Private Restrictions on Property

Winter Park Home Magazine- Issue 3 - 2011

In the previous issue, we discussed the scope and impact of restrictions imposed by a Developer on subdivided/platted land. These platted restrictions are generally entitled Covenants, Conditions, Restrictions and Easements (“Covenants”). These Covenants impose limitations on homeowners within the subdivision regarding the use and maintenance of the property. The Covenants typically establish a homeowners association (the “HOA”) to maintain the common areas, and empower the HOA to charge assessments to the individual lot owners to cover the HOA’s necessary expenses. Individual property owners also have the right to impose restrictions on land.

Typically, those restrictions are created when the owner conveys land to a purchaser and the deed recites the specific restrictions to be imposed. As long as the restrictions do not violate local governmental, state, or federal law, they can be enforced by the seller and any other party authorized to enforce the restrictions as set forth in the deed.

Whenever restrictions are imposed on land by a seller, the purchaser acquires the land subject to those restrictions and is bound by the terms recited in the deed. For example, if Mr. Jones conveyed Greenacre to Mr. Smith and recited in the vesting deed that Greenacre is subject to a minimum 35-foot front lot line building set back, then Mr. Smith could be sued if he were to construct a house 20 feet from the front property line. As a result, Mr. Smith could be compelled to tear down the new home or move it back an additional 15 feet. If the restrictions are designated to run with the land and are not limited solely to the use of the land by Mr. Smith, then subsequent purchasers of Greenacre would also be subject to the same building setback limitations. Therefore, it’s important to scrutinize any restrictions that impact land that is being purchased.

A companion question relates to enforceability. Let’s use the building setback example to address that issue. If the vesting deed delineating the restriction is silent on enforceability, then arguably only Mr. Jones could bring an action to enforce any setback violation. If the vesting deed provides that the neighbors on either side of the property can enforce this setback violation, then those neighbors could be entitled to enforce the restriction. This might occur when abutting owners of land who are not part of a platted subdivision wish to create a common scheme of a minimum setback.

Limitations imposed on land frequently consist of privately retained easements. For example, Mr. Jones owns a large tract of land with public road frontage along the south property line. He splits the tract in two, creating two separate tracts and plans to sell the south tract. His north tract will be landlocked unless he has the right to cross over a portion of the south tract to access the public road. In preparing the deed for the south tract, Mr. Jones needs to ensure that it includes a well-drafted reservation of an ingress-egress easement across the land of the south tract owner. The deed should recite that the easement is reserved not only for the benefit of Mr. Jones, but also for all subsequent owners of the north tract, include the exact location of the easement, and recite the rights and obligations of both owners relative to the easement area. If Mr. Jones intends to retain exclusive use of the easement area, the reservation of easement must recite the exclusive nature of the easement. If Mr. Jones wishes to erect a fence along the border of the easement area, the easement reservation should recite this right to construct a fence. If the easement area is to be used by both owners, then the easement reservation should recite the respective responsibilities of the parties to maintain the easement area.

A purchaser should always protect his investment by determining all matters that impact the property he is purchasing, and obtain title insurance to protect his investment.

Consider the following example. Dave Sellers owns a vacant parcel on the beach. He offers to sell the land at a reduced price to his friend, Joe Purchaser. To cut costs, Mr. Purchaser does a computer search for the public records in the county where the property is situated, and determines that there are no liens on the property. The sale is completed and Mr. Purchaser constructs a three-story house. After the certificate of occupancy has been issued by the County, Mr. Purchaser receives a certified letter from his neighbor to the West (Mr. Abut), advising him that there is a restriction on the land owned by Mr. Purchaser. The restriction was placed by a prior owner of Mr. Purchaser’s land, restricting the height of any homes on the land to two stories. In addition, the restrictions provided that Mr. Abut, and his successors in interest, have the right to enforce this building height limitation, and to collect attorney’s fees if a lawsuit is filed to enforce this provision. Mr. Purchaser now needs to retain legal counsel to address the issues presented – at considerably greater expense than the cost of a title insurance policy. This example illustrates why it is always advisable to acquire a title insurance policy, even when purchasing from a neighbor or friend.

