For more information contact: Nicole E. Molder, (954) 745-7996

]]> http://molderlegal.com/content/867/feed 0 http://molderlegal.com/content/841 http://molderlegal.com/content/841#comments Thu, 24 Jun 2010 13:38:53 +0000 Jason L. Molder http://molderlegal.com/?p=841 A safety net.

Look at almost anyone’s workstation these days and you’re sure to see their computer connected to a battery backup, or UPS (uninterruptible power supply).  The concept is simple: maintaining continuity directly after an unexpected and unavoidable event.  With a UPS, the idea is that in the event of a power outage, the user would have enough time to save their work and safely power down their system, so once power is restored, they can resume from right where they left off, without having to redo or recreate lost work.  Think of how a similar concept could play out in the context of disaster planning in connection with a Florida condo association’s official records, with these two hypothetical examples:

Example 1: The property manager for our hypothetical association works out of a small room in the security guardhouse on the property.  A hurricane hits and completely destroys the guardhouse, along with all of the documents stored there.  Among the lost documents are all of the association’s official records required by statute.  Among the damaged property is the single computer system that the property manager worked from, along with all of the association’s data.  All of the association’s official records are lost, along with financial information needed to see which homeowners have delinquent assessment balances, vendor contracts, invoices, and much more.  The effects are both devastating and embarrassing.  To the extent possible, the association tries to obtain records from third parties (such as bank statements, etc.) to begin rebuilding what it lost, but it is unlikely that many of the association’s internal records will be recoverable.  Essentially, the association has to start from scratch; something that would severely impair the operations of an established association with outstanding receivables, open contracts, and the like.

Example 2: Same association.  Same property manager.  Same office.  Same hurricane.  This time, however, the association’s records were scanned into electronic files and were backed up in the ‘cloud’ (more on that term later).  Once the hurricane passes and normal association operations resume, the property manager downloads all of the lost records from the association’s online document repository, gets them printed out, and the association is back in business.  All of the data on the property manager’s computer is likewise restored from the online backup, and the association is up and running again, as if nothing had ever happened, in a matter of days.  Sound impossible?  Read on.

What is cloud computing?

Generally, ‘cloud computing’ (sometimes used in conjunction with the term ‘hosting’) is a service where one party entrusts the storage and provision of its data to a third-party provider. In some instances, the data resides on servers controlled, operated and maintained by the third-party provider. In others, the provider itself may outsource some or all of those functions. The core concept with a cloud-based or hosted service is that the end user can simply access its data without having to worry about maintaining the underlying infrastructure.  Hosting comes in several forms, such as storage hosting (like an online disk where users can upload and access their data), and application hosting (where an application is delivered online via a web browser, and the application and the data is stored with the provider).  This latter form of hosting is commonly referred to as Software-as-a-Service (SaaS). There are other forms of hosting as well, including platform and infrastructure hosting, both of which are beyond the scope of this post.  Consumer end user are primarily focused on storage hosting (online disks) and SaaS.

Selecting a hosting provider.

There are many factors to consider in selecting a hosting provider.  Selecting a provider is in many ways like selecting a bank (except you don’t get the added protection of the FDIC). Usually you are trusting critical business assets with the provider, and it is important to select a provider that is financially stable, reliable, and able to deliver the service and support that you need. Service providers should be willing to answer questions about their company’s strength, and provide information about their storage and security practices. Providers should also be willing to allow customers (and potential customers) to tour their facilities, so end users can see exactly where their data will be housed. If you get a bad vibe about a specific provider, ask questions until you are satisfied. If you don’t feel comfortable with a specific candidate, move along.

The hosting agreement.

A hosting agreement (or the terms of service) is the written contract that governs your relationship with the provider. Much like any other agreement, this is where the terms of the relationship are set out. Since many providers offer online sign-up, the hosting agreement may be presented to you online, and the provider may ask you to agree to them before setting up your account. In almost all instances I have seen where sign-up is online, the provider will not process your order unless you acknowledge your agreement to their terms and conditions. Don’t just click “Accept.” Read the terms of service thoroughly and familiarize yourself with them completely. If you don’t agree to something (or something isn’t clear), call or email the provider and see if the terms are negotiable. If not, you may have to go elsewhere. As when entering into any other agreement, consultation with an attorney is strongly encouraged.

