litigation.

In this context, lawyers often disagree as to when the five year period begins to accrue. For example, do the five years begin when the amendment is recorded, or some other time, such as when a member took title to their property? Of course, in the latter example, the association would never truly be free from a new owner’s challenge. Additionally, if a potentially aggrieved member is time barred from challenging an amendment, then by simply re-titling their property from themselves to perhaps a family trust, they could likely bring in an otherwise time barred claim. Drawing from municipal law cases, lawyers representing associations often argue that the five year statute of limitations should begin to run from the date an amendment is recorded.

Recently, an association member upset about an amendment requiring members to pay mandatory country club fees filed a lawsuit against her association. The trial court entered summary judgment in favor of the association because the amendment had been in effect for greater than five years. However, the 4^th District Court of Appeal reversed on August 24, 2013, when in Harris v. Aberdeen Property Owners Association, Inc., et al, Case. No. 4D12-1435 (Fla. 4^th DCA 2013), the Court held that:

“until Harris took title [to her HOA lot] in October of 2006 or, alternatively, until she was assessed membership fees, there was no “immunity, power, privilege or right of the complaining party” that was “dependent upon the facts or the law applicable to the facts…Because Harris filed suit within five years of taking title, it was an error for the trial court to enter summary judgment based on the statute of limitations.”

This case is not a good one for community associations because it means that any member of an association can challenge the declaration and its amendments for the first five years of that member’s ownership of their lot (or unit) without regard to age of the declaration or the amendments. In other words, and as absurd as it sounds, an association’s declaration and its amendments are never free from the legal challenges so long as the challenge is brought by a member(s) who has not owned their property for at least five years.

Associations, like governments, should have the absolute right to know when their declaration and its amendments are free from member challenge. ATTENTION ALL FLORIDA LEGISLATORS: A LEGISLATIVE FIX TO THIS DEBACLE IS NEEDED!

As of July 1, 2013, many new laws concerning community associations went into effect. If you serve on a homeowners’ association board, there is a new law on the books you might want to discuss at the dinner table. Well, that may not be the best place because, if you are not careful, it might be your last meal as a homeowners’ association board member. Florida Statute, section 720.3033, now provides, in part that,

“an officer, director, or manager may not solicit, offer to accept, or accept any good or service of value for which consideration has not been provided for his or her benefit or for the benefit of a member of his or her immediate family from any person providing or proposing to provide goods or services to the association…

However, an officer, director, or manager may accept food to be consumed at a business meeting with a value of less than $25 per individual or a service or good received in connection with trade fairs or education programs.”

As punishment for eating a meal costing $25.00 or more, the new law takes an odd twist. The remaining board members now have the legislative authority to “kick” the accused board member off the board for enjoying a business meal costing $25.00 or more. (It’s ok, your eyes are not playing tricks. It is true.) Read it for yourselves…. section 720.303 also provides,

“If the board finds that an officer or director has violated this subsection, the board shall immediately remove the officer or director from office. The vacancy shall be filled according to law until the end of the director’s term of office.”

In an even odder twist of fate, the law does not provide any guidance whatsoever as to how the remaining board members are to decide the guilt or innocence of the accused violator. Should the standard be “beyond a reasonable doubt” (meaning without a doubt.. 100% guilty), “by a preponderance of the evidence” (meaning greater than 50% chance the accused is guilty or maybe the standard should be “clear and convincing evidence” (meaning that the burden of proof is somewhere in between the former two categories). Come to think about it, is the accused board member even entitled to any type of notice of the accusations, hearing, and trial? Is the accused board member entitled to defense?

An interesting question is whether the $25.00 limitation also applies to a “service or good received in connection with trade fairs or education programs”? A plain reading of the new legislation could be interpreted to mean that there is no limit on the value of the good or service received in connection with a trade show or fair. It’s not too likely that was the intent of the legislation, but…

On a related note, if the association enters into a contract or other transaction with any of its directors, or a company in which any of its directors are financially interested, the new legislation provides that the board must enter certain disclosures required by law into the written minutes of the meeting. In addition, the board must approve the contract by an affirmative vote of two-thirds of the directors present, compared to the typical majority otherwise required.

