Friday, December 11, 2009
Friday, November 20, 2009
Dear Bob:I received a copy of a letter that has been mailed out to [all] homeowners. I feel it is a defamation against me. Do I need Board approval to send it to you for your advise? If there is a charge for this question, please bill me seperately from the Association.....
Tuesday, November 17, 2009
Sunday, November 15, 2009
COUNTRYSIDE VILLAGE CONDOMINIUM ASSOCIATION, INC., RESPONDENT.
A Writ of Certiorari to the Circuit Court for Miami-Dade County, Mary Barzee-Flores, Judge. Lower Tribunal No. 06-24673.
Elder & Lewis and David R. Elder and Kerry H. Lewis, for petitioner.
Peter V. Fullerton, for respondent.
The opinion of the court was delivered by: Salter, J.
Before RAMIREZ and SALTER, JJ., and SCHWARTZ, Senior Judge.
Trintec Construction, Inc. seeks certiorari from a circuit court order discharging its recorded mechanic's lien claim. We grant the writ, quash the order below, and thereby reinstate Trintec's claim of lien.
I. The Roof Work and the Lawsuit
The respondent, a condominium association, contracted with Trintec for roof repairs to multi-unit buildings in thirteen separately-declared, but collectively-managed, condominiums. The written contract between Trintec and the Association included a recital that the Association was the governing body for all of the affected buildings, and the contract was signed by the president of the Association.
In April 2006, Trintec claimed non-payment and default, and it recorded a claim of lien for approximately $1.3 million the following month. The property description within the lien identified the entirety of each of the thirteen condominiums by recorded declaration, rather than the individual units and common area parcels in the condominium buildings where the work was performed. In late 2006, Trintec filed a lien foreclosure complaint and lis pendens against the Association and the property as identified in the claim of lien.
The trial court initially granted the Association's motion to dismiss the complaint without prejudice, allowing Trintec twenty days within which to amend. That order did not identify any deficiency in, or grant any relief regarding, the recorded claim of lien. The Association then sought and obtained an emergency hearing to "clarify" the trial court's ruling as it pertained to the lien.*fn1 The Association persuaded the trial court to enter a further order dismissing and discharging the lien "without prejudice." The trial court accepted the Association's argument that the individual unit owners were indispensable parties to the lien foreclosure action, and that Trintec's statutory mechanic's lien claim could not proceed without the joinder of those unit owners.
Trintec's motion for clarification and to vacate the further order discharging Trintec's lien was denied in February 2008, and Trintec then filed its petition here.
This Court initially denied the petition without prejudice to Trintec's right to amend its complaint, claim of lien, and lis pendens to conform to a more specific property description as detailed in Royal Ambassador Condominium Ass'n v. East Coast Supply Corp., 495 So. 2d 932, 935 (Fla. 4th DCA 1986). Trintec moved immediately for clarification of that order, however, based on its concern that by statute it could no longer amend its recorded claim of lien. We then directed the Association to file a response to Trintec's petition and its motion for clarification.
The parties' written submissions disagree regarding the primacy of the condominium law provision regarding mechanic's liens, see section 718.121, Florida Statutes (2006), versus section 713.08, Florida Statutes (2006), the mechanic's lien law requirements themselves. In essence, the question is whether the "owner," for purposes of the lien law's application to a condominium property and improvements to its common elements, is: (a) each and every unit owner in the condominium; or (b) the condominium association created by the declaration. The Association argues that the mechanic's lien law's use of "owner" means each individual condominium unit owner, such that those owners are indispensable parties.
We consider in turn section 718.121(2) of the Florida Statutes; the applicable provisions of Chapter 713; Florida Rule of Civil Procedure 1.221, entitled "Homeowners' Associations and Condominium Associations"; and the decisional law regarding these provisions, in order to harmonize all of them in a fair and practicable way.
A. Section 718.121(2)
Section 718.121, entitled "Liens," protects unit owners by limiting the manner in which liens may be imposed upon condominium property after the declaration of condominium has been recorded. First, section 718.121(1) requires the unanimous consent of all unit owners for the imposition of any lien against "the condominium property as a whole," and it further provides that "liens may arise or be created only against individual condominium parcels." This affords a basis, for example, for an individual unit owner to record a mortgage lien over his or her unit.
