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Condo Q&A: Bad credit and landscape contracts

 

STUART, Fla. – June 19, 2017 – Question: Can a homeowners association deny my tenant because of a poor credit history? – A.B., Fort Pierce

Answer: Generally, yes, but the covenants should clearly provide as such. Florida law on this issue generally supports an association's right to approve or deny leases for cause. The critical analysis requires a review of the governing documents to determine if the right exists in that specific community.

If the documents are silent as to the ability to approve or deny leases for cause, I would not advise any policy of lease approval or denial because the silence in the documents creates an implied right to lease to any individual regardless of credit score. If the documents do provide a right to approve or deny leases, credit score has become a somewhat standard benchmark for denial. The policy is that a credit score is an indicator of reliability to pay debt, and the more likely a tenant is to default on a lease, the more likely the community will have higher turnover and create the impression of a motel-like community.

Question: Our homeowners association has used the same landscape maintenance vendor for the last ten years and I am not aware that the Board has ever sought other bids. The Board is claiming that the contract just automatically renews every year at a favorable rate. Does the Board need to obtain bids? – S.F., Port St. Lucie

Answer: There are two issues here. First, does the landscape contract in general require bids? Second, what is the effect of an auto renewal provision in a contract?

First, Florida Statutes section 720.3055 requires the homeowners association to obtain competitive bids for any contract for the provision of services requiring payment that exceeds 10 percent of the total annual budget of the homeowners association, including reserves. There are a number of exceptions to this requirement, but landscaping maintenance agreements would not be an exception and most landscape maintenance contracts exceed 10 percent of the total homeowners association budget. Thus, yes, the association needs to obtain bids assuming the cost exceeds 10 percent of the budget.

Second, the same statute referenced above provides that "if a contract was awarded under the competitive bid procedures of this section, any renewal of that contract is not subject to such competitive bid requirements if the contract contains a provision that allows the board to cancel the contract on 30 days' notice." Thus, if the contract provides a termination provision where the Board can terminate the agreement with 30 days' notice, the Board may be acting properly by allowing the contract to automatically renew. If the contract does not provide for this automatic termination, the Board needs to obtain competitive bids.

Finally, it is worth noting that just because the Board may be able to avoid bids for 10 years does not necessarily indicate that it constitutes best practices.

Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. 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.

Editor's note: Attorneys at Goede, Adamczyk, DeBoest & Cross, PLLC, respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning, civil law and business law.

© 2017 Journal Media Group, Steven J. Adamczyk  

Related Topics: Legal