Thursday, October 28, 2010

Is your confidential information exposed for all to see in the Public Records?

Did you know that there is an awful lot of private information that has been recorded in the county public records that might include your credit card numbers, social security numbers, drivers license numbers etc.

A friend recently asked me to review her mortgage and I was shocked to find out that the No Lien Affidavit, Continuous Marriage Affidavit and other mortgage documents that she and her husband signed included their Drivers License numbers in the Notary certification. Some notaries simply check off that such identification was produced and others actually take down the license numbers which are then recorded in the Public Records and available for anyone to see! This got me curious and I went back to check personal real estate transactions for my family. My brother and his wife sold a townhouse years ago and the deed actually contains the purchaser’s social security number!

The rules pertaining to state and federal court filings have been tightened up over the years to protect sensitive information like this but many documents involved in real estate transactions (sales, mortgages, lines of credit, etc.) still contain sensitive information which is subsequently recorded in the Public Records for all to see. Broward, Miami-Dade and Palm Beach Counties have online mechanisms to have such information blocked. I’m sure other counties have similar mechanisms.

See for more info.

For the Broward form, please click here:

Request for Confidentiality in Miami-Dade:

Palm Beach County info: and form:

To block any private record information, you will first need to do a name search and review the various documents because you need the Official Records Book and Page Number of the document you want protected. Identity theft is a terrible crime that often takes years to recover from; please take a moment to ensure that your sensitive information is not open for all to see in the Public Records. In addition, the next time you sign a document look to see what personal information of yours is listed therein if that document will subsequently be recorded in the Public Records.

Tuesday, October 26, 2010

Reserve Accounts and Your Association!

Many of you are in the midst of creating association budgets for 2011. As you know, in a condominium and cooperative association, in addition to annual operating expenses, the budget must also include reserve accounts for capital expenditures and deferred maintenance.

The Condominium and Cooperative Acts require reserves for roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. The statutes state that the amount to be reserved shall be computed via a formula which is based upon the estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. A condominium or cooperative 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.

While a condominium or cooperative board MUST adopt a proposed budget with statutorily required reserves, the statutes also allow association members, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by statute. If a community is still under developer control, however, the developer is only permitted to vote to waive the reserves or reduce the funding of reserves for the first two (2) fiscal years of the association’s operation, beginning with the fiscal year in which the initial declaration is recorded, after which time reserves may be waived or reduced only upon the vote of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association. It is important to remember that if a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves, and the vote fails or a quorum is not attained, the reserves as included in the proposed budget MUST go into effect. After the turnover, a developer may vote its voting interest to waive or reduce the funding of reserves.

In a Homeowners’ Association, if the operating budget does not provide for reserve accounts and the association is responsible for the repair and maintenance of capital improvements in the community that may result in a special assessment if reserves are not provided, the association’s financial report for the preceding fiscal year must contain the following statement in conspicuous type: THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO SECTION 720.303(6), FLORIDA STATUTES, UPON OBTAINING THE APPROVAL OF A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION BY VOTE OF THE MEMBERS AT A MEETING OR BY WRITTEN CONSENT.

An HOA is deemed to have provided for reserve accounts if reserve accounts have been initially established by the developer or if a majority of the total voting interests of the association votes to establish reserves. Upon approval by the membership, the board must include the required reserve accounts in the budget in the next fiscal year following the approval and each year thereafter. Once established, the reserve accounts must be funded or maintained or have their funding waived in the same manner provided for condominium and cooperative owners. As with condominiums and cooperatives, the amount to be set aside in reserves shall be computed by using a formula that 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 of cost or useful life of a reserve item.

When creating a proposed budget each year, how many of you rely upon a Reserve Study to determine just how much should be put aside for a rainy day? While the Florida Statutes don’t require the use of specific reserve studies, many association documents do. Whether or not your community traditionally waives or only partially funds reserves, the amounts reflected in your proposed budget must still be accurate.

Thursday, October 21, 2010

Community Association Education You Need to Know About!

I am very pleased to announce that my Firm’s 2011 Legal Update has been approved by the Department of Business & Professional Regulation. Our Legal Update course is approved for two (2) hours of Continuing Education for Managers. We have other courses available as well. The 2011 Legal Update course is particularly important given the number of sweeping changes passed to the common interest ownership statutes last Session.

If you are a manager and are in need of continuing education hours, please contact my assistant, Tisa Christiana, at or by phone at 954-315-0372 to schedule this free course.

