New Condo Law

As you may know, there have been substantial changes to the laws that affect condominium associations. As of yesterday, July 1, 2010, the following laws have taken effect. Please note that the below items are a summary of the actual law. If you want additional information on any of the below items, please contact me.

1. Collecting Rent Directly from Tenants: Section 718.116(11) was added to the Condominium Act. It states as follows: If the unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association, the association may make a written demand that the tenant pay the future monetary obligations related to the condominium unit to the association, and the tenant must make such payment. The association may sue to evict the tenant as if the association were a landlord if the tenant fails to pay a required payment to the association. A tenant who acts in good faith in response to a written demand from an association is immune from any claim from the unit owner.

2. Denial of Common Areas: Associations are now allowed to deny owners or occupants the use of common areas and recreational amenities (not to include utility services, elevators or parking spaces) when the owner is more than 90 days delinquent in paying financial obligations due to the association and may deny the owner's voting rights.

3. Past-Due Assessments on Foreclosures: Lenders are now required to pay twelve (12) months or 1% of the mortgage, the lessor of. This is an increase from the six (6) months or 1% of the mortgage, the lessor of.

4. Sprinkler Systems: The requirement for mandatory retrofits of sprinkler systems in condos over seventy-five (75) feet high has been removed.

5. Insurance: The provision that required every individual unit owner to obtain hazard insurance has been repealed.

Governor Crist vetoes Senate Bill 1964

On June 1, 2010 Governor Crist vetoed Senate Bill 1964. This bill was quite controversial as it limited the tort liability of design professionals for economic damages resulting from their design defects. In essence, S.B. 1964 was legislatively overruling the Florida Supreme Court's decision of Moransais v. Heathman, 744 So.2d 973 (Fla. 1999). The Moransais decision held that the "economic loss rule" does not prevent a cause of action for negligence against a design professional. S.B. 1964 would have affected engineers, architects, surveyors interior designers and landscape architects. Governor Crist concluded that the proposed limit of liability would have granted unique privileges and advantages to design professionals by removing a consumer's right to bring a tort cause of action against them. Since errors in design may create severe economic damages, Governor Crist was concerned that this bill failed to provide any alternate remedies and shifted the losses on to consumers.

Avoiding the CON in Construction

I normally don't write reviews for a book, but I will definitely make an exception for this one. I just finished reading "Avoiding the CON in Construction". It was great! This book is very easy to read, extremely informative and very practical. I highly encourage any homeowner that is thinking of taking on a construction project to read it. It will definitely help keep the homeowner out of trouble.

Soil liquefaction, earthquakes and Haiti

In addition to poor design and defective construction, one of the causes of the mass destruction we saw during last month’s earthquake in Haiti is “liquefaction”. Liquefaction is a naturally occurring event in which the strength of soil is reduced by earthquake shaking. Specifically, the earthquake shaking causes a drop in the soil’s bearing capacity. Liquefaction is more likely to occur in low lying areas where the soil is saturated. When liquefaction occurs, the ability of a soil to support the foundation of a building is reduced, thereby causing catastrophic damage to the building itself. In a nutshell, the soil turns into a liquid allowing everything it previously supported to sink. Many buildings in Haiti were built in low lying areas where liquefaction is likely to occur. Buildings can be designed to withstand liquefaction. Through laboratory and field testing, it can be determined how the building should be designed to withstand liquefaction. The tragedy that occurred in Haiti underlines the importance of developing a thorough building code and strictly enforcing it.

Crane Ordinance: Part 2

Last week, the U.S. 11th Circuit Court of Appeals in Miami rejected part of Miami-Dade County's crane ordinance. The Court concluded that part of Miami-Dade County's crane ordinance was overruled by federal wind load standards set forth by OSHA. Miami-Dade County had approved the ordinance after a series of fatal crane accidents in the county. The Miami-Dade County Crane ordinance requires crane operators to undergo certification and requires that cranes be designed as "permanent" structures. The Plaintiff's who challenged the ordinance argued that cranes should be designed as "temporary" structures. This distinction is important because it determines the wind speed the cranes must be designed for. Currently, most crane manufacturers design cranes to meet European guidelines (i.e. 92 mph winds). On the other hand, the County Ordinance requires that they be designed to Hurricane Category 3 winds (111-130 mph).

I personally think this decision is a big win for the construction industry. It will prevent municipalities from legislating ordinances that require more than what's already required by OSHA. Designing a crane as a "permanent structure" to wind speeds of 130 mph is a total overkill that will drive up the cost of construction.

Finally, some relief for the HOA's!

There was a very interesting article in today's Daily Business Review. Recently, in a "reverse foreclosure", a Miami-Dade Circuit judge agreed to force a lender to take title to a property from a homeowners association. Pursuant to Florida Law, banks are only required to pay the lessor of, 12 months or 1% of the mortgage in past due homeowners association dues. Therefore, many lenders are accused of delaying the foreclosure process because the association dues they are responsible to pay, are capped. In this case, the association had already taken title to the unit but was unable to sell it because of the lenders existing foreclosure lawsuit. The subject property had been in foreclosure for 2 1/2 years. In order to force the bank to speed up the foreclosure process and the Association's dues, the Association filed a Motion for Summary Judgment against itself asking the Court to force the lender to take over the property. Judge Gerald Bagley agreed with the Associations request, giving Associations much needed help.

