Defense of Foreclosures

The Fourth Circuit just released it’s opinion in E Qualcom Corp. v. Global Commerce Center Association, Inc..  This is one of the most disturbing condominium foreclosure cases ever.

 Normal condominium foreclosure law provides few legitimate defenses by the unit owner.  Examples of legitimate defenses include that the unit owner paid the assessment and the association failed to apply it properly; the assessment was improperly passed or is otherwise invalid and the like.

 The recent case provides a new defense.  Here, the unit owner operated a business in a commercial condominium.  The unit’s roof was damaged, causing leaks.  The condominium association was on a notice of the damage to the roof, and failed tto repair the roof timely.  Because of the roof leaks, the unit owner’s business allegedly suffered.  The unit owner failed to pay their assessments, and the association tried to foreclose.  The unit owner defended that because of the association’s failure to maintain the common elements, the unit owner was unable to pay their assessment.

 The Fourth DCA agreed with the unit owner.  They held that the defense that a unit owner was unable to pay their assessment because of the actions of a condominium association was a defense to a foreclosure action.

 Although the facts may appear sympathetic and limited, many unit owners do claim that the association’s actions did force the lack of payment.  Furthermore, although this case involved a commercial condominium, these allegations are very common in residential condominiums as well (e.g., the board didn’t have to spend a fortune repair the roof in the manner it did and because they improperly spent a fortune I can’t afford the assessment).  This case opens up a very unnecessary slippery slope in condominium foreclosures.

2011 Condo and HOA Update

The 2011 Florida Legislative Session was rather quiet and uneventful for community associations, preferring the status quo over a serious re-write of community association laws.  In that sense, the legislature chose to fix some of the questions raised by the 2010 Act.  Governor Scott still has yet to sign the Glitch Bill into law, which he is expected to do so, but there is the possibility, however remote, of a veto.  Below is our summary of the major aspects of the Glitch Bill.

 Condominiums

 Official Records.  The first major change is with regards to official records.   Unit owners are permitted to consent in writing to the disclosure of protected contact information (i.e. telephone numbers, e-mail addresses, and the like).  This opt-in allows for associations to create telephone directories.  The Glitch Bill also clarifies that with respect to certain employee personnel records that are not normally available for inspection by owners, owners may inspect employment agreements to budgetary financial records that indicate the compensation paid to employees. 

 Meetings.  One additional change to condominium meetings is that a condominium board may close a meeting, much like a litigation meeting, for “personnel” matters to discuss employment issues.  Legal counsel does not necessarily need to be present.

 Rent Payments from Delinquent Owners.  The Glitch Bill also clarifies the tenant rent situation that we believed already exited.  Previously, there were questions as to how much rent a association can collect from a tenant and whether it could be used for applied against past due maintenance or just the current month due. The Glitch Bill clarifies that all rent to be paid from tenant to the unit owner is to be paid to the association until the all past due accounts are paid in full.  Additionally, the statute will now provide for a form letter to be sent to tenants explaining the tenant’s rights and obligations to the association.  It also provides for immunity for the tenant if the landlord sues the tenant with respect to any collection of rent paid to the association.

 Board Terms Expiration.  The Glitch Bill provides that board member terms do not expire at the annual meeting if all member terms would expire at the annual meeting and there be no board of directors.  Furthermore, board members must be eligible to serve on the board as of the deadline for submitting a notice of intent to be a candidate.  With regard to the director certification education package that was included in the 2010 legislation, new community Association directors only need to submit proof of educational course attendance and such proof maybe provided and such course only needs to be taken within one year before or 90 days after the date of election or appointment.  The written certification is good so long as the director serves on the board without interruption.  As a reminder, this firm is an approved educational provider by the Department of Business and Professional Regulation (“DBPR”).

 Elections.  One question that the Glitch Bill raises is language that states that board members may stand for re-election unless prohibited by the bylaws.  This suggests that the DBPR and several courts’ interpretations that there are no restrictions other than ones codified in law put into the bylaws may not be correct, but the language of the Glitch Bill is ambiguous on the issue.

