This year’s Florida legislative session was fairly productive for community associations. Among the statutory amendments scheduled to take effect July 1, 2021 are two which could significantly impact our clients’ covenant enforcement and collection procedures, and we are thus supplying this brief update.
Please join me in a heartfelt HALLELUJAH! After several years of attempts by the Florida Bar Condominium and Planned Development Committee, the Florida Legislature passed SB 630 which will revise the covenant enforcement process for the better, for condominiums and cooperatives. For the last several years, these associations had to pursue covenant enforcement by issuing a notice of intent to file non-binding arbitration, then filing the petition for arbitration. When the final order is filed in arbitration proceedings, and the owners inevitably fail to comply, the Association could then file its lawsuit. The procedure has become increasingly problematic in recent years (which is why the Committee was pushing for this change):
- Arbitrators’ significantly delay completion of the arbitration, which in turn delays the overall enforcement process. By way of example, C&M filed an arbitration petition in March 2021. The arbitrator entered an Order setting a deadline for the unit owner to Answer, and 3 weeks after that deadline expired, the arbitrator entered another Order defaulting the owner and providing until April 26th to respond and explain the previous lack of response, or a Final Order would be entered. Another month elapsed after the deadline, so we moved for a Final Order and fee award in late May. In late June, we still have no indication that the arbitrator actually intends to rule.
- These Arbitrators tend to award relatively low hourly rates for attorneys, causing the expectation that even inherently reasonable charges will not be awarded, and will thereby become unrecoverable except via settlement.
- The concept of “precedent” – consistent rulings by the State’s arbitrators appears to have been eroded or eliminated in recent years. Different rulings have been entered despite involving the same arbitrator and association, and identical violations. This has caused associations with valid claims to reconsider whether to pursue legitimate, clear covenant violations.
Fortunately, the new procedure will enable Florida condominiums and cooperatives to avoid many of these issues, by choosing between: (1) arbitration or (2) an offer to participate in pre-suit mediation. (See our article, What is Mediation). Pre-suit mediation has been successful in settling or avoiding wasted time in homeowners association covenant enforcement matters for several years. Offering and/or participating in a one-time mediation could save time and money as compared to arbitration, and I am glad to have participated in pushing the amendment forward.
The other major statutory change comes via SB 56, which revises the following procedures required of Florida condominium, cooperative, and homeowner associations seeking to collect assessments:
- Assessment invoices or statements of an account balance, if sent, must be sent by first class mail or email to the mailing address listed in the Association’s official records for each lot/unit.
- Before the method of delivering these notices can be changed for any individual lot/unit, the Association must provide 30 days notice of its intent to make the change, and the owner must actually acknowledge their understanding that the delivery method will change. Good luck obtaining that acknowledgement! I intend to pursue an amendment to this requirement next year, to make the Association’s obligations deemed complete once the 30-day notice is mailed or e-mailed.
- A new “Notice of Late Assessment” must be issued (in a form supplied in the statutes) before the Association can demand any attorney’s fees or costs.
- This new notice is good for 30 days, and essentially states what is due for maintenance assessments, late fees, and interest. Notably, the statutes is unclear as to whether the Association can (or must) include unpaid special assessments, or management firm charges for preparing and issuing the notice - or any prior management notices.
- Fortunately, the statute does not appear to be intended to apply retroactively. In other words, if assessment demand notices have already been issued, the process ostensibly proceeds from there rather than the association being required to start over with a Notice of Late Assessment.
- Association Boards of Directors may wish to replace any “pre-demand” notices (e.g., “reminder” letters, etc.) currently being issued, with this statutory notice, to avoid having to extend the overall timeline for the Association’s collection process.
- All Notices of Intent to File a Claim of Lien and Notices of Intent to Foreclose a Claim of Lien are now good for 45 days. Previously, these notices were good for only 30 days when issued by condominiums and cooperatives.
As always, we recommend consulting Association counsel before making any procedural changes to Associations’ enforcement or collection processes, which could require amendments to existing Association policies and procedures. Our current clients are welcome to contact me directly to discuss these changes, and others may contact Arlene Ring to arrange a consultation or representation agreement.