Author: trisha

Did you know that, for the most part, the State of Florida holds title to lands under navigable waters and a part of the foreshore  (which, in plain English, means the land between the high and low watermarks). This land is held in trust for all of us to enjoy, but the State is free to dispose of it, too, so long as certain protections are in place. One such protection is the right of an upland owner to an unobstructed view of the Channel (meaning a navigable waterway). What started out as common law rights, are codified in Chapter 271, Florida Statutes.

With that in mind, let us examine the story of Joe who purchases a condominium 20 stories high on the beach. From his gorgeous unit, there are spectacular views. He can look east, northeast, and southeast.  He can enjoy unobstructed views across the ocean’s expanse. From a different balcony, he looks out to the west, northwest and southwest. From this position, he can see the beautiful downtown skyline. Then, Joe’s worst fear comes to life when he learns that two new buildings, taller and wider than his condominium, are proposed.  The first building will be built on the property next door that is adjacent to his condominium, and the other will be built across the street, to the west, directly behind his condominium. When that building is completed, Joe’s view of the lovely downtown skyline will be forever gone.  What rights does Joe have? Sadly, not much when it comes to the view of the skyline, but it is a different story looking east.  Let us first examine the loss of the skyline view.

Florida law disdains negative easements.  A negative easement is a promise not to do something with a certain piece of property, such as not building a structure more than one story high or not blocking a skyline view by constructing a building. A negative easement is sometimes referred to as an easement of light and air. Simply put, there is no right to a negative easement unless such a requirement is set out in a recorded deed restriction.  Therefore, if Joe wants to continue to enjoy his view of the downtown skyline, he might consider buying a unit in the new condominium. However, the same is not true for Joe’s view of the ocean. In this instance, Joe is likely to fare a whole lot better as the body of “riparian law” extends certain protections to owners of “upland” property. Such rights include “the right to an unobstructed view of the channel”. But, does “unobstructed” mean the same thing as “unencumbered”?

When it comes to Joe’s right to view the ocean, there is no bright-line test used to measure when his view is unreasonably impaired. In a 1957, Florida Supreme Court case, Hayes. v. Bowman, the existing owner argued that his neighbor’s project should not be allowed to proceed because it would unreasonably interfere with his existing view of the ocean. The homeowner argued that he should be free from all interference to his view of the ocean.  He argued that his viewing rights should extend diagonally from the corners of his property line, while the developer owner of the adjacent property argued that the homeowner’s right to an unobstructed view of the ocean should only extend directly east from the corners of the property line. The Court rejected both of these arguments and held that “in any given case, the riparian rights of an upland owner must be preserved over an area “as nearest practicable” in the direction of the Channel so as to distribute equitably the submerged lands between the upland and the Channel. In making such “equitable distribution” the court must give due consideration to the lay of the upland shoreline, direction of the Channel and the correlative rights of the adjoining upland owners.

Therefore, Joe’s continued right to view the ocean will require judicial determination. Is Joe’s view unreasonably obstructed or merely encumbered?   In the Hayes case, the Court upheld the lower Court’s ruling in favor of the developer because it found that the lower Court decision in the developer’s favor “did no violence” to the right of the appellant. In other words, while the view might have been encumbered, it was not found to be unreasonably obstructed.  However, it should be noted that the Court’s decision was made based on the evidence presented. With this in mind, it should be mentioned that, had the party who complained about their diminished view presented more substantial evidence to document their situation, perhaps a different result would have been achieved.

The other day, board member Earl P. asked if a clause in his association’s declaration was enforceable. The clause provided that “before an owner can sell their unit, the association, in its sole unfettered discretion, must approve the transaction.” Well Earl, if that is the entirety of the clause, then it is very likely this type of approval clause does not pass muster. For reasons more fully explained below, the clause will not withstand judicial challenge.

