Live with David Heffernan and Gary Mars
Welcome to another episode of First off, let’s kill all the lawyers. I’m David Heffernan and I’ve been practicing personal injury law here in South Florida for nearly three decades. And the goal behind this show and we get a lot of feedback, it’s a Shakespeare quote, that he meant it as a compliment. It might have meant it as a compliment, but people laughed when that line was uttered back in the 15th century. And there’s people that today still think killing all the lawyers, maybe not a bad idea. So, goal behind this podcast is to bring in other local in South Florida. And actually, we’ve had people out of state international lawyers to kind of introduce them to the community find out about what they do, and maybe one by one, we’ll take a few of them off the kill list. My guest this morning is a friend, a classmate, we were reminiscing unfortunate goes back further than we’d like to recall. And my goal is to get them off the kill list. But I might have a hard time because I’ve got an issue because apparently Gary hasn’t aged in the 30 years since we went to law school, my guest, Gary Mars, looking great, my friend. Welcome to the show. Thank you. It’s a pleasure to be here. All right. So let’s, let’s talk a little bit just sort of general background, what is it that got you and then we’re going to get into? You know, you’ve been in a very specialized practice for the last 30 years. But what got you into law school? What was the was it always a desire to be a lawyer? Was it you know, I wasn’t sure what I was going to do, or where did it? Where did it start? Yeah, there are those that are, I think, are those of us who there that are a bit freaky. So, I’ve always been prime, pretty much designed to be a lawyer. So, I went to Emory undergrad, which is, you know, pretty much a pre professional school. So, everybody was in med, everyone’s going to medical school, right about three or four of us on my dorm floor that were going in a different direction. They all ended up half of them probably went into business school from there, and a few went into law school dribble went into actual loads of medicine, but I was always on a track to be a lawyer, just kind of how I’m wired. So that was kind of a given. But yeah, so by ology, I guess I could say, you’ve done something that’s a little unique and you look at and you know, we’re kind of blessed and partner with Mark care, one of our classmates and, you know, we’ve got a group of people from that long ago that still stay in touch. And it’s a nice network of friends to have. But you’ve done something unique, and that, that you went to a firm coming out of law school, Siegfried Rivera, and you’ve stayed there, you’re a shareholder there, and you’ve carved out a phenomenal practice there. Talk about sort of that first transition, because oftentimes, lawyers go somewhere, they get their feet wet, they learn a little they go, but you’ve dug in and build yourself a phenomenal practice at a great firm been around for 40 plus years. But talk about how you went up there. And let’s talk about how your practice developed. So, I actually, if you remember, when, when we came out of law school, there was a kind of a little bit of a glut in the market. At that point. I really like bankruptcy. I really was intrigued by the whole, you know, setting up the bankruptcy plans and working through that I thought I was, you know, that was my area. But there weren’t a lot of jobs. There were a lot of people lateral laying around at that point, because it was a really bad job market. So, while there was a good job market for laterals, not as good for people coming out, right, right. So, you have to meet you. And you know, the good news with the University of Miami and I guess most law schools are doing it now. You know, we had a really good development
office, they were they were able to line me up with a series of interviews and I interviewed with a with a law firm at the time, that was called climbing and Kaplan, which is led by Mike Hyman who’s still a very vibrant guy in his late 70s. But, you know, one of the one of the Guru’s in the condo world. There were a few guys that were, you know, really came out and started representing condos at the inception of condos because, you know, Miami doesn’t have a huge history. You know, as we look at law, the condominium world in Miami really started in the mid 60s and the laws really caught up in the early 70s. You know, prior to that, it was really cooperatives and there are still some of those old cooperatives around there, you know, which come out of the Northeast or market in the New York market, which you know, co-ops are much more prolific from that area. And so, A couple of these guys got started. Mike was one of the first condo lawyers in town. And he interviewed me and that firm hired me. So, I actually practice with that firm from law school. And in 2013, one of our competitors, which was the Siegfried firm at that time, and the Hyman firm merged together, creating the current firm that we’re at. So, in reality, I have not had an interview for the past 30 years. I my resume is really old. I mean, I really stale resume. It makes it easy, though. There’s only one entry there. You know, it’s, it’s a very short resume. But a lot of things to add to that resume, though, because, again, what you’ve done is you’ve crafted into a practice. So, the firm, I know, does Community Association does construction does real estate, you’ve really focused on community association, we talked about condos. And in fact, I learned in getting ready for this show, I didn’t know that you could be board certified in condominium in Plan Development Law. Okay, so that’s a classification that, that they have, you’ve