Welcome Community Association Management Professionals!                  Bert Rodgers Schools distance learning continuing...
Directory                  Bert Rodgers Schools                  1855 Porter Lake Dr                  Sarasota FL 34240   ...
Bert                                 Rodgers                                 Schools   Table of Contents                  ...
Bert Rodgers Schools ©2008         All rights reserved, including the right to reproduce this manual or any portion of thi...
Approved by the DBPR Council for CAM, Provider #0001856, Course #9625416                                                  ...
     Bert Rodgers Schools            shall be deemed to have consented to the amend-           club comprised of recreatio...
2008 Legal Update             tion relating to the dispute. In addition, the new law      Financial reports. Amends §720.3...
     Bert Rodgers Schools            guidelines and standards authorized by the declara-       Insurance. During the 2007-...
2008 Legal Update             • Provides that if the closing on the contract occurs       the lesser of the lowest percent...
     Bert Rodgers Schools            the state without filing a public offering statement      poration within the require...
2008 Legal Update                paid 90 days after the insurer receives notice of the     SB 714: Sponsored by Senator Si...
     Bert Rodgers Schools          CASE STUDY ONE                                               Holding          Chalfonte...
2008 Legal Update             was not adjusted accurately. Supplemental claims are       that monetary damages could adequ...
10     Bert Rodgers Schools               The Appellate Court’s order is not clear as to          Rationale          wheth...
2008 Legal Update    11         apartment, but not the apartment itself, treated the        CASE STUDY SIX         same wa...
12     Bert Rodgers Schools          addendum and induced reliance on the part of the             Act sets forth the devel...
2008 Legal Update    13         tion that when the Condominium Act was amended             Florida Statutes does not chang...
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
2008 CAM Continuing Education course
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2008 CAM Continuing Education course

  1. 1. Welcome Community Association Management Professionals! Bert Rodgers Schools distance learning continuing education courses allow you to enjoy the convenience of studying on your schedule, without the stress and expense of driving to class. Fulfill your 2008 education requirements with the courses in this book or online, studying at your pace, on your schedule in your home or office. It’s easy! Read the courses, written by nationally-known industry experts Richard Thompson and Ellen Hirsch de Haan. At the end of each course evaluate your comprehen- sion of the material by answering the true or false final assessments. Study online or by correspondence. The online option gives you the ability to register, study, answer the final assessments questions, and print your certificate(s) of completion immediately upon passing each course. If you choose correspondence, simply mail or fax your registration form and answer sheet(s) to our school (see detailed instructions in this book). We offer convenient same-day and next-day priority grading options. Save time and money when you choose Bert Rodgers Schools for your continuing educa- tion. For maximum savings, take advantage of our Special Offer—only $129 for all 5 courses (a total of 18 hours), including the 2-hour 2008 Legal Update. That’s a savings of $36! Rely upon Bert Rodgers Schools while enjoying the savings and convenience of distance learning. Benefit from our 50 years of experience in educating Florida professionals that we put to work for you! Continuing Education Requirements Community association manager licensees must satisfactorily complete a minimum of 20 hours of continuing education by September 30, 2008. The 20 hours of continuing educa- tion shall be comprised of courses approved by the Council, pursuant to Rule 61-20.5082, F.A.C., in the following areas: • hours of legal update seminars. Licensees shall satisfactorily complete a 2-hour legal 4 update seminar during each year of the renewal period. The 2-hour 2008 required legal update must be completed between October 1, 2007 and September 30, 2008. • hours of instruction on insurance and financial management topics relating to commu- 4 nity association management. • hours of instruction on the operation of the community association’s physical property. 4 • hours of instruction on human resources topics relating to community association man- 4 agement. • hours of additional instruction in course approved by the Council. 4 Community association managers licensed between October 1, 2006 and September 30, 2008, are not required to complete continuing education for this initial license period. The DBPR requires that licensees retain, and make available to the Department upon request, continuing education course certificates of completion for 3 years following course completion. Community Association Management    CAM_book.indb 1 6/12/08 7:43:53 PM
  2. 2. Directory Bert Rodgers Schools 1855 Porter Lake Dr Sarasota FL 34240 Phone 941-378-2900 • Fax 941-378-3883 Toll Free 800-432-0320 Instructor, Technical, and Administrative Support Telephone Hours: M-F 8:30 AM to 5:15 PM Email: CAMinfor@bertrodgers.com Techsupport@bertrodgers.com www.bertrodgers.com Division of Professions Regulatory Council of Community Association Managers 1940 North Monroe Street Tallahassee, FL 32399 www.myflorida.com/dbpr/pro/cam/index.html Phone: 850-487-1395 ii     Bert Rodgers SchoolsCAM_book.indb 2 6/12/08 7:43:53 PM
  3. 3. Bert Rodgers Schools Table of Contents COMMUNITY ASSOCIATION MANAGEMENT Founder Bert Rodgers 2008 Legal Update | 1 President Final Assessment | 15 Lori J. Rodgers Administrative Vice President Association Financial Management William E. Giffard and Insurance | 17 Director of Information Systems Final Assessment | 39 Alison Harner Director of Finance Aaron Pulone Operation of the Association’s Director of Operations Physical Property | 41 Kelli Finnigan Final Assessment | 63 Project managers Valerie Churchillo Lisa Lacey Communication Skills and Tools | 65 Instructor Janine Spiegelman Final Assessment | 91 Project Coordinator Jerry Schmitt Board Operation Teamwork and Student Services supervisor Problem Solving | 93 Patti Pasquini Final Assessment | 113 Student Services Brenda Fletcher Mark Forsman Instructions/Grading | 114 Jenncie Grove Mary Killoran Registration Form/Answer Sheets | 115 Shirley Samson Kayla Smillie Typesetting Wild Dezign Printing Action Printing Community Association Management     iiiCAM_book.indb 3 6/12/08 7:43:54 PM
  4. 4. Bert Rodgers Schools ©2008 All rights reserved, including the right to reproduce this manual or any portion of this manual in any form, or to use it for teaching purposes without the express written consent of the copyright holder. Richard Thompson courses used by permission. Copyright by Regenesis.net. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Bert Rodgers Schools shall not be liable in any way for failure to receive and/or grade your answer sheet within any specific time period. It is your responsibility to ensure that you have complied with your license renewal requirements in a timely manner. Bert Rodgers Schools recognizes and respects its students’ privacy. Course records are confidential, and the School does not sell or rent students’ names or other information to any company or organization. Cover design: Digital Ink Design Group ISBN: 1-891753-49-5 Printed in the United States of America iv     Bert Rodgers SchoolsCAM_book.indb 4 6/12/08 7:43:55 PM