Section 718.121(2) addresses mechanic's liens in particular and under the scenario involved here:
Labor performed on or materials furnished to the common elements are not the basis for a lien on the common elements, but if authorized by the association, the labor or materials are deemed to be performed or furnished with the express consent of each unit owner and may be the basis for the filing of a lien against all condominium parcels in the proportions for which the owners are liable for common expenses.
Finally, section 718.121(3) confirms that if a valid lien encumbers multiple condominium parcels, each owner of an encumbered parcel may exercise the rights of a property owner under Chapter 713*fn2 "or by payment of the proportionate amount attributable to his or her condominium parcel" (entitling the payor to a lien release for that parcel).
In this case, clearly the Association authorized Trintec to provide the labor and materials for the roof work. The express consent of each unit owner is thus "deemed" to have been given, and Trintec could properly file a lien against all condominium parcels in the proportions for which the owners are liable for common expenses. See § 718.121(2).
B. Chapter 713
Turning next to the mechanic's lien law itself, we consider the validity and enforceability of the actual claim of lien filed by Trintec. Sections 713.08(1)(d) and (e) specify that a recorded claim of lien "shall" state a description of the real property sufficient for identification and the name of the owner. Trintec's claim of lien described the entire condominium by identifying each declaration of condominium in its entirety, and it identified the owner as "Countryside Village Property Owners Assoc[iation]" at the address of the Association's designated representative identified in the contract.
Section 713.08(4)(a) provides that an omission or error within a claim of lien "shall not, within the discretion of the trial court, prevent the enforcement of such lien as against one who has not been adversely affected by such omission or error." The Association's response commendably concedes that it cannot show any such adverse effect in this case.*fn3 Section 713.08(4)(b) permits the amendment of a lien "during the period allowed for recording such claim of lien, provided that such amendment shall not cause any person to suffer any detriment by having acted in good faith in reliance upon such claim of lien as originally recorded." Because that period had expired,*fn4 Trintec could not record an amended claim of lien adding the unit owners at the time the trial court discharged Trintec's lien. Section 713.08(4)(c) directs that a claim of lien "shall be served on the owner," raising again the need to determine the "owner" of the condominium roofs.
Section 713.11, entitled "Liens for improving land in which the contracting party has no interest," precludes the attachment of a mechanic's lien to land if the contracting party for the labor and services has no interest in that land. In this case, however, the Association has an "interest" in all of the condominium parcels--the declaration grants the Association unique rights regarding the common elements, and Chapter 718 permits the Association to impose and collect liens on the units for unpaid assessments.
C. Florida Rule of Civil Procedure 1.221
A further source of guidance is found in Florida Rule of Civil Procedure 1.221, entitled "Homeowners' Associations and Condominium Associations." After control of a condominium association has been turned over by the developer to the unit owners, the association is a proper party to "institute, maintain, settle, or appeal actions or hearings in its name on behalf of all association members concerning matters of common interest to the members, including, but not limited to: (1) the common property, area, or elements; (2) the roof or structural components of a building, or other improvements . . . ." Fla. R. Civ. P. 1.221.
So it is clear that, if the Association is unhappy with the roof work performed by Trintec, the Association can bring an action as a single plaintiff on behalf of the affected unit owners. The unit owners themselves need not join that lawsuit as plaintiffs. The issue before us, however, is whether the converse applies--if Trintec sues the Association, may it sue the Association as the representative of all affected unit owners without naming and serving each such unit owner as a separate defendant? The Association maintains that due process and the lien statute require the identification of each unit and the joinder of each unit owner in any such action. That argument seems reasonable, particularly in a state in which many unit owners spend part of the year away from their unit and in which condominium associations are occasionally dysfunctional. If the Association is correct on this point, the statutory period for amending the lien and filing against each owner has long since expired and Trintec will no longer have a statutory lien.
But Trintec's argument is also reasonable--the Association is the democratically-elected representative of the owners; the owners empowered the Association to enter into a contract; and the cost and delay inherent in identifying, pleading against, and serving a multitude of owners (and then substituting a new owner for a predecessor during the pendency of the case as units are sold or otherwise transferred) would be substantial. Moreover, the Association has a statutory duty to keep the unit owners apprised of the lawsuit and their exposure:
In any legal action in which the association may be exposed to liability in excess of insurance coverage protecting it and the unit owners, the association shall give notice of the exposure within a reasonable time to all unit owners, and they shall have the right to intervene and defend.
§ 718.119(3), Fla. Stat. (2006) (emphasis added).
