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by Chere Trigg / Published February 2015

Drones have been the topic of conversation for the past several years sparking privacy concerns among residential communities. In the state of Florida, Governor Rick Scott signed a bill that limits law enforcement’s use of drone aircrafts; however, that bill does not pertain to or restrict the commercial and private use of drones. The “Freedom from Unwarranted Surveillance Act,” which came into effect on July 1, 2013, allows law enforcement agencies to launch camera-carrying surveillance drones under two circumstances: if a warrant from a judge is obtained or if a person’s life or property is believed to be in im-minent danger. In 2013, the use of drones was reported by both the Miami-Dade and Orange County Sheriff’s departments, each owning two drones used solely for training purposes.

However, not all states are restricting domestic drone use. The state of North Carolina, for example, does not have a bill protecting its citizens from law enforcement agencies using drones. In fact, North Carolina’s legislation recently passed a bill giving authorities permission to use drones to photograph open-invitation gatherings without the need to obtain a warrant—even if the gathering is held on private property. That is not to say there are not regulations in place protecting citizens from peeping toms photographing someone and/or their property. The use of drones for business purposes is also prohibited. For example, photographers cannot sell photos or videos taken with a drone as drones should strictly be used for recreational purposes.

Even with all of the FAA’s rulings, the commercial and private drone industry is expected to become a multimillion dollar industry, creating numerous jobs within the next ten years. The controversial topic revolving around the right or wrong use of unmanned aircrafts has many asking, where can the line be drawn? Drones are easily accessible and are found for sale all over the Web. With laws being passed focusing only on law enforcement’s use of drones, such as Florida’s Senate Bill 92, what can be said about your neighbor flying his drone over your house or condominium unit? Is it deemed acceptable because it is a hobby? Or does your neighbor need to limit his drone flying to his property only?

Allowing the use of drones within communities could also violate the privacy rights of residents and could result in legal actions for trespassing, voyeurism, harassment, and invasion of privacy. For instance, neighboring residents could attempt to use drones to spy on other residents by viewing into windows and balconies. Further, some question whether associations may use drones to inspect units for violations without the owner’s knowledge. The questions are endless, but communities can set rules in an effort to protect their residents’ privacy. At your next association meeting, you could request to limit the flying of drones to cer-tain areas to prevent anyone in your community who may own a drone from flying it near your home, on the common areas, or from the condominium property. With the popularity of the technology and lack of restrictions, board members should even consider a ban altogether to avoid any unnecessary hassles. With prices as low as $50, it is best to put the proper restrictions in place for your community before privacy is jeopardized.

Over the course of time, we will hear of new rules and regulations regarding the use of drones, especially as technology assists in their evolution to become smaller, cheaper, and much more efficient than existing methods. Companies like Amazon are already seeking approval from the FAA in an effort to pioneer drone-delivery services. Although the use of drones could potentially revolutionize the way many existing companies operate, the bigger focus lies in the misuse of drones should they begin to trample on privacy laws.

by Mike Shephard / Published January 2015

Your roof is the most important element to be installed during construction, and often it is the last item to be improved upon after installation. As events happen during the years, it is easy to forget that the roof is exposed to the environment on a daily basis. These elements wear down the most expensive part of the building structure. The old saying, “out of sight, out of mind” is an apt description to describe what often occurs when it comes to the roof. How can this be changed so the roof isn’t forgotten about?

All roofs should be inspected regularly in order to prevent a small failure from becoming a substantial failure. Inspect your roofs at least twice a year to look for ponding water, to make certain flashing details are secure, to have the roof inspected for loose tiles or shingles, and to remove any debris that could cause gutters or drains not to work properly. Have a regular maintenance program and keep the findings documented so you can budget yearly for the cost of replacing a roof. Most roofs can last longer if they are maintained, just like your car!

When the time comes for a new roof, here are a few tips that help in the process:

• Qualify your roofer.

• Must be insured and licensed in your state (your state codes might be different than others).

• Can they produce a bond?

• Run a background check and reference check.

• Set a meeting and visit their company. You must feel comfortable and confident that you are choosing the right partner in your decision.

