Monday, November 30, 2009

It's all in the family!

Hopefully you all had a wonderful Thanksgiving. If the leftovers are still good and the out of town visitors are safely on their way back home, consider yourselves fortunate!

If you're like me, you try to keep discussions of work out of your family gatherings. However, with so many people living in common interest ownership communities around the country these days it's inevitable that someone sitting at your table lives in one and has a problem or knows someone who does. My holiday gathering was not immune to the issues plaguing many of you who read this blog.

My older brother lives in a homeowners' association in Indiana that denied his request to build an 8-foot high fortress-like enclosure around his lot; they weren't too crazy about his pool plans either. My sister lives in a Broward County condominium association that is struggling with delinquencies hovering near the 40% mark and further struggling with an unreasonable land lease on their recreational facilities. After paying the lessor each month, the association barely has enough left over for basic community maintenance. As a result, they have been unable to pursue any sort of beautification or improvement projects for years. She'd like to sell her unit and move but its current value is about $50,000 less than what she owes to the bank.

My parents live in a homeowners' association in Weston where they both have served on the board or a committee at one time or another and have seen firsthand how difficult it is to get people to attend the association meetings or even send in their proxies instead. A neighbor has been the subject of bank and association foreclosure actions for well over a year but the parties and parade of new cars in their driveway continues.

My mother-in-law lives in a "55 and Over" community that has its own constant challenges as to whether or not senior housing communities can be realistically maintained in this day and age. If you polled her community members about whether or not they are happy, there would certainly be no consensus about whether the current reserve levels were correct, management was efficient and the vendors used were the best and cheapest out there.

The only one quiet at the table was my baby brother; he and his wife rent an apartment

Wednesday, November 25, 2009

What do you need to know about the new FHA condominium mortgage approval process?

The Federal Housing Administration (FHA) has a new loan approval process for condominium projects pursuant to the Housing and Economic Recovery Act of 2008 (HERA).

The FHA has revisited its earlier proposals in this regard after meeting with considerable public backlash. While the transitional and successor criteria issued by the FHA on Friday, November 6th, still make it much more difficult to obtain FHA-backed financing for condominiums, they are more positive than the FHA's first attempts in this area several months ago.

The latest proposal, Mortgagee Letter 2009-46 B, includes the following requirements for those wishing to obtain FHA financing for condominium purchases:

1. The condominium must be covered by hazard and liability insurance and when applicable, flood and, in condominiums with 20 or more units, fidelity bonding/insurance on ALL officers, directors and employees of the association and all other persons handling or responsible for association funds. The fidelity coverage must be no less than a sum equal to 3 months aggregate assessments on ALL units plus reserve funds;

2. A right of first refusal for the association IS permitted unless it is exercised discriminatorily;

3. No more than 25% of the condominium's total floor area can be used for commercial purposes;

4. No more than 10% of the units can be owned by one investor. This limitation also applies to developers/builders that subsequently rent vacant and unsold units. For condominiums with 10 or fewer units, no single entity may own more than one unit. In order to be eligible for FHA financing, all units, common elements and facilities within the condominium must be 100% complete;

5. No more than 15% of the total units can be more than 30 days past due in their payment of assessments;

6. At least 50% of the units must be owner-occupied or sold to owners who intend to occupy the units; and

7. Lenders must review the association's budget to determine if it is adequate. In cases where the budget documents do not meet the FHA's standards, the lender may request a reserve study (which cannot be more than 12 months old) to assess the financial stability of the condominium.

These are only a few of the new guidelines that FHA-approved lenders must follow to determine the eligibility of a particular condominium for financing. What does this mean for you and your community? It means the pendulum has swung very far in the other direction and it is now much more difficult for potential purchasers to qualify for the financing needed to purchase units and homes. At a time when some owners are looking to move out of communities because they cannot afford to keep paying the shortfall created by non-paying owners, their pool of eligible purchasers just got smaller. For communities praying for new owners to move in and start paying assessments, they too just took a hit.

