I had the honor and pleasure of spending a few days in Tallahassee last week. I testified at hearings before the House of Representatives. I drafted proposed legislation and had several meetings with legislators and staff. One thing is very clear this legislative session. IF YOU ARE A BOARD MEMBER OR MANAGER LOOKING TO COMMIT CRIMES OR TAMPER WITH ELECTIONS, THE LEGISLATURE IS GUNNING FOR YOU. THE JIG IS UP!
As all of you know the Miami Dade Grand Jury Report was scathing and presented condominiums in a very negative light and a place where corruption reigns. In response, House Bill 1237 was filed by Representative Jose Diaz and Senate Bill 1682 was filed by Senator Rene Garcia. Representative Diaz was very gracious and met with me regarding some serious concerns I have about the bill. To be very clear, I am all in favor of getting extremely tough on the bad apples in the bunch. However, I don’t want people to have false hope and think that if the bill passes they can now walk into their police department complaining that their director won’t give them access to records, and the police will now go out and make an arrest. I think we can all agree that won’t happen. So I’ll list below how the current bill reads, what I perceive is a potential problem and more importantly what I perceive may be a potential fix.
- The bill prevents a board member or management company from purchasing a unit at a foreclosure sale resulting from the association’s foreclosure of its lien.
Problem: Why should a board member be prohibited from participating in a public sale, but the next door neighbor isn’t? Remember that if the board member or manager buys the property, rather than the association, that board member may wind up owing a large amount of assessments to the association that would otherwise get wiped out if the association buys it.
FIX: A BOARD MEMBER OR MANAGER MAY ONLY BUY A UNIT AT A FORECLOSURE SALE IF PRIOR TO THE FORECLOSURE SALE THE BOARD OF DIRECTORS HAS PASSED A MOTION AT A PROPERLY NOTICED MEETING THAT APPROVES THE PURCHASE OF THE UNIT BY THE BOARD MEMBER OR MANAGER. IF A MANAGER OR BOARD MEMBER DOES BUY THE UNIT, ALL SUMS DUE TO THE ASSOCIATION FOR PAST DUE ASSESSMENTS SHALL BE PAID WITHIN THIRTY (30) DAYS.
- Any director who knowingly, willfully and repeatedly violates the access to records law is guilty of a misdemeanor in the second degree. “Repeatedly violates” means more than two violations within a 12 month period.
Problem: Under present law…..a director is not under a responsibility to provide access to records, an association is. So, a director cannot be found to violate the law, only an association can. You can’t say a director is guilty of a crime if the statute does not impose an obligation on the director to provide access. And….Who determines if a violation has been committed? The statute says records request cases get determined by an arbitrator. Need there be a finding first by an arbitrator that a director “repeatedly violated” the law? Can a criminal court judge make this finding without going to arbitration first? Do we want to clog the criminal courts with records cases now? Do we want people being able to go directly to the police before going to arbitration? If they do will the police really investigate and make an arrest?
FIX: AMEND FLORIDA STATUTE 718.1255 TO STATE “IN ANY ARBITRATION PROCEEDING INVOLVING ACCESS TO RECORDS, IF THE ARBITRATOR FINDS THAT A SPECIFIC DIRECTOR OR DIRECTORS WILFULLY IMPEDED AN OWNER’S ACCESS TO RECORDS THREE OR MORE TIMES IN A TWELVE MONTH PERIOD, THAT DIRECTOR OR THOSE DIRECTORS SHALL BE PERSONALLY ASSESSED THE PETITIONER’S ATTORNEY’S FEES AND COSTS, AND SAID FEES AND COSTS SHALL NOT BE ASSESSED BY THE ARBITRATOR AGAINST THE ASSOCIATION. IN ADDITION, THE ARBITRATOR SHALL ENTER AN ORDER IMMEDIATELY REMOVING THOSE DIRECTORS FROM THE BOARD OF DIRECTORS AND THE VACANCY OR VACANCIES SHALL BE FILLED BY THE REMAINING DIRECTORS. THE DIRECTORS THAT ARE REMOVED AS A RESULT OF THE ARBITRATOR’S ORDER MAY NOT BE ALLOWED TO SERVE ON A CONDOMINIUM BOARD OF DIRECTORS FOR A FIVE YEAR PERIOD. BEFORE THE ARBITRATOR ENTERS A FINAL ORDER, HE OR SHE SHALL ENTER AN ORDER JOINING THE DIRECTOR(S) AS A RESPONDENT AND SAID ORDER SHALL BE SERVED ON THE DIRECTOR(S) WHO SHALL BE ENTITLED TO NOTICE AND AN OPPORTUNITY TO BE HEARD. JOINDER, NOTICE AND OPPORTUNITY TO BE HEARD IS SATISFIED IF THE DIRECTOR(S) ALREADY TESTIFIED IN THE ARBITRATION PROCEEDING. ANY DIRECTOR ASSESSED FEES AND COSTS AND/OR REMOVED FROM THE BOARD IS ENTITLED TO FILE FOR A TRIAL DE NOVO, BUT SHALL NOT USE ASSOCIATION FUNDS FOR THE FILING FEE OR FOR THEIR ATTORNEY’S FEES.