Ask a lot of questions.

• Set the expectations from the job start to its completion and from materials to clean up. Be specific in your expectations.

Secondly, the types of roofs can be expensive. Roofing should be considered as an investment that is going to last 20 years or more. When buildings are designed, the roofing structure is chosen. The trusses are built to handle the weight of certain types of roofing choices. Often people will ask, “Can I change my shingle roof to concrete tile?” The answer is “no” because the trusses were built to handle the weight of a shingle roof, not a concrete tile roof. It is important to know the different types of roofing products and what options you may have on the different types of roofs. So, let’s put together types and cost outlines to help guide you through the process.

ROOF STRUCTURES

Low Slope Roofs

• Single ply (known as TPO and EPDM)

• Modified bitumen (common types APP & SBS)

Steep Slope Roofs

• Asphalt shingle • Steel tile

• Cement tile • Metal roof

TPO and modified bitumen roofs are mostly used on commercial buildings. They provide energy efficiency, excellent durability, and strength. Modified bitumen will be a bit more expensive. The durability is greater.

The least expensive roofing option in the steep slope roofs category is asphalt shingles. It is a good roofing system with a predictable lifespan of 15–20 years in Florida. A shingle roof can be put on any building.

The upgrade from shingles is cement tiles, which again can last 20-plus years. Concrete tiles come in many profiles and colors. They can be installed by attaching with foam adhesive or screws. Florida has many communities with cement tiles as their choice. Stone-coated steel tile is more ex-pensive than concrete, though it has virtually the same appearance. The chief advantage is that it has a much higher resistance to windstorm events. A steel tile has more fasteners per tile, and the tile itself is the primary waterproofing element of the roof. The underlayment provides only a secondary role as all the water by design stays on top of the roof tile.

Metal roofing is the most expensive of the steep slope roofs. Trending in popularity, metal roofing is not just for the commercial buildings now. Homeowners are choosing this look too! With many colors and a long life span of 20-plus years, it’s on the rise. Commercially, schools are using this for the energy efficiency and the long-lasting warranty. This is a great product without a noise issue.

Overall when selecting and investing in a roofing system, you must do your homework. Invest your time wisely in choosing your roofer and the type of roof you want on your business or home. Great success in all of these roofing systems has been seen. They have performed well in most cases and some have done better than others during our Florida hurricanes or tropical storms.

By Lisa Whitson

Biggest Monthly Increase Since U.S. Foreclosure Activity Peaked in March 2010;
  Scheduled Foreclosure Auctions Post 24 Percent Monthly Increase, REOs up 22 Percent;
  Top Five State Foreclosure Rates in Maryland, Florida, Nevada, Ohio, Illinois;

According to a monthly report released by RealtyTrac, the nation’s leading source for comprehensive housing data, Florida remains in the top 5 states for foreclosure rates and two of Florida’s MSA’s (metropolitan statistical area) have the highest number of homes or units in foreclosure; Tampa and Miami. 

While the term foreclosure carries a negative connotation, attorney Frank Ruggieri with The Ruggieri Law Firm in Orlando explains that Florida being at the top of the list in number of foreclosures is not necessarily a negative statistic for the state.  “Florida can and should lead the way in making some important reforms to the foreclosure process as the State continues to have one of the highest foreclosure rates in the U.S.,” says Ruggieri. 

Daren Blomquist, vice president with RealtyTrac states in a press release found on the RealtyTrac website that accompanied the October report that although this is not a surprise, the biggest increase in U.S. foreclosure rates since March, 2010 is more than just a seasonal uptick as many experts have suggested. “The October foreclosure numbers are not a complete surprise given that over the past three years there has been an average 8 percent monthly uptick in scheduled foreclosure auctions in October as banks try to get ahead of the usual holiday foreclosure moratoriums,” said Blomquist, “But the sheer magnitude of the increase this year demonstrates there is more than just a seasonal pattern at work. Distressed properties that have been in a holding pattern for years are finally being cleared for landing at the foreclosure auction.”

