This year, The Florida Legislature starts early. In fact, it is already in session. So what’s in store for community associations in 2018? Well, remember the “Condo Crime Bill” that was filed last year? Members in HOAs were screaming “What about us? Crime happens in HOAs too!” HB 873 and SB 1238 mirrors the condo crime bill and now attempts to apply much of the same laws to HOAs. If you like the provisions of the condo crime bill, you will like the HOA crime bill. If you thought the condo crime bill went overboard, you will think the same about this bill. Here are some of my thoughts.
- The bill prevents a board from hiring an attorney if the attorney represents the management company.
The Florida Legislature does not regulate the conduct of attorneys. The Florida Supreme Court does. There are already ethics codes in place that deal with this conduct and this does nothing to address the concerns raised in the Grand Jury Report. I don’t see this passing and I wouldn’t be surprised to see it repealed from the condo statute this year.
- 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.
I honestly don’t understand why a Board member has less of a right to participate in a public auction than anyone else. Laws already exist that prevent a board member from usurping a corporate opportunity. If a board knows about the sale, and that board is not interested in buying the unit at a foreclosure sale, why should a board member be prevented from participating in the public process? In fact, if the board member buys the property, rather than the association, that board member may wind up owing a large amount of assessments to the association. So, it may be a win-win for the association. Again, makes no sense.
- The bill would give the renter the right to access the association’s bylaws and rules.
Since renters are subject to the rules, I have no problem with this proposed amendment.
- Any director who destroys or refuses to allow inspection or copying of an official record of a homeowner’s association which is required to be accessible to parcel owners in furtherance of any crime is punishable as tampering with physical evidence
or as obstruction of justice.
If a director destroys or conceals records in order to cover up a crime or in furtherance of a crime, I have no problem with them being charged with a felony. Why would anyone have a problem with this?
- The bill would require, by July 1st, 2019, an association with 150 or more parcels to post the official records on its website.
WHY NOT MAKE EVERY ASSOCIATION PUT THEIR OFFICIAL RECORDS ON A WEBSITE IF YOU WANT TO SOLVE THE ACCESS TO RECORDS PROBLEM – NOT JUST ASSOCIATIONS WITH 150 OR MORE HOMES? In any event, this is a great start.
- A board member may not serve more than 8 consecutive years unless approved by an affirmative vote of two-thirds of the total voting interests of the association or unless there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy.
How in the world does this make sense? Obviously, if this person is able to get elected for 8 consecutive years, that person is either doing something right or the other owners are completely disinterested and have no problem allowing this person to roll over every year, while they do 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 even 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? Can you amend the bylaws now with a 2/3 vote to allow someone to serve more than 8 consecutive years?
- A terrible provision of this bill would make recalls 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 on their own dime. Associations would be prohibited from filing a recall petition.
The Florida Legislature created an absolute nightmare in regards to condominium recalls by allowing a similar bill to be passed last year. You would think that with the current fiasco going on at the arbitration division, some thought would have gone into how to fix the broken recall statute, but it didn’t. I warned the legislature last year that this terrible statute would create a nightmare and that the recall statute should be left alone, other than requiring the loser and potentially the loser’s counsel to pay the other side prevailing party attorney’s fees. I thought the idea was to prevent fraud? 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. Make the poor director who was duped responsible for going out and hiring an attorney now. Where is or was there any proof or even suggestion that the recall process was flawed? I can tell you it wasn’t. The process was detailed and during the 5 day period between the time the board gets served with the recall ballots and the recall meeting, a lot of work went into verification of the ballots. Duplicates are searched for, photocopies are disregarded, ballots are checked to ensure that the ballot is signed by an owner and not a renter, ballots are checked to ensure the person signing it has the authority to sign it pursuant to a voting certificate. That all gets thrown out the window now, and he who files fake ballots wins anyway.
- The bill states that an association may not employ or contract with any service provider that is owned or operated by a board member or any person who has a financial relationship with a board member.
A statute already exists that allows the association to do business with a company that a director may have a financial interest in, as long as the relationship is disclosed, two-thirds of the directors vote in favor of the contract and the unit owners have the right to cancel the contract at the next membership meeting. Why is this new statute necessary? If a board member is a legitimate business person, and can help the association with a good price and quality work, why in the world should the association not be able to take advantage of that opportunity? This statute simply presumes that every board member that owns a company that can provide a service to the community is a crook, and I’m sorry that is simply not the case.
- An association and its officers, directors, employees, and agents may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expense.
In light of the fact that we know that association debit cards have been used to finance gambling habits of directors at The Hard Rock Casino, this is an excellent suggestion.
- Forgery of a ballot or voting certificate would be a felony.
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 and engaging in election fraud. This is a good idea.
- 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 i.e. a director or an officer, or a relative of a director or an officer, entering into a contract for goods or services with the association. The bill is confusing because if the conflict is disclosed, it allows the Board to then vote on a contract involving a company owned by a board member or his or her family. Is it allowed or not allowed? 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.
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. Ridiculous. I have no problem with the statute simply requiring a Board member to refrain from voting on any matter wherein the Board member has a conflict of interest, meaning that the decision will monetarily effect the board member or his or her family. If the board member violates the statute, the owners in the community should act as the judge and jury and have the right to remove that director through the recall process. And that’s a right they already have.
So there you have it. What do you think HOA members? Next week we will discuss some additional pending legislation.