On another note, I am equally pleased to announce that our free series entitled Board Member Boot Camp (TM) has been approved by the Division for certification purposes for board members. All those board members who prefer to attend an educational course to meet their certification requirements under the Condominium Act can do so by attending our Boot Camp! Our next Board Member Boot Camp is scheduled for Saturday, January 22nd from 10:00 to 2:00 at Century Village East in Deerfield Beach. The event is open to all who wish to attend. Refreshments will be served. Be prepared to be put through your paces. All interested recruits should register at Please be sure to watch the 3-minute video to see what you will be missing if you don’t sign up!

There are two other exciting community association educational events on the horizon.

On Wednesday, November 3rd, the Aventura Marketing council will be hosting its Taste of the Chinese New Year & Networking Receiption & Expo at Christine Lee’s at Gulfstream Park at 901 S. Federal Highway, Hallandale Beach on the 3rd Floor from 5:30 to 8:00 pm.The event is free with free self parking. It promises to be both entertaining and educational with more than 80 Exhibitors on display. Please click the link below for more information.

The Broward Coalition will be hosting its Annual Share & Learn Trade Show on Friday, November 12th from 8:00 am to 1:00 pm at Diamante’s Banquet Center at 6501 W. Commercial Blvd in Ft. Lauderdale. Admission is free to Association Officers and Board Members; those of you wishing to attend are only asked to bring a single canned item or other non-perishable food item with you to support The Cooperative Feeding Program.

Breakfast and Lunch will be served at the event with a drawing for cash gift cards and an impressive variety of association vendors. Morning and afternoon association educational programs will be featured; my partner Leigh Katzman will be speaking at the morning program. For more information about this wonderful event, please click the link below:

For those of you who are unfamiliar with the Broward Coalition, it has been supporting community associations and their unique needs and issues for the last 30 years in Broward County. I am honored to serve as their Pro Bono Legal Advisor and would urge each of you to take a moment to become more familiar with this fantastic organization. You can visit for more information. For more information about their upcoming Share & Learn Trade Show, please contact Mary Macfie at 954-336-3335 or via email at

I hope to see many of you turn up for these events and programs that are aimed at making the time you spend serving your communities more rewarding and a little easier!

Thursday, October 14, 2010

Debunking foreclosure myths for your association members

Most of us are reading the bleak headlines each day about foreclosure freezes, investor losses, lawsuits, bank write downs and the robosigning scandal. I read recently that hundreds of depositions of former Bank of America and JP Morgan Chase employees are now revealing that these financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and assembly line workers and gave them the title of “foreclosure expert” with no formal training. Many of these folks testified that they barely knew what a mortgage was, had trouble defining the terms “affidavit” and “complaint” and some even admitted under oath that they knew they were lying when they signed the banks’ foreclosure affidavits.

Signing things you don’t understand, however, is just the tip of the iceberg. The real issue is ownership of these loans and who has the right to foreclose. Attorney Generals in all 50 states have stated that they will launch a collective probe into the mortgage industry. If you thought the banks were taking a long time to foreclose on delinquent properties in your community up until now, just imagine the amount of judicial scrutiny that will take place over the next few years when that bank’s counsel walks into court seeking a foreclosure!

How many of your community members are reading these headlines and breathing a sigh of relief that their own foreclosure will surely be stalled or derailed entirely? How many of these folks think this also means that the association cannot foreclose on them as well?

I know that many of you are expeditiously pursuing delinquent accounts in your communities. How many of you, however, are advising the entire membership (not just the delinquent owners) about what you are doing and why? Have you sent out a letter to your entire membership advising them of the following:

• If they are fighting their bank foreclsoure, working on a mortgage modification or if their bank has put its foreclosure on hold, they still must pay the association assessments! It doesn’t make much sense to work out your bank issues only to lose your home to your association foreclosure!

• It is much easier for a community association to foreclose on a home than it is for a bank to foreclose on the same property. Mortgage foreclosures can be attacked if the promissory note is lost or missing, if there are problems with the Truth In Lending Form, RESPA violations and now faulty affidavits among other items. Association foreclosures cannot be defeated because the owner challenges the validity of the most recent election, claims the common areas haven’t been maintained or has any other complaint other than that the amount is not due and owing.

• Owners with financial difficulties should be advised that avoiding their obligation to the association will only add to those difficulties. What might have been a delinquency of less than $1,000 can quickly become an amount several times more than that if the matter is turned over to the association’s attorney for collection.

