Gelfand & Arpe, P. A.

 

Vol. XVII No. 3

MEMORANDUM TO CLIENTS

JUNE 2008

2008 LEGISLATIVE SESSION-PART II:

IT MAY BE SAFE TO COME OUT NOW

As promised in last month= s Memorandum to Clients, with the close of the legislative session we are ready to report on Bills that are anticipated to impact Florida community associations. The Governor signed into law one bill, House Bill 995, Chapter 2008-28, Fla. Laws, which was summarized in the May 2008 Memorandum to Clients.

The new Bills address a panoply of important community issues. For example, House Bill 601 significantly changes condominium association insurance requirements and casualty reconstruction expense administration, as well as mandating estoppel letter approvals for condominium and homeowner associations. House Bill 679 revises condominium meeting and election procedures, requires directors, homeowners and condominium associations to certify compliance A to the best of their ability@ with the A documents,@ changes homeowners association meeting procedures, reserve funding and dispute resolution, and most notably allows fines $1,000.00 or more to be liens against homeowners= association parcels. Senate Bill 1986 clarifies last year revisions to homeowners association lien processes including limiting the liability of a first mortgagee.

The Bills deemed significant to Florida community association governance are posted on the firm= s website, www.gelfandarpe.com. Just click the A Statutory Update@ area. The firm plans to update the website with the laws as signed by the governor. Please note that the text that follows is merely summary in nature and the exact text should be referred to before taking action.

Condominium Associations. HB 601/SB 2086, except as otherwise provided, effective July 1, 2008 if signed by the Governor.

' 718.111(1)(b). Voting. A condominium association director who abstains from voting is presumed to have taken no position on the motion. [Ed.: This change conflicts with HB995/Chapter 2008-028 Fla. Laws.]

' 718.111(11). Insurance. The value of condominium hazard insurance shall be determined by an independent insurance appraisal which shall occur once every 36 months. Self-insurance and pooled funds are authorized within a narrow preview. Failure of condominium developer appointed members during developer control to obtain adequate insurance is a breach of their duty unless they have made their best efforts to do so.

Deductibles are expressly permitted to be determined by the condominium association= s board of directors if deductibles are consistent with industry standards and prevailing community practices, and may be based upon available funds including reserve accounts. The notice of a meeting at which deductibles are established shall include the proposed deductible amount, available funds and assessment authority together with estimating potential assessments to pay the deductible. Condominium associations controlled by unit owners must also utilize their best efforts to obtain insurance. An exception for the requirement of condominium association insurance coverage applies only if units are in individual free standing buildings.

Individual condominium unit owner insurance coverage must include special assessment coverage of no less than $2,000.00 per occurrence, and shall include all improvements or additions benefitting that unit owner which do not benefit all owners. The condominium association may require owners to provide proof of insurance, and upon an owner= s failure to provide proof of insurance, purchase insurance on behalf of the owner which expense shall be an assessment against the unit.

Condominium reconstruction work normally shall be undertaken by a condominium association; however, upon the condominium association= s prior written consent a unit owner may undertake work subject to the owner obtaining proper approvals. The condominium association is to be an additional insured on all unit owner casualty policies. Multi condominiums may obtain a single policy upon a proper vote and recorded instrument.

Subject to the condominium unit owners opting out, the portion of casualty repair expense not paid by insurance shall be a common expense of the condominium association, except for damage caused by a unit owner= s intentional conduct, neglect or failure to comply with restrictions. If a condominium unit owner undertakes repairs and the condominium association obtains insurance proceeds, then the condominium association shall reimburse the unit owner without a waiver of rights of subrogation. Notwithstanding the foregoing, if a condominium unit owner does not timely report an insured loss, then the condominium association does not need to pay for the loss. The condominium association= s duty to reconstruct and repair is only for improvements originally completed by the condominium developer and reasonable replacements which are standard to the units.

' 718.115(1)(a). Expenses. Amended to allow items or services, such as fire safety equipment, water and sewer, to be condominium association common expenses unless otherwise provided in the declaration of condominium.

' 718.116. Estoppel. Amended to allow a fee to a condominium association for an estoppel letter certificate, requiring the fee to be established by a writing such as a resolution or management agreement. The fee shall be included in the certificate and shall be refundable if a closing does not occur within thirty days after the schedule date.

' 718.117. Termination. Amended to clarify that a condominium termination distribution to lienholders, such as mortgage holders, shall not exceed the unit owner= s share of termination proceeds.