Let's hope that the FHA further relaxes these guidelines in the coming months.

Wishing you all a very Happy Thanksgiving!

Tuesday, November 24, 2009

What tactics do banks use to stall their foreclosure actions?

I haven't talked to a single person (other than my banker) who doesn't want to either (a) make banks pay more back assessments to community associations in which they hold mortgages or (b) make banks expedite their foreclosure actions.

We are obviously at cross purposes with most banks who have absolutely no incentive whatsoever to take back title to these properties. What happens when the bank takes back title especially to a property that has no equity?

1. The bank must first pay the statutorily required back assessments (6 months in a condominium association and 12 months in a homeowners' association);

2. The bank must start paying regular and special assessments on that property like every other owner in the community; and

3. The bank must incur additional liability as a property owner to maintain, insure and repair that property and market it for sale.

What happens when the bank delays taking title back to the property?

1. The rest of the owners in the community continue to maintain the value of the bank's collateral by paying to maintain and insure the overall community (fixing the roof, maintaining the landscaping, etc.); and

2. The property is waiting for them to take back when the market rebounds.

The question then is how are banks managing to stall their foreclosure actions? Some are using the judicial process cleverly by filing ex parte motions. An ex parte motion asks for a court order before the other party (the association) has an opportunity to be heard on the request. An ex parte motion in a child custody hearing where a parent could flee the jurisdiction is one thing but an ex parte motion to set aside the bank's Final Judgment because there is no equity in the unit??

What other tactics are lenders' counsel employing lately? They are moving to vacate the certificate of title, moving to vacate final judgments (discussed above), moving multiple times to reschedule the foreclosure sales or simply not showing up to scheduled sales or canceling the sale date unilaterally by putting these options into their Final Judgments. Of course, there are defenses to these tactics that the association can raise but most don't have the money or energy to fight the banks.

Interestingly, lender's counsel usually must convince the Court that no defendant will be prejudiced by the granting of the ex parte motion being requested. An association not hurt after years of waiting for the bank to foreclose and to have a new owner start paying its fair share of assessments only to be delayed once again by legal maneuvering? It's hard to believe any trier of fact would easily buy that argument.

Monday, November 23, 2009

How much do you know about the proper handling of condominium reserve accounts?

Section 718.112 (2)(f) of the Condominium Act provides that the annual budget prepared by the board each year shall include reserve accounts for capital expenditures and deferred maintenance. A condominium budget MUST include reserves for roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost for these items, and must also include reserves for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000.

The formula to determine how much to put away in reserve is based upon the estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance.

Even though the board must create a budget with full reserves, the members of an association have the right, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by the Condominium Act. If a meeting of the unit owners is called to determine whether to waive or reduce reserves and majority approval is not obtained or a quorum is not established at that meeting, the board's budget must go into effect with FULL reserves.

Prior to turnover of control of an association by a developer to unit owners, the developer has the statutory right to unilaterally waive the reserves or reduce the funding of reserves for the first 2 fiscal years of the association's operation, beginning with the fiscal year in which the initial declaration is recorded. After that time, reserves may only be waived or reduced with the consent of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association.

Reserve funds and any interest accruing thereon MUST remain in their individual reserve account or accounts, and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association. This means that the funds in the roof reserve can be used only to maintain, repair or replace the roof and for no other purpose unless the membership consents to such different use.

Given the serious ramifications that can occur in communities where reserves have been waived for years, the Florida Legislature amended the Condominium Act several years ago to provide that the following prominent disclaimer language be put in bold on any proxy or ballot used by owners to waive or reduce reserves:


The idea behind reserves is quite simple: put away money for a rainy day a little at a time so it doesn't hurt as much when that rainy day finally arrives. However, there will always be folks who don't like to be forced to save because they might not be around to enjoy the benefits of those savings (the "I no longer buy green bananas" crowd) as well as those folks who don't like to put any more funds than absolutely necessary at the disposal of an elected board. There have been legislative proposals the last few years that would take away the members' rights to waive or reduce reserve funding; this means that all condominium budgets would automatically include reserve amounts regardless of majority membership opinion on the matter. How many of you would support such legislation and how many of you would see that as unnecessary governmental meddling in your private community affairs?

