Florida Association News Blog

On March 18, 2019, the governor signed the new medical marijuana changes into law. Currently known as Chapter 2019-1, the legislation expands upon the medical marijuana laws previously implemented. Of particular interest is that the revised laws now permit the smoking of medical marijuana to fall within the definition of “Medical use.” However, the smoking of medical marijuana is limited, and is still prohibited on public transportation, in a school bus, vehicle, aircraft, or motorboat, and in an enclosed indoor workplace. Moreover, additional requirements are imposed upon physicians making a determination that smoking is an appropriate route of administration, as well as imposing limits on the amount of marijuana that may be prescribed at one time. Additional labeling requirements have also been established for marijuana in a form for smoking, including a warning that it be kept away from children and a warning that marijuana smoke contains carcinogens and may negatively affect health.

While there are many nuances to the new laws, of particular interest to our clients is how the new legislation affects their home and work life and their ability to restrict or regulate smoking of medical marijuana on their private property or in their businesses. It is important to understand that employers are not required to permit or accommodate medical marijuana in the workplace. The existing law already provided that an employer may establish, continue, or enforce a drug-free workplace program or policy; that an employer is not required to make any accommodation for the medical use of marijuana in the workplace nor are they required to accommodate any employee working while under the influence of marijuana; and expressly stated that the law did not create a cause of action against an employer for wrongful discharge or discrimination. Now, since smoking of medical marijuana is permitted, the new law also establishes that the ability of any party to restrict or limit smoking or vaping marijuana on his or her private property is not impaired. So, the owner of any private property is still able to restrict or prohibit the smoking or vaping of medical marijuana on his, her, or its own property.

Our recommendation to our community association clients is to establish a policy regulating the use of medical marijuana, including but not limited to, the ability of an owner to smoke medical marijuana on limited common element property or common element property. The new law does not specifically address a condominium unit owner’s right to smoke medical marijuana in his or her unit. Presumably, a unit owner now has a legal right to do so; however, this right may be limited by other restrictions in the governing documents and rules and regulations prohibiting the interference with the rights of other unit owners to peaceably enjoy their units. We recommend contacting your community association’s legal counsel to discuss implementation of a policy regulating the smoking or vaping of medical marijuana in your community.

by Lauren B. Feffer, Shareholder, Rosenbaum PLLC

Tags Florida Condominium, Florida HOA, Legal, Legislation, Medical Marijuana 2 Comments

Board members and property managers of condominium communities need to be aware that the State of Florida’s Department of Business and Professional Regulation issued revisions to rules pertaining to violations and penalties, 61B-21, Condominium Resolution Guidelines for Unit Owner Controlled Associations, which went into effect December 5, 2018.

The disciplinary guidelines detail minor violations and penalty guidelines within Chapter 718, F.S. If a violation is deemed minor, the division will send a Notice of Noncompliance to the association. A community association’s failure to timely comply with the Notice of Noncompliance may result in sanctions, including civil monetary damages and enforcement. For the violations not deemed minor by the division, there is no longer a notice/warning requirement and, if found guilty of the violation, the Association may be fined pursuant to the new standards in the rule. Rulemaking Authority 120.695, 718.501(1)(d)6., (f) FS. Law Implemented 718.501(1)(d)6. FS. History–New 6-4-98, Amended 10-23-18.

These disciplinary guidelines were enacted to inform affected parties about the range of penalties which may be imposed for violations, pursuant to subsection 61B-21.003 detailing penalty guidelines in the following categories: Accounting Records, Assessing, Board, Budgets, Commingle, Common Expenses, Conflict of Interest, Converter Reserves, Debit Card, Elections, Estoppel Certificate, Final Order, Fiduciary Duty, Investigation, Property, Records, Reporting, Reserves, Special Assessment and Website.

“It is important for community associations and the governing boards to understand the consequences and potential monetary ramifications they will face if they do not abide by these new guidelines,” said Alessandra Stivelman, attorney at Eisinger, Brown, Lewis, Frankel & Chaiet, P.A. “Ignoring or not fully compiling with the Florida Department of Business and Professional Regulation’s rules, as well as Chapter 718, Florida Statutes, in a timely manner can have a detrimental effect on an association’s financial standing.”

