THE FLORIDA LEGISLATURE AGAIN PUTS HOA DEVELOPERS AHEAD OF HOA OWNERS

 

The Florida Condominium Act mandates that the developer provide warranties to the association regarding the common elements, even in those communities that are converted from rental housing to condominiums.  The HOA statute however never provided similar protection to homeowner associations and the law was unclear as to whether or not a developer gave an implied warranty to the association regarding the construction and function of the common areas.  The 5th District Court of Appeals though recently issued a decision stating that the HOA developer does in fact provide such an implied warranty to the association and can now be sued in a court of law for breach of that warranty.  Instantly, it became panic time for the developers of HOA communities.

 

 

It should come as no surprise though that to the rescue of the developers now comes The Florida Legislature, who actually just passed legislation that is awaiting Governor Scott’s signature, that would negate the decision by the 5th District Court of Appeals and would instantly specifically provide that a developer of an HOA does not provide an implied warranty of fitness for driveways, roads, sidewalks, utilities and drainage.  In other words, it’s apparently OK with these legislators if the developer sells you a community held together by sticks and chewing gum instead of bricks and mortar.  It’s OK if your roads crumble, your lights don’t turn on, and the place floods up to your knees.  Sorry.  You have no warranty.  Just leave the nice developer alone and let him escape Dodge with your money.

 

For veterans of Florida politics, it should come as no surprise that the Florida Legislature is again helping to bail out developers at the expense of Florida residents.  That’s just the way it is and has been.  But what should strike you as less than credible is the bill’s actual wording:

 

 

“Whereas, the Legislature finds, as a matter of public policy, that the decision of the 5th District Court of Appeals goes beyond the fundamental protections that are necessary for a purchaser of a new home and that form the basis for imposing an implied warranty of fitness and merchantability for a new home and creates uncertainty in the state’s fragile real estate and construction industry.  There is no cause of action in law or equity available to a purchaser of a new home or to a homeowner’s association based upon the doctrine of implied warranty of fitness and merchantability or habitability for damages to “offsite improvements.”

 

The Florida Legislature has the audacity to say that by passing this law it actually protects our fragile real estate market!  Sorry…but I think this law makes our fragile real estate market even more fragile.  Florida already is know for being developer friendly and the place where developers leave half built communities in bad shape and broke.  Now, The Florida Legislature goes even further, and tells the developer that they can build a community and not have to worry if the drainage, the sidewalks, the streets or the roadways function as they should.  We’ll leave the homeowners to worry about that too —– even though they already can’t afford to upkeep the community because we won’t make banks pay more to the association when they foreclose.

 

Suppose the reverse happened and the Florida Legislature said…..we’re going to make developers provide very strict warranties and demand that they stick by the homes that they sell? If that means that the house will be a little more expensive, that’s fine.  Perhaps then only people that can truly afford to buy there will…………..and this would also likely cut down on the number of foreclosures.  Isn’t that stance more likely to protect the already fragile real estate market than taking away warranties from innocent purchasers?

 

All of you should be doing two things at this point.  First, you should be hitting Governor Scott’s Office with telephone calls, letters, e-mails and faxes demanding that he not sign House Bill 1013.  Second, you should be taking notes and keeping in the back of your minds which Legislators just voted to take away warranties, so that you can make it clear to them in November that their job doesn’t come with a warranty either.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WHY CAN’T WE BE FRIENDS?

 

When I sat down to write this column, I was going to initially write about the potential liability that the association may or may not be facing as a result of George Zimmerman shooting and killing an unarmed Treyvon Martin.  If you listened to the Condo Craze show yesterday, you know that I’m not yet convinced that the association faces liability and that if Zimmerman is found to have acted in self-defense, (even if he was the initial aggressor) he is immune from civil liability and that immunity would also protect the association.  But that’s not what I want to talk about today.  I want to talk about something a lot more important than dollars and cents.

 

What I have seen on TV, read in the papers and listened to on the radio about the Treyvon Martin case the last few weeks, concerns me perhaps more than the tragedy itself.  When I left New York City in 1989 to come to South Florida, race relations were horrific.  So many cases in New York during the 80s came down to black vs. white,  like the Bernard Goetz case or the Tawana Brawley case and truly divided a city.  These cases occurred nearly 30 years ago and surely race relations have gotten better.  Haven’t they?  Until a few weeks ago, I certainly thought so, but now I’m not as certain as I thought I was.

 

Despite the fact that the Florida Stand Your Ground law absolutely forbade the Sanford Police from making an arrest, especially after the State Attorney’s Office said not to make an arrest, the police department was accused of racism.  Despite the fact that Treyvon Martin wasn’t armed with anything other than Skittles, there were suggestions that he wouldn’t have gotten shot had he not “dressed black.”  The family supporters of Treyvon’s family went on record as saying Treyvon was racially profiled with absolutely no evidence of same.  In fact, based upon the number of calls Zimmerman made to the police in the past, I think if he saw anyone wearing a hoodie that he didn’t recognize, he would have called the cops on him and followed him too, and it certainly could have been a white kid or Hispanic kid who unfortunately gets the bullet instead of Treyvon.

 

Even this week leading up to the Condo Craze radio show, I received e-mails  telling me that they were “sick and tired of hearing about Treyvon Martin.”  People even insinuated that Sharpton’s involvement in the case automatically makes the tragedy all about racism, even though Sharpton had nothing to do with the incident itself and in fact, has repeatedly called for peaceful demonstrations.  On the flip side though, the new Black Panthers Party put a bounty on Zimmerman’s capture.

 

I have had the honor of representing community associations throughout this state for 2 decades now.  As time has gone on, it becomes more and more evident that our communities are more integrated than ever.  Statistics also tell us they are also safer than ever. We are all benefitting from peaceful relations between different races, nationalities and religions in our communities.  Let’s not let the rant of people on either of the extreme sides of this case ruin the progress our communities have made in learning to live with each other, for the most part in peace and harmony.  Let’s let the facts of the case play out, see where the evidence takes us, and no matter what a judge or jury may ultimately rule, respect their decision and immediately get back to being neighbors and friends despite the fact that there are people out there whose words have the potential ability to divide us rather than unite us.

SHOULD MANAGEMENT COMPANIES JUST MANAGE?

 

Although it may be hard to believe, there may be more complaints by associations about management companies than complaints by associations against the lawyers who represent the associations.  At a minimum though, board members should be aware that the contracts between the management company and the condominium association must meet certain minimum requirements.  The statute states:

 

(1) No written contract between a party contracting to provide maintenance or management services and an association which contract provides for operation, maintenance, or management of a condominium association or property serving the unit owners of a condominium shall be valid or enforceable unless the contract:

(a) Specifies the services, obligations, and responsibilities of the party contracting to provide maintenance or management services to the unit owners.

(b) Specifies those costs incurred in the performance of those services, obligations, or responsibilities which are to be reimbursed by the association to the party contracting to provide maintenance or management services.

(c) Provides an indication of how often each service, obligation, or responsibility is to be performed, whether stated for each service, obligation, or responsibility or in categories thereof.

(d) Specifies a minimum number of personnel to be employed by the party contracting to provide maintenance or management services for the purpose of providing service to the association.

(e) Discloses any financial or ownership interest which the developer, if the developer is in control of the association, holds with regard to the party contracting to provide maintenance or management services.

(f) Discloses any financial or ownership interest a board member or any party providing maintenance or management services to the association holds with the contracting party.

 

A thru E seem pretty straight forward.  F is the interesting issue.  As many of you know, management companies often times offer their association clients more than just typical bookkeeping management services through affiliated landscaping companies, concierge companies, appliance repair companies, exterminating companies and more.  Believe it or not, not too long ago, the relationship between the management company and the service provider did not have to be disclosed to the condominium association.  Today at least, it does.

The question though is whether or not a management company should be in the business of providing these other services, or if they should strictly manage and look for other unrelated companies to perform these other services for the associations they manage.  Many associations simply are not comfortable having an affiliated company of the management company also performing additional work in the community.  Other associations are all in favor of it and believe they are saving money.

 

Interestingly enough, the condominium statute even allows the association to contract and do business with companies wherein one of the Board’s own directors have a financial interest.  Pursuant to the statute though, the director who is interested must refrain from voting on the contract, the relationship must be disclosed and put in the minutes and two-thirds of the other directors must vote in favor.  So if the Board can contract with a company related to its own director, there certainly is nothing illegal about the association hiring the services of a company related to the association’s management company.

 

The question always is though………….while it may be legal, does it make it right?  What are some of your experiences when your management company was also your landscaper, valet company, painting company or the like?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHOULD BOARD MEMBERS GET PAID?

 

 

The Florida condominium statute provides that:

 

Unless otherwise provided in the bylaws, the officers shall serve without compensation and at the pleasure of the board of administration. Unless otherwise provided in the bylaws, the members of the board shall serve without compensation.

 

The Florida HOA statute provides:

 

COMPENSATION PROHIBITED.A director, officer, or committee member of the association may not directly receive any salary or compensation from the association for the performance of duties as a director, officer, or committee member and may not in any other way benefit financially from service to the association. This subsection does not preclude:

(a)Participation by such person in a financial benefit accruing to all or a significant number of members as a result of actions lawfully taken by the board or a committee of which he or she is a member, including, but not limited to, routine maintenance, repair, or replacement of community assets.

(b)Reimbursement for out-of-pocket expenses incurred by such person on behalf of the association, subject to approval in accordance with procedures established by the association’s governing documents or, in the absence of such procedures, in accordance with an approval process established by the board.

(c)Any recovery of insurance proceeds derived from a policy of insurance maintained by the association for the benefit of its members.

(d)Any fee or compensation authorized in the governing documents.

(e)Any fee or compensation authorized in advance by a vote of a majority of the voting interests voting in person or by proxy at a meeting of the members.

(f)A developer or its representative from serving as a director, officer, or committee member of the association and benefiting financially from service to the association.

 

It’s pretty clear that the idea of members of a community association Board of Directors getting paid, runs afoul to the thinking of The Florida Legislature.  Funny because the idea of some Florida Legislators getting paid runs afoul to the thinking of most Board members I know.

 

As we all know though, many people that run for the Board have no prior management, legal or accounting experience.  That does not mean that these people are not qualified for the Board.  However, I’m curious if some of you think that more candidates with professional backgrounds would run for the Board if they were able to get paid for serving.  If so, what would be a reasonable compensation to be a member of a Board?  Would it depend on the size of the community?  How about not having to pay assessments each month?

 

Or…………..should Board members serve without compensation and simply for the  overwhelming joy and appreciation they receive from everyone else in helping to run the community?

 

What do you say?  In terms of the quality of a Board member, does the old adage “you get what you pay for” hold true?

 

 

 

 

MOTHER’S DAY – A TIME TO SPEND WITH FAMILY – JUST NOT AT YOUR CONDO

 

 

As we know, Mother’s Day is all about family.  In a community association however, one person’s definition of “family” may differ with how their governing documents define “family.” The result may lead to certain people being allowed to have their “family” live with them in their condominium while their neighbor is prohibited from having their “family” live with them in the unit next door.  Sounds confusing?  We haven’t even started yet……

 

As evidenced in the news this past week, there is certainly an on-going debate as to what type of relationships will be classified as “familial” relationships by each state.  Believe it or not, the debate doesn’t end at the entrance to the condominium, but instead only heats up once inside.  As our readers know, the governing documents in many community associations only allow the units to be used by the owners and members of their “immediate family” or require the unit to be occupied solely “as a single family residence.”  Associations have routinely filed suits seeking to enforce these provisions of the governing documents in a manner that would restrict occupancy to the more traditional definitions of “family” but have often times been unsuccessful.  Let’s review a couple of scenarios:

 

Arbitration Case 1993:   A unit owner allowed his wife’s niece to reside in the unit while the unit owner was away.  The Association argued that the niece was a “guest” —– but the owner said that she was “a member of his family” and did not have to get approved.  Arbitrator held that a single family are people related by blood or marriage living and cooking together as a single family.  Since the unit owner did not reside with the niece they were guests and not a single family.

 

So in this case – according to the arbitrator, you have to be related by blood or marriage and must live together at the same time to be considered family.

 

 

Arbitration case in 1993: The term family is now one of greater flexibility.  Two males living together does not violate the provisions of the declaration limiting use as a “single family residence.”  The arbitrator held that since they were living together and  sharing expenses, that alone made them a family.

 

Like I said.  The debate continues.

 

Another arbitration case in 1994: although an owner considered the person occupying the unit “to be like a son to her,”   the occupant, who was also helping to pay bills,  was a “tenant” and not a family member and therefore the single family residence rule was violated.

 

Interesting to note that 2 men sharing expenses were considered a “family” but a younger  man and  an older woman were not, even though they both were contributing toward household expenses.

 

Another 1994 arbitration case – Elderly unit owners adult daughter and husband who co-occupied the unit with the owner were not “tenants” or “guests” under the single family restriction because they all occupied the unit as a single housekeeping unit even though the unit owners resided in the unit on a seasonal basis while the daughter and husband resided there year round.

 

Whatever your definition of family is…………..I wish you and yours only health and happiness.  Now I know that may not be possible in your condo or HOA but I’ll wish it anyway.

 

TO REJECT OR NOT TO REJECT: THAT IS THE QUESTION

 

Last week’s column about what sort of relationships may constitute a family, sure drew the ire of some of our readers.  People were outraged that their association was able to determine who can and who cannot live in or occupy a home that they own.  Some of you thought that just because you move into a community association doesn’t mean you checked your property rights at the entrance to the community.  Well…to some extent you’re wrong.  Here is what the 4th District Court of Appeal said in 1975 in a case called Hidden Harbour Estates, Inc. v. Norman 309 So.2d 180 (Fla 4th DCA, 1975):

 

Inherent in the condominium concept is the principle that to promote health, happiness, and peace of mind of a majority of unit owners, since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property.

 

So…yes you do check some of your rights at the entrance to the community.  The trade off though is health, happiness and peace of mind in your condo.  (Stop laughing)

 

Specifically, in terms of whether or not your association can decide who gets to live in your condominium here is what The Florida Supreme Court said in White Egret Condominium, Inc. v. Franklin, 379 So.2d 346 (Fla.1979),

 

we recognized that “[r]easonable restrictions concerning use, occupancy and transfer of condominium units are necessary for the operation and protection of the owners in the condominium concept.”

 

The power to screen and reject though is not absolute.  While it is apparent that the association can make reasonable regulations regarding the sale and transfer of units, in Aquairian Foundation, Inc. v. Sholom House  448 So.2d 1166 (3rd DCA, 1984) the court held:

 

The declaration of condominium in the present case permits the association to reject perpetually any unit owner’s prospective purchaser for any or no reason. Such a provision, so obviously an absolute restraint on alienation, can be saved from invalidity only if the association has a corresponding obligation to purchase or procure a purchaser for the property from the unit owner at its fair market value. Otherwise stated, if, as here, the association is empowered to act arbitrarily, capriciously, and unreasonably in rejecting a unit owner’s prospective purchaser, it must in turn be accountable to the unit owner by offering payment or a substitute market for the property. When this accountability exists, even an absolute and perpetual restraint on the unit owner’s ability to select a purchaser is lawful.

 

 

Associations should first check whether they even have the ability in their declaration to screen and reject leases, transfers or sales in the first place.  Many associations think they have that right but confuse same with their “right of first refusal” which basically only gives the association the right to purchase or lease the unit on the same terms being offered by the owner to the potential new buyer or renter.

 

Assuming that the documents allow the association to screen and reject, you may all be surprised to learn that there is little to no case law or statutory guidance as to what criteria a board must use in determining whether or not to reject an applicant.  Most attorneys agree however that allowable factors include poor credit history, prior history of foreclosure or evictions, criminal record and the immediate inability to comply with the existing documents.  (For example, documents say “no pets” and the prospective owner wants to move in with a dog)

 

Associations that have the authority to screen and reject would be wise to create a uniform set of guidelines that apply even handedly to all potential purchasers, transferees or tenants.  This could potentially protect the association against claims based upon discrimination or claims by the unit owner for breach of fiduciary duty, breach of contract and/or claims for tortuous interference with contract.

 

Last week we heard from lots of Floridians who thought that associations may have too much power in deciding who can and who can’t live in their units.  I’m guessing that there are lots of other Floridians who are glad that the association may have the right to reject felons, people with terrible credit and people who seek to immediately breach the association’s governing documents and I would certainly like to hear from them too.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIVING IN A MATERIAL WORLD

 

First thing first….I honor all those who served our country on this Memorial Day and thank them for their service.  I always am amazed about how many former service men and women serve on association boards after their service to this country is completed.  In fact, one former pilot recently told me at one of my Condo Craze Board Certification Seminars that he thought his time spent in the military was easier than his current position as President of his association.  I have to tell you…..I’m not sure if he was kidding.

 

Today we discuss an often litigated topic, “material alterations.”  As many of you know, a board of directors can’t make “material” changes to the common areas unless a vote of the community is obtained.  Usually, a 75% vote in favor of the change is required.  You may be surprised to learn though that the Board can circumvent that 75% requirement in certain circumstances if the change can be classified as a “repair.”

 

Here are some decisions by Florida arbitrators who determined whether or not a change was “material” or not and whether or not a vote of the community was required.

 

Capistrano Condominium vs. Jochim where the board, in furtherance of their duty to protect the common elements determines that landscaping stones are needed to address erosion problems, the board statutory duty to preserve the common elements overrides any requirement requiring unit owner consent.

 

Cundiff vs. Flamingo K Apartments the installation and expansion of a sprinkler system did not require unit owner approval where the Board was able to show that the area in question had a system in place that was inoperable and the vegetation was dying.

 

 

Barnhim vs. Vista Harbor Association, Inc  unit owner approval not required for installation of a chain linked fence where the fence provided security from activities occurring in an adjacent public parking lot and it was shown to be reasonable and necessary for the security of the association.

 

Krietman vs. The Decoplage Condominium  replacement of common element acoustical ceiling tiles with drywall,   and replacement of ceramic floor tiles with marble,  was determined to be necessary maintenance and did not require a unit owner approval.  The Board was able to show that drywall is more durable and cost effective.   The association should not be required to replace material that has done poorly with the identical material which may also be expected to perform poorly when it has an alternative that has a comparable function.

 

Lamar vs. Peppertree Village the board determined to replace deteriorated wood siding with stucco siding, and the arbitrator held that no vote of the owners was required. The changes are primarily maintenance related and wood siding is particularly inappropriate in south Florida where it attracts insects and is vulnerable to frequent tropical rains.

 

Midman vs. Sun Valley East Condominium Association the repair of a pool deck which was accomplished by a removal of an existing deteriorated Chattahoochee deck and replaced with paver brick was held to be a necessary repair and not a material alteration where the paver bricks required less maintenance and had a service life of two or three times that of Chattahoochee decking.

 

Baran vs. Romont South Condominium K the association’s decision to allow a unit owner to plant a garden behind his unit was not a material alteration of the common elements requiring a vote of the unit owners and the association may make day to day decisions on landscaping questions without seeking unit owner approval.

 

Ivanovski v Golden Horn: no unit owner vote needed for association to change from carpeting to tile in a room adjacent to the pool, because tile was superior.  And….the association can change the style of lighting to provide for more energy efficient lighting without a vote of the unit owners.

 

Here is what the order actually said…..

 

 

Accordingly, it is ORDERED that the association shall have 60 days in which to prepare and obtain the proper unit owner approval for the changes in lobby (other than the flooring replacement) and the color in the hallway wall paint and the exterior paint color scheme, failing which the association shall have 90 days thereafter to return the hallway walls and building exterior to their original, color and restore the lobby walls to their original form and/or condition.

That’s right.  Failure to obtain a vote when required may result in the actual un-doing of the change.  If a Board spends money to paint a building a different color, without a vote, the arbitrator can make the board paint it back to the original color.  Talk about the potential for wasting money!  All boards should be careful and get the advice of counsel BEFORE making the change.

 

In any event…..enjoy the rest of your holiday weekend, and thank you to everyone in Orlando who took time out of their holiday weekend to join us at the Condo Craze Board Certification seminar.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AMEND TO YOUR HEART’S CONTENT

 

As we spoke about yesterday on the Condo Craze and HOAs radio show, a judge in New York denied a condominium association’s request to prevent a unit owner from smoking in their unit.   I have often been asked if an association has the right to prevent an owner from smoking in their unit.  Certainly, all of you are aware that the association can prevent a unit owner’s behavior from becoming a nuisance or source of annoyance to other unit owners.  If the association can prove that the smell of the smoke is creating a nuisance or that the smoke is causing physical damage to another unit or the common areas, the association would be entitled to an injunction.  Often times however, proving a nuisance is difficult.  How do you prove to a court how bad something smells?  Rest assured the defendant will present witnesses in court saying that there is no terrible smell.  So what’s a judge to do?

 

Can the association’s board of directors pass a “rule” that prevents smoking in a unit?  Probably not, as the Board’s rulemaking authority normally extends only to use of the common areas.  There’s more than one way to skin a cat however.  Suppose the unit owners in the condominium wanted to amend their declaration to preclude smoking in the condominium units?  Would that work?  I certainly think so.

 

In Woodside Village Condominium Association, Inc. v. Jahren  806 So.2d 452 (Fla. 2002)  The Florida Supreme Court heard the story of a unit owner who owned 4 units in a condominium and who basically lost the ability to rent those units because the unit owners voted to amend their declaration of condominium to only allow a unit to be rented for 9 months in a 12 month period.  Mr. Jahren sued the association alleging that the amendment was illegal.  The Florida Supreme Court ruled however that the amendment was not illegal.  In fact, The Supreme Court made it clear that there are very few restrictions found in the Florida Condominium Act when it comes to amending the declaration and that these are found in 718.110.  For example, pursuant to subsections (4) and (8), all unit owners must consent to amendments which materially alter or modify the size, configuration or appurtenances to the unit, change the percentage by which the unit owner shares the common expenses and owns the common surplus of the condominium, or permit timeshare estates to be created in any unit of the condominium, unless otherwise provided in the declaration as originally recorded.

 

Moreover, The Florida Supreme Court found that Mr. Jahren was always on notice that the declaration could be amended and that this particular amendment does not violate public policy or his constitutional rights.

 

Finally, the court opined that these type of restrictions imposed by the amendment to the declaration “simply come with the unique territory of condominium ownership. Indeed, it is restrictions such as these that distinguish condominium living from rental apartments or single-family residences. Hence, persons acquiring units in condominiums are on constructive notice of the extensive restrictions that go with this unique, and some would say, restrictive, form of residential property ownership and living.”

 

There certainly is no constitutional right to smoke in your home.  There also isn’t any provision of the Florida Statutes which would prevent unit owners from amending their declaration to prevent smoking in units.  So again, I say it can be done.  In fact, as The Florida Supreme Court says, unless a unit owner can prove that an amendment violates the current statute, his constitutional rights, or some public policy, the right of the members to amend their declaration is certainly far and wide.

IS THERE A FRIEND IN THE HOUSE?

 

It’s been a while since I felt strong about a particular political candidate.  The two party system has simply destroyed the opportunity for any candidate to do anything other than toe his party’s platform.  If he or she deviates from the platform, the party casts them to the wind until another robot comes along and follows their party’s script, word for word.  It has inhibited candidates from promoting the best ideas of both parties and prevented reasonable solutions from being implemented and simply has resulted in and has even encouraged gridlock.  Worse yet,  you simply can’t find a candidate with enough courage to even suggest that their party’s stance on a given issue may need to be re-evaluated or should be open to further discussion.  That is until yesterday…..

 

Republican Randy Johnson is running for Florida’s House of Representatives in District 55, which encompasses parts of four different counties on Florida’s west coast.  Randy  was raised in a military family in Central Florida.  He graduated from the University of Florida in 1981 with a B.A. in Economics.  After graduation, he entered the navy where he served as an Officer and carrier pilot for nine years.  He flew over 200 missions aboard the United States Aircraft Carriers, USS Saratoga, Theodore Roosevelt and Independence.  In 1998, Randy moved his family to Osceola County and successfully ran for, and was elected to, the Florida House of Representatives. He served 4 terms and, upon his departure, was considered one of the most conservative members of the House.

Notwithstanding the fact that Randy was considered one of the most conservative members of the House, yesterday on Condo Craze and HOAs, Randy took some positions that no doubt will create a stir with members of his own party.  Randy came out in favor of expanding the jurisdiction of the DBPR to also oversee homeowner associations, came out in support of having HOA board members get certified just like condo board members, and came out in support of holding the banks more financially responsible to community associations.  When I made it clear that Republicans considered this an expansion of government and that his line of thinking certainly is not reflective of Republican thought to date on these issues, Randy’s answer was great.  He said that the Republicans care about family values, seeing families prosper in Florida, and all of these proposals he supports only enhances family values and give Florida families a chance to enjoy and keep their homes.

By the way…….I don’t remember a Democrat coming to the aid of Florida community association members either in recent memory.  In fact, both parties overwhelmingly supported removing developer warranties in an HOA community.  Right now it’s simply hard to find a friend of Florida community association members in either party.

No doubt that by sticking his neck out and daring to say what he actually believes is best for Florida homeowners, Randy will now be crucified by certain members of his own party.  I’m guessing though that in light of Randy’s military record, he’s fought tougher enemies than fellow politicians who can simply read the cue cards prepared by their party’s leaders.  To find out more, and to lend Randy support, please visit www.electrandyjohnson.com.

 

 

 

WAVING OLD GLORY MAY BE MORE COMPLICATED THAN IT SOUNDS

 

Ah………………..the first week of July is approaching.  Our thoughts turn to backyard bar-b-cues, baseball, fireworks and if you live in a Florida community association, lots and lots of fights over how, when and where to fly the flag.  It seems like each year we hear and read about so many battles between patriotic homeowners who may display large flags or many of them, and community association boards who seek strict compliance with the statutes and provisions of their declaration that deal with displaying the flag.

 

Here is how displaying the flag is actually treated in our Florida Statutes:

 

For condominiums, Florida Statute 718.113 states:

 

(4)Any unit owner may display one portable, removable United States flag in a respectful way and, on Armed Forces Day, Memorial Day, Flag Day, Independence Day, and Veterans Day, may display in a respectful way portable, removable official flags, not larger than 41/2 feet by 6 feet, that represent the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, regardless of any declaration rules or requirements dealing with flags or decorations.

 

 

For HOAs, Florida Statute 720.304 states:

 

(2)(a)Any homeowner may display one portable, removable United States flag or official flag of the State of Florida in a respectful manner, and one portable, removable official flag, in a respectful manner, not larger than 41/2 feet by 6 feet, which represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW-MIA flag, regardless of any covenants, restrictions, bylaws, rules, or requirements of the association.

(b)Any homeowner may erect a freestanding flagpole no more than 20 feet high on any portion of the homeowner’s real property, regardless of any covenants, restrictions, bylaws, rules, or requirements of the association, if the flagpole does not obstruct sightlines at intersections and is not erected within or upon an easement. The homeowner may further display in a respectful manner from that flagpole, regardless of any covenants, restrictions, bylaws, rules, or requirements of the association, one official United States flag, not larger than 41/2 feet by 6 feet, and may additionally display one official flag of the State of Florida or the United States Army, Navy, Air Force, Marines, or Coast Guard, or a POW-MIA flag. Such additional flag must be equal in size to or smaller than the United States flag. The flagpole and display are subject to all building codes, zoning setbacks, and other applicable governmental regulations, including, but not limited to, noise and lighting ordinances in the county or municipality in which the flagpole is erected and all setback and locational criteria contained in the governing documents.

 

Strangely enough, apparently only HOA owners are allowed to fly a POW-MIA flag and condo owners have no such right.  Even stranger is the fact that while in both type of associations you are allowed to display a second flag representing a division of the armed forces, only in an HOA must that second flag not be larger than the American flag.  More evidence that legislative drafting of these statutes needs work

 

In any event, it’s unfortunate that while we all agree that we should all have the ability to fly the flag, complaints, lawsuits or arbitration cases involving the number of flags, the size of the flags, and the types of flags to be flown seem to get press coverage year after year.

 

Take note that the statutes only allowed you to display an American flag in front of your home.  Should there be a right to display the flag of any country in front of your own home, or just the flag of the USA?   I always thought that it’s a matter of time before someone puts up a flag of a foreign nation outside of their home, is asked to take it down by the Board and the case heads off to court on 1st amendment grounds.  Remember, like it or not, the U.S. Supreme Court has ruled that flag burning is constitutionally protected free speech.  What about peacefully displaying a flag of a foreign nation?  Would it matter if that country is a friend or foe?  How do you think a court would rule?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OWNERS WANT THEIR “EMOTIONAL SUPPORT” DOG

BUT COURTS BITE BACK

 

There is a huge debate going on about whether or not a “no pet” community association can actually remain “pet-free” simply because the governing documents say that it is.  Despite the fact that so many communities have language in their governing documents that specifically prohibit owners or renters from having a pet, pet owners have been striking back with notes from their doctor or family therapist, saying that they need the animal for “emotional support” and that they are allowed to keep the animal pursuant to the Federal or Florida Fair Housing Act.

 

On June 13th, the 4th District Court of Appeal issued an opinion in  Sun Harbor HOA v. Bonura  where the fiancé of an owner claimed the need for a dog due to a car accident suffered years earlier.  In support of the request to keep the dog, the fiance’s initial letter included a “Registered Service Dog Certificate” purchased online from “Registered Service Dogs.com”  To tell you how ridiculous these websites are, I once registered a dog named Pluto for his owner Mickey Mouse and after paying the fee, my printer spit out a certificate.

 

The association asked the fiancé and owner to prove at a Board meeting the following:

 

  1. demonstrate that the fiancé suffers from a medical disability or handicap, unless the disability or handicap was visible, and they indicate that any written information provided by the resident would not be copies or shared and would be returned after viewing;
  2. demonstrate how the service animal can or will reasonably accommodate the disability;
  3. demonstrate that the service animal has special skills or training to accommodate the handicap; and
  4. demonstrate how the special skills and training of the service animal set it apart from an ordinary pet.

They eventually showed up, apparently couldn’t prove what they needed to, and the Board denied the request.

 

This case winds up in trial.  In support of the fiancé and owner, two different medical doctors and a Registered Nurse testified.  One of the doctors testified that the fiancé did not have any substantial limitation on any major life activity and that he never prescribed a dog.  A psychiatrist testified that he first began treating the fiancé four months after the lawsuit was filed and he testified the dog was necessary because of her ongoing depression and anxiety, and that he saw her interact with the dog on 2 occasions.  The nurse testified that the fiancé uses a service dog to alleviate her physical and psychological disorders and that she noticed a marked improvement in the fiance’s condition after she purchased a dog.  The fiancé testified that as a result of her accident she had disabilities that prevented her from attending medical school, prevented her from playing piano and that her memory, coordination and balance has now suffered. She said the dog helped her with emotional support and her memory.  After hearing all of the evidence, the trial court judge ruled in her favor and held that she was entitled to keep her therapy dog as a reasonable accommodation.

 

The association then appealed and the case then went up to the 4th District Court of Appeal.  The 4th DCA addressed the initial letter that was given to the Board, which stated that the fiancé is a “qualified individual with a disability.”  The court noted that letter didn’t say how she is qualified, the limitations and disabilities she was suffering from, why she is entitled to the dog, or that the dog that occupied the residence was necessary to afford the fiancé an equal opportunity to use and enjoy the dwelling due to her disability, as opposed to the dog being just desirable and helpful. The court also said that the association was well within its rights after it received that letter, to place the issue on the agenda for a board meeting and to determine what would need to be demonstrated at that meeting.  The court found that the medical letters failed to establish she had a handicap.   The court even cited to another case that said a doctor’s letter identifying that the plaintiff suffered from a mental dysfunction that impaired his ability to work along with the plaintiff’s own contention that he suffered from depression and anxiety and had HIV were insufficient to establish a handicap.

 

The court reiterated that the federal act defines a handicap as — “a physical or mental impairment which substantially limits one or more of such person’s major life activites such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.  The 4th DCA concluded that even the medical testimony at trial was insufficient to establish that the fiancé was suffering from a handicap because there was no substantial competent evidence indicating a substantial limitation on one or more of her major life activities.  In fact, it came out at trial that she was able to travel to and from work without the dog.  The court then concluded that the plaintiff simply failed to prove a case of disability discrimination and reversed the trial court.  Big win for the HOA.

 

A few days after that decision a federal court jury in Miami also ruled that a Hallandale condominium association did not discriminate against a 90 year old woman who was suffering from dementia, by denying her the right to move into the condominium with an emotional support animal.  The trial lasted about two weeks and the jury deliberated for nearly 3 days.

 

These cases generally start out with a doctor writing a letter basically stating that their patient suffers from an emotional condition and that they feel better with an emotional support animal and therefore the condo should allow it.  The doctor often signs a form letter that the patient pulled off of the internet and that contains the right buzz words.  And that’s mistake number one for the doctor.  If there are any doctors reading this right now, before you put your signature on that letter, you are on notice that you may be sitting in a deposition being asked to explain in detail how you arrived at the conclusions in your letter.  You may be deposed about every sentence in that letter and every word in that sentence……………..and if the case goes to trial, rest assured that you are going to be explaining it all over again in front of a jury.

 

What’s your opinion?  Would it matter to you if the person seeking the request already lived in the community as opposed to trying to move into the community knowing in advance that it was a “no pet” community?  What about the people who deliberately bought a home in a no pet community because that is what they wished for?  Are they not entitled to rely on their declaration?  Should a pet be required to have some special training rather than just make their owner feel happier?

 

 

 

 

 

 

 

 

 

 

THE MOTHER  OF ALL BATTLES – GETTING ACCESS TO RECORDS

 

To simplify, I like to say that any document that could be, might be or appears to be an official record of the association probably is.  To further simplify, every unit owner in both a condo and an HOA can see all the official records with very few exceptions.  (Even the accounting ledger for your unit)  Those exceptions basically are:

 

  1. Any record protected by the lawyer-client privilege;
  2. Information obtained by an association in connection with the approval of the lease, sale, or other transfer of a unit;
  3. Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health, and insurance records;
  4. Medical records of unit owners;
  5. Social security numbers, driver’s license numbers, credit card numbers, e-mail addresses, telephone numbers, facsimile numbers, emergency contact information, addresses of a unit owner other than as provided to fulfill the association’s notice requirements, and other personal identifying information of any person, excluding the person’s name, unit designation, mailing address, property address, and any address, e-mail address, or facsimile number provided to the association to fulfill the association’s notice requirements.

 

In a condo, the records must be made available to a unit owner within 5 working days after receipt of a written request by the board or its designee.  HOA owners have to wait longer, 10 days.  HOA owners are forced to pay more for access to and copies of records than owners in a condominium.  In an HOA, the association may charge up to 50 cents per page for copies made on the association’s photocopier, whereas a condominium can only charge a reasonable expense.

 

The bigger problem is that in an HOA, if the association does not have a photocopy machine available where the records are kept, or if the records requested to be copied exceed 25 pages in length, the association may have copies made by an outside vendor or association management company personnel and may charge the actual cost of copying, including any reasonable costs involving personnel fees and charges at an hourly rate for vendor or employee time to cover administrative costs to the vendor or association.

 

Last week, I was somewhat surprised by some of the comments from our readers of the blog.  Not everyone was sympathetic to the plight of licensed Florida CAMs.  If there is one statute to blame for why some people feel this way, the access to record statute may be the one.  Despite the fact that the statute was clearly designed to allow the association to pass on the actual costs of what the management company charges to respond to records requests from owners, many CAMS and/or management companies have interpreted this statute to mean that they are now at liberty to charge exorbitant fees to HOA owners who want access to records and who must pay these fees up front.  That is not the statute’s intent and ultimately rest assured that a court will make an example of a management company who goes too far.

 

In a condo, the failure of an association to provide access to the records within 10 working days after receipt of a written request allows the owner to file an arbitration action against the association for at least $50 per calendar day for up to 10 days, beginning on the 11th working day after receipt of the written request and for reimbursement of reasonable attorney’s fees.  So, be aware that arbitrators routinely award an owner $500.00 in damages, thousands in attorney’s fees and costs and enter an order requiring the association to permit access to the records.

 

In an HOA, an owner deprived of access to records must first go to mediation.  If that fails, it’s off to court to seek the same remedies that condo owners get in arbitration.

 

Keep in mind that both the condo and HOA statute only requires that the association provide “access” to the records.  It does not require the association to mail copies of records to owners who demand that the association send them documents in the mail.  The association is not under any obligation whatsoever to respond to records requests by mail.

 

In both a condo and an HOA, the association may adopt reasonable rules regarding the frequency, time, location, notice, and manner of record inspections and copying.  These rules however must be reasonable and cannot serve to act as a deterrent to a unit owner who demands access.  Decisions by the arbitrators who have ruled on these issues generally state that associations who are larger and have full-time staff will not be able to create rules that dramatically restrict the days and hours that unit owners are allowed to inspect records whereas associations that are small, self managed and have few resources may be more restrictive.  Before passing a rule, associations are wise to ask their counsel first if their proposed rule would pass scrutiny.