Friday, November 20, 2009

What would happen if community associations ceased to exist?

We hear a lot from people unhappy with the concept of common interest ownership communities that we would all be better off if they ceased to exist. Not building any more mandatory associations is one thing but what would really happen if the 55,000+ mandatory associations that are already in existence simply ceased to exist?

The answer depends in large part on the type of community that was built. A small homeowners' association with only some green areas would be much easier to handle following the demise of the association than a large community with tons of shared recreational amenities. If you bought in a community with a large clubhouse, pool, guard gate, tennis courts, etc. you have to wonder what would happen to all those structures were a functioning mandatory association not in place to (i) collect dues to pay for their upkeep as well as insure them (ii) hire and fire vendors and employees as needed to actually maintain, repair and replace those amenities and oversee the services they provide and (iii) provide corporate protection should someone be injured or killed while in or using those amenities.

In a condominium association, each owner owns a pro-rata share of the common elements; in an HOA, the association owns the common areas. If any of the recreational facilities are on leased land you have even more of a problem in the absence of a functioning association since the lessor can take back that property and perhaps use it for a purpose that would not be beneficial to your community or its values.

Does anyone really believe that the cities in which these communities are located would be rushing to step in to fill the void left by a former association? How many citizens are entirely happy with the job local City Code Enforcement is doing right now? Add another 55,000+ associations in to that mix and ask yourselves the same question.

The fact is that most cities would vehemently oppose having to step in to perform the functions and services currently provided by private residential community associations. These communities already function as quasi-cities by providing services such as utilities and security, disaster planning and recovery, recreation, community outreach programs and more.

The next time you hear someone say we would be better off without functioning private residential community associations ask them to map out a realistic plan that addresses the practical realities and challenges that would surface were their wish to come true!

Thursday, November 19, 2009

Could your community pool be shut down on November 25th?

On December 19, 2007, the Virginia Graeme Baker Pool and Spa Safety Act (VGBA) was signed into law. This federal law was named after the daughter of Nancy Baker and the granddaughter of former Secretary of State James Baker, who drowned in June 2002 after the suction from a spa drain trapped her under water. This Act, which was first introduced by Florida Representative Debbie Wasserman-Schulz, specifies that on or after December 19, 2008, all public swimming pools, wading pool, spas and hot tubs must meet certain requirements for the installation of compliant anti-suction drain covers.

In order to prevent drowning due to entrapment, the VGBA requires that each public pool and spa in the United States be equipped with anti-entrapment devices or systems that comply with the ASME/ANSI A112.19.8 performance standards. Each public pool and spa with a single main drain other than an unblockable drain must also be equipped with a secondary device or system designed to prevent entrapment.

The VGBA defines the term "public pool and spa" to include a pool or spa that is open to residents of all types of common interest ownership communities such as condominiums, cooperatives, homeowners' associations, timeshares and mobile home parks. If you operate your community's pool in a manner that is not compliant with the VGBA, it is a violation of Section 1404(c)91)(A)(ii) of that Act which can subject the community to fines up to $100,000 for each violation up to a maximum of $15 million for any related series of violations, imprisonment for not more than five (5) years and/or forfeiture of assets.

The U.S. Consumer Product Safety Commission (CPSC) has the authority to enforce the VGBA and random inspections have already begun. Florida's Code imposes a deadline of November 24th to comply with the main drain cover and grates. If your community has a pool and you are not certain that you meet the VGBA's and Florida's requirements regarding anti-entrapment devices, please call your pool company immediately. If you are unable to obtain the necessary parts or labor, please discuss shutting down your pool until it is compliant with the law with your association attorney.

For more information, you can contact the Federal Consumer Product Safety Commission at or you can call 800-638-2772.

Tuesday, November 17, 2009

The most difficult problem for some boards.

