In 2023, new legislation was passed (FS 768.0706) that went into effect on January 1, 2025. The legislation outlines that in order to avoid a determination of negligence in the event of a claim, the Association will have the responsibility to take certain measures to protect the property & ensure the safety of those living there.
The introduction of these deterrents (i.e. pool fobs or locks, security cameras, proper lighting, etc.) ultimately will help to protect the Association if a case is brought against them.
Additionally, it can save money on losses & defense if the Association can prove that these measures are put in place.
Ultimately, the requirements relating to windows & doors are up to the individual unit owner to put in place.
As policies renew now that the legislation is in effect, we have begun to see recommendations put forth by carriers in relation to the Presumptive Liability Defense Security Requirements for Florida Statute 768.
These requirements/recommendations are made by General Liability carriers (in particular) to ensure that they can adequately insure & protect the Association against any claims made by the assumption of negligence.
Since the legislation went into effect on January 1st, 2025, liability can now be found on behalf of the Association, along with the managing agent, if they are not in compliance. Therefore, it is essential that progress begins to be made towards complying with these standards.
At Travers Hartnett, we are here to help you navigate the new legislation. Call us to schedule a time to review your current security measures & assist as you transition into compliance with the new statute!
Meredith Palmer is a graduate of Penn State University. She is a licensed 2-20 Agent with 9 years of insurance experience. Her role at Travers Hartnett is Account Executive & New Business Support. Meredith upholds the Agency’s high standard in customer service & maintaining relationships with our clients.
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The American Psychological Association defines bullying as “a form of aggressive behavior in which someone intentionally and repeatedly causes another person injury or discomfort. Bullying can take the form of physical contact, words, or more subtle actions.”
Unfortunately, it is all too common that bullying occurs in community associations. Managers need the support and guidance to handle these types of situations. The 16-hour Florida CAM licensing course does not prepare Managers on how to take control of bullies. Bullying is a form of workplace harassment and violence. This conduct is not only unhealthy, but it also adds unnecessary stress and related health effects, which can be both physical and mental. If the bullying is directed at an employee, it can increase the use of sick leave, increase medical costs and cause employees to quit their jobs or request a transfer.
Disgruntled homeowners that challenge the board’s decisions, harass board members, chastise the manager and fight with residents have their own agenda and may be considered bullies.
There are many types of bullying; physical, verbal, cyber and gesture. I have personally witnessed physical bullying at a board meeting. A member had thrown a chair at another member and the police were called out.
Verbal abuse is the most common and is extremely demeaning and degrading. The bully feels powerful and strong. It is like children name calling. These actions are dangerous to one’s self esteem, causing anxiety, depression, emotional and psychological harm.
Cyber bullying can occur over emails, social media, digital forms and is a damaging and destructive way to attack others, spread gossip and rumors which can harm the association’s reputation and present potential liability.
Gesture bullying occurs when a bully stares and looks at you in an intimidating way and uses threatening gestures towards you.
Board bullies can cause a threat to the association, especially if they abuse their power. Resident bullies can disrupt the entire operation.
Employee bullies can interfere with the performance and productivity of others.
What is the best way to address a bully?
It can be difficult to handle someone who seems to know everything, is rude, ridicules, is aggressive, sabotages others, has an abrasive personality and/or is passive/aggressive intimidating others.
The board may have the power to remove the member as an officer and reassign to a director… or a committee chair to a committee member. If the bully is an employee, speak with the employee, document the conversation, and review the HR Employment Manual for policies regarding bullying.
Board and Resident bullies need to understand how their behavior affects the entire association.
Homeowners have the right to complain; however, they should never disrespect the Manager and the Board. The board meetings should be run according to Robert’s Rules of Order. If a resident in the audience makes any obscene gestures, is disruptive or uses profanity or foul language, they should be subject to removal and issued a letter for violating the governing documents subject to potential fines. A resolution should be adopted if the governing documents do not outline any provisions regarding this bad behavior.
Contact your association attorney to assist with drafting the language for a Board Code of Conduct and /or adopting a resolution. If things are out of control, consider a cease-and-desist order.