 Suspension of Common Areas.  The Glitch Bill clarifies that the suspension of common element use rights for nonpayment of assessments do not require hearing, but only occur at a properly noticed meeting of the board of directors. It will also clarifies that if voting rights are suspended do not count towards the vote required to approve an action or toward quorum. 

 Fire Alarm Systems.  The Glitch Bill clarifies the problem created in the last legislative session where the legislature passed two contradictory bills with respect to the requirements of installing a manual fire alarm system in a condominium.  Buildings less than four stories in height and have an exterior corridor providing a means of egress is exempt from installing a manual fire alarm system.

 Impact Glass.  The Glitch Bill provides that condominiums will be permitted to install impact glass or other code compliant windows as hurricane protection in addition to hurricane shutters.

 Foreclosures.  Condominiums that take back units through foreclosure are not liable for unpaid assessments that came due prior to the association’s acquisition in favor of any other association that holds a superior interest in the unit.

 Bulk Buyers.  The Glitch Bill made several modifications to the provisions affecting Bulk Buyers.  First, the definition is narrowed such that a Bulk Buyer and Bulk Assignee are limited to those persons who purchase more than 7 parcels in a single condominium.  Second, Bulk Assignees are not liable for developer warranties under certain circumstances.  Third, bulk buyers or assignees must file with the division and make certain disclosures to purchasers if they offer more than 7 units in a single condominium, except filings are not necessary if all of the units are being offered to a single purchaser. 

 Terminations.  Lastly, the Glitch Bill creates a concept of a partial termination.  Terminations are provided for economic waste or impossibility if a condominium includes units and timeshare estates destroyed or demolished.  The Glitch Bill would require the plan of termination to be filed in court by a unit owner.

 HOAs

 Official Records.  The first major change is with regards to official records.   Homeowners are permitted to consent in writing to the disclosure of protected contact information (i.e. telephone numbers, e-mail addresses, and the like).  This opt-in allows for associations to create telephone directories.  The Glitch Bill also clarifies that with respect to certain employee personnel records that are not normally available for inspection by owners, owners may inspect employment agreements to budgetary financial records that indicate the compensation paid to employees.

 Rent Payments from Delinquent Owners.  The Glitch Bill also clarifies the tenant rent situation that we believe already exists.  Previously, there were questions as to how much rent a association can collect from a tenant and whether it could be used for applied against past due maintenance or just the current month then due. The Glitch Bill clarifies that all rent to be paid from tenant to the unit owner is to be paid to the association until the all past due accounts are paid in full.  Additionally, the statute will now provide for a form letter to be sent to tenants explaining the tenant’s rights and obligations to the association.  It also provides for immunity for the tenant if the landlord sues the tenant with respect to any collection of rent paid to the association.

 Suspension of Common Areas.  The Glitch Bill clarifies that the suspension of common element use rights for nonpayment of assessments do not require hearing, but only occur at a properly noticed meeting of the board of directors. It will also clarifies that voting rights are suspended do not count towards the vote required to approve an action or toward quorum. 

 Internet and Cable Purchasing.  The Glitch Bill mirrors the Condominium Act with respect to bulk purchasing of information and internet services.  Also, an HOA cannot deny any individual from buying internet or cable services from any certificated or franchised provider.

 Board Eligibility.  With respect to homeowners associations, the Glitch Bill adopts the Condominium Act’s standards regarding board eligibility, namely that board members may not be delinquent on any monetary obligation due the association for more than ninety (90) days and the board members may not have been convicted of any felony unless such felon’s civil rights have been restored for at least five years.

 Meetings.  Also, the Glitch Bill repeals the requirement that the only way for members to speak at HOA meetings to have a petition of the voting interests; members will be allowed to speak with reference to all designated agenda items.

 Foreclosures.  HOAs that take back units through foreclosure are not liable for unpaid assessments that came due prior to the association’s acquisition in favor of any other association that holds a superior interest in the unit.

