C&O - Cuevas & Ortiz, P.A. - Monthly Legal Advisory

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First Quarter - 2009

Business Law – litigation and domestic/international transactions
Real Estate Law– residential and commercial closings
Immigration Law – for business persons and corporations
Community Association Law – Homeowner and Condominium Associations

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Opera Tower: Developer Triumph?

Condominium Insurance Policies Issued or Renewed After January 1

Obama on Immigration

Condominium Act Changes - 2008

Opera Tower: Developer Triumph?

Florida business periodicals were abuzz in 2008 over a District Court Decision from the Southern District entitled Weaver v. Opera Tower, LLC.   In Opera Tower, the Court dismissed a claim brought under the Federal Interstate Land Sales Full Disclosure Act (ILSFDA) and the Condominium Act False Advertising Statute found in §718.506, based upon what the Court deemed a lack of reasonable reliance on the misrepresentations that were allegedly made in promotional materials at issue. The Court also rejected the Plaintiff’s separate argument that the lack of a specific performance remedy in favor of the plaintiffs left the agreement void for lack of mirror image remedies.   Apparently some believe that the decision represents significant pushback in favor of Developers against the barrage of lawsuits for purchase deposits based on allegedly false statements in promotional material.

The Good (For Developers): The decision, using the reasonable reliance requirement found in §718.506, held that reliance on false statements in promotional materials, which are actionable under the act if the other elements are met, was unreasonable if the false statements were contradicted in the purchase contract, prospectus and condominium documents. The Decision cites the following allegations from the Complaint in describing the misrepresentations alleged: the brochure description of “designer” tile though the tile installed did not meet this standard; the brochure description of an “over-sized Olympic style” swimming pool; brochure descriptions of wide panoramic views with magnificent vistas; and representations of adjacency to Biscayne Bay.   To summarize and oversimplify, the Court stated that the purchaser’s reliance on these representations was unreasonable because the purchase contract and attached condominium documents expressly contradicted these representations.

The Court cited what can be described as a Merger clause in the purchase contract, which states that the only representations relied upon were those in the purchase contract, prospectus and condominium documents.   The Court then observed that the Contract contradicted the representations with clauses that attempted to qualify or disclaim the representations made in the brochure regarding tile by stating that the quality of the tile was subject to change, and that the purchasers disclaimed reliance on prior representations as to quality and solely relied on quality statements in the contract and attached documents. The contract also contained specific dimensions for the pool and a paragraph disclaiming reliance on representations as to view, in addition to disclosing the address of the building, which the purchasers could have visited.

The Bad (For Purchasers): See above.

The Ugly (For Everyone but Lawyers): While the decision certainly was a victory for the Developer / Defendants in that case, for other Florida Developers, the effect is still unclear. First of all, the decision, having been decided in Federal District Court, is merely persuasive, and not binding, upon Florida State Courts. In the absence of a Federal Claim stated in a Complaint, the Federal Courts would not have subject matter jurisdiction unless the amount in controversy is over $75,000.00 and there is diversity of state citizenship between the opposing parties. Furthermore, the decision could be eventually reversed at the Federal appellate level in the Opera case if there was an appeal, or overturned in an appeal of a subsequent case which follows Opera’s Holding. The Opera case’s strong reliance on merger clauses to disclaim reliance on brochures may also arguably be somewhat at odds with another Southern District case entitled Gentry v. Harborage Cottages-Stuart, where a less specific merger clause in the purchase contract did not prevent liability for misrepresentations in a brochure. It bears mentioning that this office successfully argued in State Court, mere months before the Opera decision was decided, that a Motion to Dismiss should be denied in a purchase deposit case based upon alleged misrepresentations in brochures despite the presence of an initialed merger clause in the contract. Every case is unique and this is a dynamic area of law where developers and purchasers will take whatever victories they can get.1]

[1] The above article should not be construed as legal advice. It only provides a cursory summary of the subject matter addressed, does not create an attorney-client relationship between the reader and any attorney at Cuevas & Ortiz, P.A., and may contain errors or omissions the adherence to which this firm will not take responsibility for. You should not act or not take action based upon language contained herein without first contacting an attorney if you have any questions. The hiring of an attorney is a serious decision that should not be based upon any advertisements, newsletters, or other informational publications prepared by a law firm.

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CONDO INSURANCE POLICIES ISSUED OR RENEWED AFTER JANUARY 1, 2009

Very significant changes in the new Condominium Act insurance law which took effect on July 1, 2008, were changes applicable to policies issued or renewed after January 1, 2009.