- The bill would require an association with 500 or more units to post the official records on its website.
Problem: Less than one percent of condominiums in Florida have 500 or more units.
FIX: EVERY CONDOMINIUM ASSOCIATION WITH 50 OR MORE UNITS SHALL POST THE OFFICIAL RECORDS ON A WEBSITE ACCESSIBLE TO ALL OWNERS. AN OFFICIAL RECORD SHALL BE POSTED ON THE ASSOCIATION’S WEBSITE WITHIN FIFTEEN (15) DAYS OF THE ASSOCIATION’S RECEIPT OF SAID RECORD. THIS POTENTIALLY CURES A HOST OF PROBLEMS. DELIBERATE FAILURE TO POST THE RECORDS ON THE WEBSITE SHOULD CARRY THE SAME PENALTIES AS 2 ABOVE.
- The bill would prevent a board member from serving more than four consecutive 2 year terms, unless approved by an affirmative vote of two-thirds of the total voting interests of the association.
Respectfully, if this person is able to get elected for four 2 year terms, that person is either doing something right or the other owners are completely disinterested and this person is doing all the work. Why would you want to keep that person off of the board, with all of the experience they have? And the bill does not say when this two-thirds vote is to be taken. Is it a vote that happens during the election itself? Is it a vote that needs to be obtained before the election? If so, how will it work with the other critical time constraints of the election statute?
FIX: LEAVE IT UP TO THE UNIT OWNERS IN THAT CONDO. THE STATUTE DOES NOT SPECIFICALLY STATE THAT A CONDOMINIUM ASSOCIATION MAY IMPOSE TERM LIMITS. AMEND THE STATUTE TO SPECIFICALLY STATE THAT ANY ASSOCIATION, BY AND THROUGH AN AMENDMENT TO ITS BYLAWS MAY VOTE TO IMPOSE TERM LIMITS FOR MEMBERS OF THE BOARD OF DIRECTORS. UNDER NO CIRCUMSTANCES MAY THE BLAWS REQUIRE AN OWNER TO REMAIN OFF OF THE BOARD OF DIRECTORS FOR MORE THAN ONE YEAR IN A ROW.
- Recalls would now be automatic. If the Board receives a stack of recall ballots that equal more than 50% of the units, the people are recalled, regardless of whether or not all of the ballots are fake, fraudulent or signed by non owners. It would now be up to the recalled persons to file their own arbitration case.
Problem: This bill encourages fraud. Just quickly gather as many recall ballots as you can, have them signed by anyone, serve them on the board …and you win.