If an association fails to comply with a Notice of Noncompliance, a civil penalty will be imposed between $5 and $10, per unit, for each minor violation. The penalty will be assessed beginning with the middle of the specified range and adjusted either up or down based upon any aggravating or accepted mitigating circumstances. The minimum total penalty to be assessed shall be calculated according to these guidelines or $500, whichever amount is greater. In no event shall a penalty for a minor violation exceed $2,500, the statutory maximum for a single minor violation. For all other violations (those not deemed to be minor), the penalty imposed is between $10-$30 per unit for each violation and the statutory maximum is $5,000.00. For both types of violations, multiple counts of the violated provision or a combination of the listed violations are added together to determine an overall total penalty.

Alessandra Stivelman, shareholder and partner at Eisinger Brown Lewis Frankel & Chaiet, P.A. is AV rated and focuses her practice on community association and real estate law. She can be reached at (954) 894-8000 x 304 or astivelman@eisingerlaw.com. Eisinger, Brown, Lewis, Frankel & Chaiet, P.A., is a full service Florida law firm focusing on community association law, real estate law, developer representation, commercial litigation and insurance law. Visit eisingerlaw.com.

Tags Disciplinary Guidelines, Florida Condominium, Florida HOA, Legal, New rules, Penalties, Violations 4 Comments

The sixth annual Florida Community Association Journal’s Readers’ Choice Award winners have been announced!

The FLCAJ Readers’ Choice Awards give communities and board members an opportunity to select their favorite service providers. These prestigious awards recognize service providers that offer superior service and demonstrate a commitment to the success of their communities.

Online nominations were accepted and voting ran from October 2018 until December 2018. Over 8,400 votes were cast by FLCAJ readers for the 500 nominated companies, but only a few would be dubbed winners. Levels awarded for nominated winners are: Silver as fourth place, Gold as third place, Platinum as second place and the Diamond award as first place.

For the sixth year in a row, Campbell Property Management has won the Diamond Award, the highest level of recognition.

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To see the other winners, click here.

by Ashley Dietz Gray, Marketing Director, Campbell Property Management

Tags FLCAJ 6th Annual Readers' Choice Awards, Florida community association journal 1 Comment

One of the many perks of living in the Sunshine State is our beaches. Access to the ocean is often from a public park and has long been viewed as a public amenity and free natural resource for both residents and visitors. Questions about the assumption of public access arise, however, when reaching the coastline involves crossing private property.

Earlier in 2018, the Florida Legislature passed House Bill 631, a new law which went into effect July 1, 2018. The law was created to resolve disputes between owners of private oceanfront land and local governments by creating a streamlined standard to clarify possession of real property.

It is estimated that 60 percent of Florida’s beaches are privately owned. Florida lawmakers weighed the need to protect the public’s ability to enjoy its coastlines for recreational use against protecting the rights of private oceanfront property owners.

Some people were afraid the law would immediately cut off public access to beaches all over the State, but that is not the case. The intent was to establish a simple and equitable process by which a government entity may seek the judicial determination of recreational customary use of private beach property. That determination allows due process for the private property owners and notice and public hearings to all interested parties.

When speaking of beach access, the term “customary-use” refers to a general right of the public at large to possess and use certain dry sand areas for recreational purposes. Where a customary use of a dry sand area is shown, the property owner may not use traditional causes of action like ejectment, forcible entry or trespass to stop such public use of the private land.

In Trepanies v. County of Volusia, 965 So. 2d 276 (Fla. 5^th DCA 2007), the Fifth District ruled that if a specific piece of beach property has historically been used by the public for recreational purposes, then a private landowner who owns that beach property cannot keep the public from accessing that beach. Trepanies followed a Florida Supreme Court decision which originally established the doctrine of recreational customary use for beach property. City of Daytona Beach v. Tona-Rama, Inc., 294 So. 2d73 (Fla. 1974).

Section 163.035, Fla. Stat., created by HB631, outlines limitations and prevents local governments from declaring Florida beaches on private property accessible to the public without the local government first obtaining a court declaration that the property meets four established criteria of customary use. The public’s recreational use of a specific piece of beach property must have been ancient, reasonable, without interruption, and free from dispute.