Post January 1, 2009 association policies (as opposed to individual owner policies) must cover all original improvements, replacements, and alterations, including air conditioning and heating systems, but excluding personal property within units or limited common elements. This includes unit fixtures, wall and ceiling coverings, interior unit hardware, appliances, etc. Basically, the unit itself is on its own(er). The type of policy covering such unit owner responsibilities is commonly referred to as a Homeowners 6 policy. Also within the unit owners’ responsibility are improvements by an owner or group of owners that solely benefits a single owner or small group of owners. Those owners having the use of such improvements must bear the insurance, or the Association may insure them at the cost and expense of those owners benefiting. Any policy issued to a unit owner must now name the Association an additional named insured and loss payee. Additionally, every new policy must contain loss assessment coverage for association imposed special assessments for uninsured casualty losses.

The eyebrow raiser is that an association can request proof of hazard and liability insurance coverage from a unit owner for those areas of coverage within that unit owner’s responsibility (but not more than once per year), and if they fail to provide such proof within thirty (30) days, the Association can purchase coverage for the unit owner and assess that unit directly for the cost. Furthermore, if no such policy exists, any reconstruction costs borne by the Association can be assessed against the owner.

Actual reconstruction work is to be undertaken by the Association, but a unit owner may undertake reconstruction work on portions of the unit with Association’s prior written consent. The Board can (and should) condition such consent on the approval of methods, contractor qualifications, or the contract to perform such work itself. Work performed by the Association to those areas within its responsibility is a Common Expense, but unit owners are responsible for the costs of reconstruction of individual units, and the Association can individually assess the unit owner for the Association’s costs of repair or reconstruction if it chooses to undertake reconstruction work within an individual unit. Uncovered portions of any expenses incurred by the Association after a casualty becomes a common expense, a codification of a prior Division Declaratory Statement; however, responsibility for such costs falls onto any unit owner whose intentional conduct, negligence, failure to report or violation of the Condominium Documents or Rules caused such damage or a waiver of association rights to make a claim for such damage. This includes tenants, guests, occupants or invitees. A recalcitrant owner’s responsibility also extends to damage to the property of other owners. The Association may opt out of these new reconstruction / repair requirements.

Finally, since the new law requires hazard coverage to be based upon the replacement cost of the property (regardless of what the Declaration says), based upon an independent insurance appraisal or update of an existing appraisal, such an appraisal must be done at least once every thirty six (36) months.[1]

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Obama on Immigration

Throughout the presidential elections of 2008, most candidates hesitated and never gave a real clear answer as to their immigration policy. At the beginning of the election campaign there was significant pressure as far as taking a stance on immigration issues. These issues were critical due to the large number of voting Latinos who wanted an answer in order to decide which candidate to support. Most candidates gave a very general response with nothing concrete as far as an amnesty or an increase in professional visas like the H1B or a new guest worker program. As the economy began to collapse and an increase in unemployment followed, the idea of an immigration reform or increase in professional visas became more dangerous for candidates to voice out.

Senator McCain and President Elect Obama, both have shared their deep concern with the dysfunctional immigration processes and policies that have been so ineffective throughout the years. The 12 million illegal immigrants currently in America is the result of flawed policies as well as ineffective prosecution of employers hiring illegal workers. All of these issues were of high importance to both candidates, but the answers were never clear and instead were kept consistently vague.

For instance, in 2007, Obama supported raising the H-1B cap and did so in the U.S. Senate immigration bill. It would have increased up to 180,000 H-1B visas, and additional visas for advanced-degree graduates. Currently there is a 65,000 cap, with an additional 20,000 visas set aside for graduates with advanced degrees. Unfortunately the Senate effort died in the House. Last year Obama still continued to support comprehensive immigration reform.

Despite the involvement of both candidates in the area of immigration, this subject has been completely overshadowed by the present state of the economy. As stated earlier in the year, the new President Elect Barack Obama has announced that issues like the economy and the war in Iraq are the most pressing issues that will be his main focus during his first hundred days. This means that immigration issues and the possible reform that would affect the professional field of immigrants will be pushed back.

Some others think that with Janet Napolitano as the new Secretary of Homeland Security, there will be positive changes in Immigration. In numerous occasions she has acknowledged the shortage of skilled workers in some fields, as such has supported the increase of H-1B visas. As former attorney General of Arizona, she has vast experience in this field. Arizona has been battling with a myriad of immigration issues, due to the border situation.

One thing is for certain, an immigration reform has been required for the longest time; there will be changes. How fast these will come is a mystery, but a reform should be seen within the next 3 years. [1]

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Condominium Act Changes

Significant changes were made to the Condominium Act this year, some of which took effect in July, and many of which took effect on October 1, 2008.

To view these changes please download the following PDF file found here.

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