Vote NO for Amendment 4!

Amendment 4 will be on the Florida 2010 ballot. This Amendment requires voters to approve all local comprehensive land use plan changes. With this Amendment, the citizens of Florida, not the representatives they elected, will be expected to decide 400 to 500 intricate land-use planning amendments every year. To the average person, the Amendment sounds like a great idea. However, this Amendment will paralyze any chance this state has of emerging out of the current depresive economic environment. It will be virtually impossible for construction to exist in this state should this Amendment be passed.

If the Amendment is passed, Cities and counties will be required to hold elections for each proposed comprehensive plan change whether it be major or minor. In the last four years alone, this amendment would have required an average of over 10,599 additional local votes per year in Florida. In fact, had Amendment 4 been in place in 2006, the voters of Carrabelle - a small Franklin County town - would have seen 617 separate questions in a single ballot!

Further, the cost will be astronomical. Every city and county in Florida will be burdened with the time and cost of holding additional elections to vote on proposed changes to comprehensive land use plans.

"Floridians for Smarter Growth" is an organization that has been established by our State's business and community leaders to combat this dangerous Amendment. Feel free to visit their website at www.florida2010.org

No more impression seals for engineers!

Chapter 471.025(1) of the Florida Statutes requires that all engineers obtain a seal in a form approved by the Florida Board of Professional Engineers. Until recently, that meant an impression type seal. Effective November 16, 2009, rubber stamps will also be allowed. Pursuant to 61G15-23.001 of the Florida Administrative Code, "Any seal capable of leaving a permanent ink representation or other form of opaque and permanent impression which contains the information described herein is acceptable to the Board".

Beware insurance companies...

Insurance companies recently dodged a major bullet. A very important issue is lingering with severe implications for insurance companies. The issue is: Whether an insurer in Florida is responsible for paying the expense of bringing a building into compliance with the Florida Building Code after a hurricane damaged it?
There was a very interesting article in today's Daily Business Review. QBE, an Australian insurance company, settled a lawsuit before a federal judge could rule on the above issue. In the case, QBE contends they are responsible for damages actually caused by the storm. Whereas, the plaintiff condo association claimed that QBE was responsible to bring the entire building up to code. This difference would have amounted to $4 million. In the case, the condo association had to replace all the sliding glass windows and doors in the 600 unit building in order to bring it into compliance with the current Florida Building Code. QBE countered that they were only responsible for a couple of windows that were blown out. I believe the Courts should defer to whatever the Florida Building Code requires. If the Building Code requires that the damaged building be brought up to code because the majority of the building was damaged, then insurance companies should be responsible for this.

Construction: "General Contractor Proper Payment Procedure"

When dealing with private funding for a construction project, it is extremely important that you follow the lien law procedures prior to releasing any money to the general contractor or subcontractors. Failure to do so may result in you having to pay more than the agreed to contract price. Prior to receiving any payment, the general contractor should submit to the architect a payment application with a schedule of values. The architect should then conduct a thorough inspection of the items identified in the payment application and schedule of values. The architect must then report to the owner whether the work has been properly completed and what amount should be released to the general contractor. The general contractor must provide the owner with releases through the date of payment from the general contractor and all the subcontractors and material suppliers that have been involved in the project. Only then will payments made be considered proper payments and the owner is protected from paying more than the contract price.

Florida Statute 553 vs. The Economic Loss Rule

Florida Statute 553.84 created a civil cause of action against a person who commits a building code violation. The Supreme Court of Florida held in Comptech International, Inc. v. Milam Commerce Park, LTD that the economic loss rule does not bar a claim under 553.84. Typically, the economic loss rule prevents a Plaintiff from bringing a tort action when the loss arises out of a contract and there is no personal injury nor property damage. However, the Florida Supreme Court held that the economic loss rule does not apply to a statutory claim such as Florida Statute 553.84.

The Impact of Trytek on Construction Lien Attorney's Fees

In Florida, attorney’s fees may be awarded in only two circumstances. First, there is a statute that provides for attorney’s fees or second, it is based on a prior agreement between the parties (in a contract). The Florida Lien Law provides attorney’s fees for the prevailing party in an action to enforce a construction lien. Last month, in Trytek v. Gale Industries, the Florida Supreme Court ruled that in an action to enforce a construction lien, the court must apply the “significant issues” test to determine which party is entitled to reasonable attorney’s fees under the lien law, even when the lienor obtains a judgment on the lien. This means that the court should look to see which issues were before it and which party prevailed on those particular issues. In other words, which party achieved the benefit it sought in the suit. Just because a claimant receives a judgment does not mean that he is the prevailor in the suit. For example, in the above case, the issue was the amount of setoff the owners were entitled to on a lien filed by a contractor. Since the issue was the amount of the set off and the owners obtained almost the entire amount of the setoff they sought in suit, the court determined they were the prevailing party. The court went even further and stated that this was a flexible and equitable rule and that a court has the discretion to determine that neither party prevailed on the significant issues and that neither party is entitled to attorney’s fees. Thoughts???