gone through that, which is no easy task to become board certified in any of the fields by the Florida Bar. So talk about a little bit about your practice, how is it that you evolved into that and, and have sort of become the condo guru, and then we’re going to get into kind of what kind of law is and all of the things that have now in the forefront because of surf side and other things? Yeah, so um, my initial practice was like any young lawyer, I was all over the place, I was doing transactional stuff, I was doing litigation. And then it got to a point where I was actually doing, and I still do it, but I mean, I was actually no getting into the point where I was really able to take over just, it’s just a personality thing. Takeover, you know, condominium representation, which was a firm, you know, one of the firm bread and butter practices when I started with man, in 1991. So, I vacillated between the various different areas of practice in that firm. And I started building up something which was a little unique, and that guys, typically we’re doing condo law, we’re doing condo law, and then litigators were doing the litigation. But I was able to do both and was doing both, it took a lot because I was in, you know, motion calendars at eight o’clock in the morning at the courthouse, and then you know, running, you know, condominium meetings at eight 910 o’clock in, you know, all over town. So, it was a difficult period, but it was a lot of hard work. And what ended up happening is I started developing my own book of business, which is what any young lawyer should be, you know, should have an eye on. And I was able then to develop a practice. And so, my practice kind of started working independent of the firm because I started building my own my own client base.
And it’s been really that has been the basis of kind of my success at a fairly young age by, you know, by the time I was in my early 30s, I pretty much had developed my own book. So and that has just expanded over time. So, I’m very proud to say that I work now there’s nine attorneys on my team. At Sigfried. We I’ve worked with a lot of these guys, most of them are, you know, 15 year practicing lawyers, a lot of them are partners with the firm already. It’s a great group of attorneys, the whole firm, as you know, again, there’s a lot of great lawyers doing this work. But as a law firm, I have to say that my, my co workers, or just my peers at the firm, or just every one is just more impressive than the other. They’re really phenomenal lawyers and names, like, you know, Elio dilatory. And Lisa Lerner. And I mean, I don’t know if you know these names, but in the world of practice, they’re like, you know, so I have the great benefit of working with my climbing, who’s one of the chiefs of that whole practice and then some of these others are just the next line. You know, from the standpoint of his historically and they designed and built the condominium, you know, legal practice in South Florida, and now they’re my partners. So, it’s been an amazing opportunity. And then when you add in, guys like Steve Sigfried and Stu Sobel and some of my other partners, who are really phenomenal construction lawyers, more than any in the condo side, but you know, they focus more on the construction side. It’s been a really a fantastic blend of talents. So, it makes for a great law firm. Well, and enemy Yeah, the reputations out there. I mean, yours personally, as the kind of guy but obviously the firm has a great reputation. And that’s critical. So, let’s, let’s talk because I know, early on in our career, Mark and I are litigators, you know, there’d be some issue, some questionable kind of Oh, just call Gary like, Gary knows everything about condos. So, let’s talk about this because people, it gets thrown around, but let’s kind of talk just in a simplistic term, the structure of a condominium and how that functions, because I don’t think people 100% understand that, oh, they buy a condo, but they don’t understand the common areas of Board of Directors. So, to give us an overview of what condominium is, it’s actually a really good question. Because you know, one of the problems, you’re asking me, What are the elementary issues of condos, I don’t think a lot of people understand what they’re buying. Right? So, they don’t understand to your point that you buy in a condominium. And I then therefore have more responsibilities, or I don’t have any more is this magical association or board of directors? are they responsible for everything or, you know, do I have to worry about mowing the lawn or paying insurance, you know, and I would add to that, that as people have come in from other we’ll call them jurisdictions, but other lands, other places, other parts of the world into the South Florida market, which is obviously a very international market, it gets even more complicated because, you know, people are coming with their own self defined definitions and what they’re buying. But in reality, a condominium is a legal entity, you’re buying a fee simple interest in a unit, the unit could be in a 50 story building, it can be you know, two story building, you know, doesn’t really matter, it’s still you’re buying rights to the unit. And for the most part, everything outside of the defined unit is common element. So, the association through the board of directors is responsible for everything having to do with those common elements, you own an undivided share of those interests, you don’t own it, the condominium association doesn’t own it all the unit owners actually own the common elements. And UK based upon the condominium documents a percentage share, which is your percentage of ownership for in the way of assessments to maintain and operate those areas.