 

Finally, the association may offer the option of making the records available to a unit owner electronically via the Internet or by allowing the records to be viewed in electronic format on a computer screen and printed upon request.  THIS IS A GREAT IDEA!  Many associations have embraced technology and have created a website for their association, posting all of the association’s official records, while restricting access solely to unit owners.  These associations will generally tell you that as a result of posting the official records on the website, records requests are dramatically down, the association’s office is not bogged down responding to requests, and the community association manager is happier spending his or her time on other pressing issues.

 

If anyone can think of a good reason why it should be more difficult and expensive for HOA owners to get access to records than condo owners, please let me know.  I’m certainly stumped for an answer.  I’m afraid to ask……but how about telling us some record request horror stories of your own?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WHAT’S MORE IMPORTANT,

THE ELECTION FOR PRESIDENT OF YOUR CONDOMINIUM

OR THE ELECTION FOR THE PRESIDENT OF THE UNITED STATES?

 

 

I know what you’re thinking after reading the title of the blog today.  Has Eric lost it?  Is this a serious question?  Obviously, much more important to me is the election of the President of the United States.  The owner of unit 3N vs. the owner of unit 11B simply doesn’t match-up to Obama v. Romney.  Wait.  Hold that thought.

 

Several years ago, I represented an individual in a civil rights lawsuit against a municipality.  The gist of the complaint was that the local officials, including the Mayor, City Manager and Building Official were purposefully violating my client’s rights to live in the community with the same rights as everyone else and that because of a personal vendetta by the mayor, my client’s rights were violated through never ending harassment.

 

In preparing my research for the case, I remember coming across a court opinion that basically said something like —- don’t be afraid of The President, your Senators and other federal officials.  They are too far removed from your day to day life to cause you any real personal harm.  On the other hand, you should be wary about local officials because they have the power to make your life a living hell if they want to.

 

If we agree with that court’s opinion, then it certainly bears true that nobody has more power perhaps to make your life more miserable than the President of your own association.  Especially if that President is not shy about his or her dislike for you and is not afraid to act outside the bounds of the law.

 

During the last presidential election, over 64% of eligible voters participated in the election.  That percentage is traditionally greater than the participation in the typical condominium or HOA election.  Yet, the next President of the United States won’t be able to tow your car, foreclose on your home, slander you in public, harass you with threatening letters, lien and foreclose on your home, prevent your guests from visiting you, turn off your electric, scream at your kids or steal your money.  At one point or another in my career, I have known rogue association Presidents to have done all of these things and more.  Any one of them can make turn your life into a nightmare.  Two or more of them can make it impossible to even live in your home.  On the flip-side, I have seen Presidents who turns the community from an army barrack into a fun loving friendly environment.

 

So now that you have had time to think about it a little, I’ll ask again.  What’s more important to you personally in your day to day life, the election for President of your condominium or your country?

 

P.S. time is running out to register for the Condo Craze Board Certification Seminar at the PM-Expo event in Orlando on August 15th.  To register, please go to: www.condocrazeandhoas.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WATCHING WHAT YOU SAY

 

The first thing a Board member must do, before learning all the laws, reading your docs and memorizing the rules is to immediately grow a thicker skin.  Often times, Board members hear residents say things like “so where has all our money gone” or “if you knew what you were doing, we wouldn’t need another special assessment!   And these are the compliments.  So what’s a Board member to do?

 

Most experienced Board members know that even if they figured out how to reduce assessments by 90%, there’s an owner out there who will say they could have reduced it by 95%.  Over time you kind of learn to expect these comments and it becomes a little easier to let them roll off your back.  I can’t tell you though how many times Board members have called me, wanting desperately to file a lawsuit against an owner who is vocal in the community and who routinely criticizes the Board members for their actions.  I’m here to tell them in no uncertain terms…..get over it.

 

A unit owner doesn’t lose their first amendment rights to criticize their elected representatives, just because the criticism occurs behind the gates of a condominium or HOA.  Freedom of Speech, including the right to campaign against the Board, question their decisions and complain about their conduct exists in Florida community associations and can’t be taken away pursuant to the First Amendment.  Because the owners have an interest in their community, communications of this nature are considered “privileged” and are protected speech.

 

Notwithstanding the foregoing, there are definitely times when accusations against Board members go too far and a lawsuit may be warranted.  There is no such right to accuse a Board member of stealing association funds or receiving kickbacks and engaging in other criminal conduct.  Accusing a Board member of a crime, with no proof that the crime was committed, is defamation per se, is not protected speech and can get the author of the comment in legal hot water.

 

On the flip side, Board members who accuse owners of criminal conduct can also find themselves named as a defendant in a lawsuit.  I once represented an owner in an association who was vocal in his criticism of the Board.  As a result, the members of the Board of Directors jointly prepared and disseminated a letter to the community wherein they accused him of a crime, cheating on his real estate taxes.  The Broward County Judge assigned to the case, though the conduct of the Board members was so egregious, that he allowed my client to seek punitive damages against them.  The case settled.

 

Last week, I learned during a deposition that despite having practiced in this area for 20 years, I haven’t seen everything.  I represent an individual in a community that sent a rather harmless letter to other members of the community, not accusing the Board members of stealing, but simply questioning certain decisions and wondering why so much money was recently spent.  In return, he was served with a lawsuit by the President who said he thought the letter was defamatory.   I took the President’s deposition, and learned that despite the fact that there was a reputable management company in place at the condominium, he was still in favor of keeping the court appointed receiver in place.  Receiverships are normally quite costly to the association so his testimony didn’t make much sense.  That is until he testified that a sister company of the receiver pays him $7,500.00 per month to use his realtor’s license.  I think he should have had a thicker skin too before picking a fight with a unit owner.  That case too settled upon conclusion of the deposition.  At least to me, the action of the Board member in filing suit for defamation was the classic case of “he doth protest too much.”

 

Anyone ever sue or been sued for defamation?  Threatened to be sued for defamation?  When, why and how did it turn out?

 

P.S. If you would like to register for The Condo Craze Board Member Certification Course in Orlando on August 15th or in Hollywood on November 8th, sign up at www.condocrazeandhoas.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE OTHER KIND OF BOARD MEMBER

 

 

The common complaint about a Board member is that of the typical “condo commando” who is more or less a drill sergeant, and who tries to run the place like an army barracks, inspecting every nook and cranny and looking to pick a fight with any willing participant.  While that may be the stereotypical portrayal of association Board members, there is another type of Board member that may be even more common than the “commando.”  That is the “anti commando” or the man or woman who does the opposite of the “commando” and in effect, does nothing.

 

Every board member who works hard at being a board member knows exactly who I’m talking about.  The one that abstains from voting on any issue because someone’s feelings may be hurt.  The one that looks the other way when other owners or renters commit violations of the governing documents.  The one that wants 35 bids in hand before deciding to fix a $200.00 problem.  The one that votes against raising the budget even though the association’s bills can’t possibly get paid if the budget remains the same.  The one who refuses to pass any kind of special assessment even to make mandatory or even emergency repairs.

 

I can certainly make the argument that the “anti commando” is more dangerous to the association than the “commando.”  Failing to vote on issues can result in deadlocks causing problems to linger.  Looking away when owners violate the governing documents puts the association in a potential “waiver” situation that would prevent these violations from now ever being corrected.  Over analyzing bids and unreasonably holding on for a cheaper price sometimes causes damages to compound and repair costs to increase during the delay.  Failing to increase the assessments causes bills to go unpaid or ultimately results in special assessments.

 

Why get on the Board if your approach is always “hands off?”  Better to stay on the side lines and get out of the way of those members who aren’t afraid to tackle the problem, even if their decisions may piss a few people off.  Experienced Board members know that no matter what decisions they make, they will always wind up angering a segment of the community.  They know that it’s better to have made a gallant effort to solve the problem rather than to pretend the problem never existed in the first place.

 

Being a Board member is not easy.  It doesn’t get easier when your co-directors simply occupy a seat at the Board but act deaf, dumb, blind and mute.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WATER WATER EVERYWHERE………

 

An aggravated client of mine comes to me this week, complaining that numerous owners have installed washers and dryers over the years without permission from the association, and that as a result, the owners who don’t have washers and dryers object to paying the water bill as part of the common expenses of the condominium association.

 

Regardless of whether or not the association may be able to sue everyone with a washer/dryer seeking their removal, many of the owners believe there is a fundamental unfairness in equally dividing the cost of water among the owners, when the owners of washers and dryers use substantially more water than everyone else.  In other condominiums, single residents believe it’s unfair for them to pay the same amount toward the water bill as the family with five members living in the unit next door.

 

You would think that one way of possibly correcting this situation would be the installation of separate water meters for each unit.  That way, everyone pays their fair share based upon the exact amount of water actually used by that unit.  In fact, my client contacted a company that specializes in installing separate water meters in each condominium unit and that would pro-rate the water bill appropriately.

 

Not so fast.

 

Florida arbitration cases have held that installation of individual water meters may be considered a “material alteration” of the common areas, thus requiring a three-fourth’s vote of the unit owners.    So we at least need 75% of the owners to vote in favor of this installation so it seems.

 

But wait…………..

 

This company said that their particular individual meters can be installed inside the unit, and thus not on the common areas.  Therefore, a vote of the owners is not needed.  Great!  Let’s start the work.

 

Not so fast.

 

We at least need to amend the declaration of condominium to change the way unit owners share in the payment of the common water expense.  OK.  Let’s get out the ballots right?

 

Slow down.

 

 

 

 

 

 

 

 

 

 

 

 

Florida Statute 718.110 states:

 

4)Unless otherwise provided in the declaration as originally recorded, no amendment may change the configuration or size of any unit in any material fashion, materially alter or modify the appurtenances to the unit, or change the proportion or percentage by which the unit owner shares the common expenses of the condominium and owns the common surplus of the condominium unless the record owner of the unit and all record owners of liens on the unit join in the execution of the amendment and unless all the record owners of all other units in the same condominium approve the amendment.

 

Now we have a real problem.  According to the statute, we need a vote of 100% of the owners and all of their mortgagees.  Call me skeptical, but I don’t think the owners who already have the washers and dryers or the larger familes are going to vote in favor of this change, when leaving things the status quo works to their financial advantage.

 

So…….despite the fact that this situation is common at many associations throughout Florida, there really is no remedy to cure it.

 

It is my understanding that studies have shown that overall water usage declines in condominiums subsequent to installation of individual meters.  The theory is that when people know they’re being metered, they won’t let the water run.  So these meters not only make sense from a financial and fairness perspective, but also from a Green Earth and conservation perspective.

 

It certainly would be simple enough to draft legislation that would allow owners the opportunity to vote to change their declaration to now allow for installation of separate water meters.  It’s also difficult to think of the downside in passing such legislation.  Let me know your thoughts and if we basically all agree, let’s see if we can get a member of  The Florida House or Senate to sponsor such a bill.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAN YOU GIVE AWAY WHAT’S NOT YOURS?

 

Can you tell a third person that it’s OK to drive your neighbor’s car without your neighbor’s consent?  Can you tell a third party that it’s OK to wear your neighbor’s clothes without your neighbor even knowing about it?  If you think these are silly questions, then you have to ask why some associations and some courts think it’s OK to in effect seize the home of a neighbor that stopped paying assessments, put an owner of their choice into the neighbor’s unit, and then keep the rent.

 

I see this happening more and more in associations around the state.  Associations, either of their own volition, or based upon poor advice, are being advised that simply because a unit appears to be abandoned, the association has the right to change the locks on the unit and rent out the unit until the bank finally forecloses and takes back title.

 

You know what it’s called when the association changes the lock to a unit that it doesn’t own and then rents out the property to someone else?  A felony.  Trespassing.  Theft.  A crime and dangerous.  Unless and until the association owns the unit, the association better stay out.

 

Suppose for a moment that the association was incorrect in assuming the unit was abandoned and the true owner returns to the unit, puts the key in the lock, turns the knob and sees that someone else is walking around his or her unit.  Anybody else think this situation can result in a tragedy where both parties think the other is breaking into their unit?  Under Florida’s Stand Your Ground Law and Castle Doctrine, it would seem to me that each may be justified in using deadly force against the other.  Scary to say the least.

 

Interestingly enough, I’ve seen lots of courts appoint receivers to enter these abandoned properties and grant them the authority to enter the unit, fix it up, install new appliances, find a tenant, pay a realtor, accept huge receivership fees, accept huge management fees, and the true owner never even knows that that this is happening to their own property.  Have you ever heard the saying that sometimes the cure is worse than the disease?  Often times that is the exact situation when a receiver gets appointed to manage communities with a great deal of foreclosures, because the only entity that makes money is the receiver and/or entities that are close to the receiver.  If an association has competent and honest management and legal counsel, and an elected Board of Directors, there simply is no reason for a costly receivership.

 

In fact, as you read this, a case that I have worked on has made it’s way to the Florida Supreme Court.  The issue is whether a court even has the authority to appoint a receiver to manage the association property, for reasons other that those very few specific reasons that are outlined in Florida Statute 718.  I’ll let you know when a decision is handed down.  In the mean time, promise that you won’t rent out your neighbor’s unit unless you own it.

 

P.S. To avoid confusion, the association can still collect the rent from the tenant of a delinquent unit owner after the proper statutory notice is given.  The above article is directed to the specific situation where there is no tenant, and the association seeks to put their own tenant into the unit without the consent of the current owner.

 

 

 

 

ARE THE BANKS SOLELY RESPONSIBLE FOR THIS MESS?

 

Week after week, month after month and now year after year, community associations blame the banks for their financial woes.  There’s no question that banks need to foreclose quicker, pay more to associations when they eventually take back title to a unit, and properly upkeep the property during and after a foreclosure.  This goes without saying.  However, when we read the papers and watch the news, I think we all need to admit that the focus of all that is wrong with the collapse of our real estate market seems solely to fall on the banking industry.  I’m thinking though that there might be another entity to blame though.  Dare I say it.  OURSELVES.

 

The media simply makes it seem sometimes that the banks had guns to everyone heads forcing them to borrow money to buy a house.  Correct me if I’m wrong, but the banks didn’t force anyone to borrow anything.  Everyone wanted to own a home and everyone who already owned a home wanted to own a bigger home.  People who owned big homes now wanted to own two big homes.  Nobody really cared if they could actually afford to make the purchase because obviously we were all going to get rich together.  As we all knew, the real estate market only goes up and never goes down.  Right?

 

Sure, the lending practices of the banks should have been stricter.  Of course not everyone should have been able to qualify to buy a half million dollar home.  But are the borrowers themselves at least partially responsible for their own demise?  This is not the same as a drug addict being offered drugs and simply being unable to resist.  Or was it?  Borrowers had the ability to purchase more affordable homes, but consciously and repeatedly rejected that notion in favor of over extending themselves with a devil may care attitude.  Millions even thought it was a great idea to have interest only loans, or loans with variable rates, never worrying for a minute that the rate may go up while the value of the home goes down.

 

Think about this.  About 70% of all homes in the country have a mortgage on them.  Apparently we like banks.  We need banks.  Without them, there really is no real estate market at all.  During this foreclosure crisis their behavior has been deplorable in many instances including but not limited to the robo-signing scandal and their failure to quickly foreclose and/or care for foreclosed properties.  Notwithstanding the bank’s misgivings,  I still think we are responsible for our own behavior, and even our own greed.  And for those of you who may share in this belief………you would probably also agree that the reason why your community may be suffering financially is not all the fault of the banking industry, but rather the fault of the neighbor who used to live in the unit next door before they were foreclosed on for failing to pay the mortgage they never were able to afford in the first place.

 

 

 

 

 

 

 

 

 

 

 

 

 

IT’S LABOR DAY! —- BOARD MEMBERS TOO DESERVE TO TAKE THE DAY OFF!

 

Labor Day is a creation of the labor movement and is dedicated to the social and economic achievements of American workers.  It’s certainly an acknowledgement of how hard the American worker works throughout the year and provides a well deserved reward of a day off.  You would certainly think that if paid workers are honored on this day, non paid workers should be honored as well.  So today………….let’s honor the thousands of Board members out there who serve day in and day out without compensation of any kind.

 

Think about it.  Board members get no pay for attending Board meetings.  They get no pay for taking phone calls from complaining residents.  No pay for taking complaints while walking around the community.  No pay for meeting with the association’s accountants, lawyers and management.  No pay for the time put in interviewing contractors or other personnel in an effort to repair everyone’s property and save their neighbors some money.  They work for the common good rather than for a paycheck and it is certainly a trait worth honoring today.  There’s no question that on this day, a day designed to honor hard work, your Board members are certainly deserving of a day off to relax at the condo or H.O.A. as summer comes to a close.

 

So to all you Board members out there, today is your day to use the common area swimming pool (between the hours of 8 am and 6 p.m.  No food by the pool either)  Feel free to work out in the gym (remember to wipe down the equipment and close the door behind you so the deadbeats who had their rights suspended don’t sneak in).  As we know, it’s a day made for bar b ques,  so fire up the common grill (just remember to clean the grill after you’re done).  Make sure to invite your friends and family (just make sure they park “head in” at guest parking or they will be towed).  (No more than 3 guests at the pool by the way).  And when your day off starts winding down and coming to a close, take a seat on your balcony, pour yourself a glass of wine, turn on the stereo and just relax.  (Just make sure to keep the music low or security will be banging on the door).  Then walk over to your bed (take off your shoes so you don’t bang on the tile and disturb your downstairs neighbor) and try to get a good night’s sleep.

 

Before falling asleep though, take solace in the fact that you complied with each and every rule the association has in place, you have had all the fun you can tolerate and look forward to the fact that …………………… you go back to being a Board member in the morning.

 

How about it readers?  If there’s one day a year to thank your Board members for the work they do all year long, today is the day.  Let’s hear some kind comments…

 

 

 

 

 

 

 

 

 

 

SUPPOSE IT WAS OBAMA V. ROMNEY

IN YOUR OWN ASSOCIATION’S ELECTION?

 

 

No matter who you plan on voting for in a few weeks, we can probably all agree that this has been the nastiest campaign that most of us have ever witnessed.  The mud slinging won’t stop until the last ballot is counted and we’re certainly none the wiser for it.  It makes you think though what each would say about the other were they both fighting for the Presidency of your condominium or H.O.A.

 

No doubt that Romney would say that Obama:

 

wants everyone making $200,000.00 or more to pay the monthly assessments for everyone else;

 

will immediately apologize to all your neighboring associations for winning each and every shuffleboard tournament over the last 40 years;

 

wants to force the healthy residents to make chicken soup for the residents that need medical attention;

 

may not have even been born in Florida;

 

has already told the hard working custodian of the condominium property that “he didn’t build” that tiki bar by the swimming pool.

 

 

In response, President Obama would fire back by saying that Romney:

 

Inherited his unit from his millionaire daddy who would occasionally pay his assessments late;

 

Wants to decrease the condo’s budget by sending the manager to work for another condominium in India;

 

Wants to drill for oil right in the middle of the swimming pool;

 

Is a war monger who has threatened to bomb the 55 and over retirement community next door because their golf balls are landing in our community;

 

Is the bank’s best friend and in fact has sworn to turn the clubhouse into a Wells Fargo branch.

 

 

 

 

I’m afraid to ask.  But……………………..Who would you want for the President of your condominium?  Obama or Romney?

 

 

 

 

WHEN THE SCREAMING AND THE SHOUTING RISE TO THE NEXT LEVEL

 

 

No doubt that many of us have been to a board meeting or two where screaming  breaks out, the decibel level in the room is raised, tempers flare and little gets accomplished as a result.  The overwhelming majority of these shouting matches are non violent, and end up with each side muttering a few curse words at the other at worst.

 

But sometimes these arguments rise to the next level and suddenly you may find yourself in a serious and dangerous situation.  Just two weeks ago in Kentucky, a man opened fire at his homeowner’s association meeting killing two people.  Apparently, the association had a long running dispute with an owner over the height of his fence.  The association said that last year, they received a threatening letter from this owner about the ongoing dispute.  By the way….there is no evidence that this owner turned murderer ever did anything worse than get a speeding ticket.  He worked in nuclear medicine.

 

Over the years, I have watched violence in communities grow.  I’ve seen senior citizens with walkers and canes throw them at each other.  I have seen cars of residents literally blown up.  I’ve heard threats from residents to set fire and burn down the entire property, unit owners threatened with death, unit owners actually beaten up, board members threatened with death……and the list goes on and on.

 

Once a threat is made, the threat often turns real very quickly.  The threat cannot be ignored and if the Board believes that the maker of the threat is a danger to the community they have a fiduciary obligation to the unit owners to do something about it.

 

The instant any type of a threat of violence is made the police must be called and the incident documented.  That’s just for starters.  There are also other remedies the association may wish to consider such as arbitration proceedings, lawsuits, restraining orders and even orders kicking people out of their homes.

 

Two years ago Scott and I represented a large association in South Beach.  One owner was a man in his mid thirties that simply terrorized many of the residents by letting his giant dog run unleashed, he tased a person, struck another with a fire extinguisher and stole the association’s golf carts.  The association was able to get an order against him removing him from the property.  The decision was upheld by the appeals court who didn’t take kindly to his lawyer’s suggestion that the court has no business kicking people out of their homestead property.  The court made it clear at oral argument that the courts certainly have the power to preserve the peace and if kicking this guy out of his home did just that, then mission accomplished.  By the way, the story ended with this man being found in the truck of a car in New York with a bullet in his head about two months after oral argument.

 

 

DO NOT TAKE THESE THREATS LIGHTLY.  Many people are going through difficult times right now and fighting with their association may be the one thing that puts them over the edge.  It’s not worth it to scream and shout about bushes being to tall or whether or not an owner’s truck is a vehicle that doesn’t belong on the property.  Let the courts or arbitrators figure it out.  Don’t turn your argument into a spectacle for all to see.  That’s why I basically laughed when the Florida Legislature passed a law that allows the association to prevent delinquent owners from using the common areas.  Should a Board member risk a fist fight or worse by approaching a delinquent owner and order them out of the pool in front of the other members of the community?  Maybe it would have been safer if the Legislature approached the banks and asked them to pay more money to associations when they foreclose and take back a property.

 

Bottom line.  Take all threats of violence seriously.  The one you don’t take seriously may be the one that unfortunately leads to the worst result.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAN MY NEIGHBOR’S BROTHER’S WIFE’S THIRD COUSIN

FROM CLEVELAND SERVE ON MY BOARD OF DIRECTORS?

 

 

Election time in our Florida community associations is quickly approaching.  The thought of the annual meeting doesn’t exactly invoke thoughts of birds chirping or humming birds humming, and is more akin to Halloween Horror Night at your association.  Nevertheless, unit owners far and wide will be throwing their hat into the ring trying to win a spot on their Board of Directors on this night of torture and evil.  While willing participants quickly learn how difficult it is to compete against their fellow neighbors, they are sometimes shocked to learn that will also be competing against fellow men and women who may or may not even live in the association, and believe it or not, may not even own a unit in the association.

 

Unit owners are often very surprised to learn that as far as condominiums go, there is no requirement that a Board member must also be an owner of a condominium unit at the condominium.  In fact, the statute says:

 

Any unit owner or other eligible person desiring to be a candidate for the board must give written notice of his or her intent to be a candidate to the association at least 40 days before a scheduled election.

 

Clearly, the statute contemplates the possibility that persons other than unit owners can serve on a condominium Board.  Eligibility may be determined in the bylaws which may state that a Board member must be an owner, but don’t be surprised if your do not contain such a clause.

 

The HOA statute states:

 

All members of the association are eligible to serve on the board of directors,

 

While the statute could have specifically stated that “only” members of the association are eligible to serve on the Board, absent any provision in the bylaws which would allow non owners to serve, I have no problem limiting the Board membership to owners.

 

So…..in a condo, the answer to the title of this article is “Yes” unless prohibited by the bylaws.  In an HOA, the answer is “No” unless expressly allowed by the bylaws.

 

Just because you are an owner though, you still may not be allowed to serve on your Board.  The condo statute states that any person who is delinquent in the payment of any fee, fine, or special or regular assessment is not eligible for board membership.  The HOA statute likewise states that a person who is delinquent in the payment of any fee, fine, or other monetary obligation to the association for more than 90 days is not eligible for board membership.  The difference however is that in the condo setting, the candidate must be eligible to serve on the board of directors at the time of the deadline for submitting a notice of intent to run in order to have his or her name listed as a proper candidate on the ballot or to serve on the board.  That is not the case in an HOA.

 

Both statutes are in agreement that felons are not eligible for Board membership unless their rights have been restored for at least five years.  HOA members got the right to exclude felons about two years ago.

 

For Board members in condominiums, within 90 days of getting elected to the Board you must become certified.  One way is by taking an approved course.  Florida law even allows you to get certified within one year prior to serving on the Board.  I have now taught the course and certified approximately 3,000 Floridians.  If you would like to take the course in a fun environment, have some food, get a framable certificate and an outline of everything you learned, you can register at www.condocrazeandhoas.com  Any by the way……..the course is completely free.   On November 8th we will be teaching the course at The Hard Rock Hotel in Hollywood.  On December 1st we will be teaching the class at The Waldorf Astoria in Naples and on December 15th we will be teaching at The Holiday Inn at Universal Studios in Orlando.

 

Interesting that other than perhaps having to be an owner, and having to get certified, there are no other qualifications or prerequisites for Board membership.  Should there be?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MANAGING THE MANAGER

 

The amount of hats that a community association manager often has to wear is amazing. Simultaneously, he or she needs to serve as the number cruncher, interior designer, police man, collection agency, master of ceremonies, complaint department, tech expert, unit owner liason and of course chief cook and bottle washer.  All the while performing each and every function with a cheerful and professional appearance and ALWAYS looking as if you have every situation under complete control, even if nothing is.  Throw in the fact that managers are often dealing with a Board member or two who simply doesn’t trust them, but really doesn’t have a reason for doing so, and you can see that the life of a Florida Community Association Manager isn’t all flowers, rainbows and those annoying little yellow smiley faces that everyone seems to be putting in their texts and e-mails these days.

 

Despite the daily grind, most hang in and accomplish their professional objectives each and every day without complaint.  But how do you know that they are doing their job well.  Perfect attendance isn’t enough.  How does one judge the performance of your manager?

 

You may think that one way to judge their performance is to see if expenses have been kept in check.  I would agree that a good manager should assist the association in saving money wherever possible.  But suppose assessments remain steady yet the place looks terrible?  Suppose the manager convinced the Board to be penny-wise and pound foolish?

 

What about maintaining protocol at meetings and in the association’s office?  A manager who is somehow able to bring order to chaos, whether at Board meetings or in the association’s office is worthy of a Noble Peace prize.

 

Here’s a real hard task.  Having the ability to tell your Board that they CANNOT take an action that the manager knows to be illegal because it violates a provision of Florida law or the governing documents.  Layers have a saying that it’s often times more important knowing what not to ask, rather than knowing what to ask.  For managers, it may be more important to tell the Board what they can’t do, rather than what they can do.  So the question is…..has the manager kept the Board out of legal quagmires or is the Board involved in more and more lawsuits because of alleged misdeeds?

 

These are just some criteria we may use when evaluating the performance of the managers who manage.  Perhaps the best criteria though is to simply look at the faces of all of the residents in the community since the manager started working there.  If their typical frowns are turning upside down and they are beginning to look more and more like those annoying little yellow smiley faces I mentioned earlier —— make sure you don’t let this manager slip away.

 

 

 

 

 

 

 

 

 

GATES AND FENCES CAN BE AS BAD AS BARBED WIRE

 

Each week, Jan, Darlys and I  agree on a new topic to blog about.  This week, Jan suggested that we blog about gates and fences.  My first thought was……..how much can I possibly write about gates and fences?  What comment can I make about a gate or a fence that would make the reader care about reading the next paragraph?  It turns out though that Jan was right all along.  Gates and fences have been at the heart of so much litigation in our communities over they years.  Here’s why……

 

Security:         Some people believe that installation of gates and fences around the community increases the safety of the community.  Others believe that they provide a false sense of security and have watched videos of burglars tossing people’s belongings over the security fence and into their getaway vehicle.   The question is….can a community that does not have gates install them without a vote of the members of the community, or is it a “material alteration” that requires a unit owner vote?  Surprisingly, arbitrators in Tallahassee have ruled that the installation of security gates or fences is not a material alteration if the Board’s decision is based upon their desire to make the community safer, in light of a documented history of crime.  No unit owner vote is required.

 

Fencing off your own little playground:  Three years ago, I successfully represented an association against an owner who decided to fence off a small portion of the common areas to the exclusion of others, because it was simply adjacent to her home.  She claimed that she received verbal authorization from the developer who was also a member of the Board at the time.  On appeal, the 4th District Court of Appeal held that since the declaration required “written” authorization from the Board for such a change, her fence had to go.  I’m sure this happens in lots of communities.

 

Using the gate as a form of harassment or intimidation:  This one is kind of new.  As many of you know, both the Florida condominium and HOA statutes allow the association to restrict the rights of owners to use the common areas if they become delinquent in the payment of monies owed to the association.  The condominium statute states however that the association cannot suspend the right of a delinquent owner to access common elements needed to access the unit.  The HOA statute states that the association cannot impair the right of an owner or a tenant of a parcel to have vehicular and pedestrian ingress to and egress from the parcel.    Despite these restrictions in the statutes, many associations have forced non paying owners to use the security drive thru gate instead of being able to use the gate that opens with a magic eye or clicker.  Associations have taken the position that by forcing the non paying owner to use the security gate they are not impairing access to the owner’s unit, but are simply making it more difficult to get there.  I for one agree.

 

Entrance ways and exit ways: The CCFJ website (www.ccfj.net) has an amazing news story about a community where many children live.  The community bordered on a school that is about 100 feet from the community, as long as the association allowed the kids to use a particular exit gate.  Rather than let the children use the gate, the Board decided to close it, forcing the children to walk several miles to school instead of a few yards! Boards are supposed to be concerned with the health and safety of its members.  Making these kids walk miles instead of yards is a clear indication to me of mixed up priorities on the part of this Board.  In fact, it sounds downright evil.  Most of the time gates and fences are used to keep the bad guys out.  In this case, I think it keeps them locked in.

 

ELECTION TIME IS HERE

 

 

Last week, I received an e-mail from someone who was complaining that her HOA was using the voting and election procedures required by the condominium statute, instead of the HOA statute.  In other words, using the Florida Statute 718 laws instead of Florida Statute 720.  She wanted to know if this was O.K., since the Board of Directors claims the condo statute is actually a higher standard.  As much as I wanted to write back that your Board is correct and smart, and that you should be happy they want to use the condo laws instead of the HOA laws, the problem is the HOA is stuck with the pitiful sham of election laws that currently exist under 720 and must use them.

 

With all that may be wrong with the Florida condominium statutes, they far outshine the homeowner association statutes when it comes to voting procedures.  The condo statute contains strict timelines regarding when an owner must decide to run, when the association must send out notices, how the ballots are prepared and how ballots are determined to be authentic.  They also allow for monitoring of the condo election if 15% of the owners demand it.  The HOA statute is basically silent on all of these matters and instead says that whatever your governing documents say is perfectly fine.  If you thought that after Florida was the laughing stock of the country when it came to hanging chads, we would be a little more careful about how we conduct elections in our HOA communities, you would be wrong.

 

Perhaps the best part about the condo election statute is that in order to have a valid election, only 20% of the eligible voters must cast their ballot.  A 20% voter turnout is obtained in almost every condominium election I have ever been involved in.  In an HOA however, a quorum of unit owners must appear in person or by proxy at the annual meeting in order for the election to occur, which is normally 30%.  This requirement is often times too difficult to obtain, so no election occurs and the same Board rolls over for yet another year.

 

HOA Board members, and rightfully so, often complain that if the people in the community are unhappy, they should quit their complaining and run for the Board themselves.  I couldn’t agree more.  However, what do you say to those owners that try to get involved, actually run for the Board, and then are told that there’s no election because a quorum of owners didn’t participate?  Persons who want to take part in the political process shouldn’t be penalized by the apathy in the community.

 

Let’s hope that during next year’s legislative session, The Florida Legislature takes a page out of the condo books and have the HOA laws regarding elections mirror the condo laws.  It allows for more accuracy and more participation.  You would think that the time has come for The Florida Legislature to appoint a committee to figure out what are the best and most effective aspects of Florida Statute 718 and 720, and ensure that what is successful in one type of association, be brought into the other.  Instead, we have a hodge podge  of laws that treat the same situations differently, despite the fact that one law may be a miserable failure.  Next week I’ll elaborate on this.

 

One more thing.  In all my years of participating in condominium elections and campaigning, I have never seen one person run for the Board and announce their political party affiliation.  Would it matter to the voters in the community if a candidate was a Democrat, Republican or Independent?  Should it matter?

 

CONDOS AND HOA’S ARE MORE DIFFERENT THAN YOU MAY THINK

 

I’m hoping that after reading this column today, those of you who live in an HOA will forward some of these concerns to your local Senator or House Member, because I don’t even think they are aware of just how bad the HOA statute is and how condominium owners have far greater protections under the law than members of an HOA.  For example:

 

Certification of Board Members: For whatever reason, The Florida Legislature believes that it’s only important for condominium Board members to learn the law,  be familiar with their governing documents and get certified. HOA members can just “wing it” I guess.  Certainly, education should be required for both HOA board members and condo Board members.

 

Anti Kick-back provisions: The Florida Condominium Act contains a provision that makes it clear that members of a condo Board cannot take anything in return for awarding a contract to a vendor.  The HOA statute is silent in this regard.  Apparently, The Florida Legislature doesn’t care if HOA Board members get a kickback.

 

Election Procedures: As we said last week, The HOA statute is awful in terms of election and voting procedures.  The condominium statute on the other hand works very well, provides for strict deadlines and procedures and even participation by The Ombudsman’s Office.  Apparently, The Florida Legislature doesn’t care if apathy and voter fraud exist in HOAs – but do care when it comes to condos.

 

Board members doing business with the association: The Florida Condominium Act makes directors who want to do business with the association jump through some hoops.  The contract must be disclosed, two-thirds of the other directors must vote in favor of it and the unit owners can still cancel the contract at the next owner meeting.  The HOA statute is completely silent in this regard.  Apparently, The Florida Legislature believes that HOA owners are not entitled to the same safeguards against potential corruption as condo owners.

 

Removal of Board Members: The Florida Condominium Statute specifically states that a director who is charged with a felony for stealing the association’s funds is automatically removed from the Board of Directors pending a determination of the charges.  There is no such provision under the HOA statute.  It’s amazing, but an HOA member charged with stealing the association funds gets to stay on the Board.  I’m not surprised, considering that it took a million years for The Florida Legislature to amend the HOA statute to prevent felons from serving on the board.

 

Records Requests: In a condominium, owners can be charged the reasonable expense for photocopies of the records.  In an HOA – you potentially get slaughtered because the statute allows you to be charged personnel fees at an hourly rate to make copies of the records for you.  I know there are many of you out there who have horror stories with exorbitant bills from management companies requesting unconscionable fees for copies of records.  Sorry, apparently The Florida Legislature believes that owners in condominiums are entitled to receive records more quickly and at a cheaper price than owners in an HOA.

 

Insurance: The Florida Condominium Act requires the association to purchase fidelity bonding or insurance for all people who handle the association’s funds, including the officers.  There is no such mandate in the Florida HOA statutes.  Apparently, The Florida Legislature believes that money only gets stolen from condos and not HOAs.

 

Warranties: The Florida Condominium Act contains very detailed provisions that require a developer to provide warranties to the condominium association and owners subsequent to turnover from developer control to the unit owners.  The HOA statute on the other hand was recently amended to specifically preclude the giving of warranties by the developer to the HOA.

 

Regulation: Finally, Florida condominiums are highly regulated by the Department of Business and Professional Regulation.  In fact, a developer cannot create a condominium and sell units until and unless approval of the condominium is granted by the DBPR.  The Department also provides educational materials to owners, has arbitrators on staff, document examiners, investigators, and people to answer your questions about the law.  Homeowner associations have no regulation at all.  There is nobody to ask a question to, nobody to complain to, and nobody to help you.

 

OK HOA owners, calm down, catch your breath, and let me know how you really feel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCREENING, REJECTING APPROVING AND THE RIGHT OF FIRST REFUSAL

 

 

There’s no question that one of the subjects I get most often asked about is whether or not the Board has the right to reject an applicant for either a rental or a purchase in the community.  It would be great if there was some guidance, some statute, some rule that I can point them to that tells them what criteria can be used when determining whether or not to approve an applicant, but there really is nothing to point to at all; another good example of just how poorly drafted some of our community association statutes are.

