Newletter: 1st. Quarter 2003

Having the appropriate amount and types of insurance coverage is essential for homeowners’ and condominium associations. Generally, associations should have a liability policy to cover injury and damage occurring on or in connection with association owned property or common elements. An association should also have director and officer liability insurance for the acts and omissions of its officers and directors. The association’s board of directors should be especially aware of whether the association’s insurance policy is current and up to date. In short, every association director or officer should ensure there is appropriate insurance coverage or get off the board.

If someone makes a claim or files a lawsuit against the association, it is important to know what steps to take. Obviously the association’s attorney should be notified. Moreover, the association’s insurance carrier should be notified. Generally, insurance policies contain a provision requiring the insured to put the carrier on notice of claims or lawsuits in a timely matter. The failure to put the carrier on notice timely could result in a loss or reduction of coverage, depending on whether the carrier was prejudiced in defending the association. The association does not need to second guess whether a particular incident is covered by an insurance policy.

It is best simply to make a claim against the policy whenever a claim is asserted. As long as the association is truthful in reporting the facts, the worst thing that can happen is that the carrier will deny coverage for the claim under the policy. Please keep in mind that in many situations the carrier may provide the costs of legal defense, but not coverage for the incident itself. Often, such coverage for legal expense is pursuant to a "duty to defend" provision. Therefore, although the association may ultimately have to pay the resulting liability, the carrier’s coverage of attorney fees and costs can be a substantial economic benefit.

It is important for the association to have a reliable insurance agent who can capably advise the association on appropriate amounts and types of coverages. The association should also verify that its insurance agent and insurance companies are properly licensed and authorized to do business by the Florida Department of Insurance. Questions or concerns about the status of insurance companies or insurance agents can be addressed to the local office of the Florida Department of Insurance. 7

FREE INSURANCE REFERRAL SERVICE

Are you looking for a insurance agent that specializes in representing community associations? If so, you’re in luck! We offer a free insurance referral service. If you would like to utilize this free service, please call our Client Services Department at any of our offices. It is becoming harder and harder for associations to obtain insurance. So, make it easy on yourself and find specialists by using our free service!7

ORLANDO MAGIC & C&M TEAM UP FOR FAN APPRECIATION DAYS

Remember the spectacular highlight reel dunk Tracy McGrady made at the 2002 All Star Game? Would you like to have the opportunity to see it again - in person? Well, now you can and at a special discounted rate.

In a special promotion available exclusively through Clayton & McCulloh, the Orlando Magic are offering special discounted tickets to our clients and those individuals on our mailing list. The Orlando Magic have selected two very special upcoming games for you to select from. For more information on this fabulous promotion, please see the flyer at the end of this newsletter. Join Clayton & McCulloh in cheering the Orlando Magic on to the play-offs.7

DOES YOUR COMMUNITY ASSOCIATION REALLY NEED A LAWYER?

Your Association has filed dozens of liens over the years. Your Board Members are bright, experienced people, who have reviewed liens for years and have dozens of forms to model new liens after. Do you really still need to have your lawyer prepare each new one? The bottom line is yes, preparing a lien constitutes the practice of law and an attorney licensed by the State of Florida must, at least, assist in the preparation of any lien filed in Florida.

The Florida Bar, the entity that governs Florida attorneys, also regulates and prevents the practice of law by individuals who are not licensed to practice law in Florida. The consequences for practicing law without a license may include criminal prosecution and contempt proceedings before the Florida Supreme Court.

In a 1996 Advisory Opinion, the Florida Supreme Court decided that drafting a claim of lien or a satisfaction of a claim of lien with respect to a community association’s delinquent assessments constitutes the practice of law. The Court’s reasoning was that:

"Drafting a claim of lien or a satisfaction of a claim of lien requires a legal description of the property; it establishes rights of the community association with respect to the lien, its duration, renewal information, and action to be taken on it. The claim of lien acts as an encumbrance on the property until it is satisfied. Because of the substantial rights which are determined by these documents, the drafting of them must be completed with the assistance of a licensed attorney." (Emphasis added).

