Monday, October 17, 2016

If Hillary and Donald were running for your Condo or HOA Board which one would get your vote?

I realize that the title of this blog post will prompt some readers to dash off a response in support of their favored candidate or at least launch an attack against the candidate they despise.

The question in the title of this blog post is designed to make you think about the criteria community association members currently use when deciding who to vote for in an election of directors. While the stakes are undoubtedly higher on the national stage, the more local the government, the more direct impact your elected representatives can have on your daily life.  Accordingly, many of the same factors affecting our presidential election can and do affect association board elections; voter apathy in the form of an uninformed and uninvolved electorate combined with fiery rhetoric and rigid mindsets often result in the best condo, cooperative or HOA candidates not being elected and, in many cases, not even running in the first place.

Let's imagine Hillary and Donald both running for a seat on your condominium board.  For purposes of this blog post, we'll treat Gary Johnson and Julie Stein as the condo candidates who didn't send in their notice of intent to run on time. Perhaps in your community the personality types represented by each of these presidential candidates is not far off the mark? Thank goodness the Florida statutes limit the space permitted for a Candidate Information Sheet while also providing that the association is not responsible for any of the contents.


Now, let's begin the critical analysis that voters should undertake to make an informed choice. How do you see the following aspects of association operations being impacted, positively or negatively, by the current presidential candidates (and the real ones in your community) if they were running for a seat on your board?
  • Which candidate is more likely to encourage and facilitate open board and membership meetings with order maintained while also allowing members to speak and fully participate?
  • Which candidate do you want involved in preparing and passing your association's operating budget?   
  • Which candidate is likely to engage in cronyism both in terms of hiring professional advisors and vendors as well as the uniform and fair enforcement of covenants and restrictions against members and residents?
  • Which candidate has the ability to expose the association to lawsuits based on poor judgment, refusing to honor contracts, impulse control, or a quick trigger finger? For example, fair housing claims based on discrimination often result in high penalties and punitive damages against the housing provider/association.
  • Which candidate is likely to abuse his or her power on the board by rewarding friends and punishing "enemies"?
The foregoing questions are designed to tease out the negatives in a particular choice, but you can just as easily ask the following questions from a more positive perspective:
  • Which candidate has served on a community association board before, for how long and how efficiently did the community operate?   
  • Which candidate has previously volunteered for committees and other roles for the benefit of the community?  
  • Which candidate has attended any sort of educational classes for board members or expressed an interest in learning what the position entails?
  • Which candidate respects and understands parliamentary procedure? 
  •  Which candidate has a sense of fair play and has previously helped diffuse conflict in the community?
Lastly, and because the scenario in this blog post demands it, which candidate might be a little too focused on your community's walls and fences and which might benefit from a strict email policy?
After looking through both sets of questions, you may conclude that in far too many communities there is a lack of qualified candidates and the members have very few good choices. Many people feel that way about the 2016 presidential election as well. Still, refusing or failing to vote  is guaranteed to result in you not getting the board (or president) you want. The moral of this blog post: vote or run for your board and make your community great again. After all, we're all stronger together.
I realize that the title of this blog post will prompt some readers to dash off a response in support of their favored candidate or at least launch an attack against the candidate they despise.

The question in the title of this blog post is designed to make you think about the criteria community association members currently use when deciding who to vote for in an election of directors. While the stakes are undoubtedly higher on the national stage, the more local the government, the more direct impact your elected representatives can have on your daily life.  Accordingly, many of the same factors affecting our presidential election can and do affect association board elections; voter apathy in the form of an uninformed and uninvolved electorate combined with fiery rhetoric and rigid mindsets often result in the best condo, cooperative or HOA candidates not being elected and, in many cases, not even running in the first place.

Let's imagine Hillary and Donald both running for a seat on your condominium board.  For purposes of this blog post, we'll treat Gary Johnson and Julie Stein as the condo candidates who didn't send in their notice of intent to run on time. Perhaps in your community the personality types represented by each of these presidential candidates is not far off the mark? Thank goodness the Florida statutes limit the space permitted for a Candidate Information Sheet while also providing that the association is not responsible for any of the contents.