 

The only real mention of screening in the Florida Condominium Act says:

 

No charge shall be made by the association or any body thereof in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Any such fee may be preset, but in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant.

 

So the first step is to determine if your governing documents allow the association to approve the transfer.  This is crucial.  Many associations incorrectly believe that they either inherently possess the right to approve sales and leases or that they have the right because the governing documents specifically state it.  Often times, the association only has a “right of first refusal” which only allows the association the opportunity to purchase or lease a unit on the same terms that the owner is offering to a new buyer or lessee.  It does not equate to the association having the right to screen and/or reject an applicant for purchase or lease.

 

Even if the governing documents allow the association the opportunity to screen and reject proposed purchasers and lessees, the documents may still be invalid as an illegal restraint on the owner’s ability to sell or alienate his or her property.  For example, in Aquarian Foundation, Inc. v. Sholom House, 448 So.2d 1166 (3rd DCA, 1984) the court held that since the declaration of condominium permitted the association to reject perpetually any unit owner’s prospective purchaser for any or no reason, it is an obvious an absolute restraint on alienation, and can be saved from invalidity only if the association has a corresponding obligation to purchase or procure a purchaser for the property from the unit owner at its fair market value. Otherwise stated, if the association is empowered to act arbitrarily, capriciously, and unreasonably in rejecting a unit owner’s prospective purchaser, it must in turn be accountable to the unit owner by offering payment or a substitute market for the property.

 

 

 

Interestingly enough, the court still reiterated the fact that restrictions on a unit owner’s right to transfer his property are recognized as a valid means of insuring the association’s ability to control the composition of the condominium as a whole.  So, assuming your documents give the association the ability to screen and reject, in order for the Board to avoid the requirement that it procure a purchaser should the Board reject the transfer, the Board better have reasonable criteria in place which they will use to prove that they are rejecting an applicant for cause.

 

Here are the four basic criteria the Board should use when determining whether or not to approve an applicant:

 

  1. credit score: have strict guidelines.  For example, applicants must have a minimum score or they are rejected;

 

  1. criminal history: again, have strict guidelines.  For example, rejection is required if an owner has been convicted of a felony;

 

  1. applicant’s prior history of foreclosures or evictions;

 

  1. The applicant would automatically violate the governing documents: for example, in a 55 and over community, the applicant makes it clear that the unit will not be occupied by at least one person age 55 or older.

 

Boards take note.  Failure to apply criteria even handedly across the Board can get the association sued for tortuous interference with contract and also face claims for discrimination.  Have strict procedures and guidelines in place, properly adopt and publish the criteria and document your decisions.

 

Here’s another question though…………..some people don’t want their Board having the power to screen and reject.  What’s your take on the subject?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHOULD EDUCATION BE REQUIRED FOR ALL BOARD MEMBERS?

 

A few years ago, the Florida Legislature passed a new law effecting board members of Florida condominium associations only.  The law states:

 

Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.

 

In lieu of this written certification, within 90 days after being elected or appointed to the board, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved condominium education provider within 1 year before or 90 days after the date of election or appointment.

 

 

The first method of signing what I call a silly, meaningless, self-serving affidavit that you can obtain from the DBPR’s website, is insulting to those persons who have taken the time out of their lives to take an approved course.  The statute is so flawed, that it allows for self certification without even acknowledging that you have read Florida Statute 718 or even know that it exists.

 

The other way of fulfilling the requirement of the statute is by attending an educational course approved by the DBPR.  I am proud to say that I was the first attorney in the State of Florida to design a course that allows me to certify people to serve on Florida condominium boards.  It is my honor to teach it and I have now certified over 3,000 participants.  I taught the course this past Thursday at The Hard Rock Hotel in Hollywood.  To see what it looked like, click here: http://www.facebook.com/#!/media/set/?set=a.467452716640336.122686.110621888990089&type=1

 

 

The course focuses on so many areas including fiduciary duties of board members, budgets, reserve funding, financial reporting, how to conduct board meetings, whether the new laws even apply in your community, rules and regulations, access to records, arbitration, mediation, collections and foreclosures, material alterations, emotional support animals and more.  Needless to say, you don’t learn any of this by signing an affidavit.  Despite the fact that only condominium Board members are required to get certified, so many HOA Board members attend and are eager to learn.  Therefore, the materials we hand-out at the conclusion of the course also details how the HOA statutes treat each topic and when we teach the course outside of South Florida, we also teach the laws that apply to HOAs.

 

 

Last year, there was originally legislation pending that would have required board members in HOAs to get certified as well.  That legislation eventually died.  Apparently, The Florida Legislature believes that it’s only important for condominium board members to know condominium law, but it’s not important for directors of homeowner associations to know HOA law.  And if that wasn’t enough of a beat down to HOA owners, The Florida Legislature then took away developer warranties from owners in an HOA, despite the fact that our courts ruled that developers should be held responsible to the home owners when they build communities that crumble.

 

It’s a no brainer that condominium and HOA education should be mandatory for all Board members.  The owners who the directors serve deserve no less, especially when the education is usually provided for free and only requires attendance for a few hours a year.  Education prevents costly mistakes and creates harmony in the community, even in those communities where the Board members think they know everything just because they’ve been on the Board forever.  Ironically, I often times find that it’s the longest serving Board members who need the education because they are used to doing things “their way” rather than the right or legal way.

 

Administering the affairs of a condominium association or homeowner’s association is not simple.  Many budgets exceed seven figures.  There is no requirement under the law that any Board member be an attorney, accountant, licensed property manager or have any experience managing a business.  The very least that should be required is a few hours a year of education.  A mandatory requirement would not deter those that are truly interested in serving in the first place.  On the contrary, most people who are willing to serve on the Board want to ensure they are at all times acting within the law.  They are yearning for an educational opportunity. Furthermore, the remaining owners want the peace of mind that their elected directors have at least some knowledge of the law.

 

Legislation on most matters is often difficult to pass because it requires bi-partisan support and lately our elected officials can’t seem to agree on much.  This issue however is a win-win for all Floridians who live in a community association.  It doesn’t cost the state a dime.  The Legislator who grabs the bull by the horns and lines up in support of mandatory education for Board members of Florida community associations will be looked upon as a hero to the millions of Floridians who live in a community association as will every legislator who supports such a bill.

 

If anyone is interested in taking our Condo Craze Board Member Certification Course, just visit www.condocrazeandhoas.com to register for either Naples, Fort Lauderdale, Orlando or Hollywood.

 

 

  1. Certification of Board Members: For whatever reason, The Florida Legislature believes that it’s only important for condominium Board members to learn the law, be familiar with their governing documents and get certified. HOA members can just “wing it” I guess.  Certainly, education should be required for both HOA board members and condo Board members.

 

 

 

Florida Statute 718.112(2)(d)4b states:

 

Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. In lieu of this written certification, within 90 days after being elected or appointed to the board, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved condominium education provider within 1 year before or 90 days after the date of election or appointment. The written certification or educational certificate is valid and does not have to be resubmitted as long as the director serves on the board without interruption. A director who fails to timely file the written certification or educational certificate is suspended from service on the board until he or she complies with this sub-subparagraph. The board may temporarily fill the vacancy during the period of suspension. The secretary shall cause the association to retain a director’s written certification or educational certificate for inspection by the members for 5 years after a director’s election. Failure to have such written certification or educational certificate on file does not affect the validity of any board action.

 

Solution: adopt the same provisions as the Florida Condominium Act

 

720.303(13) Certification Requirement for Board Members

Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium covenants, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. In lieu of this written certification, within 90 days after being elected or appointed to the board, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved condominium education provider within 1 year before or 90 days after the date of election or appointment. The written certification or educational certificate is valid and does not have to be resubmitted as long as the director serves on the board without interruption. A director who fails to timely file the written certification or educational certificate is suspended from service on the board until he or she complies with this sub-subparagraph. The board may temporarily fill the vacancy during the period of suspension. The secretary shall cause the association to retain a director’s written certification or educational certificate for inspection by the members for 5 years after a director’s election. Failure to have such written certification or educational certificate on file does not affect the validity of any board action.

 

  1. Anti Kick-back provisions: The Florida Condominium Act 718.111(1)(a) contains a provision that makes it clear that members of a condo Board cannot take anything in return for awarding a contract to a vendor. The HOA statute is silent in this regard. Apparently, The Florida Legislature doesn’t care if HOA Board members get a kickback.

 

Florida Statute 718.111(1)(a) states:

 

An officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. Any such officer, director, or manager who knowingly so solicits, offers to accept, or accepts any thing or service of value is subject to a civil penalty pursuant to s. 718.501(1)(d). However, this paragraph does not prohibit an officer, director, or manager from accepting services or items received in connection with trade fairs or education programs. An association may operate more than one condominium.

 

 

 

 

Solution: adopt the same provisions as The Florida Condominium Act

 

720.303(14) An officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. However, this paragraph does not prohibit an officer, director, or manager from accepting services or items received in connection with trade fairs or education programs.

 

  1. Election Procedures: The HOA statute is awful in terms of election and voting procedures. The condominium statute on the other hand works very well, provides for strict deadlines and procedures and even participation by The Ombudsman’s Office.  In addition, the Florida Administrative Code supplements the statute in this regard.

 

718.112 (2)(d) provides:

 

  1. The members of the board shall be elected by written ballot or voting machine. Proxies may not be used in electing the board in general elections or elections to fill vacancies caused by recall, resignation, or otherwise, unless otherwise provided in this chapter.

a.At least 60 days before a scheduled election, the association shall mail, deliver, or electronically transmit, by separate association mailing or included in another association mailing, delivery, or transmission, including regularly published newsletters, to each unit owner entitled to a vote, a first notice of the date of the election. Any unit owner or other eligible person desiring to be a candidate for the board must give written notice of his or her intent to be a candidate to the association at least 40 days before a scheduled election. Together with the written notice and agenda as set forth in subparagraph 3., the association shall mail, deliver, or electronically transmit a second notice of the election to all unit owners entitled to vote, together with a ballot that lists all candidates. Upon request of a candidate, an information sheet, no larger than 81/2 inches by 11 inches, which must be furnished by the candidate at least 35 days before the election, must be included with the mailing, delivery, or transmission of the ballot, with the costs of mailing, delivery, or electronic transmission and copying to be borne by the association. The association is not liable for the contents of the information sheets prepared by the candidates. In order to reduce costs, the association may print or duplicate the information sheets on both sides of the paper. The division shall by rule establish voting procedures consistent with this sub-subparagraph, including rules establishing procedures for giving notice by electronic transmission and rules providing for the secrecy of ballots. Elections shall be decided by a plurality of ballots cast. There is no quorum requirement; however, at least 20 percent of the eligible voters must cast a ballot in order to have a valid election. A unit owner may not permit any other person to vote his or her ballot, and any ballots improperly cast are invalid. A unit owner who violates this provision may be fined by the association in accordance with s. 718.303. A unit owner who needs assistance in casting the ballot for the reasons stated in s. 101.051 may obtain such assistance. The regular election must occur on the date of the annual meeting. Notwithstanding this sub-subparagraph, an election is not required unless more candidates file notices of intent to run or are nominated than board vacancies exist.

 

 

 

 

 

 

 

 

Solution: Adopt the same statutory voting procedures and the same procedures required under The Florida Administrative Code.

 

 

720.306 (9)(a)ELECTIONS AND BOARD VACANCIES.Elections of directors must be conducted in accordance with the procedures set forth in the governing documents of the association. All members of the association are eligible to serve on the board of directors, and a member may nominate himself or herself as a candidate for the board at a meeting where the election is to be held or, if the election process allows voting by absentee ballot, in advance of the balloting. Except as otherwise provided in the governing documents, boards of directors must be elected by a plurality of the votes cast by eligible voters.

 

(9)(a) Despite any provisions in the governing documents to the contrary these procedures and the procedures outlined in 61b-23.0021 of The Florida Administrative Code shall be used for all association elections.  The members of the board shall be elected by written ballot or voting machine. Proxies may not be used in electing the board in general elections or elections to fill vacancies caused by recall, resignation, or otherwise, unless otherwise provided in this chapter.

a.At least 60 days before a scheduled election, the association shall mail, deliver, or electronically transmit, by separate association mailing or included in another association mailing, delivery, or transmission, including regularly published newsletters, to each unit owner entitled to a vote, a first notice of the date of the election. Any unit owner or other eligible person desiring to be a candidate for the board must give written notice of his or her intent to be a candidate to the association at least 40 days before a scheduled election. Together with the written notice and an agenda, the association shall mail, deliver, or electronically transmit a second notice of the election to all unit owners entitled to vote, together with a ballot that lists all candidates. Upon request of a candidate, an information sheet, no larger than 81/2 inches by 11 inches, which must be furnished by the candidate at least 35 days before the election, must be included with the mailing, delivery, or transmission of the ballot, with the costs of mailing, delivery, or electronic transmission and copying to be borne by the association. The association is not liable for the contents of the information sheets prepared by the candidates. In order to reduce costs, the association may print or duplicate the information sheets on both sides of the paper. Elections shall be decided by a plurality of ballots cast. There is no quorum requirement; however, at least 20 percent of the eligible voters must cast a ballot in order to have a valid election. An  owner may not permit any other person to vote his or her ballot, and any ballots improperly cast are invalid. A unit owner who violates this provision may be fined by the association in accordance with s. 720.305. A unit owner who needs assistance in casting the ballot for the reasons stated in s. 101.051 may obtain such assistance. The regular election must occur on the date of the annual meeting. Notwithstanding this sub-subparagraph, an election is not required unless more candidates file notices of intent to run or are nominated than board vacancies exist.

 

 

 

 

 

  1. Board members doing business with the association: The Florida Condominium Act makes directors who want to do business with the association jump through some hoops. The contract must be disclosed, two-thirds of the other directors must vote in favor of it and the unit owners can still cancel the contract at the next owner meeting.

 

718.3026(3) states:

(3)As to any contract or other transaction between an association and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested:

(a)The association shall comply with the requirements of s. 617.0832.

(b)The disclosures required by s. 617.0832 shall be entered into the written minutes of the meeting.

(c)Approval of the contract or other transaction shall require an affirmative vote of two-thirds of the directors present.

(d)At the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. Should the members cancel the contract, the association shall only be liable for the reasonable value of goods and services provided up to the time of cancellation and shall not be liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

 

 

SOLUTION: Adopt the same statute for HOAs

 

720.3055(3) (3)As to any contract or other transaction between an association and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested:

(a)The association shall comply with the requirements of s. 617.0832.

(b)The disclosures required by s. 617.0832 shall be entered into the written minutes of the meeting.

(c)Approval of the contract or other transaction shall require an affirmative vote of two-thirds of the directors present.

(d)At the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. Should the members cancel the contract, the association shall only be liable for the reasonable value of goods and services provided up to the time of cancellation and shall not be liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

 

  1. Removal of Board Members: The Florida Condominium Statute specifically states that a director who is charged with a felony for stealing the association’s funds is automatically removed from the Board of Directors pending a determination of the charges. There is no such provision under the HOA statute.  It’s amazing, but an HOA member charged with stealing the association funds gets to stay on the Board.

 

 

FLORIDA STATUTE 718.112 (o)Director or officer offenses.—A director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property must be removed from office, creating a vacancy in the office to be filled according to law until the end of the period of the suspension or the end of the director’s term of office, whichever occurs first. While such director or officer has such criminal charge pending, he or she may not be appointed or elected to a position as a director or officer. However, if the charges are resolved without a finding of guilt, the director or officer shall be reinstated for the remainder of his or her term of office, if any.

 

SOLUTION:Adopt the same statute for HOAs.

 

720.303(14) Director or officer offenses.A director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property must be removed from office, creating a vacancy in the office to be filled according to law until the end of the period of the suspension or the end of the director’s term of office, whichever occurs first. While such director or officer has such criminal charge pending, he or she may not be appointed or elected to a position as a director or officer. However, if the charges are resolved without a finding of guilt, the director or officer shall be reinstated for the remainder of his or her term of office, if any.

 

  1. Records Requests: In a condominium, owners can be charged the reasonable expense for photocopies of the records. In an HOA – you potentially get slaughtered because the statute allows you to be charged personnel fees at an hourly rate to make copies of the records for you.  There are many owners out there who have horror stories with exorbitant bills from management companies requesting unconscionable fees for copies of records.  Additionally, HOA owners have to wait longer than condo owners in order to obtain access to records.   Lastly, technology has advanced to the point where owners should be allowed to photocopy records via a hand held camera or cell phone at no charge as long as the integrity of the records is not compromised.

 

Solution: Amend 720.303  as follows:

 

(5)INSPECTION AND COPYING OF RECORDS.—The official records shall be maintained within the state and must be open to inspection and available for photocopying by members or their authorized agents at reasonable times and places within 10 5 business days after receipt of a written request for access. This subsection may be complied with by having a copy of the official records available for inspection or copying in the community. If the association has a photocopy machine available where the records are maintained, it must provide parcel owners with copies on request during the inspection if the entire request is limited to no more than 25 pages.   An owner may use a camera or cell phone to take pictures of the records at no charge to the owner.

 

(a)The failure of an association to provide access to the records within 10 business days after receipt of a written request submitted by certified mail, return receipt requested, creates a rebuttable presumption that the association willfully failed to comply with this subsection.

(b)A member who is denied access to official records is entitled to the actual damages or minimum damages for the association’s willful failure to comply with this subsection. The minimum damages are to be $50 per calendar day up to 10 days, the calculation to begin on the 11th business day after receipt of the written request.

(c)The association may adopt reasonable written rules governing the frequency, time, location, notice, records to be inspected, and manner of inspections, but may not require a parcel owner to demonstrate any proper purpose for the inspection, state any reason for the inspection, or limit a parcel owner’s right to inspect records to less than one 8-hour business day per month. The association may impose fees to cover the costs of providing copies of the official records, including, without limitation, the costs of copying. The association may charge up to 50 cents per page for copies made on the association’s photocopier. If the association does not have a photocopy machine available where the records are kept, or if the records requested to be copied exceed 25 pages in length, the association may have copies made by an outside vendor or association management company personnel and may charge the actual cost of copying, including any reasonable costs involving personnel fees and charges at an hourly rate for vendor or employee time to cover administrative costs to the vendor or association. The association shall maintain an adequate number of copies of the recorded governing documents, to ensure their availability to members and prospective members. Notwithstanding this paragraph, the following records are not accessible to members or parcel owners:

1.Any record protected by the lawyer-client privilege as described in s. 90.502 and any record protected by the work-product privilege, including, but not limited to, a record prepared by an association attorney or prepared at the attorney’s express direction which reflects a mental impression, conclusion, litigation strategy, or legal theory of the attorney or the association and which was prepared exclusively for civil or criminal litigation or for adversarial administrative proceedings or which was prepared in anticipation of such litigation or proceedings until the conclusion of the litigation or proceedings.

2.Information obtained by an association in connection with the approval of the lease, sale, or other transfer of a parcel.

3.Personnel records of the association’s employees, including, but not limited to, disciplinary, payroll, health, and insurance records. For purposes of this subparagraph, the term “personnel records” does not include written employment agreements with an association employee or budgetary or financial records that indicate the compensation paid to an association employee.

4.Medical records of parcel owners or community residents.

5.Social security numbers, driver’s license numbers, credit card numbers, electronic mailing addresses, telephone numbers, facsimile numbers, emergency contact information, any addresses for a parcel owner other than as provided for association notice requirements, and other personal identifying information of any person, excluding the person’s name, parcel designation, mailing address, and property address. However, an owner may consent in writing to the disclosure of protected information described in this subparagraph. The association is not liable for the disclosure of information that is protected under this subparagraph if the information is included in an official record of the association and is voluntarily provided by an owner and not requested by the association.

6.Any electronic security measure that is used by the association to safeguard data, including passwords.

7.The software and operating system used by the association which allows the manipulation of data, even if the owner owns a copy of the same software used by the association. The data is part of the official records of the association.

(d)The association or its authorized agent is not required to provide a prospective purchaser or lienholder with information about the residential subdivision or the association other than information or documents required by this chapter to be made available or disclosed. The association or its authorized agent may charge a reasonable fee to the prospective purchaser or lienholder or the current parcel owner or member for providing good faith responses to requests for information by or on behalf of a prospective purchaser or lienholder, other than that required by law, if the fee does not exceed $150 plus the reasonable cost of photocopying and any attorney’s fees incurred by the association in connection with the response.

 

 

 

  1. Insurance: The Florida Condominium Act requires the association to purchase fidelity bonding or insurance for all people who handle the association’s funds, including the officers. There is no such mandate in the Florida HOA statutes.  Apparently, The Florida Legislature believes that money only gets stolen from condos and not HOAs.

 

Condo Statute: 718.111(11)(h) provides:

 

(h)The association shall maintain insurance or fidelity bonding of all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any such bonding.

 

Solution: Amend 720 to adopt the same procedures as 718:

 

720.303(15) The association shall maintain insurance or fidelity bonding of all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any such bonding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EVEN IN A CONDO OR HOA – THERE ARE THINGS TO BE THANKFUL FOR

 

Thanksgiving is just three days away.  Even with the “fiscal cliff” looming over our heads, unemployment still too high and Florida leading the nation in the number of foreclosures, surely there must be some things that those of us who live in condominiums or HOAs can be thankful for.  Here’s a few:

 

  1. By all accounts, real estate prices are on the rebound.  Prices are going up.  Just think, at this rate soon people will again be buying homes they can’t afford.
  1. Another year without a hurricane.  Certainly this should make our insurance rates go down.  Not.
  1. The election is finally over.  No more endless commercials about which political party will make the life of Americans better.  Back to concentrating on mindless reality TV shows with fewer commercial interruptions.
  1. If you live in a condominium — at least this year The Florida Legislature didn’t take away your ability to sue your developer for defects.  Of course this doesn’t apply to people who live in HOAs.
  1. With fewer and fewer people moving to Florida than in years past, lines at your favorite stores should be shorter.  Assuming that the store hasn’t already gone out of business.  I’ll pay cash for a Twinkie!
  1. While numerous Board members around the state were arrested for stealing funds, your association may not have been a victim.  Too often.
  1. Despite being foreclosed on by the bank three years ago, you’ve managed to stay in your condo or HOA another year without paying your mortgage.
  1. Your annoying out of state relatives are about to pay you a holiday visit and tell you how lucky you are that you live in Florida.
  1. The same relatives may be back for Christmas and New Years.  (Please make sure you register them with the condo and HOA security team 30 days in advance or they will be towed, regardless of whether or not they have a car.)
  1. You could still be living in the northeast without electricity and therefore unable to access this incredibly informative blog.

 

 

As you can see, I’m kind of a glass is half full guy.  So much to be thankful for that you can hardly wait to see what 2013 will bring us.   Regardless of what lies ahead, I wish all of you and your families a happy and healthy Thanksgiving.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESERVES: SHOULD WE FUND THEM OR SHOULD WE WAIVE THEM?

 

It’s the time of year when Boards are concentrating on passing the association’s new budget.  In a Florida condominium, the budget must contain fully funded reserve accounts that shall go into effect, unless a majority of a quorum of unit owners vote to waive or reduce the funding of reserves.  Reserves must be kept for painting, pavement and roof replacement and for any other item that is expected to cost $10,000.00 or more.

In an HOA – The budget may include reserve accounts for capital expenditures and deferred maintenance for which the association is responsible.  There are 3 ways to establish reserve accounts in an HOA:

 

  1. If they were initially provided for by the developer;
  2. a majority vote of the membership;
  3. a decision by the Board of Directors to include reserves in the budget, however, this decision is subject to any limitation on the increase of assessments in the governing documents.

 

 

The question is…in an economy where every dollar is hard to come by, is it better to waive reserve funding and hope for the best, or bite the bullet and put away a few bucks each month just in case a major repair is needed?

 

Another year has gone by in Florida without a major hurricane.  As a result, we may have become less fearful of a storm actually striking and wreaking havoc on our communities and on our wallets.  At the same time however, if we are honest with ourselves, we know that it’s only a matter of time before an Andrew, Charley or Wilma strikes again, and when it does, the financial effects can be devastating.

 

Many senior citizens are opposed to funding reserve accounts because they don’t want to pay for the replacement of a roof in twenty years, when they may not be alive any longer to see the actual replacement.  While I understand the logic, it can also be akin to playing Russian roulette should “the big one” destroy the community in which they live while they are alive.

 

After Hurricane Wilma, many people that lived in Florida condominiums were shocked to learn that their association was forced to pass huge special assessments to pay for hurricane deductibles and related repairs, because the association had no reserve accounts.  Unit owners, including many senior citizens, learned quickly that failure to pay these special assessments can result in a lien and foreclosure lawsuit and the ultimate loss of their home.  Sure, they voted against the funding of reserves, but never dreamed that by doing so, they may be voting in favor of their own foreclosure.

 

 

 

As a result of the foregoing, The Florida Legislature passed a new law that requires the association to put the following language in capitalized, bold letters in a font size larger than any other, on any proxy form that owners must sign when they vote in favor of waiving their reserve accounts or using reserve funds for other purposes:

 

 

 

WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.

 

Now, if you are going to vote in favor of waiving reserves, you must acknowledge that you may be sealing your fate and creating your own financial doom.

 

If any of you have experienced the horror of not having a reserve account when needed, please share your story so that others may learn what can happen to them.  Of course, if the reverse is true and your association was lucky enough to have that pot of gold available when needed, we certainly would like to hear from you as well and whether or not you would have been able to afford the hit of as large special assessment had the reserve account not existed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAN YOUR BOARD REALLY STOP YOU FROM PUTTING UP YOUR CHRISTMAS OR HANUKAH DECORATIONS IN YOUR CONDO OR HOA?

 

Ah….the holidays.  Thoughts of peace, love and joyous occasions fill our thoughts.  Our communities unite and happiness is proclaimed throughout the land.  Unless of course you have a Board that doesn’t feel as warm and fuzzy about your holiday decorations as you do.  If that’s the situation you find yourself in, just substitute the above words of peace, love and joy with lawsuits, fines and sabotage.  Fights over religious displays are often the most contentious and nastiest of all the fights that occur at any of our associations.

 

Until a few years ago, the law was unclear in Florida regarding some religious displays and you even had some Boards actually demanding that owners remove mezuzahs and crosses from their front door, because these Boards claimed that they wanted all doors in the community to look uniform.  Then………….based on a law that first went  into effect in Illinois, the Florida Legislature passed a condo law that states:  An association may not refuse the request of a unit owner for a reasonable accommodation for the attachment on the mantel or frame of the door of the unit owner of a religious object not to exceed 3 inches wide, 6 inches high, and 1.5 inches deep.

 

If you look at the law carefully, it allows you to display a religious symbol on the frame or mantle of the door only; not on the actual door itself.  Obviously, it also limits the size of what you can actually display.

 

To be clear, a unit owner in a condo still don’t have a right to put a big picture of Santa and his elves on their front door……………….but can put up a small religious symbol on the door frame.  Yes, even in America where we value religious freedom and free speech there is no right to stick Santa, Rudolph or Frosty the Snowman on the door to your condo unit. The statute only gives you a limited right to display your religious beliefs.

 

Luckily, not every Board cares one way or the other about what you put on your door and how big it is.  Regardless, , if you exceed the 6x3x1 and a half inch size limits………you can be asked to remove your display.

 

At the moment, there is no law under the HOA statute that gives owners in an HOA the same right to display religious symbols as owners of condo units.  It’s amazing but true.

Owners living in an HOA need to look at their own declaration of covenants and rules and regulations to find out what they can and cannot do in their own community as far as holiday decorations go.  Be prepared to fill out forms and potentially appear before an architectural review committee.  If you get your forms in quickly, you may get a hearing and be entitled to put up your Christmas display.  Next year in 2013.

 

 

 

 

 

 

 

 

 

 

YOU WANT H.O.A. REFORM?  HERE IT COMES…I HOPE

 

You may recall that a few weeks ago I blogged about the fact that members in an HOA have far less protection than unit owners in a condominium.  With the help of Jan Bergemann from CCFJ www.ccfj.net, and our lobbyist, I drafted legislation that would help HOA members throughout Florida.  Here are the specifics of the first bill we are filing:

 

  1. Just like in condominiums, require members of H.O.A. Boards to become certified. Shouldn’t HOA Board members be required to know the law as well?
  2. The HOA statute would be amended to prohibit officers and directors from receiving any type of kickbacks from vendors who are awarded HOA contracts.
  3. Just like in a condominium, the HOA statute would be amended to require HOA directors and officers who want to do business with the association to disclose the relationship, and have two-thirds of the other directors vote in favor of same.
  4. Just like in a condominium, directors or officers who are arrested for stealing association funds would be removed from the Board pending a determination of their charges.
  5. Just like in a condominium, the association would be required to purchase insurance or fidelity bonding for all persons who handle association funds.
  6. Just like in a condominium, access to records would be available within five days and the association would no longer be allowed to charge personnel fees at an hourly rate to owners who want copies. Owners would also be allowed to use a cell phone or camera of their own to photocopy the records.

 

It would be difficult to come up with any reasons why any Florida Legislator would be opposed to such a bill and I certainly anticipate its passage.

 

The second bill we prepared and filed attempts to do the following

 

  1. Just like in condominiums, HOA’s would now regulated by the Florida Department of Business and Professional Regulation.  All owners would be required to pay $4.00 per year to the Division.  In return, the Division would be able to provide document examiners, answer questions, provide educational materials, investigate wrongdoing and more.
  2. All HOA’s would be required to utilize the election procedures that condominiums use.  If 20% of eligible voters participate in the election, the election will be valid and no longer would a 30% quorum of unit owners be required to attend the annual meeting in order to have a valid election.  The condo election statute works and the HOA election procedures are woefully inadequate.
  3. Developers of HOA’s seem to maintain control of the association forever; sometimes even decades after the community is built.  Our proposed legislation would require turnover of the association to control of the unit owners when development of all of the parcels that will ultimately be operated by the homeowners’ association has been completed, some of the parcels have been conveyed to members, and no other parcels are being offered for sale by the developer in the ordinary course of business; When some of the parcels have been conveyed to members and no other parcels are being constructed or offered for sale by the developer in the ordinary course of business; When the developer files a petition seeking protection in bankruptcy; or When a receiver for the developer is appointed by a circuit court and is not discharged within 30 days after such appointment, unless the court determines, within 30 days after appointment of the receiver, that transfer of control would be detrimental to the homeowners’ association or its members.  NO MORE LIFETIME DICTATORSHIPS.

 

 

Over the next two months, we will keep you advised of the progress of the bills and what you MUST do in order to get these changes passed.  Sitting back and doing nothing is not an option.  If you want change, we are going to ask you for some help by getting involved and calling your local House member and Senator demanding their support for the bills.  Let’s make some noise together and make sure that this coming legislative session is not wasted like last year’s session was.  Buckle up….there’s a bumpy road ahead.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YEAR END FINANCIAL REPORTING

 

Every once in a while, despite it being a boring topic, we need to discuss portions of the law that if not followed, can get your association in big trouble.  Today is one of those days.  Heading into the final days of the fiscal year for most associations throughout the state is the perfect time to talk about the statutory requirement for both condominiums and homeowner associations to comply with the mandatory year-end financial reporting requirements.

 

Both statutes state:

 

Within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws, the association shall prepare and complete, or contract for the preparation and completion of, a financial report for the preceding fiscal year. Within 21 days after the final financial report is completed but not later than 120 days after the end of the fiscal year or date as provided in the bylaws, the association shall mail to each unit owner or hand deliver to each unit owner, a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, upon receipt of a written request from the unit owner.

 

In English…most association’s fiscal year ends on December 31st.  So, by April 1st the association must have at least contracted for the preparation of the year end financial report.  By May 1st, the association the association can mail the report to all owners or mail them a notice that they can get a free copy of the report by asking for it in writing.

 

The type of financial report to be prepared by the association varies and depends upon the association’s budget.  The higher the amount of the budget, the more detailed the type of financial report to be prepared.  For example:

 

An association with total annual revenues of $100,000 or more, but less than $200,000, shall prepare compiled financial statements. This is basically a glorified disclaimer by the accounting firm as to the accuracy of the finances as presented to the CPA by management or the Board.

 

An association with total annual revenues of at least $200,000, but less than $400,000, shall prepare reviewed financial statements.  In a review report, the CPA expresses a “limited assurance” — not an opinion — of the reasonableness of the financial statements.

 

An association with total annual revenues of $400,000 or more shall prepare AUDITED financial statements. A financial audit provides the highest level of financial statement assurance.  An audit normally takes considerably more time than either a compilation or a review.

 

An association with total annual revenues of less than $100,000 and An association that operates fewer than 75 units in a condominium and 50 parcels in an H.O.A.  regardless of the association’s annual revenues, shall also prepare a report of cash receipts and expenditures.

 

Suppose a Board wants to prepare a financial report that gives the owners more detail than what they are required to receive?  For example, the Board wants to provide an audit when only a compilation is required.  In a condo – An association may prepare, without a meeting of or approval by the unit owners: a more detailed year end financial report than what is required by law.  In an HOA – 20% of the owners can petition the Board for a greater report, a meeting must then be held within 30 days, and then upon approval of a majority of the voting interests of all parcel members, amend the budget or pass a special assessment to pay for the increased financial report.

 

Suppose however that the Board wants to provide the owners with a less detailed financial report than the owners are entitled to by law?  For example, the Board doesn’t want to spend money on an audit and only wants to provide a compilation?  In a condo and an HOA ——Only If approved by a majority of the voting interests present at a properly called meeting of the association,  an association may prepare a less detailed financial statement than what is required by law.

 

Bottom line….associations are required to comply with the above.  If they don’t, they can incur financial penalties, find themselves sitting at the defense table in either an arbitration proceeding or court proceeding and wind up paying attorney’s fees to the complainant.  And yes……that will have to be disclosed in next year’s financial report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YEARS – START THE YEAR OFF DIFFERENTLY THIS YEAR

 

So it’s the last blog of the year.  I need to end the year on a high note and make this blog the best one yet.  The problem is…I’m on vacation as I write this blog and I think I’m finally so relaxed that I’m having writer’s bloc.  For the life of me, I can’t think of a thing to write about.  I can’t even think of anything amusing to say.

 

And then it hits me…here is my wish for each of you as we end one year and begin another.  I hope all of you get the chance to unwind as well.  Whether you’re a Board member, owner or tenant, I hope that you get so relaxed this holiday season that:

 

  • it’s OK. if a unit owner is a few days late paying their assessments. Waiting another few days before sending a threatening letter during the holidays won’t bring financial ruin to the community;
  • it doesn’t bother you if your neighbor’s holiday party runs both noisy and late;
  • it’s no big deal if an owner backed-into their spot rather than having parked head-in as required. Maybe knock on the door first before deciding to tow the vehicle;
  • if you’re a Board member, you let it roll of your back that a unit owner insinuated that the Board wasted a lot of money this past year. You already know that all of the hard work you do for free will never get the credit it deserves;
  • your happy about the owner who has his family visit him during the holidays, despite the fact that he forgot to register his guests in advance or that they take up a few extra seats by the pool for a few days;
  • the Architectural Review Board won’t have a problem with someone’s holiday decorations staying up for a few days into the new year;
  • everyone campaigns for the upcoming election in a positive fashion, telling everyone how they can help their community rather than talk about how bad their opponent and prior administration is or was;
  • everyone realizes that while disputes that occur in our homeowner associations and condominiums often turn into long, drawn out and legendary battles, the truth is that most of the time the disputes involve topics or situations that are pretty minor on the grand scale of things to get upset about.

 

Believe it or not…there are many people out there who would gladly trade the problems many of us have living in our associations with the problems they have with their health, their employment or lack thereof, their families  and their finances.

 

So…my wish for the year ahead is simply that we all become a little more tolerant of the actions of our neighbors and friends while at the same time everyone thinks first before they act and becomes a little more considerate for the feelings of our neighbors and friends.

 

 

 

I wish all of our blog readers and their families a happy and healthy new year and please know how honored I am to know that you read my column on Mondays and listen to the radio show on the weekend throughout the year.  It is a pleasure spending time with your throughout the year and a treat to have met so many of you in person.

 

 

 

NEW YEARS RESOLUTIONS: A DOUBLE EDGE SWORD

 

 

For all eternity, the first week of the new year brings talk of resolutions for the coming year.  We resolve to eat right, exercise, lose weight, spend less, save more and the list goes on and on.  We even write these resolutions down.

 

While I think writing out resolutions is a worthy endeavor in our personal lives, I certainly would counsel a community association that it would be a bad idea to discuss and write down resolutions for the Board in the upcoming year.  The problem is…by making a list of new year resolutions, you may be admitting to not following the law the previous year, breaching your fiduciary duties and even intentionally harming the unit owners.