Service level agreements.

A service level agreement (SLA) is an agreement pertaining to how often the service will be available to the end user. An SLA is sometimes referred to as an uptime agreement. It may be either a standalone agreement, or incorporated into the hosting agreement. It is important to make sure that the SLA is consistent with the provider’s marketing. For example, make sure that if a provider markets itself as providing 99.99%, 99.999%, or even 100% uptime, those terms are clearly outlined in the SLA. Check to see how downtime is measured, if there is a cure period that would allow a provider to repeatedly violate the SLA over the course of small periods of downtime, and what end users are entitled to if downtime exceeds agreed-upon thresholds. This language is one of the most important areas to review. Review it closely and carefully.  This is especially important if an association plans to provide online access to its data, as when fulfilling certain requests under, for example, Section 718.111 of the Florida Statutes.  Again, consultation with an attorney is strongly encouraged.  Keep in mind that there will always be planned service interruptions (a.k.a. planned maintenance), which are intentional periods of downtime which are necessary to provide periodic maintenance to the provider’s infrastructure. It may include anything from an operating system or application upgrade, to physical plant maintenance which requires that systems be brought offline. Check with the provider to see if planned service interruptions are included in the SLA, or if those are separate. If separate, your SLA might not reflect true system availability.

Where is my data stored?

The hosting agreement should outline where your data will be stored. If the provider is going to outsource this function, it should clearly be disclosed in the hosting agreement, and your provider’s provider should be clearly identified. Keep in mind that if your provider outsources this function, it likely has a separate hosting agreement with its provider, and those terms may ultimately affect you. Also keep in mind that where your data is stored may implicate data, privacy, and other laws of both yours and different jurisdictions.  This post only applies to official record backups — not to the online storage of official records in lieu of keeping paper records altogether.

Data protection and confidentiality.

The hosting agreement should outline how your data will be protected (in some detail, but not enough as to compromise security), and should place on the provider certain responsibilities with respect to data security, access control, and antivirus measures.  The hosting agreement should also outline confidentiality of your data. Some agreements might simply restrict the provider’s ability to disclose your data to third-parties (except in cases where necessary to provide the service or as required by law). However, consider looking or asking for an agreement which restricts the provider’s right to view the data itself (while the provider will likely except from this technical support requests, this is a reasonable request). Overall, look for the language which best protects your data from being viewed and disclosed.

Unattended access to data at any time.  Proprietary formats.

Having unattended access to your data is very important. It will allow you to keep an updated copy of the data in-house, should it ever be needed and unavailable from the provider. Being allowed access to your data only upon request to the provider is very different from having unfettered FTP or web-based download access (e.g., imagine having a bank account without ATM access; see the difference?).  Mainly an issue with application hosting (but may also be implicated with traditional data hosting and online backup providers), consider that many applications store data in proprietary formats, which render the data inaccessible unless being read by that specific application. Make sure that not only is your data accessible, but that it is in a readable format even without the application. If the raw data is proprietary, make sure that it can be exported and made available in a non-proprietary, readable format, such as CSV or XML. After all, having access to your data is meaningless if you can’t do anything with it.

Data escrow.

Data escrow is relatively simple, and works essentially the way you would expect any other escrow arrangement to work. With data escrow, the hosting provider is typically required to mirror the data you store with it (at an agreed-upon frequency) with yet another third party, the data escrow agent. The data escrow agent then holds a copy of the data, should access to it ever be necessary. Both the agreement with your hosting provider and the escrow agreement with the data escrow agent should address in detail who can access the data, when, and under what terms. It is important to make sure that the agreements allow you immediate access to your data upon request to the data escrow agent. Language that requires both parties to agree before the data is released may seem fair, but when disputes arise, it may also mean a long delay before you are actually able to get your data. Be careful with data escrow companies that are affiliated with or are operated by the same company as the hosting provider, as this does not offer a true escrow.  If your provider will not cooperate or work with an escrow provider, be careful.

Service cancellations.

Make sure that the hosting agreement expressly covers this, and clearly addresses who can terminate, when, under what conditions, at what cost, and how the data is returned to you. Make sure you are comfortable with the language, and always make sure the agreement provides that your data is returned to you in a timely fashion, and in a readable format.  Some providers may actually facilitate a move to another provider in the event you discontinue your service. Check with them in advance if this is something that is important to you. Make sure whatever you are told is ultimately incorporated into the hosting agreement.  As with anything else that is agreed to, get it in writing by someone who is authorized to act on behalf of the provider.