Yesterday, I met with the 8-member Advisory Council for my Community Advocacy Network (CAN). CAN is a statewide not-for-profit organization that I created to help educate people who live, work and serve in community associations about the laws and government agency mandates that impact their real property values and the way they operate those communities.

My Council had a lot to discuss over the course of an afternoon but one area that took up a lot of our time was creating our legislative agenda for 2010. What help could our legislators give to those of us living in community associations? Which problems could be successfully addressed by legislation and which are just the unfortunate byproduct of living in close proximity to other human beings?

One problem we discussed at length was a problem that many in the room had dealt with personally and without much success. What can and should a board do when witnessing the physical or mental decline of a resident who lives alone in a community association?

One of the symptoms of a person in this kind of decline is hoarding items in their home (years of stacked newspapers, rotting food, etc.) for which an insect or rodent infestation is the first tipoff to the board or a neighbor that something is amiss. Other symptoms may be a radical change in behavior (belligerent interactions with association employees, board members or other residents), change in appearance and other odd behavior (cooking on the catwalks), etc.

If a resident's behavior poses a threat to his or her safety as well as to the community as a whole there are legal steps you can take but none of them are quick or easy. Many boards don't know which governmental agencies to contact to help with an impaired owner. Elder Services comes to mind but often they are unable to resolve the issue long-term. Medicine may be the solution for some of these kinds of issues but a resident living alone may forget or refuse to take it. Often, the board does not have contact information for family members or those family members have no interest in getting involved.

Naturally, there are privacy issues that must also be considered when dealing with a sensitive problem like this. Overall there is no simple solution when dealing with a resident living alone who is in a downward spiral. Compassion, even in the face of outrageous behavior, is the first thing that is needed. However, a little help from the State to deal with these types of situations comes in a close second!

For more information about my Community Advocacy Network or CAN, please visit our website at

Should a certain percentage ownership be required to serve on a community's board?

The common interest ownership statutes do NOT require a director to be an owner in the community. Whether or not ownership is a prerequisite to serving on the board depends entirely on what a particular association's governing documents say.

Most documents do state that only association members are entitled to run for the board and membership is based on ownership of property in the community. Some documents, however, have throwback language to when the developer was still in control and thus, do not specify that only owners can run for the board. In these communities, anyone who is interested can run for the board. This means the landscaper, the association manager, renters or someone's cousin who lives one county over can run for the board and serve, if the community votes them in.

Of the communities that do require that directors be owners in order to serve on the board, the vast majority do NOT specify a minimum percentage of ownership to qualify. In today's crazy real estate market there are a lot of quit claim deeds flying around. Some people are purchasing or being given, for a variety of reasons, very small percentages in residential property. This begs the question: does a 1% owner have enough of a vested interest in the property and the community to want to serve on the board?

How many of you feel that this issue should be addressed legislatively in March when our 2010 Session commences? Should a minimum percentage ownership be required in order to be eligible to serve on one's board? Should ownership at all be mandated since currently it is not?

If you can't live with the thought of non-owners serving on your board, this is one more item you will want to look at in the documents before you buy!

Friday, November 13, 2009

How does Tallahassee impact you and your community?

How many of us stop to think about how much of what goes on during the 60-day session up in Tallahassee each year impacts the way we run our communities and the costs to do so? By the time most of you read in the papers about the various community association bills that were debated and passed, it is too late for you to weigh in.

More so than other real property owners, people living in mandatory community associations are greatly impacted by the bills our legislators sponsor and pass each year. If the law is changed to require mandatory yearly audits, count on increasing your budget next year to pay for that. If the law is changed to impose one-year term limits on directors, plan on having to undertake a strong push to solicit new people willing to take on the drudgery of board work or plan for a paid receiver to come in as a worst possible scenario if no eligible people are willing to serve. These are just examples of the types of laws that could pass and the impact they will have on both board members and owners alike!

