TALK ABOUT GOING OVERBOAD-PART 1

In response to the Miami Dade Grand Jury Report that blasted officers and directors, management companies and the DBPR, but ignored the fact that prosecutor’s offices often turn a blind eye toward condo and HOA crime, Senator Rene Garcia and House Member Jose Felix Diaz filed a bill that attempts to do a lot.  Let’s review:

 

  1. The bill prevents attorneys from representing a board if the attorney represents the management company.

Since when does an attorney represent a board?  An attorney represents an association, not the board.  Moreover, the Florida Supreme Court governs the conduct of attorneys, not the Florida Condominium Act.  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.

 

FIX: DELETE THIS PROVISION.

 

 

 

  1. 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 and does nothing to address the Grand Jury’s concerns.

 

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 TEN (10) DAYS.

 

 

 

 

 

  1. The bill would give the renter the right to access the association’s official records.

Why is this so important?  Why should a renter be entitled to access the official records of a corporation that he or she is not a member of?  Should anyone be allowed to access the official records of any other private corporation?  I don’t think so.  The statute does not even allow renters to attend meetings.  Again, this does nothing to address the Grand Jury’s concerns and in effect only makes the problem worse by adding to the job of managers.

 

FIX: A RENTER IS ENTITLED TO ACCESS TO THE ASSOCIATION’S RECORDS IF THE OWNER OF THE UNIT APPOINTS THE RENTER AS THE UNIT OWNER REPRESENTATIVE UNDER 718.111(12)

 

 

  1. 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.

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 courts with records cases now?

 

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. ANY DIRECTOR ASSESSED FEES AND COSTS AND/OR REMOVED FRO 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.

 

  1. The bill would require an association with 500 or more units to post the official records on its website.

Ironically, the statute does not require the association to have a website.  So, suppose the association doesn’t have one?  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 500 OR MORE HOMES?  500 is such an arbitrary number and applies to a very small percentage of condominiums in the entire state. Again, this does almost nothing to solve the problem of obtaining access to records.

 

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.

 

 

  1. The bill allows the DBPR to basically give a notice to the association that they must comply within five days to the DBPR’s request to send the year end financial report to an owner who complained to the DBPR that the association has failed to provide a copy of the report. If the association fails, they may not waive the financial reporting requirement and provide a less detailed report than is required by law.

This is humorous to say the least.  I have always said that while the DBPR seeks to correct bad behavior through warning letters and an opportunity to cure statutory violations, the one area that they always took seriously was the association’s failure to provide the year end financial report.  I have seen associations fined thousands of dollars for this failure.  This procedure is not broken and shouldn’t be fixed.

 

FIX: LEAVE WELL ENOUGH ALONE.  THE DBPR DOES A GOOD JOB ALREADY IN THIS REGARD.

 

  1. 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.

How in the world does this make sense?  Obviously, 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 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?  If so, how will it work with the other critical time constraints of the election statute?  Respectfully, no thought has gone into this provision whatsoever.

FIX: 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.

 

  1. I’m almost embarrassed to write the next provision. 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.

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 there any proof or even suggestion that the recall process is flawed?  I can tell you it isn’t.  The process is 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 goes 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.  I have no idea of the thought process that went into this but this provision is absolutely dangerous and actually rewards illegal behavior.

 

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 SHALL PAY NO PORTION OF THE ATTORNEY FEE AWARD.

 

 

 

 

 

 

 

 

  1. 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.

 

FIX: DELETE

 

 

 

 

  1. If you’re not mad yet – now you will be. 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.  Your filing fee of $50.00 is low primarily because the salaries of the arbitrators are low.  Well without saying why, all of a sudden there is an attempt to allow private arbitrators to be hired.  Trust me, 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 by the way, if you saw the qualifications it would take to become a private arbitrator, you quickly realize that the statute is creating a private club.  If you want to fix a broken provision of the arbitration statute, remove the provision that dismisses a case if the arbitrator sends the parties to mediation and the case doesn’t settle,  Under the current statute, if that happens, and one of the parties does not agree to send the case back to the arbitrator, the case is dismissed and either party can go to court.  What sense does that make?  If the case does not settle, the case should return to the arbitrator for a final resolution, just like what happens in a court of law.

 

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.  THIS SAVES OWNERS THOUSANDS OF DOLLARS WHICH WAS THE VERY INTENT OF THE STATUTE IN THE FIRST PLACE.

 

 

  1. The bill then mentions lots of ways it would now be a crime to tamper with the election process.

After 10 straight failing provisions, finally, we get to something that makes some sense.  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.

Monetary penalties, usually paid by the association is not sufficient.

 

FIX: AMEND FLORIDA STATUTE 718.1255 TO STATE THAT IF AN ARBITRATOR MAKES A SPECIFIC FINDING THAT ANY INDIVIDUAL DELIBERATELY PARTICIPATED IN ELCTION 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 THIRTY (30) DAYS, THE STATE ATTORNEY’S OFFICE SHALL EITHER PROCEED WITH OR DECLINE PROSECUTION.  IN ADDITION, IF THE ARBITRATOR FINDS THAT A SPECIFIC DIRECTOR OR DIRECTORS WILFULLY COMMITTED ELECTION FRAUD, 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.

 

 

 

 

  1. 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.

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.

 

 

 

 

 

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.

 

So there you have it.  This is the big fix that is supposed to end condo crime as we know it.  I don’t know if the drafters of the bill live in a condo or not, but I can tell you this…….. if you ask the people that work in this area day in and day out if this is the way to stop condo crime, my guess is that they will tell you that this bill does nothing of the kind.  It will however, lead to more and more litigation and arbitration and fighting.  It creates a plethora of new problems for associations and their members to deal with, does nothing to require police departments or state attorney’s offices to devote resources or training to these issues and appears to have been put together in knee jerk fashion.  But, as Jan says all the time, the more confusion and fighting the new laws create, the more work there is for the attorneys I guess.  Remember as a child when you didn’t like the result of something?  You would yell “DO OVER!”  Well, I can’t yell it loud enough today.

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