Fla. doesn’t have a boilerplate construction contract, and HOAs can assume that a contract written by the outside contractor likely favors the firm over the HOA.
STUART, Fla. – Question: We recently hired a general contractor to remodel the common areas. The cost of the project is over a million dollars and we are not happy with the contractor. Our attorneys tell us that we are stuck in the contract, but we want to terminate the contract and finish with a different contractor. Is that possible? – T.H., Treasure Coast
Answer: When an association is considering major construction projects, like all property owners, it is common to focus only on the price and scope, and ignore the boilerplate language. There is no default construction contract in Florida, and each contractor will include different provisions – and those provisions are rarely for your benefit.
One important contract term is the termination clause. In Florida, there is no default rule that you can terminate a contract with 30 days’ notice. A contract is only terminable with or without cause if the contract specifically provides for termination with or without cause.
If this is not in the contract, then the default rule is that you can only terminate the contract if the other party breaches the contract. Even then, many contracts provide onerous cure provisions that require mediation or other opportunities to cure before you can effectively terminate a contract.
For example, the contract may provide that termination requires a 30-day cure period, and then if the alleged breach is not materially cured, another 30 days cure period, and then if the alleged breach is still not cured after an informal mediation, then you can terminate by providing 30 days more notice of termination.
This effectively makes it impractical, if not impossible, to terminate.
Thus, in order to answer your question, I would first need to review the specific contract because each contract contains different language on termination. If you have the ability to terminate with or without cause, then you may be able to terminate early and pay for work performed through the date of termination.
It can be difficult to obtain favorable termination language on larger contracts because of the mobilization costs and up-front effort by the contractor, but it is possible. At a minimum, you should be able to negotiate to remove the onerous termination language to provide more objective standards to determine whether a party is in breach.
If you wait until there is a problem and you want to change contractors, however, the opportunity to negotiate those changes has likely passed. As a result, we always recommend having contracts reviewed by a licensed Florida attorney to negotiate or recommend language that will provide flexibility and protection for the association.
Question: I attended a webinar where the speaker indicated there is a new law that requires more letters in the collection of delinquent assessments. Is this true and who sends the letter if the attorney is normally in charge of all collection efforts? – P.P., Stuart
Answer: This is correct. Historically, the Florida Condominium Act effectively required two letters before a lien foreclosure action could be filed. First, the condominium association had to send a letter informing the owner that the association would record a lien if payment was not timely made within 30 days.
Then, if the owner did not make payment, the association had to record the lien and then send a second letter informing the owner that the association would file an action to foreclose the lien if payment was not timely made within another 30 days.
The statute provided that all attorneys’ fees and costs incurred by the association and incident to collection of the past due assessments was payable by the owner.
Thus, under the prior statutory framework, there was no obligation for the association to send a warning letter or reminder letter before referring the delinquent account to an attorney or debt collection firm for collection.
It is important to note that some specific condominium documents require reminder letters and warning letters, but it was not required by the statute.
The new statute both a) provides 45 days for payment under the two letters referenced above which previously only required 30 days; and b) provides that an association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed to the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees. The statute contains a form for the notice that must be used.
Most condominiums will provide a courtesy reminder anyway without it being required by the statutes, so this will not delay too many condominiums from pursuing delinquent accounts.
But it does mean that condominium associations need to review their collection policy, if any, and review their warning letter, if any, and make sure that the policy and any reminder letters mirror the new framework established by Chapter 718.
Because the entire process has been lengthened, you may also consider starting the collections process earlier than your current policy. If the association does not follow these new requirements, it may not be able to recover attorneys’ fees incurred to collect the past due assessments, so it is important to follow these new requirements.
If you have any questions about how your existing policy may not to be modified, I recommend you consult your legal counsel.
The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, or any of our attorneys.
Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
© 2021 Journal Media Group. Steve J. Adamczyk, Esq., is partner of the Law Firm Goede, Adamczyk, DeBoest & Cross.
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