Private restrictions and easements should only be drafted by a qualified real estate attorney. All relevant terms should be defined in the recorded instrument. A purchaser is well served by thoroughly understanding his rights and obligations before the sale is completed and should, therefore, seek guidance from his real estate attorney.

Visit our website for more information on this subject.

This Article is not a substitute for hiring an independent attorney
to prepare and review your real estate contract.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank’s legal practice has concentrated on complex real estate, tax and corporate transactions throughout Central Florida. Frank has been involved in the Central Florida community for more than thirty years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980.

Comparing and Maximizing Performance Bond and Commercial General Liability Protections

Architects/Engineers Professional NetworkOften when acting as the prime on a construction project, the design professional is asked to review, comment or even craft insurance and bonding specifications for the project. With an increasing number of general contractors and subcontractors experiencing financial difficulties due to the poor economy over the last couple of years, it becomes increasingly important for owners to protect themselves as much as possible through commercial general liability (CGL) policies and performance bonds. This article distinguishes between the nature of liability insurance and suretyship, analyzes the scope of coverage and protections afforded by each – including recent case law that arguably expands CGL coverage - and discusses how owners and general contractors might better protect themselves using these tools. This article also includes a brief description of owner-controlled insurance policies (OCIP) which may be appropriate for large construction projects.

The Nature of Liability Insurance and Performance Bonds Distinguished

A performance bond issued by a Surety is not insurance. Liability insurance is a contract pursuant to which the insurer agrees to indemnify and defend the insured against certain claims for damages, specifically losses covered under the insurance policy, for which the insured is otherwise liable to third parties. If the insurer pays out under the policy, it may not later seek indemnity from the insured. This is not the case with a performance bond. A performance bond is a three-party agreement issued by a Surety who guarantees to an obligee (i.e. the protected party) that the principal (i.e. the entity whose performance the Surety guarantees) will complete the work required under the bonded contract. Also, if the bond incorporates by reference the bonded contract, the Surety may become liable for post-completion damages such as repairs necessitated by latent defects.

While performance bonds are usually obtained by the general contractor for the protection of the owner, general contractors may also require their subcontractors to obtain performance bonds. Owners too may require the general contractor to demand its subcontractors to provide performance bonds. While doing so will increase the contract price, it has the benefit of excluding lower quality and financially struggling subcontractors who cannot obtain such bonding, as well as provide the bond protection.

Unlike liability insurance, if the Surety is required to incur costs to complete the contract or otherwise pay out under the performance bond due to the principal’s default of the underlying contract, the Surety will seek indemnity from the principal. Moreover, as a condition of issuing the performance bond, the Surety likely will have required a general agreement of indemnity from not only the principal, but the individual stakeholders of the principal corporate entity and their wives. Also, the Surety has no duty to defend its principal against claims made against the performance bond.

It is important for the parties protected by the bond to recognize this distinction because it should alert them of the need to have counsel review the performance bond form being used on a project. Given the additional liability exposure to the principal under a performance bond and those individuals who signed a general agreement of indemnity to obtain the bond, the principal has an obvious incentive to propose a bond form that provides as little protection as possible. As discussed below, the protection afforded by a performance bond may differ significantly depending upon the bond form used.

Performance Bond Coverage

Again, a performance bond is a means of guaranteeing the completion of a construction project upon the default of the principal. The Surety is lending its credit to the principal. The amount of protection afforded by a performance bond is the reasonable amount to complete the project in excess of the principal's available contract balance up to the penal sum of the bond

