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Lack of Disclosure Leads to Cancellation of Contract

Q: I recently had a sales contract to sell my home, and the buyer cancelled the contract because I had not provided a mandatory “HOA disclosure” required by Florida law. My home is part of a homeowners association and I pay quarterly dues. I am trying to decide whether to hire an attorney to fight the cancellation and pursue the buyer’s deposits. What disclosure was I obligated to provide and can the buyer really cancel the deal? – D.A.

A: Florida law is pretty clear on this issue. Section 720.401 of the Florida Statutes requires the seller to furnish a “disclosure summary” for the community association in a very specific form. The disclosure, among other things, tells the buyer that he will be a member of a homeowners association, that there are restrictions on the use of the property and that there is an obligation to pay assessments. The amount of the assessments and the frequency of payment is mandatory information. If you have a Realtor, your Realtor should have included the disclosure as part of the original sales contract. It is also wise to have the buyer sign off on receiving the disclosure. If the buyer did not receive a complete disclosure, the buyer can legally terminate the contract within three days of receiving the disclosure summary. The information from the statutory “disclosure summary” cannot be provided in other documents. A Florida court recently upheld a buyer’s cancellation where the seller/builder attempted to include critical information from the disclosure summary in a separate addendum. If you were fairly certain that neither you nor your Realtor provided the disclosure summary to the buyer, it would be our recommendation that you focus your efforts on finding a new buyer and ensure that the HOA disclosure summary is provided next time.

Q: Recently, our condominium board installed security cameras throughout our building. There are cameras at every entrance to the building as well as the garage door and within the garage. We have a marina and pool and there is a camera installed outside that is wide angled and can pan the pool area and marina. The board has decided that only board members can view the camera recordings over the internet. Many unit owners feel that the cameras are excessive. Further, if the board members and their spouses have access to view the cameras whenever they want, shouldn’t the unit owners have the same privilege? Also, was the board of directors able to purchase the cameras without a vote by the owners? – D.V.

A: First, the board probably did not need the approval of the membership to purchase and install the security cameras in common areas. The board may make significant alterations or changes to the common areas without a vote of the members if the change is related to the repair, preservation or replacement of the common elements. The board members have a duty to preserve and protect the buildings and common areas. The board also has a duty to act in the best interests of the membership. If the cameras arguably improve safety and security for residents, or serve to deter theft, vandalism or other illegal activity, then the board is on solid footing to have the cameras in the common areas. However, the board might want to reconsider its position on keeping the video content private. The video content is property of the association and could be considered an “official record” that is available to the members for inspection under Florida law. Certain electronic security measures (i.e. passwords) and other operating systems are not available to the members, but the “day-to-day” video feed from the security cameras should probably be made available to a member making a proper request, unless there is a privacy concern with respect to another resident.

Q: I am a board member in a large condo association with multiple sections. Our buildings are among the older condo buildings in all of Naples. Each section has its own budget and reserves for normal repairs and replacement of doors, roofs, plumbing, etc. The association also has a general operating budget and a reserve budget. My question relates to the exterior electrical wiring and boxes that are not operating properly and do not meet code and need replacing. Our condo documents state that the association is responsible for “electrical wiring up to the circuit breaker panel in each unit.” I believe the expense of fixing these electrical issues should be a direct expense to the association’s general budget or reserve budget. Is this correct? – C.C.

A: It sounds like your community operates as a “multi-condominium.” In these communities, there is a single association that operates multiple condominiums or “sections” as you refer to them. As you are probably aware, the Florida Condominium Act requires your board to adopt an annual budget for the association’s operating expenses, which should include reserve accounts. With respect to multi-condominiums, the act requires the association to adopt a separate budget of common expenses for each condominium the association operates, in addition to a separate budget of common expenses for the association. The answer to your particular question depends on whether the expense of maintaining and replacing the electrical equipment is attributable to any particular condominium. If the expense only benefits a particular building(s), the expense should include that building’s condominium section. Conversely, if the repair or improvement is made to equipment that benefits all members of the association, the expense should be in the association’s common budget.

Q: My homeowners association is getting conflicting opinions on architectural review and whether our association has the power to regulate exterior structures. We want to have consistency in the appearance of our pool cages. Can we restrict the size and width of screen enclosures and require that the construction of such enclosures be kept within the width of the rear of the home? – T.N.

A: Your association may restrict the size and location of the enclosures; however, the community documents should be specific as to options for allowable sizes, locations, types, or appearances of these structures. The Florida Legislature significantly tightened the laws relating to architectural review when it enacted Section 720.3035, Florida Statutes, in 2007. As a general matter, a homeowners association’s authority to approve proposed plans is permitted only to the extent that the requirements are expressly stated in, or reasonably inferred from the Declaration and its rules and regulations. In plain English, this means that a homeowner should be able to review the architectural standards and understand exactly what sizes; locations, materials and colors are permitted. If your community documents allow the board or an architectural review committee to reject proposed alterations based on “harmony of external design with the community standard,” or similar language, those decisions could be subject to legal challenge. It is my opinion that developing and using specific and detailed guidelines is imperative to the effective enforcement of standards for your pool cages and other exterior improvements. I recommend that you have an experienced lawyer review your documents to determine what changes or standards need to be adopted, if any.