Used properly, cloud computing can be an important tool in the association disaster planning and preparedness toolkit — and can have a profound impact on business continuity after a catastrophic data loss (whether by hurricane, fire, theft, or otherwise).

The Legislature finds it necessary in the interest of the public safety and welfare, to prevent damage to real and personal property, to avert economic injury to the residents of this state, and to regulate persons and companies that hold themselves out to the public as qualified to perform mold-related services.

That is the legislative purpose behind Florida’s new mold-related services law, which takes effect on July 1, 2010.

The new law, codified in Chapter 468 of the Florida Statutes, among other things, provides for the licensing of those performing mold-related services, establishes required insurance coverage, and sets forth a handful of prohibitions pertaining to the provision of mold-related services. The law was initially enacted in 2007, but amended in 2010. The following synopsis of specific areas of the law covers those provisions as amended, where applicable.

Are you a mold assessor? A mold remediator?
In the new law “mold assessment” is defined as “… a process performed by a mold assessor that includes the physical sampling and detailed evaluation of data obtained from a building history and inspection to formulate an initial hypothesis about the origin, identity, location, and extent of amplification of mold growth of greater than 10 square feet.”

“Mold remediation” is defined as “… the removal, cleaning, sanitizing, demolition, or other treatment, including preventive activities, of mold or mold-contaminated matter of greater than 10 square feet that was not purposely grown at that location; however, such removal, cleaning, sanitizing, demolition, or other treatment, including preventive activities, may not be work that requires a license under chapter 489 unless performed by a person who is licensed under that chapter or the work complies with that chapter.”

As you can imagine, a “mold assessor” is “… any person who performs or directly supervises a mold assessment[,]” and a “mold remediator” is “… any person who performs mold remediation.” However, with respect to mold remediators, it is important to note that “[a] mold remediator may not perform any work that requires a license under chapter 489 unless the mold remediator is also licensed under that chapter or complies with that chapter.”

Licensing requirements.
The new law creates the “mold-related services licensing program.” The program, which will be administered by Florida’s Department of Business and Professional Regulation, will contain specific requirements for licensure, including passing an examination, being of good moral character, and satisfying certain education requirements. Both remediators and assessors will be required to have at least a 2-year associate of arts degree or equivalent, with at least 30 semester hours in specific areas, and a minimum of 1 year documented field experience. Those without the 2-year degree can qualify with only a high school degree or equivalent, if they have 4 years of documented field experience in their respective field. The application process will include fingerprinting, and both a state and FBI background check. A person may practice mold assessment or mold remediation through a corporation if they meet all of the requirements; however, corporations will not be allowed to hold a license.

Prohibitions and penalties.
The law includes a list of prohibited conduct, the violations of which carry criminal penalties, including felony charges for certain violations.

With respect to the prohibited conduct, a person violates the statute by:

• Performing (or offering to perform) any mold assessment without the required documented training in water, mold, and respiratory protection (effective July 1, 2011).
• Performing (or offering to perform) any mold assessment without first complying with the statute (effective July 1, 2011).
• Using the following titles without first complying with the statute: “certified mold assessor,” “registered mold assessor,” “licensed mold assessor,” “mold assessor,” “professional mold assessor,” or any combination thereof.
• Performing or offering to perform mold remediation to a structure on which the mold assessor (or the mold assessor’s company) provided a mold assessment within the last 12 months.
• Charging a fee to inspect any property which the assessor (or the assessor’s company) has any financial or transfer interest.
• Accepting or offering any “compensation, inducement, or reward” from/to a mold remediator or mold remediator’s company for business referrals to/from the mold remediator or the mold remediator’s company.
• Agreeing to make an omission to an assessment, or conducting an assessment where the assessment (or payment for the assessment) is contingent on the conclusions of the assessment.

The legislation also includes a separate list of prohibited conduct directly pertaining to mold remediators, “a company that employs a mold remediator, or a company that is controlled by a company that also has a financial interest in a company employing a mold remediator[.]” While the list is generally similar to that outlined above (except, of course, that it applies to remediation as opposed to assessment activities), it does not include any July 1, 2011 grace periods.