FIX: THE RECALL STATUTE IS NOT BROKEN —- EXCEPT FOR ONE THING. EVEN IF AN ASSOCIATION FIGHTS A RECALL WITH ABSOLUTELY FRIVILOUS DEFENSES, THE STATUTE FORBIDS AN AWARD OF PREVAILING PARTY ATTORNEY’S FEES. WHY? MAKES NO SENSE. SO, AMEND THE STATUTE TO SAY THAT IF AN ARBITRATOR FINDS THAT A BOARD OF DIRECTORS FAILED TO CERTIFY A RECALL IN BAD FAITH, THE UNIT OWNER REPRESENTATIVE SHALL BE ENTITLED TO AN AWARD OF PREVAILING PARTY ATTORNEY’S FEES. IF SO AWARDED BY THE ARBITRATOR, THOSE UNIT OWNERS WHO VOTED IN FAVOR OF THE RECALL AND WHOSE VOTES ARE DEEMED VALID BY THE ARBITRATOR SHALL PAY NO PORTION OF THE ATTORNEY FEE AWARD AND SHALL BE APPROPRIATELY CREDITED ON THEIR ACCOUNT LEDGERS. FLORIDA STATUTE 57.105 SHALL BE APPLICABLE IN ALL RECALL CASES. (IT IS THE STATUTE THAT POTENTIALLY MAKES ATTORNEY’S FINANCIALLY RESPONSIBLE FOR PAYMENT OF FEES AND COSTS IN CIVIL CASES WHERE FRIVILOUS POSITIONS ARE TAKEN).
- The bill attempts to privatize the entire arbitration process. The Division would no longer have to employ arbitrators who basically make next to nothing to act like Administrative Law Judges and hear your cases. The filing fee of $50.00 is low primarily because the salaries of the arbitrators are low. Even though the Grand Jury Report does not condemn the arbitrators, all of a sudden there is an attempt to allow private arbitrators to be hired. Private arbitrators will not work for the wages that the current state arbitrators do. There is no doubt in my mind that if this measure passes, Joe Citizen better get ready to pay a lot more to have their arbitration case heard. And if they can’t afford it – they won’t have their complaints heard at all.
FIX: LEAVE THE ARBITRATORS ALONE. FIX 718.1255 AND HELP THE UNIT OWNERS BY AMENDING TO SAY THAT IF AN ARBITRATOR REFERS AN ARBITRATION CASE TO A MEDIATOR AND THE MEDIATOR DECLARES AN IMPASSE, THE ARBITRATION PROCEEDINGS SHALL RESUME. AS OF NOW, IF AN IMPASSE IS DECLARED, THE CASE GETS DISMISSED. THAT MAKES NO SENSE. THIS SAVES OWNERS THOUSANDS OF DOLLARS WHICH WAS THE VERY INTENT OF THE STATUTE IN THE FIRST PLACE.
- The bill then mentions lots of ways it would now be a crime to tamper with the election process.
I know what it’s like to uncover fraud in an election. The people engaged in it need to know that there are criminal penalties for providing false votes, destroying documents and engaging in election fraud. Monetary penalties, usually paid by the association is not sufficient. However, the statute currently requires election cases to first go to arbitration. Let the arbitrator make this determination so that our police stations are not the place of first resort and they are not bombarded with election fraud cases that they will not and don’t have time to investigate.