I recommend that every association send out a letter to its membership reminding them of the association’s collection policy, when amounts become delinquent and how long of a grace period is given before the file is sent over to the attorney for collection. This same letter should debunk some of the myths and confusion out there about why and how associations foreclose on homesteaded property and what should be done to avoid becoming another foreclosure statistic.

Will such a letter cure all that ails your community? Absolutely not, but if reading it convinces one or two of your owners to continue paying their assessments, it is invaluable. Please don’t hesitate to contact me if you would like us to prepare such a letter for your use.

Lastly, some other recent reading added to my thoughts about this blog. Do you know which four states had the highest foreclosure rates in August? You are living in one and Florida is joined by Arizona, California and Nevada. In fact, one in every 155 Florida houses received a foreclosure notice which is 2 1/2 times the national average. Contrast that with a recent move last week by the City of Shanghai, China to prevent families from purchasing more than one home in that city in an effort to cool down surging property prices and curb “irrational demand”. Housing prices in 70 major Chinese cities rose 9.3% in August from the previous year. Bejing implemented a similar “one home per family” rule last Spring. We can’t give away many of our properties while Chinese citizens can’t buy property in their country quickly enough! Go figure.

Tuesday, October 12, 2010

Board and management company sued for failing to enforce community restrictions

We often hear of community residents upset about “condo commandos” overzealously enforcing the community’s rules and regulations. What about those times when a board chooses not to make an issue over rule infractions? Sometimes you’re darned if you do and darned if you don’t.

An 83-year-old Port St. Lucie man died more than two months after being attacked by a pit bull in February 2009 and his widow and adult son are suing the dog’s owners for wrongful death.

The civil suit filed last week in the 19th Circuit Court of St. Lucie County also names Cascade at St. Lucie West Residents’ Association and the association’s management company as defendants for allegedly failing to enforce dog weight limits and leash laws in the subdivision’s covenants. It also names insurance companies representing the Cutlers, the homeowners association and the management company as defendants for allegedly failing to pay Mr. Klatch’s medical bills.

According to the complaint, Robert J. Klatch was riding in a golf cart Feb. 11, 2009, in the Cascades at St. Lucie West neighborhood when his shih tzu, Shayna, was attacked by a pit bull owned by Harvey and Jane Cutler. The lawsuit states the Cutlers’ dog, named Buddy, was “unleashed and running loose.”

Klatch was thrown from the cart and bitten as he tried unsuccessfully to save his dog, according to the lawsuit. He died April 21, 2009, as a result of the injuries, according to the family’s attorney.

In Cascades at St. Lucie West, the board and manager allegedly failed to take owners to task for having overweight dogs off leash in the community. If the association and/or manager were in the process of addressing Mr. Cutler’s violation and have letters to demonstrate their intention to enforce the restriction, it could make a difference in the outcome of this litigation.

Monday, October 11, 2010

Just how valuable is the “Mortgage Terminator” legal tactic for your community?

Many of you may have questions about what has now become one of the most talked about Sun-Sentinel articles regarding condominium law in some time. The article by reporter Daniel Vasquez discussed a new legal tactic with the catchy title “Mortgage Terminator” and concerned a Pompano Beach condominium community that was able to obtain title to a property free and clear of the existing mortgage.

The Palm Aire Gardens Condominium Association was awarded title free and clear of a $184,400 mortgage held by Wells Fargo. The current value of the 2-bedroom unit is $32,500.

While the result sounds wonderful and like something every association should be pursuing, there are a few key facts that were not revealed in the article. First, how much in attorneys’ fees was spent to obtain this unusual result and how many times was this tactic tried unsuccessfully for other communities where the association was left with nothing but a larger legal bill?

In the case referenced in the article, the bank decided to walk away from a unit that was worth about $150,000 less than what was owed on the mortgage after a series of events and legal filings that fell into place just right. In other words, the Association risked attorney’s fees to try and obtain an unusual result, and got lucky in the reported case, which actually ended in settlement. The likelihood that this result will be duplicated on a widespread basis remains to be seen.