We are still months away from the start of the 2010 Legislative Session in Florida and already there are four filed bills that impact community associations. Do you know their numbers and their sponsors? Here they are: HB 115 sponsored by Representatives Ambler and Robaina; HB 327 (Robaina), HB 329 (Robaina) and HB 337 sponsored by Rep. Yolly Roberson. We will be discussing the contents of these and other bills in the upcoming months. Last year there were almost 2 dozen bills filed that could have impacted your communities and none ultimately passed. This year there will be as many or more as your legislators attempt to tackle some very real issues including lender reform for struggling communities.

I head up an organization called the Community Advocacy Network or CAN. One of our main goals is to give people like you the opportunity to play a meaningful role in the process that takes place in Tallahassee each year so you can let your legislators know your wishes before they cast their votes on these bills which can so greatly impact your lives and your bottom lines. For more information about my statewide not-for-profit group, please go to

Thursday, November 12, 2009

What should be expected of owners in community associations?

The media likes to report on the rights of condominium and HOA owners being trampled by their boards of directors. Yes, that happens and abuses deserve media attention to prevent their continuation but equal attention should be paid at least to the fact that owners have responsibilities in addition to their rights.

What, then, should an owner expect to take on as his or her responsibilities when buying a home in a mandatory community association?

1. Read the association's governing documents (the Declaration, Articles, Bylaws and Rules and Regulations). Yes, they are long and boring and filled with legalese but you have to know what you are getting into before you buy. If you have a 75-lb. Rottweiler you might want to think twice before buying a condominium with a no pet restriction or a 25-lb weight limit on dogs. The same holds true for leasing restrictions, commercial vehicle restrictions and a host of other rules that you must decide you can live with or you can't.

2. Pay your assessments even if you have a dispute with your association. If you don't like the board, hate the manager or deplore the community's condition, you must still pay your assessment or you risk being liened and ultimately losing your home to foreclosure. Pay your assessments in full and fight your other battles separately.

3. Attend board and membership meetings, vote in board elections or better yet run for the board. You lose your credibility if you complain but never get involved.

4. Speaking of complaining, resist the urge to become a recreational complainer. Some owners start out with legitimate complaints but make a career out of complaining about everything and anything. Pick your battles.

5. Maintain, repair, replace and properly insure the property for which owners bear those responsibilities.

6. Secure your property prior to a hurricane or other storm approaching. If you have furniture, plants and other items on your balcony, please take them in so they don't become missiles and harm your neighbors' property.

7. Provide the association with your most current contact information so you can receive all association notices.

8. Be a courteous neighbor and a respectful participant at meetings.

9. Don't assume other peoples' intentions; if you don't know, ask.

10. If you lease out your unit, get approval first and make sure your tenants and other occupants understand that they must comply with the association's rules and regulations.

Just as an owner should understand and fight for their rights, if necessary, he or she must also honor the responsibilities they undertake when choosing to live in a mandatory community association.

Wednesday, November 11, 2009

What does it mean to owe someone a fiduciary duty?

We hear the words fiduciary and fiduciary duty tossed around a lot in the community association setting. How many of us give real thought to what those words mean?

The textbook definition of a fiduciary is one who is in a position of authority who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor and loyalty in fulfilling that obligation.

When you agree to serve on your community's board of directors, you assume a fiduciary duty to the association members. If you fail to fulfill that duty, you leave yourself vulnerable to a breach of fiduciary duty lawsuit. Hopefully, the preceding sentence will not make you want to tender your immediate resignation; hopefully, it will make you want to learn more about your responsibilities as a board member.

Here are a few examples of what is expected from the board:

1. Maintain, repair, replace and properly insure the common elements/areas;

2. Properly vet vendors who service the community;

3. Disclose any conflicts of interests or, even better, avoid conflicts of interest;

4. Be good stewards of the members' money;

5. Insist on transparency in association operations;

6. Hold frequent and open meetings and conduct fair elections;

7. Read the association's governing documents;

8. Know when to ask an expert's advice rather than relying on the resident board "expert";

9. Treat your association's official records with respect and make them available to the owners for inspection; and

10. Basic communication skills are good; great communication skills will serve you even better while you serve your community. Tomorrow we'll talk about the owners' responsibilities.