So, there is not a situation where you’re not responsible, because you’re you know, there’s a symbiotic relationship between the unit units and the common elements. So, you have a duty to maintain your unit. And to keep it up and to take care of everything that’s inside of it. The condominium association through the board is taking care of all the common elements. But again, it’s one building, so they mesh, and it’s, it’s a lot of times where the decisions have to be made, and how things mesh and how this all goes forward, obviously, which creates a little bit of an issue, in that people need to understand that, that nothing is independent of each other, it all is all it is all very much dependent on each other. So the board who’s a representative of yours, I mean, that’s how it works. It’s kind of a representative. In the context of a democracy. It’s like our federal government works, you vote in a board, and the board makes the decisions on almost all issues. They’re the ones that are empowered to determine how to deal with these common element issues. And it’s up to the owners to monitor and critique as well as to comment to the board and the board is the one that is supposed to take your information and move forward with it. Alright, so what we see now and one of the things I think that that where people kind of get stunned in the world of condos, because you’ve talked about this symbiotic relationship. So, I own my unit, I’m paying my money’s, you know, when I pay a little bit and make sure the grass is cut everything else. But then all of a sudden, the building needs a new roof, or the building needs this and all of a sudden now there’s a you know, depending on the size building, but there’s a $15 million assessment to do that. Now that’s got to be paid proportionately by all of the unit owners. And I think this is where things sort of start to get a little squirrely with people. But it’s also where I think and we’re seeing a little bit about server side. But that inherent conflict, you’ve got that board of directors is elected. But they don’t necessarily want to have to tell their unit owners Hey, you know, we need X million dollars to do this. So where does that balance come in between the two of those because obviously board of directors is charged to make sure the building safe but I think we’re starting to see it now percolate when you see all these things happening, have that inherent conflict. Yeah. So, if you add to ask me, which we haven’t spoken about, but we were kind of getting there before you know what makes Good condo lawyer, I’m going to put the question out there, there you go. Good. I’m not talking about myself, I’m just talking about if I had, if I had to have this conversation which we’re having, it would be the ability to not only know the law and deal with the legal side of things, there are a lot of good lawyers that can do with that. It’s also to know how to deal with the sociological or psychological elements of a condominium. And being able to properly advise, you know, it’s interesting, as you and I have aged in this practice, and you’re doing pretty well, too, by the way. But as we age through this process, you know, we we’ve learned to be lawyers, but we also have to remember that we’re also referred to as counselors, 100%. It’s that counseling side of the practice, which I think makes a really good condo lawyer, and I’m working to, you know, to do that, but a lot of the work I have to do is to counsel. So in the context of counseling, and dealing with these associations, you have to look back and say, to answer your question, you know, how do you deal with these things. So you got to remember, these kinds of associations come out in the market. And I’m dealing with several right now, I do a lot of turnovers, from developer to, you know, residential owner boards. And they have to set themselves up. And when the association set themselves up, one of the first things they look at is the context. And it is one of those items, if you say, what are we going to be looking at legislatively with regard to Champlain towers is probably how reserves are collected and waived or partially funded.
But one of the critical elements to a condominium are the reserves, which are basically mandated savings account the amount of money that has to come in, in order to defer maintain, you know, over a period of time, the condominium, which is a big, fat, expensive, nobody wants to deal with the same thing. If you live in a single family home, you know, you don’t want to spend 40 $50,000, to redo your roof who wants to spend that money. But you know, what, when the roof is leaking enough times, and you don’t want to keep repairing it, you can’t repair it anymore, you got to make a decision, you got to change the roof out, it’s like, you know, you don’t have an option. It’s a similar problem in condos, except people that live in a condo don’t understand. It’s that same obligation that exists. So, when you take the mandated obligations to have to fix a building up, and the expenses that are involved in that, and you couple that into decision making by people who a lot of times don’t have a lot of experience, specifically to do maintenance at that scale. I mean, you know, a lot of us come from single family homes, we move into condos, we don’t know how to deal with those issues. So, you have to rely on management, you have to rely on professionals, engineers, people of that nature lawyers to kind of guide you, which means there’s expenses involved. So again, we’re talking about another layer of expenses, it’s not just fixing it, it’s not fixing it the way Gary Mars or Dave, happening want to fix it, it’s fixing it the way that an engineer or somebody will tell you that you need to fix it, we don’t I don’t have the knowledge of how to redo a roof or air conditioning system in a 50 story