Ruggieri agrees that the report is not surprising and goes on to share why he feels the foreclosure numbers remain high in Florida. “I believe the increased activity I have seen is mostly associated with concluding foreclosures which have sat idle for years as well as ‘secondary foreclosures’ in connection with previously modified mortgages.  Banks are now more willing to take title in light of increasing property values. Homeowners who previously negotiated modifications are now, in some cases, defaulting once again,” said Ruggieri. 

The RealtyTrac report goes on to discuss increased foreclosure activity according to metro areas across the country, again showing the strength of Florida’s foreclosure process.  “Among the nation’s 20 largest metros, those with the five highest foreclosure rates were Miami (one in every 363 housing units with a foreclosure filing); Tampa (one in every 395 housing units); Baltimore (one in every 435 housing units); Riverside-San Bernardino in Southern California (one in every 495 housing units); and Chicago (one in every 553 housing units).”

Click here to read the October, 2014 report in its entirety.

Information for this article was provided by RealtyTrac and FCAP service provider member Frank Ruggieri with The Ruggieri Law Firm. 

About RealtyTrac 
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 129 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac’s housing data and foreclosure reports are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.  

About Frank Ruggieri
Frank A. Ruggieri is the founding member of The Ruggieri Law Firm, P.A. and has practiced law for 18 years in Central Florida, 14 of which have been devoted to community associations. He concentrates his practice in the areas of community association, commercial, and general corporate law. Ruggieri has prosecuted and defended covenant violation, collection, commercial, and construction defect cases on behalf of the Firm’s community association and corporate clients.

SUBSTANTIAL COMPLIANCE WITH THE DISTRESSED CONDOMINIUM RELIEF ACT: THE NEXT BATTLEGROUND IN THE FEUD BETWEEN CONDOMINIUM BULK PURCHASERS AND ASSOCIATIONS

By David B. Haber, Esq. and Jonathan S. Goldstein, Esq.

With every year that passes since the “Distressed Condominium Relief Act” (“DCRA”)(§§718.701-708, Florida Statutes, Et. Seq.), Part VII of the Florida Condominium Act, took effect, there is the increased possibility that the novel issues that it raises will become the subject of significant and impactful legal disputes as many associations grapple with the protections and requirements for bulk purchasers of condominium units under the DCRA.  The DCRA was a law enacted in 2010 to encourage bulk purchasers of distressed condominium projects, while balancing consumer protections that have long been present in the Florida Condominium Act to protect new condominium unit owners at “Turnover” — the time when control of a condominium association is transferred to the non-developer voting interests.  The DCRA creates two new classes of condominium bulk purchasers, the “Bulk Buyer” and “Bulk Assignee,” each with their own level of responsibilities and protections from the assumption of Developer obligations and liabilities.  The DCRA alleviated uncertainty for bulk purchasers regarding their classification and obligations, most notably whether they were a “Developer” as defined by law and whether they were obligated to provide those statutory warranties for condominium property provided by a Developer pursuant to Section 718.203(1), Florida Statutes.  The DCRA typically protects Bulk Assignees from such warranties for all work not performed by or at their behest.  The DCRA also protects Bulk Buyers from any and all Developer liabilities and responsibilities, including statutory warranties, not expressly assumed in writing by the Bulk Buyer.

However, Bulk Assignee status involves significant duties and responsibilities.  Pursuant to Section 718.704(1), a Bulk Assignee is responsible for all duties and responsibilities of a Developer except for those duties and obligations specifically set forth in the DCRA.  It remains to be interpreted whether this catch-all includes a Bulk Assignee’s responsibility for any and all actions and violations of a pre-turnover association pursuant to Section 718.301(5), Florida Statutes, and a Bulk Assignee’s obligation to indemnify an association for pre-turnover actions of the association under the control of the Bulk Assignee, pursuant to Section 718.301(6), Florida Statutes, though the language strongly suggests that this is the case.