There is a long standing legal concept that prohibits “unreasonable restraints on alienation”. In an overly simplistic sense, it means that restrictions on the transfer of property must be reasonable. Absolute restrictions on the transfer of real property are not considered reasonable and are disdained by the courts. The term “alienation” is nothing more than a fancy legal word that means “transfer.” Whenever the term or a variation of it appears, just substitute the word “transfer” in its place.

In 1984, the 3rd District Court of Appeal held in Aquarian  Foundation v. Sholom House,  “a condominium association’s board of directors may have considerable latitude in withholding its consent to a unit owner’s transfer, [however] the resulting restraint on alienation (transfer) must be reasonable.” In this manner, the court continued, “the balance between the right of the association to maintain its homogeneity and the right of the individual to alienate (transfer) his property is struck.” The association argued its right to deny the purchase was balanced by a different provision in the declaration known as a “reverter”. (A “reverter clause” means the deed reverts back to a specific party upon the occurrence of specific events.) However, the court did not agree and found that the reverter clause only created a veiled obligation of the association to purchase the unit upon its denial. But, the court reasoned, if upon denial, it was mandatory for the association to provide a substitute buyer, then the restriction could have been valid.

In 1993, in Camino Gardens Ass’n Inc. v. McKim, the 4th District Court of Appeal reviewed a case where the association’s declaration was amended to provide that the prohibition on the sale, lease, or occupancy of any lot in the subdivision to anyone OTHER THAN a duly admitted member in good standing of the association was prohibited. The court held that, “in its purest sense, this provision is a condition to alien (transfer) only to particular persons, was perpetual in duration, and effects every type of alienation.  When viewed in combination with the association bylaws defining membership, the provision becomes a condition prohibiting conveyance without the consent of the Association.”  In other words, the owner was absolutely and fully prohibited from selling their property to anyone except other existing owners.

As a result, the court found the restriction invalid.

In 1977, in Coquina Club v. Mantz, the Second District Court of Appeal reviewed an association’s declaration that contained a certain age restriction (that was otherwise lawful at the time), and that also required the association to provide a substitute buyer upon its denial of a purchaser. In this case, the applicant did not meet the age requirement and was therefore “facially” disqualified. Therefore, the court reasoned that, in light of the “facial disqualification”, the association did not have to provide the otherwise required substitute buyer.

To re-cap, if a restriction is absolute, applies to all sales and is perpetual in duration, then it is invalid.  In other words, limitless power of denial is rendered judicially improper and unlawful.  If the association has the right to deny a purchaser, but the declaration is void of any standards by which such decisions should be made, the restriction is most likely invalid.

If the declaration requires a substitute buyer be provided by the association when it denies a proposed transaction, then the restriction likely has validity. If the applicant is “facially” disqualified, the association need not provide the otherwise required substitute buyer.

If the association has the right to deny an applicant “for-cause”, then to withstand judicial scrutiny, the declaration needs to minimally provide for standards as to what “for-cause” means. For example, if the declaration provides that “for-cause” meant “felons who committed crimes of moral turpitude”, then based on the existing cases, the restriction is, more than likely, valid.   Another “for-cause” standard could be as simple as requiring the applicant to be truthful. If a lie is later discovered, then the above line of cases suggests that a “for-cause” denial based on a facial disqualification would be justified.  There is another important lesson to be learned. Legislation to set parameters regarding an association’s approval rights is long overdue.

Leshana tova to all those celebrating Rosh Hashanah. May you and your families be inscribed for a good year!

The storm is over and sadly the association’s clubhouse is damaged. The manager calls the association’s insurance company to report the claim. They arrange for their “adjuster” to survey your damage and issue a report. The insurance carrier reviews the report and determines the association’s entitlement for the loss it suffered. So far, the board is pleased at the insurance company’s responsiveness and the adjuster’s attentiveness who genuinely sympathizes with the association’s loss. Everyone is starting to feel a little better about the situation. The manager starts to arrange for the substantial repairs that must be undertaken. The repair estimates arrive while the board waits for the insurance carrier’s valuation. Then, the report arrives. The board is panic struck as they read that the association’s claim is valued at $300,000., and the least repair estimate was $700,000.  What went wrong and how did this happen?

