June 2004

May was a month of many changes for Florida community association law. First, the legislative session concluded with the adoption of many laws affecting Florida communities. Second, judicial decisions continue to interpret owners’ rights and responsibilities.

LEGISLATIVE UPDATE: PART I

The Governor generally has fifteen days after presentment by the Legislature to determine whether to veto an end of session enactment. As this memo proceeds to the press, many enactments are awaiting to be sent to the Governor. Once the budget is signed, then other matters, including community association issues, will be transmitted to the Governor. In the interim, the following is a short summary of anticipated laws.

Homeowners’ association communities are the most hard hit by the legislative changes. Adding to the anticipation of whether the Governor will approve new laws is the fact there are two separate but nearly alike acts addressing the same issues. Associations will want to plan now to administer properly.

As an example of the anticipated new laws, many of the open meeting and document laws affecting condominium associations will now apply, albeit with slight changes, to homeowners’ associations. This includes the need to provide fourteen days advance notice to members of meetings considering assessments and rules affecting lots, to allow owners to speak, and to permit extensive record inspection rights. A cumbersome method to assist communities that lost their covenants due to the passage of time was also adopted.

Other homeowners’ association administrative issues were also addressed. Liens may not be based upon fines. Bidding is required for substantial jobs. Mandatory arbitration of many disputes is required.

Condominium associations will be very happy with a new enactment championed by the Real Property, Probate and Trust Law Section of The Florida Bar. This anticipated law permits the waiver of limited common element reserves by only those unit owners contributing to the fund. Otherwise, for condominium associations the position of Condominium Ombudsman was created and Question & Answer Sheets are required again. Finally, when condominium associations adopt rental restrictions the amendment must state if the amendment does not "grandfather" existing owners.

There are many proposed laws that affect all communities, condominium, homeowners’ or otherwise. For example, one enactment affects the manner of reporting and enforcement of construction claims. Stay tuned at the end of June to find out which bills actually became laws!

What happens if a homeowner has a "beef" with an association and decides to place signs expressing his or her discontent in his or her automobile? Depending on the exact language of the association’s declaration, an association may not be able to prohibit signs. In short, the reason for this treatment is that "in" may not be treated the same as "on."

A Florida appellate court recently set forth some boundaries where homeowners can place signs. In Shields v. Andros Isle Property Owners Association, Inc., 29 Fl. L. Weekly D1162 (Fla. 4^th DCA, May 12, 2004), the Association sued a homeowner for temporary and permanent injunctive relief after the homeowner displayed a for-sale sign in her front yard criticizing the builder of her home. The homeowner also placed signs complaining about her home and the builder in the windows of her automobile.

The trial court granted a temporary injunction that prevented the homeowner from posting signs on her lot. The trial court also held that the signs placed in the interior of the homeowner’s vehicle violated the association’s restrictions.

Section 8 of the Association’s Declaration stated that "[n]o signs of any kind shall be displayed to public view on any Lot except one sign of not more than two (2) square feet advertising such Lot for sale or rent." The Declaration defined Lot as "any plot of land within" the development including the "[r]esidence and all improvements constructed on a Lot." Section 11 stated that "[n]o vehicles, except four wheeled passenger automobiles ... with no lettering or signage thereon, shall be placed, parked or stored upon any Lot...."

The homeowner argued Section 8 only applied to plats of land and not to vehicles. The homeowner also argued Section 11 only prohibited signs placed "on" a vehicle but did not prohibit signs placed "in" a vehicle. The Association maintained the restrictions prohibited signs placed anywhere on the vehicle.

The Florida appellate court agreed with the homeowner. Looking at the American Heritage Dictionary, the court pointed out that the dictionary defined "therein" as "[i]n that place or context." The court concluded that the intent of the Association’s Declaration was to prohibit signs placed on the outside of vehicles, not to prohibit signs placed inside vehicles. "Thus, section 11 is aimed at prohibiting four wheeled vehicles of a recreational or commercial nature from parking on any lot in plain view, not from prohibiting residents from hanging signs in their car windows," the court concluded.

The Shields decision emphasizes the importance of carefully drafted documents. Courts tend to favor the unrestricted use of property. If an association wants to restrict particular uses of property, it is important that the restrictions be clear and unambiguous.