In the few cases seen so far where a mortgage has been “wiped out”, that result was obtained by the bank voluntarily walking away and NOT because a judge ordered this relief. In the cases we’ve seen thus far, banks have agreed to walk away only in instances where the property involved had an extremely low value and had been abandoned for some time. In one case, it appears there was so much damage to the property and the value of the unit was so low that the bank did not want to become involved in repair and reconstruction. In another, it appears the bank ignored court orders entered against it, and made a business decision to simply “walk away” from another low valued unit rather than fight. We have yet to see a case where this result was actually obtained by court order in a contested case. Generally speaking, to obtain a similar result to the Palm Aire Gardens case seems to require the home or unit to be worth $50,000 or less, the property to have been abandoned for a significant period of time or significantly damaged, the lender to ignore its mortgage foreclosure, and then decide to voluntarily walk away.

For situations that do not meet this criteria (and even for those that do), the same result cannot be guaranteed and there is the not-so-small matter of attorney’s fees to employ this tactic in court to convince a judge to actually terminate a mortgage when heretofore it has only happened because the banks have agreed to such termination voluntarily. If you swing 100 times, you’re bound to hit the ball at least once or twice! If you file an action enough times, eventually you will get a default, or the stars will align, or the bank will throw in the towel and you will have a big story on your hands. For those communities where the right set of circumstances are in place on a particular property, this strategy might work. However, whether or not this strategy will work across the board remains highly suspect for all the reasons set forth herein.

Not surprisingly, things always seem a little rosier in theory than in reality. Those of us who work for associations must keep trying to help our communities weather the current economic storm by employing strategies that make sense after taking into account each association’s particular set of circumstances and doing a cost/benefit analysis.

Thursday, October 7, 2010

Seeing Signs?

Enforcement of association sign restrictions always seems to raise complaints about freedom of speech issues but especially during election time. Most Associations have some sort of sign restrictions usually designed to reduce visual clutter in the community. Not surprisingly and irrespective of those restrictions, many folks still want to put up their favorite political sign this time of year.

What’s an Association to do?

Go back to the basics – review your documents, and enforce them accordingly. Courts have ruled that an association can enforce sign restrictions, even in regard to political signs. Remember, restrictions that are part of the Declaration are given more deference by the courts than rules passed by the Board as Association Rules and Regulations. Some guidelines for sign enforcement (and good rules of thumb for rule enforcement in general):

• Enforce restrictions equally and fairly against all owners

• Follow the language of your documents – don’t creatively “interpret”

• Amend your rule if it lacks specificity. For example, if you don’t want signs anywhere in the community be sure your restrictive language includes signs placed on or inside vehicles or other personal property

• Follow your documents in regard to enforcement

• Document the Association’s actions

• Use a common sense approach

Some communities decide to carve out an exception for political signs during an election year since they know they are temporary in nature.

What does your community plan to do in this election year?

Monday, October 4, 2010

New IRS Guidelines Provide Relief for Homeowners with “Chinese Drywall”

The Internal Revenue Service recently issued guidelines providing relief to homeowners who have suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009.

Revenue Procedure 2010-36 enables affected taxpayers to treat damages from corrosive drywall as a casualty loss and provides a “safe harbor” formula for determining the amount of the loss.

In many instances, owners with certain imported drywall have reported blackening or corrosion of copper electrical wiring and copper components of household appliances as well as the presence of sulfur gas odors. In November, 2009, the Consumer Product Safety Commission (CPSC) reported that an indoor air study of a sample of 51 homes found a strong association between the imported drywall and levels of hydrogen sulfide and corrosion of metals in those homes.

Revenue Procedure 2010-36 provides the following relief to these impacted homeowners:

• Individuals who pay to repair damage to their personal residences or household appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment.

• Taxpayers who have already filed their income tax return for the year of such payment generally have three years to file an amended return and claim the deduction. The amount of a loss that may be claimed depends on whether the taxpayer has a pending claim for reimbursement (or intends to pursue reimbursement) of the loss through property insurance, litigation or otherwise.

• In cases where a taxpayer does not have a pending claim for reimbursement, the taxpayer may claim as a loss all unreimbursed amounts paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances resulting from corrosive drywall.

• If a taxpayer does have a pending claim (or intends to pursue reimbursement) a taxpayer may claim a loss for 75% of the unreimbursed amount paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall.

A taxpayer who has been fully reimbursed before filing a return for the year the loss was sustained may not claim a loss. A taxpayer who has a pending claim for reimbursement (or intends to pursue reimbursement) may have income or an additional deduction in subsequent taxable years depending on the actual amount of reimbursement received.

Further details on Revenue Procedure 2010-36 can be found at