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Employment Law and Medical Marijuana - CAI

Rob Jackson recently presented to the North Gulf Coast Chapter Community Association Institute at the Emerald Coast Conference Center in Fort Walton Beach, Florida. Rob covered some basic and easy to understand employment rules for community association managers and the new world of medical marijuana in Florida and how it may impact the workplace.

A copy of Rob's presentation is below:

Please feel free to contact Rob or any of the lawyers at Hand Arendall Harrison Sale if you have any questions about this presentation or are in need of updated policies or procedures for your association or business.

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New Laws to Preserve and Revive HOA Covenants

MRTA Changes

The 2018 legislative session resulted in changes to Florida Statutes, Chapters 720 and 712, dealing with the preservation and revitalization of community covenants and restrictions and the Marketable Record Title Act (“MRTA”), and the addition of a new requirement for homeowner association boards to address MRTA on an annual basis. The amendments to the MRTA Statute (F.S. Chapter 712) become effective October 1, 2018. Chapter 720 amendments go into effect July 1, 2017.

The purpose of MRTA is to extinguish ‘stale’ restrictions on real property; those that are more than 30 years old, measured from the ‘root of title’ (a recorded instrument creating or transferring estate in real property). If a ‘muniment of title’ (usually a deed) specifically refers to the book and page number where the restriction is recorded in the public records, the restriction for that parcel is not extinguished under MRTA. For the unwary homeowner’s association, MRTA may have the effect of extinguishing the covenants and restrictions for lots in the subdivision, and thereby the association’s ability to enforce the restrictions, because many deeds to single family homes/lots contain only a general reference to covenants and restrictions of record, and therefore don’t qualify for an exception to extinguishment.  Condominium declarations, on the other hand, generally aren’t susceptible to MRTA extinguishment because the Condominium Act requires that the legal description for deeds to individual units include specific reference to the public record information for the declaration of condominium. 

The good news for HOAs approaching 30 years from the recording of the original declaration of covenants is that there is a process, which has been simplified by the 2018 amendments to Chapter 712, whereby the board of directors of an HOA can preserve the covenants for an additional 30 years by filing a summary notice of preservation in the public records of the county where the subdivision is located. The covenants may also be preserved by an amendment to the covenants and restrictions that is indexed under the legal name of the property owners’ association, references the legal name of the property owners’ association and references the recording information of the covenant or restriction to be preserved. For homeowner association covenants which are past 30 years from the root of title, there is a revitalization process, although it requires an owner vote.  

New Requirement for all HOA boards under §720.303(2)(2), “At the first board meeting, excluding the organizational meeting, which follows the annual meeting of the members, the board shall consider the desirability of filing notices to preserve the covenants or restrictions affecting the community or association from extinguishment under the Marketable Record Title Act, chapter 712, and authorize and direct the appropriate officer to file [notice of preservation].”  Thus, strict compliance with the new statute would require that your board consider annually the impact of MRTA, even if the 30-year deadline is years away and regardless of whether a preservation notice has already been filed.  The minutes of those meetings should reflect a discussion of the relevant dates and events relating to MRTA.  

There were additional changes including a granting of authority for communities not governed by a homeowners’ association to now revive covenants and restrictions, and an expansion of the definition of ‘parcel’ to include those used for non-residential purposes. Understanding MRTA extinguishment and the processes to preserve and revitalize can be challenging, so consult with association counsel if there is any question about the status of your restrictive covenants. Being aware of the statute and its implications however, is the first critical step.*  —Attorney Leslie D. Sheekley

*The information in this blog post is provided for general informational purposes only, and may not reflect current law in your jurisdiction. No information contained in this post should be construed as legal advice from Hand Arendall Harrison Sale LLC or the individual author, nor does it constitute legal counsel or solicitation of a prospective client. An attorney-client relationship with the Firm cannot be formed by reading or relying on this information; such a relationship may be formed only by a specific and explicit agreement with Hand Arendall Harrison Sale LLC.

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Legislative updates effective July 1, 2018 to the Condominium Act and HOA Act

 

2018 Legislative Update – 

On July 1, 2018, the amendments to Chapter 718 (Condominium Act) and Chapter 7120 (HOA Act) signed into law by Governor Scott will be effective.  Some of the changes are clarifications and modifications to the laws enacted in 2017, such as conflicts of interest, director term limits and website requirements for condominiums, and others are new additions.