However, the Surety will not be liable to the obligee for all damages arising from the principal's default. Absent certain language in the bond form, there may be several types of contractual damages for which the principal may be contractually liable but that the performance bond will not cover. Unless the bonded contract is expressly incorporated into the performance bond, the Surety may not be liable for the correction of defective work or the performance of contractually required warranty work. Also, in certain jurisdictions, even though a principal is adjudicated liable for actual delay damages resulting from its breach of the contract, the Surety will not be held liable for such damages under the performance bond absent express terms in the bond form stating otherwise. See American Home Assurance Co. v. Larkin General Hospital, Ltd, 593 So. 2d 195 (Fla. 1992). Similarly, a performance bond Surety may not be held liable for lost profits or rents on the project arising from the principal's breach of the bonded project - again, even if the principal is found liable for such damages - absent express terms in the bond form stating otherwise. The scope of the performance bond will be limited to its express terms. However, through the negotiation of the bond form, the terms might be expanded to include these types of contract damages, thus expanding the obligee's protection beyond merely the completion or correction of work.

Commercial General Liability Coverage

As commonly understood, the purpose of CGL insurance is to provide protection for personal injury or for property damage caused by an occurrence, such as the negligent performance of construction work, but not for the replacement and repair of such negligently performed work or the cost to complete unperformed work. For example, if a roofing contractor negligently constructs a roof on a building which results in damage to property located inside the building, then a CGL policy issued to the roofing contractor may cover the damage to the property inside the building but not the cost to replace the roof.

However, CGL policies may include riders and endorsements that limit coverage otherwise provided by a standard policy, such as exclusions for mold or residential construction. Such exclusions could be devastating if they are indeed a potential risk. Design professionals working as the prime on a project should strongly encourage their owner clients to have the controlling CGL policy reviewed before the contract is entered. Most construction contracts merely require that a certificate of insurance be provided to establish proof of insurance. However, the certificate of insurance does not identify the scope of coverage. Only through a review of the insurance policy itself can the scope of coverage be determined.

Recent Expansion of Commercial General Liability Coverage

While a standard CGL policy is not typically understood to cover the cost to repair and replace the insured’s own defective work, a Supreme Court of Florida case holds that such a policy issued to the general contractor may provide coverage for the cost to repair and replace the damage to a completed project caused by a subcontractor’s defective work. U.S. Fire Ins. Co. v. J.S.U.B., 979 So. 2d 32 (Fla. 2007). The court’s analysis of the CGL policy could be argued in other jurisdictions beyond Florida.

In the J.S.U.B. case, a general contractor constructed homes on soils that were not adequately compacted (such compaction being the responsibility of one of the subcontractors), resulting in settlement cracks to the homes, as well as, items placed in or affixed to the homes, such as wallpaper. The insurer argued that workmanship deficiencies that resulted in later damage to the homes constructed by the insured/ general contractor should not be considered the result of an accident and, thus, should not be deemed an “occurrence” which is covered by the insuring agreement. However, the court disagreed and determined that there was coverage for the damaged homes.

In reaching its holding, the court found that settlement damage to the homes caused by improper compaction of the underlying soil was an “occurrence”. As defined in the policy, an “occurrence” is “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The court held that when the term “accident” is undefined in a liability policy, as was the case, the term includes not only “accidental events” but also damages or injuries that are neither expected nor intended from the viewpoint of the insured – such as the negligence of its subcontractors. The court also recognized that there is a difference between a claim for the costs of repairing or removing defective work, which is not a claim for “property damage,” and a claim for the costs of repairing damage caused by the defective work, which is a claim for “property damage.” As for the “your work” exclusion, the operating policy included the following exception to that exclusion: “Paragraph (6) of this exclusion [i.e. the “your work” exclusion] does not apply to ‘property damage’ included in the ‘products-completed operations hazard.” The operating policy had products-completed operations hazard coverage.

The more expansive coverage provided by the Florida court’s interpretation of the post-1986 ISO CGL policy arguably overlaps the protections afforded by a performance bond. Given the indemnity obligations of the principal on the bond, it should be expected that principals will likely use this case law to shift liability away from its Surety and towards the CGL carrier when there is damage to the project due to a subcontractor’s deficient work.