Then, at the next regular or special meeting of the members, the board must disclose the existence of the contract to the members. Upon motion of any member, the contract must be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation, and is not liable for any termination fee, liquidated damages, or other penalty for such cancellation.

With all of this in mind, homeowners’ association board members would be wise to bring a box lunch and eat dinner at home.

Every now and then you might read about a homeowner who defaulted on his or her mortgage and ended up getting their house for FREE. This past Sunday is no exception. In the August 18, 2013 edition of the Palm Beach Post, Staff Writer Kimberly Miller’s headline article is titled “How to get your house for free: Rare but possible.” This well written, in-depth article begins with the following sentence:

“Florida’s five-year deadline to foreclose on a home is ticking on thousands of aging cases statewide, giving lucky borrowers a shot at a free house and catching banks with muddled files unaware.”

While the title to the article is catchy, Ms. Miller very quickly points out that “a very specific set of circumstances must be in play for a homeowner to walk away a jack pot winner.” Actually, you’re likely to have a better chance of being hit by lightning… over and over again. To be the recipient of such a windfall, you’ll need a very perfect storm. Let’s take a deeper look into the circumstances minimally needed to set such a stage.

At its core, the mortgage and note between the lender-bank and its borrower is a contract. Whenever there is a breach of contract, only a limited period of time exists for the non-defaulting party to file a lawsuit against the party that caused the breach. Section 95.11, Florida Statutes, provides that an action to foreclose a mortgage and an action based on a breach of contract obligation, or liability founded on a written instrument must be commenced within five years from the date the non-defaulting party knew, or should have known, of the activity that gave rise to the default. In the context of a borrower who defaults on their mortgage payments, the lender has five years to bring their lawsuit to foreclose their mortgage and note against the defaulting borrower. In the most simplistic terms possible, the “note” is defined as a contract that holds the borrower responsible for the monies borrowed, while the “mortgage” is defined as the contract that allows the lender to recover the collateral, in this case, the house, from the defaulting borrower (and most times from any other party who acquires the property prior to the conclusion of the lender’s foreclosure action).

The lender actually has five years from the date the last payment is due to foreclose their mortgage. How then does the occasional lender find themselves in the opposite position of being foreclosed out of foreclosing their own defaulting borrower? It’s actually quite simple.

The majority of all mortgages contain a provision that allows the lender to accelerate all the remaining payments in the event of a borrowers default. As a knee-jerk reaction to a borrower’s failure to make timely payments, prior to initiating the foreclosure lawsuit, the lender will often accelerate all remaining payments. For example, if a borrower entered into a 30 year loan on January 1, 2000, the lender would have until January 1, 2035 to finally file a lawsuit to foreclose their mortgage and note. However (and this is a big “however”), if the borrower stopped making his or her mortgage payments on January 1, 2010, and, as a result, the lender accelerated all of the remaining sums due, then the lender would only have five years (through January 1, 2015) in which to bring its foreclosure lawsuit. In that scenario, if the lender did not file its foreclosure lawsuit by January 1, 2015, then “all the glitters” might just turn into gold after all.

As a result of the 2007 real estate market collapse, thousands of borrowers ended up defaulting in their loan payments. In response, lenders accelerated all remaining payments and initiated foreclosure lawsuits. Only afterwards did many lenders get caught with their proverbial pants down when they realized they did not have the necessary documents to foreclose their loans. Meanwhile, as the Steve Miller Band would sing in their noted song, “Fly Like an Eagle”… “time keeps on slippin’, slippin’, slippin’ into the future.” Before you know it, five years has passed since the time of the lender’s decision to accelerate its mortgage and then… OOPS!

HOA BOARD MEMBER CERTIFICATION. Effective July 1, 2013, within 90 days of taking office, all HOA board members are required to become “certified” by either taking an approved HOA Board Member Certification Course or by certifying in writing that the board member has read the association’s declaration of covenants, articles of incorporation, bylaws, and current written rules and policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.