Tuesday, November 10, 2009

What can be done about troublesome tenants?

Let me start out by saying that today's blog is not meant to suggest that every tenant is or will become a nuisance to his or her community. There are many tenants who make better neighbors than the people who own the unit next door.

That being said, many communities today are struggling with tenants who, for whatever reason, have become a source of general nuisance to others. Most of us have suffered living next to these kinds of occupants at one time or another: loud parties, disabled car on perpetual cinder blocks, garbage on the front lawn, frequent visits from the police for the all-too-frequent domestic disputes and more.

Often the unfortunate people living next to these characters expect and fully demand that the association do something NOW! Realistically, however, how many tools does an association have at its disposal to deal with this kind of situation?

If the tenants' behavior rises to the level of a general nuisance, the association can pursue an injunction against the owner who rented to them to stop the behavior from continuing. If the association's governing documents require the use of a board-approved uniform lease form or lease addendum (and the owner in the case at hand complied with the requirement), such document should provide the association with even more options to quickly remove a troublemaking tenant. In addition, if the association's governing documents allow fining, the association can fine an owner for his or her tenant's or other occupant's misbehavior.

There is no easy or cheap solution to rid your community of a truly bad tenant. The best solution is better prevention. If you don't have the ability to screen tenants, speak with your association attorney about what you can and can't do in terms of screening. I have often told clients that it is also important to have your owners screen their own tenants to get a clear picture of who they are letting into their homes. Too many owners stick their heads in the sand about the type of tenant they are bringing in to the community. If your governing documents required owners to submit their own screening results for their proposed tenants, it might make some of them think twice if some red flags surface.

There is no surefire guarantee that screening can prevent a troublesome tenant just as there is no way to ensure that owners cannot also become a source of nuisance to their neighbors. In these troubled economic times, many owners are happy to have any tenants to supplement their assessments let alone good ones.

Monday, November 9, 2009

Dealing with satellite dishes in your community?

Have you seen a crop of satellite dishes sprouting in your community? Are some of them in unusual places? Have some been installed without obtaining board approval, or worse installed by a tenant in a unit where the owner is delinquent?

Be careful you understand what your board can and can't do under federal law with regard to satellite dishes. The first thing you need to know is that the telecommunications industry has one of the strongest lobbies on the planet. Their strength resulted in Section 207 of the Telecommunications Act of 1996, which directed the Federal Communications Commission (FCC) to adopt the Over-the-Air Reception Devices (OTARD) rule concerning restrictions on viewers' ability to receive programming signals from, among other items, direct broadcast satellites.

That rule which has been in effect since October, 1996, prohibits restrictions by both governmental and nongovernmental entities that impair the installation, maintenance or use of satellite dishes that are less than one meter (39.37") in diameter. In the community association context, the association cannot pass rules that (i) unreasonably delay or prevent installation, maintenance or use of the satellite dish (ii) unreasonably increase the cost of installation, maintenance or use; or (iii) preclude reception of an acceptable quality signal.

Be sure to speak with your association attorney to ensure that any rules you may have passed with regard to the approval process for satellite dishes, location of same or placement of concealing shrubs passes muster under the FCC Rules.

This does not mean that owners can install satellite dishes on the roof or by affixing them to the building's exterior. In fact, a condominium or cooperative owner can only install a dish pursuant to the OTARD rule to areas that are "within their exclusive use or control". Typically, that refers to a balcony or patio. Another alternative for a community that wants to prevent the installation of hundreds of individual satellite dishes is to install a community satellite dish subject, of course, to membership approval.

Friday, November 6, 2009

Important event for Broward County community associations.

There will be a "one-of-its-kind" event coming up next week for Broward County community associations. The Broward Coalition will be holding its first "Share and Learn" Workshop: What Every Association Needs to Know event at the Sunrise Lakes Phase 1 Clubhouse at 8100 Sunrise Lakes Drive North, Sunrise, FL 33322.