  5. 5. Approved by the DBPR Council for CAM, Provider #0001856, Course #9625416 2008 Legal Update by Ellen Hirsch de Haan, 2 Hours in Subject Area: Legal Update B.A., J.D., M.ED. Learning Objectives Upon completion of the course the learner shall be able to: 1. Discuss the 2007 amendments to the Florida 5. Discuss recent changes to Chapters 718, 719, Statutes. and 721, Florida Statutes, Condominiums, Cooperatives, and Vacation and Time Share 2. Identify and describe recent rule changes to Plans. Chapter 61-20, Florida Administrative Code, Parts I and II. 6. Identify and describe federal laws and regula- tions impacting community association manage- 3. Discuss review of Chapter 455. ment. 4. List key provisions of Florida Statute 617, 7. Discuss case law affecting community associa- Corporations Not for Profit. tion management. LEGISLATION from pedestrian access to a public beach contiguous to a condominium property, except where necessary The Florida Legislature had a very busy session in to protect public health, safety, or natural resources. 2007, considering and addressing a number of bills which affected operations and occupancy in condo- Lender Consent of Amendments. Amends minium, cooperative, and homeowners associations, §718.110(11), F.S., to address lender consent of as well as timeshare regimes. There were also some amendments when required by the condominium changes which generally affect community association documents. Several of the noteworthy provisions of operations. these changes are as follows: As is true every year, in 2007 there were also a • For any mortgage recorded on or after October 1, number of proposed bills which did not pass. This 2007, any provision in the declaration, articles of course includes information on those initiatives, to incorporation, or bylaws that requires the consent keep you posted on possible future trends in regula- or joinder of some or all mortgagees is enforceable tion. only as to certain matters, including, but not limited For your reference: “SB” stands for Senate Bill. to, amendments that adversely affect the priority “HB” stands for House Bill. The letters “CS” before of the mortgagee’s lien or the mortgagee’s rights to either SB or HB stand for “Committee Substitute foreclose its lien or that otherwise materially affect for.” the rights or interests of the mortgagees. • For any mortgage recorded before October 1, SB 902: Community Associations 2007, any existing provisions in the condominium SB 902 affects community associations, cooperative documents requiring mortgagee consents shall be associations, and homeowners’ associations. This law enforceable. went into effect on July 1, 2007. • Includes a method for identifying the holders of outstanding mortgages and providing them with Community Association Impacts notice of the proposed amendment. Beach access. Amends §718.106, F.S., to provide that • After the notice is sent to the mortgagees as a local government may not adopt an ordinance or required under the statute, any mortgagee who fails regulation that prohibits unit owners or their guests to respond within 60 days after the date of mailing CAM_book.indb 1 6/12/08 7:43:56 PM
  6. 6.      Bert Rodgers Schools shall be deemed to have consented to the amend- club comprised of recreational facilities in which pro- ment. prietary membership interests are sold to individuals, • For amendments requiring mortgage consent on which membership interests entitle the individuals or after October 1, 2007, any amendment adopted to use certain physical facilities owned by the equity without the required consent of a mortgagee is club. Such physical facilities do not include a residen- voidable only by a mortgagee who was entitled to tial unit or accommodation. notice and an opportunity to consent. This language provides cooperatives with an abil- ity similar to that permitted under the Condominium • Sets a statute of limitations for actions to void an Law, which allows community associations to pur- amendment. chase golf courses, country clubs, and the like. Historically, some of the condominium laws created in the past were written to require lender Homeowners Association Impacts approval of certain types of, or even all, amendments Presuit mediation procedures. Amends the petition to the Declaration of Condominium. This created a for mediation provisions contained within §720.311, significant impediment to the various associations’ F.S., which requires mandatory mediation for certain ability to amend governing documents, even if the disputes (e.g. covenant enforcement, use or changes laws changed. Previously, an association would have to common areas, etc.) between a homeowners associ- had to spend substantial time and money to obtain the ation and a member before the dispute could be filed required mortgagee consents. One of the most ben- in court. The effective date of this new law is July 1, eficial provisions in this new law is that if the proce- 2007. This change is extremely helpful for homeown- dural steps for providing notice are followed and the ers associations, which were previously required to mortgagee does not respond, it will be deemed an wade through a series of burdensome requirements of approval. This should make it easier for associations the petition for mediation process, which allowed the to reach the level of consent required by the govern- person being sued to significantly delay the enforce- ing documents. ment process. Specifically, the aggrieved party no Power to acquire leaseholds, memberships, longer has to file a petition for mediation with the or other possessory or use interests. Amends Division of Land Sales, Condominiums, and Mobile §718.114, F.S., to provide that subsequent to the Homes. Instead, an aggrieved party must now serve recording of the declaration, agreements acquiring upon the responding party a written offer to partici- leaseholds, memberships, or other possessory or use pate in presuit mediation. The form of the written interests not entered into within twelve (12) months offer must be strictly adhered to. A sample written following the recording of the declaration must be offer is contained within the new statute. The written approved in the same manner as material alterations offer, which must be sent via certified and regular first or substantial additions to real property that is asso- class mail, informs the responding party of the dispute ciation property. and offers presuit mediation as an avenue to resolve Mixed-use condominiums. Amends §718.404(1) the dispute. The aggrieved party suggests the use of and (2), F.S., dealing with mixed use condominiums. one of 5 certified mediators to mediate the dispute. §718.404(1) prohibits the condominium documents The responding party is given the option of selecting from permitting the owner of any commercial unit to one of the 5 certified mediators. have the authority to veto amendments to the decla- If the responding party agrees to attend mediation ration, articles of incorporation, bylaws, or rules and with one of the 5 suggested mediators, the mediation must be scheduled within 90 days, unless extended regulations of the association. §718.404(2) provides by mutual written agreement. Both parties are like- that where the number of residential units in the con- wise required to prepay one-half of the mediator’s dominium equals or exceeds 50% of the total units estimated fees. The aggrieved party is authorized operated by the association, owners of the residen- to immediately proceed with the filing of a lawsuit tial units shall be entitled to vote for a majority of the against the responding party if the responding party: seats on the board of administration. The new law will 1) fails to respond to the written offer via certified and make these provisions retroactive as a remedial mea- regular first class mail within 20 days of the date of sure. the mailing; 2) fails to agree to one of the 5 suggested certified mediators; or 3) fails to prepay one-half of Cooperative Association Impacts the mediator’s estimated fees. Equities facilities clubs. Amends §719.103(18), F.S., The new law also states that persons who refuse to provide a definition for an “equities facilities club.” to participate in the entire mediation process may not It provides that an “equity facilities club” means a recover attorney’s fees and costs in subsequent litiga-CAM_book.indb 2 6/12/08 7:43:56 PM