Now, let's begin the critical analysis that voters should undertake to make an informed choice. How do you see the following aspects of association operations being impacted, positively or negatively, by the current presidential candidates (and the real ones in your community) if they were running for a seat on your board?
  • Which candidate is more likely to encourage and facilitate open board and membership meetings with order maintained while also allowing members to speak and fully participate?
  • Which candidate do you want involved in preparing and passing your association's operating budget?   
  • Which candidate is likely to engage in cronyism both in terms of hiring professional advisors and vendors as well as the uniform and fair enforcement of covenants and restrictions against members and residents?
  • Which candidate has the ability to expose the association to lawsuits based on poor judgment, refusing to honor contracts, impulse control, or a quick trigger finger? For example, fair housing claims based on discrimination often result in high penalties and punitive damages against the housing provider/association.
  • Which candidate is likely to abuse his or her power on the board by rewarding friends and punishing "enemies"?
The foregoing questions are designed to tease out the negatives in a particular choice, but you can just as easily ask the following questions from a more positive perspective:
  • Which candidate has served on a community association board before, for how long and how efficiently did the community operate?   
  • Which candidate has previously volunteered for committees and other roles for the benefit of the community?  
  • Which candidate has attended any sort of educational classes for board members or expressed an interest in learning what the position entails?
  • Which candidate respects and understands parliamentary procedure? 
  •  Which candidate has a sense of fair play and has previously helped diffuse conflict in the community?
Lastly, and because the scenario in this blog post demands it, which candidate might be a little too focused on your community's walls and fences and which might benefit from a strict email policy?
After looking through both sets of questions, you may conclude that in far too many communities there is a lack of qualified candidates and the members have very few good choices. Many people feel that way about the 2016 presidential election as well. Still, refusing or failing to vote  is guaranteed to result in you not getting the board (or president) you want. The moral of this blog post: vote or run for your board and make your community great again. After all, we're all stronger together.

Tuesday, October 4, 2016

Indemnity Provisions can leave Associations holding the bag for someone else's wrongdoing!


A recent Broward County negligent security lawsuit filed on August 31st raises issues about who should  pay the consequences when a security breach results in a resident's death. In this case, a community with an entrance feature protected by a 24-hour guard and security cameras became vulnerable to entry when a perimeter fence was not properly maintained. An intruder with a decade-long rap sheet entered the upscale Davie community and fatally stabbed a resident. The multimillion dollar lawsuit was filed against the community's management company and security company but not the association. The initial reaction from the volunteer board of directors may have been relief to not have been named in the lawsuit until someone reminded them that they likely agreed to broadly indemnify both the management company and the security company in their contracts.

 

This blog post addresses provisions in existing service contracts which require the association to be financially responsible if its vendor’s negligent actions cause damage to a third party. As it is typical for boards to agree to provide broad indemnification in management, security and elevator contracts, in the negligent security case discussed above, it is likely that the management company and/or security company will file third party claims against the association to enforce the terms of those indemnification provisions.

 

While agreeing to an indemnification clause is often a cost of doing business these days, these provisions should not be treated as harmless boilerplate. Indemnification clauses must be carefully considered and discussed with legal counsel prior to agreeing to same. Moreover, the association must contact its insurance agent to confirm whether or not its current insurance policy will cover such clauses or if additional coverage is required. Most indemnification clauses will require that the vendor be added as an additional insured to the association's policy and the association's policy will be treated as the primary coverage for any claims even if the vendor has sufficient coverage to address its own negligence.

 

In the case of an onsite manager, that individual really is an extension of the board so it is reasonable for the association to indemnify him or her for actions taken at the board's request and with their direction. However, consider the case of a woman trapped in an elevator who sues the elevator company for negligent maintenance which resulted in her entrapment and injuries. The elevator company was hired to perform regular maintenance and repairs on the association's elevators. Neither the volunteer board members nor the association manager have the skill or expertise to determine when repairs and maintenance must be performed nor how to perform those functions, hence the need to hire an elevator expert. With a broad indemnification clause in place, however, the elevator company can avoid liability for all but the most egregious actions which typically must rise to the level of gross negligence or willful misconduct.

 

In a contractual setting, a fair indemnification provision should be reciprocal (meaning the contractor or vendor agrees to protect the association in addition to the association protecting them) and should be based on the party causing the harm being the party responsible for fixing it.

 

 

 

 

Friday, September 9, 2016

The 5 Most Frequently Asked Questions About Florida Fire Sprinkler Retrofits


As the 12/31/16 deadline for Florida high-rises to opt out of a full sprinkler retrofit looms large, the confusion regarding which multifamily buildings should opt out, why and what the consequences of that opt out vote will be escalates.

Here are the top five questions I've been asked over the last several months from condominium and cooperative associations throughout Florida.