Just as the Association was empowered to contract for the roof work for the benefit of the unit owners, then, it seems that the Association is the logical entity to manage and defend the lawsuit relating to that work. If the unit owners decide to exercise their statutory rights under Chapter 713, they can do so, and they have an absolute right under section 718.119(3) to intervene in the lien foreclosure and contract lawsuit brought by Trintec.
In adopting the precursor to Florida Rule of Civil Procedure 1.221, the Florida Supreme Court concurred with the position of The Florida Bar's Consumer Protection Law Committee that the rule, "expressly declaring condominium association members a class as a matter of law without the necessity for pleading or proving the traditional seven class action elements," adequately protects the individual association members "from capricious or arbitrary class actions by the governing authority of the association through provisions of Chapter 718 . . . as well as decisions which impose a fiduciary duty upon the governing body of such associations to afford due process and equal protection to its members." In re Rule 1.220(b), Fla. Rules of Civil Procedure, 353 So. 2d 95, 97 (Fla. 1977).
D. Applicable Case Law
In Graves v. Ciega Verde Condominium Ass'n, 703 So. 2d 1109 (Fla. 2d DCA 1997), the Second District considered a similar set of facts. Graves entered into a contract with Ciega Verde Condominium Association to repair exterior siding on the condominium buildings. Graves filed his mechanic's lien foreclosure claim and lis pendens against the unit owners, however, as well as the association. He sued the association as class representative for all unit owners on the basis of rule 1.221. The association alleged in its affirmative defenses that the claim of lien was improperly served on the unit owners. Graves prevailed on a companion contract claim in arbitration, and then moved in the circuit court to confirm that award and set a trial date for the lien foreclosure claim. Graves obtained a judgment and a sale date, but new counsel for the unit owners then persuaded the trial court to dismiss the individual unit owners because they had not been served within 120 days from the filing of the complaint. By that time, Graves could not bring a new action against the individual unit owners because the applicable statute of limitations had expired.
The Second District reversed, holding that the trial court "obtained jurisdiction of the unit owners because they constituted a class because of their membership in the Ciega Verde Condominium Association." Graves, 703 So. 2d at 1111. The Court held that Graves was not required to join or serve the individual unit owners. It found that "[t]he concerns of due process are sufficiently addressed by the fiduciary duty that the board of directors have [sic] to the members of the association." Id. at 1112.
In this case, Trintec did not name or join the individual unit owners (as Graves had), but rule 1.221 and the Graves decision do not require those procedural steps. Indeed, in Cooley v. Pheasant Run at Rosemont Condominium Ass'n, 781 So. 2d 1182 (Fla. 5th DCA 2001), the Fifth District affirmed a trial court ruling that the unit owners were not proper defendants in a personal injury lawsuit brought against the condominium association for injuries allegedly sustained upon common elements. The trial court dismissed the claims against the unit owners with prejudice and indicated that their joinder might be subject to fees under section 57.105 of the Florida Statutes. Id. at 1185 n.1.
Finally, in Four Jay's Construction, Inc. v. The Marina at the Bluffs Condominium Ass'n, 846 So. 2d 555 (Fla. 4th DCA 2003), the Fourth District reversed a final judgment that dismissed with prejudice a balcony contractor's claims for breach of contract, quantum meruit, unjust enrichment, and promissory estoppel against all owners of record of individual condominium units as a class. The condominium association had been named and served as the class representative. In that case, there was apparently no claim for the foreclosure of a mechanic's lien, but the Court held that "unit owners may be sued, pursuant to [rule 1.221], with the association as representative." Id. at 556.*fn5
Upon consideration of the applicable condominium and mechanic's lien provisions, rule 1.221, and prior decisions, it seems clear that Trintec is entitled to proceed against the Association as the representative of all unit owners. Trintec is not required to join the individual owners as indispensable parties. As noted, the unit owners are free to intervene in the lawsuit below. They are also free to exercise their rights under Chapter 713, including the right to "bond off" their proportionate share of the lien amount*fn6 to facilitate a sale, refinancing, or other transaction. The unit owners also have remedies against the Association and its officers and directors if the lien against their unit resulted from improper action or omission of the Association.
This is an appropriate case for the exercise of our certiorari jurisdiction. The competing interests of the contractor and the individual unit owners are substantial and each worthy of protection; it is understandable that the trial court would consider the unit owners' interests paramount. Nevertheless, the order discharging Trintec's recorded lien departs from the essential requirements of the law, as detailed above, and relief is necessary to prevent the loss of the contractor's statutory remedy. We therefore grant the petition and quash the order discharging Trintec's claim of lien, with the result that the claim of lien is reinstated.*fn7
Petition granted; order of discharge quashed.