An old expression comes to mind, “the good Lord helps those who help themselves”. In this made up story, that likely at times resembles real life, the association did not avail themselves of what some consider to be the most important part of making an insurance claim. The association did not retain a Public Adjuster to value the claim.

Albeit the term “Public Adjuster” can be a bit of a misnomer and is confusing. Let’s address that right now. A Public Adjuster is a state licensed insurance claims adjuster who advocates for YOU in appraising and negotiating your insurance claim.

In general, there are three classes of insurance claims adjusters: i) “staff adjusters” who are employed by an insurance company or self-insured entity, ii) “independent adjusters” who are independent contractors hired by the insurance company and iii) “Public Adjusters” who are hired by the policyholder.

The Public Adjuster works for you, the property owner, and not the insurance company. Aside from attorneys and your insurance broker, Public Adjusters are advocates for your rights. Public Adjusters are experts on property loss adjustment who are retained by policyholders to assist in preparing, filing and adjusting insurance claims. Employed exclusively by a policyholder who has sustained an insured loss, these professionals manage every detail of the claim, working closely with the insured to provide the most equitable and prompt settlement possible. A Public Adjuster inspects the loss site immediately, analyzes the damages, assembles claim support data, reviews the insured’s coverage, determines current replacement costs and exclusively serves the client, not the insurance company. Public Adjusters are also beneficial when it is clear that the insurer will pay the claim and the only issue is the proper identification of all losses and their valuation and cost to repair.

A typical wind storm, fire or flood policy contains hundreds of provisions and stipulations, constantly changing forms and endorsements, and many complex details such as inventory appraisals and real estate evaluations that are required in case of a loss. Most policyholders are not aware that they have the burden of proof.

Best of all, Public Adjusters are highly motivated to ensure that you receive every penny you can because they typically charge a percentage of the insurance settlement.  It’s money well spent! How do I know? Because, even as an attorney, I used them, too. Years ago after we were hit with multiple storms back to back, my own claim was undervalued. My Public Adjuster helped ensure that my claim was properly compensated.

Whether you’re an association board member or homeowner, if your property suffers damage from a casualty event, remember to avail yourselves of the benefits of a reputable Public Adjuster.

Consider this: A quasi-governmental utility company, let’s call it “Florida Electric” (a fictitious company) seeks to enter the sprawling common areas of several sub-associations to do some below ground work necessary to provide better service. While each sub-association is managed by the same management company, each sub-association is represented by a different law firm. The first time Florida Electric requests a sub-association sign their “Easement Agreement” the manager sends it to that sub-association’s lawyer who substantially edits the document to provide better protection for their association client.

Florida Electric makes the same request of the other sub-associations. Rather than involve each of the remaining sub-associations’ lawyers, the manager privately shares the previously negotiated Easement Agreement with the other sub-associations to avoid legal expenses for the other sub-associations.  While this is a made-up story, similar events do happen in the real world, and likely with more frequency then we are aware. Let’s take a look at just a few issues that can arise from such events.

For starters, the manager has done the other sub-associations an extreme disservice by practicing law without a license.  Each community is set up to function differently by their developers, and that includes different easement rights and differing degrees of authority granted to each board. What may have been permissible by one sub-association board could be prohibited without an owner vote in another. Moreover, the limits for Florida Electric’s liability may need to be set at differing amounts pending insurance coverage concerns that also often differ greatly amongst similarly situated sub-associations. Likely, the manager could face civil and criminal theft of service charges. A complaint to the Florida Division of Professional Regulation is a very real possibility, too. Moreover, the manager has exposed the board members to liability, too, as they are complicit factors in the managers bad acts and have completely abrogated their duty to exercise their reasonable business judgment in such an illicit scheme.