Google threatens to shut down Swiss Street View

Google threatens to shut down Swiss Street View – Yahoo! News http://yhoo.it/lxsnkF

Cohn v. Grand Condominium

Recently the Florida Supreme Court on March 31^st issued their opinion in Cohn v. Grand Condominium[1] holding that a condominium declaration is immune to future statutory changes that the legislature enacts unless the condominium document states that it is subject to the Condominium Act “as amended from time to time.”  Unfortunately, press reports of the Cohn decision grossly oversimplifies the case.

The United States Constitution, which is the supreme law of the land, has a provision that states that no state legislature can pass any law impairing an obligation of contract.[2]  This was evidently put into the United States Constitution to remedy the previously widespread problem of state legislatures passing private lease bills negating certain contracts, promissory notes and mortgages.[3]  When Florida adopted their latest version of the State Constitution in 1968, the drafters of the Florida Constitution thought it was important to restrict the state legislature’s power to impair contracts by putting in not just one reference, but two separate references in the state Constitution to restrict the Florida legislature’s power with respect to statutorily amending contracts.[4]

Although the text of the Constitutions are rather clear, the case law is not.  On a federal level, until 1933,[5] the case law was unanimous in striking down any state statute that impaired any obligation of a contract.  In 1933, however, the United States Supreme Court diverged from established precedent and started holding that certain statutes were not impairments of contracts but rather expressions of the State’s power to police certain activities.[6]  From 1933 to 1983 the United States Supreme Court and the rest of the federal judiciary were wrestling with the implications until the United States Supreme Court announced a three part test:[7]

First, does the state regulation substantially impair a contractual relationship?

Second, does the state have a significant and legitimate purpose behind the        statute, such as the remedying of the broad and general social or economic   problem?

Third, is the law reasonable and appropriate for its intended purpose?

This is currently the test of whether a law is an impairment of contract or an exercise of police power under federal law today.

Florida jurisprudence followed a similar, albeit belated, tract as the federal judiciary[8]; until 1979 the Florida Supreme Court in every case held that the Florida Legislature could not impair an obligation of contract and struck down every statute as unconstitutional that purported to do so.  In 1979 the Florida Supreme Court announced that it would adopt the more flexible federal judiciary interpretation.[9]

The 1979 Florida Supreme Court announcement is important to an understanding of the Cohn case the case was first appealed to the 3rd District Court of Appeals.[10] The 3^rd DCA’s exhaustive review of the various tests under the Contract Clause to see if there was an impairment of contract by the Florida Legislature enacting amendments to 718.  One important fact to keep in mind is that the Declaration of Condominium in this case said that it was subject to Fla. Stat. 718 as it existed on the date of the recording of the Declaration.  The amendment complained of, namely, Fla. Stat. 718.404, would have provided a substantial change to the association’s board of directors that did not solve any legitimate police power of the state.  Therefore, the 3^rd District Court of Appeals ruled in favor of the condominium stated that the Florida Legislature’s subsequent amendments to Fla. Stat. 718 should not constitutionally be applied to the Grand Condominium.

When the case reached the Florida Supreme Court, the Florida Supreme Court’s decision was rather short in affirming the 3^rd District Court of Appeals.  In short, the Florida Supreme Court merely stated that subsequent amendments to Fla. Stat. 718 as the rules being applied in this particular was an unconstitutional impairment of contract.  Although it cited the 1979 prior Florida Supreme Court case that set forth the beginning of the tests, the Florida Supreme Court  in the Cohn case did not explicitly engage in any of the tests.

One of the big questions going forward is how does the Cohn case apply, and the answer is it depends on how the current case is read.  One way to read the Cohn case is a categorical blanket statement that no impairment of contract will be tolerated in Florida.  This is certainly the view expressed by some, including most of the newspaper reports.  There is, however, an alternative view, namely that the Florida Supreme Court did not reverse its post-1979 jurisprudence, instead relying on the 3^rd District Court of Appeals’ opinion to do the analysis.

The latter interpretation does have a strong basis.  First, traditionally when a court overturns prior case law it does so explicitly.  In the instant case, Florida’s Supreme Court did not do so.  Second, when a higher court disagrees with a lower court’s analysis or decides on a separate basis or rationale, the higher court normally highlights its disagreement with the lower court.  In Cohn the Florida Supreme Court did not.  Third, given the current ideological make up of the Florida Supreme Court, it is unlikely that the unanimous court would have returned to a pre-1979 jurisprudence.

