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T H E L A W 0 F F I C E S 0 F BRUDNY & RABIN, P.A.
TABLE OF CONTENTS
A. 2006 Legislation Affecting Community Associations ………………………… 1 1. House Bill 7121 – Elevators, Generators and Emergency Operations Plans ……………………………….….. 1-2 2. Brief Summary of Other Legislation ………………………………... 3
B. Legislation Which Was Vetoed by the Governor …………………………... 3-4
C. Changes Within the Firm ……………………………………………………4
D. Insurance Issues and Other Document Amendments ……………..…………4-6
A. 2006 LEGISLATION AFFECTING COMMUNITY ASSOCIATIONS: There was some very significant legislation which was passed by the Legislature, and which would have affected both homeowners’ and condominium associations, had Governor Bush not vetoed this legislation. A brief summary of the contents of the legislation that was vetoed appears below. Other than one significant bill which relates to high-rise buildings, there was not a great deal of legislation which actually became law. 1. House Bill 7121 – Elevators, Generators and Emergency Operations Plans: House Bill 7121, relating to emergency management, was passed by the 2006 legislative session and became law on July 1, 2006. This bill attempts to remedy some of the problems with emergency systems which became evident in the last two years due to the large amount of hurricane damage. There is one section (Section 12) in this lengthy bill which applies to condominium and other residential high-rise buildings. A high-rise building is defined as one that is 75 feet or higher, measured from the lowest level of ingress, up to the floor level of the highest occupiable space. If you do not reside in a high-rise building, this portion of the law does not apply to you. For those residential multi-family, high-rise buildings containing at least one non-service elevator, new safety measures must be complied with in order to protect residents in times of emergency. These safety measures include the installation of an alternative power source for an elevator, as well as emergency lighting and fire alarms, and the creation of an Emergency Operations Plan. A “non-service elevator” is one that is not exclusively used for service personnel. If your building contains multiple elevators, you are only required to make the necessary changes to one elevator. There are three deadlines set forth in the legislation: (1) The first deadline, which was completely unrealistic, was for all entities operating and managing high-rise buildings to have an Emergency Operations Plan in place as of July 1, 2006. Most associations will obviously not have met this deadline, and since generators actually need to be installed in many cases, this deadline was unrealistic. However, this was apparently intended to try to motivate all associations and other entities to act as quickly as possible, due to the approaching hurricane season. Failure to have such a Plan in place could subject the association to liability, and we therefore urge all associations who are affected by this law to comply with these requirements as soon as possible. (2) The second deadline is December 31, 2006. By that date, your building must provide the local building inspection agency verification of the plans which provide for the capability to generate power by alternative means. (3) The final deadline is December 31, 2007, by which date the modifications must be completed, and operational capability of the alternate power system must be verified by the local building inspection agency, and confirmed with the county emergency operations agency. The Emergency Operations Plan is described in the legislation, and if there are any questions you should consult your association attorney. The Plan must address in detail the issues which must be addressed before, during and after an emergency. At a minimum, the Plan must include a life safety plan for evacuation; maintenance of the electrical and lighting supply systems; and provisions for the health, safety and welfare of the residents. The law also refers to an alternate power source. This is a source which provides electricity in the event that normal electricity is not operating. This is commonly referred to as a generator. Under the new law, each building must have a generator and a fuel source on the property, or have proof of a current contract posted in a conspicuous place confirming that a fuel source is available on-call within 24 hours from a request. The generator must be able to power the elevators, and a connected fire alarm, and must provide emergency lighting to interior lobbies, hallways and other public portions of the building for a specified number of hours each day over a five-day period. The key to the generator must be kept in a lock box posted at or near the generator. Records are also required to be maintained of any contract for the alternate power sources. Quarterly inspection records of the life safety equipment must also be maintained, and these are to be posted in a conspicuous place so that the elevator inspector can confirm that the equipment has been properly maintained and that it is in good working condition. The associations who are affected by this new law need to consult with professionals in order to obtain proper generators. Portable generators are not sufficient and can be hazardous. Larger generators may only be installed by a proper professional after permitting, and other steps which need to be taken, all of which will increase the costs involved to comply with these new requirements. The relevant portions of the law are contained on the website which is known as “onlinesunshine”. The address for this is http://www.leg.state.fl.us Alternatively, you can access this at http://www.myfloridahouse.gov Follow the links to House Bill 7121, and look for the final “enrolled” version of the law. The language referred to above is found in Section 12 of this new law. Please consult your association attorney if you have any questions regarding the steps which must be taken, including the contents of your Emergency Operations Plan. Once again, this needs to be addressed as soon as possible by all affected associations. 