*fn1 The Association's motion to dismiss requested dismissal of the complaint; it did not request the discharge of Trintec's claim of lien. The Association did not file a separate motion regarding its "emergency" request for clarification of the order dismissing the complaint.
*fn2 These rights include, for example, the right to "bond off" the lien claim (section 713.24), and rights to a final affidavit (section 713.06), and a list of subcontractors and suppliers (section 713.165).
*fn3 If the Association had alleged an adverse effect, an evidentiary hearing would have been required to resolve that question of fact. See Royal Ambassador, 495 So. 2d at 935.
*fn4 Section 713.08(5) allowed 90 days from the date Trintec's "final furnishing of the labor or services or materials." Trintec's original claim of lien was recorded during that period.
*fn5 The Fourth District certified to the Florida Supreme Court as a question of great public importance [w]hether rule 1.221 authorizes plaintiffs to sue individual owners of condominium units (to the extent of their interest) as a class of defendants, by suing the condominium association as class representative, as distinguished from simply suing the condominium association as contracting party, in a controversy concerning matters of common interest.
Four Jay's, 846 So. 2d at 559. The supreme court did not accept jurisdiction.
*fn6 It bears repeating that a unit owner's unit is only subject to a non-recourse percentage of the total lien amount (if ultimately allowed by the trial court) "in the proportion for which [the] unit is liable for common expenses." Royal Ambassador, 495 So. 2d at 934. A unit owner is not personally liable for any obligation incurred by the Association beyond "the value of his or her unit." § 713.119(2), Fla. Stat. (2008).
*fn7 Trintec's amended complaint, if filed, is not before us. We note that the original complaint fails to include a specific allegation identifying the Association as the representative of the class of condominium unit owners pursuant to rule 1.221, or to confirm Trintec's representations in its submissions to this Court that the lien claimed on each unit is limited to that unit's proportionate share of common expenses. It would unquestionably aid the trial court, any further appellate review, and any examiner of title to an individual unit, for Trintec to provide express allegations on each of these points in an amended pleading.
Saturday, November 14, 2009
Monday, November 2, 2009
Sunday, November 1, 2009
Friday, October 30, 2009
Sunday, October 25, 2009
Your New Condo Leaks? Join the Club
ROOFS and windows that leak whenever it rains.
Heating and air-conditioning units that can’t quite heat or cool the entire building.
Balconies with flaking concrete and wobbly railings.
These kinds of complaints have become more and more common in recent months, according to lawyers and engineers who represent owners of sleek new condominium units across the city.
They say the wave of development in New York City that started in 2004 and crested in mid-2007 has resulted in a wave of accusations about defective construction and building design.
“There’s always an underlying number of lawsuits about defects,” said Stuart M. Saft, a real estate lawyer and the chairman of the Council of New York Cooperatives and Condominiums, “but about a year ago the number started to increase. And over the next two years there’s going to be an explosion, because of all the buildings that were built at about the same time.”
He noted that buildingwide problems often don’t become apparent until people have lived in a building for a while. Legal action is often delayed because sponsors typically control a condo board for a year or more after a building opens and can block attempts by residents to file complaints.
But since condo owners have a three-year statute of limitations for suing a developer or construction contractors for negligence, many people who moved into new buildings in 2007 — when about 7,000 condos came on the market — are realizing that they will soon run out of time.
A negligence lawsuit charges a sponsor or contractor with causing harm or damage to condo owners. If the owners believe a written agreement has been violated, another legal strategy is to sue a sponsor for breach of contract. The statute of limitations for breach of contract is six years.
Lawyers at several firms said that the volume of condo defect work had doubled in the last year, adding up to dozens of buildings with construction problems. In most cases, the condo owners hire lawyers to add muscle to their complaints, in the hope of getting the necessary work done. In a few instances they have filed suits. Lawyers say that condo owners are reluctant to talk about the defects in their buildings, fearful that publicity will decrease the value of their properties.
Water leaks and climate control problems top the list of complaints. Many of the recently built glass towers are especially prone to temperature issues, because air-conditioning units are too small to combat the punishing summer sun, and heating systems can’t make up for a lack of insulation during the cold months.
But lawyers and engineers said that they had also come across buildings with more serious defects that violate the city’s building code. The most common code violation involves inadequate fire-stopping components — building materials that are used to fill empty spaces where fire or smoke can spread between floors and apartments.