Another large question is how is this case supposed to be read with regard to other areas of Florida jurisprudence. For example, Fla. Stat. 617.0102 states that corporations not for profit in the State of Florida by virtue of their formation agree to be subject to future changes to the Florida not-for-profit corporation statute.  There is some indication that the Florida legislature’s staff that at some time in the past in the Florida legislature considered and intended that changes to Fla. Stat. 718 and 720 with respect to corporate issues be incorporated into the Florida not-for-profit corporation statute, although such language did not appear in the text of the statute, but instead only in the legislative staff committee reports.  The second example is that the Florida Supreme Court has not interpreted statutes that it altered vested rights, but it would apply only to remedies[11]

---

[1] ____ So. 2d ____, 2011 WL 1158938, 36 Fla. L. Weekly 5129 (2011)

[2] Article 1, Section 10 of the United States Constitution contains the following provision:  “No state shall enter into any Treaty, Alliance, or Confederation; grant letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post factor Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

[3] James Ely, The Guardian of Every Other Right (Oxford Univ. Press, 1998)

[4] Article 1, SECTION 10.  Prohibited laws.—No bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed.

Article 3, SECTION 11.  Prohibited Special Laws.—

(a) There shall be no special law or general law of local application pertaining to….

(9) creation, enforcement, extension or impairment of liens based on private contracts, or fixing of interest rates on private contracts;

[5] Fletcher v. Peck, 10 US 87 (1810); Dartmouth College v. Woodward, 17 U.S. 518 (1819).

[6] Home Building and Loan Association v. Blaisdell, 290 U.S. 398 (1934)

[7] Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400 (1983)

[8] Yamaha Parts Distributors, Inc. v. Ehrman, 316 So.2d 359 (1975); Hardware Mutual Casualty Company v. Carlton, 9 So.2^nd 359 (1942); Coral Lakes v. Bussey Bank, 30 So.3d 579 (2^nd DCA 2010)

[9] Pomponio v. Claridge of Pompano Condominiums, 378 So.2d 774 (Fla. 1975)

[10] 26 So.3d 8 (2009)

[11] See Metropolitan Dade County v. Chase Federal Housing Corporation, 737 So. 2d 494 (Fla. 1999).

 

Yul Gok

 

Yul Gok means Cheasnut Valley.  It’s the pen name of Yi I.

Yi I was born in Gangneung, Gangwon Province in 1536. His father was a Fourth State Councillor and his mother, Shin Saimdang, the accomplished artist and calligraphist. It is said that by the age of seven he had finished his lessons in the Confucian classics, and passed the Civil Service literary examination at the age of 13. Yi I secluded himself in Kumgang-san following his mother’s death when he was 16 and stayed for 3 years, studying Buddhism. He left the mountains at 20 and devoted himself to the study of Confucianism.

He married at 22, went to visit Yi Hwang at Dosan the following year. He passed special exams with top honors with a winning thesis titled Cheondochaek , which was widely regarded as a literary masterpiece, displaying his knowledge of history and the Confucian philosophy of politics, and also reflecting his profound knowledge of Taoism. He continuously received top honors on civil exams for a consecutive 9 times. His father passed away when he was 26. He served in various positions in government from the age of 29, and visited the Ming Dynasty as seojangwan  in 1568. He also participated in the writing of the Myeongjong Annals and at 34, authored Dongho Mundap, an eleven-article political memorial devoted to clarifying his conviction that a righteous government could be achieved.

Due to his vast experience in different offices over the years, Yi I was able to garner a wide vision of politics and with the deep trust of the king, became one of the central figures of politics by the time he was 40. His many documents and theses were presented to the royal court but when political conflicts escalated in 1576, his efforts proved fruitless and he returned home. Following his return, he devoted his time to studies and education of his disciples and authored several books.