The law was found to be necessary after some local governments proposed or passed ordinances declaring certain private property to be accessible to the public under the doctrine of recreational customary use. This created conflict with private landowners. In response, the Florida Legislature passed Section 163.035(2), which flips the burden of going to court from the landowner to the governmental entity. The statute prohibits local governments from adopting such ordinances without first filing an action in court and successfully obtaining a judicial declaration that a specific parcel of beach property meets all four criteria of recreational use. Moreover, Section 163.035 (3) specifies that before the local government can file an action in court seeking such a declaration, the local government must first do the following: adopt a formal notice of its intent to do so at a public hearing; list the specific parcel of property involved; identify each source of evidence the government entity intends to rely upon in court to prove customary use; and give each owner of affected property notice of the public hearing.

Once such an action is filed in court, the governmental entity must give notice to all affected landowners, who then have 45 days to intervene in the action. In the court proceeding, there is no presumption of customary use, and the governmental entity has the burden of proof.

Section 163.035 gives hotels, condominiums and private homeowners more control over the beachfront they own, all the way to the mean high-water line (the point where the sand gets wet). Despite the high concentration of oceanfront development in South Florida, we will not see a major impact nor will this new law affect current public beach access.

Disputes over the new law will vary by municipality and county along the coast. For example, most, if not all, of the beaches in Miami Beach are public. In contrast, the competing rights of public access and private property ownership are currently being disputed in Walton County in Florida’s Panhandle, where beachfront property owners sought to restrict the public’s access and county officials said they could not.

In a state that runs on tourism and real estate development, travel industry stakeholders and beachfront homeowners have competing concerns. Supporters of the law contend that it acknowledges the need for public access, but requires local governments to establish it through a specific legal process. Opponents say the legal requirement burdens local governments. While Walton County is fighting the battle over beaches in court, other communities have chosen to ignore the disagreement over public use of private beachfronts until a conflict erupts and then resolve the clashes on a case-by-case basis.

Tags Florida Condominium, Florida HOA, Legal, Private Beach, Public Access, Real Property 1 Comment

Community associations have an interest in the safety and integrity of their communities. Generally speaking, boards of community associations would like to be reasonably certain that potential owners, renters and other occupants have the financial capability to meet their financial obligations. Also of concern are potential purchasers’ and tenants’ criminal backgrounds, if any, so as to avoid endangering the overall safety and welfare of the community.

To address these concerns, many associations have purchaser and tenant approval procedures set out in their governing documents, usually the declaration, which often authorize the association to obtain “consumer information reports” on all applicants as part of the screening process. This leads to the question of when and how a community association can utilize a background check that includes both a credit report and criminal history.

The first step is to determine if the governing documents provide for the approval process. The second step is to ensure there is meaningful criteria by which to evaluate the results of the consumer information report. The consumer information report (a/k/a the background check) is typically compiled by a consumer reporting agency or company, which is engaged in the business of gathering credit scores, reports on previous rental history, criminal background information, employer history, and verification of income amongst other information. The consumer information report cannot be used for any other purpose other than for the determination of approval. Importantly, it cannot be used in a discriminatory manner to reject housing based on race, color, religion, national origin, sex, disability, or familial status.

If the community association makes an unfavorable determination on the applicant’s status based on information contained in the consumer report, then the association MUST provide certain information to the applicant pursuant to the terms of the Federal Fair Credit Reporting Act.

1. The association must provide the applicant verbal or written notice that the applicant was denied based on the information supplied in the consumer report.

2. The verbal or written notice of adverse determination must include:

a) the name, address, and phone number of the consumer reporting company that supplied the report,
b) a statement that the company that supplied the report did not make the decision for the unfavorable action and cannot give reasons for the denial;
c) a notice of the applicant’s right to dispute the accuracy and completeness of the information in the credit report and that the applicant may request a free report from the credit reporting company within 60 days.

For the protection of the association, this notification should always be done in writing so as to provide proof positive of compliance with the Fair Credit Reporting Act. Additionally, there are local Broward and Miami-Dade County Ordinances requiring that a written notice be mailed to the rejected applicant which provides with some degree of specificity the basis for the disapproval, in addition to the notice required by the Federal Fair Credit Reporting Act.

The information that the association relied on in making the adverse determination CANNOT be released to the applicant, but the applicant may request from the credit reporting agency to see the information in the consumer information report and correct any inaccurate information. Even if the information provided a small role in the total determination of the application, the applicant must be provided the required notice by the association.