Pursuant to Section 718.706(3)(a) and (b) of the DCRA, Bulk Assignees are required to fund mandatory reserves unless a waiver of reserves is approved by the non-Bulk Assignee controlled units.  Bulk Assignees are required to provide various turnover records in a timely fashion and conduct reasonable due diligence to attempt to locate same pursuant to Section 718.705(3), Florida Statutes.  Additionally, pursuant to Section 718.704(2), Florida Statutes, a Bulk Assignee that is not assigned the right to guarantee a level of assessments and fund budgetary deficits is required to pay maintenance for all of their unsold units.  Bulk Assignees are also responsible for transferring control of the condominium association in the manner required by Section 718.705(2), Florida Statutes.

While Bulk Buyers are perhaps provided with fewer specified obligations in the DCRA as Bulk Assignees, Bulk Buyers still can assume liabilities and responsibilities voluntarily.  Bulk Assignees and Bulk Buyers must both comply with various pre-sale disclosure and administrative filing requirements pursuant to Section 718.706, Florida Statutes, including requirements to include certain conspicuous disclosures related to their status.  Pursuant to Section 718.706(4), Florida Statutes, the DCRA does not allow Bulk Assignees or Bulk Buyers to run afoul of the prohibition in Section 718.302(4), Florida Statutes, against unreasonable “Pre-Turnover” contracts entered into by the Association.

The failure to meet these respective obligations could have significant consequences upon the Bulk Assignee or Bulk Buyer’s rights to avoid Developer liabilities.  Tucked into the DCRA is a provision that all associations dealing with Bulk Assignees and Bulk Buyers must take heed of, because it is a trap for the unwary Bulk Assignee or Bulk Buyer that can drastically overturn the dynamics of their obligations to the association.  Specifically, section 718.705(5), Florida Statutes, states in pertinent part:
“(5) Failure of a bulk assignee or bulk buyer to substantially comply with all the requirements in this part results in the loss of any and all protections or exemptions provided under this part.”
This language refers to all of the requirements and protections or exemptions of “this part,” which seemingly refers to the DCRA as a whole.

The stakes of such substantial compliance are likely very high.  Forfeiture of these DCRA exemptions and protections due to non-compliance could potentially expose a Bulk Assignee or Bulk Buyer to unexpected liability for any and all statutory warranties pursuant to §718.203(1), Florida Statute, which the DCRA would typically protect Bulk Assignees from for all work not performed by the Bulk Assignee.  In addition, there are other obligations and responsibilities of Developers from which Bulk Buyers and Bulk Assignees are generally exempt, including certain financial obligations of the Developer that a Bulk Assignee or Bulk Buyer could become exposed to.  This concept of “substantial compliance” with the DCRA still awaits judicial clarification, and it is likely to be the next major battleground between both types of bulk purchasers and condominium associations.

 

Haber-Goldstein

Attorneys David B. Haber and Jonathan S. Goldstein, of the Law Firm of David B. Haber, P.A., can be reached at dhaber@dhaberlaw.com and jgoldstein@dhaberlaw.com.  This article is for general information purposes and is not intended to be and should not be taken as legal advice.

FCAP’s John Wattick with Converged Services Inc., shares why it’s important for board members and managers to monitor trends in technology and why it can even impact a board member’s fiduciary duty if left unchecked.

Consumers of all age groups are watching video on many devices and remotely.  Recent surveys have shown that over 60% of the viewing audiences have at least 4 devices in their homes and want the ability to remotely enjoy video as well as have access to security systems, lights and other in-home devices.

What impact does this shift in viewing habits have on community associations? Access to services and amenities by residents is the reason association board members and management company executives should take notice of trends in technology. The service in this instance is broadband technology.

The growing number of Smart TVs, tablets, smart phones and personal computers found in homes across the country is fueling the upward trend in broadband requirements in community associations.  Time spent watching digital video daily among adults 50 – 64 increased 72% in the second quarter of 2014 according to Nielsen’s Cross-Platform Q2 2014 viewing report. More than 70% of U.S. households subscribed to broadband services at the end of last year and more than half of those households surveyed have a TV connected to the internet, according to various research reports.