1. Should low and mid-rise buildings vote to opt out?

The decision to opt out for low and mid-rise buildings requires a conversation with knowledgeable association counsel. I have some of my low and mid-rise clients who are taking the opt out vote and others who are not.

I have discussed the preventative value of an opt out vote for non-high-rises, however, there are also some perceived disadvantages to taking the vote as well including the fact that post vote notice requirements must be followed including the possibly chilling impact on sales and rentals when owners must notify all future potential purchasers and potential renters about the opt out vote.

When I have this discussion with my low and mid-rise clients the factors we discuss include:
  • Physical configuration of the building; specifically whether there are exterior catwalks with two remote entrances at each end.
  • Age of the building. If the building is three stories or higher (but fewer than 7) and was built after 1994 the permitting process required sprinkler installation so the potential need to opt out should no longer exist.
  • The existence of a local ordinance or code pertaining to sprinklers and low and mid-rise buildings. If such an ordinance or code exists then I am inclined to recommend the opt out vote for those low and mid-rises.
  • The percentage of short-term rentals permitted in the building. If a building has enough short-term rentals it may be treated as a public lodging establishment and its life safety requirements are much higher which might make the opt out vote more compelling.
  • The existence of commercial units in the building.
2. Will filing a Petition with the DBPR for a Declaratory Statement to clarify whether low and mid-rise buildings should opt out solve the problem?

No.  The DBPR does not make or enforce the Life Safety Code.  The Division will likely deny any such petition based on the fact that it does not have jurisdiction to interpret fire codes. A member of the Division initially took the position in a press article that the ability of all buildings to opt out under Chapters 718 and 719 of the Florida Statutes must mean that those low and mid-rise buildings must do so or be forced to retrofit. The Division has since backed off that position thanks to the efforts of the Florida Bar's Condo Committee, outreach by Senator Jeremy Ring, one of the sponsors of the opt out bill, and members of my law firm, Becker & Poliakoff. As such, there is absolutely no need to ask the Division to weigh in on a matter for which it has no jurisdiction and has already backed off an initially incorrect stance. It might be easier for some attorneys to have the Division undertake the legal analysis needed to answer clients' questions on the highly complicated sprinkler question but please see my comment in #1 about having a conversation with knowledgeable legal counsel on this topic.

3. Do high-rises who have opted out still have to install sprinklers?

Yes, partial sprinklers are typically part of an Engineered Life Safety System (ELSS) and, while buildings which would otherwise have to fully retrofit have the right to opt out of that full sprinkler retrofit, an ELSS cannot be waived. The main difference is that an ELSS typically only requires the installation of a sprinkler head just inside the entrance to a unit or in the kitchen while a full sprinkler retrofit is much more intrusive with sprinklers located throughout each residence. There is some growing talk about seeking new opt out rights from an ELSS and we will have to wait and see if that legislation has any real chance at passing.  Buildings which are required to retrofit with full sprinkler retrofits and opt out before the deadline must then install an ELSS as an alternative to that full sprinkler installation. If your building was not required to fully retrofit you would not be required to install an ELSS.  HOWEVER, there are elements of an ELSS which are otherwise required under the Life Safety Code so the Fire Marshal usually gets you one way or the other.

4. Can we use online voting to take the sprinkler opt out vote?  Unfortunately, it is not advisable to use online voting for the sprinkler opt out vote even though doing so would be the most convenient method for high-rise buildings with a significant percentage of out-of-state owners.

Section 718.112 (2)(l)1, F.S. provides that "a vote to forego retrofitting may be obtained by limited proxy or by a ballot personally cast at a dully called membership meeting or by execution of a written consent by the member." Moreover, the notice of the meeting at which the opt out vote will be taken CANNOT be transmitted electronically but must be mailed or hand delivered to each unit owner at least 14 days' in advance. Given the significance of the sprinkler opt out vote it is best not to attempt taking same via online voting regardless of the convenience factor involved.

5. What if we took the opt out vote but forgot to take some of the post vote steps required by law?

The statutes require that associations who successfully vote to opt out of the full sprinkler retrofit must take the following steps:

  • File a Certificate with the Division reflecting the opt out vote.
  • Mail or hand deliver to  notice of the results of the opt-out vote within thirty (30) days after the vote takes place to every owner. Compliance with this requirement must be evidenced by an affidavit from the person providing the notice and such affidavit must be maintained as part of the official records of the association.
  • After the association sends out notice to each owner, each owner must then provide a copy of that notice to a new owner before closing or to a renter before signing a lease.
If you failed to record your Certificate on the Opt Out Vote or failed to hand deliver your Notice of the Opt Out vote within thirty (30) days after your vote occurred, you should consider retaking the vote in an abundance of caution prior to the deadline. There is no way to tell right now if failure to take these post vote steps is a fatal flaw in the process but you certainly don't want your association to be the test case.