CONDOMINIUMS:

Conflicts of Interest [§718.3026(3) and §718.3027]

There were significant additions to Chapter 718 in 2017 regarding director and manager conflict of interests, and associated penalties.  The 2018 legislative session further amended the provisions to remove some confusion associated with the conflict provisions being in both 718.3026 (dealing with contracts), and 718.30127 (entitled “Conflicts of Interest”).  Now they are contained only in 718.3027, with some further amendment. 

Official Records [§718.111]

  • §718.111(12)(b): The deadline to respond to written official records requests is extended from 5 business days to 10 business days (now matches HOA statute timeline)
  • Minutes of all meetings must be permanently maintained (7- years was previously required)
  • Accounting records for the association and for each unit the association operates must be permanently maintained (7- years was previously required)
  • Copies of Rules adopted for the association are also now to be kept permanently, even if amended in their entirety

Websites  [§718.111(g)]

  • As of January 1, 2019, all condominium associations “managing a condominium with 150 or more units” must maintain a website.
  • The website or web portal must be owned and/or operated by the association or operated by a third-party provider with whom the association owns, leases, rents or otherwise obtains the right to operate.
  • There must be a protected location on the site that is only accessible to unit owners and employees of the association and not to members of the public. On written request, unit owners are to be provided a user name and password.
  • The following documents must be posted in digital form on the website:
    • Articles, Declaration, Bylaws and Rules (and amendments)
    • A list of all executory contracts or documents to which the association is a party
  • i.e. management agreement, maintenance and landscaping contracts 
      • The 2017 version of the statute required copies of the actual contracts. With the 2018 amendment, only a list of these contracts is required. 
    • After bidding for projects is closed, a list of bids received by the association within the last year. 
    • If the bid exceeds $500, a summary of the bids must be maintained on the website for 1 year; in lieu of summaries, complete copies of the bids may be posted.
    • Annual budget and any proposed budget to be considered at the annual meeting.
    • Financial report required by subsection (13) of 718.112, and any monthly income or expense statement to be considered at a meeting. 
    • Director certifications.
    • All contracts or transactions between the association and any director, officer or entity in which the director has a financial interest.
    • Any contract or document regarding a conflict of interest or possible conflict of interest as provided in §468.436(2)(b)6 and §718.3027(3).
    • Notices of unit owner meetings and agendas – to be posted no later than 14 days before the meeting.  
    • must be posted in plain view on front page of website or on a subpage labeled “Notices”
    • Must also post copies of any documents to be considered and voted on by owners at the meeting – at least 7 days before the meeting
    • Notices of any board meeting and agenda, posted no later than date for posting notice of the meeting.

The association is not to post items not available for inspection by unit owners such as attorney-client privileged documents and communications or payroll records of employees, but the association will not be liable for doing so, unless the disclosure was made with a knowing or intentional disregard of the protected or restricted nature of the information. [§718.111(g)(3)]

The failure of the association to post the documents required under the statute does not, in and of itself, invalidate any action or decision of the board or its committees. [§718.111(g)(4)]

Meeting Notices [§718.112]

Special Assessment meetings: Replaced the prior requirement of stating in the notice the “nature, estimated cost, and description of the purpose of the assessment” with a requirement that the notice state “that assessments will be considered and provide the estimated cost and description of the purposes for such assessments.”  718.112(2)(c)(1)

Website posting of notices: In addition to posting meeting notices on the condominium property, Associations may adopt rules and procedures for noticing owner meetings and agendas on a website, so long as the time requirement for noticing such meetings is met. Any rule adopted must include a requirement that the electronic notice be sent in the same manner as a notice for a meeting of the members, and must include a hyperlink to the website where the notice is posted. This notice must be sent to all owners who have provided their e-mails as an official record. §718.112(2)(c)(1), § 718.112(2)(d)(3).