And be careful! Violations carry criminal penalties: a first violation is a second degree misdemeanor; a second violation is a first degree misdemeanor; and a third or subsequent violation is a third degree felony.

Required Insurance Coverage
The law requires mold assessors to maintain both general liability and errors and omissions coverage (for both preliminary and post-remediation mold assessment) of at least $1 million. Mold remediators are required to maintain general liability coverage of at least $1 million, “… that includes specific coverage for mold-related claims.”

Summary
As with any new law that impacts your business, become thoroughly familiar with it, and make sure that your business practices, including all of your marketing and signage, are compliant.

Please note: This post is not intended to be a complete analysis of this law. Do not use this post as a replacement for competent legal advice.  This post does not cover all aspects of this law, and should not be relied upon in any real-life situation.

For specific information about how this law impacts you, contact a qualified and licensed Florida attorney.

As of July 1, 2008, Florida law provides that when a first mortgagee acquires title to a unit in a homeowners’ association, whether by foreclosure or by deed in lieu of foreclosure, the first mortgagee’s responsibility to the association for unpaid assessments that became due before the mortgagee acquired title are limited to the lesser of: (a) the unpaid common expenses and regular periodic or special assessments that came due during the 12 months immediately preceding the acquisition of title, and were not paid; or (b) one percent of the original mortgage debt. (See section 720.3085 of the Florida Statutes.)

However, in Coral Lakes, the Association’s Declaration provided that anyone obtaining title to a lot pursuant to the foreclosure of a first mortgage, or where a first mortgage holder accepts a deed in lieu of foreclosure, such person acquiring title would not be liable to the Association for any money due the Association by the prior owner, which became due prior to acquisition of title, unless the payment of such funds was secured by a lien that was recorded prior to the recording of the foreclosed or underlying mortgage. In its opinion, the Second District opined that this provision was ”…likely added to the Declaration to induce lenders to aid homeowners in purchasing property in the community by awarding them priority over the HOA’s claims for unpaid assessments.” The homeowners executed the note and mortgage in favor of Busey in May of 2006, prior to the 2008 change to F.S. 720.3085.

The only disputed issue at summary judgment was whether F.S. 720.3085 applied to the Bank under the circumstances, or whether the Bank was excused from paying the unpaid assessments that had accrued pursuant to the terms of the Declaration.

In affirming the lower Court’s summary judgment in favor of the Bank, the Second District held

…that because of the Declaration’s plain and unambiguous language subordinating any claim for unpaid HOA assessments to a first mortgagee’s claim upon foreclosure or deed in lieu of foreclosure, it controls and absolves the Bank, as first mortgagee, from liability for any assessments accruing before it acquires the parcel.

Citing to a 2006 Second District case, the Court further noted that “[f]irst mortgagees in this community, although not parties to the Declaration that is the contract between the HOA and its members, are clearly third-party beneficiaries of this contract.”

What does this mean for Florida HOAs?

The Second District’s decision appears to have been solely focused on whether the statutory change in F.S. 720.3085 could operate to defeat clear and unambiguous language contained in a previously-recorded declaration (i.e. a “…prior, established contractual relationship.”) However, the Court admittedly did not address the issue of whether, in amending F.S. 720.3085, the legislation effectively rewrote the Association’s Declaration. This, the Court commented, “…was not the basis of the trial court’s summary judgment.” At a minimum, Florida HOAs should closely examine their governing documents to see what they currently provide, and to determine if changes are possible and advisable, and what effect any changes would possibly have.

I originally wrote the following post as a FAQ for Legal OnRamp.  As hosted computing, cloud computing, and online storage become more and more popular, it is important to take a few moments to discuss something that many people may overlook: the hosting agreement.  Hosting agreements take many forms, and may come to you as a benign-looking “terms and conditions” page on a website, that you are asked to click through in order to proceed.  This post examines several (but not all) issues that pertain to hosting agreements.

1. What is hosting?

Generally, ‘hosting’ (sometimes used in conjunction with ‘cloud computing’) is a service where one party entrusts the storage and provision of its data to a third-party provider. I some instances, the data resides on servers controlled, operated and maintained by the third-party hosting provider. In others, the hosting provider itself may outsource some or all of those functions. The core concept with a hosted service is that the end user can simply access application data (and possibly even the application itself) without having to worry about the underlying infrastructure.