  7. 7. 2008 Legal Update     tion relating to the dispute. In addition, the new law Financial reports. Amends §720.303(7), F.S., as fol- allows the prevailing party in any subsequent arbitra- lows: tion or litigation proceeding to recover costs and attor- • Deletes the requirement that the association pre- ney’s fees incurred in the presuit mediation process. pare a financial report within 60 days after the close Overall, the changes made to §720.311, F.S., will of the fiscal year and replaces it with a requirement prove very beneficial to homeowners associations. that within 90 days after the end of the fiscal year, The new law will dramatically accelerate the presuit or on the date provided in the bylaws, the associa- mediation process. Additionally, the new law will pro- tion must prepare and complete or contract with a vide homeowners associations a less expensive path third party for the preparation and completion of a to the courts by providing a lower procedural hurdle financial report for the preceding fiscal year. to moving into court. If you have any questions con- • Requires that within 21 days after completion of the cerning the new requirements mandated by §720.311, financial report, but not later than 120 days after the F.S., you should contact your legal counsel to guide end of the fiscal year or other date as provided in you through the process. the bylaws, the association must provide each mem- Official records. Creates §720.303(5)(d), F.S., to pro- ber with a copy of the financial report or a written vide that the association is not required to provide a notice that a copy of the financial report is available prospective purchaser or lienholder with information upon request. about the subdivision or the association other than Architectural control covenants. Creates §720.3035, information required to be disclosed by Chapter 720. Florida Statutes. The noteworthy provisions are as If the association chooses to provide information, the follows: association may charge a reasonable fee for providing • Provides that the authority of an association or an good faith responses to requests for information if the architectural committee (or other similar commit- fee does not exceed $150 plus the reasonable costs for tee) to review and approve plans and specifications photocopying and attorney’s fees. for the location, size, type, or appearance of any Reserves. Amends §720.303(6), F.S., as follows: structure or other improvement on a parcel, or to • Provides that if the association does not provide for enforce standards for the external appearance of any reserve accounts, each financial report must state structure or improvement located on a parcel, shall in conspicuous type that the budget does not pro- be permitted only to the extent that the authority is vide for reserves. (The exact language required is in specifically stated or reasonably inferred as to such §720.303(6)(c), F.S.) location, size, type, or appearance in the declaration • Provides that an association shall be deemed to have of covenants or other published guidelines and stan- provided for reserve accounts when reserve accounts dards authorized by the declaration of covenants. have been initially established by the developer or • Provides that if the declaration, or other published when the membership of the association affirma- guidelines and standards authorized by the declara- tively elects to provide for reserves. tion, provides options for the use of materials, the • Provides that if reserve accounts are not initially size of the structure or improvement, the design of provided for by the developer, the membership may the structure for improvement, or the location of the elect to establish reserve accounts upon the affirma- structure or improvement on the parcel, neither the tive approval of not less than a majority of the total association nor any committee shall restrict the right voting interests of the association. of a parcel owner to select from the options provided in the declaration or other published guidelines and • If reserve accounts are established, they shall be standards authorized by the declaration. funded or maintained unless the reserves have • Provides that unless otherwise specifically stated been waived or reduced by the membership upon in the declaration or other published guidelines or a majority vote at a meeting at which a quorum is standards authorized by the declaration, each parcel present. shall be deemed to have only one front for purposes • Provides funding formulas for reserves. of determining the required front setback. When • Describes the funding of pooled reserve accounts. the specific setback limitations are not provided, the • Provides that reserve funds and any interest thereon applicable county or municipal setback limitations must remain in the reserve account and used only shall apply. for authorized reserve expenditures unless their • Provides that if a homeowners association or any use for other purposes is approved in advance by committee should unreasonably, knowingly, and a majority vote at a meeting at which a quorum is willingly infringe upon or impair the rights and priv- present. ileges set forth in the declaration or other publishedCAM_book.indb 3 6/12/08 7:43:57 PM
  8. 8.      Bert Rodgers Schools guidelines and standards authorized by the declara- Insurance. During the 2007-A Special Session, the tion, the adversely affected parcel owner is entitled Florida Legislature adopted legislation permitting to recover damages caused by such infringement community associations operating at least 50 residen- or impairment, including any costs or reasonable tial parcels or units to “self insure,” for the purpose of attorney’s fees incurred in preserving or restoring pooling and spreading the liabilities of its group mem- the rights and privileges of the parcel owner. bers relating to property or casualty risks or surety • States that neither the association nor any architec- insurance. Specifically, the law permitted windstorm tural control committee shall enforce any policy or insurance coverage for a group of no fewer than 3 restriction inconsistent with the rights and privi- communities created and operated under Chapter 718 leges of a parcel owner set forth in the declaration (Condominiums), Chapter 719 (Cooperatives), Chap- or other published guidelines and standards autho- ter 720 (Homeowners Associations), or Chapter 721 rized by the declaration, whether uniformly applied (Timeshare Associations) to be obtained and main- or not. tained for the communities if the insurance coverage Because architectural control is one of the most is sufficient to cover an amount equal to the probable important functions of a homeowners association, it is maximum loss for the communities for a 250-year particularly important at this time that all homeown- windstorm event. ers associations review their declaration of covenants HB 7031 fixed what was perceived to be certain and other published guidelines and standards provid- “glitches” in the law adopted during the Special Ses- ing for architectural control. A homeowners associa- sion, including: tion or an architectural committee (or other similar • Amends §718.115 and §719.107 to provide that the committee) should not rely on undefined, unwrit- common expenses of an association include the cost ten, or unpublished architectural control guidelines. of insurance acquired by the association, including Rather, guidelines and standards should be published costs and contingent expenses required to partici- in the declaration of covenants or in a separate docu- pate in a self insurance fund. ment if authorized by the declaration of covenants. The new law’s apparent goal of requiring pub- • Amends §720.308, F.S. to provide that assessments lished guidelines and standards for architectural con- may be levied by the board to secure the obligation trol should assist associations and architectural review of the association for insurance acquired from a boards when considering requests to approve plans and self-insurance fund. specifications and when enforcing architectural control Another “glitch” to be corrected was that the requirements. This should eventually result in a fewer original legislation did not amend Chapters 719 and number of disputes between the association and parcel 720 to specifically authorize cooperative associations owners with respect to architectural control. and homeowners associations to self-insure. This law Attorney’s Fees. Amends §720.305(1)(d), F.S., to pro- fixes that glitch and implements for cooperatives and vide that a member prevailing in an action against the homeowners associations the self insurance provisions association under §720.305(1) is entitled to recover in the law adopted during the 2007 A Special Session. reasonable attorney’s fees and additional amounts as Developer Disclosures. Amends §§718.503 and determined by the court to be necessary to reimburse 718.504, F.S. and §§719.503 and 719.504, F.S., relat- the member for his share of assessments levied by the association to fund its expenses of the litigation. ing to developer disclosures prior to sale. These pro- visions apply to both condominium and cooperative Developer requirements. associations. The following are some of the changes: • Creates §720.307(3)(t), F.S., to provide that for asso- • Provides that the figures contained in any budget ciations incorporated after December 31, 2007, the delivered to a buyer are estimates only, that the developer must pay to have a turnover audit pre- actual cost of such items may exceed the estimated pared of the association’s financial records. cost, and that any such changes in cost do not con- • Creates §720.308(2), F.S., to address guarantee of stitute material adverse changes in the offering. common expenses by the developer. • Requires that the budget prepared by a developer be prepared in good faith and must reflect accurate HB 7031: Community Associations estimated amounts. This bill, dealing with insurance, developer disclo- • Preserves the developer assessment guarantees in the sures, and condominium conversions, became effective prospectus and provides that subsequent increases on May 24, 2007 when it was approved by the Gover- that are beyond the control of the developer shall nor. It impacts community associations, homeowners’ not be considered an amendment that would rise to associations, and cooperative associations. rescission rights.CAM_book.indb 4 6/12/08 7:43:57 PM