Fire sprinklers in homes?

In a landslide vote this summer, the International Code Council mandated that fire sprinklers be required in all one and two family homes and townhouses built to the International Residential Code ("IRC") as of January 1, 2011. However, because IRC codes aren't enforceable until they are adopted by local jurisdictions, the long running debate over residential fire sprinklers is far from over. Home builders are totally against the above requirements preferring hard-wired, interconnected smoke detectors which are already in the building code, over sprinklers. It'll be interesting to see how this works out.

What Welding Does to Aluminum

This is an issue that architects, engineers and contractors need to look out for. Welding aluminum may create issues that do not get much attention for steel: the effect of the welds on the strength of the base metal. Welding significantly reduces the strength of the aluminum base metal. Reason being, the heat created by welding reduces the yield and ultimate strength of aluminum alloys that get their strength from various heat-temper treatments. Reductions in strength may exceed 50-60%. In a nutshell, if you weld aluminum improperly, you risk significantly reducing the strength of the welded member. Building officials and inspectors are aware of this and you run the risk of them red tagging your project. Therefore, structural calculations by a registered Professional Engineer or a Product Approval are a must.

Establishing boundaries and ownership when property borders a lake

As a lake rises and falls, so do the boundaries of any bordering properties. Therefore, it can be said that the boundary between privately owned uplands and submerged bottoms (often owned by government) is a dynamic one. Under Florida Law, riparian owners have the vested right to future accretion and reliction that inure to their benefit. State v. Florida National Properties, Inc., 338 So.2d 13 (Fla. 1976) Meaning, if the water level of a lake diminishes over time through natural processes, the additional exposed land becomes part of the upland property. Conversely, if the lake erodes the upland property, the upland property loses land.

Contractor State Certification vs. Local Licenses

If a contractor obtains a state "Certificate of Competency" this entitles said contractor to an occupational license in any portion of the state for the specific trade that has been been certified. A contractor that has received state certification is also known as a "Certified Contractor". Meaning, the contractor can work anywhere in the state and does not need to obtain a local certificate. On the other hand, if a contractor obtains a local license, said contractor can only perform the scope of work that was certified within that specific county. Meaning, the contractor can only work in the county in which he obtained a local license. In addition, contractors who obtain a local license might also have to "register" with the Florida Construction Industry Licensing Board. Contractor's who obtain a local license and register with the state are known as "Registered Contractors". It is critically important that all contractors be properly licensed. For more information please visit Florida Statute 489

Can Architects be held liable for delay damages?

Yes... If a contractor is delayed by the fault of others under contract with the owner (i.e. by the architect's failure to: 1) provide approriate design docs; 2) properly administer the project; 3) timely approve shop drawings), the contractor may be entitled to delay damages from the liable party. Hewett-Kier Construction, Inc. vs. Lemuel Ramos & Associates, Inc. 775 So. 2d 373 (Fla. 4th DCA 2001)

Mechanics of the Surety Relationship

A surety contract is a three (3) party agreement in which the Surety guarantees to the Obligee (usually the Owner) that the Principal (usually the General Contractor) will perform in accordance with the terms and condistions of the contract. Meaning, if the Principal fails to perform, the Surety promises the Obligee that it will answer the default of the Principal. In normal language, the Surety promises the Owner that if the Contractor fails to perform its job, the Surety will step in and finish. Unlike an insurer, Surety's have the right to seek indemnification from the Principal if the Surety ends up stepping in and finishing the job. There are many types of surety bonds (i.e. statutory and common law). For more information please shoot me an email.

Does Miami-Dade County's Crane Ordinance violate OSHA Rules?

Great article in today's Daily Business Review. Local Builders and Contractors' Associations have filed suit claiming Miami-Dade County's crane ordinance steps on OSHA Rules therefore are requesting that it be blocked from becoming law. The Miami-Dade County Crane ordinance requires crane operators to undergo certification and requires that cranes be designed as "permanent" structures. Plaintiff's argue cranes should be designed as "temporary" structures. This distinction is important because it determines the wind speed the cranes must be designed for. In addition, Plaintiff's also claim that the Ordinance requires additional "jumps" (extension of crane height) which is the most dangerous part of crane operating. Currently, most crane manufacturers design cranes to meet European guidelines (i.e. 92 mph winds). On the other hand, the County Ordinance requires that they be designed to Hurricane Category 3 winds (111-130 mph). Judge Ursula Ungaro of the U.S. District Court Southern District of Florida should rule on this by next week. I'll keep you posted...

Liabilities of Homeowners' Association Developer-Appointed Directors...

Developer appointed board members have the same fiduciary duties and responsibilities as non-developer appointed board members. Furthermore, developer appointed board members are expressly excluded from certain statutory liability limitations. Meaning, they can be sued in their personal capacity. If a developer has established a shell corporation, or has no assets, the developer appointed board members may be an associations only source of redress in the situation where a developer has acted negligently or fraudulently.