tower, it just isn’t something we have typically the benefit of so we have boards of directors who don’t understand that, and they’re going to go out and they’re going to make these decisions or not make these decisions. And then you factor in the last element, which is a very difficult but real one. And that’s the political nature. You know, a lot of a lot of people sitting on boards want to remain on the boards they have. I’m not saying it’s for nefarious reasons, they just, they like it, they like the involvement and engagement, maybe some of them like it for the you know, the power element of it, they’d like to be in charge their leaders, given them all the benefit of the doubt. But that becomes a political thing. So, if you want to stay in a board, and you want to keep people happy, there’s a there’s kind of like an innate element in all of this, that we got to keep the numbers down. Really, the bottom line is in a condo is that you’re supposed to break even, you’re not supposed to not supposed to have a big fat juicy savings account, you’re not supposed to have tons of money in your operating account, you’re supposed to, you know, have a sub zero budget every single year. That’s a really good board. And you’re supposed to accumulate reserves. But again, full circle on this point. If you start off initially you start waiving reserves, so you don’t have which is a fairly low margin of owners to waive reserves or partially fund reserves, and you’re not building up those funds. And you’re 1015 20 years out and then you’re starting to look at big expenses. There’s only one way to raise that capital and that’s through a special assessment. And then that really is a terribly difficult moment because you’re dealing with, you know, 20 year old building, and, you know, you just haven’t built up you haven’t built up any kind of cash source and you got to go to the owners and say, you know, kick him 50 6070 Whatever the dollar amount is, we need it. So it becomes very, very big. issue functionally and politically. And I can see that I mean, again, look, it’s easy. Hey, we’ll have 100 million in reserve, except where do you get $100 million? You know, we have that we’re fine. Versus we have nothing in reserve because we don’t want to, we don’t want to sort of burden our homeowners here, the condo owners. So I can see that balance in there. Let’s shift a little bit. Because, I mean, we saw what happened in Surfside, okay. And, and obviously, that’s, that’s drawn, you know, national attention and a tragedy of I mean, unparalleled proportions. And I don’t want to talk about the litigation of them. That’s a whole different issue of insurance and what’s there and that battles being played out. And it’s, you know, it’s unfortunate because you’re, you’re pitting property owners against people that died and all of that balance, but, but let’s just talk about the change, or what you anticipate the changes in the law, I kind of look back and I go, you know, you look at some of the zoning stuff, and then we had Hurricane Andrew. And that opened a lot of eyes, because we’re like, How could, how could that happen? How could we have that kind of devastation? And progressively over time, now we get a big storm, you don’t see that damage, because codes have changed. But that’s not an overnight process. So I think the big thing we’ve all heard about, oh, it’s a 40 year inspection? Well, again, to the lay person, that seems like a long time, so what do you see changing that? Maybe it’s already changed? Or Where are these things going to go and condo law.
So to your point, I think the first thing that’s probably going to be looked at is not in the condo act, but it’s probably going to go more towards our building and zoning to determine I mean, you got to understand 40 year research is a Dade, Miami Dade County and Broward County function. It’s not everywhere in the state of Florida. So, um, so but that’s a 40 year, you know, investigation. And so I think what we’ll probably end up seeing, which is fine, is we’re going to see some elements of something in a lesser amount of time, whether it’s a 25 year period, that may not be the same level, they may I think we which probably should be the case, there should be kind of like a gradation type thing, you do something at 25 years to do something at 40 years to do something. And so right now, it’s 40 years 50 or 60, once you hit the 40 year mark, it’s every 10 years, you have to go through this structural and electrical evaluation of your property. It doesn’t address the entirety of your building. So, I have a feeling that we’ll end up seeing, and I know there’s there are local, through the local municipalities, there are panels and conditions that have been brought together for that purpose on a statewide basis. And my firm was definitely a part of a, there was a statewide, you know, bar involved. So, the task force, the bar put together a task force to address it. And they came up with a report. And, you know, and it’s led by Bill Skylar, is a great lawyer agreed to advocate for community associations. He was very engaged in the process. And that report was a very good report. I don’t think there was anything shocking in that report. But there are legislative changes, I think one of the bigger issues that comes out of that is going to be something along the lines of You know, creating an environment where waiving those reserves or partially funding those reserves are going to be more difficult to do it’s not going to be which is for the most part right now it’s a majority of a quorum, as designated by the bylaws is the vote that you need. The owner can vote the owners can majority the owners house, well, we don’t we don’t want to build up reserves. Okay, so the way the law works right now is that the reserves have to be included in the budget. So when you get a budget every single