2. What different types of hosting services are there?

Providers may offer different types of hosting. Some providers offer only storage hosting, such as an online disk where users can upload and access their data. Other providers offer application hosting, a service where an application is delivered online via a web browser, and the application and the data is stored with the provider. This latter form of hosting is commonly referred to as Software-as-a-Service (SaaS). There are other forms of hosting as well, such as platform and infrastructure hosting. End users though are primarily focused directly on SaaS.

3. How do I select a hosting provider?

This is a very difficult question to answer, and there are many factors to consider. Selecting a hosting provider is in many ways like selecting a bank (except you don’t get the added protection of the FDIC). Usually you are trusting critical business assets with the hosting provider, and it is important to select a hosting provider that is financially stable, reliable, and able to deliver the service and support that you need. Service providers should be willing to answer questions about their company’s strength, and provide information about their storage and security practices. Providers should also be willing to allow customers (and potential customers) to tour their facilities, so end users can see exactly where their data will be housed. If you get a bad vibe about a specific provider, ask questions until you are satisfied. If you don’t feel comfortable with a specific candidate, move along.

4. What is a hosting agreement?

A hosting agreement (or the terms of service) is the written contract that governs your relationship with the hosting provider. Much like any other agreement, this is where the terms of the relationship are set out. Since many service providers offer online sign-up, the hosting agreement may presented to you online, and the provider may ask you to agree to them before setting up your account. In almost all instances I have seen where sign-up is online, the provider will not process your order unless you acknowledge your agreement to their terms and conditions. Don’t just click “Accept.” Read the terms of service thoroughly and familiarize yourself with them completely. If you don’t agree to something (or something isn’t clear), call or email the provider and see if the terms are negotiable. If not, you may have to go elsewhere. As when entering into any other agreement, consultation with an attorney is strongly encouraged.

5. What is a service level agreement?

A service level agreement (SLA) is an agreement pertaining to how often the service will be available to the end user. An SLA is sometimes referred to as an uptime agreement. It may be either a standalone agreement, or incorporated into the hosting agreement. It is important to make sure that the SLA is consistent with the provider’s marketing. For example, make sure that if a provider markets itself as providing 99.99%, 99.999%, or even 100% uptime, those terms are clearly outlined in the SLA. Check to see how downtime is measured, if there is a cure period that would allow a provider to repeatedly violate the SLA over the course of small periods of downtime, and what end users are entitled to if downtime exceeds agreed-upon thresholds. This language is one of the most important areas to review. Review it closely and carefully.

6. What are planned service interruptions?

Planned service interruptions (a.k.a. planned maintenance) are intentional periods of downtime which are necessary to provide periodic maintenance to the provider’s infrastructure. It may include anything from an operating system or application upgrade, to physical plant maintenance which requires that systems be brought offline. Check with the provider to see if planned service interruptions are included in the SLA, or if those are separate. If separate, your SLA might not reflect true system availability.

7. Where is my data stored?

The hosting agreement should outline where your data will be stored. If the provider is going to outsource this function, it should clearly be disclosed in the hosting agreement, and your provider’s provider should be clearly identified. Keep in mind that if your provider outsources this function, it likely has a separate hosting agreement with its provider, and those terms may ultimately affect you. Also keep in mind that where your data is stored may implicate data, privacy, and other laws of different jurisdictions.

8. How is my data protected?

The hosting agreement should outline how your data will be protected (in some detail, but not enough as to compromise security), and should place on the provider certain responsibilities with respect to data security, access control, and antivirus measures.

9. What about confidentiality?

The hosting agreement should outline confidentiality of your data. Some agreements might simply restrict the provider’s ability to disclose your data to third-parties (except in cases where necessary to provide the service or as required by law). However, consider looking or asking for an agreement which restricts the provider’s right to view the data itself (while the provider will likely except from this technical support requests, this is a reasonable request). Overall, look for the language which best protects your data from being viewed and disclosed.

10. Will I have unattended access to my data at any time?

Having unattended access to your data is very important. It will allow you to keep an updated copy of the data in-house, should it ever be needed and unavailable from the provider. Being allowed access to your data only upon request to the provider is very different from having unfettered FTP or web-based download access (e.g., imagine having a bank account without ATM access; see the difference?).