 

A list of resolutions for a community association Board may look something like this:

 

  1. We resolve to timely prepare our financial reports this year. (This certainly may be construed as an admission that they weren’t timely prepared last year, or the year before for that matter.)  That can result in fines and penalties from the DBPR.
  2. We resolve to prepare the budget timely and accurately. (This may be construed to mean that the Board failed to notice the budget meeting timely last year or prepare a budget that accurately projects the costs of the community.)
  3. We resolve to respond quicker to requests for access to records by our unit owners. (This may be construed that the association previously failed to timely respond to records requests and subject the association to monetary penalties in an arbitration action)
  4. We resolve to treat all non paying owners equally and even handedly. Does this mean that some delinquent owners were given breaks while others were not? Were some owners charged interest and late fees while others were not?
  5. We resolve to finally fix all of the common elements that are leaking or may be a danger to our owners. (This is the one that can really hurt the association)  Admitting that necessary repairs to common elements were ignored is exactly the type of information that owners who suffered water damages or tripped and fell on the common areas are looking for)  I have been involved in numerous cases over the years where these types of admissions appear in minutes of Board meetings and they help prove an owner’s case immensely.

 

 

 

 

 

So……. rather than write down  a list of new year resolutions, a better idea would simply be for the Board to simply follow Florida law and your governing documents in the year ahead.  Because if any lawyer got his or her hands on an actual list of resolutions prepared by the Board, it could be a very costly new year for the association.  You know how those lawyers can be…

 

DON’T TELL ME WHAT TO SAY AND WHAT NOT TO SAY

 

I always tell both Board members and unit owners that you don’t lose your first amendment rights once you move into a community association.  Board members and owners are free to say words and criticize each other as long as they don’t cross the line and actually defame each other with accusations of committing a crime for example.  You can’t stop people from talking.  It’s funny however that each year, Lake Superior State University comes out with a list of new words that they believe should be banned from the English language because they are now somehow offensive or no longer have the same meaning originally assigned to them.  They actually want to inhibit your right to speak.  Over the last 3 years, they have suggested banning the words “amazing” “baby bump” “occupy” “shared sacrifice” “man cave” “ginormous” “thank you in advance” “fiscal cliff” “kick the Can Down The Road”” Double Down” “Passionate” “Bucket List” “Guru.” “Fail” “Man Up” “The American People” and “I’m Just Saying.”  So to Lake Superior State University I say this…..

 

First, I want to wish all of you a “ginormous” “thank you in advance” for reading this column.  You should know that I am actually typing this column while sitting in my home office that my wife loves to call my “man cave.”  To tell you the truth I believe every good man deserves his own.

 

And, I find it amazing when women who “occupy” a unit in a 55 and over community suddenly develop a “baby bump” and the Board wants to know if the baby can stay or if the community will be forced to make a “shared sacrifice” and listen to the new baby howl and scream in the night.

 

Are you telling me that if your community waives the funding of reserve accounts again you are not “doubling down” that a big storm won’t hit?  That you’re not “kicking the can down the road” and praying that a special assessment won’t be necessary to prevent your community from going over the “fiscal cliff?”

 

Most Board Members I know are “Passionate” about fulfilling their responsibilities as Board members as I am about practicing community association law.  In fact, it’s certainly on my “bucket list” that I will one day be affectionately referred to as the condo “guru.”

 

For those Board members who won’t get certified by taking a course and choose instead to sign that silly self-serving know it all affidavit, I would suggest that you “Man Up” and spend a few hours learning something because if you don’t you’re more likely to “fail” as a Board member.  That’s right I said “fail.”  Sue me.

 

Take that Lake Superior State.  I may not represent all of “The American People” but I am from Brooklyn.  “I’m just saying.”

 

 

 

 

 

 

 

 

 

DOES DISCRIMINATION STILL EXIST?

 

It only makes sense that on today’s national holiday of Martin Luther King Day, we discuss the topic of racial, religious or other forms of discrimination in your association.  It may seem uneasy, uncomfortable and difficult,  but we need to talk about it if we are ever going to rid it.

 

I’ll start with an admission.  I have had Board members ask me straight out over the years how the association can prevent certain types of people from moving into their community based upon their race or national origin.  What kind of tips or legal advice  could I recommend that would keep their community free from who the Board and other members of the community perceive as undesirable neighbors.  Quickly, the conversation turns to something like “Don’t ever ask me that again” or “Find your self another lawyer” if that’s what you are trying to do.  I promise you this happened more than once and I doubt I’m the only community association attorney who can tell that story.

 

I am not suggesting for a moment that many Boards act in this obscene manner.  On the contrary, I have met with and/or represented thousands of associations over the years, and can count this scenario on one hand.  However, it simply has not been eradicated despite the fact that we would like to think it has.

 

A few years ago, I was representing a buyer of a condominium unit in Hollywood, Florida who was prevented from purchasing a unit.  The President of the Association denied the sale and wound up trying to purchase the unit for herself.  My client had an Italian last name.  There was a Jewish judge assigned to the case.  Despite the fact that I argued that the President prevented my client from purchasing the unit due to personal financial reasons, the judge took it one step further.  The judge was under the firm belief that the buyer was rejected simply because the President didn’t like the buyer’s Italian sounding last name.  I watched the judge slam the door to his chambers and chastise the association’s lawyer like I had rarely seen.  It was clear to this judge that discrimination was very much alive and well in this Broward County condominium association.  When I told the judge that I was not even alleging racial discrimination, I was told that “I should learn to shut up when I’m winning.”  It was a lesson well learned, believe me.

 

The flip side to the foregoing is that I have also seen associations accused by the local Housing Authority of discrimination based upon race, even though clearly race was not a motivating factor when the association denied a minority applicant the right to rent or purchase.   This is government gone too far and is unfair to Boards and their members who have the right under their governing documents to legitimately screen and reject owners or renters, some of whom may be a minority.  When the government assists with prosecuting non legitimate claims of racial discrimination it serves to water down the many legitimate claims of prejudice that are worthy and have merit.

 

 

So let’s get real today.  Do any Archie Bunkers live in your community and even occupy a seat on your Board?  Have you been the victim of discrimination based upon race, religion or nationality in your community association? Have any minority Board members been the victim of harassment by the owners because of their race?   Are there any Board members out there who want to admit that their Board does try to keep certain people from moving into the community?  Your contributions to the blog can be anonymous —- so let the comments fly.

 

H.O.A. MEMBERS —- IT’S NOW UP TO YOU

 

If this were a football game, I would say that Jan Bergemann and I helped get you to the red zone.  Our two bills have now been filed and have numbers assigned to them.  IT’S NOW UP TO ALL OF YOU TO CALL YOUR LOCAL SENATOR AND HOUSE MEMBER AND DEMAND THAT THEY VOTE IN FAVOR OF THESE BILLS!

 

Our request for changes to the H.O. A. laws were broken down in two different bills.  The first bill is number SB 580.  Here is what it proposes:

 

 

  1. Just like in a condominium, require members of H.O.A. Boards to become certified. Shouldn’t HOA Board members be required to know the law as well?
  2. Just like in a condominium, the HOA statute would be amended to prohibit officers and directors from receiving any type of kickbacks from vendors who are awarded HOA contracts.
  3. Just like in a condominium, the HOA statute would be amended to require HOA directors and officers who want to do business with the association to disclose the relationship, and have two-thirds of the other directors vote in favor of same.
  4. Just like in a condominium, directors or officers who are arrested for stealing association funds would be removed from the Board pending a determination of their charges.
  5. Just like in a condominium, the association would be required to purchase insurance or fidelity bonding for all persons who handle association funds.
  6. Just like in a condominium, access to records would be available within five days. However, now the association would no longer be allowed to charge personnel fees at an hourly rate to owners who want copies.  Owners would also be allowed to use a cell phone or camera of their own to photocopy the records.

 

To say that passage of the above bill should be a no brainer, is an understatement.  The provisions are obviously beneficial and already work for condominiums.  No legislator should have a legitimate quarrel with any of the foregoing measures unless they support kickbacks, lack of education, self-dealing, stealing and over charging owners for copies of records.

 

The second bill, numbered _______ attempts to do the following

 

  1. Just like in condominiums, HOA’s would now be regulated by the Florida Department of Business and Professional Regulation.  All owners would be required to pay $4.00 per year to the Division.  In return, the Division would be able to provide document examiners, answer questions, provide educational materials, investigate wrongdoing, investigate developers and more.
  2. All HOA’s would be required to utilize the election procedures that condominiums use.  If 20% of eligible voters participate in the election, the election will be valid and no longer would a 30% quorum of unit owners be required to attend the annual meeting in order to have a valid election.  The condo election statute works and the HOA election procedures are woefully inadequate.
  3. Developers of HOA’s seem to maintain control of the association forever; sometimes even decades after the community is built.  Our proposed legislation would require turnover of the association to control of the unit owners when development of all of the parcels that will ultimately be operated by the homeowners’ association has been completed, some of the parcels have been conveyed to members, and no other parcels are being offered for sale by the developer in the ordinary course of business; When some of the parcels have been conveyed to members and no other parcels are being constructed or offered for sale by the developer in the ordinary course of business; When the developer files a petition seeking protection in bankruptcy; or When a receiver for the developer is appointed by a circuit court and is not discharged within 30 days after such appointment, unless the court determines, within 30 days after appointment of the receiver, that transfer of control would be detrimental to the homeowners’ association or its members.  NO MORE LIFETIME DICTATORSHIPS.

 

No doubt you will hear from some Legislators that this second bill is more difficult for them to pass.  You will hear grumblings about the cost to the State to expand the DBPR to now oversee H.O.A.’s in addition to condominiums.  It’s hogwash.  Don’t believe it and don’t stand for it.  The $4.00 per unit paid by condominium unit owners more than covers the budget for the DBPR.  In fact, despite the fact that this money is technically earmarked for a trust fund, the Florida Legislature has used it time and again for general revenue purposes.  There are far more H.O.A. units than there are condominium units.  Therefore, the State would financially prosper even more if this bill were to pass.  It would be completely funded by the $4.00 per unit each HOA member would pay.  Surveys have shown that HOA members would gladly pay $4.00 per year for the same benefits that condominium owners receive from the Division.  If HOA members want to be regulated and pay for it, why should legislators stand in the way?

 

By the way…..if anyone can intelligently tell me why condominiums are subject to DBPR regulation but HOA’s are not, I’m all ears.  There’s a dysfunctional and untruthful way of thinking out there that suggests there’s a significant difference between these two types of communities that simply isn’t there.  There is just no justification for regulation of one, but not the other.

 

The H.O.A. statute stinks when it comes to administering elections.  It is far less trustworthy than condominium elections and breeds disinterest.  Adopting the condominium voting system is long overdue.

 

Finally, there are just too many stories out there of HOA communities being under developer control for decades.  Any statute that even remotely addresses this issue should be passed without a second look.

 

So here we are…….We drafted the legislation and had it sponsored by representatives in both the House and The Senate.  To be frank, the rest is up to you.  How about each of you do two things?  Respond to this blog below, which I will treat as a petition to The Florida Legislature to pass these two bills.  Then, make the effort to call your local Senator and House member and urge their support.  Both of these things shouldn’t take you more than about ten minutes.  Unless of course you’re happy with the way things are.

 

 

 

 

ARE YOU FINE WITH FINES?

 

 

So what is an association to do if Sally plays her music too loud too often?  What about if Joe fails to pick up after his dog?  Or suppose Sam parked his unattended car again in the building’s circular driveway for a few hours?  Sure, we may be able to take all of these rule breakers to arbitration, or maybe even a court of law, but doesn’t that take a long time?  Doesn’t it also cost a lot of money.  Isn’t a better idea to hit that rule breaker with a monetary fine instead?  Hit them in the pocketbook where it huts?  Maybe not.

 

In terms of condominiums, the statute says:

 

The association may levy reasonable fines for the failure of the owner of the unit or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association. A fine may not become a lien against a unit. A fine may be levied on the basis of each day of a continuing violation, with a single notice and opportunity for hearing. However, the fine may not exceed $100 per violation, or $1,000 in the aggregate.

 

The same statute does give the condo owner some due process and states:

 

A fine or suspension may not be imposed unless the association first provides at least 14 days’ written notice and an opportunity for a hearing to the unit owner and, if applicable, its occupant, licensee, or invitee. The hearing must be held before a committee of other unit owners who are neither board members nor persons residing in a board member’s household. If the committee does not agree, the fine or suspension may not be imposed.

 

The condo statute and the HOA statute are basically the same, except for one DRAMATIC difference.  Where the condo statute specifically says that no fine can become a lien on a unit, the HOA statute says otherwise.  The HOA statute says:

 

A fine of less than $1,000 may not become a lien against a parcel.

 

 

So in an HOA —- if the fine imposed by the association equals $1,000.00, the association can file a lien against the unit, and if the lien isn’t paid, the association can foreclose on that lien.  That right does not exist in a condo.

 

And in terms of notice, the HOA statute says:

 

A fine or suspension may not be imposed without at least 14 days’ notice to the person sought to be fined or suspended and an opportunity for a hearing before a committee of at least three members appointed by the board who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee. (The condo statute says: the committee must be made up of other unit owners who are neither board members nor persons residing in a board member’s household)

 

The HOA statute also requires the association to provide written notice of such fine or suspension by mail or hand delivery to the parcel owner and, if applicable, to any tenant, licensee, or invitee of the parcel owner. There is no post decision notice required in a condo

 

You may be thinking: why should there be a difference in how condos and H.O.A.’S treat fines?  Why should one type of association be entitled to lien your home for failure to pay a fine — but not the other?  The answer is very simple.  There is absolutely no justification whatsoever for the difference.  It is ridiculous that fines are treated differently depending upon what kind of an association you live in.  It’s absurd that in one type of an association a person can be foreclosed upon for having too many guests at the pool, but not in the other.

 

The real question however is whether the fining process is something that seems to work at all in Florida community associations?   I never thought that a fining committee was an effective way of getting people to comply with correcting violations.  The attendees at our Board Certification courses overwhelmingly feel the same way.  If the owner doesn’t pay, and the fine is less than $1,000.00, there really isn’t much an association can do to collect the fine, except to now file a small claims court lawsuit.   On the flip side, if the fine is over a thousand dollars, I really don’t want an owner facing the loss of their home because they failed to cut the grass for the first time.  Arbitrators with the DBPR hear these types of cases all day long and are qualified to determine these disputes and entertain any defenses an accused owner may have.  That independent arbitrator can force a rule breaker to comply with the rules and hit them with attorney’s fees and costs.  Furthermore, if the owner is found not to have broken the rules, the arbitrator will award the owner their fees and costs.

 

As a practical matter, it’s also difficult to find people who are willing to serve on the fining committee.  It’s certainly not the committee to join if you want to win friends and influence people.  What’s your experience with fines in your community association?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HAPPY PRESIDENT’S DAY!

 

 

Today is President’s Day.  Today, our thoughts and attention are turned to such great names as Washington and Lincoln.  But what about Jones, Smith, Goldberg, Johnson, Williams, Cohen and Brown?  Never heard of them?  Not only will I bet that some of them turned out to be great Presidents, but they were also great female Presidents.  Some of these names no doubt are the greatest Presidents in history.  The history of your community association that is.

 

Is it so wrong to think that on this President’s Day, at least some recognition should be given to the men and women who not only get elected to our community association’s board of directors, but then take the extra step of saying “I’ll take on the responsibility of the Presidency”  “I’ll be the face of the community”  “The buck will stop with me?”

 

We already know how difficult it sometimes is to get volunteers for our boards.  Presidents of Boards not only throw their hat into the ring, they take on primary responsibility for the well-being of the entire community.  We all know that it is also an often times thankless job.  They know going in that if someone’s unit is flooding at 3 am, it’s them that’s going to get the phone call in the middle of the night.  They know that if a strange car is parked in someone’s assigned space, it’s them that’s going to get the complaint.  They even know that if a Hurricane strikes the community some unit owner is going to blame them for mother nature’s work.  Yet, they do it anyway.

 

So, on this President’s Day, here’s to those who do what they can to serve their communities knowing that their opinions will be second guessed all the time.  How about acknowledging some of the hard work our Presidents do today with your comments?  For those Presidents that read this column, tell us why you do it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPOSE THERE WERE NO ASSOCIATIONS?

 

It is extremely rare today to see any type of housing that is being built in Florida today that is not contained within a community association.  While many of us grew up outside the setting of a condominium or HOA, on a regular street with private houses, that simply is no longer the case.  These types of true single family private homes are not being built.  The question is why?

 

Part of the thinking that went into the building of these communities is that each person would get more bang for their buck.  Instead of each owner being able to afford their own swimming pool, we can just build one that everyone can share.  Same goes for the gym and the tennis courts.  Each owner would in effect be purchasing their own resort style living, but instead of it being for their exclusive use, they would have to share it all with their neighbors.

 

Well……..here we are, about 40 years into the condo and HOA way of life.  Yes, some of our properties are outstanding.  There’s even basketball, racquetball courts, a gym, shuffleboard, card rooms, movie rooms and more.  Surely, we would never be able to afford all of these things in our own private non community association property.

 

So why are so many people unhappy?  Sure, sales of homes in HOA’s and condominium units have been incredible as millions of these properties have been bought and sold since their inception. But do large sales equate to happy communities and wise investments?  What say you?  Community associations…….. a way to live like a rich man….. or simply an awful idea?  If you did buy into a community association, would you do it again?  If you never lived in one, what’s keeping you from giving it a try?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DON’T CONFUSE ASSISTANCE

WITH OVER-REACHING REGULATION

 

As you all know, Jan and I are trying hard to finally allow the Department of Business and Professional Regulation to have the ability to help the millions of Floridians who live in homeowner associations throughout the state.  Let me tell you a little about what we are up against.  Unlike the Florida Condominium statutes which speak volumes about how the DBPR assists owners and residents who live in condominium associations throughout the state, here is what Chapter 720 of the Florida Statutes says regarding homeowner associations:

 

The Legislature recognizes that it is not in the best interest of homeowners’ associations or the individual association members thereof to create or impose a bureau or other agency of state government to regulate the affairs of homeowners’ associations.

 

For some reason, of which I am still unaware, there is a belief by The Florida Legislature that members who live in a homeowner’s association should have no assistance whatsoever from the Department of Business and Professional Regulation.  I guess the thought is that members of homeowner associations should not be hassled by a government office who would stick their noses into the affairs of the people who live in these horizontally spread out communities.  But…..if you live in one of those vertical buildings called condominiums, it is apparently in your best interest of for the state to create or impose a bureau or other agency of state government to regulate your affairs.  If it sounds like an absurd double standard, it’s only because it is.

 

Perhaps when creating Florida Statute 720 The Florida Legislature envisioned that having the DBPR assist homeowner associations would be a form of …..dare I say it………..bureaucracy.  An over expansion of government.  While I too am all in favor of not having the government meddle in all our affairs, that is absolutely not the role of the DBPR as it applies to condominiums or as it would apply to homeowner associations.

 

On the contrary, the DBPR assists condominiums by reviewing and approving declarations of condominiums before developers are allowed to sell units in their community, investigates complaints against boards who may be violating the law, investigates complaints against developers, provides educational materials to condominium residents, answers condominium questions on the telephone, provides an Office of the Condominium Ombudsman who provides election monitoring assistance if the members of the condominium community want it, and provides a website to help answer common condominium questions.  Does this sound like a bureaucracy that we need to be afraid of?   Does this sound like over-regulation if also applied to homeowner associations?  Or……….does it sound like members of homeowner associations are not getting the same benefits that members of condominiums do?

 

Funny how the legislature apparently likes to stay out of the affairs of homeowner associations until it’s time to protect HOA developers.  Despite the fact that developers of a condominium are required by law to provide extensive warranties to the owners of new condominiums, last year The Florida Legislature overturned the decision of a Florida appeals court that extended similar warranties to HOAs.  Instead of applauding the fact that the court decision provided HOA owners with certain protections from developers who build communities for families, on the contrary, The Florida Legislature took those warranties  away in the blink of an eye, declaring that removing warranties for people that put down their life savings on a home would be in the interest of protecting Florida’s fragile real estate market.

 

If you are upset about how The Florida Legislature treats owners in an HOA and believe that owners in an HOA are entitled to the same rights and privileges and assistance as those that live in condominiums throughout our state, you are again urged to contact your local State Senator and House Representative and demand their support for SB 580 and SB 596.  To find out who your elected officials are, go to:

 

 

www.myfloridahouse.gov/sections/representatives/myrepresentatives.aspx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WHAT’S THE RULE ABOUT MAKING RULES?

 

Last Sunday’s Condo Craze and HOAs radio show struck a nerve with some listeners.  For those of you who missed the show, I discussed the fact that there’s an HOA in Pembroke Pines that has lots of kids and lots of families but apparently has a rule that says kids can’t play outside in the street.  The 12 year old niece of one of the attorneys in my office was actually approached by the HOA manager and told to stop playing with sidewalk chalk and go inside her house to play.  Now some of you may be thinking…….. ‘What kind of weirdo kid likes to play outside when there’s perfectly good video games on the inside of the house?”  But this kids got some Brooklyn in her jeans so — she’s a outdoor kind of kid.

 

When I was a kid, if someone on my block on East 28th Street in Sheepshead Bay made a complaint about kids playing outside and making too much noise…….that guy usually wound up with some sort of baseball or soccer ball right through their living room window.  Probably more than once.   Or twice.  And the playing continued without further interruption.

 

The real question is…….

 

EVEN IF THERE IS A RULE THAT SAYS KIDS CAN’T PLAY OUTSIDE —- CAN THE H.O.A. REALLY ENFORCE THAT RULE?

 

Let’s talk about what the rules are regarding making rules.  In Hidden Harbor Estates v Norman which was decided by the 3rd DCA in 1975 — the court spoke about whether a Board rule which prohibits alcoholic beverages in the clubhouse was reasonable and here is what the court said:

 

It appears to us that inherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property.

 

Certainly, the association is not at liberty to adopt arbitrary or capricious rules bearing no relationship to the health, happiness and enjoyment of life of the various unit owners. On the contrary, we believe the test is reasonableness. If a rule is reasonable the association can adopt it; if it’s not, it cannot.

 

 

The court found that a rule prohibiting alcohol in the clubhouse was reasonable.  In light of the Hidden Harbor case, no doubt the association would argue that kids playing on the streets in the community creates excess noise and therefore their rule promotes health, happiness and enjoyment of life.  But, it can certainly be argued the other way too — it’s harmful to a child’s health, happiness and enjoyment of life to be prevented from playing outside.  That’s why so many are growing up overweight and without the social skills necessary to communicate, unless it’s through a computer screen or cell phone.  And by the way…….anyone who doesn’t want to hear the noise of children playing is free to move into a 55 and over community.  If you’re not 55 and just can’t cope with the noise of a child playing then you’re free to pitch a tent and move to Florida’s Everglades.

 

 

 

For condominiums, there may be a little more wiggle room.  I grew up in an apartment building and there were rules that said no playing in the hallways.   That might have been reasonable….but my friends and I didn’t comply with those rules too often either ——— especially in the winter.  And if an adult complained about my friends and I playing in the hallway and making too much noise —- my dad backed me every time — and told the neighbor that if they yell at me one more time — my dad would join me and start playing in the hallway too.  As I got older, I stopped playing in the hallway and started playing in my apartment.  The drums that is.  Then the neighbors wished I played baseball in the hall again.

 

I don’t think it would be easy to find a judge in South Florida to say that it’s a reasonable rule to prevent children from playing outdoors in a 55 and over community.  But I want to know what our readers think.  Is such a rule reasonable?  Are there any crazy rules that were passed in your community?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELECTION TIME IS ALMOST OVER

 

A few months ago, I blogged about election season getting under way.  Now, it’s time to blog about the fact that election season is just about over and the elected directors are settling into their positions on the Board and as officers of the association.

 

So what generally happens in the few months between the time when the elections start and when the elections end?  Typically, I get calls and e-mails from people all around the state with complaints about:

 

associations not sending out notices of the annual meeting 60 days in advance;

 

associations not putting a candidate’s name on the ballot;

 

the ballot not listing the candidates in alphabetical order;

 

the Board sending out endorsements of candidates on association stationary;

 

voters being improperly denied the right to vote;

 

directors getting elected using staggered terms in condominiums;

 

certain owners not getting their ballot in the mail;

 

ballot tampering;

 

proxy votes being counted in condominiums;

 

owners allowing others to cast their ballot for them;

 

the votes not being counted in front of the members of the community;

 

and so on, and so on, and so on……….

 

Needless to say, plenty of you are hip to the fact that at least in condominiums, there are strict procedures that need to be followed in order to ensure a fair election.  If these procedures are not followed, unit owners in both condominiums and HOA’s have the right to challenge the election results by filing a petition for arbitration with the Department of Business and Professional Regulation.

 

However, Jan will tell you later in the week that despite the right of all of you to have fair elections and to challenge unfair and improper results, there is a bill that is about to become law which dramatically effects your right to challenge an improperly conducted  election and also attempts to eradicate  your right to remove Board members through the recall process during the first 60 days of their term.  So at a time when Jan and I are screaming in Tallahassee about giving owners more rights and more protection, there is a strong push back to do just the opposite.  I know…….what else is new?

 

So how was this year’s election in your community?  Calm or crazy?  And I certainly want you to tell us all why it’s so important that your right to challenge an unfair election through an arbitrator or judge should never be tampered with by The Florida Legislature.  Not in this country, not now, not ever.

WHAT TO DO ABOUT RECORDS REQUESTS?

 

 

As our blog readers know, Jan and I are doing all we can to pass legislation that will help owners in HOAs.  In fact, it’s pretty clear that our suggestion of allowing owners to use their cameras and cellphones to copy the official records will become law as of July 1st.  So far so good.

 

Here is what the HOA statute says in terms of what HOA owners must pay for copies of records:

 

If the association does not have a photocopy machine available where the records are kept, or if the records requested to be copied exceed 25 pages in length, the association may have copies made by an outside vendor or association management company personnel and may charge the actual cost of copying, including any reasonable costs involving personnel fees and charges at an hourly rate for vendor or employee time to cover administrative costs to the vendor or association.

 

As you can see, unlike condominium owners, HOA owners must may personnel fees and charges at an hourly rate for vendor or employee time to cover administrative costs to the vendor or association.  Why should HOA owners be forced to pay these charges when condo owners don’t?  Moreover, after hearing horror stories of owners being charged in excess of $100.00 per hour to simply get access to records, it became clear that this language in the law needed to go.

 

Last week, a House sub-committee unanimously agreed to support our proposal to eliminate these fees.  However, there was some discussion on the committee as to what to do about those owners who constantly barrage the association with records requests.  The thought was, shouldn’t those types of owners be forced to pay for the time it takes for the manager or other employee to get those records ready and available for inspection, and for the time they spend making photocopies?

 

The law already exists that allows the association to adopt reasonable written rules governing the frequency, time, location, notice, records to be inspected, and manner of inspections.  Surely you would think that the association could pass a reasonable rule that prevents an owner who wants access to records from becoming over zealous, and ensures  free access.  What about the statute having a maximum hourly rate that can be charged to cover personnel fees?

 

HOA owners and community association managers, I would love to get your thoughts.

 

 

 

 

 

 

 

 

 

 

 

 

WOULD AN ASSOCIATION REALLY DO THAT?

 

There are tens of thousands of Board members that proudly serve on condominium and HOA boards in Florida with pride, dedication and integrity.  No doubt that they are rightfully appalled when accused of being the typical “condo commando.”  In fact, they can’t even conceive of taking actions against their neighbors solely out of spite or just to remind the owner who still is in charge.

 

The Florida Legislature knows that despite all the selfless volunteers that understand the definition of “fiduciary duty” there are lots of others who have abused their powers and wrecked havoc on fellow unit owners who simply disagreed with the Board’s position.  That’s where the statutes prohibiting SLAPP suits come in and here’s what they say:

 

(1)It is the intent of the Legislature to protect the right of condominium unit owners to exercise their rights to instruct their representatives and petition for redress of grievances before the various governmental entities of this state as protected by the First Amendment to the United States Constitution and s. 5, Art. I of the State Constitution. The Legislature recognizes that strategic lawsuits against public participation, or “SLAPP suits,” as they are typically referred to, have occurred when association members are sued by individuals, business entities, or governmental entities arising out of a condominium unit owner’s appearance and presentation before a governmental entity on matters related to the condominium association. ….

 

(2)A governmental entity, business organization, or individual in this state may not file or cause to be filed through its employees or agents any lawsuit, cause of action, claim, cross-claim, or counterclaim against a condominium unit owner without merit and solely because such condominium unit owner has exercised the right to instruct his or her representatives or the right to petition for redress of grievances before the various governmental entities of this state, as protected by the First Amendment to the United States Constitution and s. 5, Art. I of the State Constitution.

 

In short, this statute admits that instances “have occurred” in condominiums and HOAs where owners got sued for opening their mouths at public hearings or for making complaints about the association to a government agency.

 

A good example of a SLAPP suit would be if Jane, a unit owner, complains to the local building official that the association is putting on a new roof with unlicensed contractors.  As a result, the project is red tagged and halted.  Within a week, Jane gets sued by the association for having a dog, despite the fact that the dog now lives at the association for 11 years and is walked in plain view every day.

 

SLAPP suits are ones that are obviously filed for the purpose of retaliation and to shut the unit owner up.  To stop them from making trouble and to remind them that if they don’t like the way things are now, we can make it worse for you by drowning you with lawsuits and legal fees. The statute makes it clear that association funds can’t be used for prosecuting a SLAPP suit and that a unit owner is entitled to treble damages and costs and attorney’s fees if they successfully defend a SLAPP suit.

 

It’s also a pretty safe bet that Board members can face individual liability that won’t be covered by the association’s D & O insurance policy should an owner sue the association because they were served with a SLAPP suit.

 

But is all this talk for nothing?  Would an association really sue someone just to keep them quiet?  Just because they made a complaint?  Just because they exercised their right to free speech?

 

Exercise your First Amendment rights and let your fellow blog readers know what you think.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HEY DEVELOPERS!  WHEN IS ENOUGH ENOUGH?

 

As we all know by now, our Senate Bill 580 tries to stop the scenario where HOA developers maintain control of the Board of Directors for years, if not decades after they rightfully should.  There are countless horror stories throughout our state where owners simply cannot get their voices heard or opinions counted in communities that are almost entirely occupied by their home buyers, or where the developer has virtually abandoned the community.  It’s the developer’s voice that only gets heard.  It’s the developer’s decisions that are put into effect and it’s the developer’s show to run.  Period.

 

So what’s asked for in our bill this year?

 

In addition to what the statute already allowed, homeowner’s would be now allowed to elect a majority of the Board members:

 

(c) Two years after the developer has ceased construction or ceased to offer parcels for sale in the ordinary course of business;

 

(d) Upon the developer abandoning or deserting its responsibility to maintain and complete the advertised amenities or infrastructure. There is a rebuttable presumption that the developer has abandoned and deserted the property if the developer has not engaged in construction or sale of properties or has unpaid assessments or guaranteed amounts under s. 720.308 for a period of more than 2 years;

 

(e) Upon the developer filing a petition seeking protection under chapter 7 of the federal Bankruptcy Code;

 

(f) Upon the developer losing title to the property through a foreclosure, or the transfer of a deed in lieu of foreclosure, unless the successor owner has accepted an assignment of developer rights and responsibilities; or

 

(g) Upon a receiver for the developer being appointed by a circuit court and not being discharged within 30 days after such appointment, unless the court determines within 30 days after such appointment that transfer of control would be detrimental to the association or its members.

 

In addition, the bill requires that members other than the developer are entitled to elect at least one member of the board of directors of the homeowners’ association if 15 percent of the parcels in all phases of the community which will ultimately be operated by the association have been conveyed to members.

 

Finally, the bill requires that members other than the developer are entitled to elect at least two members of the board of directors of the homeowners’ association if 50 percent of the parcels in all phases of the community which will ultimately be operated by the association have been conveyed to members.

 

Is there anything even remotely objectionable about any of these new provisions?  Shouldn’t the owners be allowed to elect a majority of the Board if any of the above occurs?  Isn’t it fair and rational?  Everyone seems to thinks so.  Except the developers that is.

 

 

Let me be remarkably clear about something.  Last year the developers of homeowner associations in Florida hit the Florida Powerball and Lotto combined when The Florida Legislature gave them the biggest break of all time and passed a law that said developers don’t give warranties to homeowner associations for the communities they build.  This is despite the fact that an appellate court said they did.  If the streets flood, the electric doesn’t function, your clubhouse collapses and your driveway caves in the day after you close on your new home purchase, you’re on your own and the developer has no liability to fix any of it.

 

You would think with that kind of break, the developer lobby would simply be humble and not even show their face in Tallahassee this year before The Florida Legislature realizes what it did and quickly repeals what may be the worst law ever if you’re a homeowner in Florida.

 

But the developer lobby has no shame and obviously no fear of The Florida Legislature.  They won’t even agree to allow you to govern the communities that they  abandoned, have lost to foreclosure, receivership or bankruptcy.  They want to control the purse strings of the community until the last blade of grass is sold to the last buyer.

 

Our bill also requires HOA’s to now simply give their name, address, budget and total number of parcels to the DBPR each year.  The developer’s response:  wait a minute, what’s the rush, why this need for regulation and expansion of government?

 

By law, a developer of a condominium must get approval of the governing documents by the DBPR, and pay a fee.  HOA developers don’t even want to provide the name of the community they are building.  They want to simply be off the state’s radar, build communities without any laws overseeing same, provide no warranties and provide no representation on the board to the owners who live in the HOA communities.

 

If there ever was a time to pick up the phone and call your legislators, e-mail them or write them letters urging them to support a bill, this is the time and SB 580 is the bill.   Unless you think the developers make sense.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SO WHAT RECORDS CAN’T BE SEEN BY UNIT OWNERS?

 

In both Florida condominiums and homeowner associations, unit owners are entitled to see virtually all of the association’s official records.  There are very few records that members cannot see and here they are:

 

1. Any record protected by the lawyer-client privilege as described in s. 90.502 and any record protected by the work-product privilege, including a record prepared by an association attorney or prepared at the attorney’s express direction, which reflects a mental impression, conclusion, litigation strategy, or legal theory of the attorney or the association, and which was prepared exclusively for civil or criminal litigation or for adversarial administrative proceedings, or which was prepared in anticipation of such litigation or proceedings until the conclusion of the litigation or proceedings.

2. Information obtained by an association in connection with the approval of the lease, sale, or other transfer of a unit.

3. Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health, and insurance records. For purposes of this subparagraph, the term “personnel records” does not include written employment agreements with an association employee or management company, or budgetary or financial records that indicate the compensation paid to an association employee.

4. Medical records of unit owners.

5. Social security numbers, driver’s license numbers, credit card numbers, e-mail addresses, telephone numbers, facsimile numbers, emergency contact information, addresses of a unit owner other than as provided to fulfill the association’s notice requirements, and other personal identifying information of any person, excluding the person’s name, unit designation, mailing address, property address, and any address, e-mail address, or facsimile number provided to the association to fulfill the association’s notice requirements.

6.  Electronic security measures that are used by the association to safeguard data, including passwords.

7. The software and operating system used by the association which allow the manipulation of data.

 

 

The statute seems pretty clear.  If the record does not fall within one of these seven exceptions, the unit owner can see it.  Then how is it that associations think they have the authority to enter into confidential settlement agreements like the one just entered into between Treyvan Martin’s family and the association where George Zimmerman was in charge of security?  I say they can’t and every unit owner who wants to know the precise details of that settlement has the authority to see the settlement documents.

 

In Yacht Club Southeastern Inc. v. Sunset Harbour North Condominium Association, Inc. 843 So.2d 917 (3rd DCA, 2003) the association  sued the developer for construction defects. The parties participated in a court-ordered mediation but failed to reach an agreement. Subsequently the developer wrote a six page letter to all individual unit owners, purportedly to inform them of the status of the legal proceedings. The letter included the amount of a settlement offer made by the developer, which amount had been rejected by the Sunset Association during mediation.  The Sunset Association moved for sanctions, complaining of disclosure by the developer of confidential  information  and the trial court agreed.  On appeal however, the appellate court reversed, holding that the developer did nothing wrong by disclosing the confidential communications that took place at mediation to the unit owners, because they were the real parties in interest.

 

 

 

When I teach the Board Certification Seminar, many people in the audience gasp when they learn that even the account ledger of a unit owner can be seen by every other unit owner.  That’s because as a unit owner you are the real party in interest and have the right to know about the financial status of the community that you live in, and absent those few exceptions named above, you get to see everything.

 

Have you been denied access to certain records that the Board or management company said are not available for the eyes of the unit owners?  What records did you want to see and were you ultimately able to get them?

 

 

 

 

IS A SALARIED BOARD THE ANSWER?

 

 

Florida condominium law provides that:

 

Unless otherwise provided in the bylaws, the members of the board shall serve without compensation.