It should be noted that the ISO has begun to issue an endorsement that may be included in a CGL policy which arguably eliminates coverage for the the cost to repair and replace the damage to another subcontractor’s work necessitated by the insured’s negligent performance, thus negating the Florida court’s expanded interpretation of the standard post-1986 standard ISO CGL policy. Such an endorsement is not in the owner’s or general contractor’s interest. Accordingly, if an insurer has included this endorsement as a part of the CGL policy, an owner and general contractor would be advised to determine if the endorsement can be stricken and, if so, find out the cost for doing so and perform a cost/risk analysis. Further, the case high-lights the importance of obtaining products-completed operations hazards coverage as part of the CGL policy, i.e. coverage for occurrences that arise after the project is complete.

Additional Insured to a CGL Policy

Owners should be advised to demand that they be named as an “additional insured” on all CGL policies protecting the project. Further, they should ensure that the insurer actually issues the endorsement naming them as an additional insured, as an action against a potentially insolvent subcontractor for breach of contract for failing to obtain the contractually required endorsement may not afford a sufficient remedy. An additional insured can make a direct claim against the policy and sue for a declaratory judgment establishing coverage. Absent being named an additional insured, only the insured can sue the insurer before the insured’s claim is resolved. Additionally, many states allow the prevailing party to recover their attorney’s fees in an action to recover against their own carrier for an insured loss.

Owner-Controlled Insurance Policy

An owner-controlled insurance policy (OCIP), often referred to as a "wrap-up" policy, is a policy obtained by an owner to provide coverage for all of the project participants on very large construction projects or a combination of related projects. Such a policy typically provides commercial general liability insurance for all parties, as well as, workers compensation, employer's liability, personal injury and property coverage. Such policies can also include professional liability and builder's risk coverage. The potential advantage of OCIP is to avoid multi-insurance lawsuits seeking recovery for various claims between the owner, architect, engineer, contractor, subcontractors and suppliers. However, unlike individually obtained policies, OCIP coverage typically expires at the end of the project - before liability exposure of project participants ends. Accordingly, the owner may be advised to require project participants to obtain additional coverage in excess of the wrap-up policy to address that concern. Given the complexities of these wrap-up policies, they should be purchased only after consulting with an experienced insurance broker and legal counsel.

Conclusion

While owners may believe they have protected themselves by requiring CGL insurance and a performance bond for a project, a design professional acting as prime should advise their owner clients to conduct a more thorough review and negotiated modification to the insurance policy and bond form with the help of their legal counsel and insurance broker. Further, owners should be advised of the possible advantages of obtaining an OCIP or “wrap up” policy. Doing so can significantly expand their protections and increase the likelihood of a successful and profitable project.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

HOA Restrictions on Property

Winter Park Home Magazine - Issue 2 - 2011

Many individuals purchasing real property expect that they have the right to use the land without interference from their neighbors. However, that right is limited both by local governmental regulations and any recorded restrictions imposed on the property. This article addresses private restrictions.

Developers typically place restrictions on large tracts of land that are subdivided into smaller parcels and then formally submitted to the local governing body as a new plat, or subdivision. These Developer restrictions typically incorporate terms that are more extensive than private parcel restrictions. These recorded Covenants, Conditions, Restrictions and Easements (the “Covenants”) impose easements and restrictions on lots in that subdivision. So, any purchaser of a lot acquires that property subject to those conditions. Terms vary and often cover a wide variety of items such as the type of roof shingles that can be installed, to the selection of exterior paint color, location of trash cans, and the right to construct fences and the type of material for a fence. They may also include building setbacks, the location of utility easements on each lot, and even the number of pets that a lot owner may have. Covenants will also occasionally include minimum age requirements for lot owners.

Covenants usually provide for mandatory membership of all lot purchasers in a named Homeowners’ Association (“HOA”), with the obligation to pay annual dues and special assessments, together with the obligation to abide by its Rules and Regulations. Some individuals take the position that they should not be subject to the HOA’s authority and the restrictions on the property. However, purchasers of land in Florida acquire their title subject to those matters which have been previously recorded and which directly impact their property. Therefore, a purchaser is “on notice” of the Covenants, and is obligated to be a member of the HOA, pay assessments, and abide by the restrictions.