  •  Associations are still required to physically post meeting notices on the property.
  • Unit owners who consent to receiving notices electronically are responsible for removing or bypassing filters that may block receipt of mass e-mails sent to members on behalf of the association in the course of giving electronic notices. §718.112(2)(d)6

Board Member Terms [§718.112]

  • Amendment to 718.112(2)(d) clarifies the 2017 2-year term limit imposed.
    • “Board members may serve 2-year terms longer than 1 year if permitted by the bylaws or articles of incorporation.  A board member may not serve more than 8 consecutive years four consecutive 2-year terms, unless approved by an affirmative vote of unit owners representing two-thirds of all votes cast in the election the total voting interests of the association or unless there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy….”  

Recalls [§718.112]

  • Board of Directors must hold a meeting within 5 business days after the adjournment of the recall meeting or service of a written recall agreement.

 If a recall is determined at the conclusion of that meeting to be “facially valid”, then the recall of the member, or members, is effective immediately upon the conclusion of the board meeting. §718.112(2)(j)

 A recalled board member may file a petition under 718.1255 challenging the validity of the recall

    • If the arbitrator determines the recall was invalid, the board member is immediately reinstated and the board member is entitled to recover reasonable attorneys’ fees and costs incurred.

 If the board determines at the conclusion of that meeting the recall is not facially valid, the recalling unit owner(s) representative may file a petition under 718.1255 challenging the board’s determination. §718.112(2)(j)4.

 The arbitrator may award reasonable attorneys’ fees and costs to the respondents if they prevail, if the arbitrator makes a finding that the petitioner’s claim is frivolous. §718.112(2)(j)6.

 Material Alterations and Substantial Additions [§718.113]

  • Clarifies that approval of 75% of the voting interests of the unit owners must be obtained BEFORE commencing a material alteration or substantial addition to common elements or to real property that is association property, unless the condominium’s declaration provides otherwise. This restriction applies to condominium associations existing on July 1, 2018. §718.113(2).

Fines and Use Right Suspensions [§718.303(3)]

  • Fine/suspension committee to be composed of at least 3 members appointed by the board; cannot be officers, directors, or employees of the association, or the spouse, parent, child, brother or sister of an officer, director, or employee.
  • Clarifies that the fine/suspension committee decides to approve or disapprove the fine and/or suspension by majority vote.
  • If approved by the committee, a fine is now due 5 days after the date of the committee meeting at which the fine is approved.
  • Written notice of a fine and/or suspension of use rights must be provided to the unit owner, and if applicable to any tenant, licensee or invitee, by mail or hand-delivery.

Electric Vehicles  [§ 718.113, § 718.121]

A condominium association may not prohibit a unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area, however, the installation of an electric vehicle charging station is subject to a number of restrictions enumerated in the statute, such as safety, preservation of the condominium property, and the unit owner’s responsibility for associated costs.  718.113(8)

The installation of an electric vehicle charging station may not be the basis for filing a construction lien under Chapter 713, Florida Statutes, against the association, but a construction lien may be filed against the unit owner. 718.121(2), Fla. Stat.

 HOMEOWNERS ASSOCIATIONS:

 Governing Document Amendments

 Amendments to governing documents must contain the full text of the provision to be amended; proposed language to be added is to be underlined and deleted language must be stricken. §720.306(1)(e)

 If the changes are so extensive that underlines and strike throughs would hinder, rather than assist the understanding of the proposed amendment, a notation must be inserted stating “Substantial rewording.  See governing documents for current text.”

 Amendments to governing documents are effective when recorded in the public records.

 Immaterial error or omission in the amendment process doesn’t invalidate the amendment

 *Notices for required for amendments must be mailed or delivered to the addresses of the owners on the property appraiser’s website, or electronically if the owner has consented in writing to receive electronic notices. 

 Fines and Suspensions

  • “A fine or suspension levied by the board of administration may not be imposed unless the board first provides at least 14 days’ notice to the parcel owner and, if applicable, any occupant, licensee, or invitee of the parcel owner, sought to be fined or suspended and an opportunity for a hearing before…” the fine/suspension committee.   §720.305(2)(b)

-The role of the committee is limited to determining whether to confirm or reject the fine or suspension levied by the board.

 Fines are due 5 days after the date of the committee meeting at which the fine is approved.

