Real Estate Law Article
Dan Rich

Enforcing community association rules by imposing fines.

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By Dan Rich

One of the most common challenges for community associations is how to effectively enforce association rules against residents who repeatedly violate them. To start, it is important that the rules and regulations, as set forth in a community’s governing documents, be enforced consistently for each and every member, director, officer and resident or else the rules may be rendered unenforceable over time. If a community is faced with a repeat violator who has no intent of complying with the community’s rules, one of the most effective tools an association can use is to impose fines against the violator.
As of 2015, Florida law allows both homeowners and condominium associations to impose fines against members, tenants, guests and invitees who violate a community’s declaration of covenants, articles of incorporation, bylaws or any rules adopted by the association. For both homeowners and condominium associations, Florida statutory law provides that fines may not exceed $100.00 per violation, and that the fines may be imposed for each day that a violation continues, with the statutory mandate that fines cannot exceed $1,000.00, in total, per violation.

It is imperative that an association follow the statutory procedures as they are specifically outlined in Chapters 719 and 720, in order to impose fines at a later date. The steps necessary for imposing a fine are summarized below:

  • Step One. Establish a fining committee: An association’s board of directors must appoint an independent committee, often called the “fining committee” or “compliance committee” as its first step towards imposing fines. Fining committee members cannot be officers, directors, or employees of the association, nor can they be a spouse, parent, child, brother or sister of an officer, director or employee. The homeowner association statute requires a minimum of three (3) committee members, and the condominium association statute is silent as to the required number of committee members; however, selecting an odd number is often encouraged to avoid ties and unnecessary deadlock.
  • Step Two. Place violator on notice: After establishing the fining committee, and upon the occurrence of a violation, the association’s board of directors may place the violating resident (owners and tenants alike) on notice of the violation. Often times, it is most practical to send a courtesy notice warning the resident of their violation. Courtesy notices should contain the nature of the violation, the rule or regulation being violated, and provide a reasonable time frame to remedy the violation. If the violation remains uncured, the association is permitted to impose a fine; however, the violator must be provided with an additional notice, before the fine can take effect, stating that the violator has fourteen (14) days to request a hearing in front of the fining committee to dispute the validity of the fine before it is imposed.
  • Step Three. Fining committee hearing: If the violator requests the hearing mentioned in Step Two above, he or she is afforded an opportunity to appear in front of the fining committee to dispute the validity of the fine being imposed against the violator. The fining committee then has two options: (i) impose the fine levied by the association’s board; or (ii) overturn the fine – at which point the matter ends and the fine is no longer actionable. If the violator fails to request a hearing, for any reason, the fine can be imposed immediately at the end of the fourteen (14) day period.
  • Step Four: Collect the fine. If the fine is approved by the fining committee, the minutes from the meeting should be provided to the association’s board so that they can impose the fine. Typically, the fine is placed onto an invoice and transmitted directly to the violator. As stated previously, fines cannot exceed $100.00 per violation, but can be assessed against the violator for each day that the violation continues until the aggregate amount reaches $1,000.00. Only one fourteen (14) day notice and one opportunity for a fining committee hearing is required, thus, subsequent notices or hearings for the same fineable violation are not necessary. The association laws differ on how a maximum fine can be collected. In homeowners associations, the law provides that once the maximum fine is reached a lien can be recorded against the violator. However, for condominiums, the right to lien is absent. As such, the condominium association must pursue a collection action using the courts, or await a sale and then recoup the amount of delinquent funds at that time.

Hopefully, this step-by-step analysis will help association’s better address compliance and enforcement issues. However, if the process – as outlined above – is not followed properly, it can result in expensive legal exposure that ultimately could invalidate the fine. In fact, if a fine is challenged in court, the opposing counsel will first attack the association’s process in an attempt to invalidate the fine. This is why if you or your association should strongly consider consulting an attorney who is knowledgeable in Florida community association law for guidance.