 

Florida HOA law provides that:

 

A director, officer, or committee member of the association may not directly receive any salary or compensation from the association for the performance of duties as a director, officer, or committee member and may not in any other way benefit financially from service to the association.

 

HOA Officers and directors can get compensated however if authorized in the governing documents or if authorized in advance by a vote of a majority of the voting interests voting in person or by proxy at a meeting of the members.

 

 

So there you have it. You can get compensated for serving on the Board.  It just has to be stated in the bylaws or declaration.  Why is it then, that virtually no documents that I have ever seen contain a clause that allows directors to get compensated?

 

Board members will tell you that they spend countless hours per year devoted to a position where they are second guessed, yelled at, woken up and defamed.  And that’s the benefits of this non paying position!  They also negotiate with vendors, help prepare the budget, keep on top of the staff, work with association’s counsel, attend meetings, sign checks and more.

 

Is it unreasonable to ask: why would anyone do this if you don’t even get paid minimum wage?

 

Wanting to do good for your community and volunteer your time to help others is certainly a noble cause.  But, is it enough to attract the most qualified people in the community to serve on the Board?  Would payment to directors attract more qualified candidates?  If Board members did get paid, what’s the best way to handle it?  An hourly fee?  A monthly fee?  Anyone out there think that compensation should simply be prohibited?  Does anyone live in a community where the directors are paid?  If so, how much and how is it working out?

 

 

 

REGULATION OR STRANGULATION?

 

What an amazing legislative session it was for Jan and I this year.  I’m sure we would both agree that when we decided on what to focus on this year, our agenda was a little aggressive.  The strategy of course is to ask for a million things and be happy if you get a few.  Well…….looks like we got more than a few.  As far as legislative reform for HOA’s goes…this was the biggest year in the last decade.

 

Of course, our most grandiose plan was to have HOA’s assisted by the Department of Business and Professional Regulation, on the same scale as condominiums are.  I have to tell you, I never felt that there was much resistance to the idea from our legislators.  On the contrary, and understandably, most of them wanted to first get a handle on just how many HOA’s there are to begin with.  It may seem incredible to you if you live in an HOA —- but the State of Florida does not know that you exist.  There is no list with the name of each HOA on it.  The State does not know the name of your community, if you are an HOA, where you are located, how many parcels you have,  and the amount of your budget.  As the saying goes…….out of sight, out of mind.

 

Starting July 1st however, all HOAs will be required to provide all of this information to the DBPR.  There will be no cost to the association for providing the information, unless your management company charges you for the 30 seconds it should take to fill-out the form.  By the end of the year, we should have a pretty good handle regarding the amount of associations, the number of people living in them and where they are all located.

 

Then what?

 

When it becomes clear that the number of people living in HOAs exceed the number of people living in condominiums, we may wonder why it’s taken up until now to decide that these residents are entitled to the same benefits from the DBPR as condominium residents.

 

But wait?  Some people may say that now allowing the DBPR to assist HOA’s would be an example of over regulation.  The term “regulation” at one time meant a form of supervision by a government agency in order to promote and protect the public welfare.  It was a good thing.  Today however it has taken on the negative connotation of crippling bureaucracies and stifling progress.  In a word…strangulation.

 

 

 

 

 

 

So let’s see what the DBPR already does for condominiums so we can determine if it’s strangulation or much needed assistance.  The DBPR provides condominiums with a complaint department and assigns investigators to assist in uncovering illegal activities in associations.  At worst, they ask the associations to comply with the governing laws and issue guidance on how to become compliant.  Offenders are rarely asked to pay even a small penalty, and usually are only asked to agree to comply with the law in the future.  Hardly sounds like strangulation to me.

 

The DBPR also has a telephone hot line and on-line website  to help answer condominium related questions.  This may save an association from having to pay a lawyer an hourly fee to answer the same questions.  Again….. this is assistance.  Not regulation or strangulation.

 

The DBPR provides free educational materials to condominium associations.

 

The DBPR issues declaratory statements and arbitration decisions regarding a wide range of condominium issues.  Where’s the strangulation?

 

Oh wait!  There is one thing that the DBPR does that may be considered oversight.  They have examiners review and approve the governing documents of a new condominium in order to ensure that the developer’s documents comply with the law and are otherwise not screwing over the eventual buyers in that community.  If the documents don’t comply with the law, they don’t get approved and the developer can’t sell.

 

And now you know where the real opposition is coming from.  Developers.

 

The developer lobby will be the first group to scream and shout that regulation by the DBPR will hurt the industry and prevent them from selling homes.  Ask them if it has hurt their ability to sell condominium units and they have no answer.  Ask them why there are more condominium units today than ever before with tens of thousands of more units on the horizon.  Make no mistake.  This time next year the developer lobby will be screaming that HOA regulation is equal to developer strangulation.  It’s not.  It’s just not the massage that they have gotten used to from The Florida Legislature until this year.

 

 

 

ARE THINGS BETTER THAN THEY ACTUALLY SEEM?

 

At the Condo Craze Live Radio Show last week, the issue arose as to whether the negative connotations that some of our condominiums and homeowner associations have, are blown out of proportion.  Some attendees thought that there wasn’t enough press coverage about how bad things really are in our associations while others thought that tales of board members looting the association’s funds and taking kickbacks for awarding contracts are extreme exceptions to communities that are run by Board members who serve without any compensation and solely out of a desire to do good for their community.

 

So what’s the truth?

 

The truth is, there are lots of people who get arrested in various professions for violating the trust that others have placed with them.  It seems like doctors get arrested for insurance fraud almost daily here in South Florida.  Police officers get arrested for abusing their authority.  Teachers get arrested for sleeping with their students or doing drugs with them.  Building officials get arrested for turning a blind eye to building violations in exchange for a bribe.  And yes……even attorneys get arrested all too often for looting trust accounts which contain their client’s money.

 

Sure we hear stories every so often about Board members stealing money.  In fact, that was one of the reasons Jan and I pushed so hard for an HOA law that automatically kicks an HOA director off the Board if they are arrested for stealing the association’s funds.  We just didn’t think it was right for the director to continue to serve on the Board FROM PRISON.  I just don’t think however that if we compare Board members with other professions, there is more crimes being committed by Board members in our community associations than there are crimes being committed  by individuals in most other professions.

 

Some may argue however that because of unit owner apathy in many communities, board members are simply not caught with their hands in the cookie jar.  I’m not buying it.  After 21 years of practicing community association law here in Florida, I’m still looking at community association boards through rose colored glasses and believe that more than most Board members have their heart in the right place.

 

I know lots of you will disagree with me on this one.  So let’s hear it.

 

CAN A CONDO PREVENT SMOKING IN A PRIVATE UNIT?

 

 

We all know that if we choose to live in a community association in Florida, we will be subject to reasonable rules and regulations.  For example, we may want to take a swim at 2 a.m. but the pool may be off limits at that hour.  We may need permission as to who can rent or buy our unit.  We may be subject to rules regarding the hours of the clubhouse, where we can park, and how many guests we can invite to the gym at one time.  We’re used to rules and regulations of this variety that involve use of the common areas.  The question however  is …..can the association prevent you from doing things in your unit, like preventing you from smoking?

 

Any discussion of just how far an association and its members can go in regulating use of units must start with a case decided by The Florida Supreme Court in 2002 called Woodside Condominium Association v. Jahren.  In Woodside, a unit owner was renting out his units for about 18 years in a row, when the association members passed an amendment to the declaration of condominium which in effect, banned the rental of units.  Jahren and the association wound up in litigation, with the unit owner arguing that it would be unfair to deprive him of the ability to rent after 18 years.

 

The Florida Supreme Court cited to Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180 (Fla. 4th DCA 1975), to further explain the restrictive nature of condominium ownership and living:

[I]nherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization.

Finding that the amendment did not violate public policy or the owner’s constitutional rights, The Florida Supreme Court held that there are very few restrictions to the member’s ability to amend their declaration….and restricting the ability to rent was reasonably related to improving the community.

 

So in light of the Woodside case, it’s pretty clear to me that if the owners in a condominium pass an amendment that would prohibit smoking in their unit, that amendment would be valid because there is no constitutional right to smoke in your unit.  Moreover, it’s an amendment that is not arbitrary or capricious and on the contrary is designed to promote the health and welfare of the community.

 

 

Now before you start worrying about whether or not your condo association can pull a Mayor Bloomberg and stop you from drinking large sodas in your unit or eating greasy cheeseburgers, remember that a court would likely strike down such an amendment because unlike smoke that starts in one unit and enters other units, the act of that one owner in eating unhealthy in his or her unit has no bearing on the health and welfare of the other owners or occupants in the community.

 

 

 

 

MEMORIAL DAY: A REMINDER OF PAST AND PRESENT BATTLES

 

Memorial Day is a national holiday dedicated to honoring those that have died while serving in our armed forces.  The holiday was once referred to as Decoration Day, inasmuch as the tombstones of fallen soldiers were and in some cases still are actually “decorated” to honor them.  It seems almost ironic then that a national holiday known for encouraging decorations, also causes battles between community associations and those who wish to decorate their homes with American flags or other patriotic displays.  Every year, without fail, stories make the news about an association telling an owner to take down an American flag or other display.

 

Here is what our Florida statutes allow:

 

In a condominium —  Any unit owner may display one portable, removable United States flag in a respectful way and, on Armed Forces Day, Memorial Day, Flag Day, Independence Day, and Veterans Day, may display in a respectful way portable, removable official flags, not larger than 4 1/2 feet by 6 feet, that represent the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, regardless of any declaration rules or requirements dealing with flags or decorations.

 

In an HOA – Any homeowner may display one portable, removable United States flag or official flag of the State of Florida in a respectful manner, and one portable, removable official flag, in a respectful manner, not larger than 41/2 feet by 6 feet, which represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW-MIA flag, regardless of any covenants, restrictions, bylaws, rules, or requirements of the association.  (HOA owners can even erect a flag pole)

 

As many of you know, I spent a great deal of time this past year trying to bring the condo statutes and HOA statutes closer together, the intent being that owners in one type of community have the same rights as owners in the other type of community.  The above statutes are yet another example of inconsistencies that make no sense.  In a condominium, it must be Armed Forces Day, Memorial Day, Flag Day, Independence Day or Veterans Day in order to display a flag that represents the Navy, Air Force, Marine Corps or Coast Guard.  In an HOA — a homeowner can display such a flag all year round.

 

Go tell a former marine that he can’t display his Marine Corps flag because he lives in a condo – but former Marines who live in an HOA can display the Marine Corps flag all year round.  You may want to duck.

 

 

 

 

 

 

 

 

 

 

More importantly, why is it that we hear these stories year after year of associations demanding that the American flag or other patriotic decorations be removed from front lawns or windows?  On the contrary, we almost never hear complaints from associations about over zealous Christmas decorations or other holiday displays.  What is it about the display of the American flag or similar decorations that causes association leadership to sometimes demand that even the most tactful and tasteful displays of patriotism be immediately removed?  I’m not suggesting that a homeowner be allowed to paint their entire home red white and blue with 50 stars.  I am suggesting however that associations must often make the choice of picking and choosing their battles, and far too often the battle chosen seems to be a battle against our own flag.

 

 

TOWING – KNOWING YOUR RIGHTS

 

There may be a group that I dislike more than developers as far as community associations go; tow truck companies.  No doubt, many of you that are reading this blog today either had your car or your guest’s car towed from right in front of your home or while legally parked in a guest parking spot or other proper location in the community.  It happened to me too.  To the average homeowner, or owner of a vehicle for that matter, it appears that tow truck drivers and tow truck companies operate with complete immunity and have absolutely no laws that regulate them and their conduct.  Believe it or not however…Florida Statute 715.07 is chock full of provisions that are designed to protect you from often times over aggressive behavior of tow companies and their drivers.  Here are but a few:

 

The law clearly recognizes the right of condominium associations to tow vehicles and states: the owner or lessee of real property, or any person authorized by the owner or lessee, which person may be the designated representative of the condominium association if the real property is a condominium, may cause any vehicle or vessel parked on such property without her or his permission to be removed by a person regularly engaged in the business of towing vehicles or vessels, without liability for the costs of removal, transportation, or storage or damages caused by such removal, transportation, or storage…

 

However,  Any towed or removed vehicle or vessel must be stored at a site within a 10-mile radius of the point of removal in any county of 500,000 population or more, and within a 15-mile radius of the point of removal in any county of less than 500,000 population. That site must be open for the purpose of redemption of vehicles on any day that the person or firm towing such vehicle or vessel is open for towing purposes, from 8:00 a.m. to 6:00 p.m., and, when closed, shall have prominently posted a sign indicating a telephone number where the operator of the site can be reached at all times. Upon receipt of a telephoned request to open the site to redeem a vehicle or vessel, the operator shall return to the site within 1 hour or she or he will be in violation of this section.

If no towing business providing such service is located within the area of towing limitations set forth in sub-subparagraph a., the following limitations apply: any towed or removed vehicle or vessel must be stored at a site within a 20-mile radius of the point of removal in any county of 500,000 population or more, and within a 30-mile radius of the point of removal in any county of less than 500,000 population.

The police must be notified within 30 minutes after completion of such towing or removal. A person in the process of towing or removing a vehicle or vessel from the premises or parking lot in which the vehicle or vessel is not lawfully parked must stop when a person seeks the return of the vehicle or vessel. The vehicle or vessel must be returned upon the payment of a reasonable service fee.

 

 

 

Notice must be posted meeting the following requirements:

a. The notice must be prominently placed at each driveway access or curb cut allowing vehicular access to the property, within 5 feet from the public right-of-way line. If there are no curbs or access barriers, the signs must be posted not less than one sign for each 25 feet of lot frontage.

b. The notice must clearly indicate, in not less than 2-inch high, light-reflective letters on a contrasting background, that unauthorized vehicles will be towed away at the owner’s expense. The words “tow-away zone” must be included on the sign in not less than 4-inch high letters.

c. The notice must also provide the name and current telephone number of the person or firm towing or removing the vehicles or vessels.

d. The sign structure containing the required notices must be permanently installed with the words “tow-away zone” not less than 3 feet and not more than 6 feet above ground level and must be continuously maintained on the property for not less than 24 hours prior to the towing or removal of any vehicles or vessels.

e. The local government may require permitting and inspection of these signs prior to any towing or removal of vehicles or vessels being authorized.

 

 

When a vehicle or vessel has been towed or removed it must be released to its owner or custodian within one hour after requested. Any vehicle or vessel owner or agent shall have the right to inspect the vehicle or vessel before accepting its return, and no release or waiver of any kind which would release the person or firm towing the vehicle or vessel from liability for damages noted by the owner or other legally authorized person at the time of the redemption may be required from any vehicle or vessel owner, custodian, or agent as a condition of release of the vehicle or vessel to its owner. A detailed, signed receipt showing the legal name of the company or person towing or removing the vehicle or vessel must be given to the person paying towing or storage charges at the time of payment, whether requested or not.

 

Although reading today’s blog won’t keep you from getting towed, if you are, you now know your rights and are a force to be reckoned with on that inevitable day when you’re late for work, grab your car keys, run out the front door and jump into your……….wait a minute.  Where the #$%@& is my car?

 

Any towing horror stories?  Let’s hear em.

LANDSCAPING — WHAT IS THERE TO POSSIBLY FIGHT ABOUT?

 

No matter whether we live in a community association or not, we would all agree that Florida is lush with green spaces, beautiful towering palm trees, wide open fields of grass, exquisitely colored flowers and some of the most spectacular landscaping on the planet.  Just looking at all of these remarkable trees and flowers should instantly provide you with a feeling of serenity, relaxation and calm.  Don’t you agree?

Then why is it that some of the most vicious knock down drag em out fights in our community associations involve landscaping?  Is there no topic that’s safe?  What landscaping issues can you possibly fight about you ask?  Here’s a few…

In Baran v. Ro-Mont   a unit owner planted their own garden outside of the unit, on the common elements.  The Board removed the garden.     The Board claimed that Baran made a material alteration to the common areas that required a vote of the owners.  Baran claimed a prior Board gave him the authority to plant the garden.  Baran sued and won.  The interesting part of the case is that the arbitrator held that even if a prior Board gave Baran permission to install his own garden, that was not a decision that resulted in a material alteration to the common areas,  because landscaping decisions simply fall within the business judgment of the Board of Directors.

In Mueller v. La Renaissance Condominium, the association planted 3 palm trees between the petitioner’s unit and the ocean, without first obtaining a vote of the unit owners to alter the common elements. The petitioner testified that they are blocking his view of the ocean and that a board member told him in 1990 that they intentionally planted the trees at that location to harass him. The arbitrator’s view of the trees from the petitioner’s unit revealed that although they blocked a small portion of his view of the horizon, they did not obscure it.   The arbitrator ruled that routine maintenance of the common elements is a matter within the discretion of the board, and the board’s decisions regarding maintenance of the common elements, including the planting of trees, are presumed correct absent a showing of mismanagement, fraud, or breach of trust. The arbitrator ruled that the business judgment rule provides that the arbitrator will not substitute her judgment for that of the board.   The trees get to stay.

 

Fighting over landscaping.  Really?  Why not just everybody stop and smell the roses once in a while?  So…. Anybody have an interesting landscaping story to tell?

THANK YOU FLORIDA LEGISLATURE

Every survey seems to confirm that people are simply fed up with politics and their elected politicians.  Approval ratings have never been lower.  Compromise is not an option and stalemate is the new norm.  Perhaps until now.

This year, at least as far as the few million owners in homeowner associations go, instead of criticism, the members of The Florida Legislature deserve a standing ovation.  Recognizing that members in homeowner associations are in desperate need of legislative assistance, understanding that condominium owners have far greater protections than owners in an HOA, and acknowledging that time was of the essence, the members of The Florida Legislature passed common sense legislative reform of HOA’s without bickering, delay tactics, name calling or blind allegiance to a party philosophy.

In all of the hearings and in all of the meetings regarding House Bill 7119, professionalism reigned.  In addition to our legislature, The Department of Business and Professional Regulation agreed to approve classes for certification of HOA directors and deserves applause as well.  This year, even the interests of the owners were placed way ahead of the interests of developers.  Hard to believe, but I saw it with my own eyes.

It would never have happened without strong leadership supporting the legislation.  Senator Hays, Representative Larosa and Representative Mayfield led the way and had the obvious confidence and admiration of all of their colleagues on these issues from both parties.

So after this year, perhaps it’s time to have some renewed confidence in the ability of The Florida Legislature to respond to the needs of homeowners throughout Florida, even if their needs don’t necessarily align with Florida developers.  I guess we’ll see if the trend continues next year.  This year however, send your local legislator an e-mail,  give him or her a call or post a comment to this blog and say THANK YOU for working together with your fellow Representatives and Senators to pass HB 7119.

Many of you have asked for a copy of the actual bill.  Simply click here: http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_h7119er.docx&DocumentType=Bill&BillNumber=7119&Session=2013

 

 

 

MIND YOUR OWN BUSINESS

 

I have a confession to make.  As I write this column, I may be breaking the law in my own community.  I’m actually doing work while sitting in my home on the computer.  Suppose my governing docs say however that my home can only be used for residential purposes and not for commercial purposes?  Am I doomed?  Do I need to worry about fines, or worse yet, a scary warning letter from one of those attorneys that practice association law?

 

Each day that goes by we become more and more technologically advanced — we’re all walking around with cell phones where you can speak with and even see people live wherever they are in the world.  We can send e-mails from our home or phone, we have powerful computers in our home that perhaps used to only be located in our offices — and I’m certainly finding that even lawyers feel that they can work from home and actually get more done than if they came into the office and have to put up with all of the distractions.

 

As a result, there’s no question that we see an increase in people are starting all of these home based businesses.   After all, the start up expenses are minimal — and of course there’s no office rent to pay.

 

But what about all those clauses in our association’s governing documents that say that a unit owner is not allowed to conduct a business from their home?  What exactly does that mean?  How far can someone go without actually violating such a provision?  The answer lies in an arbitration case called The Inlet at Ponte Verde Beach v. Bissell,  —- which was actually decided by Bruce Campbell who is now The Florida Condominium Ombudsman.   Here are the facts of the case—-   the occupant performed work activities in the condo unit consisting of paperwork, phone calls and exchanging e-mails. No customers visited the unit. No other employee visited the unit. No business professionals or collectors came to the Unit.  There was no shipping or receiving of products at the Unit. There was no signage or other evidence of the office use of the Unit on the exterior of the condominium.

 

The next door neighbor of the Unit complained however that he hears frequent ringing of telephones and loud conversation from the unit.  But, other than telephones and conversation, no activity in the Unit is perceptible to the outside or common elements.  The first thing the arbitrator said was: — frequent telephone rings and loud conversation — are not inconsistent with purely residential use.  And he’s right.  There are plenty of people who are not operating any business in their home — yet are on the phone all day long yapping and yapping.  (He’s right.  I have a 16 year old daughter home for the summer)  So — lots of phone calls being made or received has nothing to do with whether or not the unit is being used for commercial purposes according to this arbitrator.

 

 

 

 

 

 

 

The arbitrator then cited to an old Florida Supreme Court case decided in 1925 which held that: “Instances are not lacking in which other courts have held or intimated that property restricted to use for residential purposes, so long as if is in good faith used for such, may be also used to a minor extent for the transaction of some classes of business or the following of some professional pursuits so long as the latter use is in fact casual, infrequent, or unobtrusive and results in neither appreciable damage to neighboring property nor inconvenience, annoyance, or discomfort to neighboring residents.

 

So even though computers didn’t exist in 1925, the issue of using your residential homes for commercial purposes has been an issue in this state for nearly 100 years.  The arbitrator then cited to another Florida case referred to as the Hidden Harbor case which held that: The restriction in Petitioner’s Declaration, which had a limited reference to “non-commercial purposes”, does not clearly prohibit a home office. The provision must be strictly construed to allow a unit owner to use his property as he pleases, so long as he does not disrupt the integrity of the common scheme.

 

The arbitrator then did the old fashioned thing and actually pulled out Websters dictionary to look up the word “commercial” because the declaration prohibits “commercial” use.  The first meaning listed for “commercial” in Webster’s II New College Dictionary (1995) refers to “commerce” — “the buying or selling of goods”. BASED UPON THAT DEFINITION, THE ARBITRATOR RULED THAT THE PROHIBITION OF THE DECLARATION DOES NOT APPLY TO A HOME OFFICE BUSINESS WITHOUT INVENTORY, MERCHANDISE OR PHYSICAL INTERACTION WITH CUSTOMERS.

 

So there you have it.  If there is no inventory, merchandise or physical interaction with customers — an association is probably wise not to oppose a unit owner who does some business out of their home.  I can tell you that as we move more and more to a work force where so many people are now working from home — look for this type of issue to be litigated more and more between associations and their unit owners or occupants.

 

 

NEW LAWS KICK IN TODAY — BUT SUPPOSE THERE WERE NONE?

 

 

Today is July 1st.  That means that all the new laws we fought so hard for take effect as of today.  Lots of changes happened this past legislative session.  Glazer and Associates, P.A. prepared our newsletter which details these changes in easy to read format.  For a copy, simply click here.  Newsletter.

 

On a day when we really celebrate all of these new laws that promote harmony and common sense in community associations, I also can’t help but think that week after week, year after year, people complain that condos and HOA’s are simply places where there are too many laws, too many rules and too many regulations.  In fact, the stereotype surrounding many of these Florida associations is that they are governed by rigid boards of directors who are sticklers for the rules and who lurk around the community looking for the slightest of violations so they can pounce the fining committee or the association’s law firm on the unsuspecting poor unit owner.

 

Suppose for one year we decided to scrap the condo and HOA laws completely?  In fact, Boards wouldn’t even have the right to make any rules and regulations and there would also be no laws preventing Board members from looting the association’s operating and reserve funds.  Instead, we would all have to rely on each other to administer fair elections to decide who would be in charge.  We would have to completely trust the Board members not to steal because there would be no punishment.  We would also have to rely on the unit owners to voluntarily pay their monthly or quarterly assessments on time in order that the bills get paid, even though there would be no law that forces them to pay and no consequences whatsoever for non payment other than utilities to the community eventually being turned off.  We would also rely on the common sense and kindness of our neighbors to only use the common area swimming pools and exercise rooms at hours that don’t annoy their fellow neighbors and appeal to their sense of reasonableness that they would keep the stereo and TV down in their unit.

 

Of course we are all concerned about the appearance of the community, so even though there would be absolutely no means of enforcement, unit owners and homeowners would be politely asked to keep the appearance of their homes up.  The penalty for failing—none.  Parking rules and regulations would be tossed to the wind as well.  Park wherever you want — but keep in mind that there is only one designated spot per unit so please don’t park more than one car.  The penalty for bringing four cars — none.

 

Of course you also wouldn’t be entitled to get copies of the association’s records.  If someone was keeping copies of those records and if they were kind enough to share those records with you, only then would you be able to get a copy.  And by the way……if the roof starts leaking and we need to fix it, we would simply ask that everyone voluntarily chips in to make the repairs because it’s only fair.  If you don’t contribute though — there’s not a thing that can be done to you.  We are simply relying on your generosity and sense of fairness.

 

I can go on all day with these type of examples.  Of course, my point is that while people complain about community associations having too many laws, there’s no question that without laws there would simply be chaos.

 

On the other hand, some have suggested that all of these laws have now resulted in chaos.  Who is right?

 

HOA’S —– IT’S TIME TO SIGN UP

 

 

 

 

As many of you know, the State of Florida has no idea how many HOA’s there are, or where they are located.  In effect, HOA’s have largely been out of sight and out of mind at the legislative level for quite some time, until this past session.  Make no mistake, HOA’s and HOA reform received lots of attention this year and should see a lot of attention next year.  However, as a good start, The Florida Legislature thought best to first get a handle on finding out just how many HOA’s there are and where they are located.  So, the new law requires that by November 22nd, 2013 the community association manager, or management firm, or the association when there is no community association manager, shall report to the Division of Florida Condominiums, Timeshares and Mobile Homes, the following information:

 

Name of the association,

federal employer i.d. number,

mailing and physical addresses,

total number of parcels,

and total amount of revenues and expenses.

 

There is no fee involved.  The DBPR form can be found on-line by clicking here ________

 

Some people have acted like The Florida Legislature just required all of their HOA members to sign up for the draft.  That’s hardly the case.  Perhaps we can pass even better laws if we know how many people those laws  would be effecting, where they are located and the average amount of their HOA budgets and expenses.  Perhaps by getting these numbers in place now, we can learn that the DBPR can provide consumer assistance to both HOAs and condominiums at a price of less than $4.00 per unit as currently charged to condominiums.  Isn’t it worth finding out?  Especially when the cost for HOAs to register with the state is zero?

 

As an aside, one of the best parts of HB 7119 that passed, is the ability for HOA members to get certified just like condominium members can.

 

 

 

 

 

WHEN IS A TRUCK A TRUCK?

 

Lots of arbitration cases involve whether or not an owner can park their truck or commercial vehicle on the common areas or in their own driveways.  I’m not so sure however that these decisions have made the problems easier to solve.  For example:

In the Fairways at Pinebrook Owner’s Association, Inc. v. Graham the issue was whether Respondents’ 2006 Ford F-150 pickup truck was permitted to be parked in their designated parking space at the condominium. The F-150 is a red two-door vehicle with passenger rear seats. The bed of the F-150 has a locking cover. The Association did not allege in its petition that this vehicle was being used for commercial purposes.

The Declaration of Condominium of Fairways at Pinebrook Condominium states:

There shall be no parking of boats, trucks, trailers, motorcycles or any vehicles other than passenger vehicles in any parking area except parking spaces which may be designated by the Association for such specific purposes, if any.

Neither “truck” nor “passenger vehicle” was defined by the Declaration.

The arbitrator held that since the association did not allege that the unit owner’s F-150 was being used primarily in the trade or business for the transport of goods and materials, then the F-150 appears to be used primarily for personal transportation and therefore it is a passenger vehicle and allowed to remain on the property.   However, the arbitrator simultaneously ruled that the owner’s  F-150, as a truck, is prohibited.  Under this case it apparently is OK for The Partridge family to park that big multi-colored bus that they drove in, right on the condominium’s parking areas.  As long as it’s used to transport people and not goods —- it gets to stay.

 

However, in Sabal Pines Condominium Association, Inc., v. Felling, Arb. Case No. 99-1326, the condominium declaration stated:

(2) Trucks of any kind, motorcycles, motorbikes, commercial vans, buses, boats., are not permitted on Sabal Pines property at any time.  Here, the arbitrator found that a Ford F-150 pickup truck was prohibited as it was a clearly a “truck of any kind” and therefore prohibited under that declaration.

Confused?  You should be.  Bottom line —- when drafting these provisions in your governing documents, you need to be careful about how they are drafted.  According to one arbitrator, if your docs allow passenger vehicles, but prohibit trucks, you still must allow trucks, if the trucks transports people and isn’t used for business.  This is regardless of the size of the truck.  The other arbitrator felt however that they know a truck when they see it.

Maybe keep the language simple like limiting the size of the vehicle, requiring a certain number of windows, disallow any flatbeds and any commercial lettering.  The more specific you are, the greater success you may have in enforcing the restriction.

THE ROLE OF TECHNOLOGY IN OUR ASSOCIATIONS

 

Each week on Monday mornings at 9:00 a.m. this column is sent to thousands of you by e-mail.  It’s something that so many of you have simply gotten used to and something that I have gotten used to as well.  After a few weeks, it becomes second nature.  I expect to write it, and you expect to receive it, each and every Monday morning.

 

Wouldn’t it be great if the relationship between the association and its unit owners worked the same way?  Suppose the Board and/or manager decided that on the 1st and 15th of the month, an e-mail would be sent to everyone in the community advising of the events over the past two weeks?  After a while, it too would become second nature.  I’m  not saying that such an e-mail would need to detail every check that was written in the past two weeks, but it could include copies of the latest minutes of any Board meetings, copies of any new contracts that were entered into by the association, an update on the receivables, the status of repair projects and heavens forbid maybe even a section devoted to wishing the owners who have birthdays or anniversaries that month some good luck.  There are communities that actually do this, and my guess is there’s less suspicion of the Board, better communication and more peace and harmony in the community.

 

A website for your association is really a no brainer too.  Why not put the official records on the website so that all of the unit owners can see them with a click of their mouse?  Think of the time that this would free up for your manager.  Arbitration cases for failure to turn over records would become a thing of the past.  Copies of the declaration, bylaws and rules can be posted as well.

 

I have even seen some communities have their own Facebook page.  If used productively, it could be a great place for owners to voice concerns and have debate by and between members of the community regarding any association issue.  If your association has such a page, let us know how it’s working out.

 

In the summer months, many owners reside outside of Florida.  Why not have summer Board meetings, or any Board meetings,  broadcast over a free conference call line, where owners can call in and listen to the meeting even if they’re thousands of miles away?  What’s the harm?

 

Technology is advancing every day.  This year we were successful in getting The Florida Legislature to allow owners to use their cell phones or cameras to photograph the association’s official records.  That’s a good start.  It just seems however that any technology that allows greater communication between the board and the owners and allows for more involvement by the community members should be followed through whenever possible.  Any other ideas for bringing technology into our associations to make things better?  Let us know.

NEVER GO BROKE ASKING FOR RECORDS AGAIN

 

As our blog readers know, we worked real hard this year getting legislation passed that prevents owners from getting gouged when getting copies of the association’s financial records.  Here’s what the new statutes says:

 

For HOA’s:

 

The association shall allow a member or his or her authorized representative to use a portable device, including a smartphone, tablet, portable scanner, or any other technology capable of scanning or taking photographs, to make an electronic copy of the official records in lieu of providing the member or his or her authorized representative with a copy of such records. The association may not charge a fee to a member or his or her authorized representative for such use of a portable device.

 

So here’s my advice HOA owners……take photos of the records with your camera or phone.  You can’t get charged for doing that.  The association can still charge you however if you want them to make the copies for you.  However, they can’t charge you basically whatever they want to charge you like before the statute was amended this year.  Now the statute reads as follows:

 

 

The association may impose fees to cover the costs of providing copies of the official records, including, without limitation, the costs of copying and the costs required for personnel to retrieve and copy the records if the time spent retrieving and copying the records exceeds one-half hour and if the personnel costs do not exceed $20 per hour. Personnel costs may not be charged for records requests that result in the copying of 25 or fewer pages. The association may charge up to 25 cents per page for copies made on the association’s photocopier. If the association does not have a photocopy machine available where the records are kept, or if the records requested to be copied exceed 25 pages in length, the association may have copies made by an outside duplicating service vendor or association management company personnel and may charge the actual cost of copying, as supported by the vendor invoice.

 

Again…….make the copies yourself with your camera or cell phone.  No fees.

 

 

For Condominiums the statute reads:

 

An association shall allow a member or his or her authorized representative to use a portable device, including a smartphone, tablet, portable scanner, or any other technology capable of scanning or taking photographs, to make an electronic copy of the official records in lieu of the association’s  providing the member or his or her authorized representative  with a copy of such records. The association may not charge a member or his or her authorized representative for the use of a portable device.

 

 

 

In terms of the association charging for making the copies, the association may still charge a “reasonable expense.”    Therefore, use the technology that you carry around in your pocket, on your hip or in your bag to your advantage and take photos of the records yourself.  With technology improving and multiplying each year, look for additional changes to the statutes in the future that incorporates these advancements.

 

How about allowing board interviews of prospective owners or tenants by SKYPE or by video conference?  Any other suggestions?

 

 

 

 

 

SCREENING, REJECTING APPROVING

AND THE RIGHT OF FIRST REFUSAL

 

 

The condo and HOA world is cyclical.  I once heard a fellow attorney say that in good times we close, and in bad times we foreclose.  Now that foreclosures are not as frequent as they once were, and we hear that the real estate market has picked up, it’s no surprise that I am being asked by some association clients whether or not they should reject either proposed owners or renters based upon negative information in the background report the association paid for.

 

We actually blogged about this topic about a year ago, but because of the recent upswing in the market it bears a second look.  This issue arose in my firm three times in the past week alone.   It would be great if there was some guidance, some statute, some rule that I can point them to that tells associations what criteria can be used when determining whether or not to approve an applicant, but there really is nothing to point to at all; another good example of just how poorly drafted some of our community association statutes are.

 

The only real mention of screening in the Florida Condominium Act says:

 

No charge shall be made by the association or any body thereof in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Any such fee may be preset, but in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant.

 

So the first step is to determine if your governing documents allow the association to approve the transfer.  This is crucial.  Many associations incorrectly believe that they either inherently possess the right to approve sales and leases or that they have the right because the governing documents specifically state it.  Often times, the association only has a “right of first refusal” which only allows the association the opportunity to purchase or lease a unit on the same terms that the owner is offering to a new buyer or lessee.  It does not equate to the association having the right to screen and/or reject an applicant for purchase or lease.

 

Even if the governing documents allow the association the opportunity to screen and reject proposed purchasers and lessees, the documents may still be invalid as an illegal restraint on the owner’s ability to sell or alienate his or her property.  For example, in Aquarian Foundation, Inc. v. Sholom House, 448 So.2d 1166 (3rd DCA, 1984) the court held that since the declaration of condominium permitted the association to reject perpetually any unit owner’s prospective purchaser for any or no reason, it is an obvious an absolute restraint on alienation, and can be saved from invalidity only if the association has a corresponding obligation to purchase or procure a purchaser for the property from the unit owner at its fair market value. Otherwise stated, if the association is empowered to act arbitrarily, capriciously, and unreasonably in rejecting a unit owner’s prospective purchaser, it must in turn be accountable to the unit owner by offering payment or a substitute market for the property.

 

 

 

Interestingly enough, the court still reiterated the fact that restrictions on a unit owner’s right to transfer his property are recognized as a valid means of insuring the association’s ability to control the composition of the condominium as a whole.  So, assuming your documents give the association the ability to screen and reject, in order for the Board to avoid the requirement that it procure a purchaser should the Board reject the transfer, the Board better have reasonable criteria in place which they will use to prove that they are rejecting an applicant for cause.

 

Here are the four basic criteria the Board should use when determining whether or not to approve an applicant:

 

  1. credit score: have strict guidelines.  For example, applicants must have a minimum score or they are rejected;

 

  1. criminal history: again, have strict guidelines.  For example, rejection is required if an owner has been convicted of a felony;

 

  1. applicant’s prior history of foreclosures or evictions;

 

  1. The applicant would automatically violate the governing documents: for example, in a 55 and over community, the applicant makes it clear that the unit will not be occupied by at least one person age 55 or older.

 

Boards take note.  Failure to apply criteria even handedly across the Board can get the association sued for tortuous interference with contract and also face claims for discrimination.  Have strict procedures and guidelines in place, properly adopt and publish the criteria and document your decisions.