Elections

The following language was added to §720.306(9)(a): “If an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required pursuant to this section or the bylaws, write-in nominations are not permitted and such qualified candidates shall commence service on the board of directors, regardless of whether a quorum is attained at the annual meeting.”

Application of Payments

This amendment clarifies that regardless of whether a unit owner places a restrictive endorsement on or accompanying their payment to the association, such as “paid in full” or the like, it does not operate as accord and satisfaction as to a greater amount owing, and the association may apply the partial payment in the order of the statute, to interest, then to any late fees, costs and attorneys’ fees and then to assessments, and continue to seek collection of the remaining balance owing. §720.3085(3)(b)

 

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Legislative Update - Associations. Pay close attention to new requirements for websites

 

The Florida Legislature was very active last year with many changes being made Chapter 718 of the Florida Statutes, which became effective on July 1, 2017.  Below is a summary of many of the changes.

   

Offenses which can Result in Criminal Penalties

  • A Director accepting or soliciting a “kickback” or anything of value for the benefit of him or her or their family;
  • Forgery of a ballot envelope or voting certificate;
  • Theft or embezzlement of funds of the association; and 
  • Destruction or the refusal to allow inspection or copying of official records of a condominium association that is accessible to unit owners within the time periods required by law in furtherance of a crime.

Conflicts of Interest

  • An association may not hire an attorney who represents the management company of the association;
  • A board member, manager, or management company may not purchase a unit at a foreclosure sale resulting from the foreclosure of its lien for unpaid assessments or take title by deed in lieu of foreclosure;
  • An association may not employ or contract with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer;
  • Directors and officers of the board must disclose to the board any activity that may reasonably be construed to be a conflict.  The statute now lists activities that are considered to be a conflict subject to a rebuttable presumption.

Official Records

  • Bids for materials, equipment or services are to be kept as part of the Official Records available for inspection;
  • A renter of a unit now has the right to inspect and copy the association’s bylaws and rules.

New Requirements for Websites

  • By July 1, 2018, an association with 150 or more units shall post digital copies of the following documents on its website:
    • The recorded declaration of condominium of each condominium operated by the association and all amendments;
    • The recorded bylaws of the association and each amendment to the bylaws;
    • The articles of incorporation and amendments thereto;
    • The rules of the association;
    • Any management agreement, lease, or other contract which the association is a party or under which the association or the unit owners have an obligation or responsibility;
    • Summaries of bids for materials, equipment, or services for the past year;
    • Annual budget and any proposed budget;
    • Financial report;
    • The certification of each director;
    • All contracts or transactions between the association and any director, officer, corporation, firm, or association that is not an affiliated condominium association or any other entity in which an association director is also a director or officer and financially interested;
    • Any contract or document regarding a conflict of interest or a potential conflict of interest;
    • Notice and agenda for any unit owner meeting no later than 14 days before the meeting.  The notice must be posted in plain view on the front page of the website or a separate subpage of the website labeled “Notices” which is linked from the front page along with any document to be considered and voted upon; and
    • Notices of any board meeting, the agenda, and any other document required for the meeting;
  • The website must be wholly owned and operated by the association or operated by a third party with whom the association owns, leases, rents or otherwise obtains the rights to operate;
  • The site must be accessible through the internet and must contain a subpage, web portal, or other protected electronic location that is inaccessible to the general public and accessible only to unit owners and employees of the association; and
  • Upon a unit owner request, the association must provide the unit owner with username and password and access.

Financial

  • An association that operates fewer than 50 units is no longer permitted to prepare a report of cash receipts and expenditures in lieu of financial statements (this applies in both 718 and 720);
  • Must provide an annual report to the department containing the names of all financial institutions with which association maintains accounts;
  • Unit owner may provide written notice to the division if the association fails to mail or hand deliver a copy of the most receipt report within 5 business days after the request was submitted; and
  • Association and its officers, directors, employees and agents may not use debit cards in the name of the association or billed directly to the association for the payment of any association expense.  The use of a debit card may be prosecuted as credit card fraud.

Board Member Term Limits

  • A board member may not serve more than four consecutive 2-year terms, unless approved by an affirmative vote of 2/3 of the total voting interests of the association or unless there are not enough eligible candidates to fill the vacancies.  (This section does not apply to board members serving 1-year terms); and 
  • The process to recall a board member has changed.

