Monday, December 27, 2010

Association Governance Elsewhere.

I was fortunate enough to take a recent vacation to Costa Rica. The phrase “Pura Vida” is heard at every turn in this Central American country. Most folks think the words mean Pure Life but it has evolved into several meanings and uses including a greeting, a goodbye and a phrase to celebrate good living.

My family and I stayed in several secluded areas where cell and internet service were not available. Having the chance to unplug for a little while was wonderful but even so I managed to still come in contact with community association issues!

Several of the people we met who live in Costa Rica mentioned their desire to move into gated communities for security reasons. When I asked them whether or not they believed such security was real or merely an illusion I was informed that guards in these private residential communities are armed and have the ability to discharge those firearms under certain circumstances so yes, the security they provided was quite real to them. What were some other surprising association tidbits I learned during my stay?

For starters, an owner of a Costa Rican condominium unit has voting power relative to the value of his or her unit. Those with more valuable property in the community carry greater voting power.

As far as HOA’s are concerned, they are unconstitutional in Costa Rica as having a purpose which is contrary to the inalienable rights of property owners granted under the constitution of Costa Rica. I know that tidbit will make some readers of this blog very happy and will strike terror in the hearts of other readers.

In Costa Rica, it is not uncommon for developers of single family lot subdivisions to represent to prospective purchasers that an HOA will be formed to deal with matters of common interest as well as to deal with common property and to levy fees on the property owners to carry out the mandate of such homeowners’ association. Despite those representations, Costa Rican HOA’s are purely voluntary in nature as far as participation by property owners is concerned. Costa Rican HOA’s do not have the legal authority to carry out any proposed mandates or to collect fees from the property owners in the subdivision that they purport to govern. Although the formation of HOA’s may make practical and logical sense in these communities, their mandate and the collection of any fees from property owners is unenforceable.

Just when I thought the association topic was over when I reached the airport in San Jose to return home, a fellow Spirit passenger mentioned how much he hates all kinds of community associations. This amiable fellow’s occupation was “house flipper” (his words) and he mentioned that the associations made his job of buying and selling real estate quickly in these communities very difficult. He did concede that his perspective was quite different from people who actually buy in these communities with a goal of making it their home. His main work now rests in Las Vegas and California since Florida proved to be an inhospitable climate what with our real estate taxes, high insurance rates and other fees related to property transfers. This gentleman’s parting advice to me was that no one should ever buy property in the State of Florida; renting was the way to go.

One thing is certain: everyone has an opinion about the community association lifestyle. Next time you travel, inquire about the local laws pertaining to common interest ownership communities; you might be surprised to find out how much better (or worse) we have it down here in Florida.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Thursday, December 16, 2010

Board Member Certification Requirements

If you are a newly elected or appointed condominium director, are you aware of the statutory certification requirements that apply to you?

Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.

In lieu of this written certification, the newly elected or appointed director may submit a certificate of satisfactory completion of the educational curriculum administered by a division-approved condominium education provider.

A director who fails to timely file the written certification or educational certificate is automatically suspended from service on the board until he or she complies with this certification requirement. The board may temporarily fill the vacancy during the period of suspension. The secretary must place a director’s written certification or educational certificate in the association’s official books and records for inspection by the members for 5 years after a director’s election or appointment.

The failure to have such written certification or educational certificate on file does not affect the validity of any action taken by the board. Please click the link below to find a sample Condominium Association Board Member Certification Form promulgated by the Division of Condominiums.

Some of the questions that have arisen as a result of this certification requirement are whether or not directors who have served before and are being re-elected are required to submit this certification form or attend an educational course and whether or not a possible candidate for the board can attend such a course prior to actually being elected and still use the course completion certificate after being elected.

Since the Division has not, to my knowledge, issued a definitive rule on these two questions, here are my common sense answers. When a director’s term is up and he or she is re-elected to serve, they are new to that board! I think an argument can be made either way but often the directors who are in the most dire need of education are the ones who might have served the longest. The most prudent course of action would be for every director to read the association’s governing documents and attend educational courses to help them best serve their communities.

With regard to individuals who might want to serve on their board, attending a course beforehand would be one of the best ways to learn about what that service entails. As long as the attendance occurred within a reasonable period of time prior to the election, I suspect that the certificate of attendance will meet the certification requirements.

The Community Advocacy Network (CAN) has a free Board Member Boot Camp (TM) coming up on Saturday, February 5th from 10 am to 3 pm at Century Village East in Deerfield Beach. All interested “recruits” should register at You can also call Drill Sergeant Tisa Christiana at 954-315-0372 to register. Board Member Boot Camp has been certified by the Division to meet your certification requirements. We hope to see many of you on February 5th!