11. How is my data stored? Is it kept in a proprietary format?

This issue mainly comes into play with application hosting, but may also be implicated with traditional data hosting and online backup providers. Many applications store data in proprietary formats, which render the data inaccessible unless being read by that specific application. Make sure that not only is your data accessible, but that it is in a readable format even without the application. If the raw data is proprietary, make sure that it can be exported and made available in a non-proprietary, readable format, such as CSV or XML. After all, having access to your data is meaningless if you can’t do anything with it.

12. What is data-escrow?

Data escrow is relatively simple, and works essentially the way you would expect any other escrow arrangement to work. With data escrow, the hosting provider is typically required to mirror the data you store with it (at an agreed-upon frequency) with yet another third party, the data escrow agent. The data escrow agent then holds a copy of the data, should access to it ever be necessary. Both the agreement with your hosting provider and the escrow agreement with the data escrow agent should address in detail who can access the data, when, and under what terms. It is important to make sure that the agreements allow you immediate access to your data upon request to the data escrow agent. Language that requires both parties to agree before the data is released may seem fair, but when disputes arise, it may also mean a long delay before you are actually able to get your data. Be careful with data escrow companies that are affiliated with or are operated by the same company as the hosting provider, as this does not offer a true escrow.

13. Will my provider cooperate with a data-escrow provider?

Ask. If the answer is no, be careful.

14. What if I want to cancel my hosting service?

Make sure that the hosting agreement expressly covers this, and clearly addresses who can terminate, when, under what conditions, at what cost, and how the data is returned to you. Make sure you are comfortable with the language, and always make sure the agreement provides that your data is returned to you in a timely fashion, and in a readable format.

15. What if I want to switch to another provider?

Some providers may actually facilitate a move to another provider in the event you discontinue your service. Check with them in advance if this is something that is important to you. Make sure whatever you are told is ultimately incorporated into the hosting agreement.

16. Are these types of agreements with the provider even negotiable?

That depends. It probably comes down to the size of the provider and the size of the account you represent. If you are interested in negotiating the terms of the hosting agreement, ask to speak to someone in the provider’s legal department. And whatever is agreed to, get it in writing by someone who is authorized to act on behalf of the provider.

The Court held that the plain meaning of § 718.202 required the developer to have established two separate escrow accounts to hold the purchaser’s deposit, since the deposit was in excess of 10% of the purchase price of the unit.  In so holding, the Court commented:

Subsection (1) states that all payments up to 10 percent of the purchase price are to paid “into an escrow account” by the developer.  Subsection (2) states that all payments in excess of 10 percent of the purchase price are to be “held in a special escrow account established as provided in subsection (1) . . . .” The use of the modifier “special” in subsection (2) differentiates the account referenced in subsection (2) from the escrow account described in subsection (1), notwithstanding that the “special” account is to be established as provided in subsection (1). That language referring back to subsection (1) does not mean it is the same escrow account, merely that the second, “special” escrow account is to be established in the same manner as the escrow account described in subsection (1). Had the two accounts been referring to the same account, rather than discrete accounts, the legislature could have simply stated that payments in excess of the 10 percent are to be held “in the escrow account already established in subsection (1).”

Section § 718.202(5) of the Florida Statutes provides that

The failure to comply with the provisions of this section renders the contract voidable by the buyer, and, if voided, all sums deposited or advanced under the contract shall be refunded with interest at the highest rate then being paid on savings accounts, excluding certificates of deposit, by savings and loan associations in the area in which the condominium property is located.

As a result, the Court held that “… given the express language of section 718.202(5), Swire’s failure to establish two separate escrow accounts for Plaintiffs’ deposit violated the statute, and rendered the Purchase and Sale Agreement voidable by the Plaintiffs.”

The Court’s decision has widespread implications for Florida condominium developers that did not establish two separate escrow accounts to hold purchaser deposits that exceeded 10% of the unit’s purchase price.  Under the decision, purchasers would be entitled to void their contracts and seek a full refund of their deposits, plus interest as provided by the statute.  For many developers that have already used a portion of purchaser deposit funds for construction purposes, this means digging into their own pockets to pay back purchasers, something that in this market may be extremely difficult.