HOAs generally are responsible for the care and maintenance of common areas and recreational facilities on the plat. They also oversee each lot owners’ compliance with the restrictive covenants. The HOA will assess each lot owner his proportionate share of these maintenance expenses. Prior to closing, a prospective purchaser should determine the amount of dues each lot owner must pay annually to the HOA. In today’s market, a buyer should also determine whether there are substantial special assessments that will be charged to cover payments by delinquent lot owners, or to pay for expensive repairs to the common areas. A prospective buyer, not wishing to become responsible for paying such fees and assessments is well advised to purchase property elsewhere.

A buyer should also determine if there are any regulations in the Covenants with which he cannot comply. For example, if Andy Anderson intends to rent the property after a closing, he should first confirm that the Covenants and the HOA’s rules and regulations permit non-owner occupied lease agreements, their permitted terms, and whether the HOA must pre-approve the tenant.

Recently, Tom Johnson received a notice from an HOA concerning outstanding dues. Tom told me that he has lived on the property for over five years, that no one has ever contacted him to pay dues, and that he wasn’t even aware that there was any HOA in his subdivision. A review of the original recorded Covenants confirmed that there were no provisions establishing any HOA. Subsequent amendments to the Covenants also failed to identify any HOA. I advised Mr. Johnson that this HOA appears voluntary in nature, and that he could not be required to pay any dues. We subsequently obtained a title search for Mr. Johnson’s property and confirmed that neither Mr. Johnson, nor his predecessors in title, ever consented to the authority of this voluntary HOA.

I frequently receive questions concerning the enforceability of restrictions. For example, if the Covenants provide that a lot owner cannot build a fence along the rear property line, the HOA typically retains the right to enforce these restrictions. The HOA can sue to have the fence taken down; impose a fine on a lot owner who violates this fence restriction; and can record a lien against that owner if the fine is not timely paid. That lien will attach to the real property and, if provided for under the Covenants, can be foreclosed.

Alternatively, if there is no HOA, the Covenants usually provide that any impacted lot owner in the subdivision may enforce the restrictions. Although there may be situations where a neighboring property owner is granted rights to enforce restrictions, generally only those subdivision lot owners who are subject to Covenants have a right to compel compliance with its terms. Certainly a neighbor could contact the city or county government if the actions of a lot owner constituted a public nuisance. But this right is distinct from the right afforded to members of the HOA to enforce its Covenants.

This Article is not a substitute for hiring an independent attorney
to review the impact that restrictions may have on real property.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Power of Attorney II-The Sequel

Winter Park Home, Volume 9 / Issue 1, 2011

In the previous issue, I covered the use of a Power of Attorney in real estate transactions for those situations in which a party is not available to sign documents at a closing and appoints a third person to sign on his or her behalf. This column continues that discussion, addresses the proper format for the execution of a document by the Attorney-in-fact, and introduces the use of a statutory form of Power of Attorney known as a Durable Power of Attorney.

A Power of Attorney is a written instrument in which one person, known as the “Principal,” delegates authority to another person, known as the “Attorney-in-fact,” to act as an agent of the Principal to sign specific documents on behalf of the Principal. The Attorney-in-fact is only authorized to sign documents in his/her representative capacity, and should never sign the documents in his/her own name. If, for example, Michael Smith gives a Power of Attorney to David Jones to sign a warranty deed on his behalf, then structurally the grantor of the deed is still Michael Smith. The signature block should state “Michael Smith, by David Jones, his Attorney-in-fact,” and David Jones should sign the deed in the same manner as recited in the signature block. If the deed fails to recite that David Jones is signing the deed in his representative capacity as an Attorney-in-fact, then the deed will fail for lack of proper execution. Additionally, the original Power of Attorney must be recorded with the transaction to establish on the public record the authority of the Attorney-in-fact to sign on behalf of his Principal.