The Supreme Court of Florida has given The Florida Bar the duty to investigate and take action against the unlicensed practice of law through “The Standing Committee on Unlicensed Practice of Law”.  It is currently considering a request for formal advisory opinion on whether certain activities, when performed by community association managers, constitute the unlicensed practice of law.

In a recent written request from the Chairman of the Florida Bar’s Real Estate Section, confirmation is sought that the activities previously found to be the unlicensed practice of law in the Florida Supreme Court’s 1996 opinion continue to be the unlicensed practice of law. Those activities include the drafting of a claim of lien and satisfaction of claim of lien; preparing a notice of commencement; determining the timing, method, and form of giving notices of meetings; determining the votes necessary for certain actions by community associations; addressing questions asking for the application of a statute or rule; and advising community associations whether a course of action is authorized by statute or rule. The Chairman also asked the Standing Committee to confirm if the unlicensed practice of law for a community association manager includes:

1)    Preparation of a Certificate of Assessments due once the delinquent account is turned over to the association’s lawyer;

2)    Preparation of a Certificate of Assessments due once a foreclosure against the unit has commenced;

3)    Preparation of Certificate of Assessments due once a member disputes, in writing, to the association the amount alleged as owed;

4)    Drafting of amendments (and certificates of amendment that are recorded in the official records) to the governing documents;

5)    Determination of number of days to be provided for statutory notice;

6)    Modification of limited proxy forms promulgated by the State;

7)    Preparation of documents concerning the right of the association to approve new prospective owners;

8)    Determination of affirmative votes needed to pass a proposition or amendment to recorded documents;

9)  Determination of owners’ votes needed to establish a quorum;

10) Drafting of pre-arbitration demand letters required by Section 718.1255,       Florida. Statutes;

11) Preparation of construction lien documents;

12) Preparation, review, drafting and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, etc.;

13)  Identifying, through review of title instruments, the owners to receive pre-lien letter; and

14) Any activity that requires statutory or case law analysis to reach a legal conclusion.

To read a full copy of the Chairman of the Florida Bar Real Estate Section’s letter seeking the advisory opinion, go to www.Floridabar.org. Then, click the “lawyer regulation” link, and then click “unlicensed practice”, and finally click “formal advisory opinions”.

Living in a community association brings with it many obligations and responsibilities such as the need to pay assessments and maintain your property.  Additionally, living in a community association also means that every member has certain basic rights.  Do you know your rights?

YOUR BILL OF RIGHTS 

1)    The right to receive at least 48 hours notice of board and certain committee meetings inclusive of an agenda of the items to be addressed;

2)    The right to receive at least 14 days notice of annual and special members’ meetings and any meeting at which the board will consider a special assessment, and rules pertaining to a condominium unit or HOA lot use;

3)    The right to receive as a condominium unit owner the appropriate notice for committee meetings where the committee will take final action on behalf of the board or make recommendations to the board regarding the budget;   and the right as a homeowners association lot owner to receive the appropriate notice for committee meetings where a final decision will be made regarding the expenditure of association funds or where the committee will make decisions regarding architectural decisions with respect to specific parcel of residential property owned by a member of the community;

4)    The right to address the board on each and every agenda item, subject to reasonable rules  adopted by the board;

5)    The right to record board and member meetings subject to reasonable restrictions;

6)    The right to receive at least 14 days prior notice of any hearing where consideration of a fine may be levied against you for failing to abide by the associations governing documents;

7)    The right to vote for the board so long as you are not delinquent greater than 90 days in any monetary obligation due to the association;

8)    The right to use the common areas and common elements of the association so long as you are not delinquent greater than 90 days in any monetary obligation due to the association;

9)     The right to inspect the association’s official records subject to the reasonable rules   adopted by the association;

10)  The right to vote for recall of any existing board member;

11)  The right to run for the Board of Directors so long as you are not delinquent greater       than 90 days in any monetary obligation to the association and are  not a convicted felon whose rights have not been restored for at least five years;

12)  The right to receive certain financial records as it relates to the association;

13)  The right to exclusive use of your  unit or lot, as the case may be;

14)  The right to participate in the decision of whether the association should bring    certain lawsuits;

15)  The right to express your opinions free from “SLAPP” lawsuits.