I have read the book Emotional Intelligence 2.0 by Travis Bradbury and Jean Graves, and it helps to understand what makes people tick and how they are wired.
It is important to respect differences of opinion and agree to disagree; however, it does not give a person the right to be tough on others, be disruptive, disrespectful and difficult. You may not be able to totally change their behavior; however, you can set boundaries in creating a better environment that does not reward their bad behavior or disrupt the association.
Marcy Kravit is a professional award-winning, and innovative leader, educator, mentor, and published author. She is a respected contributing writer for CondoExec and holds multiple industry credentials, including CMCA, AMS, PCAM, CFCAM, and CSM. Marcy is also a Florida Licensed Community Association Manager (CAM) and serves as an Adjunct Professor at Palm Beach State College.
Read More…As community associations in Florida continue to face stricter legislation and insurance costs at all-time highs, it’s becoming increasingly more important for condominium and homeowner’s associations to have the option to utilize bank financing for the completion of major infrastructure projects. In this article, we’ll take a look at some important aspects of community association operations and management that financial institutions will consider during the lending process.
Purpose
Not all banks have an appetite for lending to community associations. Once a potential need for financing has been identified, it’s important to reach out to your bank to see if they make loans of this type. If they don’t, seek out a prospective lender that understands and has a proven track record in this area. Community association loans can generally be obtained for the following: clubhouse renovation, concrete/seawall restoration, painting & waterproofing, pool/patio/plumbing repairs, roofing, elevators, and other improvements to common areas.
Collateral
A special assessment levied on the unit owners and acceptable to the lender is the most traditional form of collateral. The length of the special assessment should match the desired term of the loan, and it’s important to note that the maximum loan term will generally coincide with the useful life of the capital improvements being financed. For example, if a roof has a 15-year lifespan, the maximum loan term for a roof replacement project would be approximately 15 years (and would still need to match the term of the special assessment).
Although not as common, some financial institutions will accept general assessments as collateral provided that the repayment of the proposed debt has already been worked into the operating budget for the year.
Ownership (single, secondary residence, rental/investment)
While the units themselves aren’t utilized as loan collateral, communities that consist of a higher number of rentals, or a large percentage of units owned by one person, can be viewed as higher risk. Generally, rentals should account for fewer than 25% of the overall units in the community and no single entity (individual or business) should own more than 10% of the units overall. Units owned as a secondary residence or “vacation home” are typically omitted from the rental percentage figure as long as they are not rented to a 3rd party at any time.
Banks will also look at how long it’s been since control of the association was turned over from the developer to provide enough time for any malfeasance or major construction flaws to become evident. Moreover, it demonstrates the board’s ability to govern itself without continuing developer/sponsor support. Three years (or longer) of complete separation from the developer is typically acceptable.
Delinquencies & Foreclosures
Past-due assessments and unpaid mortgage notes can also be indicative of higher lending risk. Banks typically look for total delinquencies (30 days or greater) to be around 10% or less of the total, annual budgeted assessments, and units in foreclosure to be at or less than 5% of the total number of units in the development.
Building/Community Size
From a lender’s perspective, each unit within a Condo/HOA represents an individual contributor in the repayment of a loan through their respective payment of the associated special assessment. Therefore, the greater the number of units in the association, the more the risk of a potential loan default is mitigated. Many lenders require the minimum number of units within the borrowing community to be somewhere in the 25-50 range.
Financial Impact on Unit Owners
Even if a special assessment is passed and approved by the association, the lender may still refuse to accept it as sufficient collateral if the net increase in total assessments to the unit owners is viewed as “excessive”. If a special assessment results in a financially stressful repayment situation for the unit owners, it may result in non-payment of the special assessment and an increased likelihood of loan default. Lenders will generally tolerate a 10% – 40% increase in unit owner assessments depending on several factors such as the total number of units in the building/community, history of delinquencies, number of rentals, and even certain socioeconomic and demographic characteristics of the unit owners, community, and surrounding area.