The purpose of this event is to provide a forum for education, discussion and even a little bit of entertainment for those of you involved in community association living!

The event will take place from 9:00 am to 1:30 pm. There will be a panel of experts and plenty of Q and A time for those in attendance. Breakfast & Lunch will be served for everyone in attendance and there is NO admission fee although attendees are asked to bring one non-perishable food item for the Cooperative Feeding Program. There will be 21 door prizes awarded in addition to two $250.00 gift certificates (winners of all prizes must be present to collect their prize).

I am proud to serve as the Broward Coalition's Pro Bono Legal Advisor. What does that mean? I try to answer a lot of association questions for the Broward Coalition members the same way I do in this blog. The Broward Coalition serves the interests of more than 200 community associations in Broward County and that number is growing. Their board is comprised of so many talented and dedicated people and is led by well-known community advocate and activist, Charlotte Greenbarg. You may have read about Charlotte lately in her fight to make sure the Broward School Board and other elected Broward County officials actually do the job we elected them to do.

I hope as many of you as possible are free to join us on November 13th for this amazing event. Please RSVP to Mary Macfie by November 10th if you will be attending via email at

Thursday, November 5, 2009

Is your community violating state and federal fair housing

Sometimes discrimination can be subtle by just implying that something is not wanted rather than shouting it. A sign at the front of a beautiful community in a desired location proclaiming: "A 55 and Older Community" sends a pretty clear message that families are not wanted. In other communities, it may be a little more subtle with pictures on their website of only seniors and tagwords like "mature" when describing the type of occupant who will enjoy living there.

In addition to the federal fair housing law, Florida law also prohibits discrimination based on familial status. Both the state and federal fair housing laws permit communities to exclude children as permanent occupants if they meet certain exclusions. To qualify for the "55 and older" federal exemption, communities must meet the requirements established in the Housing for Older Persons Act of 1995 (HOPA). Specifically, at least 80% of the units or homes must be occupied by at least one occupant who is age 55 or older and the community must be able to demonstrate, through written policies, lease provisions, advertising, etc. that the community is designed exclusively for older residents.

A community will only be able to exclude children if it meets this criteria and if the age restriction is applied to the entire development and not just one portion of it. In other words, a multi-condominium community could not set aside just one building for older occupants and exclude children from the entire complex.

You cannot get around this criteria by simply passing rules designed to discourage families with young children while not meeting the 80% occupancy threshold. A classic example is prohibiting children from riding bikes in the community's green areas while not similarly prohibiting adults from riding bicycles there. The Department of Housing and Urban Development (HUD) periodically sends "spotters" to test for discriminatory practices and a large percentage of those tests do produce fair housing complaints. Remember, if you have that sign out front proudly proclaiming that you are a Senior Housing Community but you haven't taken a census in the last decade to actually verify that information, you have committed de facto discrimination because potential younger purchasers drove by under the mistaken assumption that they could be kept out.

Most people living in adult communities purchased there because they wanted a certain lifestyle. If that is the case in your community, it is important that you routinely safeguard that lifestyle by ensuring that you continue to meet all necessary requirements under federal and Florida law. Lastly, considering that women today are having babies well into their forties and most 55-year old's in 2010 are 2 or 3 decades from retiring, the tagline "55 and Over" for a community without children seems a little out of touch with today's realities. The threshold would probably make more sense if we nudged it up a decade to 65 and Over.

Wednesday, November 4, 2009

No one benefits from a community in turmoil.

Despite what you may have been told, most attorneys I know don't root for communities to head into crisis mode so they can crank out the billable hours. These kinds of communities present all sorts of challenges and potential liabilities for the attorneys who serve them.

A board under siege (either due to their own petty infighting or because they have been victimized) is an unfocused board. A client that can't understand and follow advice or, even worse, doesn't know when to reach out for help in the first place, is a dangerous client to have. It's easy for fighting board members to twist counsel's words or advice to their own advantage. Let's not also overlook the fact that having a scapegoat like your association attorney when there is nowhere left to hide from bad decisions can be appealing for some.