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In addition to multiple devices used in homes, viewers are also moving in large numbers to direct streaming which pulls on an already stressed broadband delivery system in some of our existing communities. Welcome to the over-the-top era or OTT as media insiders refer to this period in consumer viewing history named for the proliferation of direct streaming services like Netflix, Hulu, and Amazon Prime. The OTT era is here and it’s not showing signs of slowing in the near future.

Researcher Joyce Wang says, “It’s been a busy couple months with numerous significant OTT announcements.” Time Warner execs finally confirmed an OTT version of HBO service to be launched in 2015. CBS is making its OTT service available in its owned-and-operated markets, and last month, Viacom officially announced a deal with Sony to license live and on-demand programming for Sony’s to-be-launched OTT service. Dish is working on its OTT package to be released by the end of the year. The Telcos (telephone companies) are looking to get a slice of the pie too, with both AT&T and Verizon execs signaling their interests in launching similar offerings.

A high-rate of subscriptions to OTT services was found among owners of streaming media players—devices like Roku, Amazon Fire and Apple TV, among others—with more than 75% of streaming media player owners subscribing to an OTT service, according to Parks Associates.

Online video streaming continues its major transgression into the consumer mainstream, with research firm Frank N. Magid Associates reporting that 83 percent of U.S. TV viewers now stream movies and TV shows, at least occasionally.

Another concern association decision makers should keep in mind is that more video content over broadband means the possibility of internet service providers (ISPs) charging for data transport. There is significant scrutiny for the first time into interconnection, analysts say. The risk of OTT depends on whether cable can or can’t price broadband in such a way to offset lost video transport revenue and the most obvious ways to recapture lost “transport revenue” are usage based pricing, surcharges on naked broadband (deeper discounts on bundles) and interconnection pricing.

OTT providers have the support of the FCC as FCC Chairman, Tom Wheeler has circulated a rulemaking proposal to give OTT providers access to programming.  Wheeler announced “We have passed from an era where it was necessary to build a purpose-specific pathway to deliver video. The innovation of internet protocol (IP) has freed video from these closed pathways and single-purpose devices. Consumers have long complained about how their cable service forces them to buy channels they never watch.” Wheeler went on to say “The move of video onto the internet can do something about that frustration— but first internet video services need access to the programs.”

We are seeing this shift reflected in the numbers of broadband internet customers in the major providers’ portfolio vs their traditional video business.

  • Charter has about 4.15 million pay-TV customers and nearly 4.7 million broadband internet customers.
  • Video subscribers for Comcast now total 22.4 million. Comcast now has 21.6 million internet broadband customers.
  • Verizon has a total of 6.5 million Fios internet and 5.5 million Fios video connections.
  • Time warner has 10.8 million TV users and 11.5 million internet broadband customers.

As these trends in viewing continue it is imperative that service providers build and upgrade their architecture to handle these demands.  Deeper fiber penetration to the home (FTTH), IP and Cloud technology become essential features homeowners expect in their community.  Associations and management companies are beginning to experience selection when an association signs or renews their cable TV, internet and voice agreements, whether they are bulk, ROE (Right-of-Entry) or a combination.

The right-of-entry (or ROE) agreement is the legal agreement that allows the service provider to access private property for the purpose of providing broadband services to residents in a multi-dwelling unit such as a high-rise condominium.

Under a Bulk ROE agreement, the service provider provides its services to 100% of the residential units at the property, and the HOA pays a monthly bulk fee.

Under a standard ROE agreement, the service provider provides its service to any resident who subscribes to that service under a separate individual service agreement between the resident and the provider.

The chart below is significant for association board of directors and management companies as many residents are choosing communities that reflect this change in technology and delivery architecture.

 

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As a community association board member or management company executive it is imperative to stay abreast of technology and the costs associated with providing or more importantly, not providing access to the latest in broadband services to residents and homeowners. Industry consultants like FCAP’s John Wattick at Converged Services Inc. (CSI) can work with associations to determine if their community’s existing infrastructure is sufficient to meet current and future needs. Visit CSI at www.convergedservicesinc.com for more information on technology and your community.