*  *  *  *  *

In short, SLAPP lawsuits are used to stifle and otherwise silence critics. The term “SLAPP” is an acronym for “strategic lawsuits against public participation”.  The goal of any person in bringing a slap suit against an association member is to invoke fear in the member and increase their legal costs, etc., which lead to the exhaustion or abandonment of the member’s criticism.

Warning, an esoteric thought follows: In many ways SLAPP lawsuits are similar to the Alien and Sedition Act passed into law by President John Adams in 1798 in support of a more powerful and centralized government. In brief and by way of over simplification, when this Act was in effect you could be arrested for speaking out against the president.  Supporters of the Act argued that the Act allowed people to say what they wanted against the government, but it did not mean they were free from governmental retaliatory action after the comment was made.  Thus, citizens were free to express themselves, but it was not without consequence.

Nevertheless, from a practical perspective, the Alien and Sedition Act stifled free-speech because while you can say what was on your mind, you certainly could be arrested or otherwise penalized for doing so.  If an association member had to worry each time they spoke up against the present board that a lawsuit could be brought against them or a fine levied for speaking their mind, then the First Amendment of the United States Constitution would be nothing more than a meaningless mockery of a sham of a travesty shrouded in enigma wrapped  inside of a quagmire.  With that as our backdrop, while association members are free to express their thoughts, they should   do so with respect for their board members in light of the hard work they put in for the betterment of the community.

For some time now condominium and cooperative associations alike benefited from the implied warranty of habitability for construction defect damages.  While these rights are codified in Florida Statutes Chapter 718 (the “Condominium Act”) and Chapter 719 (the “Cooperative Act”), there is no similar codification in Chapter 720 (the “Homeowners’ Association Act”).

In plain English, and loosely stated, the “implied warranty of habitability” means that the home, as built, is reasonably fit for its intended purpose (i.e., that the home is suitable to live in).  But, just how far does the “home” extend?  In other words, if an off-site improvement, such as the roadways or drainage system, falls victim to a construction defect, does that mean the home is unsuited for occupancy?  While a court said “Yes”, the Florida Legislature and the Governor said “No”.

In July 2012, in Lakeview Reserve v. Marondo, the 5^th District Court of Appeals recognized, and thus judicially created, implied warranties for off-site homeowners’ association improvements. The sole issue in the case was whether the   homeowners’ association could maintain a claim for breach of the common law implied warranties of fitness and merchantability, also referred to as a warranty of habitability, against a builder/developer for defects in certain off-site improvements including roadways, drainage systems, retention ponds and underground pipes in a residential subdivision?

In Lakeview Reserve, the Association filed a complaint against the Developer for breach of the implied warranties of habitability based on latent defects (a fancy legal term that, in plain English, means “hidden defects”) in the subdivision’s common areas.  Specifically, it claimed that the roadways, retention ponds, underground pipes, and drainage systems throughout the subdivision were defectively constructed.  The Developer filed a “motion for summary judgment” (another fancy legal term that means there are no disputed facts and the party that filed the motion believes it is entitled to a verdict in its favor based on the application of existing law), arguing that the common law implied warranties do not extend to the construction and design of off-site improvements in a a subdivision, because these structures do not immediately support the home(s).  The trial court agreed with the Developer but, on appeal, the 5^th DCA reversed the trial court’s decision and ruled in favor of the HOA.  Then, on April 27, 2012, House Bill 1013 was signed into law by Governor Scott, which killed the recently created judicial remedies.