Howard L. Zimmerman, an architect whose firm is checking about 35 new condo buildings for construction problems, said that his workers had found fire-stopping violations in about a third. He said his firm has clients in buildings of five to 300 units, throughout Manhattan and in Brooklyn and Queens.
According to Mr. Zimmerman, the most common problem is found behind the walls of apartments, where, say, no caulking material has been used to seal a two-inch space between a pipe and a concrete wall. That unsealed space, he said, “is where smoke and fire can travel quickly,” and it could also allow smells to float through a building. “Odor migration has been a tremendous problem, and if you buy a $3 million apartment, you probably don’t want to smell your neighbor’s smoking or the restaurant downstairs.”
Mr. Zimmerman says that the Department of Buildings can miss these kinds of lapses because architects or engineers hired by the sponsor are allowed to vouch for certain aspects of construction. “There was supposed to be somebody on the job who signed off that this was all installed before the walls got covered up,” he said. “As nutty as it sounds, just because you have a certificate of occupancy doesn’t mean you have a building that’s code compliant.”
He and real estate lawyers said that even when a condo board discovers building code violations, it is often reluctant to alert city officials because the board then becomes responsible for correcting the problem as well as for paying any fines.
James P. Colgate, an assistant commissioner at the Department of Buildings, says that condo boards are not under any obligation to report code violations. But when they do, the department may decide to investigate whether an engineer or architect improperly certified work at the building.
As for problems like water leaks, Mr. Colgate said that a certificate of occupancy was not the same thing as a guarantee. Such a document “certifies that the building is substantially in compliance with rules governing its construction,” he said, “and even if workmanship in a building may not be superb and you get those kinds of issues, the building might still be in compliance.”
When a building is clearly out of compliance, talk quickly turns to lawsuits.
Steven D. Sladkus, a real estate lawyer at Wolf Haldenstein Adler Freeman & Herz, said that he represents an Upper East Side building where the developer put only one layer of wallboard between the floors, instead of the two layers required by city code to create a fire-resistant barrier. “The board knows that’s a serious code violation, and it’s prepared to do the work and sue the developer and hope for reimbursement,” he said.
Mr. Sladkus said that the board hoped that the New York State attorney general’s office, which oversees condominium offering plans, would press the sponsor to do the work.
It will be expensive and disruptive, he added, since contractors will have to remove ceilings and recessed lighting to install the fire-stopping materials.
At the Slate Condominium, a 12-story glass-walled tower in Chelsea where in 2007 one-bedroom apartments sold for as much as $1.4 million and two-bedrooms for as much as $1.9 million, the condo board filed a lawsuit in March accusing the sponsor, Chelsea Luxury Condos, of using defective materials and of not living up to promises made in the offering plan.
“The unit owners have not only personally observed a number of defective and unsafe conditions in the building, but they have suffered a plethora of dangerous conditions,” the suit states. The complaint lists incomplete fire-stopping in hallways, and uneven floors and water damage in various places. Problems common to individual units include warped floors and balcony doors, nonworking electrical outlets, rusted kitchen faucets and water leaks.
Most people moved into the 26-unit building in 2007, and the apartment owners took control of the condo board in April 2008. Debra Guzov, the lawyer representing the condo board, would not comment on the case.
Anna A. Higgins, the lawyer representing the sponsor, said the sponsor had hired its own engineer to inspect the building, and “our position is that the problems listed are mostly punch-list items and are not considered defects, but things that are under warranty and therefore the responsibility of the subcontractors.”
The sponsor has, in turn, brought several of its building and electrical contractors into the suit as third-party defendants, charging they were negligent. “This is a reputable building and company,” Ms. Higgins added. “And they take these matters very seriously.”
The sheer volume of new buildings that went up during the condo construction boom is the main reason for the increase in defective buildings, lawyers and engineers said.
“It happens in every cycle,” Mr. Saft said. “At the beginning of the cycle, workers are underemployed, then suddenly they’re busy, and at the height, there are too many projects and not enough workers. Then what happens is shoddy workmanship, and when you have sponsors running out of money, they start to cut corners.”
Andrew P. Brucker, a real estate lawyer with the New York law firm of Schechter & Brucker, said that the boom had prompted people with no experience in real estate to start building condos. “When the market was hot,” he said, “anybody who had a couple bucks suddenly became a developer, thinking they’d get rich. When the market was strong, if you complained about something, sponsors would fix it, but then the market started to tank and brand-new buildings aren’t selling out, so there’s no money to do that anymore.”