The Florida Supreme Court also determined that drafting a notice of commencement form; determining the timing, method, and form of giving notices of meetings; determining the votes necessary to take certain actions; drafting a limited proxy form; and drafting the documents required to exercise a community association’s right of approval or first refusal to a sale or lease all require the assistance of an attorney.

Therefore, Board Members must be careful not to cross the line when preparing documents for their community association. Regardless of the competency of the non-attorney preparing the document, there are certain documents that a licensed attorney must assist in preparing. Furthermore, because the failure to complete or prepare legal forms accurately could result in serious legal and financial harm to a property owner and/or the association, it makes sense to have a licensed, and preferably, experienced attorney prepare or review your community association’s legal documents.

Similarly, amendments to an association’s governing documents should be prepared, or at least reviewed, by an attorney. The numerous technicalities involved with properly drafting and recording amendments to an association’s Declaration, Articles of Incorporation, or Bylaws leave much room for error. In addition, while an association’s rules and regulations may generally be prepared and revised by the association’s Board of Directors, such rules and regulations must be reasonable to be enforceable. Thus, newly adopted or amended rules and regulations are arguably more challengeable than amendments to an association’s Declaration, Articles of Incorporation or Bylaws, and therefore, arguably, require a higher degree of clarity and professionalism. Thus, while most amendments are challengeable to some degree, the input of an attorney in drafting and/or recording amendments should lessen the risk that such amendment(s) will be successfully challenged.

Another area in which Board Members may cross the line into the unlicenced practice of law is representing their association in court. Community associations are, of course, corporations. While Florida law allows a corporation to be represented by a non-attorney in small-claims court, in county and circuit court, corporations must be represented by an attorney. Furthermore, any pleading filed in county or circuit court on behalf of a corporation must be signed be a licensed attorney. Thus, it is improper for a Board Member, Officer, or even an owner, to represent or file pleadings in county or circuit court on behalf of an association, unless of course, that person is a Florida attorney. The worst consequence in the given situation is that the Association’s lawsuit may be dismissed, or a default may be entered against it.

There are certain actions necessary for the proper functioning of a community association that are considered the practice of law. As such, these actions, including the preparing of liens and litigating in county or circuit courts, require the involvement of an attorney. Any Board Member who ventures to take these actions without the assistance of an attorney risks personal prosecution by the Florida Bar and/or the State Attorney, and also puts his or her Association at legal and financial risk.7

2003 SEMINARS CANCELED

We have canceled our annual Community Association Law Seminars for 2003. While we have enjoyed providing seminars to community associations and developers throughout Central Florida, to properly service our existing clientele, including the tremendous number of clients we have added in the past couple of years from our seminars and referrals, Clayton & McCulloh has determined that we need to take a year off. While Clayton & McCulloh is still accepting clients, we were concerned we could not properly absorb the significant number of new clients which are generated from the popularity of our seminars. We have decided to redirect the considerable amount of time that has been devoted to preparation for and presentation of seminars toward providing high quality service to our clients and making additional efforts to improve our services. People often do not realize that our Client Services Department prepares a year in advance for our seminars and this effort requires hundreds of man hours. To give you a glimpse of the effort, in addition to our attorneys spending several weeks preparing their topics and delivering their lectures, our entire staff spends three to five Saturdays staffing the seminars once all the preliminary work is completed. As you can see, seminars entail a tremendous amount of work, time and effort . This year, we have committed to redirect this time and effort to the needs of our existing and developing clientele. We will notify you either via newsletter or e-mail or mailing of future Clayton & McCulloh seminars. If you have any questions, please call Arlene Ring in our office.7

COMMERCIAL LEASING & PERSONAL INJURY TEAMS ADDED

We’ve added two new teams to our growing areas of practice. Neal McCulloh heads up the team to handle commercial leasing matters and Kevin Cannon heads up the personal injury team. If you should need either of these services, please call our Director of Client Services at our office.7

NEW WAYS TO SAVE MONEY

Is your Association looking for ways to save money on legal fees? Then perhaps one of our new Annual Legal Packages or other flat rate service may be just what you are looking for. We are excited to offer three new Annual Legal Packages, a new covenant enforcement letter, and several flat rate services. Listed below are highlights of our new packages and other services. If you would like more information and/or brochures on these packages, please call Arlene Ring at our office .