  9. 9. 2008 Legal Update     • Provides that if the closing on the contract occurs the lesser of the lowest percentage of voting interests more than twelve months after the filing of the needed to amend the declaration or as provided in the offering circular with the Division of Florida Land Declaration for termination of condominiums. There Sales, Condominiums, and Mobile Homes, the are special provisions in this bill for the termination of developer must provide a copy of the current oper- timeshare units. Optional termination can be effectu- ating budget to the buyer at closing. ated by 80% of the unit owners if not more than 10% Cooperative Special Assessments. Amends § of the total voting interests of the condominium have 719.108, F.S. to clarify (similar to the Condominium rejected the plan of termination by negative vote or Act) that if a special assessment is levied, excess funds by providing written objections thereto. Mortgagee may, at the discretion of the board, either be returned consent is not required unless the plan of termination will result in less than full satisfaction of the mort- to the unit owners or applied as a credit toward future gage lien. The effective date of this new law is July 1, assessments. 2007. Condominium Conversions. Amends Chapter 718, Part VI, to change the information that must be dis- SB 1844: New Collection and Foreclosure closed by the developer of a residential condominium Regulations for Homeowners Associations created by a conversion. Some of the changes include: SB 1844 deals with liens and foreclosures for hom- • Clarifies the law by adding the terms “converter” eowners associations. The effective date of this new and “as provided in this section” to modify “reserve law is July 1, 2007, and it will have a dramatic impact accounts” in order to better differentiate between on the collection and foreclosure process for home- converter reserve accounts and regular reserve owners associations. SB 1844 creates §720.3085, F.S., accounts. and several of the noteworthy provisions of the bill • Requires the age of any component or structure are documented below: for which the developer is required to fund reserve • The bill mandates that a parcel owner is liable for accounts be measured in years, rounded to the near- all assessments on a parcel and is jointly and sev- est whole year. The amount of converter reserves to erally liable with the previous parcel owner for all be funded must be based on the age of the structure unpaid assessments that came due up to the time of as disclosed in the inspection report, which must be transfer of title. determined by an architect or engineer. • Provides for the payment of interest and late fees on • Requires a developer who sells a condominium unpaid assessments. parcel in a condominium conversion project to dis- close in conspicuous type in the contract whether • Prioritizes the application of any payment received. the developer has established converter reserve • Prohibits the placement of a restrictive endorse- accounts, provided a warranty of fitness and mer- ment on the payment. chantability, or posted a surety bond for purposes of • Requires written notice before a lien is filed against complying with the law. a parcel. • Provides the owner with 45 days to make payment SB 314: Condominium Termination for all amounts due. SB 314 had the strong support of the Real Property • Provides for the foreclosure of the lien, but not Section of the Florida Bar. A very similar bill passed until 45 days after the parcel owner has been pro- the Legislature last session (unanimously), but was vided notice of the association’s intent to foreclose. vetoed by Gov. Bush because he felt the threshold to • Permits the owner to make a qualifying offer one terminate could be too easily attained. Hearings were time during the pendency of a foreclosure action, held around the state to strike a balance between the in which case the foreclosure action is stayed for a property rights of condominium owners as a whole period not to exceed 60 days. against the rights of a lone holdout who opposes the termination plan. The bill was then modified to HB 405: Timeshare and Vacation Plans address those concerns. SB 314 amends §718.117, F.S., to provide a The new law makes a number of changes to Chapter method of terminating condominiums in the event of 721 dealing with timeshares and vacation plans. The economic waste, disrepair of the property, and when effective date is July 1, 2007. Some of the significant continued operation of the condominium is made changes include the following: impossible by law or regulation. In the event of eco- • Permits a seller to offer timeshare interests in a real nomic waste, the percentage needed to terminate is estate property timeshare plan located outside ofCAM_book.indb 5 6/12/08 7:43:57 PM
  10. 10.      Bert Rodgers Schools the state without filing a public offering statement poration within the required time period. Additionally, provided certain criteria are satisfied. the bill provides for a time period within which an • Creates definitions for “lead dealer” and “resale application for funding for relocation expenses must service provider” and creates new recordkeeping be submitted to the Florida Mobile Home Relocation requirements for lead dealers and resale service Corporation. SB 259 became law on May 22, 2007, providers. the day the Governor signed the bill. • Provides that the failure of the managing entity to HB 7057: My Safe Florida Home Program, obtain and maintain insurance coverage during any Florida Building Code, and Citizens Property period of developer controls constitutes a breach of Insurance Corporation and Openings the managing entity’s fiduciary duty. Protection • States that a managing entity that is an owners asso- HB 7057 has a number of sections dealing with the ciation may waive or reduce reserves by a majority My Safe Florida Home Program, the Florida Build- vote of those voting interests present, in person, or ing Code, and eligibility for coverage by Citizens by proxy, at a duly called meeting of the owners’ Property Insurance Corporation. The part that has association. received the most attention is the section creating • States that the managing entity is authorized to man- §627.351(6)(a)8., F.S., which provides that effective age the reservation and use of accommodations using January 1, 2009, a personal lines residential struc- those processes, analyses, procedures, and methods ture located in a wind borne debris region that has an that are in the best interest of the owners as a whole insured value on the structure of $750,000 or more is and to encourage the maximum use and enjoyment not eligible for coverage by Citizens unless the struc- of the accommodations and other benefits. ture has openings protections. A residential structure • States that any determination by a timeshare asso- will comply with the requirements if it has shutters or ciation of whether assessments exceed 115% of opening protections on all openings and if such open- assessments for the prior fiscal year shall exclude ing protections complied with the Florida Building anticipated expenses for insurance coverage required Code at the time they were installed. by law or by the timeshare instrument. Note that condominium buildings are not con- sidered “personal lines residential structure.” Rather, • States that the managing entity shall use due dili- condominium buildings are insured as a “commercial gence to obtain adequate casualty insurance in such lines residential” structure. Therefore, it appears that covered amounts and subject to reasonable exclu- the new law will apply to single family homes (with sions and reasonable deductibles. an insured valued of $750,000 or more in the wind • Provides certain factors to be taken into account borne debris region and insured by Citizens), but not when determining whether the insurance obtained to condominium buildings. by managing entity is “adequate.” • Provides that the managing entity is authorized SB 2498: Insurance Reform to apply any existing reserves toward payment