What is to be done with the consumer information report after a decision has been made? The general rule is that all information in the consumer report must be destroyed in such a manner that it cannot be reconstructed. But arguably, Florida law requires community associations to keep such records, as all written records of an association must generally be kept for seven years. Therefore, the association will want to store the consumer report in the applicant’s file, which will need to be designated as confidential with restricted access. It is NOT part of the official records open to inspection and, thus, not available upon a request to inspect the association’s official records.

If a declaration has general language providing for the purchaser and tenant approval but does not provide the standards and procedures necessary to make such a decision, then in all likelihood, the association’s approval is on thin ice and subject to challenge. This is a good time to check your declaration and seek advice from the association’s lawyer as to whether your association’s declaration approval process needs to be updated.

Jeffrey Rembaum, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. He is a regular columnist for The Condo News, a biweekly publication and was inducted into the 2012, 2013 & 2014 Florida Super Lawyers. He can be reached at 561-241-4462.

Tags Compliance, Consumer Reports, Florida Condominium, Florida HOA, Leases, Rembaum Association Roundup, Sales 1 Comment

From a recent Fourth District Court of Appeal case, Seminole Lakes Homeowner’s Association, Inc. v. Esnard, decided December 19, 2018, we once again learn that application of prior case law sometimes creates strange and convoluted results. Just because an association negligently creates obvious conditions for an accident to occur does not necessarily mean the association will have liability for such accident when the conditions created by the association did not directly lead to the accident. This is the circumstance where, in-spite of the negligent acts of the association, a supervening incident occurred which directly led to the accident even though the accident may not have occurred had the conditions not been created by the association in the first place. Yes indeed, the law can be cruel.

In the Seminole Lakes case, the association ignored its own declaration of covenants and the municipality’s parking ordinances by allowing vehicles to park on both sides of the association’s streets thereby creating bottleneck conditions. As a result, at various and unpredictable times, only one car could pass between the two parked vehicles located on both sides of the street. During one such occasion, on their way to their rented home within the association’s community, the Esnards encountered a bottle neck condition and had to stop their vehicle to wait for the oncoming vehicle to pass between the two parked cars. While waiting, they were rear ended from behind and were caused significant personal injuries. The case went to trial.

The jury determined that the association was 30% responsible for the accident for having created the bottleneck conditions. The driver of the vehicle which caused the accident was found to be 70% responsible. Unhappy with the result, the association appealed on the grounds that a motion for a directed verdict which was made and denied by the judge during the trial court proceedings should have been granted.

As to such motion, at the close of the Esnards’ presentation of evidence, the lawyers for the association moved for a directed verdict arguing that the association’s decision to allow cars to pack on both sides of the streets was not a “proximate cause” of the accident. You see, in order to have legal liability, and thus monetary responsibility, for causing an accident, the act which led to the accident must be the “proximate cause” of the accident.

In reviewing the situation, the appellate court looked to a prior case which held that, “a remote condition or conduct which furnishes only the occasion for someone else’s supervening negligence is not the proximate cause of the result of the subsequent negligence… conduct prior to an injury or death is not legally significant in an action for damages like this, unless it is a legal or proximate cause of the injury or death – as opposed to a cause of the remote conditions or occasion for the later negligence.”

Applying those principles to the Seminole Lakes case, the Fourth District Court of Appeal determined that the association’s decision to allow parking on both sides of the streets was not a proximate cause of the accident. The Court reasoned that “[i]t is within common experience while driving on the streets of Florida to encounter traffic that is slowed or stopped… The law requires every driver to maintain a safe distance from the traffic in front of them to avoid rear-end collisions… The parking situation was patently obvious to any and all drivers using the streets in Seminole Lakes.” Thus, the Court held that the association’s failure to enforce its parking rules was not a cause in fact of the accident, but rather the association’s negligence only furnished the occasion for the driver of the other vehicle to hit the Esnards. Therefore, given the general conditions of the residential neighborhood at hand, the Court held that the driver’s negligence was not reasonably foreseeable by the association, and the failure of the association to enforce its parking rules was not the proximate cause of the Esnard’s injuries.

Notwithstanding the reversal of the trial court’s ruling against the association, the association in this case would appear to be extremely and unpredictably lucky. After all, when an association allows haphazard parking in direct violation of both city ordinance and its own declaration of covenants, it certainly could be foreseeable that accidents will occur. However, unlike this author’s opinion, the opinion of the appellate court becomes the law of the land.