MEMORANDUM TO CLIENTS

INSURANCE: THE IMPORTANCE OF READING THE FINE PRINT TO KNOW WHAT YOUR POLICY COVERS

What would happen if an owner or visitor is injured while using equipment in the Association’s exercise room or in the lobby or outside the building? Would the Association be covered for his or her injuries? Maybe yes, maybe no - it depends on what the policy includes and excludes.

The recent decision of Union American Insurance Company v. Haitian Refugee Center, 28 Fla. L. Weekly D2220 (Fla. 3^rd DCA, September 24, 2003), emphasizes the importance of knowing what your insurance policy covers. Donaldson Dona St. Plite died after being shot by a member of a crowd at a street rally sponsored by the Haitian Refugee Center a mile from the Center’s headquarters. Mr. St. Plite’s Estate filed a wrongful death action against the Center, seeking money damages for the Center’s negligence.

The Haitian Refugee Center’s insurance policy limited coverage to "bodily injury ... arising out of [t]he ownership, maintenance or use of the premises shown in the [s]chedule and operations necessary or incidental to those premises." The trial court ruled that the Center’s insurance company provided liability coverage to the Center for the shooting death of Mr. St. Plite. The trial court found that the event at which Mr. St. Plite was killed was "an operation necessary or incidental to the business" of the Center.

The Florida appellate court disagreed with the findings of the trial court. The appellate court pointed out that the policy used the word "premises" and not "business." Because the death occurred at a location away from the Center and in a manner unrelated to the Center, the court concluded that the Center’s insurance policy did not cover Mr. St. Plite’s shooting death.

This case emphasizes the importance of knowing what your insurance policy covers. As we all know, insurance policies are typically long and difficult to read. Nonetheless, it is important to know what type of coverage you have in the event someone is injured on your property. Take the time to read your insurance policies. Consult with your insurance agent. It may help avoid surprises down the road.

Do you live in a high rise condominium in Florida? Does your building contain a fire sprinkler system? If not, despite the cost, your condominium association may be required to install a fire sprinkler system in common areas.

Florida Statute §718.112(2)(l) requires the Association’s Bylaws to provides for "a provision that a certificate of compliance from a licensed electrical contractor or electrician may be accepted by the association’s board as evidence of compliance of the condominium units with the applicable fire and life safety code." Thanks to Florida Senate Bill 592, which became effective as of May 21, 2003, Associations can opt out of individual unit and common element installation of a fire sprinkler system under certain circumstances.

The first test under the statute deals with the height of buildings. Section 718.112(2)(l) provides that a Florida condominium association may not forego the retrofitting of a fire sprinkler system of common areas in a building over 75 feet in height. The common areas include any enclosed hallway, corridor, lobby, stairwell or entryway.

If your condominium building does not exceed the height threshold, then the statute next provides a complicated procedure for opting out of the fire sprinkler requirements. The statute provides that the unit owners can forego retrofitting of the fire sprinkler system if two-thirds of all voting members agree to do so. The vote to opt out may not be obtained by general proxy or limited proxy. The vote must be obtained either (1) by a vote cast personally at a duly called membership meeting or (2) by execution of a written consent by the member. A certificate attesting to such vote must be recorded in the public records.

The Association must provide each unit owner written notice of the vote to forego retrofitting of the required fire sprinkler system in at least 16-point bold type, by certified mail, within 20 days after the Association’s vote. A copy of the notice must be provided by the current owner to a new owner prior to any closing and to a renter prior to signing a lease.

Local authorities cannot require completion of retrofitting of common areas with a sprinkler system before the end of 2014. However, it is important to note that if the retrofitting has not been completed as of December 31, 2014, the building will be in violation of the Florida Fire Prevention Code. Associations should therefore begin the process well in advance of the deadline to either opt out of the requirements or to have fire sprinkler systems installed. Remember to follow each point mentioned above.

FIRM NEWS

In observance of national holidays, the firm’s offices will be closed on Thursday, December 25, 2003 and Thursday, January 1, 2004. The firm’s offices will also be closed the afternoon of December 16, 2003.

Happy holidays! May the new year bring peace, happiness and good health to all.