June 2016 Condo Association News Roundup

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Happy Solstice!  Hopefully your summer has been treating you well.  This month’s news includes questionable fees in Florida, a potentially major Airbnb legal ruling, and legal shenanigans related to a new condo project in Michigan.  Enjoy your June 2016 Condo Association news roundup!

South Florida Condo Boards Rip Off Consumers with High Application Fees

Nicholas Nehamas, Miami Herald, June 3, 2016 

Since it is June, it’s important we of course return to the land of well-managed Condo Associations … Florida.  This time there is an excellent article that covers widespread overcharging of applications fees in Florida.  The Florida Condominium Act prohibits the charging of fees greater than $100 for any transfer of a Condo.  However, apparently the rules are apparently widely ignored with some fees up to $625.  Even more disturbing is that the fees are nonrefundable, even if you’re not approved, creating a revenue source for these buildings.  Apparently these fees are being charged by the Management companies, not the Associations themselves.  The article also quotes a lawyer who claims that fees greater than $100 are allowed if they are paid to a Management company, not an Association.  However, a 2008 letter from the Florida Division of Condominiums contradicts that, saying $100 is the cap no matter what.  However, the Florida Division of Condominiums also refused the reporter an interview.  What’s going on here?

These fees don't seem completely legitimate, considering a State memo to the contrary.
These fees don’t seem completely legitimate, considering a State memo to the contrary.

This story captures much of what is wrong with Florida Condo Associations.  You have what appears to be a possible loophole to the law allowing Management companies to charge more, despite a letter from a State regulatory agency saying otherwise.  Nonetheless the practice seems rampant, and Owners and prospective Owners are the ones who suffer.  It sounds like absent a lawsuit to prove a point, which would require an Owner with deep pockets or a lawyer willing to work on contingency, this practice will continue.  

Allegan County Trial Court Rules That Short-Term Vacation Rentals Violate Deed Restrictions

William Kolobaric, Michigan Community Association Law Blog, June 9, 2016

The issue of Airbnb, VRBO and others has continued to vex community Associations.  While Owners love the ability to rent out their units for some extra cash, such activity may violate various CC&Rs communities have.  From a practical standpoint, short-term tenants may sometimes be loud and more aggressive on depreciating a property.  A lawsuit in Allegan County, Michigan, found in favor of plaintiffs who alleged that “short-term vacation rentals violated deed restrictions which barred commercial activity in the subdivision.”  In short, the Court found that while the specific nuances of what a “commercial activity” is were not well defined, the ban on “commercial activity” was very clear.  The article does an excellent job further explaining the legal details of the case. The article also notes that for Associations who wish to restrict this activity, this provides a strong legal case to back up such bans.

Innovation, or nuisance?  Depends on if you're the one making money.
Innovation, or nuisance? Depends on if you’re the one making money.

I have long postulated that the big issue (outside the issues of zoning and the like) is that most Owners who are renting their units out are doing so on the sly.  Knowing human (and Association) nature, if there was a fee associated with the transaction going to the Association, and short-term renters were not noisy, most people wouldn’t care.  However, Associations are very bad at being proactive about these types of issues, so you’ll continue to get people sneaking around the rules and the occasional lawsuit rather than a solid policy discussion.  

Judge Accuses Rockford, Developers of ‘Chicanery’ in Controversial Condo Project

John Agar, mlive.com, June 7, 2016

In Michigan, there’s quite a bit of legal drama around a controversial 51-unit Condominium project in the City of Rockford, Michigan.  The project required a “supermajority” (i.e., 66%, or in this case, 4-1) vote of a five-person zoning board.  The project was only able to achieve a 3-2 vote, which did not qualify.  The Developer then filed in federal court against the City, and as part of the proposed federal settlement, the City would approve the zoning.  This process is being viewed as fishy, because the City had failed to approve it under its own processes.  That called into question whether thethe federal lawsuit – and subsequent settlement – seem like an end-around of regular process.  Opponents are saying the entire thing was collusion between the City and the Developers.

New construction projects can be hotly contentious.  Developers want to make money and will often to go to any lengths to get a project done.  On the other hand, “not in my backyard” citizens will also use any means to stop a project.  Such tactics include environmental assessments and potentially frivolous lawsuits.  This seems like yet another case where there are deeply entrenched opponents.  However, it does seem like something fishy is going on considering that the City couldn’t get the project passed through its own zoning board and had to “settle” in a federal lawsuit to advance things.   


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