The more unusual problems that Mr. Brucker has encountered include a building whose developer built an illegal pool and another whose developer put the building’s electrical system in a closet inside an apartment. The pool, he said, was never approved by the Buildings Department and may have to be removed. The electrical closet may also be illegal, because it may not be easily accessible in an emergency. In both cases, the solutions will entail costly projects.
When it becomes clear that a building has problems that go beyond punch-list items — a kitchen drawer, say, that won’t stay shut or a closet door that sticks — the first thing owners should do is hire an engineer.
“You have to get a top-to-bottom assessment of the building — the interior, the exterior, all the systems,” Mr. Sladkus said. “That creates a record and tells the board where things stand.”
The sooner this is done, the better, he added, because it takes away a sponsor’s potential claim that problems were caused by the apartment owners. Depending on the size of the building, an engineering report could cost $10,000 to $50,000.
Filing a lawsuit is usually a last resort because it can be costly and take years to resolve. Lawyers say the condo board’s first course of action should be to try to negotiate with the sponsor, with a goal of having the sponsor make the repairs or pay a settlement to get the work done.
If that fails, lawyers said, a condo board can file a complaint with the attorney general’s office, which can help to mediate a dispute and press developers to make repairs. The office can, but rarely does, file its own lawsuit against a developer. But lawyers say that the attorney general has been inundated with complaints; it can take months just to find out if the office will take on a building’s case.
“The attorney general will look at life, health and safety issues and things like whether a temporary certificate of occupancy is current,” said Jeffrey S. Reich, another real estate lawyer at Wolf Haldenstein. “But it’s hard to get them motivated to roll up their sleeves on minor issues.”
Lawyers believe that the attorney general’s office is more likely to act on behalf of smaller buildings, because it recognizes that litigation could be prohibitively costly for buildings with relatively few unit owners.
That presumption is well illustrated by one case in which Mr. Reich represents the owners in a large luxury building that he had hoped the attorney general would see to. But, he said, “the sponsor’s attorney went to the attorney general and said they should not take the case because the apartments are larger than regulation basketball courts and the owners are titans of finance who are fully capable of pursuing it in court.”
Mr. Reich said he was able to persuade the office to keep pursuing the complaint only because an aspect of law was involved that could not be addressed in court because it fell under the attorney general’s jurisdiction.
A spokeswoman for the attorney general encouraged condo owners facing building problems to contact the office’s real estate finance bureau.
The attorney general’s Web site states that when the office receives a written complaint about a building, “we usually demand that the sponsor provide a written response to the allegations. Sometimes, this alone causes the sponsor to repair the defects.”
If that fails, the site states, the office may send its own engineers to inspect the property or have the two sides jointly hire an engineer or architect to evaluate the building and suggest solutions.
Sometimes, even when an early settlement offers the promise of resolution, unit owners still end up in court.
At the Broadway Arms, a 12-unit building that opened in Williamsburg, Brooklyn, in late 2004, the owners took control of the condo board fairly quickly. When they noticed the leaking roofs, shoddy balcony railings and a faulty ventilation system in 2005, they hired an engineer to review the building.
By July 2006, the condo board had reached an agreement with the sponsor, Broadway Driggs Associates, to fix many of the problems the engineer had found. But Alan Winkler, the condo board’s lawyer, said that the work was never completed and that the board decided to sue the sponsor in late 2008 for failing to live up to the offering plan and the settlement agreement.
Mr. Winkler said that the sponsor had repaired the balconies and done some work on the building’s upper roof, but that a lower roof still had leaks, and various problems persisted in the common areas. “At this point,” he said, “there shouldn’t be any contention as to whether this work needs to be done.”
The sponsor denied the charges in court filings and has accused its building contractor of walking off the job. The contractor in turn has denied that in court papers and has claimed that the sponsor owes him $200,000.
Charles L. Mester, the sponsor’s lawyer, said, “A lot of the problems were fixed and it’s just an opinion of some other experts that what was done should have been done another way.” He added that the $200,000 figure “has no basis in anything.”
Five years after they moved into the building, the owners “would like to resolve this quickly,” Mr. Winkler said. “But they want to make sure they get the value they were promised for their units when they bought it.”