Association’s Right to Suspend Owner Voting

  • The Association may not suspend voting rights unless the owner owes more than $1,000, is 90 days delinquent, and has been given 30 days’ notice.  

Estoppel Certificates (Applies to Chapter 719 and 720 as well)

  • The certificate must be provided within 10 days after receipt of written or electronic request (formerly 15 days).
  • The Association must designate on the Association website the individual responsible for receiving request.
  • The maximum fee that can be charged for a standard estoppel request is $250.  This can be increased by $150 for units that are delinquent.  An additional fee of $100 can be added for rush requests.  
  • The estoppel certificate must list additional information not previously required, including, name of the attorney and contact information if the unit has been turned over for collection and the name and contact information for the insurance agent.

Our firm is experienced in helping individuals, managers, and board members navigate the Association’s documents as well as the Florida statutes.  If you have questions regarding how these new changes may affect you or your Association, please do not hesitate to contact us.

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Do association rules apply to vacation rentals booked through owner/consumer rental sites?

           Home-sharing and short-term rentals have steeply risen in recent years thanks in part to websites such as Airbnb.com, VRBO.com, HomeAway and similar sites.  The rise in use of these websites causes significant issues for community associations, such as those involving privacy, security, traffic-control and parking.  Where the restrictive covenants are silent on the issue of short-term rentals, any ambiguity as to whether short-term rentals are allowed generally must be resolved in favor of the homeowners’ free and unrestricted use of the property.  That being said, many community associations and/or neighboring homeowners often believe that short term vacation rentals are forbidden by the association governing documents, as most governing documents prohibit “commercial or business use” and restrict the property to “single family residential use” or some similar variation thereof. 

          The First District Court of Appeal ruled in a case originating out of Walton County in 2017 that short-term vacation rentals do not violate restrictive covenants requiring property to be used only for residential purposes and prohibiting its use for business or commercial purposes.  This case appears to be a matter of first impression in Florida.  The critical issue considered by the court in determining whether short-term rentals are residential uses of the property is the character of the actual use of the property by those residing thereon – i.e., whether the renters are using the property for ordinary living purposes such as sleeping and eating.  The duration of the rental was not deemed a determining factor.  The court noted that the nature of the property’s use is not transformed from residential to business simply because the owner earns income from the rentals or pays a lodging tax.  Where there are several indicia of a business enterprise, however, other Florida courts have found violations of residential-use-only restrictions.

          As to the restriction mandating single family use, Association documents typically do not define the term “single-family,” and there is no common-law interpretation of “single family” in the community association setting.  Applicable local zoning ordinances may or may not provide a relevant definition of “single-family.”  Nevertheless, most Florida cases construe the “single family residence” or other similar restriction as restricting only the types of structures allowed on the premises rather than who may use or occupy it.

          Nuisance restrictions are also contained in most associations’ governing documents, but these provisions are typically very basic and provide little guidance in determining what constitutes a nuisance.  Thus, unless the short-term renters are carrying on illicit behaviors and/or causing loud noises at all hours of the night, it would be difficult to use the provision as a bar to short term vacation rentals.  To add to that difficulty, most such renters usually will have departed before any enforcement action is even begun, much less completed.

          An association can amend the governing documents to prohibit short-term vacation use, but adding such a restriction will typically require a supermajority approval.  For example, under the Florida Condominium Act, an amendment that prohibits owners from renting their unit, alters the duration of the rental term, or limits the number of times owners are allowed to rent their units during a specified period requires approval by two-thirds of the unit owners (unless otherwise specified in the governing documents), and is applicable only to owners who consent to the amendment and those owners acquiring title after the effective date of the amendment.  As for homeowners’ associations, the governing documents will generally specify the percentage approval required to amend the governing documents, and if no threshold of approval is set forth, then the Florida Homeowners’ Association Act requires the approval of two-thirds of the voting interests to amend the governing documents. 

          In many instances, associations may assuage the effects of such rentals by adopting rules regulating the manner in which vacation rentals are operated and charging fees to accommodate for additional burdens borne by the association.  Any such rules, however, may not effectively prohibit the use of such vacation rentals, must be reasonable, and must be consistently applied to all owners.

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