The aforementioned case should not be interpreted to mean that an association can escape liability for its negligent acts. For example, in a recent Daily Business Review summary of Florida’s top verdicts and settlements of 2017, there are three noteworthy trial court decisions that act to temper the Seminole Lakes outcome:

1) A tenant claimed a hose left on the sidewalk caused a tripping hazard and was awarded over $1 million dollars;

2) A plaintiff claimed a poorly repaired sidewalk resulted in a slip and fall causing personal injury and was awarded $1.4 million dollars;

3) A plaintiff argued that the association’s failure to replace a “no driving” sign resulted in an accident which caused paralysis and was awarded over $10 million dollars.

Notwithstanding the outcome of the Seminole Lakes case, associations should either abide by the provisions set out in their declaration of covenants or amend them if they are unhappy with a particular provision and do not want to enforce it as written. Board members and managers with questions regarding the Seminole Lakes case, should discuss them with their association’s attorney.

Tags Accidents, Florida Condominium, Florida HOA, Holiday lights in South Florida, Liability, Rembaum Association Roundup, Safety No Comments »

In the recent Fourth District Court of Appeal case of Charterhouse Associates, Ltd., Inc. v. Valencia Reserve Homeowners Association, Inc., decided November 28, 2018, the Court determined whether a homeowner is entitled to bring their own personal trainer to the association’s fitness center where the association’s board of directors enacted a new rule prohibiting private trainers, instructors, physical therapist, and massage therapists from working in the fitness center.

In this case, Charterhouse Associates, Ltd., Inc. owned the lot within the association’s community and authorized Kenneth and Gail Browne to reside at the property and assume the ownership rights of the corporation, which included membership within the association. The Browne’s brought their personal trainer to the clubhouse on several occasions but were later prohibited from doing so because of the aforesaid rule adopted by the board.

The association’s Declaration of Covenants, provided in relevant part, that the association property, which includes the fitness center, was reserved for the private use and enjoyment of… “the owners, and their family members, guests, invitees and tenants, but only in accordance with this Declaration.” In addition, the owners, their family members, guests, tenants, agents, and invitees, all had a permanent and perpetual, nonexclusive easement for ingress and egress over, enjoyment in, and use of the association property. Also, the Declaration provided the board the right to establish rules and regulations pertaining to the use of the association property. Because the association entered into a contract with a private provider, it enacted the rule prohibiting private personal trainers, among others.

Initially, the trial court, as a result of the summary judgment hearing, ruled in favor of the association. On appeal, the appellate court reviews trial court decisions stemming from summary judgment hearings in a light “most favorable to the non-moving party.” The appellate court, in addition to focusing on whether the trainer was an “invitee” of the Browne’s who was prohibited by the adopted rule in question, also focused its analysis on whether the board had the authority to enact the rule which prohibited the Browne’s trainer in the first place.

The appellate court looked to an often-cited case, Beachwood Villas Condominium v. Poor, a 1984 Fourth District Court of Appeal case. In this appellate decision, the Court looked to a decision from yet an older 1981 appellate case, Hidden Harbor Estates, Inc. v. Basso, which suggested that condominium rules fall into two classifications: those rules set out in a declaration of condominium and thus approved by the membership, as compared against those rules adopted by the board. The rules contained in the declaration itself are clothed with a strong presumption of validity. However, board adopted rules are reviewed by first determining whether the board acted within its scope of authority and then whether the rule reflects reasoned or arbitrary and capricious decision-making.

As to the board adopted rule prohibiting private trainers, the appellate court held that the board’s adopted rule prohibiting the member’s private trainer directly conflicted with the declaration’s provision granting all owner’s invitees access to the fitness center. Therefore, the appellate court held that the board adopted rule contravened an express provision of the declaration and thus, the board exceeded their scope of authority by enacting the rule in the first place.

Ultimately, what can be gleaned from this case is that before determining whether a board adopted rule is reasonable as compared against being arbitrary and capricious, is to first ensure that the requisite authority exists for the board to adopt a rule in the first place. Since the appellate court determined that the rule should not have been adopted because it was contrary to the terms of the declaration, the appellate court reversed the trial court and remanded the case back to the trial court for further proceedings consistent with their opinion.

Tags Clubhouse, Florida Condominium, Florida HOA, Gym, Personal Trainer, Rembaum Association Roundup 4 Comments

Roof tops Does your building have a rooftop lease agreement with a wireless carrier or does your association have a telecommunications tower lease agreement?