Monday, October 12, 2009
|Member Must Pay Association's Attorney Fees|
Facts: A member obtained the approval of the association to build a house, a retaining wall, and a barn on his lot located in the community. The governing documents require that work on any construction projects must be completed within a year of approval. Even so, two years after approval, the member still had not begun construction of the house, and the association gave the member notice that it would begin mediation proceedings to resolve the construction delays. The member did not heed the notices, the mediation proceedings fell through, and the association sued the member, requesting an injunction to require him to stop construction on the improvements on his lot and to substantially build the house within the year. The association requested further that if the member did not substantially build the house within the year, then the association would have access to the member's property and would be able to tear down the improvements on his lot.
The trial court, in its ruling, provided specific deadlines for the member to meet. If the member did not meet these deadlines, the association was allowed to come onto the property and demolish the half-completed structures. The court also awarded attorney fees to the association. These orders were made pursuant to California state law, which states that in an action to enforce governing documents, the prevailing party shall be awarded its attorney fees. Because the association did not receive the exact injunction it requested, the member appealed the attorney fee award.
Ruling: A California appeals court agreed with the lower court's decision to award the association with attorney's fees.
Reasoning: The appeals court ruled that the trial court's ruling embodied the association's “main” litigation objective. The association clearly received a more favorable judgment at trial, one that contemplated demolition. And the court stated that even after the modified injunction, demolition of the member's structures remained a substantial possibility.
My Take: members always almost always take the position that "It's better to ask for forgiveness than permission" and argue that an order requiring removal of an improperly built home constitutes "economic waste" I beg to differ; if you want enforceable requirements, get squared away ASAP with your policy under the law, set objective standards, and enforce them...REMEMBER: there is no such thing as "ugly" any more....
Tuesday, October 6, 2009
Wednesday, September 23, 2009
It may be a buyer's market for those looking to purchase a South Florida condominium, but a new FHA rule putting an end to "spot approvals" for home loans may burst the shopping bubble and make it much more difficult to qualify for a loan.
By extension, the same rule may also mean more bad news for condo sellers, already suffering through a bad economy which has sent property values into the Dumpster, since it impedes buyers' ability to purchase. And the financial pain could eventually spread to all Florida homeowners by way of higher property taxes, say experts.
What is happening: Beginning Nov. 1, a new Federal Housing Administration rule goes into effect that disallows a loan process called "spot approvals," which gave loan underwriters the authority to approve individual units rather than an entire building.
The reason such authority was so helpful to buyers is the cost and paperwork for a condo association to get an entire building approved by the FHA is onerous at best, costing tens of thousands of dollars for appraisals, structural engineering reports and other reports.
Spot approvals, in comparison, only require an association representative to spend 15 minutes filling out a single-page form. Those loans are prized by buyers because they generally have lower interest rates and require much lower down payments, about 3.5 percent of the purchase price compared with conventional bank loans, which may require up to 30 percent down.
Now, without spot approvals, condo buyers and owners will not be able to get an FHA loan for units in a non-approved building and will have to rely on conventional bank loans or pay cash, said Theresa M. Schmitz, a senior underwriter for Amerifirst in Fort Lauderdale.
"This poses a potential downward trend in condo values because many people can't afford to put such a large down payment down on a condo," Schmitz said. "And if there is a smaller pool of buyers, the market value of condos will decline even further and a condo unit will only be worth what a cash buyer is willing to pay for it."
Ripple effect: It also stands to compound the current real estate market problems that have caused cities to raise tax rates, Schmitz said. "Single family homeowners may think this doesn't affect them, but indirectly it will. When the condo assessed valuations plummet, our collective tax base will decline. Single family homeowners will pick up the slack with a hike in the millage rates and property taxes."
What you can do: Board members should check the federal Housing and Urban Development (the department that oversees the FHA) website https://entp.hud.gov/idapp/html/condlook.cfm to determine whether their condominium complex is on HUD's approved list.
Daniel Vasquez can be reached at email@example.com or 954-356-4219 (Broward County) or 561-243-6686 (Palm Beach County). His condo column runs every Wednesday in the Local section and atsunsentinel.com/condos. Check out Daniel's Condos & HOAs blog for news, information and tips related to life in community associations at sunsentinel.com/condoblog You can also read his consumer column every Monday in Your Money and at sunsentinel.com/vasquez. The Sun Sentinel is hosting a Condos & HOAs Town Hall meeting on Oct. 29 at Nova Southeastern University. Submit a question for our panel of experts online athttp://www.sun-sentinel.com/condoquestions.