2. Brief Summary of Other Legislation: ▪ House Bill 65 – This Bill revises foreclosure proceedings by providing new procedures in connection with judicial sales and other documents filed in connection with foreclosures, in order to protect the rights of owners and other interested persons to seek surplus proceeds resulting from a judicial sale. ▪ House Bill 1089 – This Bill affects that statute of limitations for claims against architects, engineers and licensed contractors, and shortens the maximum period for such claims from 15 years to 10 years. There is a shorter limitations period which applies to most claims. This Bill also limits the applicability of Section 718.618, which applies to condominium conversions and required reserves for condominium conversions which must be funded by the developer. ▪ House Bill 1139 – This Bill substantially expands the provisions of Chapter 558 of the Florida Statutes concerning pre-suit procedures in construction and design defect cases. All associations which have claims for construction defects must comply with the requirements of this legislation. ▪ House Bill 1443 – This Bill provides for modifications to the law relating to construction liens. It allows permits to be issued before a notice of commencement is filed; provides for the electronic application and issuance of building permits; and otherwise modifies some of the laws relating to construction liens in Florida.
B. LEGISLATION WHICH WAS VETOED BY THE GOVERNOR: ▪ House Bill 391 – This was a very significant bill affecting condominiums, cooperatives and homeowners’ associations, and contained several important changes. Some of the changes included: making it easier to obtain lender consents when these are required in order to amend condominium documents; extending the time frame for retrofitting of fire sprinklers in high-rise condominiums; clarifying the right of beach access to condominium unit owners and guests; removing the mandatory mediation procedures which now apply before legal action can be taken to enforce rules and restrictions on behalf of homeowners’ associations; clarifying the amount that can be charged for information provided by homeowners’ associations and their agents to prospective purchasers and mortgagees; creating a new section relating to architectural control decisions made by homeowners’ associations; and establishing some guidelines in regard to the handling of reserve accounts. There were also requirements for a transition audit to be required for homeowners’ associations which were created after December 31, 2006 when the developer turns over control to the homeowners, and some other changes regarding the timing of financial reporting for homeowners’ associations. One important clarification which was contained in this legislation relates to the need to provide written notice to all members of a homeowners’ association of the Board meeting where the annual budget will be considered. Section 720.303(2)(c)2 requires such a notice to be sent at least 14 days in advance of a Board meeting where an assessment will be considered, and there is doubt which exists as to whether this requirement applies to the annual budget as well as special assessments, due to two conflicting bills that were passed on this subject in 2004. Since this ambiguity in the law has not been clarified due to the veto, we recommend that all homeowners’ associations provide their members with at least 14 days written notice of the Board meeting where the adoption of the annual budget will be considered, unless your governing documents require a greater amount (e.g., 30 days) of prior written notice. It is expected that some of these same proposals will be brought up again in the upcoming legislative session. ▪ Senate Bill 1556 – This Bill provided a more uniform procedure for the termination of a condominium. There were detailed provisions addressing all aspects of this very complex process. It is expected that this issue will again be brought up in the upcoming legislative session.
C. CHANGES WITHIN THE FIRM: Although we have notified our clients of this previously, we are happy to announce that we are settled into our new offices which are located off of Tampa Road in Oldsmar, and we have direct dialing for telephone and facsimile transmissions from both the 813 and 727 area codes. Also we are very pleased to again announce that we have hired a third attorney, Monique Parker, and Monique has now been with us for a few months. She is assisting Michael Brudny and Ben Rabin with various issues. Monique has an excellent academic background as well as litigation experience and we feel confident that our clients will find her very easy to work with.