To meet this new requirement, Attorney Jeffrey Rembaum, of Kaye Bender Rembaum, Attorneys At Law, will be presenting three (3) FREE HOA Board Member Certification Courses, generously sponsored by FirstService Residential (formerly, The Continental Group). These FREE courses will be held on August 13 and 27, from 12:30 PM to 2:30 PM and August 20, from 7:00 PM to 9:00 PM at the South County Civic Center located at 16700 Jog Road, Delray Beach. To reserve your seat(s), contact Janeal Aponte at 561-989-5064 or Janeal.aponte@fsresidential.com.

In addition, Kaye Bender Rembaum, Attorneys At Law, is offering the following FREE HOA Board Member Certification Courses from 6:30 PM to 8:30 PM on August 27, September 24, and October 29 in the Firm’s beautiful Pompano Beach office located at 1200 Park Central Boulevard, South. To reserve your seat(s), contact Odalis Milanes at 954-928-0680 or Odalis@KBRLegal.com.

A MEMBER’S RIGHT TO SPEAK.  At members meetings, all HOA members have the right to speak for at least three (3) minutes on all items open for discussion or included in the agenda without regard to any provision to the contrary in the governing documents or rules adopted by the board or membership. Similarly, at board meetings, all HOA members also have the right to speak on all items open for discussion or included in the agenda, however, the law does not provide for the same minimum three (3) minutes. In both instances, the board can adopt reasonable rules regarding frequency, duration, and other manner of member statements. Every board should consider doing so. As compared to condominium associations, a condominium association member has the right to speak only with reference to all “designated agenda items” at both member meetings and board meetings. Similarly with HOAs, a condominium association may adopt written reasonable rules governing the frequency, duration and manner of member statements. In the condominium context, there are no statutory time limitations imposed on member statements.

ELECTION CHALLENGES & RECALLS. Any challenge to a condominium or homeowners’ association election process must be commenced within sixty (60) days after the election results are announced. Recall attempts cannot be conducted until at least sixty (60) days after the election and not within the sixty (60) day period prior to the subsequent election.

A NEW TAX LOOMS OVERHEAD (A/K/A THE BOSTON TEA PARTY, CONTINUED). You likely already know that the Division of Florida Condominiums, Timeshares and Mobile Homes (the “Division”) requires condominium associations to pay a fee (aka, a tax) of approximately $4.00 per unit, per year. The revenue is used to offset the Division’s operating costs and programs. But, did you also know that the Florida Legislature diverts the lion’s share of this collected revenue for other expenditures not all related to the Division’s needs by commingling the revenues into the State’s general coffers?

Apparently, the Legislature is considering reaching even deeper into your wallet. By November 22, 2013, every HOA is required to inform the Division of, amongst other things, the total number of parcels and total amount of revenues and expenses from the association’s annual budget. The collected information is to be presented to the Governor, the President of the Senate, and the Speaker of the House of Representatives by December 1, 2013, and each year thereafter. For what other reason could such information be required, if not to consider additional taxes?  Perhaps we should all meet by the intracoastal waterway, tea in hand…

NEW HOA OFFICER AND DIRECTOR CONFLICT OF INTEREST LAWS. If the association enters into a contract or other transaction with any of its directors or other entity in which an association director is also a director or officer or is financially interested (except in other community associations), the board member (1) must disclose the facts of the relationship, (2) such facts must be entered into the minutes, (3) an affirmative vote of two-thirds of the directors present is required to approve the contract (minus the vote of the interested/conflicted director), and (4) the contract or transaction must be fair and reasonable. In addition, at the next regular or special meeting of the members, the existence of the contract (or transaction) must be disclosed to the membership. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other penalty.

A HOA director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property is removed from office, and the board must fill the vacancy. However, if the charges are resolved without a finding of guilt or without acceptance of a plea of guilty or nolo contendere, the director or officer must be reinstated.  A HOA member who has such criminal charges pending may not be appointed or elected to a position as a director or officer.

A HOA is required to maintain insurance or a fidelity bond for all persons who control or disburse funds of the association. If annually approved by a majority of the voting interests present at a properly called meeting of the association, the association may waive the requirement of obtaining an insurance policy or fidelity bond for all persons who control or disburse funds of the association. Why would members vote to do that?

