Blog

August, 2013

Budget Meeting For Condominiums Require at Least 14 Days’ Notice

August 29th, 2013

Posted in Condominium & Homeowner Association Law

With annual budget season rolling around, it is important to remember the procedures that must be followed by a condominium association in order to properly pass a budget in accordance with Chapter 718 of the Florida Statutes (Condominium Act).  Section 718.112(2)(e) of the Florida Statutes provides that “[a]ny meeting at which a proposed annual budget of an association will be considered by the board or unit owners shall be open to all unit owners.  At least 14 days prior to such a meeting, the board shall hand deliver to each unit owner, mail to each unit owner at the address last furnished to the association by the unit owner, or electronically transmit to the location furnished by the unit owner for that purpose a notice of such meeting and a copy of the proposed annual budget.”
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Home Affordable Modification Program Tax Attributes

August 20th, 2013

Posted in IRS & Tax Information

The Home Affordable Modification Program is an important tool for homeowners who are experiencing financial difficulties in making their mortgage payments yet desire to keep their homes.  Most would probably agree that the ideal home loan modification would include a lower monthly payment, lower interest rate, and probably most importantly, a principal reduction.  However, that principal reduction could affect the homeowner when he or she later decides to sell the property.  Although a principal reduction loan modification will not typically result in cancellation of debt income, it will likely reduce the homeowner’s basis in the subject property.  The basis reduction will equal the amount of the principal reduction.  The end result could increase the homeowner’s tax liability when the property is later sold.  See IRS Publication 4681 (2012).

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Members Are Permitted to Tape Record and Videotape Board and Membership Meetings

August 15th, 2013

Posted in Condominium & Homeowner Association Law

A frequent question is whether members may tape record or videotape meetings of the board or membership meetings.  The answer as to condominium associations, homeowners associations, and cooperative associations is “yes”, subject to reasonable written rules adopted by the board.

Condominium unit owners have the right to tape record or videotape board meetings subject to the following restrictions: (1) the only audio and video equipment and devices which unit owners may use is equipment which does not produce distracting sound or light emissions; (2) if adopted in advance by the board or unit owners as a written rule, (a) audio and video equipment must be set up before the meeting starts, (b) anyone videotaping or recording a meeting cannot move about the meeting room, and (c) unit owners must give advance notice to the board if they intend to videotape or tape record a meeting.  Fla. Stat. § 718,112(2)(c), F.S., and Rule 61B-23.002(10), Florida Administrative Code.
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What Happens to the Interest and Penalties Accruing From Tax Debt in a Chapter 7 Bankruptcy?

August 10th, 2013

Posted in Bankruptcy Information,IRS & Tax Information

Interest follows the tax liability.  See  In re Burns, 887 F.2d 1541 (11th Cir. 1989).  If the tax debt is non-dischargeable, then the interest accruing on the tax debt will be non-dischargeable.  “[A] tax penalty is discharged if the tax to which it relates is discharged […] or if the transaction or event giving rise to the penalty occurred more than three years prior to the filing of the bankruptcy petition.”  In re Burns, at 1544.  If the tax liability is non-dischargeable, but the penalty portion of the liability is, then the interest which follows the tax is non-dischargeable but the interest which follows the penalty is likely dischargeable.

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Annual Membership Meetings Must be Held in Accordance With Governing Documents

August 9th, 2013

Posted in Condominium & Homeowner Association Law

Florida condominiums, co-ops, and homeowners associations are required by law to hold a meeting of the membership annually at a date set forth in the association’s governing documents.  As to homeowner and condominiums associations, the election of directors must be held at the annual meeting as provided in the governing documents.  Fla. Stat. § 720.306(2); Fla. Stat. § 718.112(2)(d).  As to cooperatives or co-ops, they must hold the election at the annual meeting unless the bylaws call for an election at another meeting.  Fla. Stat. § 719.106(1)(d).  Failure to properly hold an annual meeting and/or to hold an election as required may result in an adverse ruling in front of the Department of Business and Professional Regulation (“DBPR”) Arbitration division, which governs election disputes for condominiums, co-ops, and homeowner associations, and may result in the ordering of an election and the payment of legal fees to the prevailing party in any dispute.  The association’s legal counsel should be sought to discuss the specific language contained in the association’s governing documents as to the annual meeting and election requirements.

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Condominium Association’s Painting of Building May Require Membership Approval

August 5th, 2013

Posted in Condominium & Homeowner Association Law

A frequent question from a board of directors of a Florida condominium association is whether an action requires membership approval, or, whether a board vote would suffice.  In the instance of painting the condominium association’s building and common elements, the answer is: it depends.  If the board’s intention is to re-paint the building in the existing color then a membership vote is most likely not required, as this would be likely deemed a maintenance function properly carried out by the board through authorities set forth in the association’s governing documents.  However, if the intent is to re-paint a different color, then a membership vote may be required as it could be considered a “material alteration” of the common property.   The seminal case on this issue defined a “material alteration” as “to palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance.”  Sterling Village Condominium, Inc. v. Breitenbach, 251 So. 2d 685, 687 (Fla. 4th DCA 1971).  Section 718.113(2)(a) of the Florida Statutes provides that a material alteration of common elements or association property may only be undertaken in accordance with the procedures set forth in the association’s governing documents, and if the documents do not specifically provide a procedure for approving such action, then seventy five percent (75%) of the total voting interests must approve.  While not uniformly consistent as to all cases involving material alteration, as to the issue of painting a building a different color, appellate and arbitration decisions are consistent in finding that the change of color constitutes a material alteration, and thus approval should be sought in the manner set forth in the governing documents (or, if silent, with 75% approval pursuant to F.S. 718.113(2)(a)).

As always, counsel should be sought in order to determine the proper procedure for any type of an action that may constitute a material alteration.

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