In closing, the process of undertaking major repairs and infrastructure projects for your community association can be a daunting one, and the decision whether or not to utilize bank financing can further complicate matters. However, having trusted relationships with key business partners (insurance, legal, banking, accounting) can provide you with the expertise and guidance to make sure that you’re keeping the best interests of your community top of mind.
Mike Caro is a respected contributor to CondoExec and serves as a VP with BankUnited covering Broward and Palm Beach Counties, specializing in working with Community Associations. Through a combination of industry knowledge and a “white glove” approach to working with Condominium Homeowners Associations, Mike ensures that his clients are prepared to weather whatever challenges are thrown their way.
Read More…Many HOA’s are unaware there are companies that provide turnkey solutions for infrastructure. These companies employ service-based, pay-as-you-go models (similar to ones employed by utility companies) that focus on maintenance and transform infrastructure into a service. This type of service can relieve associations from the typical burdens associated with infrastructure, such as installation, ongoing upkeep and (maybe most importantly) having to deal with special assessments and reserve shortfalls.
Infrastructure, like water and electricity, is ultimately consumed. Although the latter two are typically consumed over a short time, infrastructure is ultimately used-up as well. Unfortunately, “dust you are and to dust you shall return”1 also applies to, for example, roofs, HVAC systems and structural components of buildings. Therefore, thinking of infrastructure as a consumable, rather than an asset, may help associations better frame the infrastructure challenges many of them are facing. (Afterall, an “asset” is supposed to increase in value and kick-off a dividend, whereas infrastructure continually depreciates and costs money to maintain.)
An association typically procures water and electricity as a service and through a turnkey solution known as a “utility.” In exchange for a monthly charge (typically communicated via a water or electricity bill), the utility company handles all of the challenges (i.e. headaches) associated with the consumable. These challenges include funding new equipment and ongoing maintenance as well as reserving for the future infrastructure needed to provide the service.
Water and electricity are generally obtained through a utility because a utility model provides the best (i.e. lowest cost, steadiest rate and easiest) platform to generate the service. The cost-savings, and monthly-bill consistency, associated with a utility model exist because the utility 1) purchase robust equipment at the outset, 2) maintains the equipment and 3) steadily reserves for the equipment’s maintenance/replacement. By following these three tenants, a utility-model is able to deliver a turnkey solution that saves money, allows for budgeting, does not require the consumer to reserve for the equipment used to generate the service and, maybe most importantly, eliminates the brain-damage the consumer would have to go through if they were forced to generate the water and/or electricity themselves.
The cost savings mentioned above can be better understood by thinking about the lifecycle cost of a piece of infrastructure. Lifespan costs are driven by 1) the initial cost of the infrastructure, 2) the cost of capital (opportunity or financing) required to purchase the infrastructure and 3) the useful life of the infrastructure. Of these three, the one under the most control by the party responsible for the infrastructure is its useful life. Through the implementation of a rigorous maintenance program, the cost of infrastructure per unit of time can be significantly reduced.
A simple example may be helpful here. Suppose two different associations each pay $200,000 for roof. The first association does not maintain its roof and it last 20 years. The second association makes sure the roof is maintained and it lasts for 25 years. The first association has paid $10,000 per year for its roof, while the second association has only paid $8,000 per year. After 20 years, the second association has saved $40,000 when compared to the first and, maybe more importantly, has five more years to deal with the replacement of its roof. Also, there are ancillary financial benefits to the second association (such as lower insurance costs due to the relative shape of its well-maintained roof) the example above does not account for.
As turnkey, maintenance-focused, solutions for infrastructure become more common, associations may want to consider them as an option to overcome their infrastructure challenges. A service-based, pay-as-you-go model for infrastructure may be a useful “easy button” for association boards and may also reduce infrastructure usage costs, special assessment burdens and reserve requirements for association members.
Michael J. Tari, Ph.D. is a Partner at Sustainability Partners (SP), where his responsible for designing and implementing complex infrastructure solutions for communities. Before joining SP, Michael worked on Wall Street as a senior trader, portfolio manager and strategist. Michael holds both Ph.D. and M.S. degrees in Mechanical Engineering from the University of California, Los Angeles and a B.S. in Mechanical Engineering from Rutgers, The State University of New Jersey.
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