Thank you to all our clients and we wish you a very happy and safe holiday!
Thank you to all our clients and we wish you a very happy and safe holiday!
We wish everyone a very Merry Christmas and a Happy New Year. Along with the excitement of the holiday season, we at C&S are very excited about the roll out of our new website and association websites. There are many new features available which will facilitate greater communication. In these challenging economic times, it is very important to use digital forms of communications whenever possible to help save on postage and printing costs.
Looking forward to 2012, C&S is planning many activities. Look for us March 9, 2012 at the Community Associations Day which is presented by the Community Association Institute (CAI). CA Day will be held at the Manatee Convention Center on Haben Blvd., Palmetto, FL. C&S is again a major sponsor. This is the largest educational and trade show event of the year so please plan to come out and be sure to stop by to visit with us at our booth.
It's amazing how fast this year is going by. Seems like only yesterday associations passed their annual budgets. If you have not already started, it is time again to begin the budget process. August is the time to get all information together to prepare the first draft. C&S managers will be working with association boards for a first draft to be completed in September.
The Florida Legislature and Governor have embarked on a bold plan to stabilize insurance prices over the long term. By allowing prices to significantly increase short term, it is believed that insurance carriers will return to Florida and with the increased competition, prices will stabilize and begin to decrease. Citizen Insurance cannot cover the amount of policies it presently has in the event of a major event. Since the budget is prepared well in advance of when the association's 2012 increase will be known, C&S and the association's insurance agent try to determine the best amount to place in the budget for insurance. This is sometimes a very challenging task.
House Bill 1195 has finally been signed by Governor Rick Scott and will go into effect July 1, 2011. The bill has been referred to as the “glitch bill” due to cleaning up many loose ends from last year’s changes. Two such items are that now the entire rent paid from a tenant may be required to be paid to the association for current and back unpaid assessments, and those units or lots that are over 90 days delinquent may be removed from the quorum and vote counts to pass actions of the association.
The first law firm guide has been published and you may see it by clicking here: Guidebook to House Bill 1195
While our Legislature and Governor are finishing this year's legislative session, we thought we would provide you some news from the Federal level. The Community Associations Institute reports that as the Federal Government continues its push to reform the mortgage finance system, CAI members should take comfort knowing that their efforts to shape the debate have started to bear fruit. In fact, members' efforts on two critical issues, the Federal Housing Administration condominium guidelines and the Federal Housing Finance Agency's private transfer fee regulation, have not only impacted the policy debate, they have made national headlines. Based on these early returns, CAI will continue to chalk up victories for all associations.
On the two biggest federal issues facing associations, CAI secured important victories. First, in March, FHA issued a waiver on rental restrictions. Originally, to qualify for FHA-backed mortgages, rules required that at least 50 percent of units in a condominium be owner occupied. FHA would have disqualified any association that adopted a rental restriction. Ironically, many condominiums put rental restrictions in place at FHA's urging years ago. CAI highlighted the inconsistency, and FHA issued a waiver, allowing condominiums with rental restrictions to qualify for financing.
Another important development critical to associations has been the issue of deed-based, private transfer fees. Last fall, the FHFA issued a craft regulation that would have effectively cut off any federally backed mortgages to properties with a deed-based transfer fee. FHFA was unaware that such fees have long been used by about half of all community associations to fund reserves, capitol projects and operations. If the FHFA proceeded, up to 11 million homes in community associations would have been unable to qualify for most mortgage products. Thanks to CAI member grassroots efforts, FHFA issued a revised draft of its proposal and addressed almost all of the issues raised by CAI members. Not only did FHFA publicly note the tremendous response from CAI members, but our grassroots efforts made the headlines in The Washington Post, which singled out CAI members' efforts as "swift and intense". CAI is currently submitting comments on the revised proposal.
In addition to these projects, CAI has made it easier to follow all the mortgage issues and changing rules. To keep our members engaged on the latest news, calls to action and impact of new regulations, CAI established the Mortgage Matters program. The program will provide members with updates on various federal mortgage issues. It is designed to provide a comprehensive view of federal regulatory and legal changes, and to offer members opportunities for education and input into our ongoing efforts.
As soon as the Florida Legislative session ends, the Governor signs or vetoes the bills, and we have the initial legal reviews, we will update everyone on this year's changes.
C&S wishes to invite everyone to two upcoming events. March 4, 2011 is Community Association Day which is a free education expo and trade show, presented by the West Florida Chapter of the Community Associations Institute. CA Day will be at the Manatee Convention Center and C&S is a major sponsor. We hope everyone will come by and take advantage of the education opportunities and be sure and visit us at our booth.
Our second event to inform you of is on April 14th, 2011 and it is a free seminar "The Conflict Resolution Process", also presented by the West Florida Chapter of the Community Associations Institute. The panelists include Attorney Mary Hawk, of Porges, Hamlin, Knowles & Prouty P.A., President Anthony Sawyer, The Meadows Master Association, and our own, Chris Brown, PCAM, of C&S Management. The program is divided into seven sections: 1. Typical Conflicts, 2. Selective Enforcement, 3. Pre-emptive Tools, 4. "The Knock on the Door" - The Process Begins, 5. Hearing and Fining Committees/HOAs, Condominiums, 6. Injunctions & Other Scary Sounding Legal Stuff, 7. Question and Answers.
