Can A Florida HOA Or CA Restrict The Sale Of A Condo Or A Home?
In certain instances, they can. An association has to be very careful because there are sometimes boards that think that because they have a restricted community in and of itself because you have governing documents that they can restrict everything from tenancies to the sale of the home. Under certain circumstances they may be able to restrict it. The first thing that I would point out is that an association has to be very careful not to violate any federal or state housing laws. So if you start restricting and discriminating against persons because you have a certain type of person that lives in an association and you want to exclude other people and those exclusions are illegal based upon federal housing acts in Florida or fair housing acts. You can have issues with that, big issues and those may involve civil penalties but if they are done in a malicious way, they certainly could involve other penalties as well. Punitive damages could be out there as well.
So an association has to be extremely careful with that. One of the issues that comes up is that associations try and restrict sales to individuals with certain criminal background problems or to certain civil issues such as bankruptcies or credit issues. With the bankruptcy and credit issues, I’ve seen those in the documents. I have yet to see a battle where that’s been fought and I really think that the associations would lose on that front if they are trying to restrict the sale to somebody because they are saying they may not be able to pay their assessments because they claimed bankruptcy which as a practical matter is nonsense. So I think that those would not survive.
The more questionable issue is whether or not a unit owner can sell to somebody that has some type of criminal background. So, upon the sale, the declaration says that you have to submit the application of new purchaser to the board for approval and they do a background check and they say well he has been convicted of certain crimes, so we are not going to allow that sale. The governing case law to date and it shifts so you have to be careful. The case law that is in place now really focuses in on language that is in the declaration that would be used to restrict a potential sale or a potential buyer based upon the criminal record. So if you are going to say anybody with a criminal record, I think that the associations can lose that battle. If that restricts it to certain felonies then the association is getting closer but it needs to spell out what felonies need to be reasonably tied to the safety of the neighborhood. So if they are going to restrict it and say that you can’t sell to people who have convictions and have been listed as sexual predators then that may be able to be enforced.
But, as a general rule, if you say we don’t want anybody in here with a criminal record or payment issues, the association is going to lose on that. So they can restrict the sales but they have to be careful that they don’t run afoul of any federal or state housing laws or acts and then you need to make sure that if they are trying to restrict it based upon the background of a potential buyer but not based on any kind of race or creed or religion or any things of that nature but based upon the background of their criminal or civil actions against them then it’s possible to do but you have to be very specific and those have to be reasonable restrictions. So it’s kind of a dangerous area for associations to tread into but there are some of those that if drafted correctly, they can be enforced.
Does A Florida Association Have To Carry Insurance On The Condominium Property?
They do. They have to carry insurance for replacement value and that is for the common elements. To determine the replacement of value, they have to have an independent appraiser determine what that replacement value would be every 36 months under the statute. So they do need to carry that insurance. There is not a guideline or a restriction in the statute, I should say, that requires a certain amount for a deductible or restricts a certain amount so the deductible is not too high. So there is not a provision in the statute for that but there may be in the governing documents. If the governing documents say we don’t have to carry insurance, that’s going to be trumped by the statute which says that the association does have to carry insurance for common elements.
Typically though, they exclude the property that’s within the units themselves because the unit owners are supposed to insure those. There was an amendment that was for all intents and purposes supposed to delete the requirement for a condominium unit owner to have insurance but there are other parts of the statute that they didn’t delete that still implies that they have to carry insurance and obviously it’s a good idea to have insurance for the contents of the property and also to the parts of the interior of the building that are considered to be limited common elements, those are typically excluded on the insurance that the association carries because typically those are the obligation of the owners that have the use of the limited common elements.
But, as I stated before, there is some case law that suggests that certain limited common elements are the responsibility of the association but it wouldn’t be a bad idea for the association to cover that as well. My interpretation of the statute is that it is required in the code. So there is that requirement.
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