All Aboard Florida’s public forum for its express passenger rail service made a stop in Stuart Thursday night and FCAP’s Director of Business Relations, Richard Johns, was in attendance for a portion of the meeting.

According to an article published last night by the Palm Beach Post, the meeting in Stuart was one of the largest meetings to date in their public relations tour. “It was the fourth, and busiest so far, of eight draft environmental impact statement meetings for residents to learn more about the unprecedented train service from Miami to Orlando that will operate on the Florida East Coast Railway tracks,” writes Kimberly Miller.

Johns attended the meeting in an effort to gather information on the impact of All Aboard Florida on community associations along the route of the rail service which will serve Floridians from Miami to Orlando with stops in West Palm Beach and Fort Lauderdale.

The reaction in the room of over 700 residents was mixed with a majority opposing the rail service and its impact on boat traffic along waterways of Treasure Coast communities.

Those in favor of the express rail service see it as an economic boost of over $6 billion for the state’s economy.

Four public meetings remain on the All Aboard Florida environmental report tour.

  • Nov. 5, 3:30 – 7 p.m., Indian River State College, Richardson Hall, 6155 College Lane, Vero Beach
  • Nov. 6, 3:30 – 7 p.m., Port St. Lucie Civic Center, 9221 S.E. Civic Center Place, Port St Lucie
  • Nov. 12, 3:30 – 7 p.m., Cocoa Civic Center, 430 Delannoy Ave., Cocoa
  • Nov. 13, 3:30 – 7 p.m. Wyndham Orlando Resort I-Drive, 800 International Drive, Orlando

Your participation can make a difference! Managers and board members, help us make the 2015 Salary Survey as accurate as possible by completing our online survey at  www.flcaj.com/survey. The survey is used throughout the year by board members and managers alike, so it is important to have a good sample.

The staff at FCAP – Florida Community Association Professionals truly believe in the positive affects of humor in business and life. The creation of Hurricane Winds Condominium Association comic strip, which debuted recently in Florida Community Association Journal, began as an idea by CEO Jim McMurry to add humor to the pages of the longtime trade publication. When McMurry began the search for an artist to bring his idea to life, he knew exactly who to turn to. FCAP’s graphic designer, Joey Phelps, took the idea of humor in community business to heart and the characters of Hurricane Winds Condominium Association were born.

 

 

Hurricane Winds is a new venture for Florida Community Association Journalbut a comic strip is nothing new for Phelps. Phelps and his brother, Michael, are lifelong artists who have worked together to make art and humor a successful business. The Phelps brothers created a comic strip several years ago for an international non-profit online magazine, Hat Trick Magazine, which still runs today. The strip can also be found at www.LilNipperSnappers.com.

Phelps knew that humor built around the seriousness of community association management would be the perfect medicine for managers and board members who face stressful and sometimes volatile situations on a regular basis. According to an article published by the Mayo Clinic, “Laughter enhances your intake of oxygen-rich air, stimulates your heart, lungs and muscles, and increases the endorphins that are released by your brain.” The same article goes on to say, “Laughter can also make it easier to cope with difficult situations.” What better prescription for what ails us then, than the characters brought to life in Hurricane Winds

 

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So exactly how does Phelps bring his characters to life? This is where pencil & paper and digital technology come together. Working closely with McMurry to develop the ideas for who each character will be and will look like, Phelps uses pencil and paper to sketch out characters and develop the unique characteristics for each. He then goes back over each sketch with pen and ink to make the characters more vivid and bold on paper. The pen and ink drawings are then scanned into Photoshop where Phelps adds color digitally via a Cintiq monitor and can take advantage of technology to move, reposition, and tweak each character.

 

 

joey-cintiq

 

Each installment of the Hurricane Winds Condominium Association comic strip is brought to life each month through a series of brainstorming sessions between McMurry and Phelps and are developed through the same system as the initial character development. From pencil and paper to PhotoShop and a digital tablet, the words and story lines come to life. Phelps has spent years working with this industry through the production of Florida Community Association Journal and has watched it grow and change over the years. He gains insight for each character and story line from the relationships built between this organization and those he serves.