Dan Rich is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to thelaw@cclmlaw.com.

Litigation Law
J. Matthew Kelly

Does the other side have to pay my attorney’s fees?

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By: J. Matthew Kelly, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

One of the most common questions I receive as a litigation attorney is: “Does the opposing party have to pay my attorney’s fees if I win?” The general answer of “no” often surprises people, however, there exists many exceptions to this general rule.

The American Rule

Florida, and the majority of states and jurisdictions in the United States of America follow the American Rule. The American rules provides that attorney’s fees can only be awarded to a party if authorized by the contract of the parties or authorized by statute.

Attorney’s Fees Provisions by Agreement

One of the most common ways a prevailing party can recover its attorney’s fees is if the agreement or contract which is being disputed has an attorney’s fees provision. As previously mentioned, an exception to the American Rule is when the parties expressly agree that a prevailing party will be entitled to fees.

It is very important when entering, drafting, or creating contracts to consider whether an attorney’s fee provision will best suit your objectives. If you are a party to a contract and a lawsuit results from an alleged breach of that contract you will be paying your own fees, even if you prevail, if the contract is silent as to attorney’s fees. Having an attorney’s fee provision in the contract can deter frivolous litigation as a party is less likely to bring a baseless lawsuit if it will be responsible for the other party’s attorney’s fees. On the other hand, not having an attorney’s fee provision can also help deter litigation in certain situations as litigation can be costly and without the ability to recover their fees a party may refrain from filing a lawsuit.

It is not uncommon to see contract with a one-sided attorney’s fee provision. A one-sided attorney’s fee provision is an attorney’s fee provision which only allows one party to the contract to recover its attorney’s fees in the event of legal action on the contract. In Florida, if the contract only provides that one party will be entitled to attorney’s fees the court may also allow the other party to recover attorney’s fees if the other party prevails in the legal action.

Statutory Authorization to Attorney’s Fees

The other way a party in a legal action can seek to recover its attorney’s fees is if a statute authorizes attorney’s fees.

Some common proceedings where a statue authorizes attorney’s fees are as follows: landlord tenant disputes relating to non-payment of rent, many disputes relating to homeowners’ associations, disputes relating to the Florida Deceptive and Unfair Trade Practices Act, disputes where an insured prevails against an insurer, and in many family law proceedings including dissolution of marriage.

Two other common statutory mechanisms for seeking attorney’s fees are Florida Statutes Section 57.105 and Florida Statutes Section 768.79.

Florida Statutes Section 57.105 allows for a party to seek to recover its attorney’s fees in relation to unsupported claims or defenses. When a litigant is met with a frivolous claim he or she can use Section 57.105 as a mechanism to attempt to recover attorney’s fees. In certain circumstances under Section 57.105 the attorney who filed the frivolous motion can be forced to pay a portion of the attorney’s fees. Section 57.105 has many requirements that need to be followed before a court will consider awarding fees. One such requirement is that the party seeking to use Section 57.105 against a frivolous claim must serve the other party with the proposed motion, and typically a letter, allowing a twenty-one (21) day window for the offending party to withdraw or correct its claim.

Florida Statutes Section 768.79 governs “offers of judgment” which are offers from one party to another to settle the case for a certain amount. Any such offer must also comply with Florida Rules of Civil Procedure 1.442. Generally, this works by allowing a plaintiff to present an offer to the defendant. If, the defendant accepts the offer of judgment the case ends at the point. However, if the defendant rejects the offer of judgment and the plaintiff ends up prevailing and receiving a judgment in an amount which as at least twenty-five (25) percent greater than the offer of judgment, then the Plaintiff will be entitled to recover attorney’s fees that were incurred from the date of filling the offer forward. Defendants can also make offers under this provision but will only be entitled to fees if the plaintiff’s judgment is at least twenty-five (25) percent less than the defendant’s offer.

