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May 1, 1996 MEMORANDUM TO CLIENTS
CLASS ACTIONS WORK While seemingly everyone complains about lawyers and the courts, and in particular class action litigation, class action litigation is assisting home-buyers nationwide. As home-buyers find it increasingly difficult to seek redress for construction problems against developers and contractors, especially because of the "economic loss rule", class actions may be the literal court of last resort for deceived home-buyers. As a result of class action litigation, consumers' rights that otherwise would be lost may be vindicated, at least for two products. The first claim concerns defective polybutylene piping. Though many bemoan class action litigation, a class action resulted in a $75,000,000 settlement for buyers of the defective piping. Some claims must be filed as early as August 21, 1996. Your association counsel will have information that will assist your efforts to determine if your association or association members should file a claim. The second claim concerns exterior press-board siding, including Masonite®. Many individuals have followed what is known locally as "the Masonite litigation" in Palm Beach County Circuit Court. Though the well publicized case only involved one development, the result apparently has had an impact throughout the industry. Specifically, a $275,000,000 fund has been set aside for property owners except those in Florida who bought Louisiana-Pacific Inner Seal Exterior siding. The purchase must have occurred before December 31, 1995. There is a pending class action suit concerning claims which will involve Florida purchasers. THERE ARE FEW THINGS THAT ARE CERTAIN IN THIS LIFETIME, EXCEPT...
How many associations budget for sales taxes levied upon assessments? Undoubtedly the answer is few, if any. The low or non-existent number is probably because sales tax collectors have not been reported to seek taxes from assessment revenues. While taxing association assessments may seem to be a political "suicide pill", as the legislature searches further and further afield to find revenue streams, association should be prepared for the legislature to consider taxing assessments. This warning is not without a basis in fact. The decision in Department of Revenue v. John's Island Club, Inc. _______ So. 2d _______ , 21 Fla Law Weekly D750 (Fla. 1st DCA, March 27, 1996), describes how the Department of Revenue sought to tax capital contributions paid by club members. The State's claim was based upon the Florida Legislature's sales tax on "admissions" first levied in 1949. Before 1990, "admissions" included "all dues paid to private clubs providing recreational facilities", a very broad definition. In 1990 the law was further broadened to include physical fitness membership club "dues". The following year club "fees" were also taxed. Upon the last statutory change, allowing the taxation of club "fees" the Department of Revenue sought to collect sales tax upon club capital contributions. The appellate court differentiated between dues and fees, and separate capital contributions. Capital contributions would appear not to be a use fee, but instead a type of equity investment; thus, capital contributions are not subject to sales tax. Notably, the court accepted the proposition that other dues and fees, not capitalized, would be taxable. Under the court's reasoning, club capital contributions could be taxed if the legislature changed the law. Taking the reasoning one step further, the legislature could easily tax homeowners', cooperative and condominium association fees, including assessments. Thus, the ever-widening reach of the revenue authorities seems to be inching closer and closer to association assessment income! PLEASE, PLEASE DO NOT ASK
No one should ever request a Notary Public to acknowledge or to verify documents in the absence of the signer. The decision of Ameriseal of North East Florida, Inc. v. Leiffer, _______ So. 2d _______ , 21 Fla L Weekly D777 (Fla. 5th DCA, March 29, 1996) reinforces this self-evident, but not always followed policy. This decision concerned an organization's employee who was a Notary Public who acknowledged signatures on a bond of two individuals who were not present before her. The individuals did not swear to the truth of the document. The bond issuer discovered that an unauthorized individual had signed the bond and withdrew the bond. As a result the organization lost a contract and suffered significant damages. The appellate court noted that the purpose of notarizing is to allow someone not present to rely on the documents. The Notary Public's obligation was stated to be "quite simple". The Notary:
The court's comments are particularly appropriate. The Notary potentially liable for the loss. The organization that employed the Notary is also potentially liable. Thus, Notaries should not be asked to undertake the acknowledgement or verification of documents not executed in their presence by someone who is not properly identified. GET AN EDUCATION
With the "season" coming to a close, many involved with association governance are taking stock of the past year, and lessons learned. Thus, it is time to consider continuing education programs. Two programs are of particular note. First, on May 13 - 16, 1996, the State of Florida Office of the Department of Urban Development's Office of Fair Housing and other governmental agencies will sponsor a Fair Housing Symposium in Miami. In addition to those who earn a living through housing efforts, residents and association representatives are expressly invited to attend. The symposium's objectives include reviewing current issues in fair housing, how communities can meet certification requirements, and state organizational efforts. The sponsors have set a registration fee of $125.00 including luncheons and receptions. For information please do not contact the firm; instead, contact Ms. Tapscott of HUD at (305) 662-4549. Second, closer to home, the Palm Beach County Bar Association is sponsoring seminars as part of the Bar Association's extensive public education campaign. This year the firm's senior shareholder, Michael J. Gelfand, will be presenting the Bar Association's Law Week Condominium Update seminar. Though Law Week registration is closed, the Bar Association is sponsoring a Condominium Update Seminar for attorneys on June 11, 1996. Mr. Gelfand will present the "Case Law Update." Please do not contact the firm, but contact the Bar Association at (407) 687-2800 for additional information.
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