The Conflict Resolution Process seminar will take place at the Venice Community Center, 326 South Nokomis Ave., Venice, Florida, 34285. We hope to see you there.
C&S wishes everyone a very happy, healthy, and prosperous new year. Recent trends show a stabilization forming regarding community association delinquency and bad debt. While we certainly have not turned the corner, the delinquent amount of member fees for community associations, is leveling out so we are hopeful that 2011 will be seen as a better year than past few. This is significantly due to the large increase in "short sales" that are occurring in the Tampa Bay area.
From the association’s point of view, short sales are a very positive alternative to foreclosure by either the bank or the association. Two main reasons are: first, the association controls how much if any will be written off the outstanding balance for the short sale to proceed. In a bank foreclosure, per Florida Statute, it is usually only 1% of the original mortgage which is generally much less than what is owed. Second, short sale homes are much better kept up than those homes that are in foreclosure or have been completely abandoned. The homeowner wants to sell the home so they are trying to keep everything up and attractive. With foreclosed properties, the association is usually left with the choice of letting the appearance continue to decline which can affect the neighboring homes or units, or the association at its expense (your expense) will try to keep the property maintained. The association can try to collect on its costs but since the home is likely to continue through to foreclosure, there is very little hope of collection, and remember per Florida Statute, when the bank takes title, the association receives the lesser of 12 months back member fees or 1% of the original mortgage, which will generally not even cover the back member fees. There is no provision in the Statute to recoup maintenance and upkeep costs.
Since we are at the start of our new year we can certainly be optimistic at this point and hope that 2011 ends the year showing that the bottom has been reached and we can look forward to improvement in the years to come.
The Americans with Disabilities Act (ADA) which passed Congress in 1990 has created challenges for associations since its passage. Many far reaching scenarios have been presented to Boards of Directors to allow all types of animals as service animals.
In July of this year, the Department of Justice has released new regulations that clarify the intent of Congress. Although the definition of disability has been greatly broadened, the use of service animals has been greatly limited. Only two animals may now be used as a service animal to assist with a person's disability, specifically the dog and miniature horse.
Other species of animals, whether wild or domestic, trained or untrained are not service animals, per the new rule. The main consideration now is the animal's training. It is now clear that a dog's training takes precedence over the owner's disability. Dogs that simply provide companionship and comfort, no longer qualify as a service animal. Legitimate service animals are exempt from association pet restrictions.
Examples of tasks that qualify as service are now available and include: guiding the blind, alerting deaf owners to sounds, pulling wheelchairs, assisting a person during a seizure, alerting owners to allergens, retrieving medicine or the phone, supporting people with mobility problems and impeding impulsive or destructive behavior.
As a side note motorized conveyances have also been expanded to include golf carts and Segways to operate in areas without defined pedestrian routes.
Senate Bill 1196 has been signed by the governor and will go into effect July 1, 2010. The bill contains a wide range of changes to community association laws. This reform bill has many very positive changes for community associations but unfortunately does not provide the desired assistance to delinquency/foreclosure problems. Although the number of past due assessment months a foreclosing bank or mortgage company must pay to a condominium association upon taking title was raised to twelve months, the alternative 1% of the original mortgage remained the same. Since in most foreclosures the 1% was already less than the six months assessments, the increase to twelve months will only help in a very few number of cases. By Statute the mortgage holder only pays the association the lower of the 1% or twelve months. Homeowner associations were already at 12 months.
Attorney Donna Burger was one of those who worked hard to secure passage of SB 1196 and she did a very good job watching out for community association interests. Her Fort Lauderdale law firm prepared an excellent review of Senate Bill 1196. You may see it by clicking here: Guidebook to Senate Bill 1196
Unpaid member fees are hurting most associations to one degree or another. Actions by the government may end up hurting community associations even more. This update is from the Community Association Institute.
Helping Homeowners, Hurting Associations?
by Tom Skiba, Chief Executive Officer at 03:41PM (EST) on March 2, 2009
After passage of the stimulus bill, Congress and the President have now turned their attention to addressing the ongoing housing crisis. In fact, shortly after he signed the $787 billion stimulus bill into law, the President announced his three-point plan to stabilize the housing market called the Homeowner Affordability & Stability Plan.
The plan as announced has three broad goals. First is to provide refinancing for homeowners who are current in their mortgages, but whose loan to home value ratio may preclude them from qualifying for refinancing. Second, and potentially more problematic, is the plan to address those homeowners who are upside-down in their mortgages. That is that they currently owe more than the market value of their home. And finally, efforts by the government to shore up Fannie Mae and Freddie Mac to help ensure lower mortgage rates.