The first of our new Annual Legal Packages is the Deluxe Annual Legal Package which consists of:

Twelve (12) hours a year of legal consultation whether by phone, in person, or in writing (cumulative from month to month, but may not be carried over from year to year);
Deluxe Annual Meeting Package;
Annual Directors Workshop; and
One (1) Quarter Pounder Covenant Enforcement Letter.

The price for this package is $2,350.00. If purchased separately, these services would, at a minimum, cost $2,925.00. Your Association saves at least $925.00 per year.

Additionally, we are proud to offer our Standard Annual Legal Package which consists of:

One (1) hour legal consultation per month whether by phone, in person, or in writing (non-cumulative);
Deluxe Annual Meeting Package;
Annual Directors Workshop; and
One (1) Quarter Pounder Covenant Enforcement Letter.

The price for this package is $2,000.00. If purchased separately, these services would, at a minimum, cost $2,925.00. Your Association saves at least $925.00 per year.

Last, but not least, is our new Mini Annual Legal Package which can also be used as a renewal of any of our new or previous Annual Legal Packages. This Package consists of:

Six (6) hours per year of legal consultation whether by phone, in person, or in writing (cumulative from month to month, but may not be carried over from year to year);
Deluxe Annual Meeting Package;
Annual Directors Workshop; and
One (1) Quarter Pounder Covenant Enforcement Letter.

The price for this package is $1,500.00. If these services were purchased separately, these services would cost, at a minimum, $1,875.00. Your Association saves at least $375.00.

Our Deluxe Annual Meeting Package includes the preparation of the *Proof of Notice Affidavit, First Notice of Election, *Second Notice of Election, Notice of Members’ Meeting, Proxy, Instructions for Completing Election Ballot, *Candidate Fact Sheet, and *Acknowledgment of Written Notice of Intention to be a Candidate for Board of Directors. We will then forward these documents to the Association for copying and distribution to the members. Additionally, one of our attorneys (excluding senior partners) will attend your Annual Meeting for up to three hours (including travel time). This package is offered separately for $600.00 and is also included in our Annual Legal Packages above. Of course, we still offer our Standard Annual Meeting Package which includes only the preparation of the documents above. The fee for this service is $250.00. If you wish to use the Standard Annual Meetingl Package the second year, the discounted fee is $150.00. *Indicates documents required for condominiums.

New on the Board? Unsure what is expected of you as a director? Then this workshop is what you are looking for. Our very popular Annual Directors Workshop has a new, lower price and a new feature - an attorney at each workshop to provide legal advice on a selected topic. Additionally, our Director of Client Services addresses the practical points of being a director. The fee for the Annual Directors Workshop is $100.00 for the entire board of directors or, $40.00 per director (up to two directors).

In addition to the new Annual Legal Packages, we are now also offering an alternative to our famous "Pounder" covenant enforcement letter. Responding to our clients request for an inexpensive, "gentler" approach to a covenant enforcement demand letter as opposed to the more aggressive approach in our Pounder letter, we now offer the "Quarter Pounder." The Quarter Pounder is approximately 1 to 1 ½ pages in length and takes a gentler approach to requesting violating owners to come into compliance. The fee is $125.00 plus costs. You may select the Pounder on one occasion and the Quarter Pounder on another. You are not locked into using only one version.

