Randall's Condo Corner

Hi folks,
     It just occurred to me that if I place my column on this site after editing it myself, I just may be able to get constructive feedback from some of you (and possibly make changes prior to submission), and at the same time, since it's about a month before it will be published, there may be some benefit to be gleaned by publishing it on the Blog 1st. So I'm gonna give it a shot, and if it turns out that it isn't such a good idea, I'm sure I'll be informed of that as well.

Randall's Condo Corner


ADMINISTRATION OF THE CONDOMINIUM ASSOCIATION

Adequate knowledge to properly administer the affairs of the condominium association is neither something obtained at birth, nor is it the product of common sense alone. The basics may only be learned by investing time in reading on the subject. From the outset, I highly recommend purchasing the 11th Edition of “The Condominium Concept”, by Peter M Dunbar, Esq., published by Pineapple Press, right here in Florida (as an administrative expense). It is a “must read” for every Board of Administration and for those unit owners that would also like to educate themselves on this subject. Over the years through interaction with Boards and owners alike, I have found that one of the most frequent causes of conflict between board members and between the Board and the unit owners, is that the rights and responsibilities of both parties need to be learned, as common sense is frequently not a sufficient or a legal guide for action or inaction. That being said, go to the bookstore or order the book over the Internet. Be certain to order the most recent publication, which is as I have stated above, is the 11th Edition.


HIGHLIGHTS OF THE LEGISLATIVE AMENDMENTS OF 2010

Condominium Rental Amendment (Section 718.110(13), F.S.: Please be advised that I've accessed 5 separate legal websites and received five different interpretations of the 'expanded' Statutory Amendment. Additionally, even one of the largest Condominium Law firms in Florida dodged the very questionable 'plain meaning' of this amendment by simply stating how it read prior to and subsequent to the adoption of this amendment. Until the interpretation of this new language is tested, or a competent condominium attorney advises you in writing on this issue, it would be wise not to attempt to apply it to any new rental restrictions.

For example, one source referred to as 'relaxed' since it would only apply to amendments (recorded post July 1st, 2010) that restrict the rental term, or the number of times a unit can be rented in a given period of time. Yet, the statutory language of this section begins with “An amendment prohibiting unit owners from renting their units...”. In my experience, a blanket 'no rental policy' has (for at least thirty years) been considered an unreasonable restraint on the alienation of one's property, which is supported by many decades of case law. Has this changed? The Florida Legislature, in 2004, most definitely moved in the direction of considering rentals a vested property right, by basically stating that any (new) rental restriction would require the consent of a member for the member to be bound by the amendment, but it if such consent was withheld, it would become effective upon the sale of the unit. Without such consent, legal opinions support the idea that the unit owner would only be bound by the previous rental restriction.

Since October 1st, 2004 any amendment that placed a restriction on an owner's rights relating to renting or leasing of units ONLY APPLIED TO THOSE UNIT OWNERS WHO CONSENTED TO AMENDMENT AND TO THOSE OWNERS WHO PURCHSED THEIR UNITS AFTER THE EFFECTIVE DATE OF THE AMENDMENT. This original amendment (2004) to Florida Statute, Section 718.110(13) was originally misinterpreted by some who believed that rental application changes (a restriction of sorts) fell into this category, among other changes which did not restrict the actual right to rent. I originally believed that they attempted to simplify the amendment, by detailing what actually constituted a rental restriction. That is certainly different from 'relaxing' a restriction.

The newly adopted Statutory amendment reads as follows: “An amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment”. This of course only applies to amendments which were recorded after the statutory amendment took effect.

Condominium Official Records

Records not accessible to owner inspection are extended to include the following: E-mail addresses, telephone numbers, emergency contact information, and addresses of unit owners other than those provided to fulfill the association's notice requirements, and other personal identifying information of any person, excluding the person's name, unit designation, mailing address and property address.

An association is not responsible for the use or misuse of information provided in compliance with request for records inspection, unless the association discloses information that it has the duty not to disclose. For example, a specific unit which is delinquent in the payment of assessments, fines, fees, etc. cannot be posted by the Board or discussed at a meeting which may embarrass or harass such owner of the unit. This information is accessible by any owner who requests such information, and how they choose to use such information is not the responsibility of the association. Individual director liability for failure to maintain or destruction of official records is now limited to cases where there is intent to harm the association or one or more of the members.

Last year the act was amended to authorize civil penalties against anyone (individuals- i,e. board members, manager) that knowingly or intentionally defaced or destroyed accounting records or for knowingly or intentionally failing to create or maintain the accounting records. The civil penalties are now limited to the time period the records are required to be maintained. Such penalties are likewise not appropriate for failing to create or maintain these records unless there is a finding of intent to harm.

Elections and Director Eligibility:

The restrictions upon co-owners serving on the Board is relaxed to allow co-owners to serve where such co-owners own more than one (1) unit, or where there are not enough eligible candidates to fill the vacancies on the Board. Now this one is interesting, because it runs contrary to the original Staff Analysis of the 2008 legislative amendment which clearly stated that there is an inherent tendency for individuals with aligned financial interests to share common financial goals, provides an unfair voting leverage on Board votes, and inhibits robust discussion. I fail understand how owning multiple properties in an association would have a limiting effect on such expressed concerns.