Watch for the next issue of Hurricane Winds in the November issue of Florida Community Association Journal, arriving in mailboxes very soon.

 

FCAP members Dan Gleason, CAM, CFCAM  and Ronald Scott Kaniuk, Esq with Bakalar & Associates, PA recently discussed Master HOA authority and unit leases. Here is a look at their informative Q&A.
 
Dear FCAP,
 One of my associations is the lone condo district in a larger HOA association made up of 13 districts.  The master HOA association wishes to limit the ability of the condo association owners to leases of only 2 years in length and the lessees can never lease again in the condo association even from a different condo owner.  FS 718.110 (13) seems contrary to that notion, but the master claims in its documents that it is not a condo association and therefore unaffected by FS 718.  The condo owners have not consented to this change in the master association’s documents and no vote has been taken by members of the condo association to accept or reject this change.  Some of the condo owners have long term lessees whom they want to keep as lessees.  Will they lose their long term lessees and if so when?

Dan Gleason, CAM, CFCAM
 


 
 Dear Dan,
It seems that there are 2 questions presented here.
 
The first question is whether or not the Master HOA can enact rules to limit the ability of the Condominium Association owner to lease their property (both in duration of lease and identity of lessee).  The answer to this question is Yes, the Master HOA can enact rules to limit the ability of the Condominium Association owner to lease their property (both in duration of lease and identity of lessee), but need to follow the applicable rules to modify the governing documents for the Master HOA.  
 
The second question is, assuming such rules could be enacted, what the effect will be on existing leases.  The answer to this question is that existing leases would be unaffected.  The Master HOA would not have the power to void or seek to void a valid lease between an owner as landlord and a tenant.  However, any such amendment would have an effect to limit new leases entered into by any property owners, whether or not they are currently leasing their property.
 
FS 718.110(13) governs the rights of the Condominium Association to restrict rentals.  It is ineffective against Homeowners Associations, who are governed by Section 720.
 
Ronald Scott Kaniuk, Esq.
Bakalar & Associates P.A.
www.assoc-law.com

Vizcayne Condo Association North and Vizcayne Condo Association South filed suit Friday, October 10, 2014 in Miami-Dade against owners RW 244 Biscayne Res LLC and RW 244 Biscayne RET LLC, real estate finance executives Shane Hillsley and Thomas W. Duncan of Duncan Hillsley Capital LLC, the master association and the Vizcayne Commercial Condominium Association, which controls a commercial lot on the property.
 
During an interview with Vizcayne Condo Association North and South attorney David Haber who filed the suit on behalf of the associations explained to FCAP that instead of absorbing construction costs as the project went along, RW (referring to owners Hillsley, Duncan and their private equity firm) charged the associations for millions of dollars in construction expenses, waived reserves illegally, and retains control of the master although turnover has occurred.

According to Haber real estate finance executives Hillsley and Duncan kept a log of expenses throughout construction and presented them to the associations for payment after turnover of Vizcayne North and South had occurred. During construction when the expenses occurred and should have been presented for payment, Hillsley and Duncan had control of the associations.

In an article with Daily Business Review Haber is quoted as saying “It’s about unit owners getting stuck with what the hedge fund should have paid.” He goes on to say, “They made a lot of money on the sale of the units, but they didn’t have the right to stick it to the unit owners. It’s about greed.”

In the FCAP interview Haber outlined the other issues prompting the suit. “RW waived reserves illegally and controls the master even though turnover has occurred.”

During the FCAP interview the question was raised about more associations suing developers and contractors due to the uptick in construction in South Florida. Haber answered that we probably won’t see many cases exactly like this one. It is unique because it deals with bulk assignees who took over the project through a buyout of foreclosure. This is not a case of construction defect or the quality of work due to the construction boom post-recession.
 
The fact that this complaint arose and the missteps happened at all is further evidence of the need for awareness of community associations and the laws that regulate this industry. It is indeed important to note that yes, community associations are where we call home but our homes are also part of an industry.  FCAP will continue to promote awareness of this industry through its Family of Services.