However, and importantly, all is not yet lost.  House Bill 1013 made patently clear that both the HOA’s and the purchaser’s of homes within them have other existing rights to pursue causes of action arising from defects based on contract, tort or statute.  In the end, what does all of this mean to your HOA?  It simply means that if an off-site improvement is the subject of a construction defect, such as an improperly built drainage system, an HOA and/or a member can still bring a cause of action against the developer for such things as failure to build the system as designed, etc., but the HOA won’t have the ability to include an additional cause of action for damages to off-site improvements that stem from a breach of the implied warranty of habitability.

If anyone other than the contractor with whom you have a signed contract is performing services or providing goods to your property, then you have financial exposure and could end up paying twice, unless you understand a few terms and make sure a few steps are followed. Florida’s construction lien law is both a blessing and a curse. Sadly, it seems that the only people that truly grasp its implications are contractors and lawyers. Simply put, if you pay the general contractor, but they fail to pay a subcontractor or supplier, then you could be responsible to pay them, even though you paid the general contractor, unless you protected yourself.  To do so, first we’ll examine contractors, architects, landscape architects,  interior designers, engineers, etc. when such individuals are in direct contract with the owner of the property, then we’ll examine suppliers (also known as “materialmen”) and subcontractors who are doing work on the property, but have no direct contractual relationship (“privity”) with the owner.

Pursuant to Chapter 713, Florida Statutes, any person or firm that performs services as an architect, landscape architect, interior designer, engineer, or surveyor who is performing their services pursuant to a contract with the owner, has a lien on the real property improved for any money that is due for his or her services. In addition, a supplier, laborer, or other contractor in “privity” with the owner, has a lien on the real property improved for labor, services, materials or other items required by or furnished in accordance with their contract.

Where it gets tricky, and where your liability to pay twice is created, is when a subcontractor or supplier performs work or services on your property and they are NOT in direct contract with you, the owner (meaning that there is no “privity” between the owner and the person providing the services or goods). It’s easy to protect yourself.  To do so, you need to understand a few new terms, the “notice of commencement”, “notice to owner” and “partial and full payment affidavits”. So long as you sign the “notice of commencement” and ensure your general contractor records it, the subcontractors and suppliers with whom you have no privity, can record and send you their “notice to owner.” So long as you are certain to demand partial and full receipt, be sure you receive partial and final payment affidavits from the general contractor along the way, too.

For the suppliers and subcontractors to be in a position to record and send their “notice to owner”, you are responsible to make sure your general contractor records the “notice of commencement” that is duly executed by you, as the property owner.  To record their “notice to owner”, the subcontractors and suppliers look to the “notice of commencement”.  In fact, the cautious subcontractor won’t begin work if they are not in privity with the owner when the “notice of commencement” is not recorded.

The “notice to owner” is a publicly recorded document that is also sent to the property owner to alert him or her of all subcontractors and suppliers who are not in direct privity with the owner and are providing services or goods to the owner’s property. In order for the subcontractors and suppliers to perfect their lien rights, they must serve their  “notice to owner” which sets forth the name and address of the person or entity providing the goods or services, a  description of the real property being improved, and the nature of the services or materials furnished or to be furnished.  If, after the “notice of commencement” is recorded, the supplier or subcontractor doesn’t complete the “notice to owner”, then, after a certain amount of time is passed, in the event you paid the general contractor who fails to pay the subcontractor or supplier, they will have a difficult time arguing that you, the property owner, are still responsible to pay them.

Prior to each payment, the property owner, at their sole option, can require the general contractor to first provide an affidavit which sets forth the names of each subcontractor and supplier who had  not been paid in full, and  the amounts due, or to come due, for labor, services or materials furnished. The owner has the right to rely on the contractor’s affidavit in making the partial and final payment meaning that any subcontractor or supplier who did not complete the “notice to owner” and where the owner of the property has no knowledge of the individual doing any work, then the lien rights of such subcontractor or supplier are not vested and do not attach to the property.

If you don’t follow these simple steps, then you’re at full risk for paying twice for the same work.