D. INSURANCE ISSUES AND OTHER DOCUMENT AMENDMENTS: We will be providing some further updates as circumstances warrant. All associations should be aware of the need to update and amend their documents. There are numerous changes in the law which have occurred over the years, many of which can be taken advantage of with document amendments. One example relates to amending Bylaws to provide for emergency powers in the event of a hurricane or other emergency situation. Through a Bylaw amendment, the procedures for holding Board meetings and conducting the business of the association can be modified. Those Board members that are available can even hold a meeting and authorize one person to be able to act on behalf of the association during an emergency, and protection from liability can also be provided to all persons acting on behalf of the association under these circumstances. If any associations are interested in adopting this “emergency powers” amendment, or otherwise updating their governing documents, please let us know. Associations should also have rules in place to deal with hurricane shutters and relating issues such as protective materials that are often used in lieu of shutters. We can assist the association with the development of rules for these and other purposes. Finally, several major issues have arisen over the past year related to insurance, where amendments will likely benefit the association. These include: (a) The need to revise any limitations in governing documents regarding budget increases or special assessments for insurance purposes. (b) The practice of many insurance companies for homeowners (which were approved by the Division of Florida Land Sales in its Declaratory Statement of January 13, 2006 regarding Plaza East Association, Inc. (DS 2005-055)), of attempting to hold the association responsible for interior damage within condominium units caused by water intrusion and other insurable events, regardless of whether the association was responsible in any way for the damage which occurred. The Plaza East decision represented a major change by the Division of Florida Land Sales in regard to responsibility for repairs to interior damage within a condominium unit, or to the limited common elements which the owner may be obligated to maintain. Previously, numerous arbitration cases had held that if an area which the unit owner was required to maintain was damaged due to water intrusion or other reasons, the association was not responsible for such damage in the absence of a showing that the association negligently failed to maintain the common elements, or carry out some other duty of the association. However, the Division concluded in the Plaza East decision that after an insurable event (such as a storm, fire, sewer backup or other cause) the association must pay for all repairs to the portions of the unit or limited common elements which the association is required to insure under the 2003 amendments to Section 718.111(11) of the Florida Statutes, regardless of whether insurance proceeds are available, and regardless of the fact that the unit owner may be responsible for maintenance and repair of such items under the Declaration. This was a major departure from prior opinions and interpretations by the Division, and by our Firm. Our Firm, and other firms who specialize in this area of law, did not agree with the reasoning or conclusions in the Plaza East decision. A later declaratory statement has been issued by the Division in a case involving Allstate Floridian Insurance Company (DS 2006 – 007). In this decision, the Division retreated from the position it was taking in Plaza East, and from any implications that it had determined who had the ultimate responsibility for repairs. The Division indicated that the “courts, not the Division, determined questions of negligence, liability, and damages”. The Division went on to state that “the Division does not have the power to interpret ambiguous condominium documents or an insurance contract in a declaratory statement proceeding”, and that: “Saying that the Condominium Act obligates the Association to insure the drywall inside the unit does not answer what duty the unit owner and his insurer have in regard to the damage, the cause of the damage, the location of the damage…, the liability for the cost of repair, or who must make the repair. All of these questions appear to be disputed… these are matters for resolution by the courts”. Therefore, there is currently no legal basis upon which insurance companies are entitled to conclude that the association is responsible for repairing damage inside units which is not covered by insurance, in situations where the association may be obligated to insure such areas, but not to maintain or repair them. The effect of the position taken by these insurance companies, which was supported for a period of time by the Plaza East decision, is to increase the responsibility of the association for repairs which are not covered by insurance. This can include situations where water intrusion results in mold or other serious complications. The association should carefully review any opinions it receives from homeowners’ insurance companies in regard to the responsibility of the association, and consult with legal counsel on these issues, especially if the facts do not support any association negligence in connection with the particular claim that is at issue. In response to the general lack of clarity in association documents regarding unit owners’ responsibilities to take action to prevent losses or damages, and as to the responsibility of a unit owner for damages caused by their failure to maintain components of the unit and limited common elements, we are recommending amendments to condominium documents to attempt to place clearer responsibility on unit owners to maintain all appliances so as to prevent leaks; turn off water supplies when they are away from their units; and otherwise be responsible to the fullest extent allowed by law for any damages caused by leaks within their units, including damage which is caused to other units or the common elements. (c) The need for associations to consider establishing, and authorizing in their governing documents, an insurance reserve account, or other funding source, to deal with premium increases, losses falling within a deductible under an association insurance policy, and uncovered losses (including damage to units or limited common elements which the Association may be responsible for). If any of our clients have questions about any of these issues, or other potential amendments to their governing documents, please let us know. Otherwise, best wishes to all of our clients and their managers for a quiet hurricane season this year. Sincerely, Sincerely, Sincerely,
Michael J. Brudny Bennett L. Rabin Monique E. Parker
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