As you can see from the foregoing, this puzzle is only going to be solved by relying on the advice of your own experienced counsel and not by relying on free blogs and newsletters. Even folks with good intentions can harm others by providing inaccurate or incomplete information.

The moral of this post: please try to resist relying on information from entities and groups who use important topics like the sprinkler retrofit vote in Florida as a marketing tool.

Wednesday, August 10, 2016

Zika Virus and Your Community Association

Ask the average community association resident whether or not the association board has a duty to protect him or her from foreseeable risk inside the community and the answer is likely to be a resounding "OF COURSE".

Whether or not that duty is spelled out in the governing documents there is the expectation that the association will ensure that residents do not get sucked into a non-compliant pool drain and drowned, trapped inside an unsafe elevator or mugged in the parking lot.


With the growing threat of Zika virus in the U.S. and particularly in South Florida what, if anything, should your community be doing to lessen this threat to your residents?

A physical inspection of your community is warranted. The Centers for Disease Control and Prevention (CDC) has issued important recommendations on how to address any property conditions which might be attracting mosquitoes and providing convenient breeding grounds for them. Standing water in your community should be drained if possible or treated with insecticides. Non-functioning fountains should be drained and turned off and birdbaths drained.

The CDC is also recommending that air conditioning be used to combat mosquito breeding grounds so if you have vacant units or you keep the air off in your clubhouse or other indoor common areas to save money now is the time to address those situations.


Aerial spraying in your community may be useful in combating mosquitoes but may also draw the ire of your chemically sensitive residents.  Speak to your city or county officials to see what if anything is being done to address a potential Zika problem in your geographic area.

Lastly, if you host outdoors community events in the summer for your residents you might want to consider hosting those events inside this year rather than outdoors. You might also wish to adjust the hours your pool and other common areas are open at night.

There is no reason for your community to panic nor is there a reason for your Board to undertake responsibilities that are not yours to bear.  However, taking reasonable steps to prevent a potentially devastating problem for some of your residents should be explored.


For more information about how to combat the Zika virus in your community please click here:  http://www.cdc.gov/zika/prevention/prevent-mosquito-bites.html




Sunday, August 7, 2016

Pokemon GO.... Away! Mobile game can spell headaches for private residential communities.

After writing this blog for well over a decade, I often think that I have covered every conceivable topic which can impact shared ownership communities. Almost inevitably, just when I start thinking this is the case something new crops up like drones or, more recently, locating, battling and capturing virtual creatures called Pokemon.
Recently a condominium board called me to discuss a new security risk in their community. When I inquired if the risk pertained to infrastructure deficiencies (inadequate lighting at night, overgrown landscaping, etc.) or recent criminal activity such as vandalism or theft I heard something entirely new: "there is a PokeStop just outside the entrance to our community." 
I had a vague familiarity with what appears to be the biggest fad of Summer, 2016 as several of my friends and relatives are enthusiastic participants in this augmented reality game played on mobile devices.  Apparently, participants find a variety of these creatures and other game-related goodies at locations called PokeStops which have been assigned this status by the game's maker, Niantic. 
Unfortunately for my client in question, the entrance to their community had been randomly listed as a PokeStop which meant that over the course of the prior week, hundreds of people were milling outside their entrance looking at their phones and not the incoming or outgoing traffic from the community.  Needless to say, this situation presented a real concern for the community and its inhabitants. In addition to creating possible security risks given that most players are entranced by their virtual surroundings and not their physical location when at a PokeStop or Gym (a place where virtual battles occur) there are also just locations that do not lend themselves to a whimsical game like Pokemon Go; for example, the National Holocaust Museum would not seem to be the best fit for this kind of activity.
A little research revealed that it is possible to request that a PokeStop be removed. However, it is also possible to request a specific PokeStop location. For some residents intent on creating mayhem in a community, this might be an innovative new way to rile up the neighborhood. For those of you like me who never thought you would have to discuss virtual creatures in the context of community security, think again and check out whether or not you might have one of these locations near you.  To remove a PokeStop that might be impacting your community, you can visit the Niantic site here: https://nowloading.co/posts/4000106


Thursday, July 28, 2016

The Fuss about Florida's Fire Sprinkler Opt Out Deadline

The Division of Florida Condominiums, Timeshares and Mobile Homes ("Division") has recently been quoted in several media articles advising that all multifamily buildings in Florida, regardless of height, must install sprinklers unless they opt out prior to the December 31, 2016 deadline. In the aftermath of that revelation, some Florida attorneys are advising communities that they all must take an opt out vote prior to the December 31, 2016 deadline or they will be required to begin installing a full sprinkler system shortly thereafter.