He returned to office at 45 and while holding various minister positions, produced many writings which recorded crucial political events and showed his efforts to ease the political conflicts that were rampant at that time. However, King Seonjo was noncommittal in his attitude and it became difficult for Yi I to remain in a neutral position in the conflicts. He left office in 1583 and died the following year.

According to legend, he had a pavilion built near the ford of the Imjin River in his lifetime and instructed his heirs to set it ablaze when the king had to flee northward from Seoul, to provide a guiding beacon. This took place during Hideyoshi’s invasions of Korea at the Battle of the Imjin River (1592).

Yi I was not only known as a philosopher but also as a social reformer. He did not completely agree with the dualistic Neo-Confucianism teachings followed by Yi Hwang. His school of Neo-Confucianism placed emphasis on the more concrete, material elements; rather than inner spiritual perception, this practical and pragmatic approach valued external experience and learning. Unlike Yi Hwang, who suffered through tumultous times and did not enjoy being in politics, Yi I was an active official who thought it important to implement Confucian values and principles to government administration. He emphasized sage learning and self-cultivation as the base of proper administration.

Yi I is also well-known for his foresight about national security. He proposed to draft and reinforce the army against a possible Japanese attack. His proposal was rejected by the central government, his worry was found to be well-founded soon after his death, when Hideyoshi Toyotomi’s Japanese forces invaded Korea in 1592.

Yul-Kok Hyung     (38 movements)

Direction	Movement	Stance	Action
N	—	Feet together	Ready position
N	Lf toward W	Horse stance (chest-N)	L middle straight punch <Slowly & Exhaling>
N	—	<same>	R middle straight punch
N	—	<same>	L middle straight punch
N	Lf -> Rf, then Rf toward E,  stomping the foot	Horse stance (chest-N)	R middle straight punch <Slowly & Exhaling>
N	—	<same>	L middle straight punch
N	—	<same>	R middle straight punch
NE	Shift Rf toward NE	R front stance	R high outward forearm block (radius side)
NE	Lf –>	—	L front kick
NE	Drop Lf forward	L front stance	L middle straight punch
NE	—	L front stance	R middle reverse punch
NW	Lf toward NW	L front stance	L high outward forearm block (radius side)
NW	Rf –>	—	R front kick
NW	Drop Rf forward	R front stance	R middle straight punch
NW	—	R front stance	L middle reverse punch
N	Rf toward N	R front stance	R knifehand hooking block  <Slowly & Exhaling>
N	—	R front stance	L knifehand hooking block  <Slowly & Exhaling>
N	—	R front stance	R middle straight punch
N	Forward	L front stance	L knifehand hooking block  <Slowly & Exhaling>
N	—	L front stance	R knifehand hooking block  <Slowly & Exhaling>
N	—	L front stance	L middle straight punch
N	Forward	R front stance	R middle straight punch <Yell!>
N	Lf -> Rf	Feet together (chest-E)	Both fists chambered at the right hip
N	Lf –>	—	L side kick
N	Drop Lf	L front stance	R horizontal elbow strike into the L open palm
S	Rf -> Lf	Feet together (chest-E)	Both fists chambered at the left hip
S	Rf –>	—	R side kick
S	Drop Rf	R front stance	L horizontal elbow strike into the R open palm
E	Lf toward E	L back stance	Twin knifehand blocks (see note for explanation)
E	Forward	R front stance	R middle vertical spearhand strike (L open hand guards under the R elbow)
W	Rf toward W, CW	R back stance	Twin knifehand blocks (as above)
W	Forward	L front stance	L middle vertical spearhand strike (R open hand guards under the L elbow)
S	Lf toward S	L front stance	L high outward forearm block (ulna side)
S	—	L front stance	R middle reverse punch
S	Forward	R front stance	R high outwad forearm block (ulna side)
S	—	R front stance	L middle reverse punch
S	hopping forward off the R foot	Crossed stance (chest-W) Rf x’d behind the Lf	L downward backfist strike <Yell!> (R fist chambered at belt)
E	Rf toward E, 270* CW	R front stance	Double forearm guarding blocks
W	Rf -> Lf, then Lf toward W	L front stance	Double forearm guarding blocks
N	Lf -> Rf	Feet together (chest-N)	Ready position.