Do you know what happens most frequently in conflicted communities? They don't pay their legal bills. Contrary to the belief that "the lawyers are benefitting from all this", many times lawyers representing communities in crisis wind up struggling to get paid. Wise attorneys won't work with communities who can't or won't benefit from their advice.

Associations are corporate entities which require general corporate representation. There will always be enough legal work that must be performed for well-run, peaceful communities. Documents need to be tended, budgets prepared, meetings held, units conveyed, etc. Of course, just as with any other corporate entity there will be bumps in the road in the form of collections and litigation.

An association attorney's real worst nightmare is a community in turmoil because it probably means being fired, not paid or possibly sued. Just as associations should be picky about the attorneys they invite into their communities, attorneys should be equally selective about the associations with whom they choose to partner for the ultimate benefit of the membership.

Tuesday, November 3, 2009

Is Chinese Drywall creating problems for you?

Last week the Consumer Products Safety Commission (CPSC) came out with a series of inconclusive reports regarding the stinky Chinese Drywall (CDW) plaguing so many American homeowners. The most definitive finding was that CDW has a higher level of strontium than domestic drywall.

There is no known relationship, as of yet, between strontium and the "rotten egg" odor typically caused by sulfur and the corrosive effects of CDW on copper piping that have been reported. Of course, many people are most concerned with whether or not CDW carries any health risks in addition to these other adverse effects.

There is an ongoing nationwide class action regarding CDW. All CDW cases filed in federal court have been transferred to Judge Fallon of the Eastern District of Louisiana in New Orleans. Judge Fallon has scheduled three trials for early next year, the first of which will begin in January. Judge Fallon has decided that the first trial will be for a house in Louisiana and will be focused solely on property damage rather than health issues.

So how do you know if you have Chinese Drywall in your home? Here are some telltale signs:

1. The easiest way to determine whether you have CDW is to look on the backside of a piece of your drywall for an identification mark such as "made in China" or the name of a CDW manufacturer such as Knauf;

2. Do you detect a foul smell in your home similar to rotten eggs?; and

3. Look for corrosion on your copper pipes or the coils inside your air conditioning unit. Have an electrician inspect these items rather than attempting to do it yourself as you can be injured;

For more information on the nationwide class action lawsuit on Chinese Drywall please visit:

Monday, November 2, 2009

Tenants get new federal rights while associations get nothing.

How many of you are aware of the existence of the Protecting Tenants at Foreclosure Act of 2009? Apparently, this law was slipped in while people were busy watching the health care bills, the new Supreme Court Justice nominee and which of Obama's staff members didn't pay their taxes!

The law is not crystal clear as to what rights it affords tenants in homes or units that have been foreclosed on but it clearly confers some important new tenant protections. The law automatically expires on December 31, 2012, but until then it could significantly impact your community association. The Act provides protection to bona fide tenants (defined as any person not related to the person being foreclosed on who enters into a lease before the notice of foreclosure, in an arms-length transaction for a rental amount that approximates fair market rental value).

The Act specifically provides that a bona fide tenant cannot be kicked out of the dwelling as soon as someone else (the bank or presumably the association) takes title to the property. Instead, whoever takes title to the property at the foreclosure sale does so subject to the tenant's new federal right to occupy the unit for a period of time and must provide the tenant with a 90-day notice to vacate before attempting to remove that tenant.

Moreover, unless the property is sold to someone who intends to occupy the property as their primary residence, whoever takes title at the foreclosure sale must honor any existing bona fide lease even if it goes beyond the 90 days. In other words, someone who has a year left on their lease cannot be kicked out until their lease is over unless the property is sold to someone who intends to occupy it as their primary residence and the 90-day notice has been given.

For some associations this might be a good thing as the units/homes they foreclose upon will come with ready-made tenants. However, I can see room for problems including tenants who claim they have prepaid their rent to the prior owner and issues with troublesome tenants whose removal will now be delayed as a result of this new law.

The real question remains why struggling association members remain the last group standing who have not received any sort of federal or local help.