One way to try and determine whether a condominium deposit was segregated into two separate accounts as required is to simply look at the back of the canceled checks, to see if they were endorsed with the same deposit account number.  If that doesn’t answer the question, or the canceled checks are no longer available, escrow agents should be able to provide this information.

*Any italic emphases in original quotes were lost in formatting this post.

However, consider the following issues that may affect your company should you choose to have your data stored on a third-party’s servers:

1. What if your hosting provider suffered a catastrophic data loss and your data was not adequately backed up, resulting in a loss of your data?
2. What if your hosting provider goes out of business and you are unable to get your data back from them (either immediately or in the long-term)?
3. What if your hosting provider’s equipment is repossessed by one of their creditors, with your data on it?
4. What if your data is on a machine that is stolen?
5. What if your data is on a machine that is lawfully seized because of another customer’s data?

These are just some considerations that immediately came to mind while I was writing this post – that said – I’m sure there are more. There is also a way in which you can help to mitigate your chances of suffering an involuntary data loss due to any of the above, i.e., by always having an up-to-date copy of your data stored locally (and securely) on your own hardware or media which you control. However, Florida companies and organizations may also wish to consider having a data-escrow agreement in place with their hosting provider.

A data escrow agreement is relatively simple, and works essentially the way you would expect any other escrow agreement to work. With data escrow, the hosting provider is typically required to mirror the data you store with it (at an agreed-upon frequency) with yet another third party, the data escrow agent. The data escrow agent then holds a copy of the data, should access to it ever be necessary. Both the data escrow agreement with your hosting provider, and the terms of the actual escrow agreement with the data escrow agent, should address in detail who can access the data, when, and under what terms. Since these agreements may ultimately have serious implications for your business should an issue with your hosting provider ever arise, it is important to make sure that the agreements cover all possible bases, and allow you immediate access to your data upon request to the data escrow agent. Language that requires both parties to agree before the data is released may seem fair, but when disputes arise, it may also mean a long delay before you are actually able to get your data. Finally, be careful with data escrow companies that are affiliated with or are operated by the same company as the hosting provider, as this does not offer a true escrow.

Before trusting your valuable data (and possibly your entire business) to a third party hosting provider, consider a data escrow agreement with your hosting provider. With cloud computing becoming more and more popular, providers should be increasingly open to such agreements, which offer an added layer of protection (and peace of mind) to their customers.

A brief refresher on Florida’s Chapter 558.

Chapter 558 of the Florida Statutes was enacted in 2003 in order to provide the design and construction industry with pre-suit notice and opportunity to cure before a claimant can file a lawsuit for construction defects. Under the statute, before a claimant can file a lawsuit against a developer, contractor, subcontractor, material supplier, or design professional alleging a construction defect, the claimant must first provide notice of the alleged defect, along with an opportunity to cure. The statute is highly specific, outlining the periods of time in which the recipient of such a notice has to put others on notice, inspect the alleged construction defect, and provide a response to the claimant. The most recent set of amendments to Chapter 558 took effect on October 1, 2009.

A brief summary of the notice provisions under s. 558.004 that are specific to associations representing more than 20 parcels:

• The written notice of claim under Ch. 558 must be served at least 120 days before filing a lawsuit pertaining to the claim (as opposed to 60 days for all others);
• The person served with the notice of claim is allowed 50 days after service in which to perform a reasonable inspection (as opposed to 30 days for all others);
• The person served with the notice of claim may serve a copy of the notice on each contractor, subcontractor, supplier, or design professional whom it reasonably believes is responsible for each defect specified in the notice (as opposed to 10 days for all others);
• The person who was served with a copy of the notice must furnish a written response to the person who served it within 30 days after such service (as opposed to 15 days for all others);
• The person originally served with the notice by the claimant must furnish the claimant with a written response within 75 days after being served with the notice (as opposed to 45 days for all others).

While Chapter 558 can be a valuable resource for those with construction defect claims, and when used correctly can be an excellent tool in mitigating construction defect litigation, it can also be a minefield for those not familiar with its extensively detailed provisions.

This post is not meant to be a complete analysis of Chapter 558, or the way in which it applies to associations representing more than 20 parcels. For information pertaining to your specific situation, consult a Florida-licensed attorney experienced in handling construction defect matters.