year, in a condo, there’s a component of the budget, which is operations, which is very fluid and able to be moved around and everything. And then you have this restricted portion of it, which are the reserves, and the reserves are supposed to be $10,000, or more deferred maintenance items, whatever they are in your building. And you’re supposed to be collecting on a on a useful life formula. So how much time is left on it? So, for quick example, if you have a roof, which every building has a roof, and I’m just you know, forget about inflation, I’m just using numbers, it’s $100,000. To replace it in 10 years, you’re supposed to be collecting $10,000 a year. So in year 10, you have that full value in the reserves. And what the law has stated is that if associations want through their through our unit owner vote, they can either waive those reserves, we’re not collecting any of that 100,000 or some other component will only collect 50,000 And that requires a unit owner vote. That vote will likely increase the requirement will be a more difficult vote to get is something I definitely do you see happening? This is a starting point. All right, and you know, I think, again, typically with everything, it’s easy, and I’m not knocking politicians, but they all want to come out and scream, change, change. But you’ve been doing this a long time, I’ve been doing it in a different areas, make changes got to be a gradual, you can’t just all of a sudden come out and say, you know, we’re going to inspect every building every five years, and you’re going to need structural engineers. And I mean, it’s just not a feasible thing. It sounds good, and it appeases the public. But where’s that balance ultimately going to come from? My guess is the question. Right? So listen, one of the big issues that we have right now is that to your point is that you need engineers, you need you need, you need people working in the building and zoning departments, you need all of these people and they’re not around. I mean, you know, I deal with, you know, engineering firms all day all night and my construction defects I do my practice, you know, every Association has, you know, not every but a lot of associations, even five year old associations that have not a problem, you know, affiliated themselves retained whatever the case might be an engineering firm, because they want to have that access so that they can deal with their issues. So when you have a real issue going on in another building, you know, get online, there’s just so many people so that that is definitely an issue.
All right. So and we got to wrap up, but obviously, we go on this for a long time, just looking at some stats, because I’d like to take your crystal ball out. So apparently, there’s somewhere around 1.5 million condo units in Florida. And they said 60% Of those, which would be about a little over 900,000. Which of 2 million occupants are more than 30 years old. So just shifted for a minute. On the real estate side, what do you see happening? Are people hesitant to buy into condos now? Are older condos? I mean, are they going to ultimately suffer? I mean, I know Look, real estate’s through the roof down here. So people are looking for places, but are people going to change their views in buying condos? Um, well, my crystal ball is telling me probably not right. I think people are looking for places to live. And I think obviously, I mean, just small comment, you know, people’s historical memories are very short. That’s true. Do I think people should probably be a little bit more diligent and do some due diligence in their, in their purchases? Absolutely. Looking at, you know, when these buildings have been modified, improved, how their maintenance records or what they’ve done, what their engineering reporting looks like, things of that nature, I think that’s a very, very critical step. If I was, you know, any friend of mine was buying a condo, those were the be the things I would tell them, you know, you got to look a little bit more into the state of your condo, you don’t want to buy in a 3040 year condo and find out that they haven’t done any kind of deferred maintenance, you know, to the type that we’re talking about that that’s probably not a good scenario, somebody is going to have to do it at some point. But more importantly, it’s telling you something about the track record of the building. And, you know, obviously, you want to an older building that’s being maintained. And there are some gray buildings sure South Florida market, which have been maintained phenomenally, they’re, they’re in great shape, and they’re aging, you know, nicely dressed, good sage advice for buyers, you know, sort of buyer beware going and open and, you know, you can’t just assume it’s all been taken care of be a little more proactive, I guess. And definitely, when you think about the relationship of condo, you really should be proactive because you do own a portion of all of it. Alright, Gary, it’s been a pleasure fun catching up. Like I said, I know, I know, we could cover a lot of this. And I think it’s important because I don’t think people truly understand condominium law. But I can tell you if you’ve got a condo question, Gary’s the condo guru. Great, firm, great lawyer. Look forward to seeing you soon as the world ultimately gets there. So but a great job. I got to do I want to interview you now. Dave, I want to be I need to do you on the other side of the microphone. Well, we’ll do that. We’ll do that one day for sure. But right now, I think we can take the condo guru off the kill list, you know, vital, important part of society to make sure that we’ve got it going, Gary, it’s been a pleasure. Appreciate it, my friends. And we’ll see we’ll see you next week on another episode of First off let’s kill all the lawyers.
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