 

Here’s another question though…………..some people don’t want their Board having the power to screen and reject.  What’s your take on the subject?

 

 

 

 

 

 

 

 

 

 

 

IS YOUR BUDGET READY FOR A HURRICANE?

 

 

As our listeners of the Condo Craze and H.O.A.’s radio show know, we’ve been spending some time recently telling them how they can make their property ready for a hurricane, so that if a storm hits, they can weather it.  We’ve spoken about preparing your roof, electricity, plumbing, interior furnishings and more.  There’s one more thing though that should be in order before a storm, and that’s your budget.  Are you reserving funds that will be there after the storm in order to meet huge insurance deductibles and for other out of pocket expenses?

 

I first want to clear-up some confusion about how your windstorm insurance deductible works.  The deductible is usually about 5% of the total value of the property being insured.  So for example, if the property is insured for 10 million dollars, the deductible is $500,000.00.  So the insurance company does not have to pay a nickel to the association unless the claim exceeds $500,000.00.  The deductible is not 5% of the claim, again it’s 5% of the insurable value of the property.

 

I can’t tell you how many Board members are in shock when they actually learn this at one of our Board Certification seminars.  So the question is…….is your association ready to meet its deductible should a storm hit?  Many associations are not, because they are choosing to waive the funding of reserve accounts each year.  As our readers know, the community can vote to waive the funding of reserve accounts by a majority vote of the owners at a meeting where a quorum is present.  But is it the smart thing to do?

 

The Florida Legislature certainly does not think it’s a good idea to waive the funding of a reserve account.  After storms ravaged Florida about a decade or so ago, owners across the state were amazed to learn that their associations needed to pass huge special assessments to cover their deductibles, and that if the special assessments were not paid, the association was allowed to foreclose on their homes.  As a result, here is what the law now requires when unit owners are asked whether to waive the funding of a reserve account:

 

In a condominium:

 

Proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended shall contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.

 

 

 

 

 

In other words, from now on, if you’re going to waive the funding of your reserve account, the state is going to require that you acknowledge the risks.

 

In an H.O.A. if reserves are not being funded, the year end financial report must contain similar language that places owners on notice that special assessments may become necessary.

 

So what do our readers think?  Is it a good idea to reserve funds just in case disaster strikes?  Or is it worth the risk of saving money each month and praying that a potentially unaffordable special assessment does not become necessary?

 

 

P.S. Our Condo Craze and H.O.A.’s Board Certification Course has been approved by the Florida Department of Business and Professional Regulation and allows us to certify both condominium directors and H.O.A. directors in the same course.  Come learn about budgets, reserves, operations, financial reporting, access to records, alternative dispute resolution, all the new association laws and A LOT MORE.  The course is free and we have locations all across the state.  To register, please go to: www.condocrazeandhoas.com.

 

 

LOSING YOUR RIGHT TO VOTE

 

As we all know from even our early school days, this country was founded upon the principle of no taxation without representation and one man one vote.  After achieving the ability to govern ourselves as a nation, women and minorities fought for and ultimately obtained the right to vote as well.  It’s pretty safe to say that the right to vote is something that Americans hold as sacred.  In fact, the number of persons who fought and died for the right to vote and participate in the affairs of their government is staggering.

 

So how is it possible that owners in condominiums and homeowner associations can lose the ability to vote in the affairs of their community without the right of any due process whatsoever?

 

A few years ago, The Florida Legislature thought that one way to get delinquent owners to pay their assessments would be to prevent them from voting in their community elections.  As a result, the law now says that in a condo and H.O.A.  an association may suspend the voting rights of a unit, parcel or member due to nonpayment of any monetary obligation due to the association which is more than 90 days delinquent.

 

While the statutes require that the suspensions occur at a Board meeting, there is no mention in the statute as to what, if any, due process is afforded the owner before they lose the right to vote.  Believe it or not, it is possible that someone is making a mistake and the owner is not more than 90 days delinquent.  But I guess who cares about due process when there’s overdue monies to collect.

 

It gets much worse for the unit owner however.  At the board certification seminars I teach there is always a board member or three that wants the ability to list the names of the “bad guys” in big bold letters on the bulletin board so that the world can see who is behind in paying their assessments.  I always tell the association that this is simply a bad idea and could land the association in the defendant’s seat in either a state or federal courthouse.  It seems however that I’m wrong, if the association wants to suspend the voting rights of that bad guy, at least according to a decision by the arbitration division of the Department of Business and Professional Regulation.  In Leonardis v. Portofino Gardens the arbitrator ruled that the Board must state which owner’s voting rights are being suspended at a Board meeting, and their names must be included in the minutes of the meeting.  So now, your name is published both verbally and in print as a dead beat and you lose the right to vote, before being entitled to any hearing whatsoever.  And, I see no reason why the Board can’t legally post the minutes of the last Board meeting.

 

Don’t get me wrong, I’m all in favor of doing what we can to make people pay their assessments.  But should it be done by throwing out the ability to defend oneself and trampling on the theory of innocent until proven guilty?

 

I have a better idea Florida Legislature.  If you want to crack down on those that are harming the financial interests of our community, you may want to start with the banks who are sitting on tens of thousands of cases in the foreclosure pipeline and also harming our civil courts by clogging up our dockets.  I know that’s a tougher fight than taking away the voting rights of people who may have lost their job, or senior citizens who can barely keep up, but that’s where the problem lies.  But I know you knew that already.

 

 

 

 

LABOR DAY — NO THANK YOU

 

Last year on Labor Day, Condo President Leava Mealoni had the day off from her real job, working at the local day care center, changing diapers and otherwise helping to care for two year old kids.  It was well deserved.

 

Leava would often come home with migraine headaches and smelling from all things that two year olds excrete.  The hours were long and the pay was crappy too.  It was time to relax.

 

Leava invited a few friends over for a swim and some lunch.  While leaving her unit, she ran into her neighbor, Constance Complainer who thought that now was the best time to talk about how dirty the carpets look and how the janitorial staff isn’t doing their job.  She recommended that the condo switch to her son in law’s company.  Leava tried to be polite and gave Constance about 15 minutes of her time.  She got into the elevator, only to have it stop on the third floor.  In walks Alfred Annoying smoking one of his giant cigars and stinking up the place like nobody’s business.  Leava politely tells Alfred that smoking was not allowed in the common areas, including the elevator.  Alred unpolitely tells Leava what she can do with her rule and they both get out at the lobby.

 

Finally heading for the pool door, Leava passes the mailboxes and sees unit owner Don Delinquent standing at his mailbox holding a letter and cursing up a storm.  She hopes that she can quickly sneak past Don, but Don is too quick.  He sees Leava and starts waiving an envelope in her face and screams something about how he pays all his bills and the association’s attorney and the Board are all thieves.  Leava assures Don that he won’t be evicted within 48 hours and that she’ll see if there’s a mistake by the manager.  Don says he’s going to the police anyway.

 

Running late, Leava makes her way down to the pool, only to find that Pamela Partridge and her family, and their friends and relatives, have commandeered the pool and all of the chairs.  Furious, she confronts Pamela about the rule that only allows owners to have two guests at the pool and Patricia, like Alfred, tells her what she can do about her pool rule.

 

With nowhere to sit, Leava heads back upstairs to make lunch for her friends.   Front gate Security Officer Ima Sleepin finally calls to let her know her friends are here, but they can’t come in with their car because the pool guests took up all of the guest spots.  Furious, Leava tells Ima to tell her friends to park in the shopping center down the block and walk back.  She can’t believe that the Condo President doesn’t have enough pull to get her own guests a lousy parking spot.

 

 

 

 

 

 

Lunch goes great.  Fantastic food, great wine and loud music.  From Leava’s next door neighbor’s home that is.  Mr. Jarda Hearin had the day off too, and being an opera buff, he cranked up the record player (yes, record player — he’s old) and the Italian verses were heard throughout the building.  When Leava banged on his door to lower the music and reminded Mr. Hearin about the rule against playing loud music, it was as if Mr. Hearing was told what to say by Patricia and Alfred a few hours before.

 

When it was time for her friends to go home, Leava walked them downstairs.  While passing the parking lot, Ida Shootya is pulling in with her 1978 Oldsmobile with 6,500 original miles.  Ida goes nuts and starts screaming that she’s too old to be parking in Spot Number 12 which is 21 feet from the entrance and that Leava, being the President and a youngster, should switch spots with her and shouldn’t get spot Number 11.  Leava by the way is 81.

 

Leava heads back upstairs, sits down on the couch and the most beautiful smile comes across her face.  She remembers that she’s going to be with all those two year olds in just a few more hours.

 

IT’S BACK TO SCHOOL TIME

 

It’s September.  Day camp is over for the kids.  It’s starting to get dark a little earlier each day and  the brutal summer heat is not as bad as it was a few weeks ago.  This can only mean one thing……..it’s time to go back to school.  I’m not talking about the kids.  I’m talking to you Mr. or Mrs. Unit Owner or Home Owner.

 

It has been an honor and a pleasure certifying over 5,000 Floridians who are now eligible to serve on a condominium Board of Directors.  One of the best accomplishments this year of our new legislation was getting the statutes amended to now allow for certification of H.O.A. directors as well.   The DBPR truly deserves a round of applause for agreeing to approve classes that certify H.O.A. directors.  Until now there was little to no education available to them.  That all has now changed.

 

Unfortunately, the law still allows directors of condominiums and H.O.A.’s to sign what I call a silly self-serving affidavit stating:

 

that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.

 

Blah Blah Blah…….

 

The affidavit doesn’t even require you to acknowledge that you read Florida Statute 718 or 720, or even require you to know that they exist.  The ability to become certified by signing this ridiculous piece of paper is an insult to the thousands of Floridians who took a few hours out of their lives to attend a live course.  In all candor, I would be wary of anyone on my Board of Directors who was arrogant enough to believe they couldn’t benefit from a live course and who can’t find a few hours to learn something.

 

As many of you already know, the condominium and H.O.A. laws are changing quickly.  This coming legislative session will no doubt yield further changes and it is imperative that your Board stay ahead of the curve and stay up to date.  Our free Condo Craze and H.O.A.’s certification course has now been approved by the D.B.P.R. to teach both condominium and H.O.A. law in the same course.  We cover topics like budgets, board meetings, reserves, year-end financial reporting, foreclosures, fiduciary duties and board member liability, recalls, and much more.  We even discuss whether or not these new laws that get passed by The Florida Legislature each year apply in your community or not.  The answer may surprise you.

 

So don’t be lazy!  Our free courses will be given all around the state.  Our first one is only two weeks away!  Here’s our current 2013 schedule:

 

 

 

SEPTEMBER 26TH – 7:00 P.M. AT THE HARD ROCK IN HOLLYWOOD.

 

October 10th, – 8:00 a.m. – at the Miami Beach Convention Center;

 

October 16th, – 8:00 a.m. at the West Palm Beach Convention Center;

 

October 24th, 8:00 a.m. at the Tampa Bay Condo and HOA Expo;

 

November 16th, 9:00 am. at the Holiday Inn at Universal Studios in Orlando;

 

December 4th, 8:00 a.m. at the South Florida Cooperator Expo in Fort Lauderdale.

 

And before long…..we’ll have our schedule up for 2014.

 

 

To register for any of these seminars, please go to: www.condocrazeandhoas.com

 

I look forward to seeing all of you in class.  If you can’t make it….I want a note from your parents.

 

 

BE CAREFUL C.A.M.S

 

 

Licensed professions in Florida each have their own set of rules that licensees are required to follow.  For example, lawyers are required to abide by The Rules Regulating the Florida Bar.   Community association managers also have rules to abide by and can be subject to discipline for doing any of the following:

 

1. Violating Florida Statute 468..

2. Violation of any lawful order or rule rendered or adopted by the department or the council.

3. Being convicted of or pleading nolo contendere to a felony in any court in the United States.

4. Obtaining a license or certification or any other order, ruling, or authorization by means of fraud, misrepresentation, or concealment of material facts.

5. Committing acts of gross misconduct or gross negligence in connection with the profession.

6. Contracting, on behalf of an association, with any entity in which the licensee has a financial interest that is not disclosed.

7. Violating any provision of chapter 718, chapter 719, or chapter 720 during the course of performing community association management services pursuant to a contract with a community association as defined in s. 468.431(1).

 

The first six provisions are pretty self explanatory.  It’s item 7 that deserves additional discussion.  Read it again.

 

In other words for example, if you know that your declaration does not allow for interest and late fees, don’t charge them to the unit owners because by doing so you violate the statute.  Don’t send out letters demanding the payment of a fine when the unit owner has not had the opportunity for a hearing.  Don’t charge for access to records if an owner decides to use their own camera to take pictures of those records.   I can go on with examples, but don’t take an action that violates the statute despite any perceived pressure from any board members, unit owners or even the company you may be working for.  It’s your license on the line and you will be held to answer for your actions.  If you haven’t heard, the “I was only following orders” defense doesn’t work either.

 

As if the above statute wasn’t enough for CAMs to worry about, The Florida Supreme Court is again deciding what CAMs can and cannot do and which of their actions constitute the unauthorized practice of law, which is a violation of the criminal law.  For example, the preparation of a claim of lien is considered the practice of law and can only be drafted by an attorney.

 

 

 

Experienced CAMs know exactly what I’m talking about when I speak of being placed in uncomfortable positions.   Most are wise enough to say “NO” when asked to do something that they are not allowed to do.  If as a CAM you ever find yourself in a position where you are unsure if your conduct will violate the law, pick up the phone and get some legal advice first.  It’s much better than having that lawyer defend you at a future disciplinary proceeding.

 

By the way…….our Condo Craze 2014 Legal Update Course for community association managers has just been approved by the DBPR.  Give us a call at 855-4-condocraze if you’re interested in taking the course.

 

 

 

BROWARD’S NEW ORDINANCE

 

 

I don’t know if any of you heard yet, but a new Florida law has been passed that says:

 

  1. Public schools are no longer under an obligation to accept your children.
  2. Hospitals are under no obligation to treat you or your family medically.
  3. Florida business establishments can refuse entry to you and your family;
  4. Restaurants can refuse to serve you and your family.

 

 

And…………. neither the schools, the hospitals, the businesses or the restaurants have to provide you with any explanation whatsoever as to why they are refusing to serve you.   Of course, they are not allowed to discriminate against you because of your race, religion, nationality, sex or familial status.   You have to take them on their word that it has nothing to do with any of these factors.

 

If this outrages you, then you should have no problem with Broward’s new ordinance which requires associations to simply let families know why they’re not good enough to live in your community.  Here is what the new ordinance says:

 

 

Within 10 days after its receipt of an application (or any amended application) to purchase or rent a dwelling, the condominium association, homeowners’ association, or cooperative association shall provide the applicant with written acknowledgement of receipt of the application.  If the application is incomplete or completed incorrectly, the acknowledgement shall specifically identify each item that needs to be completed or corrected.

 

I don’t know what world some people live in, but in the world I live in, sellers and buyers sign contracts to purchase real estate.  These contracts have important deadlines.  Moreover, banks keep loan commitments open for just so long.  It’s not unreasonable for an association to take a cursory look at an application and within ten days, simply state that the application is incomplete.  Most declarations say that the clock starts for an association to deny someone upon receipt of a completed application.  Shouldn’t the applicant have the right to know if that application is complete or not?  Should buyers or proposed lessees have to wait forever to eventually be told that the Board hasn’t even looked at the application because it wasn’t complete?

 

 

 

 

But here is where the true controversy comes in.  The new Ordinance goes on to say:

 

Within 45 days after receipt of a complete application, the association shall either reject or approve the application and shall provide the applicant with written notice of same.  If the application is rejected, the written notice must state with specificity each reason for the rejection.

 

This language has some Board members and some community association attorneys freaking out.  Now, instead of association boards hiding behind language in their documents that say they don’t have to give a reason for their rejection, they have to actually tell fellow human beings whey they aren’t good enough to live in the community.

 

By the way, I was kidding of course about the stores, supermarkets, hospitals and schools having the ability to prevent you from entering and not having to give you a reason for keeping you out    I hope you were outraged when you read it though, as you should be.  Why is it OK then for community associations to keep people out without providing them any reason whatsoever?

 

Assuming that associations have the ability in their governing documents to screen and reject people, and the association is using color blind criteria, this new law does not prevent the association from keeping people out of their community based upon poor credit, criminal history, prior foreclosures or evictions or an inability to comply with the governing documents.   What it does do however, is prevent associations from hiding behind “we won’t tell you why” clauses in their governing documents as a means of masking intentional discrimination.

 

As long as Broward County does not use this ordinance as a spring board to overly investigate and punish associations who have rejected applicants without regards to the color of their skin or other illegal discriminatory factors, the ordinance is not a bad thing for associations.   I know that if my family and I were rejected by a community association, I would want a valid reason for the rejection.  Wouldn’t any human being want to know why they apparently didn’t measure up to the standards in your community?    And if that community refused to provide an answer, wouldn’t most anyone tend to believe the decision was based on some form of discrimination?  Of course they would.   This law gives the association the opportunity to prove that their denials are above board and legitimate.  It’s an opportunity to show for certain that they don’t discriminate and all are welcome in their community.  It’s a good thing, unless you’re not interested in such an opportunity because your motives may not be as pure as you say they are.  Or in the case of some community associations, as pure as you don’t have to say they are.

 

 

ONE BOARD’S OBSSESSION WITH GARBAGE CANS

 

 

Let’s do the blog a little differently this week.  Before reading on, click here and watch this report and then come back: http://www.clickorlando.com/news/kissimmee-hoa-walks-off-with-residents-trash-bins/-/1637132/21985458/-/66by62z/-/index.html

 

 

 

Now that you watched the news report, I would love to get your thoughts.  Here’s mine.  These garbage cans were stolen from people’s property.  Period.  The association keeps justifying this bizarre move by stating that everyone had advanced notice that their garbage cans were going to be removed from the property.  So what?  There’s still not a provision in the governing documents that allowed this association to send its landscapers on to the owner’s property and take what isn’t theirs.  One neighbor said it best when questioning whether this H.O.A. would now take bicycles left out on the lawn.

 

As you know, Jan and I will be advocating this upcoming legislative session for the Department of Business and Professional Regulation to start overseeing homeowner associations just like they are already doing for condominium associations.  This case demonstrates a perfect example of why this is necessary.  This particular Board is still arrogant enough to warn people that it’s going to keep happening to them.  They are not going to stop.  The owner’s property is going to repeatedly get removed from their own homes.  Now, if this were happening in a condominium, any owner would immediately have the ability to file a complaint with the D.B.P.R., an investigator would be assigned and a letter would go out to the Board advising them to cut the nonsense or face fines and penalties in the future.  Because this is an unregulated homeowner’s association however, these homeowners have nobody to complain to and must take legal measures to stop the association’s abuse.

 

You wonder why I pushed so hard for certification and educational courses for H.O.A. directors this past legislative session?  Look no further than this case as a perfect example of why I thought it was necessary.  Although, it would not surprise me one bit if this particular Board signed or will sign the self serving all knowing affidavit that says they read their governing documents, instead of spending a few hours at an educational seminar.  After all, they don’t have the time for a class.  They’re too busy walking the streets looking to take their neighbor’s  garbage cans.

 

 

 

 

 

WHO CAN GET DISCIPLINED AND WHY?

 

Let’s pretend that we’re taking a law school exam today.  I’ll give the fact pattern and look for the answers from you.

 

Facts: The Cheatem Blind Condominium needs a new roof.  With no vote of its Board, directors Sam Shyster and Carlos Crook execute a contract with Carlos’ own roofing company.  The condominium attorney, David Disbarred was paid by Carlos to give the association an attorney’s letter which states that the Board can do business with Carlos’ roof company.

 

The condominium is totally broke.  They don’t have the $200,000 necessary for the new roof, so a special assessment is necessary. Cam Weasel, the community association manager tells the association that they can pass the special assessment at a meeting, as long as there is 48 hour notice of the meeting that is posted in a conspicuous place on the condominium property.  Of course, he knows that 14 day notice is required, but doesn’t want to drag this situation out for another 2 weeks.

 

At the meeting, the community is in an uproar.  They can’t believe that the association is doing business with Carlos’ roofing company.  Carlos hasn’t even paid his assessments in 8 months and owes the association thousands.  It gets worse…..Sam Shyster is due to receive a kick back from Carlos should Carlos get the condo roofing contract.

 

At the special assessment meeting, David Disbarred tries to calm the crowd by ensuring everyone that he has reviewed the contract and made sure the terms are in the best interest of the association.  David is also currently defending Carlos’ roofing company in a lawsuit by the Soaking Wet Condominium just a few doors down.  They hired Carlos to put their roof in about a year ago, but Carlos botched the job, causing tens of thousands of dollars in damage to the common areas. David has not revealed this representation to anyone.    At the special assessment meeting, 2 other directors were unable to appear.  They gave their proxies to Carlos with the specific instruction of voting in favor of passage of the special assessment.  Cam Weasel, the manager, thought this was a good idea and instructed the Board to count their votes.

 

The roof fails after about one month.  The Board complains to David Disbarred who immediately files suit on behalf of the association against Carlos and his roof company.

 

So……..who is getting in trouble, with whom, and why?  Are each likely to be subject to any discipline?  Does this story sound impossible in your association or …is it a typical Thursday?

 

 

CAN YOUR ASSOCIATION BORROW MONEY?

 

 

Each year your condo association or HOA is required to pass an annual budget that in theory should pay all of the bills of the association.  The statutes require this.  Then a storm hits, or balconies start deteriorating and many Associations suddenly find themselves in desperate need to repair the common areas with no reserve funding to rely on.  Rather than pass a huge special assessment and force everyone to instantly dig deep into their pockets, many associations turn to banks for a loan.  The question is…is there anything in the condominium or HOA statutes that would prohibit this.  In simple terms, the answer is no.  In fact, borrowing money is expressly authorized in the Florida not-for-profit corporation statute.  So, unless there is a specific restriction in your governing documents that prohibits the Board from borrowing money, there really are no restrictions.

 

When borrowing money from a bank, the association will be required in the loan documents to pass a special assessment in an amount sufficient to fund the repayment of the loan, or promise to include the debt payments in the annual budget.  Several years ago, The Director of the Division of Florida Land Sales, Condominiums and Mobile Homes issued a Declaratory Statement that allows Condominium Associations to permit owners the option of paying the special assessment in full without interest or paying the assessment with interest over time.   The decision does not say the association must offer the option, only that it may offer the option.

 

Has your association borrowed money from a bank?  Was it a good idea, or did it turn out to be a long-term drain on the resources of the community?

 

 

DO COMMUNITY ASSOCIATION MANAGERS GET AWAY WITH MURDER?

 

 

Chapter 468 of The Florida Statutes contains numerous provisions about how community association managers get disciplined by the Department of Business and Professional Regulation.  This year, The Florida Legislature amended Florida law to allow community association managers to get disciplined if they violate  the Florida condominium, co-op or HOA statutes.  The Florida Supreme Court is due to hand down a decision which may consider some of the normal duties of a community association manager to be the unauthorized practice of law.  Two years ago, licensed managers almost lost their profession when there was an attempt to deregulate them, now there’s an effort to regulate everything they do.  Hey managers!  You are on the radar.

 

Why is it then that there is at least a perception that community association managers can do whatever they want with little or no fear of actually losing their license or even being suspended?

 

I have come in contact one way or another with thousands of community association managers over my career.  In very few circumstances have I felt that there was a clear case of discipline warranted against a community association manager.  The exceptions were when I proved at trial that the manager deliberately threw an election, or when it became clear that the manager stole cash payments from unit owners that should have gone into the association’s bank account.  Failing to turn over the association’s official records after being terminated is also something that deserves discipline.

 

So, what’s your take?  Can community association managers get away with murder?  Or, is the probability of CAM discipline just about the same as the probability of discipline against the association attorney, board members or other vendors that work for the association?

 

 

 

 

TIME TO PREPARE THE ANNUAL BUDGET

 

 

It’s that time of year again — number crunching time.  Time to figure out if everyone is going to be paying a little more next year in their monthly or quarterly assessments.  Here are some things to keep in mind:

 

  1. In a condo — when the budget is mailed to the owners, the budget must show the reserves as fully funded. If the Board is going to give the owners the right to waive the funding of full reserves, the Board can also show what the budget would look like with partial funding of reserves or a complete waiver of reserves.  But in any event, everyone must be shown a budget with fully funded reserves.  Notice that I said “IF” the Board is going to give the owners the right to waive full funding of reserves.  There is nothing in the statute that requires the Board to give the owners this choice.  So, for all intents and purposes, if a Board wants fully funded reserves, they get them.  Sure, the owners would have a right to call a meeting and vote them down later, but I have never seen that happen.
  2. In case you haven’t heard, there is a foreclosure crisis here in Florida. That means you should include a line item in your budget for “bad debt.”  This is a figure that equals the amount of money you are not likely to receive from the unit owners in assessments, because their homes are in some form of collection.  It gets added back into your budget, so that at the end of the year, you actually collect all of the money necessary to pay the association’s bills.  If you don’t include a line item for bad debt, there is a likelihood that at the end of the year, you will run short and have to pass a dreaded special assessment.
  3. In an HOA – reserves must be included in your budget if the developer placed them in the budget while the developer maintained control of the community, if the owners previously voted for reserves, or if the Board simply wants reserve funding in the budget. If done solely by a board vote, the board cannot exceed any limitations on the amount of the budget as reflected in the governing documents, if any.
  4. If your association has a huge surplus at the end of the year, it is not automatically allowable to transfer that surplus into a reserve account. Suppose the owners have voted against the funding of reserves?  Those monies should either be returned to the owners or credited against next year’s future assessments.
  5. Despite the fact that your association is a not for profit Florida corporation, you are still required to file a federal tax return. I am amazed at how many associations have not filed returns for years on end.
  6. Remember to give proper notice of the budget meeting to the owners. 14 day advance notice for a condominium.  In a HOA – notice is determined by your governing documents.

 

 

 

  1. As I said, reserves can be waived by the owners. However, if not waived properly at a meeting of the owners, the budget with fully funded reserves goes into effect – LIKE IT OR NOT.

 

Often times, the budget meeting unfortunately turns into a shouting match.  It really shouldn’t.  The Board’s job is to simply pass a budget that ensures he bills get paid as they come due.  Nothing more, nothing less.

 

So, I wish for all you this year significant decreases in your assessments, smaller bills for your windstorm insurance, 100% collection of assessments from your owners and to be litigation free.  Well maybe not litigation free……..

A TALE OF TWO ELECTIONS

 

This is a story about John and Jane.  John lives in a condominium in Miami and Jane lines in an H.O.A. in Central Florida.  Election season is approaching quickly in both of their communities.  While it may seem at first glance that all things are equal…….that is certainly not the case.

 

The election in John’s condominium runs relatively smooth from year to year.  The manager sends out a notice at least 60 days before the election asking everyone if they would like to run for the Board.  The unit owners must respond in writing.  They can even choose to submit a resume about themselves.  The manager then prepares the ballots and they get mailed to everyone in the community.  On the night of the election, the signatures of the voters are verified, the votes are counted, and as long as 20% of the eligible voters participated,  the new Board members  assume their new roles.  A relatively painless process.

Jane, on the other hand, has no idea who is running for the Board of Directors in her community.  In fact, she probably won’t know until the night of the election.  All she does know is that people are knocking on her doors asking for her proxy if she won’t be able to make it on the night of the election meeting.  John doesn’t have to worry about his neighbors wanting his proxy.  In a condo, you can’t vote by proxy anyway.  The truth is….Jane has even tried to get on the Board before.  Although she had the backing of a bunch of people in the community, the annual election didn’t even happen two years ago because 30% of the owners (a quorum) did not show up for the meeting.  So yet again, for what seemed like the hundredth year in a row, the same Board of Directors rolled over for another year.  Jane is convinced that this just makes the owners even more apathetic to get involved.  She does remember a time when enough people showed up to have an election.  It was a fiasco and took forever.  People were being nominated from the floor.  Others came in carrying dozens of proxies and got to vote for their neighbors, ballots were being exchanged for the proxies, voting took place at the meeting instead of in advance of the meeting and fighting and screaming raged on and on into the wee hours.

Don’t get me wrong, two years ago 15% of the owners in John’s condominium didn’t trust the process and wanted a third party to administer their election.  They got together and signed a petition asking the Florida Condominium Ombudsman’s Office to administer the election.  They did, and ran the election without a hitch.  Of course Jane lives in an HOA, so she can’t get the help of an independent Ombudsman to assist in her election.

 

Jane is thinking about moving to a condominium, where she hopes to serve as President one day.  She’s deciding to first wait and see if the legislation proposed by Cyber Citizens for Justice gets passed this legislative session that requires HOAs to adopt the condominium election process.  She’s urging everyone to support it and to visit www.hoareformbill.net for more information.

 

 

HOLIDAY DECORATIONS — WHAT ARE THE LIMITS?

 

 

Now that Thanksgiving is over, there’s a race to get those Christmas decorations up.  It’s no longer too early to start.  Twinkle the lights, plug-in the blow-ups, put up the signs, sprinkle the lawn with fake snow, place reindeer in the driveway and most of all, get in the holiday spirit.    Your house looks great!  Just one thing…….you’ve gone too far and your Board says it all has to come down.

 

Freedom of religious expression you say?  Well,  the law in Florida regarding religious displays in your condominium is clear.  It was passed a few years ago to combat boards who wanted owners to remove mezuzahs and crosses from their front door, because these Boards claimed that they wanted all doors in the community to look uniform.  Then………….based on a law that first went  into effect in Illinois, the Florida Legislature passed a condo law that states:  An association may not refuse the request of a unit owner for a reasonable accommodation for the attachment on the mantel or frame of the door of the unit owner of a religious object not to exceed 3 inches wide, 6 inches high, and 1.5 inches deep.

 

If you look at the law carefully, it allows you to display a religious symbol on the frame or mantle of the door only; not on the actual door itself.  Obviously, it also limits the size of what you can actually display.  That’s all it allows.  A unit owner in a condo still does not have a right to put a big picture of Santa and his elves on their front door, only a small religious symbol on the door frame or mantle.

 

That’s more rights than HOA owners have though.  At the moment, there is no law under the HOA statute that gives owners in an HOA the same right to display religious symbols.  Owners living in an HOA need to look at their own declaration of covenants and rules and regulations to find out what they can and cannot do in their own community as far as holiday decorations go.  Be prepared to fill out forms and potentially appear before an architectural review committee.

 

What’s your take?  Should there be restrictions on displaying religious symbols in your condo or HOA?  Should exceptions be made during certain holidays?  Can the exceptions wind up swallowing the rule?  Any horror stories out there of owners being told to take down Santa or Rudolph?  Did you?  Are Scrooges alive and well in our Florida community associations or is the usual bickering put on hold during the holiday season?

 

HEY H.O.A. OWNERS —  THERE IS STRENGTH IN NUMBERS

 

Last legislative session, Jan and I tried valiantly to have The Florida Legislature pass legislation that would have allowed the Department of Business and Professional Regulation to assist Floridians who live in homeowner associations.  As you are aware, each owner of a Florida condominium unit pays $4.00 per year to the DBPR, and in return the DBPR provides, document examiners, investigators, educational materials, arbitrators, declaratory statements, an informational website with forms, and persons who can answer questions over the phone.  Not bad for about a penny per day.  Owners living in homeowner associations don’t get any of these benefits and are often forced to have their questions answered and problems solved by hiring legal counsel and incurring the expense of same.

 

While most legislators I appeared in front of and/or met with were not against the idea of expanding the DBPR’s jurisdiction to now encompass homeowner associations, most were concerned that nobody knew just how many HOAs there were or where they were located.  So, legislation was passed which required that HOAs register with the DBPR.  The deadline was November 23rd.

 

As of the deadline, over 12,700 homeowner associations across the state registered, encompassing over 2.2 million homes.  This is a great start to at least getting a handle on just how many of us live in HOAs.  I wouldn’t be surprised however, if the real numbers are about twice as many.

 

So, what does this all mean?  I’ll tell you what I see when I look at the list.  I see potentially the single most important block of voters in the state.  That list is powerful because any candidate who influences a majority of the homes on that list to vote for them is a safe bet to get elected.   So HOA owners,  if you want HOA reform and the same rights that condo owners have, support our bill at www.hoareformbill.net.  You are now a true force to be reckoned with.  The State of Florida now definitely knows you exist and those legislators not backing HOA reform may be sorry that they got exactly what they asked for when requiring all of you to register.

 

 

HAVE I GOT A DEAL FOR YOU

 

We all know that in both a condo and an HOA board members serve without compensation.  Suppose however that a member of the Board owns a business and that business wants to enter into a contract with the association?  For example, let’s say the condominium needs a paint job.  The condo President is a general contractor and his company is qualified to do the work.  The President tells the other Board members that the association should hire his company to do the job because he will give them the best price, he will personally supervise the job, he will provide the standard warranties and his company is licensed, insured and will pull the proper permits.  Can the Board vote to hire the services of the company owned by the association President?  The answer is “Yes” but only if certain legal hurdles are accomplished first.

 

Both Florida condominium and H.O.A. law would allow the association to enter into this agreement.  First however:

 

(a)The association shall comply with the requirements of s. 617.0832, meaning the contract and the relationship must be disclosed;

(b)The disclosure shall be entered into the written minutes of the meeting.

(c)Approval of the contract or other transaction shall require an affirmative vote of two-thirds of the directors present.

(d)At the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. Should the members cancel the contract, the association shall only be liable for the reasonable value of goods and services provided up to the time of cancellation and shall not be liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

 

I know that some of you may think it’s simply a bad idea to hire the services of a company owned by one of the directors.  I can’t say I agree.  If the Board member’s company is reputable,  the association is getting a good deal and the statute is complied with, perhaps it can work out well for the association.  I would love to know if any of you had positive or negative experiences in this regard.

 

MERRY CHRISTMAS

Today, I may disappoint some of you.  I won’t be writing about bar room type brawls at our association meetings, election shenanigans, missing money, broken pipes, noisy neighbors or even emotional support animals.  All of this stuff will still be around next week in all of our associations.

 

This week, I simply write to say that I thank each and every one of you for sharing your Monday mornings with me for another year.  It is truly an honor and a privilege to know that so many of you participate in reading our blog and enjoy posting your comments.  Please know that each year I continue to learn from all of you and I am flattered by every kind word you say about this column, the Condo Craze and HOAs radio show and the Glazer and Associates law firm.  Each of you makes me want to communicate with all of you even more.

So today, I wish each of you a Merry Christmas and a warm joyous new year.  And,  since today is my 23rd wedding anniversary, I also wish my wife and best friend Michal, a very happy 23rd anniversary.

 

A NEW YEAR, A LOOK BACK AND A PEEK INTO THE FUTURE

 

 

My what a difference a year makes.  This time last year, we had no idea how many HOAs there were in the State of Florida, unit owners weren’t allowed to use their cameras and cell phones to take pictures of the official records, exorbitant fees were being charged by some management companies for copies of records, HOA board members stayed on the Board even when caught stealing association funds, HOAs weren’t required to insure those handling association funds, HOA developers were basically able to freely amend the governing documents, turnover from developer control in an HOA was much harder to accomplish and HOA directors weren’t required to get certified.   All that has now changed.

 

There’s no question that as we say good-bye to 2013, we can look back and call it a very productive year for owners of homes in our community associations throughout the state.  Some times, voices are heard and hard work does pay off.

 

So, what does 2014 hold in store?  Hopefully, my column on this date next year will start out saying “This time last year the D.B.P.R. was not able to assist HOAs and their members and HOAs were still using a terrible voting system that allowed for proxies and required a 30% quorum at meetings.”  That’s my wish and I resolve to do all I can to get that accomplished.

 

The first quarter of 2014 will be busy up in Tallahassee.  At the risk of having some egg on my face, I will say however that I am optimistic about getting our HOA reform bill passed.  Better late than never.

 

No matter what lies ahead, we’ll keep fighting the fight.  And…..I wish all of you and your families a very happy and healthy new year.

 

A NEW YEAR AND SOME NEW RESOLUTIONS

 

Originally, I was going to blog about resolutions that Board members should make for 2014, but that topic has been written about a million and one times.  Everyone seems to have suggestions about how to be a better Board member.  Let’s flip it around this time and resolve to be better unit owners, neighbors and friends.  Here’s a top ten list:

 

  1. Learn to appreciate that the members of your Board are unpaid volunteers, the overwhelming majority of whom ran for the Board to simply make their community a better place to live. Not everything that goes bad in a community is their fault.  Your assessments are going up for example because insurance rates are going through the roof, not because of anything wrong your board is doing.
  2. If you’re convinced that I’m wrong about number 10, get up off your

behind and run for the Board yourself.  If you truly believe that the members of your Board are incompetent, you have an obligation to your community, if not to yourself, to run for the Board and try to do a better job.