The director delinquency restriction is expanded to include any person delinquent more than ninety (90) days in the payment of any monetary obligation to the association, including fines, fees, and regular or special assessments. Such persons are not eligible for board membership. If elected or appointed they must step down. The interim replacement must step down once the obligation is paid.

Removes the candidate certification requirement, and replaces it with a certification required from all directors within ninety (90) days of being elected. In other words, this form is no longer required to be submitted with a timely notice of intent for candidacy, but submitted by each newly elected or appointed director within a ninety (90) day period. It must affirm that he or she has read the association's governing documents, and that he or she will work to uphold these documents to the best of his or her ability, and faithfully discharge his or her fiduciary duty to the association and its members. In lieu of written certification, a director may submit a certificate of satisfactory completion of the educational curriculum from a provider approved by the Division. For whatever reason, the legislature failed to include the previous requirement or any reference to reading and understanding to one's best ability, Florida Statutes and applicable Rules (Florida Administrative Code). Removal of officers or board members whether for delinquency or certification requirements, whether right or wrong, lends itself to uncertainty as to the composition of the board from time to time.

A condominium association may now also suspend the voting rights of a member due to the non-payment of any monetary obligation due the association which is more than ninety (90) days delinquent.

Where the number of board seats expiring is greater than the number of candidates running for those seats, each board member whose term has expired is eligible for reappointment without standing for reelection. What if no member submits a timely notice of intent for candidacy... who does the reappointment? It used to be that the previous board stayed in place since no member or other eligible person sought candidacy. What if only one member submits his or her candidacy? On election day or at the next Organizational Meeting of the board, he or she may fill the remaining seats regardless of the fact that a quorum will not be present.

Directors who do not submit proper certification (within the ninety day period) are suspended from board service until they comply with the requirement, and the Board may appoint an interim replacement. This interim replacement must of course submit to the new certification/education requirements. The question begs, how long must the 'interim' board member wait before being considered a permanent member of the Board ???

Directors charged by information (which may refer to an accusation by anyone without real proof) or indictment for felony theft or embezzlement offense involving association funds must be removed from office until the end of the period of suspension or the end of the director's term whichever comes first. O.K. When a director steals money exceeding $400.00 it is a severe Grand Theft Offense (in Florida) which can be charged as a misdemeanor OR a felony. As far as “information”, what if the administrative expenses are unreasonable (including association payment one or all directors cell phones, or car expenses, including repairs, in traveling on association business) and such information is judged by whom, as sufficient for suspension. Is this embezzlement, or unreasonable use of Association funds? What if the information is “hearsay evidence” alone?

Condominium Financial Records

Small associations, those administrating fewer than seventy-five (75) units, may prepare a cash report, rather than a statutory financial report.


Remedies for Delinquencies

New self-help remedies include suspension of common element use rights and suspension of voting rights after a ninety (90) delinquency in assessments. WPRF owns most of the pools and is paid for the upkeep of those pools, and those few associations owning their own pools could attempt to tell a delinquent owner that their common element rights have been suspended. Who gets to pull the elderly person out of the pool? Does this include delinquencies prior to the effective date of this amendment (July 1st, 2010)? Most experts agree that it does. It is considered a continuing debt included in this period, are still due and owing, and therefore are a continuing obligation. The term “monetary obligation” is not defined, and therefore would not only include regular assessments, but late fees, attorney's fees, unpaid fines, dues, and special assessments which were due prior to the amendment. However, the suspension must be approved at a properly noticed Board meeting. Associations cannot suspend use of limited common elements, utility service, parking spaces, elevators, or impede access to or from the unit or the Village. Comcast thus far refuses to disconnect a unit from the system and are being paid by the associations as part of a bulk contract agreement, so what sense would it make to attempt to do so? Would such a disconnect offer the incentive to pay overdue assessments?

Attaching rents without court action could be helpful in some cases. The Board must send a letter to the unit owner (and should send one to the tenant as well), stating that until the accruing debt is paid, the association must receive the rent directly from the tenant to offset an unpaid monetary obligation.

A receipt is issued to the tenant from the association and is legally considered “rent paid by the lessee” and the landlord is required to honor it. The landlord can't evict a tenant on such basis, but if the tenant fails to pay the association, the association has the right to evict the tenant (and charge all expenses to the unit owner/landlord) and also has the right to suspend common use rights. Now, who do you think the tenant is going to pay? I like that one, but it has limited applicability to delinquent owners who have tenants in place. On a different note, unworthy of its own section, for units foreclosed on by the banks, forget the benefit of an increase in liability from 6 months to 12 months. The lesser of 1% or 12 months assessments in Century Village will always be the 1% of the original mortgage amount owed to the association by the bank. No benefit exists to this community with this change.

This article is by no means comprehensive, and many amendments are likely to be tested in court or by the “Division” regarding proper interpretation. No aspect of this article should be considered legal advice. An opinion by a competent condominium attorney should always be sought.