9th Circuit, Chipolte and the Disabled

If you didn’t see it, the 9th Circuit just ruled in a huge case that will affect many restaurants that restaurants that have 45″ counters where you can watch your food being prepared (e.g., Subway, Quiznos, Chipolte and the like) violate the ADA because the counters are too high .  In Antoninetti v. Chipolte Mexican Grill the 9th Circuit specifically held in Chipolte’s case the restaurant design violated the ADA because wheelchair bound patrons could not view the food being prepared.    And Chipolte’s attempt at remediation – table side service for disabled patrons – was not sufficient for the 9th. 

This case demonstrates the need to revisit how the ADA and FHA works.

What I am questioning is media reports that claim the Americans with Disabilities Act is 220 years old.

Free Checking

With the Dodd-Frank FinReg in the books, there is real concern that the days of free checking are over.  Many of the fees that banks charge that they use to underright free checking will disappear under Dodd-Frank.  Forbes has an interesting article here about the days of free checking being almost over.

Jailbreaking

The Copyright Office just issued their exemptions for Copyrights.  The exemptions include:

• allow owners of cell phones to break access controls to include their own third party apps.

• allow owners of used cell phones to break access controls on their phones in order to switch wireless carriers.

• allow people to break technical protections on video games to investigate or correct security flaws.

• allow college professors, film students, documentary filmmakers and producers of noncommercial videos to break copy-protection measures on DVDs so they can embed clips for educational purposes, criticism or commentary.

• allow computer owners to bypass the need for external security devices called dongles if the dongle no longer works and cannot be replaced.

• allow blind people to break locks on electronic books so that they can use them with read-aloud software and similar aides.

Even though you may not be violating any copyright laws if you jailbreak or unlock your phone, make sure you don’t care about your warranty and read your user agreement.

Shortest Monopoly Game

I’ve worked out what I think is the shortest Monopoly game possible in a two player situation (the odds of playing it are about 1 in 253,899,891,671,040):

Player 1, Turn 1:
1-1 -> Community Chest, Bank Error in Your Favor, collect $200 (Player 1 now at $1700). Doubles, so roll again.
5-3 -> Visiting Jail.

Player 2, Turn 1:
3-1 -> Income Tax, Pay $200 (Player 2 now at $1300, or $1350 if 10% of assets ($150) is allowed as in the older games – it really doesn’t matter).

Player 1, Turn 2:
3-3 -> St. James Place, Buy for $180 (Player 1 now at $1520). Doubles, so roll again.
1-1 -> Tennessee Avenue, Buy for $180 (Player 1 now at $1340). Doubles, so roll again.
3-1 -> Chance, Go Back 3 Spaces -> New York Avenue, Buy for $200 (Player 1 now at $1140).
At the end of his turn, Player 1 puts 4 houses on St. James Place ($400), 3 houses on Tennessee Avenue ($300), and 4 houses on New York Avenue ($400), for a total cost of $1100 (Player 1 now at $40 cash on hand).

Player 2, Turn 2:
6-6 -> St. James Place, with 4 houses is $750 (Player 2 now at $550 or $600, depending on the income tax square). Doubles, so roll again.
2-1 -> New York Avenue, with 4 houses is $800.
GAME.

It Pays to be a Geek

A lot of people don’t realize the value in comic books.  Not so much for their acadmic or cultural value, but the sheer volume of business they do.  And because of that, the copyrights in those works are very valuable as well.

Take for example the on-going fight between Neil Gaiman and Todd McFarlane.  Who are they you ask?  Gaiman is a famous science fiction writer and McFarlane is a comic book artist known for his work on Spiderman and Spawn.  The heart of the dispute is three minor characters in the Spawn comic book series, as well as a valuation of three other characters that McFarlane admits is Gaiman’s.

Remember, this case has been on-going since 2002.

The lesson to be learned is to make sure anything that you have that might be copyrightable you get taken care of on the front end.  Trying to negociate dollars after everything is said and done is very time consuming and wasteful.