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Friday, December 10, 2010

5th DCA rules that Association can demand sale date in a mortgage foreclosure case!

Finally some good news on the mortgage foreclosure front for associations! The Fifth District Court of Appeals has recently ruled in the case of LR5A-JV, etc. v. Little House LLC, et al (Case No. 5D09-3857) affirmed the trial court’s order setting a date for the lender’s foreclosure sale at the association’s request.

The lender, LR5A, argued unsuccessfully that as the judment holder only it has the right to control when, if at all, a foreclosure sale takes place under Section 45.031, F.S. According to LR5A, the Association as a junior lien holder cannot demand that a foreclosure sale be set. LR5A appealed to the 5th DCA claiming that the trial court erred as a matter of law when it set the date for the lender’s foreclosure despite the lender’s objections.

The association argued that Section 45.031, F.S. gives the trial court the ultimate authority to order a judicial sale and the 5th DCA agreed with the association. The exact language from Section 45.031(1)(a) is as follows:

(1) Final judgment. –
(a) In the order or final judgment, the court shall direct the clerk to sell the property at public sale on a specified day that shall be not less than 20 days or more than 35 days after the date thereof, on terms and conditions specified in the order or judgment. A sale may be held more than 35 days after the date of final judgment or order if the plaintiff or plaintiff’s attorney consents to such time . . . .

The appellate court stated that the lender’s argument “not only contravenes the provisions of section 45.031, but also ignores the Association’s interest in collecting lawful assessments on the subject property. As the Association points out, LR5A is not obligated under 7203085, Florida Statutes, to pay the Association’s assessments, yet, the Association must still maintain the common property and facilities, which inure to the benefit of the property.”

This ruling is binding authority in Florida’s Fifth District ( which includes 13 Florida counties: Orange and Osceola, Volusia, Flagler, Putnam, St. Johns, Lake, Marion, Sumter, Citrus, Hernando, Brevard and Seminole) and persuasive authority in other districts elsewhere in our State. It is welcome relief provided by both the trial and appellate courts which acknowledged that foreclosure proceedings are equitable in nature and, as such, the interests of all involved parties should be taken into account when the matter of the foreclosure sale date is raised!

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Tuesday, December 7, 2010

What are some banks telling your delinquent association members?

A colleague of mine was recently in court waiting his turn for 2 hours listening to mortgage foreclosure cases all the while. During this time, he learned that some banks are telling delinquent owners NOT to pay the association assessments and instead direct that money to the bank during the mandatory mediations that are required in residential mortgage foreclosures. Some banks are actually telling people that they should just stop paying their HOA, condominium or cooperative assessment and other monies such as cable television in order for the banks to come to some sort of a settlement with the homeowner at the mediation. In the meantime, the delinquency owed to the association continues to balloon.

We all know that banks are taking forever to foreclose either because there is no incentive to do so or they can’t due to documentary hurdles but how many of us knew that some were actively working against associations getting paid??

It seems pretty simple, doesn’t it? If an owner has a finite amount of money and cannot pay both the association and the lender, the lender wants to grab as much as possible of those limited resources. We must educate every association member that if they are on the receiving end of this kind of advice from their lender it is very misleading and self-serving given that:
1. There is no defense to the association’s foreclosure (other than that the debt is not owed) which means that association foreclosures can typically be prosecuted much quicker than a bank’s foreclosure which can be stalled as a result of lost promissory notes, botched documents as well as numerous statutory and equitable defenses;

2. The bank’s liability once it obtains title (which is likely to happen since most loan modifications seem to fail eventually) is limited in any event for pre-title delinquencies; and

3. The banks are putting money in their pockets at the association’s expense which really means the expense of all those owners still paying their share of the assessments.

This information should strengthen the resolve of many associations to forge ahead with their own foreclosures. In addition, with this evidence in hand, our legislators might be more inclined in the 2011 Session to reconsider the statutory cap enjoyed by lenders which they managed to so skillfully protect during the 2010 Session.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Saturday, December 4, 2010

Happy Holidays and Wishes for a Brighter 2011!

2010 brought many significant changes to community associations around our State. Many of them were unfortunately not positive such as the continued harmful impact of the foreclosure crisis on our communities. Others were baby steps in the right direction like the new statutory tools for associations to begin dealing with their ongoing delinquencies.

What has been a constant is the camaraderie that is felt when you go out to various town hall and other umbrella organization speaking events and realize that association members around the State are experiencing the same fears, frustrations and small triumphs regardless of where they are located.

It has been my pleasure to be at so many of those events listening to you and answering your questions. Please click this link to see my law firm’s heartfelt holiday message to you and your community:

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.