Clayton & McCulloh’s Mortgage Foreclosure Monitor service is now being offer as a flat rate service for $250.00. Many times, an owner will default on his/her mortgage payments and the mortgage holder will initiate foreclosure. We will prepare an answer to the Motion for Foreclosure, monitor the status of the case with Court, and provide a monthly Sstatus Report to the Association. Additionally, we provide the Association with a Copy of Certificate of Title (which provides you the name of the new owners) and the Notice of Dismissal (which allows you to contact the new owner to collect any unpaid assessments).

We also provide the following services on a flat rate: Document Organization Service, MRTA (Marketable Record Title Act) for Simple Communities, Document Rehabilitation Letter, Frequently Asked Question and Answer Sheet for Condominiums (and a new lower rate for the renewal), Disclosure Summary for Homeowner Associations (and a new lower rate for the renewal), Collections, and Registered Agent for the Association.

If you would like more information on any of the flat rate services or a brochure in this article, please contact Arlene Ring at our office. 7

UPDATE YOUR DIRECTOR INFORMATION ON WEB-SITE

Need to a quick way to update your new Board of Directors information with Clayton & McCulloh? Want to change your mailing address? Perhaps you’d just got a new e-mail service and want to receive updates on Florida Statutes and Case Law, changes in the community association industry, and newsletters? Maybe you want to be the first to register for our seminars? Well, now you can - quick and easy! Effective March 1, 2003, you can visit our web-site and can update your information.

To provide us with new director information, simply "click" on the "Clients: Update Your Information" button on the home page. You will be switched to the form where you can input the information we need to furnish you many of our complimentary services.

If you are receiving this newsletter and are no longer on the board, then we have not been furnished with your director information. If this is the case, please visit our web-site and provide us with this vital information.

Got questions? Call our Client Services Department and get more information! 7

FREE REFERRAL SERVICE AVAILABLE

Need a management company? How about an accountant that specializes in servicing community associations? This information is just a phone call or e-mail away.

Locating professionals which specialize in community associations can sometimes be difficult. Since Clayton & McCulloh has worked with thousands of associations through the years, we have had the opportunity to work with specialists in this demanding field.

Here’s how our referral service works! We will contact at several professionals which service community associations and provide them with general information on association - as much or as little as you request. We will ask them to contact you via the method of communication you desired - telephone, mail, or e-mail. After we’ve contacted the management companies, we will forward to you the list of companies which we contacted on your behalf.

If you would like to utilize our Community Association Referral Services, please call Arlene Ring at our office.

ORLANDO MAGIC & CLAYTON & McCULLOH FAN APPRECIATION DAYS

In 2002-2003, the Orlando Magic games are going to be some of the hottest events in Central Florida. Two time all-star, Tracy McGrady is one of the NBA’s most phenomenal players! Come see the NBA’s Leading Scorer! Mike Miller will astound you with this spectacular performances!

As a special promotion in conjunction with Clayton & McCulloh, the Orlando Magic are offering special discounted tickets to those individuals receiving these newsletters. Choose either of the following games:

Orlando Magic vs. New York Knicks

Friday, March 7, 2003 at 7:00 p.m.

Orlando Magic vs. New Orleans Hornets

Saturday, March 15, 2003, at 7:00 p.m.

$50 tickets for only $44 ($6 savings)

$45 tickets for only $35 ($10 savings)

$40 tickets for only $33 ($7 savings)

$33 tickets for only $27 ($6 savings)

$27 tickets for only $21 (6 savings)

$21 tickets for only $18 ($3 savings)

No service charges or sales tax!

THIS SPECIAL DISCOUNT IS AVAILABLE COURTESY OF CLAYTON & McCULLOH

Full season, half season, 15 game packages (lower level), and 10 game package (upper level) available. Season tickets start as low as $10!

For more information or to purchase tickets, please call David Jarema, Account Executive for the Orlando Magic, at (407) 916-2928 and ask for the Clayton & McCulloh discounted tickets!

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IMPORTANT NOTICE. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. This web site presents general information about the law firm of Clayton & McCulloh and is not intended as legal advice nor should you consider it as such. Although we welcome your calls, letters and e-mail, please keep in mind that merely contacting our office will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established.