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Association Developments

Volume 3 -- 2010 Volume 1 2011 Page 2 Page 2

handling payoffs and estoppel Requests

By sonia Bosinger, attorney & counselor at law

MAny AssociAtions have questions when it comes to preparing a payoff or estoppel letter. When a title company is preparing for a closing on real property, a title search is normally done to determine whether there are any liens or encumbrances on the property. An Association's governing documents, usually the declaration, would be revealed in the title search. The Association's declaration is a covenant running with the land that is recorded in the public records in which the property is located. The declaration creates a continuing lien on the property, meaning that any monies owed to the Association are a lien on the property relating back to the recording date of the declaration. The title company would then contact the Association through its management company, law firm, or Board member to determine whether any monies are owed to the Association. Florida Statute Chapters 718, 719 and 720 require that the Association provide the amount owed on the property to the title company within fifteen (15) days. Therefore, this process is time-sensitive and must be given immediate attention by the Association or its agents. If the Association has turned over the particular account to its law firm, it should forward the estoppel request to the law firm to handle. The Association should not provide any information to the title company except the contact information for the Association's law firm. It is imperative that assessment information not be given to the title company in the form of a ledger or letter, or the Association may be compromising its ability to collect certain amounts such as interest, late fees, attorney's fees, and costs.

If the property is subject to mortgage foreclosure, the Association's law firm should be reviewing the mortgage, any assignments of record, the final judgment of foreclosure, pertinent pleadings, and the certificate of title to determine the amount that the association is entitled to collect. Associations have been led to believe that in every mortgage foreclosure case, they are only entitled to collect the lesser of six (6) or twelve (12) months of unpaid assessments, and no other amounts regardless who takes title. However, this is not necessarily true. In many cases, the Association is entitled to collect all assessments, interest, late fees, attorneys' fees and costs, which is the information that the Association's law firm would ascertain. Without allowing the Association's law firm to review these documents, the Association may be foregoing hundreds, if not thousands, of dollars. Clayton & McCulloh has been handling mortgage foreclosure cases and then preparing the estoppel letters for closings occurring on those properties. We have been extremely successful in collecting the maximum amount possible for our clients and continue to do so.

in tHis issUE

Blanket Receivership vs. Collection of Rents Handling Payoffs and Estoppel Requests Rights & Responsibilities for Better Communities 2010 Fireside Chat Success Is Your Association Going to the Dogs? Are Your Window Blinds or Shades Harboring Biological Contaminates? Page 1 Page 2 Page 4 Page 5 Page 5 Page 6

Sonia A. Bosinger currently practices law, primarily in Clayton & McCulloh's Collections Department, drafting claims of liens and handling such matters as lien foreclosures.

Association Developments Association Developments

Volume 3 Volume 1 - 2011- 2010 Page Page 3 3

Blanket ReceiveRship vs. collection of Rents

from page 1

The Statutes have generated much confusion and debate as to exactly how the Statutes are to be applied in practice, how much rent an Association can demand from a tenant, and whether rental payments may be applied to delinquent sums that existed prior to the July 1, 2010, effective date of these new statutory amendments. Some of the more prevalent issues are discussed below. First, it is clear that the Association assessment(s) must be delinquent in order for the Statutes to apply. However, the Statutes do not define delinquent. In most cases, the Association's governing documents will be determinative of when an owner is deemed to be delinquent, and application of the Statutes will be determined on a case-by-case basis. Second, the obligation of the tenant with regard to the Statutes is to "future monetary obligations." However, again, the Statutes do not define what is a "future monetary obligation." Most attorneys seem to be interpreting "future monetary obligation" to mean monies that will come due to the Association in the future and not the past due assessments. Some will further argue that "future monetary obligations" means assessments accruing after service of the mandatory written notice on the tenant that the assessment or rent is to be paid thereafter to the Association. Third, if the tenant is paying the Association according to a demand made by the Association, the tenant is supposed to be immune from any claim from the landlord/owner. However, a question arises as to what an Association is entitled to demand. Some attorneys believe that if the differential between the monetary obligation and the full amount of the rent is not paid by the tenant to the owner, the tenant could be in breach of the lease. This issue is subject to interpretation and application by the courts, but it stands to reason that, if the balance of the rent not paid to the Association under the Association demand is not paid to the owner, the tenant may be subject to eviction by the owner. Fourth, the Statutes state that the tenant is to pay rent to the Association upon its written demand. The use of the word "rent" creates uncertainty as to what the Association is supposed to collect - "monetary obligations" or "rent?" If the Association is collecting "rent" and the sums collected exceed the "monetary obligation," what is the Association to do with