While many parts of the proposed plan attempt to help the most and harm the least, one pending concept—judicial mortgage modification—holds the potential to drive up assessments and needlessly hurt responsible homeowners in community associations across the country. Under the proposal currently before the House of Representatives, a homeowner whose home value is less than their outstanding mortgage (so called 'upside down' mortgages), could petition a federal bankruptcy court to 'modify' their mortgage. The bankruptcy court could rewrite this person's mortgage and lower their payments and even reduce the principle balance to more 'affordable' levels. In other words, the court could 'cram down' both the homeowner's monthly paymentsand the overall principle balance on their mortgage. Proponents argue that this approach is the best way to address the unprecedented decline in housing prices and keep as many people in their homes as possible. Critics contend that allowing the courts to rewrite private contractual agreements will increase interest rates for all homeowners and reward irresponsible homebuyers who relied on exotic mortgages to gamble on rising housing prices.
For community associations there is an added element of urgency to this proposal. As written, the mortgage cram down legislation could allow the courts to bypass state laws related to assessment liens, priority liens or other tools associations use to collect past due assessments. Because bankruptcy law is a complex mix of federal and widely differing state statutes, the actual impact could vary from state to state, but generally there is a concern that as written, the Cram Down legislation could allow bankruptcy courts to discharge past due assessments regardless of any lien or priority lien levied by the association. This would result in irresponsible homeowners getting a free pass on their past due assessments, raising the burden for everyone else or resulting in cuts to community maintenance and reserves. In addition, the possibility exists that judges could arbitrarily lower future assessment payment obligations for such homeowners. As a result, CAI feels that this proposal will have the perverse impact of hurting home values in community associations by leaving gaping holes in associations' budgets. Holes that will have to be filled by the the rest of the communities residents, putting further pressure on them and causing additional homeowners to fall behind on their mortgage, assessment, and other payments. Clearly an outcome that no one desires.
The current federal bankruptcy code under Chapter 11, section 523(a)(16) recognizes the unique nature of community associations and provides that a homeowners assessments to their community associations cannot be discharged in a chapter 11 bankruptcy proceeding. If Congress's goal for the so-called “Cram Down” legislation is to reduce the mortgage payments on upside down mortgages to manageable levels, without harming responsible homeowners, then they must revisit the legislation and expressly limit the authority granted to bankruptcy courts solely to addressing the principle balance of the primary mortgage, while preserving the ability of associations to collect past due assessments on such property. Failure to do so could:
Impact an association's ability to recover delinquent homeowners' assessments and potentially affect future assessment obligations to the community.
Bypass state statutes that provide a priority lien or assessment lien for past due association assessments.
Cause additional strain on the housing market by forcing non-foreclosed homeowners to pay higher fees to cover mandatory operating expenses, pushing more homeowners into financial distress.
Cut funds available to maintain common areas of the community, resulting in a spiral of deteriorating infrastructure, lower property values and ultimately, higher financial burdens on state and local governments.
Undermine, if not unravel, the benefits of common ownership communities by exempting some homeowners from the obligation to pay their fair share to support common elements of the community.
CAI has taken our concerns to the leaders of the House of Representatives, and we will soon be asking you to make your voice heard as this issue moves through the legislative process. Each year, community associations save taxpayers close to $80 billion, by assessing themselves for the provision of services and amenities in their communities. Any approach to helping distressed homeowners must take into consideration the impact to the 1 in 5 homeowners who live in community associations and assure that the limited means available to associations to collect past due assessments are not thrown aside to the detriment of the vast majority of responsible homeowners in associations across the country.
C&S very much appreciates our clients and strives to provide the best service of any management company. In the past we have requested our client board members to complete a performance survey. Starting this year we have placed the survey on-line and it is now available to all members of the community, not only board members. Your survey is transmitted directly to Chris Brown, President of C&S. Please take a few minutes to complete the survey so that we may learn which areas we need to concentrate more attention on. There is also a comment section at the end for suggestions. You will find the “Survey” button on the left side of our home page and other pages. Thank you for being our client.
C&S has contracted with Pitney Bowes and GPE Software for development of what C&S believes will be the most effective and fastest digital processing of collection on delinquent accounts. The new equipment and software will begin arriving in January and hopefully be operational by February. Delinquent account collections will now be handled and tracked much like the way you can digitally process and track a FedEx or UPS package. In this day of high foreclosure and delinquency rates, C&S believes a faster more aggressive program is needed to assist their association clients.
Senator Lee Constantine, Chairman of the Florida Senate Ethics and Elections Committee, announced December 12, 2007, that the Committee has recommended confirmation of Chris Brown to another term as a Member of the Regulatory Council of Community Association Managers. The appointment, which has been requested by Governor Christ, will be submitted to the full Senate during the 2008 Legislative Session for final consideration. Chris Brown, the President of C&S, presently is the Chair of the Regulatory Council. Over the past year the council has developed an extensive bill which will also be introduced during the next Legislative Session. A main purpose of the bill is to create better safeguards and protection for community associations.