' 720.30851. Estoppel - HOA. Created to limit homeowners= associations right to charge for estoppel certificates in the same matter as condominium associations referenced in ' 718.116 above.

' 718.501. Suspensions. If the Division of Land Sales determines that a condominium developer violated a State rule, then the Division may suspend that developer= s right to file a new prospectus. The Division may petition for the appointment of a conservator for a condominium association to take action as required by a court. The Division may also seek restitution to a condominium association and issue notices to show cause and levy penalties for failure to abide by the orders.

Community Associations. HB 679, effective July 1, 2008, if signed by the Governor, unless otherwise provided in the Bill.

Chapter 514 is amended to provide that homeowner association pools serving over 32 parcels be subject to State swimming pool regulations.

' 718.112(2)(d). Meetings. Condominium association annual members= meetings shall be held at the location provided in the association= s by-laws, and if the bylaws are silent, then within 45 miles of the condominium.

Terms. Condominium association directors= terms end at the annual members= meeting unless: staggered terms are provided for in the by-laws as originally drafted or amended by a majority f the unit owners; or, if no person provides an intent to run for the position.

Co-owner Directors. In condominium associations administering more than ten units co-unit owners may not serve on the board of directors.

Director= s Disqualification. Condominium Association officers and directors may be disqualified from serving if suspended by the Division for misfeasance, if delinquent in the payment of fees or assessments to the association, or if convicted of a crime anywhere in the world that would be considered a felony in the state, unless civil rights were restored.

Elections. Only condominium associations governing ten units or less may opt out of the Condominium Act= s absentee ballot process.

Director= s Certification. Within 30 days of election, a new condominium association director must deliver to the association= s secretary a certification that the director has read the A condominium documents@ and policies and will work to uphold the documents and policies to the best of their ability.

' 720.303. Homeowners= Association Administration.

Open Meetings. Homeowners= association directors= and committee meetings need not be open to members if discussing pending or proposed litigation with counsel, or personnel matters.

Records. A parcel owner= s records request to a homeowners= association delivered by certified mail return receipt which is not responded to with records within ten business days creates a presumption of wilful failure to comply. Duplication of more than twenty-five pages may be by an outside vendor as well as association management personnel. The reasonable cost of duplication, including hourly employee rates and administrative costs may be charged.

Reserves. Funding of homeowners= association reserve accounts is clarified. Unless reserves are established by the community= s developer or the membership, assessments for reserves shall be limited if the governing documents limit assessment increases or the parcel owners agree to terminate the reserve. If reserves are created by the developer or parcel owners, then reserves must be funded unless a majority of the voting interest of the association approves termination. If reserves are not kept or are intended to be waived, then the financial report, budget and proxy must contain conspicuous notifications and warnings in a statutorily required format.

Compensation. Association officers, directors and committee members may not receive, directly or indirectly, any compensation for service, except for benefits enjoyed community wide, as authorized in the governing documents, or authorized in advance by a majority of the members.

' 720.305(2). Homeowners= Fining. The fining process is clarified, providing that daily fines may be up to $100.00 and that a fine of $1000.00 or more may be a lien against a parcel.

' 720.306. Homeowners= Elections. Directors shall be elected by secret ballot. Absentee ballots are authorized if implemented with an inner envelope, and deadlines for nominations and balloting. A certificate by directors similar to that in ' 718.112, discussed above for condominium associations, is also required.

' 720.401. Homeowners= Disclosures. A selling parcel owner= s disclosure statement was expanded to include development district taxes and liability for association assessments.

' 34.01 Jurisdiction. County courts have jurisdiction of certain homeowners= association disputes.

' 720.302. Disputes. Mandatory pre-suit alternative dispute resolution procedures are expanded to deed restricted communities in addition to defined homeowners= association communities.

' 720.501 - 505. Home Court. A new part IV of the Homeowners= Association Act, entitled A Dispute Resolution,@ the so-called short title being A Home Court Advantage Resolution Act,@ is effective July 1, 2009.

' 720.503. In addition to the current pre-suit mediation process, an aggrieved party may opt to proceed with mandatory pre-suit arbitration instead of or in addition to mediation.

' 720.504. Before proceeding with mediation or arbitration, a party must provide notice to the other party of the dispute. The notice of dispute shall also provide specific information of the dispute including the text of the governing document or rule provision sought to be enforced. The party receiving notice of a dispute has ten days to resolve the dispute.