The board must immediately remove an officer or director from office if the board finds that such person solicited, offered to accept, or accepted any good or service of value for which consideration has not been provided for his or her benefit or for the benefit of a member of his or her immediate family from any person providing or proposing to provide goods or services to the association, excluding food to be consumed at a business meeting with a value of less than $25.00 per individual and services or goods received in connection with trade fairs and education programs. It is not clear from a plain reading of this new legislation whether the $25.00 cap is intended to also apply to services or goods received in connection with trade fairs and education programs.

About a year ago, Rembaum’s Association Roundup reported that the 5^th District Court of Appeals (“5^th DCA”), in Lakeview Reserve v. Maronda, recognized that the rights of homeowners’ association members included the implied warranty of habitability for off-site homeowners’ association improvements built by the developer such as roadways, drainage systems, retention ponds, underground pipes, etc. The sole issue in the case was whether the homeowners’ association could maintain its claim against the homeowners’ association’s developer for breach of the common law implied warranties of fitness and merchantability, also referred to as the “implied warranty of habitability.”

Lakeview Reserve alleged that its developer, Maronda Homes, defectively designed and constructed the subdivision’s infrastructure, roadways, retention ponds, underground pipes, and drainage systems, breaching the implied warranties of fitness and merchantability for the residential home development and causing damage to the entire residential subdivision. Lakeview Reserve asserted that the defects were latent, as they were not readily discoverable by home purchasers who lacked specialized knowledge and were undiscoverable by home buyers upon the exercise of reasonable diligence at the time of purchase. Lakeview Reserve also alleged that it sustained serious damages due to the defects because one of its obligations as the homeowners’ association was to correct and repair the subdivision’s structural defects which impacted the homes in the development. Initially, the trial court agreed with the developer. On appeal, the 5^th DCA reversed. This meant that the homeowners’ association could sue the developer for a breach of the implied warranty of habitability.  Then, the Florida Legislature gutted the 5th DCA’s decision by passing new legislation, section 553.835(4), Florida Statutes, effective July 1, 2012.

Section 553.835(4), Florida Statutes, provides that “there is no cause of action in law or equity to a purchaser of a home or to a homeowners’ association based upon the doctrine or theory of implied warranty of fitness and merchantability or habitability for damages to offsite improvements.” The statute defines the term “offsite improvements” as “the street, road, driveway, sidewalk, drainage, utilities, or any other improvement or structure that is not located on or under the lot on which a new home is constructed… and also includes the street, road, driveway, sidewalk, drainage, utilities, or any other improvement or structure that is located on or under the lot but that does not immediately and directly support the fitness and merchantability or habitability of the home itself.” The law also provides that it applies to all cases accruing before, pending on, or filed after that date.

The Florida Supreme Court recently examined the retroactivity aspect of the new law, and, on July 11, 2013, held, in Maronda v. Lakeview Reserve, case No. SC10-2292, that, “for the retroactive application of a law to be constitutionally permissible, the Legislature must express a clear intent that the law apply retroactively, and the law must be procedural or remedial in nature. Remedial statutes operate to further a remedy or confirm rights that already exist, and a procedural law provides the means and methods for the application and enforcement of existing duties and rights. In contrast, a substantive law prescribes legal duties and rights and, once those rights and duties are vested, due process prevents the Legislature from retroactively abolishing or curtailing them.”

The Florida Supreme Court found that section 553.835, Florida Statutes, is substantive and is not remedial in nature because it does not simply clarify an existing right, but rather, prescribes legal duties and rights. Therefore, the new law could not be constitutionally applied retroactively to Lakeview Reserve or to any causes of action that accrued before the law’s effective date.  As to homeowners’ associations created after the effective date of section 553.835, Florida Statutes, unless the legislature amends or abolishes the law, there is likely little chance of successfully bringing a claim for breach of the implied warranty of habitability.

In rendering its decision, the Florida Supreme Court clearly expressed its unhappiness with the Legislature’s “side-stepping” the 5^th DCA’s earlier decision, as evidenced by the Court’s comment when it declared, “the Legislature does not sit as a supervising appellate court over our district courts of appeal.”