The major wireless carriers (Verizon Wireless, AT&T Wireless, T-Mobile, and Sprint) are actively seeking rent reductions to their existing site lease agreements. The carriers often hire a third party company, who contacts the building rooftop owner or tower owner and attempts to negotiate a rent reduction to the existing lease agreement in exchange for a longer “guaranteed” term and several other “not-so-pleasant” leasing conditions, such as the tenant modifying contract terms without paying increased rent to the owner. Has your association or have you been contacted to renegotiate your rooftop lease agreement(s) or even sell your existing lease agreement outright? Do you know what the correct value of your lease agreement is? Do you know if selling your existing lease agreement is the correct choice?

When drafting a lease agreement with any of the wireless carriers do you know what to look for and what to accept and what to reject? Is it wise to accept an annual payment of rent rather than a monthly payment of rent? What should the annual escalation be or is it wise to consider a term escalation? Should the agreement permit “site improvements?” These questions and more need to be answered correctly when constructing a lease agreement with the wireless carriers and it would be wise to construct a binding document so in the future, when an amendment is required, it will be a rent increasing opportunity for your community.

Converged Connect provides guidance in reviewing and constructing lease agreements, license agreements, amendments, and letters of intent with the major wireless carriers for more than 20 years to ensure contract terms are in the best interest of your association and community.

by Michael Davis, Converged Services Inc., Michael can be reached at mdavis@convergedservicesinc.com or (610) 613-9969.

Tags Condo Rooftop Lease agreements, CSI, Rooftop Lease Agreements, wireless carrier No Comments »

Happy holidays to you and your family! As the year comes to a close, holiday season is reaching it’s peak and cooler temperatures are beginning to reach the sunshine state. Most South Florida landscapes will do fine in a “normal” Florida winter, however unexpected below-average temperatures may do damage to some of your plants.

With that being said, it’s important to know how to properly care for your lawn during the winter months.

Here are a few South Florida Winter landscaping tips you should consider to keep your lawn in tip top shape for the winter season:

As the holiday season ends, take care when removing any festive lighting and/or decorations. Be careful to safely disconnect any power cords, take precaution when removing elevated decorations, and remove decorations from vegetation with care to not harm the plant, bush, etc.
If you wish to add some color to your outdoors, add poinsettias to your landscape. These bright red plants are a favorite for this time of the year and go well in most settings. A few places you might want to consider are your community clubhouse, guardhouse, or even pool area.
Add mulch wherever your lawn permits. Mulch moderates soil temperatures, helps sustain soil moisture, inhibits weeds, reduces soil erosion, and can even help improve the soil. Mulch acts as a great heat insulator, helping to keep your plants warm during the cooler nights.
To prepare for the colder weather, fertilize your grass in order for it to sustain the winter temperatures. Well-fertilized grass will be able to handle the colder temperatures better and will survive longer.

How do you prepare your lawn and landscaping for the colder temperatures? Let us know in the comment section below!

by Shane Humble, President, Complete Property Maintenance, Inc.

Tags CPM, Florida Condominium, Florida HOA, Landscaping, South Florida, Tips, Winter Season No Comments »

Our condominium association clients frequently ask whether they can charge “a new owner fee” or a “working contribution” or “capital contribution” to buyers of a unit. We respond “no.” After our condominium clients get over the initial shock we didn’t provide the usual lawyer answer, “it depends,” the next question usually is “why not”, or “but a neighboring association does – how come they can and we can’t.” This is where the lawyer responses start. For example, we usually say “well, it’s complicated”, or “is your neighbor an HOA?”

WHEN DID THE CONDOMINIUM ACT GET SO COMPLICATED?

