February 2004

What happens when owners refuse to pay assessments? Associations are unable to provide services that attracted owners to their community. To avoid communities "going to seed," associations can lien a delinquent owner’s property. However, if changes are made to existing law, it may become harder to enforce these liens, endangering communities throughout the State.

Two matters illustrate the delicate nature of lien rights. First, a recent Florida appellate decision limited a municipality’s ability to enforce its lien rights. In Fong v. Town of Bay Harbor Islands, 28 Fla. L. Weekly D55 (Fla. 3^rd DCA, December 24, 2004), the court ruled that a town could not impose a lien for code violations on homestead property. In 2000, the Town of Bay Harbor Islands filed a lien on a resident’s property. The Town then filed suit against the resident to foreclose its lien. The trial court found that the Town was entitled to execute and levy against all property owned by the resident except for her homestead. Nonetheless, the trial court found the Town’s lien could remain on the homestead property to be satisfied from the proceeds of sale if the property ever lost its homestead status.

The resident argued the imposition of the Town’s lien on her homestead property violated the Florida Constitution. The appellate court agreed. "If Fong were to sell the property, there would be no lien on the property then in the hands of the purchasers; rather, the proceeds from that sale could be reached by creditors such as the Town if Fong failed to invest these proceeds into another homestead within a reasonable period of time," the court stated. "However, should the property lose its homestead status while still owned by Fong, then the Town’s order against her could be enforced as a lien against the property."

In other words, the court determined that the Town could not impose a lien on a resident’s homestead property. If and when the resident’s property ever lost its homestead status, the Town could then enforce its order against the resident’s property. The Fong decision points out that a municipality’s lien rights are severely limited when property is classified as homestead.

The second matter illustrating lien rights is the report submitted by the Select Committee on Condominium Association Governance. The Committee submitted proposed changes to both condominium and homeowners’ laws which would reduce association lien rights. If an association can not enforce its lien rights, associations can lose the ability to collect assessments necessary to maintain the high standards of the community. While no one likes liens or assessments, without either communities cannot survive. Let your legislator know associations require practical solutions.

Can you rely upon municipal building officials? What happens if a building official gives you the wrong information when you go to apply for a building permit? Even if you build your home or make your alteration in reliance on the wrong information, and the city or town knowingly places an incompetent employee in a position of authority, you may not be able to hold the city or town responsible for damages you incur.

In Storm v. The Town of Ponce Inlet, 2004 WL 19497 (Fla. 5^th DCA, January 2, 2004), the court ruled that a homeowner could not sue the Town for the negligent retention of the chief building official. The homeowner alleged that the chief building official expressly misrepresented the Town’s building code and regulations when the homeowner applied for a building permit. The building official allegedly misrepresented the proper building elevation upon which the homeowner’s residence needed to be built. As a result, the homeowner was unable to obtain flood insurance. The homeowner claimed the Town was negligent because it did not fire the building official after learning of his malfeasance and incompetence.

The court found that the homeowner alleged the building official knowingly gave false information, that the Town knew of the damage the official was causing, and the Town allowed it to continue. However, the court concluded that the Town was protected by the doctrine of sovereign immunity. Generally, a state and its agencies cannot be sued unless it consents to be sued. This means that the Town cannot be sued even if it was negligent in not firing its employee.

This decision points out the problem with relying on municipal officials concerning building matters. An association may not be able to rely on inspections, final or otherwise, to require correct work. Usually it is recommended that an association hire an engineer to inspect work before payment is made.

This year, the Secretary of State changed the procedure for filing annual reports. Instead of receiving large envelopes, Associations will receive postcards encouraging them to file annual reports online. If an Association chooses to file a paper report, it must return the postcard to the Secretary of State. Remember, file your report on time. After May 1, 2004, the $150 filing fee will become $550. Associations which do not file by October 2004 will be administratively dissolved. If a corporation is dissolved, it may not be able to undertake business. Those that seek to undertake business, may be personally responsible if something goes wrong.

For many Associations, Gelfand & Arpe is the Association’s registered agent. Because the firm moved, Associations should complete the Registered Agent form for a change of address in order to ensure that legal papers are properly delivered to the firm. Forms must be sent to the firm for our signature. Please feel free to contact us with any questions.

FIRM NEWS

The firm will be closing its office on Monday, February 16, 2004 in observance of President’s Day.

© 2004 by Gelfand & Arpe, P.A.