FIX: AMEND FLORIDA STATUTE 718.1255 TO STATE THAT IF AN ARBITRATOR MAKES A SPECIFIC FINDING THAT ANY INDIVIDUAL DELIBERATELY PARTICIPATED IN ELECTION FRAUD, MEANING KNOWINGLY AND DELIBERATELY DESTROYING OR ALTERING DOCUMENTS USED IN THE ELECTION PROCESS, THE ARBITRATOR SHALL SEND A COPY OF THE FINAL ORDER TO THE STATE ATTORNEY’S OFFICE OF THE COUNTY WHEREIN THE CONDOMINIUM IS LOCATED. WITHIN SIXTY (60) DAYS, THE STATE ATTORNEY’S OFFICE SHALL EITHER PROCEED WITH OR DECLINE PROSECUTION AGAINST SAID DIRECTORS. THE DECISION BY THE ARBITRATOR SHALL BE ALLOWED IN AS EVIDENCE IN ANY SUBSEQUENT CRIMINAL PROCEEDING. IN ADDITION, IF THE ARBITRATOR FINDS THAT A SPECIFIC DIRECTOR OR DIRECTORS WILFULLY COMMITTED ELECTION FRAUD, THE ARBITRATOR SHALL ENTER AN ORDER JOINING THE DIRECTOR(S) AS A RESPONDENT AND SAID ORDER SHALL BE SERVED ON THE DIRECTOR(S) WHO SHALL BE ENTITLED TO NOTICE AND AN OPPORTUNITY TO BE HEARD. JOINDER, NOTICE AND OPPORTUNITY TO BE HEARD IS SATISFIED IF THE DIRECTOR(S) ALREADY TESTIFIED IN THE ARBITRATION PROCEEDING. THAT DIRECTOR OR THOSE DIRECTORS SHALL BE PERSONALLY ASSESSED THE PETITIONER’S ATTORNEY’S FEES AND COSTS, AND SAID FEES AND COSTS SHALL NOT BE ASSESSED BY THE ARBITRATOR AGAINST THE ASSOCIATION. IN ADDITION, THE ARBITRATOR SHALL ENTER AN ORDER IMMEDIATELY REMOVING THOSE DIRECTORS FROM THE BOARD OF DIRECTORS AND THE VACANCY OR VACANCIES SHALL BE FILLED BY THE REMAINING DIRECTORS. THE DIRECTORS THAT ARE REMOVED AS A RESULT OF THE ARBITRATOR’S ORDER MAY NOT BE ALLOWED TO SERVE ON A CONDOMINIUM BOARD OF DIRECTORS FOR A FIVE YEAR PERIOD. ANY DIRECTOR ASSESSED FEES AND COSTS AND/OR REMOVED FROM THE BOARD IS ENTITLED TO FILE FOR A TRIAL DE NOVO, BUT SHALL NOT USE ASSOCIATION FUNDS FOR THE FILING FEE OR FOR ATTORNEY’S FEES.
- The bill requires directors and officers of an association, and the relatives of such directors and officers to disclose to the board any activity that may reasonably be construed to be a conflict of interest. The bill then lists categories that make it a rebuttable presumption that a conflict exists. The bill then allows the Board to remove the member who allegedly failed to disclose the conflict without a vote of the members, through a lengthy complicated process.
Problem: This is a recipe for disaster. What is good about the current statutes is that it takes a majority of the unit owners to remove a director, not a simple vote of the Board members who can now allege at any time that a Board member failed to disclose a conflict. The statute nowhere else allows a Board to remove a director, not even if that director shoots someone living at the condominium. But now, with this new law, we allow the Board to remove someone based on a subjective feeling that the member failed to disclose a conflict.
FIX: THE CONDOMINIUM ACT DOES NOT PRESENTLY CONTAIN A SIMPLE PROVISION THAT STATES THAT A DIRECTOR MAY NOT VOTE ON ANY MATTER WHEREIN THE DIRECTOR HAS A CONFLICT OF INTEREST. A CONFLICT OF INTEREST IS DEFINED AS VOTING ON ANY MATTER, THE RESULT OF WHICH HAS A DIRECT FINANCIAL IMPACT ON THE DIRECTOR OR A MEMBER OF THE DIRECTOR’S FAMILY. IF A DIRECTOR IS FOUND BY AN ARBITRATOR TO HAVE VOTED ON A MATTER THAT THE DIRECTOR HAD A CONFLICT THAT HE OR SHE FAILED TO DISCLOSE AND THE DIRECTOR FAILED TO ABSTAIN ON A VOTE REGARDING SAID MATTER, THE ARBITRATOR SHALL REMOVE THE DIRECTOR FROM THE BOARD, SHALL ASSESS ATTORNEY’S FEES AND COSTS AGAINST THAT DIRECTOR AND THAT DIRECTOR IS PRECLUDED FROM SERVING ON A BOARD OF DIRECTORS FOR A PERIOD OF FIVE YEARS. ANY DIRECTOR ASSESSED FEES AND COSTS AND/OR REMOVED FROM THE BOARD IS ENTITLED TO FILE FOR A TRIAL DE NOVO, BUT SHALL NOT USE ASSOCIATION FUNDS FOR THE FILING FEE OR FOR ATTORNEY’S FEES.