of Some of the highlights include: insurance deductibles or the repair or replacement • Freezes rates charged by Citizens Property of the timeshare property after a casualty without Insurance Corporation until 2009. regard to the purpose for which such reserves were originally established. • Amends §627.70131, F.S., to require insurance companies to pay or deny a claim or a portion of the SB 259: Mobile Home Relocation claim within 90 days of receiving notice of a claim. SB 259 changes the eviction notice requirements found • Amends §627.70131, F.S., to apply the 90-day pay- in §723.062, F.S., by requiring the following language ment requirement to residential property claims, be added, “You may be entitled to compensation from commercial property claims for structural or con- the Florida Mobile Home Relocation Trust Fund, tents coverage if the insured structure is 10,000 Administered by the Florida Mobile Home Relocation square feet or less, and commercial property claims Corporation (FMHRC). FMHRC contact information for contents coverage under a commercial property is available from the Florida Department of Business insurance policy if the insured structure is 10,000 and Professional Regulation.” The bill also provides square feet or less. for late fees if a mobile park owner does not make pay- • Amends §627.70131, F.S., to require the insurer to ments to the Florida Mobile Home Relocation Cor- pay interest on any payment or a portion of a claimCAM_book.indb 6 6/12/08 7:43:58 PM
  11. 11. 2008 Legal Update     paid 90 days after the insurer receives notice of the SB 714: Sponsored by Senator Siplin claim, or more than 15 days after there are no longer This bill would have prohibited associations from factors beyond the control of the insurer which rea- liening, foreclosing, and/or pursuing a monetary sonably prevented such payment, whichever is later. judgment for amounts less than $2,500 and would have removed the association’s ability to recoup attor- SB 500: Instant Bingo ney fees and costs. Known as the anti-foreclosure bill, SB 500 deals with gambling regulations and amends SB 714 would have greatly impacted an association’s §849.0931, F.S. The effective date of the new law is ability to timely and efficiently collect its assessment July 1, 2007 and recognizes “instant bingo” as a per- stream in order to ensure the continuation of essential missible form of bingo on community association community services. property. Instant bingo is a form of bingo that is played using tickets that contain numbers that are concealed HB 1373: Sponsored by Representative Robaina by a cover. The player removes the cover and wins a This bill would have imposed sweeping changes to prize if the set of numbers, letters, objects, or patterns the laws pertaining to condominiums, cooperatives, on the ticket match a pre-designated pattern. The pre- and homeowners associations as well as expanding the designated pattern appears on a “game flare,” which is powers associated with the Office of the Condomin- a board or placard that contains the game name, the ium Ombudsman. The original version of this bill was manufacturer’s name or logo, the form number, the 221 pages in length. Several of the highlights of this ticket count, the prize structure, the cost per play, and bill are as follows: the serial number of the game. Although many of the • required notices of proposed amendments to be new provisions governing instant bingo are identical sent via certified mail to those governing traditional bingo, there are a few key differences. • eliminated the ability of members to waive the The new law does not restrict the number of financial reporting requirements for more than 2 instant bingo prizes that may be awarded in one day. years Likewise, the amount of each prize is not restricted. • eliminated the ability of the members to opt out of Instead, the prize amount is simply indicated on the the statutory election procedures game flare. Additionally, the number of days per week • required a community association to give members that instant bingo can be played is not limited by this 24-hours advance written notice of any attempt to legislation. The price of an instant bingo ticket must be access a condominium unit, and printed by the manufacturer on the face of the ticket, and the price cannot exceed $1.00. No discounts or • revised the prescription pet requirements free tickets are permitted. The game flare must be posted prior to the sale of any tickets, and the serial RECENT CASES, ARBITRATION DECISIONS, numbers of the tickets and the game flare must match. AND DECLARATORY STATEMENTS AFFECTING COMMUNITY ASSOCIATIONS SB 2234: Regulation of Building Inspection Professionals In addition to legislative changes, during the course of a year, the Circuit Courts, District Courts, and Arbi- This legislation will require that building inspectors, tration Division of the Department of Business and mold assessors, and mold remediators be licensed by Professional Regulation deliver decisions and rulings the Department of Business and Professional Regula- which affect the operations of Community Associa- tion by July 1, 2010. tions in Florida. These are referred to as “case law” or “common law.” SB 1824: Mortgage Fraud The following are case study samplings of rel- This legislation provides greater consumer protec- evant 2007 case law: tions related to the mortgage loan application process and makes mortgage fraud a third-degree felony. The effective date of the law is October 1, 2007. Noteworthy Bills That Did Not Pass These bills did not pass in 2007. The substance of the bills can be reintroduced in subsequent years.CAM_book.indb 7 6/12/08 7:43:58 PM
  12. 12.      Bert Rodgers Schools CASE STUDY ONE Holding Chalfonte Condominium Apartment Association, No Inc. v. QBE Insurance Corporation, Case No. 06- 81046 (S.D. Fl. 2007) Rationale The association’s claim went to trial on 3 separate Facts counts (legal theories). The first count asked the court In October 2005, Hurricane Wilma damaged the to issue a declaratory judgment declaring that the asso- Chalfonte Condominium, a luxury condominium ciation was entitled to coverage for damages related adjacent to the ocean in Boca Raton, Florida. Chal- to Hurricane Wilma. The second count alleged that fonte Condominium was insured by QBE Insurance QBE was in breach of the insurance policy as a result Corporation with coverage of approximately $70 mil- of its failure to provide coverage. The third count lion dollars related to property damage, and an addi- was a count for breach of the implied duty of good tional $6.5 million in law and ordinance coverage. faith and fair dealing related to the provisions of the Chalfonte Condominium reported significant damage insurance contract. The association argued that the to QBE immediately after the hurricane. QBE failed duty of good faith and fair dealing is implied into all to adjust the claim in a timely manner. In fact, the Florida contracts, including insurance policies. QBE association did not receive a formal adjustment (esti- argued that the judge should enter judgment against mate) of the damages from QBE until after the asso- the association, at least on the third count, claiming ciation sued QBE in Federal Court. that Florida Law does not recognize a separate count The association stated that it spent approximately for breach of the implied duty of good faith and fair $12 million dollars on hurricane related repairs that dealing related to the provisions of the insurance con- tract. QBE also argued to the judge that Count III of should be covered by QBE. QBE disagreed, and the Complaint was actually an action for “bad faith”, a claimed that the association exaggerated its damages. second lawsuit sometimes feasible only after the con- QBE also claimed that many of the damaged items clusion of the first lawsuit. The judge disagreed and were excluded from coverage due to ordinary wear decided that the association was entitled to allege a and tear, corrosion, and other issues. QBE also chal- breach of the implied duty of good faith and fair deal- lenged the association’s decision to replace all the exte- ing related to the provisions of the insurance contract. rior windows and sliding glass doors, not only those The judge also decided that the discretion afforded to beyond repair. The association’s decision to replace QBE by the insurance contract could not be exercised all the exterior windows and sliding glass doors was in a manner that destroyed the parties’ reasonable based on the analysis of a certified general contractor, expectations based on the language of the insurance who determined that more than 75% of the sliding contract. glass