' 720.505. Delivery of a demand for mandatory pre-suit dispute processes may be by hand delivery with an affidavit of the person delivering notice, in addition to the Certified Return Receipt Mail. An initial notice must be attached to a demand for mandatory pre-suit mediation or arbitration. A specific demand is provided with an agreement to mediate, details on service and allocation of expenses. A responding party may opt to demand arbitration or agree to mediate and agree to a mediator. Mediation must be scheduled within a ninety day period. If a responding party fails to respond, fails to choose a mediator or fails to pre-pay a mediator= s fee, then the aggrieved party may immediately proceed to filing a lawsuit. If any party fails to participate as required, then that party may not recover attorney= s fees and costs in litigation regarding the same dispute and the same parties. If the session cannot be scheduled within ninety days without the fault of any party, then there will be an impasse declared and either party may proceed.

' 720.506. A responding party may opt out of mediation and proceed with non binding pre-suit arbitration.

' 720.507. The process for initiating pre-suit arbitration is stated, including an agreement of the parties to proceed together with penalties for not proceeding in good faith.

' 720.508. Rules of procedure for mediation and arbitration shall generally follow the Florida Rules of Civil Procedure and Florida Statutes Chapter 44.

' 720.509. Mediators and arbitrators are to be a Certified Circuit Court Civil Mediators and a member of the Florida Bar.

' 720.510. Procedures for enforcement for mediation agreements are stated.

' 718._ Insurance. Without assigning a specific statutory section, a new provision allows three or more condominium associations to form a self insurance fund under certain specified circumstances.

Homeowners= Association Liens. SB 1986/HB 921, effective July 1, 2008, if signed by the Governor.

' 720.3085. Provides that homeowners= association assessments liens are effective upon recording. If recorded after the effective date, the lien shall relate back to the date the original declaration was recorded; however, concerning the first mortgage of record as of the effective date, the lien is effective from and after recording. Requirements for the lien and a notice of contest of lien are provided.

A homeowners= association may foreclose a lien as a mortgage and\or to seek money damages for which the association is entitled to recover reasonable attorneys= fees. Owners remaining in possession after a foreclosure judgment may be required to pay rent and an association is entitled to purchase a foreclosed parcel.

The liability of a first mortgagee, or its successor or assign as a subsequent holder of the first mortgage, for homeowners= association assessments coming due before the mortgagee= s acquisition of title is limited to the lessor of twelve months of regular and special assessments or 1% of the original mortgage debt.

A homeowners= association may record a claim of lien forty-five days after depositing a notice in the mail to the owner. Qualifying offer procedures are clarified.

Fire Safety. HB 727/SB 1554, effective July 1, 2008 if signed by the Governor.

' 633.027. Light frame truss-type construction, if in a commercial, industrial or three unit or more residential structure, must post State Fire Marshall approved signage.

Building Code Standards. HB 697/SB 560, effective July 1, 2008, if signed by the Governor.

' 163.04(2) Covenants. Amended to provide that declarations of condominium cannot forbid or otherwise control alterations within the boundaries of a condominium unit concerning installation of solar collectors or other energy devices.

' 718.113(6). Authority. The board of directors may without unit owner approval install on common elements or association property energy efficient devices.

Association Receivers and Collections. HB 1105/SB 2494, effective July 1, 2008, if signed by the Governor.

' 718.1124. Condominium Receivership Application. A A Notice of Attempt to Apply for Receivership@ must be provided to a unit owner petitioning for the appointment of a receiver of a condominium association.

' 718.117(7)(a). Condominium Receiver Notice. A condominium association receiver shall provide notice of appointment to unit owners.

' 718.127. Receivership Appointment Notice. Provides procedures for a condominium association receiver to provide a notice to owners within ten days of appointment.

' 719.1124 and ' 719.127. Cooperative Receivers. The appointment and notice of an appointment of a cooperative association receiver follows procedures similar to those adopted for condominium associations discussed in ' 718.127, above.

' 720.305(4), ' 720.3053 and ' 720.313. Homeowners= Receivers. Current homeowners= association receivership requirements are deleted. Replacement provisions are similar to the procedures adopted for condominium associations discussed in ' 718.127, above.

' 719.108, Cooperative Collections. Cooperative associations are to provide members the same thirty day notice before proceeding with a lien as apply to condominium associations as stated concerning ' 718.121, above.