Conceptually, the Attorney-in-fact is given full authority to bind the Principal, but only to the extent that the Principal could bind himself and execute those same documents. Since a Principal can sign a deed or a mortgage only if the Principal himself is both alive and competent, then the Attorney-in-fact likewise can only execute those same documents if the Principal is alive and competent. As part of the execution of documents by the Attorney-in-fact (the “AIF”), and under the provisions of Chapter 709 of the Florida Statutes, the AIF must sign an affidavit to verify that to the best of the agent’s knowledge the Principal is still alive and mentally competent. Provided this affidavit is recorded in conjunction with the documents that are signed by the AIF, a good faith purchaser or Lender will be able to rely on the documents executed by the AIF on behalf of his Principal. If the AIF knows that the Principal is alive, but cannot verify that the Principal is competent, then the AIF no longer has authority to sign documents on his Principal’s behalf.

The Durable Power of Attorney created under F.S. 709.08 addresses those situations where the Principal was clearly competent at the time of the execution of the Power of Attorney, but subsequently may no longer be competent, and where there has never been an adjudication of incompetency. This situation frequently occurs when the Principal is appointed as an Attorney-in-fact for an aging or sick relative or spouse. To create a valid Durable Power of Attorney, words identical to, or similar to, the following must be incorporated into the Durable POA: “This Durable Power of Attorney is not affected by a subsequent incapacity of the principal except as provided in F.S. 709.08, Florida Statutes.” These words express the Principal’s intent that the authority conferred on the Principal is exercisable notwithstanding the principal’s subsequent non-adjudicated incapacity. This statute provides that the Power of Attorney may be used by the AIF as long as the Principal has not been adjudicated as incompetent, and as long as no petition or court proceeding has been filed to determine the competency of the Principal. Under these guidelines, the Durable POA may be used even if the Principal clearly is no longer lucid.

The advantage of the Durable Power of Attorney is clear. In relying on the powers recited in a general or specific POA, the Attorney-in-fact may not execute documents if he has any reason to believe that the Principal is now mentally incompetent. The Durable Power of Attorney statute provides that this incompetency standard is not one that needs to be decided by the Principal. The AIF of a Durable POA must only verify that the Principal is alive, that the Principal is not currently adjudicated as mentally incapacitated, and that no proceeding has been initiated to determine the mental capacity of the Principal. The use of the Durable Power of Attorney has become much more commonplace, especially for those individuals assisting elderly and sick parents and spouses in this world of Alzheimer’s and related illnesses. It is, as always, critical that the person granting the Power of Attorney truly trusts the person to whom the authority is granted.

A general or specific Power of Attorney normally must be executed with the same formalities as the document that is to be signed by the Attorney-in-fact. An exception to this rule applies to homestead property. Any POA involving homestead property must be executed with the formalities of a deed, i.e. two witnesses and a formal notarized acknowledgement. Durable Powers of Attorney, on the other hand, must always be executed with the formalities of a deed.

You should always contact your attorney to prepare the appropriate Power of Attorney for a real estate transaction, and to provide the necessary empowerment language and execution formalities, to ensure that the requested Power of Attorney is properly prepared, executed, and utilized for its intended purposes.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER-Dumping timeshare could mar credit

Orlando Sentinel, January 17, 2011

Question:
We paid cash for an Orlando timeshare 15 years ago, but we can no longer afford its annual maintenance fees. We’re thinking about refusing to pay any more maintenance fees. We’ve been told the timeshare would revert to the parent company, and we could walk away with just a minor blemish on our credit.

Is this our best option?
I.D., Eagleville, PA

Answer:
A Florida timeshare interest owner is personally liable for all assessments during the course of ownership. The timeshare managing entity, or TME, holds a lien over the timeshare that it can foreclose to secure payment of assessments.

The TME has two forecloser options. The first is a traditional foreclosure lawsuit in which a personal claim against you – for assessments as well as for attorney’s fees and costs – could be made. The second is a non-judicial foreclosure in which the TME’s recovery is limited to only the proceeds of any sale.

The TME should prefer the efficiency of the second option, but both are possibilities. Because personal liability exists, your credit could be seriously affected by non-payment. You should contact the TME to discuss voluntarily selling or exchanging your interest in return for a release of personal liability, or seek help from a Florida attorney.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.