Gelfand & Arpe, P. A.

 

October 2008

Vol. XVIII No. 10

LEGISLATIVE UPDATEC PART III: IMPACT

As we head into A season@ the impact of the 2008 Florida Legislative Session is being felt. All the nuances of the new laws, contained in thousands of pages, cannot be summarized with any degree of fairness or reliability in one or a series of Memoranda; thus, the laws= exact text are posted on the firm= s website at www.gelfandarpe.com.

In Florida, condominium associations are impacted more than homeowners= associations as a result of the veto of House Bill 679. With budgets and annual meeting planning upon us, issues requiring advance planning for meetings and administration include the following:

CONDOMINIUM ASSOCIATIONS

Elections. Director nominees must provide a competency verification form with their nomination. Condominium associations with two year or more staggered terms must obtain unit owner approval of the terms before elections.

Assessments. When undertaking the lien process, condominium associations must provide thirty day notice of intent to lien and thirty day notice of intent to foreclose.

Insurance. The State of Florida Division of Land Sales has taken an unofficial position that condominium associations must obtain proof from each unit owner that the owner has obtained required coverage for items not insured by the condominium association. The new law does not specify when the proofs must be obtained; however, proofs should be obtained within a reasonable period of time, presumably by the end of the year. While the new law does not state what must occur if the proof is not received, the State appears to require a condominium association to bring a claim against the unit owner and/or for the association to pay for insurance coverage. Either way, this can be a very expensive proposition.

Reports. If a condominium association desires to avoid the expense of a building report, then unit owners must prove waiver of the reporting requirements before the deadline. While the building report cycle is five years, it is suggested that associations obtain waivers earlier, rather than later.

HOMEOWNERS= ASSOCIATIONS

Elections. Director nominees must provide a competency verification form with their nomination.

Reserves. Reserves still have to be funded as provided by last year= s amendments to the Homeowners= Association Act, ' 720.303, Fla. Stat. because changes adopted by the legislature this year were among the provisions vetoed and did not take effect.

Budgeting. When the holder of a first mortgage forecloses on a parcel, homeowners= associations are limited to seeking the lesser of one percent of the original mortgage principal balance or twelve months of assessments.

RESTRICTIVE COVENANTS: ENFORCEMENT IS NOT JUST THE RIGHT OF THE ASSOCIATION

Who can sue to enforce restrictions? Most declarations grant the association, and the association alone, the power to enforce restrictions. What happens, however, if the association declines to file suit against an owner who violates a restriction? Are owners who are affected by the violation out of luck?

In Kirschner v. Baldwin, 33 Fla. L. Weekly D1899 (Fla. 5th DCA, August 1st, 2008), an owner allegedly violated a community= s restrictive covenants by constructing a garage which encroached on a 35 foot rear setback. In addition, the garage hindered the neighboring owners= view of a nearby river. The association administering the covenants declined to file suit to enforce the covenants.

A neighboring owner filed suit to enforce the restrictive covenants. The trial court dismissed the claim for damages, finding that the complaining neighbor did not have standing to sue. A Standing@ is the legal right to assert a claim. The court found that the association= s declaration did not expressly grant owners the right to enforce the association= s restrictions. The trial court also found it would be inequitable to require the owners to remove the part of the garage which encroached on the setback.

The Florida appellate court disagreed with the trial court= s decision to deny an injunction. The fact that the declaration granted the association power to enforce restrictions did not eliminate owners= enforcement rights. The appellate court reasoned that the declaration specifically provided that certain restrictions benefitted all lot owners. As a clearly intended beneficiary of the declaration, the complaining neighboring owner had the right to enforce the association= s restrictions. Thus, in addition to an association, owners may have A standing@ to enforce those restrictive covenants which are intended to benefit them as well. Because most restrictions are for the benefit of all owners, directors should be aware that if an association chooses not to bring suit for a violation of a restrictive covenant, another owner may.

As Florida associations draft amendments to declarations and alteration agreements, consideration to allow neighboring owners to enforce the provisions may be an issue to consider.

TRUST ACCOUNT SAFETY

Gelfand & Arpe, P.A. holds funds in trust for clients. Occasionally, when a large sum of money is being held for a long period of time, a special account can be opened for trust funds. However, the expense of opening a separate account usually outweighs anticipated benefits; thus, it usually is not practical for the firm to manage the account for funds held in trust so that all the funds are within the limits of Federal deposit insurance. If a firm client desires the firm to make special arrangements for an account, then please contact the firm= s administrator, Jamie Stanton, to discuss procedures, signature requirements and expenses.

This information is provided for general information purposes only, and may not be relied upon and is provided without obligation or fee. It is distributed to the firm's association clients to provide a general comment of recent legal changes. This information is not legal advice, representation counsel or opinion. The changes in the law may not have been reviewed by Florida courts and may be subject to further challenge. Before taking any action you are urged to consult with counsel to ensure that your legal rights are protected.

8 2008 by Gelfand & Arpe, P.A.