 

  1. Never make accusations about Board members you can’t prove. All year long I hear allegations that “I’m sure that this Board member or that Board member is getting a kickback.” It’s a horrible thing to say about someone if you don’t have the proof.  Moreover, it may get you sued.  If you have the goods on the Board member, go to the police.  If you don’t, keep your thoughts to yourself.
  2. How about being a little kinder to that community association manager who works his or her butt off the whole year? It wouldn’t hurt to say “Please” or “Thank You” when they help you out with a records request or answer a question.
  3. Here’s my personal favorite: Stop yelling at the association’s attorney that he or she works for you as a unit owner and not just the Board and therefore the attorney can’t take any action against you.  That is simply incorrect.  The attorney works for the association of which you are a member, but the attorney takes direction from the Board of Directors. You know, the people that were elected to do just this.
  4. For heaven’s sake — put some clothes on when walking in the hallway.
  5. Be a little kinder not just to the Board members, but to all of your neighbors. My father lost the ability to walk the last few years of his life.  My mom however made it a point to take him out to a restaurant a few days a week.  It was very hard for a woman in her late 70s to wheel my father in a wheelchair to the car, put my dad in the car and then fold up the wheelchair and place it into her trunk — and then do the reverse when getting to the restaurant.  Many a day she would comment that men would see her struggling to lift my dad or the wheelchair and turn a blind eye, while others always asked if she needed a hand.  Don’t turn a blind eye to a neighbor who may need a helping hand.
  6. How about understanding that the appearance and upkeep of your home has a direct effect on the value of mine? Have the decency to keep your home or exterior of your condo unit in a neat and clean fashion.  Don’t use your balcony as a storage closet.  Your front yard does not have to look like the Garden of Eden, but the grass can at least be cut, and if you don’t have grass you can certainly buy some.  If you can’t afford to paint your entire home, at least try to get by with a pressure cleaning.  Have pride in your home and in your community.
  7. No matter how bad things may seem in your community, don’t ever make comments like “It’s like Nazi Germany in here” or “it’s worse than living in a concentration camp.”  I have to tell you….I don’t like reading that.  It’s an insult to every person that spent time truly living through hell.  In all candor, the minute someone writes that comment to me, their credibility is a huge problem.
  8. And whether you’re a Board member, unit owner or homeowner, make 2014 the year where you learn all about the laws that govern your community association.  Attend one of our Condo Craze Board Member Certification Classes that approximately 7,000 Floridians have now taken around the state.  Our next one is Saturday, January 25th at 9:00 a.m.  It’s fun, it’s free and it even provides 4 continuing education credits for community association managers.  Following the Board Certification class, there will be other free classes on fraud, elections, roofing, watching your wallet, electricity, water damage, concrete and more.  All of the show’s sponsors will be there too with information on how they can help your community.  To register, go to: condocrazeandhoas.com.

 

 

 

MATERIAL ALTERATIONS – LOOK BEFORE YOU LEAP

 

 

Today we discuss an often litigated topic, “material alterations.”  As many of you know, a board of directors in a condominium can’t make “material” changes to the common areas unless a vote of the community is obtained.  Usually, a 75% vote in favor of the change is required.  You may be surprised to learn though that the Board can circumvent that 75% requirement in certain circumstances if the change can be classified as a “repair.”

 

Here are some decisions by Florida arbitrators who determined whether or not a change was “material” or not and whether or not a vote of the community was required.

 

Capistrano Condominium vs. Jochim where the board, in furtherance of their duty to protect the common elements determines that landscaping stones are needed to address erosion problems, the board’s statutory duty to preserve the common elements overrides any requirement requiring unit owner consent.

 

Cundiff vs. Flamingo K Apartments the installation and expansion of a sprinkler system did not require unit owner approval where the Board was able to show that the area in question had a system in place that was inoperable and the vegetation was dying.

 

 

Barnhim vs. Vista Harbor Association, Inc  unit owner approval not required for installation of a chain linked fence where the fence provided security from activities occurring in an adjacent public parking lot and it was shown to be reasonable and necessary for the security of the association.

 

Krietman vs. The Decoplage Condominium  replacement of common element acoustical ceiling tiles with drywall,   and replacement of ceramic floor tiles with marble,  was determined to be necessary maintenance and did not require a unit owner approval.  The Board was able to show that drywall is more durable and cost effective.   The association should not be required to replace material that has done poorly with the identical material which may also be expected to perform poorly when it has an alternative that has a comparable function.

 

Lamar vs. Peppertree Village the board determined to replace deteriorated wood siding with stucco siding, and the arbitrator held that no vote of the owners was required. The changes are primarily maintenance related and wood siding is particularly inappropriate in South Florida where it attracts insects and is vulnerable to frequent tropical rains.

 

Midman vs. Sun Valley East Condominium Association the repair of a pool deck which was accomplished by a removal of an existing deteriorated Chattahoochee deck and replaced with paver brick was held to be a necessary repair and not a material alteration where the paver bricks required less maintenance and had a service life of two or three times that of Chattahoochee decking.

 

Baran vs. Romont South Condominium K the association’s decision to allow a unit owner to plant a garden behind his unit was not a material alteration of the common elements requiring a vote of the unit owners and the association may make day to day decisions on landscaping questions without seeking unit owner approval.

 

Ivanovski v Golden Horn: no unit owner vote needed for association to change from carpeting to tile in a room adjacent to the pool, because tile was superior.  And….the association can change the style of lighting to provide for more energy efficient lighting without a vote of the unit owners.

 

However, when it came to changing the color of the building, both inside and out, here is what the order actually said…..

 

 

Accordingly, it is ORDERED that the association shall have 60 days in which to prepare and obtain the proper unit owner approval for the changes in lobby (other than the flooring replacement) and the color in the hallway wall paint and the exterior paint color scheme, failing which the association shall have 90 days thereafter to return the hallway walls and building exterior to their origina, color and restore the lobby walls to their original form and/or condition.

That’s right.  Failure to obtain a vote for a material alteration, when required, may result in the actual un-doing of the change.  If a Board spends money to paint a building a different color, without a vote, the arbitrator can make the board paint it back to the original color.  Talk about the potential for wasting money!  All boards should be careful and get the advice of counsel BEFORE making the change.

 

In an HOA, the law is a little different.  The statute says:

 

All common areas and recreational facilities serving any homeowners’association shall be available to parcel owners in the homeowners’ association served thereby and their invited guests for the use intended for such common areas and recreational facilities.

 

In other words…..don’t turn the tennis court into a parking lot.

 

 

SMILE —- YOU’RE ON CANDID CAMERA

 

In  a post 9/11 world, big brother is watching us like never before.  Walk into any business and you can bet you’re on camera being video taped.  Same thing goes while walking down any city street for that matter.    Indeed, many of us live in communities where there are security cameras all over the place watching our every move.  What happens when a unit owner in a condominium or HOA wants a copy of the video tape that recorded a scene from the common areas on a particular date and time?  Is the owner entitled to a copy of that tape?  What about unit owners who are uncomfortable knowing that another unit owner can get a copy of a video tape which shows them walking the common elements or perhaps even sitting by the pool in revealing attire?

 

There is no statute which specifically states that this surveillance tape is an official record of the association.  However, as for condominiums, Rule 23.002(9)(b), Florida Administrative Code, provides in pertinent part:

 

Audio and video recordings made by the board or committee or at their direction [are official records].

So, we know that if there is a recording of a meeting, made by the board or a committee, owners are entitled to a copy, at least until the minutes of that meeting are officially adopted.This still doesn’t answer the “surveillance” tape issue.  We do know however that both the condominium statute, co-op statute and the HOA statute have very broad language which basically makes any record available to the owners that relates to the operation of the association.  There are only very limited exceptions such as attorney/client privileged documents, information obtained by the association from approval or transfer applications and medical records of owners.  There is certainly an argument to be made that if The Florida Legislature did not want owners to get copies of surveillance tapes, the statute could have easily said so.  It doesn’t.

 

There is also a declaratory statement written by the Department of Business and Professional Regulation which holds that surveillance tapes that are not automatically “dumped” after 30 days and are then copied by the association, are official records that can be copied by the owners, at the owner’s cost. This statement does not address whether or not the surveillance tape is an official record if not specifically copied off of the hard drive by the association before it gets automatically dumped.

 

 

In my mind, surveillance tapes are recorded with cameras that were purchased with association funds.  They are stored on tapes or hard drives that were purchased with association funds, and they don’t fall within any exception to the official records statutes.  Moreover, they relate to the security of the property and therefore the “operation” of the association.  Therefore, these surveillance tapes are official records, subject to be examined and copied by unit owners. Finally, unit owners who know that their every move is being video taped by the association certainly have no expectation of privacy.

What’s your take?  Are you comfortable with any owner being able to see surveillance tapes of your community and get copies?  Should these tapes only be available for review if a crime or vandalism occurs?  Should the tapes only be reviewable by the police or through a subpoena?

 

 

 

ARE YOU IN GOOD HANDS?

 

 

Insurance payments may be the single largest expense of an association’s budget.  Typically, and to over-simplify, the association pays for general liability insurance should someone get injured while on the association’s property.  In addition, the association pays for windstorm insurance which covers damages to the common areas should a storm hit and the property is damaged by wind.  In addition, the association pays for flood insurance should the common elements be damaged as a result of flooding.  Finally, the association also pays for director’s and officer’s liability insurance which insures these people against claims made against them as a result of their service to the community.  There may be other policies the association has as well, like worker’s compensation, and even a policy that covers the association for liquor liability issues.  The association also better be purchasing insurance for the units that it now owns as a result of foreclosure, before they allow a tenant to reside in the unit.

 

 

 

Despite the fact that the association has all of this insurance, often times when an owner suffers damages to their unit as a result

 

 

ARE YOU IN GOOD HANDS?

 

 

Insurance payments may be the single largest expense of an association’s budget.  Typically, and to over-simplify, the association pays for general liability insurance should someone get injured while on the association’s property.  In addition, the association pays for windstorm insurance which covers damages to the common areas should a storm hit and the property is damaged by wind.  In addition, the association pays for flood insurance should the common elements be damaged as a result of flooding.  Finally, the association also pays for director’s and officer’s liability insurance which insures these people against claims made against them as a result of their service on the Board.  There may be other policies the association has as well, like worker’s compensation, and even a policy that covers the association for liquor liability issues.  The association also better be purchasing insurance for the units that it now owns as a result of foreclosure, before they allow a tenant to reside in the unit.

 

Because the association has all of this insurance, often times when an owner suffers damages to their unit as a result of a broken pipe, or a fire, they look to the association for not only repair of the unit’s walls, floors and ceilings, but also the personal contents of their unit including furnishings, appliances artwork and more.  The law is clear however that in the absence of negligence on behalf of the association, the association must simply repair or replace the common elements, like the drywall.  Negligence on behalf of the association is often difficult, if not impossible to prove.

 

In fact, The Florida Statutes make it clear that the association has no responsibility to insure most everything within the unit and reads as follows when it comes to the association’s master policy:

 

The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. SUCH PROPERTY AND ANY INSURANCE THEREUPON IS THE RESPONSIBILITY OF THE UNIT OWNER.

 

So, if you don’t already own one, you certainly may want to find out about an HO-6 policy which covers those items not covered by the association’s master policy.  In addition, the policy provides at least $2,000.00 in coverage should your association pass a special assessment as a result of a catastrophic event like a hurricane.  Finally, if your unit causes damage to another unit, the policy provides you with coverage should a neighbor seek reimbursement from you for their damages.

 

We all hate paying for it, but when we need it, we’re glad we have it.

 

 

SOME CLARITY FOR CAMs MAY BE COMING

 

 

We have blogged before about the battle brewing in Tallahassee between Community Association Managers and The Florida Bar.  In fact, we are awaiting a decision from The Florida Supreme Court concerning what activities a community association manager can perform and which actions go too far and constitute the unauthorized practice of law.  In the mean time however, a bill has been filed in the Florida House of Representatives which seeks to clarify and potentially expand the role of community association managers.

 

PCB CJS 14-02  would still not allow unlicensed managers to operate associations with more than 10 units or budgets in excess of $10,000.00.  However, the bill does expand the allowable duties of a community association manager to now include:

 

Determining the number of days required for statutory notices;

Determining amounts due to the association;

Calculating the votes required for a quorum or to approve a proposition or amendment;

Completing forms related to the management of a community association that have been created by a statute or by a state agency;

Drafting demand letters;

Drafting meeting notices and agendas;

Calculating certificates of assessments;

Responding to requests for an estoppel letter;

Negotiating monetary or performance terms of a contract subject to approval by an association.

 

Before jumping to a conclusion on any item just yet, keep in mind that if the association decides not to hire professional management, and instead chooses to be self managed, any unlicensed member of the Board of Directors would be allowed to do any of these things and need not be concerned about being charged with the unauthorized practice of law.  This is because the board member is not charging a fee to the association for the service.  Community association managers charge a fee for these services, and that’s what makes what they do subject to an “unauthorized practice of law” inquiry.  So, in reality, what is really in play here is whether or not a community association manager is going to be allowed to get paid by the association  to do these things, as opposed to the association’s attorney being the only one able to charge.  In a nutshell, it’s all about the money.

 

 

 

 

 

 

In general I have no objection to community association managers being allowed to perform almost all of these tasks as mentioned in the bill.  If they can’t look at the documents and determine how many owners are needed to constitute a quorum or vote in favor of a proposed amendment, I don’t want them managing my community.  The statute requires the association to maintain an accurate detailed ledger for all units, so what’s the harm in an association manager reading the ledger that they are required to maintain and telling an owner how much they owe?  If the file is already in legal they simply better check with the lawyer first to see if attorney’s fees and costs should also be tacked on.  Why can’t they use fill in the blank forms right off of the DBPR’s website? If they can’t prepare a simple agenda for a meeting, then I don’t want them at the meeting. Ever.  For heaven’s sake, why make a community association manager get licensed and take continuing education classes if they are not going to be allowed to perform these tasks?

 

It gets a little more complicated though when allowing community association managers to draft demand letters and negotiate contracts.  Forgetting to include certain buzz words in a demand letter or including too many demands can seriously delay an association’s right to proceed to arbitration or obtain relief.   Forgetting to include terms in a contract or allowing certain horrific clauses to remain in a contract can truly be detrimental to associations as well.  Many of you are familiar with contracts for laundry equipment that last forever.  I once argued that such a contract is illegal because it is a contract in perpetuity and can go on forever with no way out for the association.  The judge asked one question at the hearing: “Was the association represented by an attorney before signing the contract?”  When I said “NO,” the judge simply said “Well they should have been.  Case dismissed.”

 

So who supports the new bill?

 

 

 

 

COMMUNITY ASSOCIATIONS — IT’S TIME TO REPORT!

In the world of community associations, this is a pretty important time of year.  In most associations, the fiscal year ends on December 31st.    The condo, HOA and co-op statutes provide:

Within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws, the association shall prepare and complete, or contract for the preparation and completion of, a financial report for the preceding fiscal year. Within 21 days after the final financial report is completed but not later than 120 days after the end of the fiscal year or date as provided in the bylaws, the association shall mail to each unit owner or hand deliver to each unit owner, a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, upon receipt of a written request from the unit owner.

 

In sum, by the end of April, your association better have completed its year end financial

report so that the owners know how their money was spent.  I can tell you that the Department

of Business and Professional Regulation takes this requirement very seriously and associations

who fail to have the reports ready can be subject to thousands of dollars in fines.

 

The question is….what type of financial report must your association prepare, and the answer depends on the size of the association’s budget.  Associations with budgets between $150,000.00 and $300,000.00 must hire a CPA to perform a compilation.  Associations with budgets between $300,000.00 and $500,000.00 must hire a CPA to prepare a review.  Finally, associations with budgets of $500,000.00 or more must hire a CPA to prepare an audit.

 

By the way…..many of you reading this blog are getting ready or have already done your 2013 taxes.  Guess what?  Your association needs to do the same.  Many boards of directors are surprised to learn that your association is required to file a federal tax return even though you are a not for profit corporation.

 

Are your associations complying with these laws?  Are year end financial reports being prepared?  Are the owners being made aware that these reports are available to them?  How many of you even bother to take a look at them at all?

 

 

 

 

THE RIGHT TO RENT – THERE’S MORE TO KNOW THAN YOU THINK

The right to rent your unit has undergone some change over the years.  It all started in a landmark case called Woodside v. Jahren which was ruled upon by The Florida Supreme Court in 2002.  A condominium in Clearwater amended its declaration of condominium to suddenly prohibit the rental of your unit to no more than nine (9) months in any twelve (12) month period.  Mr. Jahren had been renting out several of his units for nearly twenty (20) years and he sued the association, seeking a ruling from the court that this amendment was illegal because it took away a vested right he had to rent his unit all year long.  The Florida Supreme Court disagreed.

Basically, The Florida Supreme Court ruled that despite the fact that the declaration of condominium originally allowed Mr. Jahren to rent his units, he was on notice that the unit owners had the authority to amend the governing documents to prohibit renting in the future.  In simple terms, The Florida Supreme Court opined that if a super majority of owners in a condominium can finally agree on something, the courts should not stand in the way, unless the amendment violated a constitutional right of an owner.  Since there was no Constitutional right to rent your unit, the amendment which limited rentals was affirmed by The Florida Supreme Court.

This did not sit well with one Florida Supreme Court Justice who thought it was unfair for Mr. Jahren to lose this valuable property right after so many years, and she urged The Florida Legislature to ensure a fairer system was put in place.  So, in 2004 The Florida Legislature passed the following law in regards to condominiums only:

FS 718.110(13)  Any amendment restricting unit owners’ rights relating to the rental of units applies only to unit owners who consent to the amendment and unit owners who purchase their units after the effective date of that amendment.

So, as of 2004 if your declaration gave you the right to rent your unit, that right could not be taken away from you during your ownership, unless you specifically voted in favor of such an amendment to your declaration of condominium.  Once you sell however, your buyer becomes stuck with that restriction.  That remains the law today.

Over the years I have heard a million arguments both for and against the rental of units and homes.  Many people think that owner occupied communities are less likely to suffer from a foreclosure problem.  I don’t know.  It seems to me that lots of people lost their homestead property during the recent foreclosure crisis.  In fact, some owners were begging the Board to please let them rent their unit in order to avoid the unit slipping into foreclosure.  Many Boards still said NO.  Then, these same associations foreclosed on some units and took back title to several units.  Now the association wanted to rent out the unit each month.  Was the association bound by the same rental limitations as all of the owners?  Of course they were.  But that didn’t stop many of them.

 

 

 

 

 

A SUCCESSFUL ANNUAL MEETING – PART TWO – CURBING THE VIOLENCE

A few weeks ago, we blogged about how to run a successful annual meeting.  I not so jokingly said the best way to make the meeting run smoothly was to order food.  Lots of it.  I also made it clear not to serve liquor.  I wasn’t joking about that either.  As many of us know, liquor tends to fuel the emotions and removes the filter from people’s tongues and brains.  There is already so much pent up feelings at these annual meetings that adding liquor can only be equated to adding fuel to the fire.

In fact, in the case of Hidden Harbor Estates v. Norman, the Forth District Court of Appeals upheld a rule of the condominium board of directors who voted to preclude any alcoholic beverages in the clubhouse.  The Court found the rule to be perfectly reasonable, and so do I.

Just recently, at one of our Condo Craze seminars, a new vendor got loaded and sexually harassed two wonderful attractive female friends of the show.  He was escorted out, putting it nicely.  At a recent bar b que I attended, after pounding back a few, some guy who appeared to be very friendly, went on to explain to me how not a single Jewish person died in the 9-11 tragedy in New York because “the Jews knew the planes were coming and signaled to each other in advance to stay home from work that day.”  He was not escorted out so nicely.  And that’s all I’ll confess to about that.

These fights took place at friendly events.  It certainly begs the question as to what would happen if liquor was served at no so friendly events like an annual meeting.  If liquor is to be served however, the association better purchase a liquor liability policy in advance.

Several times I have watched annual meetings or board meetings turn violent.  Just this week, at one Board meeting I was pretty happy to have two Metro Dade Police Officers in attendance after I had to advise someone with a prior felony conviction that he’s now off the Board.  In Hallandale a few years ago, I had to be escorted to my car at 1:00 a.m. by a police officer after a guy in a drunken stupor started screaming at me “You are my lawyer and you will do what I say.”  He eventually did what the Hallandale Police said.

In a tough economy, it seems that everyone’s fuse is a little shorter.  The situation is compounded in those communities that do a poor job keeping their owners advised of association matters throughout the year.  The more communication, the less distrust amongst the owners of the Board and management, and even of the association attorney.  The more communication, the greater likelihood of a smooth sailing annual meeting.  A growing trend by associations is to have a police officer at the annual meeting.  If there is any concern whatsoever that the meeting may become violent or the crowd or even specific individuals may become unruly, having a law enforcement officer at the meeting is a wonderful idea.  Owners may scream in the face of Sally, the 94 year-old President, but they’re probably not going to do it if Joe Police Officer is sitting next to her.  Better safe than sorry.

 

 

COLLECTIONS LAW UPDATE

 

It seems as if the foreclosure crisis is certainly not as bad as it once was, even though Florida is still the worst state in the nation, with approximately one in every 346 homes in foreclosure.  The percentage of delinquencies in our community associations are certainly down from where they were just a year or two ago and hopefully things will remain this way.

Even though the worst may be behind us, associations and their owners have taken a tremendous financial beating for nearly a decade.  It happened, because the association laws are simply designed to protect the banks and not the owners.  As most of you know, if a bank loans money to someone who purchases a unit or home in a community, and that unit owner does not pay the assessments to the association, if the bank forecloses on the property and becomes the owner, the bank only has to pay the association the lesser of one year of unpaid assessments or 1% of the original amount of the mortgage.  So typically, even the owner is indebted to the association for thousands or tens of thousands of dollars, the association gets peanuts from the bank.

It got even worse this week for condominiums when the 3rd District Court of Appeals issued an opinion in a case called Aventura Management v. Spiaggia.  In this case, the condominium foreclosed on a delinquent unit owner and took ownership of a condominium unit.  The bank then foreclosed, but a third party purchased the unit at the bank’s foreclosure sale.  The condominium demanded that the purchaser at the bank’s foreclosure sale pay the association all of the assessments owed by the delinquent owner.  The 3rd DCA held however that the purchaser only owes the unpaid assessments from the time the association became the owner.  In fact, if the association rented out the property during the time it owned the unit, the new buyer at the foreclosure sale may not owe the association a dime.  So…..bottom line…..on the day when the condo forecloses and takes back title to a unit, the account ledger goes to zero.

Currently, there is a bill filed in The Florida Legislature which seeks to make the banks pay more if they foreclose and become an owner.  It would make the bank liable for 2% of the original amount of the mortgage or 2 years of assessments, whichever is less.  While I hope it passes, I believe it has little or no chance whatsoever.

So, why do the banks have so much more influence with The Florida Legislature that Joe Citizen?  For the same reason why Dillinger thought it was a good idea to rob a bank.  BECAUSE THEY GOT ALL THE MONEY.

 

 

 

DO YOU HAVE THE RIGHT TO RENT YOUR UNIT?

DEFINITELY MAYBE

 

In Woodside Village Condominium Association, Inc. v. Jahren  806 So.2d 452 (Fla. 2002)  The Florida Supreme Court heard the story of a unit owner who owned 4 units in a condominium and who basically lost the ability to rent those units because the unit owners voted to amend their declaration of condominium to only allow a unit to be rented for 9 months in a 12 month period.  Mr. Jahren sued the association alleging that the amendment was illegal.  The Florida Supreme Court ruled however that the amendment was not illegal.  In fact, The Supreme Court made it clear that there are very few restrictions found in the Florida Condominium Act when it comes to amending the declaration.   Moreover, The Florida Supreme Court found that Mr. Jahren was always on notice that the declaration could be amended and that this particular amendment does not violate public policy or his constitutional rights.

 

Finally, the court opined that these type of restrictions imposed by the amendment to the declaration “simply come with the unique territory of condominium ownership. Indeed, it is restrictions such as these that distinguish condominium living from rental apartments or single-family residences. Hence, persons acquiring units in condominiums are on constructive notice of the extensive restrictions that go with this unique, and some would say, restrictive, form of residential property ownership and living.”

 

One Florida Supreme Court Justice was upset however with the fact that Mr. Jahren lost this valuable property right after so many years, and she urged The Florida Legislature to fix the problem.  As a result, the following law was passed for condominiums only:

 

An amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment.

 

So, since this law was enacted, you still retained all the rights you ever had to rent your unit, as long as you did not vote in favor of any amendment which takes away those rights.

 

There is legislation pending now which would change this.  It would require you to affirmatively vote against the amendment which would restrict your right to rent, and if not, the amendment will apply to you too.

 

 

 

 

 

 

There is potential for disaster if this provision passes.  For example, suppose you claim you were never sent the ballot to vote in the first place, and the amendment passes.  You’re stuck with it anyway.  Forever.  You can no longer rent your unit.  Even if you were out of the state or the country when the vote took place.  Unless you now sue the association.

 

People that actually do vote against the amendment will also no doubt be defending their position one day when the association tells them — we have no vote from you against the amendment in our files.  Associations and even management companies are known to lose or misplace records every now and then.  For example, try and locate the original list of parking assignments from the developer to all of the unit owners.  Good luck with that.  And that is why there are fights over parking spots thirty years after the condo is built.

 

Sometimes you have to leave well enough alone.  Another way of saying it is…….if it ain’t broke….don’t fix it.

 

PICK A LANGUAGE….ANY LANGUAGE

 

Believe it or not……I received more than one e-mail this year from people complaining that their annual meetings are being conducted in a language other than English and some people are fighting mad about it.  I’ll risk being politically incorrect and say that I think it’s absurd that that a unit owner can attend the association’s annual meeting and find out when they get there that the meeting will not be conducted in English and instead will be conducted in a language that they completely don’t understand.  It is wrong and should be illegal, but it isn’t.

 

 

While there is no “official language” for our country, in 1988 the voters of this state passed a Constitutional amendment that makes English the official language of the State of Florida.  And, the Florida Constitution says the legislature has the power to enforce that section by appropriate legislation.  So The Florida Legislature would be allowed to pass legislation requiring the meetings to take place in English.

 

Several years ago, I was at a meeting in Sunny Isles Beach that was conducted entirely in French.  This really upset many English speaking people who had no right under the statute to do anything about it.  I felt like I was in Bizzaro World, not knowing what anyone was talking about.

 

I understand that many of our communities, especially in South Florida, are comprised of occupants whose first language may not be English.  I also understand that as a result of the composition of that community, it would be easier to conduct the meeting in a language other than English, and that the majority of those in attendance would gain a better understanding of the meeting if it were conducted in their native tongue.  However, even if only one English speaking person shows up to that meeting, shouldn’t he or she have the right to know what is going on?  They are property owners for heaven’s sake.  The governing documents are printed in English, the statutes are printed in English.  Is there no right available to that owner to have the important meetings in the community conducted in English?  Should the English speaking owner be forced to hire an interpreter at their own expense?  I don’t think so.

 

How about some simple legislation that says the following:

 

All meetings of the Board of Directors, any committee, or the membership , including the annual meeting and the budget meeting, may be conducted in a language other than English.  If however, at or prior to the meeting,  any Board member, committee member or other member of the association requests that the meeting be conducted in English, the meeting must also be conducted in English.

 

Anybody else want to risk being politically incorrect?  Let’s hear what you think.

 

 

 

GOVERNOR SCOTT………THE DEMOCRAT

Republicans always knock the Democrats for never actually solving a problem, but choosing instead to form a committee to investigate solutions that may one day hypothetically come up with the answer to the problem and which may ultimately and possibly be utilized in the future to solve the problem, after running it through a few more investigative committees first.

If that’s how Democrats solve problems, this year we found out that Governor Scott is a Democrat.  Last year, while C.C.F.J. and I worked so hard to finally get the Department of Business and Professional Regulation (DBPR) to provide consumer assistance to homeowner associations in our state, just like they already do for condominium associations, The Governor chose instead to wait it out another year.  Instead, he signed an apparently useless bill which made homeowner associations register with the DBPR by basically providing their name, address and number of parcels.  He created needless bureaucratic red tape under the guise that before allowing  the DBPR to assist HOAs, let’s learn how many there are first.

The results are in.  Over 13,000 HOAs registered.  We learned that well over 2.5 million of us live in HOAs throughout the state.  We learned quickly that there is an even greater need to provide consumer assistance to HOAs than condominiums.  In light of these findings which were not surprising at all, Senator Alan Hays, a conservative Republican from Umatilla  filed Senate Bill 1348 which would simply get HOAs the same equal treatment with the DBPR as does condominiums.  In fact, the plan was actually to decrease the fee that condo owners pay from $4.00 per year to $2.00 per year and HOA owners would also pay only $2.00 per year.   It was a win win.

Despite the fact that a Conservative Republican from his own party filed the bill, Governor Scott would not allow a House companion bill to even be filed.  Instead, remarkably the Governor lined up with a few Democratic organizations in Palm Beach and Broward (who will never vote for him in a million years) and whose members consist of Board members of community associations.  In other words the Governor backed Board members who want to stay in power and don’t want any governmental agency investigating whether or not they are following the law.  Instead of Governor Scott standing with Senator Hays and protecting the 2.5 million of you who live in HOAs and complain about the failure of your Boards to abide by Florida law, Governor Scott partnered up with the guys who want no oversight, and no relief for owners who dare complain about an illegal action of the Board, other than being forced to hire a lawyer at their own cost to file a lawsuit.

So…..when the Governor is told about the HOA problem last year, he punts and says “let’s do a study.”  When the study confirms the problem, he pretends not to see it and kills legislation that his own party filed in order to fix the problem.  Instead of his slogan being “Let’s Get to Work” maybe it should be “Let’s Pass the Buck.”  How about “Let’s turn a blind eye.”  Maybe “Let’s Look the Other Way.”

When the survey results came out, I previously blogged that now that we actually have a list of all of these HOAs, the members of Florida HOAs instantly became one of the most powerful voting blocs in the state. A swing of 1% of eligible voters of HOAs is enough to determine an election in this state.   If those of you who live in HOAs are simply tired of being ignored by Governor Scott, here’s some advice come November…….”Let’s get to work”

WHAT ‘S ON YOUR WISH LIST?

 

It’s been a pleasure meeting so many of you this past week, teaching the Condo Craze Board Certification Course at the PM-EXPO event in West Palm Beach and then at the Holiday Inn at Universal Studios.  Even though we were unsuccessful this legislative session in accomplishing further H.O.A. reform, it was incredibly heart warming to hear “thank you for trying” from so many of you.  It is truly an honor and a pleasure to teach all of you at our seminars, write to you each Monday in our blog, and take your calls on the radio each Sunday.

So, after a stellar 2013 legislative session, 2014 will be a bust.  Rest assured however that we will try again next year to accomplish our objectives.

H.O.A. reform is not the only item on the agenda.  We want to hear more from each of you as to what other changes to the law you would like to see.  I’ll start if off.  I certainly would like to see the loophole removed that allows directors to become certified by simply signing a self serving affidavit that basically says they read their governing documents, but doesn’t even require them to acknowledge that the statutes even exist.  If you want to serve as a director, a three hour course should be required and you shouldn’t be able to weasel out of it by signing a dumb form.

Now it’s your turn.  What’s on your wish list?

 

 

FLORIDA – FOR BETTER OR FOR WORSE

It’s hard for me to believe, but in July I will be a resident of Florida for 25 years, or more than half of my life.  The change that has taken place in these 25 years is nothing short of dramatic.  In terms of population, Florida has just leap-frogged New York State and jumped into 3rd place with over 19 million residents.   I remember a time when I vacationed here as a child, or teenager and felt like I was in a far quieter place, with a relaxed attitude and little to do in terms of entertainment other than Jai-Lai or attending a Dolphin game during the football season.  There were also delicatessens everywhere and today almost none exist.  There was no traffic and no need for reversible lanes on highways, or the need to pay for high cost express lanes.

We were a far less diverse community too.  Today, Florida and especially South Florida, is almost the melting pot that New York is.  South and Central Americans, Cubans, Canadians  and now Europeans make up large percentages of our cities.  Different languages can be heard spoken at Starbucks that seems to be on each corner where none previously existed.

There was only one Disney theme park.  Universal didn’t exist.  Even professional sports was almost non existant where today, there are nine professional sports franchises throughout the state.  If you wanted to gamble, you had to board a gambling cruise, whereas today Indian reservations and other hotels have slot machines and table games all over the state.

The skylines in our major cities look nothing like they did 25 or 30 years ago.  The building of massive  large scale condominiums keeps on happening because it seems as if the people keep coming and coming.  Florida is no longer “god’s waiting room” as the number of families with children in our state rises every year. We are simply growing and growing and growing.  The massive amount of baby boomers who are expected to retire in the coming years only means that this trend in population growth will continue with no end in sight.

So to those of you that have lived through this meteoric rise in population, I ask if you think Florida has gone from better to worse or visa versa?  Do you miss the Florida that was once known solely as a place to relax and retire, or is the trend toward families, entertainment and youth a trend that has made Florida a better place to live?

 

 

 

 

 

 

 

 

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SO WHEN IS A MEETING A MEETING?

 

Without a doubt, one of the most common complaints unit owners hurl at their Board of Directors is that the Board hold private meetings that the owners simply never get notice of.  May owners complain that these meetings violate the “Sunshine” laws that require public meetings, but they are incorrect, as the “Sunshine” laws apply to meetings by governmental bodies, not community associations.

In regards to condominiums, Florida Statute 718.112(2)(b)5(c) states:

(c) Board of administration meetings.—Meetings of the board of administration at which a quorum of the members is present are open to all unit owners.

As to condominium committees, the same statute provides:

Meetings of a committee to take final action on behalf of the board or make recommendations to the board regarding the association budget are subject to this paragraph. Meetings of a committee that does not take final action on behalf of the board or make recommendations to the board regarding the association budget are subject to this section, unless those meetings are exempted from this section by the bylaws of the association.

 

In regards to Homeowner Associations, Florida Statute 720.303(2)(a) provides:

(2) BOARD MEETINGS.—

(a) A meeting of the board of directors of an association occurs whenever a quorum of the board gathers to conduct association business.

(b) members have a right to attend all meetings of the board.

As to HOA committees, the same statute provides:

The provisions of this subsection shall also apply to the meetings of any committee or other similar body when a final decision will be made regarding the expenditure of association funds and to meetings of any body vested with the power to approve or disapprove architectural decisions with respect to a specific parcel of residential property owned by a member of the community.

Here’s the bottom line.  Neither statute is designed to prevent board members from socializing together and requiring that a notice gets posted every time a bunch of board members and their spouses want to go out to eat or take a swim in the pool.  Both statutes are simply making it clear that if a quorum of board members are going to get together, talk shop and engage in discussions about the needs of the community, it must be done at a properly noticed meeting.

Many associations attempt to skirt the notice requirement by taking the position that they aren’t having meetings, but instead are having “workshops.”  The bottom line is that if a quorum of board members will be in attendance at that “workshop” it is a Board meeting, it needs to be properly noticed, and the unit owners have a right to attend.

Finally, both the condo and the HOA statute allow for private closed door meetings of the Board, but only when the meeting is with the association’s attorney to discuss proposed or pending litigation or meetings of the board held for the purpose of discussing personnel matters.   So, unless the association’s attorney is present either in person or by phone, there is no attorney/client closed door meeting, even if the Board is discussing pending litigation.

The issue of just what “personnel matters” are subject to closed door meetings is also unclear.  The statute was primarily designed to allow association boards to discuss termination of employees or address employment related problems in private, so that the employee’s dirty laundry would not get exposed to the entire community.  It certainly does not mean that association Boards get to discuss the hiring of vendors and the awarding of contracts in private closed-door meetings.  These decisions still must be made at board meetings that are properly noticed and where owners have the right to attend.

 

 

NEW LAW PROVIDES HIGH STANDARDS FOR COMMUNITY ASSOCIATION MANAGERS

 

The Florida Legislature just passed a new bill that creates high standards for Florida’s community association managers and management companies.  The Governor is expected to sign it.  Here is what the law says:

 

468.4334 Professional practice standards; liability

(1) A community association manager or a community association management firm are deemed to act as an agent on behalf of a community association as principal within the scope of authority authorized by a written contract or under this chapter.  A community association manager and a community association management firm shall discharge duties performed on behalf of the association as authorized by this chapter loyally, skillfully, and diligently; dealing honestly and fairly; in good faith; with care and full disclosure to the community association; accounting for all funds; and not charging unreasonable or excessive fees.

(2)(a) A contract between a community association and a community association manager or a contract between a community association and a community association management firm may provide that the community association indemnifies and holds harmless the community association manager and the community association management firm for ordinary negligence resulting from the manager or management firm’s act or omission that is the result of an instruction or direction of the community association.  This paragraph does not preclude any other negotiated indemnity or hold harmless provision.