the balance? Unfortunately, the Statutes do not address the issue. Many attorneys argue the Association must account to the owner for the balance. That said, it appears safe to assume that rents received after the "pre-paid" rents may be applied to all assessments that accrued subsequent to the written notice to the tenant. After those post-notice assessments are paid, any remaining rents would likely belong to the owner. Finally, the Statutes dictate that the Association can evict a tenant who fails to pay rent monies to the Association after written demand pursuant to the Florida Landlord/Tenant Act. For Associations who do not possess a copy of the tenant's lease and/or have no provision within its governing documents authorizing it to obtain a copy of the lease, the risks of utilizing the Statutes may substantially outweigh its benefits. Landlord/Tenant law requires a party seeking eviction to strictly adhere to the Landlord/Tenant Act and/or terms of the lease. Any defect in the three-day notice (notice required by the Landlord/Tenant Act prior to filing eviction), or other condition precedent can be fatal to an Association's suit for eviction. Should the tenant retain an attorney and successfully defeat the Association's suit for eviction, the Association may be liable to the tenant for his/her attorney fees and costs. We can not emphasize enough that without a copy of the tenant's lease, an Association should proceed with great caution. As the above issues illustrate, the Statutes are not always clear as to how such are to be applied, and significant risks exist for those Associations endeavoring to use it as a collection tool. For most Associations, pursuing a blanket receivership will be much more effective while also limiting the Association's exposure to risk. Until the Statutes are clarified by case law or further legislative amendments, Associations should consider pursuing a blanket receivership over the Statutes' collection of rents. Some of the advantages of blanket receiverships are itemized below: · A receiver can apply rents to an owner's entire delinquency as opposed to assessments accruing after July 1, 2010 (or after service of the written demand). · A receiver can unquestionably apply rents to late fees, interest, attorney fees, costs, and other charges, while some attorneys believe rents collected pursuant to the Statutes can only be applied to assessments. · If a tenant fails to pay, a receiver can request that See Blanket, Page 4

Association Developments

Volume 3 - 2010 1 2011 Page 4

Blanket ReceiveRship vs. collection of Rents

from page 3

a court hold the tenant in contempt of court for violating the court order requiring them to tender rents, while the remedy under the Statutes is to evict the tenant with no guarantee to recover any rents. · Appointment of a receiver is a one-time flat-rate fee, while an Association will expend attorney fees each time it seeks an eviction for a tenant's failure to pay (i.e., receivers generally retain their own counsel to enforce the court order). · A receiver derives its authority via the court order appointing the receiver. As such, the need for a copy of the tenant's lease is alleviated. Moreover, the court order requires the owner and tenant to provide a copy of the lease.

community Leaders Have the Responsibility to:

· Fulfill their fiduciary duties to the community and exercise discretion in a manner they reasonably believe to be in the best interests of the community. · Exercise sound business judgement and follow established management practices. · Balance the needs and obligations of the community as a whole with those of individual homeowners and residents. · Understand the association's governing documents and become educated with respect to applicable state and local laws and manage the community association accordingly. · Establish committees or use other methods to obtain input from owners and non-owner residents.

For more information on blanket receiverships and collection of rents, please contact us at Clayton & McCulloh.

community Leaders have the Right to:

Rights and ResponsiBilities foR BetteR communities

CAI's Principles for Homeowners and Community Leaders

Homeowners Have the Right to:

· A responsive and competent community association. · Honest, fair and respectful treatment by community leaders and managers. · Participation in governing the Community Association by attending meetings, serving on committees and standing for election. · Access to appropriate association books and records. · Prudent expenditure of fees and other assessments.

· Expect owners and non-owner residents to meet their financial obligations to the community. · Expect residents to know and comply with the rules and regulations of the community and to stay informed by reading materials provided by the Association. · Respectful and honest treatment from residents. · Conduct meetings in a positive and constructive atmosphere. · Receive support and constructive input from owners and non-owner residents.

Homeowners Have the Responsibility to:

· Read and comply with the governing documents of the community. · Maintain their property according to established standards. · Treat Association leaders honestly and with respect. · Pay association assessments and charges on time. · Vote in community elections and on other issues.

Association Developments Association Developments

Volume 3 Volume 1 - 2011- 2010 Page Page 5 5

2010 fiReside chat success

During 2009, Clayton & McCulloh listened closely to the needs and desires of their client managers and board members. Both management companies and associations alike were being affected by the economy and changes in Community Association laws. They had numerous questions and were looking for a venue that would not only allow them to learn about the legal changes, but give them the opportunity to have individual questions addressed by Community Association lawyers.

is youR association going to the dogs?

In order to meet these needs, Clayton & McCulloh initiated their Fireside Chats, which were small seminars, offered at no cost to the attendee, targeting both clients and non-clients in Clayton & McCulloh's service areas. The Fireside Chats were held in 11 venues in 9 cities throughout Florida; Viera, Clermont, Lake Mary, Kissimmee, Palm Bay, New Smyrna Beach, Daytona Beach, Palm Coast, East Orlando, SW Orlando, and Maitland.

