Live in a home governed by a condominium, co-op or homeowner’s association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.
Question: You say that condominiums are required “to collect reserve funds for roof replacement, painting, pavement resurfacing, and any other deferred maintenance item that is estimated to cost more than $25,000.” I am confident that this is an incorrect usage of the term “deferred maintenance” — and that “scheduled maintenance” is what you intended to describe.
“Deferred maintenance” means maintenance that is currently needed, but which was or has been “deferred” to some later time, generally because of lack of sufficient funds. In other words, “deferred maintenance” is overdue maintenance. In fact, Fanny Mae and Freddie Mac both have rules prohibiting their purchase of condominium loans with “significant deferred maintenance.”
If a condominium board were to label several items in its budget as being identified as items of “deferred maintenance,” I think it might run the risk that any owners trying to sell a unit might run afoul of the Fanny Mae and Freddie Mac prohibitions. Signed, J.M.
Dear J.M.,
I didn’t intend to use the word one way or another — it’s the actual word used in the statute. I was quoting Section 718.112, Fla. Stat. And unfortunately, the statute never defines the term.
But we have some sense that it intends the use of the word a lot more broadly than your own understanding of the term — it describes things like building painting and pavement resurfacing as examples of either capital expenditures or deferred maintenance and then says that reserves must include funds for any other item with a deferred maintenance expense exceeding $25,000.
If the term were only used as you suggest, there would be no reserves for most items in any community where they had not been actively deferring such maintenance. So, it seems that can’t be what the legislature intended, and we need to go with their intent, even if there is a more typical use of the term.
But I agree that, universally, when I research this term, I get a definition that’s a lot closer to your understanding.
State laws and term limits in condo associations
Question: Do you have an opinion about the application of the term limit provision of the Condominium Act (Section 718.112(2)(d)2) considering that the 2019 arbitration decision in Glanz v Hidden Valley rendered the statute inapplicable to associations whose documents did not contain Kaufman language? I have not seen any later rulings, opinions or comments. However, the fact that the legislature amended the statute in 2021 without adding this exception would seem to suggest its intent was to apply term limits to all associations. Can you offer any guidance? Signed, G.S.
Dear G.S.,
To summarize the issue with so-called “Kaufman language,” Florida’s constitution prohibits laws from retroactively impairing substantive contract rights, except in limited circumstances. Kaufman language, a concept formalized in a case called Kaufman v. Shere, is language stating that a community association is governed by the relevant statute “as it may be amended from time to time.” When governing documents have that language, it effectively adopts any future changes to the statute into the declaration (which is a contract), and the question of retroactive impairment becomes irrelevant.
When courts review issues of contractual impairment, they do a complicated analysis to determine if the law is procedural or substantive in nature. Procedural laws apply to existing contracts and do not impair their rights, while substantive laws cannot apply retroactively. The court will also look to whether the legislature has demonstrated a clear intent for even a substantive law to apply retroactively, and then whether various public policy concerns override the due process concerns of impairing an existing contract.
The arbitrator in Glanz did not do such an analysis. He wrote conclusorily that, as the Hidden Valley declaration stated that it was governed by the Condominium Act as it existed on the date of recording, and because it did not contain Kaufman language, “the Association and its members are not subject in any way to the term limit provision in the 2018 amendment to Section 718.111 (2)(d)2.”
There’s not a lot we can take from that. Remember that arbitration cases are not precedent and are only binding on the parties to that action — and then only to the extent that neither party seeks a trial de novo, where the entire case is a do-over in front of a court (and where the court can entirely ignore the arbitrator’s findings).
Plus, the new version of the eight-year term limit expressly states that it only counts board service occurring on or after July 1, 2018 — so this is the first year that it will become relevant.
So, we’ll need to wait for arbitration rulings, and then court cases, and then appellate court cases — and only then will we have a reliable legal opinion to answer the ultimate question. There’s no way to predict which way it will go. Because the issue of retroactive impairment is so complicated, it’s always best to assume that a law applies until an appellate court expressly says otherwise.
Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living.” Email your questions to condocolumn@gmail.com. Please be sure to include your location.
This article originally appeared on Palm Beach Post: FL condo law leaves some definitions up to interpretation, expert says
Reporting by Ryan Poliakoff, Special to the Palm Beach Post / Palm Beach Post
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