So what's the problem?

For starters, neither the condominium law nor the cooperative law impose retrofitting requirements nor do Chapters 718 or 719 of the Florida Statutes confer jurisdiction on the Division to interpret or enforce life safety laws. That  function rests with the Fire Marshal. The requirement for sprinkler retrofitting arises from Chapter 633 of the Florida Statutes not from either Chapter 718 or 719 where the opt out rights are provided. Chapter 633 of the Florida Statutes incorporates the National Fire Protection Association (NFPA) standards. The NFPA requires "high rise" buildings (which are defined as buildings in excess of 75 feet) to retrofit with sprinklers. While there may be other circumstances where buildings less than 75 feet must be equipped with fire sprinklers, there is no blanket requirement that all condominiums and cooperatives in the State of Florida, regardless of height or occupancy or date of construction be equipped with fire sprinklers.

Why does the Division and those following their lead believe otherwise?

In 2010 Chapters 718 and 719 were amended to remove the word "high rise" from the original "opt out law" which was enacted in 2003. That change occurred through SB 1222/SB 1196 which was sponsored by Rep. Ellyn Bogdanoff and Senator Jeremy Ring. It is likely that the Division believes that the removal of the reference to the "high rise buildings" signified a legislative intent to create a retrofitting requirement for all condominium and cooperative buildings through the condominium statute. As discussed above, that logic is not supported by the statutes or the NFPA standards. Moreover, Senator Ring has confirmed that the legislative intent behind the 2010 change was not to impose a blanket retrofitting requirement on all multifamily buildings in Florida but rather was to remove the reference to building height since the shared ownership statutes were not the proper place to impose physical requirements relative to life safety standards.




What does this mean for your multifamily building? 

After Jan 1, 1994, all new buildings 3 stories and above had to have fire sprinklers. In addition, buildings that are treated as public lodging establishments, regardless of height, have life safety obligations which include sprinkler installation. Other than those exceptions, if your building is not a high-rise of 75 feet or higher and you are confused about whether or not you should take a sprinkler opt out vote prior to the 12/31/16 deadline you need to discuss with your association attorney (who is hopefully experienced in these matters) whether or not your local government is requiring low and mid-rise buildings to retrofit with sprinklers due to a local code or ordinance and what the costs and repercussions of taking and not taking that opt out vote are.

Are there any repercussions to taking or not taking this vote?

For high-rises, the failure to take the opt out vote prior to the December 31, 2016 deadline is clearly spelled out in the statutes. Those high-rises who fail to opt out by the deadline must initiate an application for a building permit for the required installation with the local government having jurisdiction demonstrating that the association will install a full sprinkler system by December 31, 2019.

For buildings other than high-rises, the failure to take the vote may have no repercussions at all if they are not otherwise required by local ordinance or code to install sprinklers or it might have some preventative value should a local authority try to impose a sprinkler requirement on them. Your low and mid-rise building must weigh the costs and labor to take the vote against the preventative value or no value in doing so. It is also important to remember that once an opt out vote is taken that the association doing so must take the following steps:


  • Within 30 days after the association’s opt-out vote, notice of the results of the opt-out vote must be mailed or hand delivered to all unit owners. Evidence of compliance with this notice requirement must be made by affidavit executed by the person providing the notice and filed among the official records of the association.
  • After notice of an opt out vote is provided to each owner, a copy must be provided by the current owner to a new owner before closing and by a unit owner to a renter before signing a lease.
  • As part of the information collected annually from condominiums, the division shall require condominium associations to report the membership vote and recording of a certificate under this subsection and, if retrofitting has been undertaken, the per-unit cost of such work. The division shall annually report to the Division of State Fire Marshal of the Department of Financial Services the number of condominiums that have elected to forego retrofitting.
If you manage or serve on the board of a multifamily condominium or cooperative building in Florida which does not currently have a full sprinkler system and you have not yet taken an opt out vote, relying on media articles, newsletters and communications from attorneys who do not serve your community is not your best course of action. Blog posts, including this one, are a good way to start a conversation about an important topic but an informed board must make that decision by relying upon its own advice of counsel.