Well, is it? If it is, then make plans to attend our 2011 Seminars at the following locations: · Best Western Vero Beach - March 30, 2011 · Holiday Inn Viera/Melbourne - March 31, 2011 · Renaissance Resort St. Augustine - April 27,2011 · Embassy Suites Jacksonville - April 28, 2011 · Hilton Lakeland - May 26, 2011 · Hilton Tampa Airport Westshore - May 27, 2011 · Sonesta Orlando - June 23, 2011 · Hilton Ocala - June 30, 2011 · Caribe Royale Orlando - Sept. 13, 2011 · Hampton Inn Daytona Beach - Sept. 22, 2011 · Econo Lodge Leesburg - Oct. 11, 2011 Due to popular demand, the subject matter will be the collection of delinquent assessments, lien foreclosures, and mortgage foreclosures. The bonus portion of the seminar will be the new law requiring directors to take a class. Make your reservations as soon as you receive your invitation as the 2011 Seminars will be restricted in size. Orlando, Jacksonville, Tampa and Melbourne will accommodate a maximum of 200 attendees, while the other seminars will accommodate a maximum of 100 attendees. Once we reach the maximum number of attendees, we regret that we will be unable to admit any additional attendees. Invitations will be sent via mail approximately five (5) weeks before the seminars. In order to allow ample time for questions, these seminars will not be offered for credit to managers. However, they are offered on a complimentary basis. Check your mail or our Website at www.clayton-mcculloh.com for more information!

You have brains in your head. You have feet in your shoes. You can steer yourself Any direction you choose. - Dr. SeuSS

Association Developments

Volume 3 -- 2010 Volume 1 2011 Page 6 Page 6

aRe youR WindoW Blinds oR shades haRBoRing Biological contaminates?

You may not realize that your window blinds and shades can harbor biological contaminates such as bacteria, molds, mildew, human skin cells, nicotine, viruses, pet dander, dust mites, droppings from insects and pollen, to name a few. Allergic reactions can be triggered by biological contaminates as well as infectious illnesses. Some symptoms of health problems caused by these pollutants include breathing problems, sneezing, watery eyes, fever, coughing, etc. Asthma can be triggered by mold, pet dander, pest droppings and dust mites. These pollutants are airborne and can be distributed through your home, business or recreational environment. It is known that measles, influenza, Tuberculosis, Legionella, chicken pox and staphylococcus infections are transmitted by air. You would be interested to know that a school science project conducted by a pediatrician at a day care center in the Wekiva area (in northwestern Orange County) showed that window blinds had the most germs. Cultures were taken from the walls, floor, tables, chairs, book cases, toys, etc. The conclusion was window blinds harbored the most germs. Why? Because the window blinds were only dusted and not properly cleaned. General good housekeeping is very important to reduce exposure to biological contaminants. In our homes, we usually dust or vacuum our window blinds or shades. Hand dusting creates static electricity and does not remove germs. The static electricity attracts more dust, dirt and only resoils the surface and causes a build-up of allergens. Household cleaners can remove paint or stain the blinds. The most effective cleaning technique for your window treatments today is Ultrasonic Cleaning. Ultrasonic cleaning has been used in the space, electronics, jewelry, medical and automotive industries for years to clean and disinfect numerous items. Ultrasonic blind and shade cleaning is very popular in other environmentally-conscious states. Unfortunately, this revolutionary cleaning method for window treatments is difficult to find in Florida. However, it not only improves the indoor air quality of your home or business environment, but also improves the appearance of your window treatments. Ultrasonics is a method of cleaning your window blinds or shades through the use of sound waves. The ultrasonic cleaning tank creates vibrating sound waves in warm water, which in turn produce millions of microscopic bubbles that gently remove visible and microscopic dirt particles and germs from an object. These bubbles are small and allow every crevice and cavity to be cleaned along with dirt, stubborn stains, and biological contaminants. The ultrasonic cleaning process breaks the static bond with the aid of a mild biodegradable detergent solution. The window blinds/shades are rinsed and then dried. Ultrasonic window blind and shade cleaning does not scratch, pit or damage items the way conventional cleaning methods can. It is fast, gentle, efficient and safe. No dangerous chemicals are involved in the cleaning process. Ultrasonics cleans the vanes/slats of the window blinds and head rail, as well as the cords, strings and wand. It is very important to choose an established contractor experienced with Ultrasonic Cleaning and the handling of various types of window blinds and shades. The fabric shades (Silhouettes, Duettes, Honeycomb, Pleated, Roman) must be handled with care and require a specialized cleaning method to avoid damage to the fabric and shrinkage. A contractor who is Hunter Douglas Certified has been trained by Hunter Douglas on the proper handling of their products. Ultrasonic Blind Cleaning is a necessary cleaning service for residential homes as well as public venues such as club houses, fitness centers, offices, hospitals, schools, nursing homes, restaurants, etc., where infections and illnesses should be controlled. Go to www.epa.gov/iaq/biologic.html to get additional valuable information on Indoor Air Quality and Biological Pollutants.

Submitted By: Jim Vivioni, WashRite Cleaning, Inc.

For additional information, go to www.washritecleaning.com

Don't fight a battle if you don't gain anything by winning. - Gen. GeorGe S. Patton

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