doors and windows were severely damaged and After a trial that lasted 2 weeks, a Federal Court had to be replaced. The association also determined jury returned a verdict finding that the association that it was required to replace all the windows and suffered hurricane related damages in the amount of sliding glass doors because the alternative (replacing approximately $8.1 million dollars and that QBE did the vast majority but leaving a small percentage of the not act in good faith. QBE will also be responsible to original doors and windows) would create an incon- pay pre-judgment interest and prevailing party attor- sistent design and violate the local ordinances. The ney’s fees and costs to the association. The jury’s find- local ordinances specifically require multiple building ing will also allow the association to pursue another communities to have a unity of character and design. lawsuit against QBE for “bad faith” pursuant to Sec- QBE rejected most of the association’s claim, and tion 624.155 of the Florida Statutes, which could lead argued the actual casualty damage suffered by the to QBE having to pay triple the damage award. association was only about $460,000. This amount This verdict sends a message to QBE that they was well under the $1.6 million dollar deductible, so cannot treat their insureds that way. The verdict is also QBE determined that the association was entitled to a reminder to all community associations of the criti- no compensation despite the insurance policy and cal importance of conducting a complete and thor- Hurricane Wilma. ough post casualty inspection, which should include an inventory of the entire property, including the Issue units. This process should also include documenting Was QBE’s claim that it owed the association no all of the damages, and as soon as possible, retaining money because the casualty damage suffered by the competent professionals who also document the dam- association was actually below the $1.6 million dollar ages with photographs, video, and detailed records. It deductible in the insurance policy correct? is also worth noting that it may not be too late to file a supplemental insurance claim if the original claimCAM_book.indb 8 6/12/08 7:43:59 PM
  13. 13. 2008 Legal Update     was not adjusted accurately. Supplemental claims are that monetary damages could adequately compensate still being processed by the major insurance carriers any breach, unless there are equitable defenses to the in certain instances. request for an injunction (i.e. failure to enforce similar violations). Therefore, the Appellate Court reversed CASE STUDY TWO the Trial Court’s order permitting the possible breach of a restrictive covenant. Auto Zone Stores, Inc. v. Northeast Plaza Ventures, LLC, 934 So.2d 670 (Fla. 2nd DCA 2006) CASE STUDY THREE Facts Muegge v. Heritage Oaks Golf Country Club, Inc., A landlord filed a lawsuit seeking a court order declar- 209 FED.APPX. 936 (11th Cir. 2006) ing that the landlord could develop certain property. The landlord argued that the development 1) did Facts not breach the restrictive covenants affecting the real The home of plaintiff’s daughter was robbed by paint- property, but 2) the court should enter an immediate ers who were painting the exteriors of the homes in order declaring that the development was permitted the Heritage Oaks Club Homes Three Subdivision. regardless of whether the restrictive covenants were Plaintiff sued (among others) Heritage Oaks Club breached. The landlord argued that if the court even- Homes Three Association, Inc. for negligence. The tually found breach of the restrictive covenants, the Trial Court entered judgment as a matter of law breach could be remedied with a payment of mone- against the Plaintiffs and refused to allow the case tary damages and court orders preventing violations against the homeowners’ association to proceed to of restrictive covenants should only be entered if trial. The Plaintiff appealed. the party suffering from the breach can demonstrate irreparable harm, or that monetary damages could not Issue adequately compensate for the breach. The trial court Does a homeowners association owe a duty to its agreed, and entered the declaratory order permitting residents or their guests related to security where the landlord to develop the property, without ruling the Declaration specifically and clearly states that the on the issue of breach. The tenant appealed. association was not responsible for providing security, even though Heritage Oaks provided gated entrances Issue to the subdivision? Does a party need to demonstrate irreparable harm, or that monetary damages could not adequately com- Holding pensate the breach in order to obtain a court order No, at least as to security issues unrelated to the gates (an injunction) prohibiting the breach of a covenant affecting real property? Rationale In order to bring a successful claim for negligence, a Holding plaintiff must show, among other things, that the party No being sued owed a duty to the plaintiff. Here, the asso- ciation’s governing documents explicitly disclaimed Rationale all liability to provide security. The association con- Restrictive covenants affecting real property are usu- trolled the gates, but the court stated “Muegge failed ally intended to create rights to use or limit the use to present any evidence that Heritage Oaks had a duty of property in order to maintain the character of a to do more.” The court did not write a detailed opin- neighborhood. Their value is often difficult to mon- ion on the issue. The court appears to rely entirely etize and sometimes impossible to replace, unless the on the language in the Declaration to hold that the affected party moves. Therefore, Florida courts have association did not have a duty to do anything other traditionally afforded restrictive covenants affect- than reasonably operate the gates, if it was obligated ing real property (such as the restrictions contained to do even that. Previous Florida courts have held that in community association declarations) a special sta- associations may be responsible for crimes committed tus; and entered court orders to prevent their breach in the community if the association should have fore- without regard to whether the party claiming breach seen the possibility of the crime and did not take any could demonstrate irreparable harm, or that monetary action to prevent it. Additionally, other Florida courts damages could not adequately compensate the breach. have held that even in the absence of a duty, a claim In fact, Florida law requires that injunctive relief to for negligence can be sustained if an entity provides remedy the violation of a restrictive covenant be security voluntarily (despite the lack of a duty to do entered, even if the breaching party can demonstrate so), but does so negligently.CAM_book.indb 9 6/12/08 7:43:59 PM
  14. 14. 10     Bert Rodgers Schools The Appellate Court’s order is not clear as to Rationale whether it was holding that the language of the Dec- If the document granting the easement does not laration disclaiming any duty related to security was address the issue, whether or not a gate may be enforceable in all instances, or only in this case because erected depends on whether the gate would unreason- the plaintiff did not present any evidence that the asso- ably interfere with the easement holders’ rights. The ciation should have reasonably foreseen the risk due Appellate Court distinguished one prior community to other similar crimes in the community, or owed a association case precluding the erection of a gate by duty to the plaintiff because the association attempted holding that the gate here was much easier to access to provide security, but did so negligently. Regardless, because it could be opened from a distance by anyone the lesson to be learned from this case is that the asso- in all of the above described ways. It is unclear how ciation’s governing documents should provide for clear many of these access options are necessary to obtain disclaimers of any duty to provide security. the same result in light of the prior cases which have held that other gates without all of these access options CASE STUDY FOUR do unreasonably interfere with easement rights. It is also important to note that Florida case law Sand Lake Residence LLC v. Ogilvie, 951 So.2d 117 still considers some gates and standard speed bumps (Fla. 5th DCA 2007) to unreasonably interfere with the easement rights of the owners that are commonly included in community Facts association’s governing documents. Therefore, absent Landowners who held easement providing for ingress specific language in a community’s governing docu- and