NEW YORK (Reuters) - High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday.
Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.
August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.
The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.
The results, which correlate with consumer bankruptcy filings, suggest U.S. homeowners remain under financial stress despite signs of improving sentiment and fundamentals in the U.S. housing market.
August bankruptcy filings were up 32 percent from a year earlier, compared with a 35 percent year-over-year increase in July.
Still, while more Americans were late with mortgage payments, they are keeping up with other bills. The proportion of credit card accounts at least 60 days past due was down in August for the third straight month, while subprime card delinquencies also fell.
That improvement in delinquency rates partly reflects risk-aversion among issuers, which have cut the number of cards by 82 million, or 19 percent, over the past year, while slashing credit limits by $721 billion, to about $3.6 trillion.
The number of new cards being issued is down even more dramatically. In June, 2.6 million new cards were issued, compared with 4.7 million a year earlier.
Lenders are increasingly targeting consumers with high credit scores, Equifax found. While in 2007, about one in five new cards went to people with a credit score above 760, such consumers account for two in five new cards in 2009. Equifax found similar trends in auto loans.
"The data from August further confirms that we're witnessing a dramatic change in consumer habits," said Dann Adams, president of Equifax's Consumer Information Solutions group.
Total consumer debt is down more than $300 billion, or almost 3 percent, from its peak in September 2008, Adams said, while the savings rate is nearing 5 percent, "a level we haven't seen in years."
Friday, August 28, 2009
NEW APPELLATE DECISION AFFECTING DEVELOPERS OF CONDOS
In Comcast of Florida, L.P. vs. L'Ambiance Beach Condominium Association, Inc., No. 4D08-2326 (FL 4th DCA August 26, 2009), the District Court of Appeals for the Fourth District affirmed a Broward County Court decision finding that a condominium association could rely on Section 718.302 to terminate a cable agreement entered by the developer prior to turnover upon more than 75% of the unit owners voting to cancel the agreement. Comcast had argued that cable agreements are not for the "operation, maintenance, or management" of the association or property serving the unit owners and thus, 718.302 did not apply. Comcast also argued that Section 718.115(d), which provides expressly for terminating cable agreements at the next regular or special meeting after they are entered, should apply. The court rejected Comcast's arguments.
It is our understanding that this is the first appellate court decision in Florida upholding this application of Section 718.302, and thus, becomes a stronger state-wide precedent. Based on this decision, many condo associations will most likely try to get out of many current cable TV agreements, and cable operators and
This emphasizes my mantra to act quickly, always, but even more so now....
Postponing the Day of Reckoning
By Kate Berry, American Banker
August 26, 2009
Pick up just about any city's newspaper or turn on any news show, and if the topic is real estate, the banking industry is likely being lambasted for foreclosing on troubled homeowners.
But industry data and anecdotal evidence suggest banks and servicers have been dragging out the process – not rushing to kick people out of their homes.
Granted, the deferrals may not be motivated by compassion, or even political pressure. Rather, banks and mortgage investors want to avoid repossessing hundreds of thousands of homes, which would produce losses and hits to capital.
"The goal is to hold off on foreclosures and take losses as slowly as possible to keep balance sheets up," said Deborah Voelz, the chief financial officer of National Asset Direct Inc., a New York buyer and servicer of distressed loans. "Everyone is looking at what the ultimate loss is going to be and whether it makes sense to hold off another year or two and mitigate the results."
The foreclosure process -- and it is a process -- now takes, on average, 18 months to two years, up from 15 months a year ago, according to Amherst Securities Group LP. Backlogs in county courts and at servicing companies, along with local government moratoriums, have contributed to the delays. But plenty of signs indicate that the mortgage companies themselves are in no hurry to seize their collateral.
Rick Sharga, a senior vice president at RealtyTrac Inc., an Irvine, Calif., company that monitors foreclosure filings, said banks often start proceedings but then decide "they don't want the property" and suspend the process indefinitely.
Of the 2.3 million homes that received foreclosure notices last year, one-third had been repossessed by yearend, according to RealtyTrac.
Banks also "are allowing borrowers to be delinquent for longer and longer periods of time before initiating foreclosures," Sharga said.
Tom Booker, a senior vice president in the default information unit at First American Corp. in Santa Ana, Calif., concurred. "There are borrowers who are six or eight months in default; they may have exhausted their workout options; but they're put on a forbearance plan because it's an interim to a final resolution, which is foreclosure," he said. "Banks don't want to take the losses now."