Once upon a time, the Florida Condominium Act and the case law interpreting it could be read in less than a day. Those days, however, are long since gone. Fortunately, we have all kept up with the latest developments in the law (see our 2018 legal update!). But seriously, getting back to whether a condominium may charge a buyer a fee in connection with the transfer of a Unit, Section 718.112(2)(i) of Florida’s Condominium Act is one of the clear provisions in what is now pages and pages of statutes. This section states:

(2) REQUIRED PROVISIONS.—The bylaws shall provide for the following and, if they do not do so, shall be deemed to include the following:

(i) Transfer fees. —No charge shall be made by the association or any body thereof in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Any such fee may be preset, but in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant. However, if the lease or sublease is a renewal of a lease or sublease with the same lessee or sublessee, no charge shall be made. The foregoing notwithstanding, an association may, if the authority to do so appears in the declaration or bylaws, require that a prospective lessee place a security deposit, in an amount not to exceed the equivalent of 1 month’s rent, into an escrow account maintained by the association. The security deposit shall protect against damages to the common elements or association property. Payment of interest, claims against the deposit, refunds and disputes under this paragraph shall be handled in the same fashion as provided in part II of chapter 83. (emphasis added).

As you can see, Section 718.112(2)(i) clearly and unambiguously prohibits a condominium association from charging a fee “in connection with the sale, mortgage, lease, sublease, or other transfer of a unit” with one exception. The only exception to the blanket “no charge” prohibition “in connection with” the sale of a condominium unit is a $100.00 “application fee”. There is no similar prohibition in Florida’s Homeowners’ Association Act – yet. That’s it you say!? But a background check costs $150.00! We know. We understand. But apparently the Legislature has not been informed that inflation is still alive and well and that maybe it’s time to increase that $100.00 fee to some more reasonable amount.

Even an increase to the allowable application fee, however, would not authorize charging “capital contributions”, such as one or two quarters of assessments, to offset operating expenses, or to fund reserves. When you get back to one of the core fundamentals of the condominium entity you will see why amending the declaration to require a “capital contribution” to buyers of a unit violates the Condominium Act. When a condominium is created, Section 718.104(4)(g) requires the declaration to state the percentage or factional share of liability for common expenses of the condominium for each unit. Common expenses are defined as all expenses incurred by the Association in the performance of its duties. Charging a “capital contribution” to a buyer of a unit operates to change the fractional or percentage share for common expenses stated in the declaration for that unit.

So, why can’t we pass an amendment anyway to provide an exception to this? Well, it’s complicated… Section 718.110(4) prohibits amendments to a declaration that change the proportion or percentage by which the unit owner shares the common expenses of the condominium unless the record owner of the unit and unless all the record owners of all other units in the same condominium approve the amendment. So, an amendment for this type of charge is not feasible because every time a “capital contribution” is charged you would arguably be changing the percentage or fractional share of liability for common expenses each time the fee is charged.

SO WHAT SHOULD WE DO?

So what should a condominium association do to help raise much needed cash without levying special assessments? For starters, we recommend to our association clients that they have a reserve study performed every three to five years. We also recommend that if your association is not fully funding reserves, then the association should establish a plan to move toward fully funded reserves, otherwise the old adage “you can only kick the can down the road so far” will surely come back to haunt your association. As many condominium buildings in South Florida approach or have surpassed their 40^th birthday, condominium boards are struggling with retrofits, upgrades, and deferred maintenance projects and trying to figure out how to pay for those projects because reserves are underfunded. Also, by waiting as long as possible to deal with the inevitable, suddenly hasty decisions have to be made, such as hiring contractors and engineers without having the opportunity to fully vet them or send association counsel their proposals or contracts for review.

Wait a minute, I thought I asked a simple question – why can’t we charge a capital contribution simply because we are a condominium. Like we said in the beginning, it is simple, but then it gets complicated.

by Steven R. Braten, Shareholder and Paula S. Marra, Senior Associate, Rosenbaum PLLC

Tags Capital Contricution, Fees, Florida Condominium, Florida Condominium Act, Legal, New owner 3 Comments

Marijuana – Take Two

Florida’s Department of Business and Professional Regulation Issues New Guidelines for Community Associations – Stricter Disciplinary Civil Penalties of Noncompliance Now In Effect

The Sixth Annual Florida Community Association Journal’s Readers’ Choice Award Winners have been Announced

New Private Beach Access Law Limits Local Governments, Attempts to Clarify Possession of Real Property

Use of Consumer Reports In Determining Approval For Sales and Leases – Is Your Association In Compliance?

Creating Conditions That Lead To A Horrific Accident Does Not Always Create Legal Liability

What Do You Mean, I Can’t Bring My Own Personal Trainer To The Clubhouse Gym?

The 411: Rooftop Lease Agreements

Winter Landscaping Tips for South Florida

Can Condominiums Charge Capital Contribution Fees?

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