egress across permanent access road on adjoin- ments permitting material changes to the Commu- ing property (Sand Lake) sued to remove the speed nity’s gate or the addition of a gate or speed bumps, bumps installed by Sand Lake, and require that Sand the Board should consult the association’s attorney. Lake leave an electronic gate that Sand Lake installed Depending on the language of the Community’s gov- but that was not described in the easement agreement erning documents, such changes (or other material open. The easement agreement provided a nonex- changes) are commonly only permitted if the owners clusive perpetual easement in favor of the adjoining vote to amend the governing documents or otherwise landowners’ over Sand Lake’s access road. The agree- hold a vote to approve the change. ment contemplated the installation of one electronic gate but Sand Lake installed a second electronic gate CASE STUDY FIVE and placed speed bumps across the permanent access Philips v. Hirshon, 958 So.2d 425 (Fla. 3rd DCA road. Sand Lake provided the adjoining owners sev- 2007) eral means to pass through the front gate, which was not contemplated in the agreement. The landowners Facts could open the gate by using a single button remote, by entering a personal access code in the gate’s keypad, An individual owning a cooperative apartment died by calling Sand Lake’s office during business hours, by and willed his cooperative apartment to a friend. The calling their own cell phone numbers from the gate Florida Constitution prohibits the devise of home- and buzzing themselves in. If the owners wished to stead property if the owner is survived by a spouse or minor child. Individuals owning cooperatives are admit a guest or a delivery person, they were per- permitted to declare the cooperative as a homestead mitted to either provide that person with their per- for tax purposes. If the apartment was a condomin- sonal access code, or utilize any of the other options ium (or a free standing home), the portion of the for entry. The Trial Court held that both the speed will regarding the cooperative apartment would be bumps and the gate unreasonably interfered with the invalid because condominiums and homes in associa- adjoining landowners’ easement rights, and ordered tions are considered real property and subject to all that they be removed. Sand Lake did not appeal the of the homestead provisions of the Florida Constitu- ruling with regard to the speed bumps, but did appeal tion (not just considered homestead for tax purposes). the ruling with regard to the gate. This means, among other things, that condominiums and homes that qualify as homestead are protected Issue from forced sale of most creditors, and also may not Does an electronic gate with all the options mentioned be devised by the owner if the owner is survived by a above unreasonably interfere with the easement rights spouse or minor child. of the owners? Issue Holding Is a cooperative apartment, where the “owners” actu- No ally own shares in stock entitling them to occupy theCAM_book.indb 10 6/12/08 7:44:00 PM
  15. 15. 2008 Legal Update    11 apartment, but not the apartment itself, treated the CASE STUDY SIX same way as a condominium apartment with regard J. Lynn Construction, Inc. v. Fairways at Boca Golf to all of the homestead provisions of the Florida Con- Tennis Community association, Inc., 2007 WL stitution? 1931390 (Fla. 4th DCA 2007) Holding Facts No The association entered into a written contract with Lynn Roofing, a roofing contractor for construction Rationale and repairs. The contract required Lynn Roofing to In 1978 the Florida Supreme Court decided that obtain a bond insuring that it would comply with its cooperatives were not subject to the homestead provi- obligations under the contract. Lynn Roofing applied sion in the Florida Constitution which prohibits the for and attempted to obtain the bond, but Lynn Roof- devise of homestead property where there is a sur- ing stated that obtaining the bond was impractical. viving spouse or minor child. The Florida Supreme Without modifying their original written contract, Court concluded that “owners” of cooperatives the parties negotiated an alternative. Specifically, the owned stock, and not real property, so this provision association agreed to accept a personal guarantee by of the Florida Constitution did not apply to coop- Lynn Roofing’s President and a more favorable pay- eratives. Although owners of cooperatives can claim ment schedule. The understanding was memorial- the homestead tax exemption, they are still not con- ized in correspondence and an addendum prepared by sidered in the same way as other real property. This the Association’s attorney was signed. However, the appellate court also explicitly disagreed with a recent addendum was not signed by both parties as required appellate decision from another part of the state that by Section 11 of the original written contract, which was decided in 2002. This appellate court concluded required modifications to be in writing and signed that cooperatives are subject to forced sale by credi- by both parties. Within a couple of weeks, the asso- tors, and would not be considered protected by the ciation’s attorney sent a letter to Lynn Roofing ter- homestead provision of the Florida Constitution for minating the contract and arguing that the parties’ that purpose either. The 2002 appellate decision from subsequent negotiations and the addendum were of another area of Florida previously held that coopera- no force and effect because Section 11 of the origi- tives were protected from forced sale and considered nal contract required all modifications to be in writing homestead for that purpose. and signed by both parties to be effective. The trial It is important to note that this appellate court court agreed and ruled that Section 11 of the original recognized that the Cooperative Act (which arguably contract was unambiguous and therefore the subse- was enacted by the legislature and intended to treat quent negotiations and the addendum were not bind- cooperatives as real property) was not considered by ing on the association because they were not signed the Florida Supreme Court in its 1978 decision, but by both parties. Lynn Roofing appealed. felt that if change was warranted, the Florida Supreme Court should make this decision. It is also important Issue to note that the appellate court recognized its decision Can unambiguous written contracts be modified by added to the uncertainty in an area of the law of great subsequent oral agreement or other course of conduct public importance, with broad ramifications. For this of the parties even though the original written con- reason, this appellate court explicitly asked the Florida tract unambiguously prohibits modification without Supreme Court to decide whether the 1978 decision the written consent of both parties? was still viable and also clarify how all judges should treat cooperatives, at least with regard to the homestead provisions related to forced sale and devise and decent. Holding Please note: This decision was written on May Yes 2, 2007, and at least one brief has already been filed with the Florida Supreme Court. There is a reason- Rationale able possibility that the Florida Supreme Court will The appellate court reversed the trial court and stated issue an opinion clarifying how cooperatives are to be that in some instances unambiguous written contracts treated and resolving the conflict. Unless and until can be modified by subsequent action of the parties. that happens, the result in a case now depends in cer- This may also include a subsequent “oral agreement tain instances either on the area of Florida where the of the parties,” even though the parties’ written con- cooperative is located, or the judge randomly selected tract explicitly prohibits such modification. Although in areas where the appellate court has not ruled. the result of this decision was likely due in part to the fact that the association’s own attorney prepared theCAM_book.indb 11 6/12/08 7:44:00 PM