It is important to have an attorney review and draft contracts when possible to help determine whether an attorney’s fee provision is right for your situation. It is equally as important to have an attorney handle the bringing or defending of any claim to make the determination of whether or not you will be able to recover your attorney’s fees if you prevail. Importantly, litigants must request attorney’s fees in the initial pleadings or they waive the ability to recover such fees. Once a party prevails that party must move for its attorney’s fees within thirty days or again it will lose the ability to seek them. Many of these mechanisms involve significant judicial discretion as to entitlement and amount.

J. Matthew Kelly is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to thelaw@cclmlaw.com.

Tax Law Article
Kevin Albaum

Alternative Ways for Charitable Giving After the Tax Cuts and Jobs Act of 2017

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BY: Kevin R. Albaum, ESQ.
Clark, Campbell, Lancaster & Munson, P.A.

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (TCJA) into law.  Most of the changes went into effect on January 1, 2018, and do not impact 2017 taxes. The individual tax changes are favorable to many with the standard deductions being raised in 2018 ($12,000 for an individual. $13,600 for 65+ individual; $24,000 for married couple; and $26,600 for married 65+ couple) and most individual income tax rates being lowered a few percentage points. Further, the child tax credit is doubled from $1,000 to $2,000 and the estate tax threshold was raised ($11.2 Million for an individual or $22.4 Million for a married couple).

Some believe that because of TCJA that the number of households claiming a Charitable deduction for an itemized gift to non-profits organizations will shrink. As result of the increased standard deductions, many taxpayers may not be able to claim an itemized deduction for their charitable gifts.  Although the standard deduction has been increased, there are planning opportunities to still receive a tax benefit for gifts to charities.

The question becomes should you stop donating to your favorite charities that depend on your donations for their day-to-day operations just because it may no longer be as tax-advantageous? No, as many people give to help benefit the charitable organizations they care about and not just for potential tax benefits. However, you may consider other alternative charitable giving opportunities.

An individual over age 70 ½ can transfer up to $100,000 per year from their traditional IRA (not Roth) to charity (the distribution can count as the Required Minimum Distribution) and if they follow the rules for a qualified charitable distribution, the gift will not count as taxable income to the individual.  However, the distribution must go directly from the individual’s IRA to the charity to be transferred income tax-free.  For example, if your RMD is $50,000 in a given year, you may direct all of the RMD, a portion of it or up to $100,000 from your IRA be distributed to a charity.  If you direct $5,000 of the $50,000 RMD payment to a charity, you will recognize only $45,000 of income.

If you are interested in using your IRA to give to a charity, contact your plan administrator that manages your IRA and explain to them that you would like to make a qualified charitable distribution and they will help assist you in the transaction.  It is very important not to receive your distribution first and then give the money to the charity (after you received it) as this will not qualify as a qualified charitable distribution of your IRA to a charity and will make the distribution subject to individual income tax.  You can give up to $100,000 of your IRA to the charitable organization and name as many organizations you wish to receive the qualified charitable distributions (For example, you may give $50,000 from IRA to 5 different charities).

An individual may also bundle their contributions all at once, so they can benefit from a larger itemized deduction in certain years instead of making smaller gifts each year.  If you do not wish for a charity to receive a lump sum gift in a given year, you may give the large sum to a donor advised fund (DAF).  Often this large charitable gift is not given to the charity directly but instead given to a DAF.  By using a DAF, you claim a large itemized deduction in one year, and the DAF will distribute the money to your favorites charities over time as you direct them.  There are numerous charitable organizations and financial companies that can assist to establish and manage the DAF for you.   DAFs are a good option for those that want to continue to make charitable donations but also obtain the income tax benefits while doing so.

Before setting up a DAF or planning IRA distributions to your favored charities, it is recommended that you contact either a qualified tax professional or an attorney to advise you on obtaining the tax benefits that you are seeking.

Kevin Albaum is an attorney in the Elder Law Practice at Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to thelaw@cclmlaw.com.