' 718.121(4). Condominium Liens. A condominium association may not lien a unit until 30 days after providing a notice of intent to lien sent certified mail return receipt requested and first class mail to an owner, and first class mail if outside the United States. (Ed.: This provision likely should have been an amendment to ' 718.116.)

EMPLOYMENT DISCRIMINATION: WHAT CONSTITUTES A DISABILITY?

If an employee in Florida is injured in a non-work related accident, then can the employee be fired for being continually late for work in violation of the employer=s rules? It may depend on whether the employee=s injury Asubstantially limits@ a major life activity.

A Florida appellate court recently ruled that an employee who was fired for continually calling in late to work was not entitled to damages because she was not discriminated against on the basis of a disability. In Lenard v. A.L.P.H.A. AA Beginning@ Inc., 32 Fla. L. Weekly D67 (Fla. 2nd DCA, December 22, 2006), an employee of a residential facility for pregnant women and new mothers was injured in a horseback riding accident. The employee claimed she had problems standing, walking and sitting for long periods of time.

The residential facility had a written attendance policy requiring all employees to call no less than eight hours before the beginning of a shift if they were going to be absent so that the facility could comply with state regulations which required at least two staff members be present at all times.

After the employee called in late numerous times, the residential facility fired the employee.

The employee filed a claim with the Florida Commission on Human Relations. She alleged that the residential facility violated the Florida Civil Rights Act by terminating her based on her disability. The Commission ruled in favor of the employer, finding that the employee was not entitled to damages because she was not discriminated against on the basis of a disability.

The Florida appellate court agreed with the Commission=s decision and thus sided with the employer. The court explained that a disability under the Americans with Disabilities Act requires the impairment to Asubstantially limit@ a major life activity, such as walking, seeing, hearing, speaking, breathing, learning and working. The court pointed out that the employee presented no evidence that her ability to sit and stand was significantly less than that of the average person. Although the court agreed that the employee suffered a permanent physical impairment, the court concluded that the employee=s physical impairment did not constitute a disability under the Florida Civil Rights Act.

The employer in this situation appeared to properly document the situation as it unfolded. Thus, the decision reinforces the need for Florida community associations to address employee issues, including timeliness and evaluations, in a businesslike fashion.

NEGLIGENCE: DANCING ON WET NAPKINS

Can a community association be held liable if someone slips and falls on community property due to an obvious danger such as water on the floor? Just because the danger is obvious, that obviousness may not protect the association from liability.

In a recent ruling, a Florida appellate court concluded that a business owner owes a duty to its invitees, those persons present to undertake business, to make reasonable efforts to keep transitory foreign substances off the floor, including napkins. In Izquierdo v. Gyroscope, Inc., 32 Fla. L. Weekly D197 (Fla. 4th DCA, January 10, 2007), a customer sued a restaurant for negligence after she slipped and fell on a wet napkin, breaking her leg. The restaurant had a somewhat unique Atradition@ for the waiters and customers to throw paper napkins into the air as music played. The napkins fell onto the floor where they remained. The customer claimed the restaurant was negligent in leaving wet napkins on the floor.

The restaurant manager agreed that leaving wet napkins on the floor was a hazardous condition. The manager admitted that the napkins were not cleaned up until after the restaurant was closed. The jury found the restaurant was not negligent.

The Florida appellate court found that the jury=s verdict finding no negligence on the part of the restaurant was contrary to the evidence presented. The court pointed out that Section768.07(1), Fla. Stat. (2004) provides:

The person or entity in possession or control of business premises owes a duty of reasonable care to maintain the premises in a reasonably safe condition for the safety of business invitees on the premises, which includes reasonable efforts to keep the premises free from transitory foreign objects or substances that might foreseeably give rise to loss, injury, or damage.

Thus, even if was the customer was aware of the tradition of throwing napkins, the court explained it did not alleviate the restaurant=s duty to maintain the premises in a reasonably safe condition.

A customer=s knowledge of a dangerous condition only discharges the restaurant=s duty to warn of napkins on the floor. Whether the danger of wet napkins was obvious is an issue of comparative negligence. Here, the court determined the evidence established the restaurant was at least partially negligent; thus, the court ruled the customer was entitled to a new trial.

This case, though in the restaurant context, is valuable for Florida community associations because the court educates readers on the importance of keeping property free from substances that might reasonably be believed to cause someone to slip and fall. It is not enough to say that it is obvious that there is something on the floor.

This information is provided for generl 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.