  16. 16. 12     Bert Rodgers Schools addendum and induced reliance on the part of the Act sets forth the developer warranties and appears to roofing contractor, and the case can be distinguished exclude “mechanical elements serving only one unit” based on this fact alone (among others), there is some such as air conditioners, a review of the history of the broad language in the appellate court’s opinion. As a Condominium Act and the remainder of its provi- result, any time an association takes any action that is sions permit such a claim. This is because the objec- contrary to the express terms of the contract, or could tive of the Condominium Act as demonstrated by its reasonably be interpreted to modify the parties’ origi- other provisions is to also cover and extend warran- nal written contract, the court may consider this evi- ties to personal property transferred by the developer dence. Moreover, if the evidence is substantial, there with the unit, which can include items such as refrig- is a risk that the judge or jury will determine that the erators, stoves, ceiling fans, or air conditioners. The other party reasonably relied on the actions of the opinion is very broadly worded and a developer might association, permitting the judge or jury to ignore the be required to warrant any personal property trans- unambiguous contractual provisions in the original ferred with the unit (perhaps even furniture), but at a contract. This case emphasizes how important it is for minimum, significant items such as those mentioned associations to be very careful when communicating above are subject to claims for breach of warranty, with vendors, and choosing attorneys. despite the apparent exclusion contained in Section 203, and the general rule applicable to most other real CASE STUDY SEVEN estate transactions of “buyer beware.” This decision is a big victory for condominium unit owners and opens Turnberry Court Corporation v. Bellini, 2007 WL the door to claims against developers that were once 2254680 (Fla. 3rd DCA 2007) thought by many to be barred by Section 203 of the Condominium Act and Florida law. Facts Porto Vita was the owner/developer of the South CASE STUDY EIGHT Tower of Porto Vita, a residential condominium complex in Aventura, Florida. On March 22, 2000, a In Re: Petition for Declaratory Statement, Clois- unit was sold to 2 individuals by the developer. Both ter Beach Towers Association, Inc., Docket No. prior to and after the closing, the owners complained 2007003592 (Declaratory Statement Issued Feb- of problems with the unit’s air conditioning system. ruary 28, 2007) These problems included leakage, dust accumulation, abnormal noise, and uneven air flow temperatures. An Facts inspection revealed that the problems were caused by Cloister Beach is community association. In 1995, the several deficiencies in the installation of the air condi- association amended and restated the By-Laws. The tioning system. amended By-Laws provide that “A director who has The owners sued the developer and the jury completed a 3-year term as a member of the Board of returned a verdict in favor of the owners on the the- Directors shall not be eligible to serve on the Board of ory that there existed an implied warranty of the air Directors again for a period of one year.” conditioning system by the developer. The devel- oper appealed and argued that pursuant to the Con- Issue dominium Act (FL. St. §718.203), developers do not Can a community association prevent a unit owner impliedly warrant air conditioning systems, because from running for the Board if the association’s gov- they are excluded from such warranty as “mechanical erning documents explicitly provide certain qualifica- elements serving only one unit.” tions that the unit owner does not meet, and/or can an association enforce term limits contained in an Issue association’s governing documents. Does Florida law permit an individual owner to sue a developer of a condominium based on an implied Holding warranty theory if the unit purchased by the owner No contains defective property such as an air conditioner, which the developer sold to the owner with the unit? Rationale The Division analyzed the language of the Condo- Holding minium Act, and concluded that the Condominium Yes Act explicitly permits all unit owners to run for elec- tion to the Board, with the sole exception of convicted Rationale felons whose right to vote has not been restored. Even though Section 718.203 of the Condominium The Division also noted as support for its interpreta-CAM_book.indb 12 6/12/08 7:44:00 PM
  17. 17. 2008 Legal Update    13 tion that when the Condominium Act was amended Florida Statutes does not change the number of mem- in 2000, the legislature repealed the provision of the bers of the Board as it only operates in the absence Condominium Act that specifically stated “In order of any provision specifying the number of members.” to be eligible for Board membership, a person must This broad logic (and the actual text of the statute) meet the requirements set forth in the Declaration.” arguably calls into question the Division’s prior opin- Therefore, all owners, (except felons whose right to ions, which state that if a condominium’s documents vote has not been restored) are permitted to run for are not silent and explicitly address the issue, but the Board, and provisions of the condominium docu- provide a possible range of the number of directors ments adding additional qualifications or term limits without an explicit method for determining the actual are unenforceable because they contradict the current number of directors, there must be 5 directors, even Condominium Act. though the condominium documents provide for a possible range. However, in this instance, the Division CASE STUDY NINE did not reconsider its older decisions on this point, and it did not have to because the Division held that In Re: Petition for Declaratory Statement, Gulf the condominium documents stated clearly enough Island Beach and Tennis Club Community associa- that 3 directors should govern the association. There- tion I, Inc., Docket No. 2007001248 (Declaratory fore, although the Division may clarify this issue in the Statement Issued March 26, 2007) future, the Division’s current opinion appears to be that if the governing documents provide a range but Facts do not provide a method for determining the number Gulf Island Beach and Tennis Club is a community of directors within the range, 5 directors shall be on association. Article VII, Section 1 of the condomin- the board pursuant to the statutory default. However, ium’s Articles of Incorporation provides “The affairs if the condominium documents provide for a range of of the Association shall be managed by a Board con- directors, but also can be reasonably read to provide sisting of the number of directors determined by for a default number of directors other than 5 (such the By-Laws, but not less than 3 directors and in as 3 in this instance), the default number contained in the absence of such determination, shall consist of 3 the condominium documents (3 in this instance) shall directors.” The By-Laws did not specify any number govern the association. of directors. However, Article 4 of the By-Laws stated that the Association shall be managed by a Board “as CASE STUDY TEN set forth in the Articles of Incorporation.” Prior deci- Faircrest Community association, Inc. v. Sullivan sions of the Division held that if a condominium’s – Moore, 2006 WL 4451884 (Final Order June documents provide a possible range of the number of 2006) directors without an explicit method for determining the actual number of directors, they would be treated Facts as silent on this point. Therefore, the association must The association filed a Motion seeking attorney’s fees be managed by 5 directors, the statutory default. This and costs related to an arbitration that was dismissed, is because Section 718.112(2)(a)(1) provides that if the because the owner conceded to the association and By-Laws are silent, the association shall be run by 5 began complying with the association’s written directors (unless there are less than 5 units). demand to cure before the arbitration was served. The owner also ultimately cured the violation (removing Issue the unauthorized lanai cover on her property). If language in a community association’s By-Laws (either explicitly or by reference to another one of Issue the condominium documents) provides for a range of If an owner concedes that the association is correct, directors, but also provides that in the absence of a and begins complying with the association’s written specific mechanism in the condominium documents demand and reasonably begins to cure the violation to determine the number of directors, the Board shall before the arbitration is served on the owner, and consist of 3 directors, should the board be comprised eventually does cure the violation, is the association of 3 directors or the statutory default of 5 directors? entitled to an award of attorney’s fees and costs related to the written demand and the drafting of the arbitra- Holding tion petition? Three directors Holding Rationale No The Division’s logic is that “Section 718.112(2)(a)(1),CAM_book.indb 13 6/12/08 7:44:01 PM

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