(b) Indemnification under paragraph (a) may not cover any act or omission that violates a criminal law; derives an improper personal benefit, either directly or indirectly; is grossly negligent; or is reckless, is in bad faith, is with malicious purpose, or is in a manner exhibiting wanton and willful disregard of human rights, safety or property.

 

So what does all this mean?  Often times the association gets named as a defendant in a lawsuit because of something the manager or management firm did, even though the manager or management company had no written authority to take the action they did.  The plaintiff alleges that the manager was the association’s “agent.”  Now, unless that manager or management firm had written authority to take the action it did, they cannot be classified as an “agent” of the association and the association is potentially off the hook for their actions.

The new language saying that managers shall act loyally, honestly etc… doesn’t do much.  Managers were already under an obligation to act this way under the Florida Administrative Code including accounting for funds.  Not charging unreasonable or excessive fees sounds nice….but what does that mean?  What is reasonable or excessive?  When CCFJ thought managers were charging too much for access to records, they helped pass legislation amending the statute to specifically state $20.00 per hour was the max a management company can charge.  This new provision scontains no such limitation.

Almost every management contract I’ve ever seen indemnifies the manager for ordinary negligence.  No surprise or big change to the law there.   It’s also doubtful that a manager or management firm can ever be indemnified by the association for gross negligence, recklessness, maliciousness or for acting in bad faith.  Again… no big changes.

So community association managers……all in all it wasn’t too bad a year.  Your powers at least were outlined as we blogged about before, and you now know what you can and cannot do.  Additionally, the law now obviously treats you as professionals and just like lawyers demands that you provide your clients a high degree of care and that you do a quality job.  And for those of you who respect the profession and are proud of what you do every day, that is exactly what you want.

 

BEFORE SIGNING THAT CONTRACT………….

 

I can’t tell you how many times a new client has come into the office and proceeded to show me a contract that they already signed, without having an attorney look at it first.  They have now realized how one sided it is and how devastating the terms are to the community.  I am then asked “so can you get us out of this?”  Unfortunately, the answer is often times “NO.”

There are so many terms of a contract that are often not included in contracts between an association and a service provider or contractor that can harm the community.  Even basic terms like the start date, completion date, exact scope of the work, price, payment schedules, warranties, cancellation terms, precise automatic renewal terms,  and more are left out of contracts, leaving the association guessing as to who has what responsibilities.   Even worse, horrific terms are often left in the contract which greatly restrict the association’s right to damages in the event of a breach and/or that require the association to sue the provider in a completely different venue.

It still puzzles me when I see an association sign contracts for tens of thousands of dollars or even hundreds of thousands of dollars without first having an attorney take a glance at it.  Associations often learn the hard way very quickly how it was penny wise and pound foolish to try to save a few bucks on a lawyer.

Let me give you an example of a situation I was involved in maybe 15 years ago that I know so many of you will relate to, because I still receive these types of complaints all the time.  It involved a contract between the association and a supplier of laundry equipment.  (Stop laughing)  The association had signed the contract with the laundry machine supplier maybe 20 years earlier and desperately wanted to get out of this deal.  The contract contained a clause that basically said the contract can continue forever, and renews every seven years, as long as the laundry machine company replaced at least 50% of the machines in that 7 year period.  The association wanted me to file a lawsuit and try to get out of this never ending contract.  I did.  I argued to the court that the law generally frowns on contracts in perpetuity and that the contract automatically renewed two or three times by now, and that equity and fairness at this point allows the association the right to get out.   At the hearing, the judge asked me one question:  Was the association represented by counsel before signing that contract?  I answered “No.”  Her response was “Well…..they should have been.  Your case is dismissed.”

So……while The Florida Legislature just gave community association managers the right to negotiate some terms of contracts on behalf of associations, it is a responsibility that I urge managers to be very careful with.  It’s all in the fine print.  Directors and CAMs should be smart and get an opinion from counsel before putting your John Hancock on the contract.  If not, you may find yourself in a life time marriage with no possibility of a divorce.

HERE TODAY — GONE TOMORROW

 

Although you may not know it, your condominium could be terminated by a vote of the owners.  This simply means that the provisions of your Declaration of Condominium would no longer apply and you can in effect be forced out of the property.

All declarations of condominium contain a section regarding how the condominium may be terminated.  Generally speaking, those condominiums that were built prior to 2007  have language in them that require as much as a 100% vote of the owners in order to terminate the condominium.  Needless to say, that is pretty difficult to obtain.

However, in  2007, when the condominium market really started to bottom out and in an attempt to again help developers,  The Florida Legislature enacted the following new law:

3)  OPTIONAL TERMINATION.–Except as provided in subsection (2) or unless the declaration provides for a lower percentage, the condominium form of ownership of the property may be terminated pursuant to a plan of termination approved by at least 80 percent of the total voting interests of the condominium if not more than 10 percent of the total voting interests of the condominium have rejected the plan of termination by negative vote or by providing written objections thereto. This subsection does not apply to condominiums in which 75 percent or more of the units are timeshare units.

So what does this all mean to you?  Well, let me tell you what I am starting to see.  There are some older properties that are taking up some very prime real estate locations.  Developers are making huge offers to owners to sell their units.  And if that developer is able to get to the magic 80% number, the remaining 20% are gone and out the door, regardless of whether or not they want to continue to live there or not,   regardless of whether or not they paid their dues and regardless of whether or not they have lived there their whole lives.

By the way….suppose you have a mortgage that you still owe?  The “plan of termination” that gets filed in the County where the property is located can simply require that you get paid the fair market value of your property as determined by the current value given to the property by the County Appraiser’s Office.  Many of you owe mortgages that far exceed the value assigned by your county appraiser.  So, not only can you lose your home, but you can still be liable for your mortgage after you get kicked out.

I’ll leave it to Jan to tell you how this all happened.  Just now that the term “the comfort and safety” of your own home may be a fallacy if an eager beaver developer comes knocking on the doors of all your neighbors.

 

 

HERE TODAY — GONE TOMORROW

 

Although you may not know it, your condominium could be terminated by a vote of the owners.  This simply means that the provisions of your Declaration of Condominium would no longer apply and you can in effect be forced out of the property.

All declarations of condominium contain a section regarding how the condominium may be terminated.  Generally speaking, those condominiums that were built prior to 2007  have language in them that require as much as a 100% vote of the owners in order to terminate the condominium.  Needless to say, that is pretty difficult to obtain.

However, in  2007, when the condominium market really started to bottom out and in an attempt to again help developers,  The Florida Legislature enacted the following new law:

3)  OPTIONAL TERMINATION.–Except as provided in subsection (2) or unless the declaration provides for a lower percentage, the condominium form of ownership of the property may be terminated pursuant to a plan of termination approved by at least 80 percent of the total voting interests of the condominium if not more than 10 percent of the total voting interests of the condominium have rejected the plan of termination by negative vote or by providing written objections thereto. This subsection does not apply to condominiums in which 75 percent or more of the units are timeshare units.

So what does this all mean to you?  Well, let me tell you what I am starting to see.  There are some older properties that are taking up some very prime real estate locations.  Developers are making huge offers to owners to sell their units.  And if that developer is able to get to the magic 80% number, the remaining 20% are gone and out the door, regardless of whether or not they want to continue to live there or not,   regardless of whether or not they paid their dues and regardless of whether or not they have lived there their whole lives.

So how much do you get if you’re forced out?  The “plan of termination” that gets filed in the County where the property is located can simply require that you get paid the fair market value of your property as determined by the current value given to the property by the County Appraiser’s Office.   As we know, those values are often very low.

I’ll leave it to Jan to tell you how this all happened.  Just now that the term “the comfort and safety” of your own home may be a fallacy if an eager beaver developer comes knocking on the doors of all your neighbors.

 

 

AS THINGS QUIET DOWN

 

 

Today is Memorial Day which unofficially kicks off the summer.  It’s a strange and quiet time of year coming up for most associations.  The budget and the elections are over with, the Board members are hopefully certified by now, and the next election is still far enough into the future so there’s nothing to plan for at the moment.  Dare I say it, but it seems that’s it’s time, at least for the next few months, to simply sit back, relax and use the pool, exercise room, bar b que and all of the other amenities your association has to offer.

 

There are other owners however who see this time of year as an opportunity  to escape the brutal Florida summer.  They simply pack up and head north, leaving their unit vacant.  But remember…..just because you leave your Florida condominium for a few months doesn’t mean that your responsibility to continuously maintain your unit stops.   Even when you’re away from your home, there is still a responsibility to maintain it.

 

Every declaration of condominium has a general clause that requires the owner of the unit to maintain his or her unit in good condition.  In fact, arbitration decisions have held that:

 

“where an owner does not reside in the unit, it is incumbent on the owner to routinely and periodically examine and inspect the unit to ensure the absence of leaks and conditions that would otherwise lead to damage to the building and its occupants.  In recognition of the fact that where multiple owners occupy a single building, a problem that develops in one unit may well affect other units and the common element components of the building.”  See: Los Prados Condominium Association v. Lemley Case No. 03-6092, May 25, 2004, Arbitrator, Scheuerman.

 

Many associations have rules or provisions in their declarations that require owners to leave a key with the association to their unit, in order that the association has the ability to enter the unit in the absence of the owner.

 

Unit owners may be required to provide the Association with keys to their units, because the right of access is for the protection of all units within a building and the owner of one unit may not be available to give permission at the time of an emergency. Costa Bella Ass’n, Inc. v. Scuteri, Arb. Case No. 02-4624, Final Order (June 7, 2002). A common type of emergency occurs when a plumbing leak in one unit causes damage to another unit or to the common elements. See Oceanview Towers Condo. Ass’n, Inc. v. Diaz, Arb. Case No. 2006-01-6632, Final Order (January 3, 2007).

 

Unit owners can also forget about refusing to provide a key.  They will lose in arbitration every time.  They can also forget about placing any restrictions on the association’s right of entry or otherwise complaining about what is or isn’t an emergency.

 

 

 

 

In general, issues of the timing of the entry and notification to the owners are a function of good business judgment, prudence, and civility, which are concepts that resist further enunciation and definition in the case law. The fact that the statute, case law and governing documents do not attempt to define emergencies demonstrates the futility of an effort to specify unexpected events or foreseeable events happening at unexpected times.  In re: Petition For Arbitration,  The Marina Club of Tampa Condominium Association, Inc., Petitioner, v. Robert B. Schwartz, (May, 2012)


Respondent’s defense that the Association has not met his conditions for entry is invalid. An impermissible denial of access occurs where a unit owner seeks to place conditions upon the association’s access to his or her unit. Park Lake Towers Condo. Ass’n, Inc. v. Halley, Arb. Case No. 2003-08-3367, Amended Final Order on Motions for Attorney’s Fees (January 28, 2004)(Where the association sought access to the respondent’s unit in order to fix a plumbing assembly, and where the respondent directed that the association would only be permitted access upon providing proof of insurance and a valid building permit, the respondent was held to have denied access to the unit.) Pursuant to Section 718.111(5), Florida Statutes, Respondent must allow the Association access to his unit to repair the common elements without any conditions.

A few years ago, my sister’s condo unit was accessed by someone who stole the keys from the condo’s office.  At first, she didn’t even realize it.  Luckily, nothing valuable was stolen.  However, after about the third day in a row, she noticed that something was wrong when there was a half eaten apple on her kitchen counter.  A check of the refrigerator showed that the crook also helped himself to some Weight Watchers frozen dinners.

 

So my legal advice to the snow birds is…….don’t forget about your unit while you’re away and give up your key to the association – but you may want to hide your food.

55 AND OVER COMMUNITIES – A PRIMER

 

I remember as a kid when Century Village was being built and Red Buttons was all over the TV in New York telling everyone why they need to retire to one of the fine “adult only” communities that are being built in South Florida.  Dare I say it, but in a couple of more birthdays, I’m eligible to move in.

So, what actually is a “55 and over” community?  Generally speaking, state and federal law prohibit an association from discriminating against families with children.  This simply means that a community cannot say that children are not allowed to live here.  The exception to the rule is when the community provides “housing for older persons” and is a 55 and over community.

In a 55 and over community, the declaration of condominium or declaration of covenants must specifically state that at least one person age 55 or older must live in the unit or home.  Moreover, in order to qualify as a 55 and over community, at least 80% of the units or homes must be occupied by one person age 55 or older.  There is often times confusion about this 80% number.  In sum, the 80% number is simply a threshold that must be maintained in order to be classified as a 55 and over community.  It does not mean that if the community already has 95% of the units being occupied by someone 55 and older, the association must now allow a unit to be occupied by someone who is not age 55 or older.

Associations must also register with the Florida Commission on Human Relations by sending a letter to the Commission to register as a facility for older persons. The letter must be on the letterhead of the facility or community, and it must be signed by the president of the facility or community and mailed to the Commission.  A fee of $20.00 is required.

 

Additionally, ownership of the units are not a concern.  The unit can be owned by anyone and their age is irrelevant.  An 18 year old can own the unit.  The critical issue in a  55 and over community is occupancy, not ownership.

One serious problem that 55 and over communities face is that they can lose their exemption to preclude children, if at least once every two years the association is not taking reliable surveys to ensure that the units are occupied by at least one person age 55 or older.  When taking these surveys, the association can ask for copies of birth certificates, driver’s licenses, passports or other identification from which the age of the occupant can be determined.

 

As we all know, the baby boomer generation has already started making their way south.  I think that we will continue to see these communities being built to accommodate the massive influx of expected retirees.   It’s not a place for everyone however, as some people don’t mind hearing the cry of a baby, kids playing ball in the street or some kid playing the drums in their apartment.  Although, I’m guessing that my neighbors from Brooklyn wished many a time that I had never bought that damm set of drums.  Man, what I must have put them through as a kid.

CONDO CRAZE AND HOAS – WEEK 223

 

 

KAREN:          GOOD AFTERNOON, AND WELCOME BACK TO CONDO CRAZE AND HOAS HERE ON 850 WFTL.  I’M KAREN CURTIS, AND I’M HERE AGAIN TODAY, AS WE ARE EACH SUNDAY AT NOON, WITH ATTORNEYS ERIC GLAZER AND SCOTT SHAPIRO FROM GLAZER AND ASSOCIATES, P.A.  A LAW FIRM PRACTICING COMMUNITY ASSOCIATION LAW THROUGHOUT FLORIDA.    AS OUR LISTENERS KNOW, WE ARE HERE EACH WEEK TO ANSWER ALL OF YOUR CALLS AND E-MAILS ABOUT THE ISSUES THAT MAKE LIFE IN YOUR CONDOMINIUM OR HOA ABSOLUTELY CRAZY FROM ONE MINUTE TO THE NEXT.

 

AS ALWAYS…………WE WOULD LOVE TO GET THE PHONE LINES GOING EARLY – ANSWERING ALL OF YOUR QUESTIONS – SO GIVE US A CALL RIGHT HERE IN OUR STUDIO AT: 877-850-8585 – AGAIN THAT’S 877-850-8585

 

Or…………IF YOU PREFER TO E-MAIL US YOUR QUESTIONS……..YOU CAN DO SO BY VISITING THE SHOW’S WEBSITE AT CONDOCRAZEANDHOAS.COM AND BY CLICKING ON THE “E-MAIL THE SHOW” TAB

 

ERIC:  and…………..even if you don’t want to send us an e-mail, you should still visit the show’s website at condocrazeandhoas.com where you can:

 

  1. A) LISTEN TO ALL OF OUR PAST SHOWS,
  2. B) SIGN UP FOR OUR FREE SEMINARS;
  3. C) AND SEE WHO THE SHOW’S SPONSORS ARE AND VISIT ALL OF THEIR WEBSITES
  4. D) AUTOMATICALLY LINK TO OUR FACEBOOK PAGE
  5. E) AUTOMATICALLY LINK TO OUR BRAND NEW HOA AND CONDO BLOG AT HOA-CONDOBLOG.COM – tomorrow’s topic – Everything you need to know about 55 and over communities.

 

  1. F) JOIN OUR E-MAIL LISTS AND GET COPIES OF OUR NEWSLETTERS AND OTHER ANNOUNCEMENTS ABOUT THE SHOW. IN fact, our new newsletter is out and it was sent to everyone on our list this week. So make sure you are on our mailing list.

 

(let’s save this for when we come back from our SECOND  break)

KAREN:  AND BY THE WAY………IF YOU HAVE A PRODUCT OR SERVICE THAT WOULD BE BENEFICIAL TO OUR LISTENERS, AND WANT TO BE A GUEST ON THE SHOW, ATTEND OUR MONTHLY SEMINARS WHERE YOU WILL MEET HUNDREDS OF DIFFERENT ASSOCIATIONS, BE LISTED ON THE SHOW’S WEBSITE AND HAVE A COMMERCIAL SPOT DURING EACH WEEK’S SHOW — YOU CAN BECOME A SPONSOR OF THE SHOW ——–JUST VISIT THE SHOW’S WEBSITE AT CONDOCRAZEANDHOAS.COM AND SEND US A QUICK E-MAIL

 

ERIC: AND OF COURSE – IF YOU WOULD LIKE TO CALL OUR LAW FIRM DIRECTLY AND PICK OUR BRAINS OFF THE AIR – CALL GLAZER AND ASSOCIATES AT 855-4-CONDOCRAZE AND VISIT THE LAW FIRM’S WEBSITE AT CONDO-LAWS.COM. AGAIN, THAT’S CONDO-LAWS.COM.

 

ERIC: Before we start, when one of our sponsors does great work we want to let our listeners know about it.  So…if you’re looking for a paint or stucco company you may want to grab a pen and paper………I just want to let everyone know that at my home, one of the outside walls, right outside my front door, was literally crumbling.  All the stucco was falling off the house – and it looked bad – like a serious problem — certainly way above my head and required much more than a paint brush to fix.  So – what do I do — I called one of our sponsors of our May 18th Hard Rock event, – PD Painting— and Daniel, the owner jumped on it.  He said they would be over on Monday — on Monday morning at 9am my doorbell rings and it was them.  And two nice gentleman worked on my home for hours — chipped out huge sections of stucco ——– and fixed it great — these gentlemen were real craftsmen.  And the job came out fantastic.  So…..all I can say is that if your home or condo is having painting issues or stucco issues…….PD Painting are the guys to call.  And here is their contact information…..Their telephone number is 888-416-3204, again 888-416-3204 and their e-mail address is www.pdpaintinginc.com  again that’s www.pdpaintinginc.com Make sure to let them know you heard about them on the show…and make sure to ask for Daniel.

 

 

 

KAREN: LAST WEEK WE STARTED THE SHOW BY GIVING EVERYONE A RE-CAP OF OUR BIG EVENT AT THE HARD ROCK — AND THEN, WE SPOKE ABOUT THE ASSOCIATION’S RESPONSIBILITY TO PREPARE YEAR END FINANCIAL REPORTS FOR ALL OF THEIR OWNERS …..AND WE REMINDED OUR LISTENERS THAT JUST LIKE ANY OTHER BUSINESS……..CONDOS AND H.O.A.s HAVE TO FILE TAX RETURNS TOO.

 

ERIC: And sure enough… people that live in HOAs were complaining that their HOA doesn’t prepare year end financial reports —– and they asked what they can do about it and — the only thing we could say is to file a lawsuit.  But if that same complaint comes up in a condo — the DBPR can certainly help out that condo owner.

 

SCOTT:  Well…..next year is not an election year…….and no matter who gets in…..perhaps we’re going to get that legislation passed that lets the DBPR help out homeowner associations too.  For $2.00 per year….trust me it’s a lot cheaper than having to file even a single lawsuit.

 

 

KAREN: IT WAS INTERESTING TO LEARN THAT — THE LARGER THE ASSOCIATION’S BUDGET IS —– THE MORE DETAILED OF A FINANCIAL REPORT THE UNIT OWNRS ARE ENTITLED TO. NOT EVERY ASSOCIATION HAS TO DO THE SAME THING.

 

ERIC: As we said last week…..there’s a compilation, review and an audit.  And of course the audit is the most thorough of the reports.  Now suppose however that an association is only required to do an review or a compilation …..but a new Board comes in and says….wait a minute… we don’t trust the last Board….so we want to do a more detailed report……we want to do an audit.  Can the Board just do that without asking the unit owners?  Remember, it costs a lot more money to do an audit.

 

 

 

SCOTT: In a condo — the answer is easy.  The Board can simply agree to provide a more detailed year end report and spend more of the owners’ money.  In an HOA though – it’s a little more complicated —and 20% of the owners must petition the Board for a more detailed report.

 

KAREN: SUPPOSE THE BOARD IS SUPPOSED SPEND A LOT OF MONEY NOW ON AN AUDIT — BUT THE BOARD SIMPLY REFUSES TO SPEND THE MONEY — AND THEY WANT TO DO A CHEAPER YEAR END REPORT?  CAN THE BOARD DO THAT?

 

ERIC: No — the Board can’t give the owners less than what they’re entitled to.   But….in both a condo and an HOA the unit owners can vote in favor of a less expensive less detailed year-end financial report.  But… they can only vote to do this for 3 years in a row and in year 4, like it or not, you must do that more expensive report.  So again….the Board can give you more than you’re entitled to in a condo – without a vote of the owners.  But, in both a condo and HOA the Board can’t give the owners less than what they’re entitled to without a vote of the owners.

 

ERIC: So….that’s about everything you need to know about your year end reports.  And most importantly, if you haven’t done it by now — you are late.

 

ERIC: Lots to talk about on the show today….let’s take our first break of the hour and when we get back, we’ll tell you about a story we have wanted to talk about for a while, but keep running out of time, and it’s about a new law that requires you to vote “NO” regarding your amendments to your declaration…..and if you don’t…..guess what….you just voted “YES” — even if you didn’t vote at all.  And of course, we’ll take all of your other calls and e-mails on anything and everything else in the world of condos and HOAs — just give us a call here in the studio at 877-850-8585.  We’ll be back right after this.

 

 

SCOTT: OK.  About a decade ago, in a case called Woodside v. Jahren, The Florida Supreme Court ruled that as long as the requisite number of unit owners in the condominium agree to amend their declaration, the condominium association can now prevent the rental of units in the condominium.  However…..Justice Quince at the time thought that this was unfair to a unit owner who grew accustomed to renting out their unit.  She urged  The Florida Legislature to do something to protect what she thought was a valuable property right going forward.

 

 

 

ERIC: So, as a result, The Florida Legislature passed a statute that says, if the association passes an amendment that now limits the right to rent your unit, it does not apply to you unless you specifically vote in favor of the amendment, or it will only apply to your home when you sell it to the next owner.   And this has worked well. Again, the new rental restrictions would not apply to you unless you SPECIFICALLY voted in favor of the rental restrictions.  Well, NOW here comes Representative Moraitis, and he now files a bill that says — we’re going to change that.  From now on, when the community takes a vote to prevent rentals, the rental restrictions will apply to you, unless you specifically vote against the amendment, and even if you decide not to vote at all.

 

 

KAREN: BUT SUPPOSE YOU’RE OUT OF TOWN WHEN THE VOTE IS TAKEN — OR THE ASSOCIATION LOSES YOUR VOTE?

 

ERIC: Well, when you get back from your vacation, you may now be told, sorry, you missed the opportunity to vote against the amendment, so when your current lease with your tenant is up—– you can’t rent your unit any longer and has to get out.

 

SCOTT: and believe it or not—– associations are known to lose a document every now and then —- SO EVEN IF YOU DO VOTE AGAINST THE AMENDMENT —- BELIEVE ME — ONE DAY YOU MAY BE TOLD THAT YOU DIDN’T —— AND NOW YOU HAVE TO GET YOUR TENANT OUT BECAUSE THE RENTAL RESTRICTION APPLIES TO YOU.

 

 

 

ERIC: It just makes no sense.  There’s no justification for it.  In fact, if the association knows that it has the votes needed to amend the documents — maybe it’s in their interest to DELIBERTELY not mail a ballot to those people they believe won’t vote in favor of the amendment, and these people won’t even get the chance to vote against it —– and if you think it can’t happen, it will.  And Scott —- if our listeners don’t believe that documents sometimes disappear — let me remind them that many association governing documents speak about that certain document called “the original assignment of parking spaces list” from the developer. I don’t think I ever met an association that has it.  But here we have a perfect example of The Florida Legislature trying to fix something that isn’t broken while they let broken things stay broken.  Unreal.  This is dangerous….and mark my words….there will be future lawsuits whjere the association will try to stop someone from renting…and the person will either say they voted against the amendment and the association lost it…..or that they were simply never asked to vote on the amendment in the first place.

 

_______________________________________________________________________________

 

 

 

 

ERIC: Interesting article in the paper the other day about “boomerang buyers.”  So…..what is a boomerang buyer……..someone who basically lost their home one way or another during the foreclosure crisis…but has now boomeranged back and is eligible all over again to qualify and buy another home.

 

KAREN:  TYPICALLY….FANNIE AND FREDDIE REQUIRE SOMEONE WITH A PREVIOUS FORECLOSURE TO WAIT 7 YEARS BEFORE QUALIFYING FOR A NEW MORTGAGE ——— BUT YOU’RE ACTUALLY IN BETTER SHAPE IF YOU FILED A BANKRUPTCY BECAUSE THEN…. THE BORROWER ONLY HAS TO WAIT 4 YEARS BEFORE QUALIFYING ALL OVER AGAIN.

 

SCOTT: And someone who had to get rid of their home in a “short sale” has to wait only 2 years before getting another Fannie or Freddie Loan.  And anyone seeking an FHA loan can qualify after only 3 years after a foreclosure and short sale.

 

ERIC: There’s even another program now for owners who lost a home because of at least a 20% cut in pay—– that’s called FHA’s Back to Work Program.  Now some boomerang buyers have to put down payments of 20% —- but some of these programs offer the ability to put down as little as a and a half percent or 5 percent.  So……..just when the foreclosure crisis starts getting a little better……..we have all these programs out ……..again…… which are going to potentially allow people to purchase homes they can’t afford……….and in my mind I’m thinking………prices are going up again……..people are going to be taking out equity lines again……..and forget “boomerang buyers” —- it’s going to be “boomerang foreclosure crisis” all over again.

 

 

 

SCOTT: I have no problem saying that it would be great if everyone lived in a nice big house with a pool and a white picket fence ——— but You would like to think that the banks and/or the federal government now has new measures in place that would prevent people from buying homes they can’t afford — so that we don’t suffer through yet another real estate collapse.

 

KAREN: WE HAVE HAD THIS DISCUSSION A FEW TIMES ON THIS SHOW —— THERE ARE SOME PEOPLE OUT THERE WHO WERE SO BURNED IN THE REAL ESTATE CRASH OVER THE LAST FEW YEARS —– THAT THEY DON’T WANT TO BUY AGAIN —– EVEN IF PRESENTED WITH THE OPPORTUNITY — THEY WOULD RATHER RENT.

 

 

 

ERIC: All I’m saying is……..I’m looking at what’s going on……… all kinds of programs are out there again apparently encouraging people to buy homes…..prices are rising………the job market is stagnant….. and this may be a recipe for a boomerang crash.  History repeats itself….but let’s hope that in this case – I’m wrong.  But, I would like to know what our listeners think?  Should everyone be able to buy a home?  Do you think the real estate crash can happen all over again?  And….if you have been burned before…..are you even still interested in purchasing a home should you have the opportunity?  Give us a call here in the studio at 877-850-8585.

 

ERIC: We all know that in both a condo and an HOA board members serve without compensation.  Suppose however that a member of the Board owns a business and that business wants to enter into a contract with the association?  For example, let’s say the condominium needs a paint job.  The condo President is a general contractor and his company is qualified to do the work.  The President tells the other Board members that the association should hire his company to do the job because he will give them the best price, he will personally supervise the job, he will provide the standard warranties and his company is licensed, insured and will pull the proper permits.  Can the Board vote to hire the services of the company owned by the association President?  Scott…..what’s the answer?

 

 

 

 

 

 

 

SCOTT: The answer is “Yes” but only if certain legal hurdles are accomplished first.

 

Both Florida condominium and H.O.A. law would allow the association to enter into this agreement with the President’s company.  First however:

 

(a) The association shall comply with the requirements of s. 617.0832, meaning the contract and the relationship must be disclosed;

(b) The disclosure shall be entered into the written minutes of the meeting.

(c) Approval of the contract or other transaction shall require an affirmative vote of two-thirds of the directors present.

(d) At the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. Should the members cancel the contract, the association shall only be liable for the reasonable value of goods and services provided up to the time of cancellation and shall not be liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

 

ERIC: I know that some of you may think it’s simply a bad idea to hire the services of a company owned by one of the directors.  I can’t say I agree.  If the Board member’s company is reputable, the association is getting a good deal and the statute is complied with, perhaps it can work out well for the association.  I would love to know if any of you had positive or negative experiences in this regard.

 

KAREN: LET’S FIND OUT WHAT OUR BLOG READERS HAD TO SAY:

 

Laura said:

I had a similar situation at my HOA but it was for providing a web site, which is slightly different. We were paying a board member’s husband to develop and maintain a web site. We were paying between $280 and $300 per month and getting approximately 8 hits per month. The site was asthetically very nice, but the documents were cut off.  You could send an email request, but couldn’t discuss issues with other members or get information about your account or the associations accounts. When I offered to improve the site for free, I was denied. The board members were friends with this couple and they did not want them to lose their income, even for a better web site.

 

ERIC: that is a bad story of the Board members worrying about protecting their own first and potentially not acting in the best interests of the community.    Score one for not doing business with a director.

 

 

 

 

 

 

 

 

ERIC: Nila Ridings said:

We got a double whammy. The board president completely renovated the clubhouse; new kitchen, baths, wood flooring, window treatments, pool furniture, and fabricated a “decorating business” which she claimed did the work. This was never up for bid. Years after the newsletter had been published with paid advertisers we learned during a jury trial this same board member was also the “publisher” of the newsletter.   This “publishing company” was depositing their fees directly into the board president’s personal banking account. Even odder, the state has no record of this board member ever owning a decorating or publishing business! Never of these two situations were ever put out for bid…they just “conveniently” fell right into the hands of the board president while eight other board members went along with it. As far as I’m concerned I think if somebody wants to do business with the HOA, resign from the board and after 90 days you can submit your bid for approval.

 

ERIC: Now I know Nila is from Kansas —- and maybe those types of shenanigans goes on in Kansas — but this is Florida —- there are no scammers here.  Every association complies with the law here and every one of us are decent hard working, law abiding honest citizens.   And in Kansas it all started with The Wizard of Oz – you remember how he scammed Dorothy, The Tin Man, The Lion and The Scarecrow?

 

 

SCOTT: Ulises said:

 

I don’t see a reason why the association should pass up a good deal, as long as all is handled appropriately. It can be a WIN WIN for all involved…

 

 

 

ERIC: and that is the point I was trying to make.  It can be a win win.  And…if it’s handled above board….it’s certainly no greater risk than doing business with any other company.  However……I would not want the Board member signing checks to their own company.  That would bother me.  I still want the other Board members to ensure that the director’s company is only getting exactly what the association agreed to pay and not a penny more…and that the association isn’t suddenly paying increased amounts for unexpected things and cost overruns.  It is incumbent upon the other directors to make sure that the company owned by their fellow Board member is performing under the contract — and if they aren’t, to fire them or warn them appropriately.

 

ERIC: Let’s talk about a topic that drives some owners in community associations absolutely nuts — and that is whether or not their Board of Directors is allowed to borrow money on behalf of the association rather than pass a special assessment to pay the bills.

 

SCOTT:  Well as we know, Each year your condo association or HOA is required to pass an annual budget that in theory should pay all of the bills of the association.  But then a storm hits, or balconies start deteriorating and many Associations suddenly find themselves in desperate need to repair the common areas with no reserve funding to rely on.  But…..Rather than pass a huge special assessment and force everyone to instantly dig deep into their pockets, many associations turn to banks for a loan.

 

 

 

ERIC: And The question is…is there anything in the condominium or HOA statutes that would prohibit this.  And In simple terms, the answer is no.  In fact, borrowing money is expressly authorized in the Florida not-for-profit corporation statute.  So, unless there is a specific restriction in your governing documents that prohibits the Board from borrowing money, there really are no restrictions.

 

 

 

 

When borrowing money from a bank, the association will be required in the loan documents to pass a special assessment in an amount sufficient to fund the repayment of the loan, or promise to include the debt payments in the annual budget.  Several years ago, The Director of the Division of Florida Land Sales, Condominiums and Mobile Homes issued a Declaratory Statement that allows Condominium Associations to permit owners the option of paying the special assessment in full without interest or paying the assessment with interest over time.   The decision does not say the association must offer the option, only that it may offer the option.

 

KAREN: WE ASKED OUR BLOG READERS: Has your association borrowed money from a bank?  Was it a good idea, or did it turn out to be a long-term drain on the resources of the community?

 

 

 

DEBBIE GUEST SAYS: Our board can borrow money. It has in the past, and one of the owners/board members works for a bank and in the past has helped us. Our board was responsible enough to pay it back, and quickly. Our board also can special assess. Over the past 10 years, our board just adds up their budget — sometimes with extras for the board members to play with — and just charges an extra $100 assessment or whatever they need that year. They feel they can just work off the budget, not complying with our Declarations or any other laws governing assessments.

 

 

ERIC: Hbosch said:  It is best to ask the Condo owners if any of them want to lend to the Condo. Do a promissory note, pay it back over a year or so. They make more money than depositing in bank, and condo pays less than borrowing from bank.  What do you think Scott?

 

 

 

SCOTT: As long as this is disclosed at a Board meeting, the rate is good, the terms are fair, there is nothing that says the money must be borrowed from a bank.  If it’s a good deal for both sides….there’s nothing wrong or illegal about it.

 

SCOTT:  Michelle said:

Never borrow money. We are more in debt than we started. A $23,000 loan has grown to over 100,000 with no end in sight. The attorney that works with them ripped us off and then quit. We are a small 36 unit condo. If anyone would like to write a book about this condo in this day and age it would be a best seller

 

 

ERIC: anonymous said:

We bought a condo in a small building where  most OF THE units were in foreclosure. A few of us have fixed the place up to an acceptable level by cutting costs and doing work ourselves. Most of the building is now occupied, but mostly by renters. Because of this, it is almost impossible to get a loan from a local bank. A new roof will be needed soon. There are no reserves and maintenance fees are low and will likely go up and soon. The budget needs will likely be in the thousands and with no bank lending, is an assessment the only way out?  If no bank loan, will an equity line of credit be the answer to our dilemma?

 

 

A couple of problems in this condo — first, a bank may not lend if many of the units are renter occupied.  There’s no reserves, yet a new roof is needed.  And, there’s an admission that the maintenance is too low.  Well to start….how about passing a realistic budget that includes reserves?  This isn’t magic……if assessments are too low and the bank is probably not going to lend—– yes you will be looking at a huge special assessment in the not too distant future.

 

 

SCOTT:

ANONYMOUSE WRITES IN AND SAYS: If your reserve account has the money in it, why not just change your reserve fund from a straight line to a pooled reserve account?

 

 

 

 

 

ERIC: To remind our listeners…..reserve funds in a straight line account can only be used for the specific line item for which they are reserved.  For example, if you are reserving for the roof, you can’t use those funds for a plumbing job that suddenly comes up.  So… Anonymous is suggesting that if you have this money….you vote to switch to a pooled reserve account where you can use those reserve funds for any category of reserves.  And that may provide a temporary patch…..until you borrowed the roof funds and a year later you need a new roof.

 

 

KAREN:  Nila Ridings from Kansas said:

Our former property manager used dues to pay off old debt (500 THOUSAND DOLLARS) and then convinced the board to borrow $1,000,000 (one million) Of which he got 10%, $100,000 off the top for “managing” the million dollars. It was entirely spent in one year. The HOA could not afford the payments, so they paid interest only for 12 months. Another $60,000. Now, they are making payments of principle and interest. I’ve calculated IF it’s ever paid off the total cost with interest will run over $2M. I say IF because it’s a line of credit not a loan. They can pay it down and re-borrow. All without the vote or approval of any kind from the homeowners! What did they do with the money besides line the pockets of the property manager? THEY BOUGHT PAINT TO PAINT THE HOUSES! By the time the million dollars is paid off, if ever, it will be long past the time the next paint job is due!

 

 

 

ERIC: Who would think that stuff like this goes on in our nation’s heart-land — Kansas of all places.  First thing is…..why did that manager get $100.000.00 — Enquiring minds would certainly want to know more about that transaction.  But Nila raises a good point.  Lots of associations borrow money or open up a line of credit an swear only to use it in an emergency.  But just like everyone does with their credit cards ……they use that line of credit for everything and anything that comes up, instead of including those expenses in the budget.  You know….much like ho the government works.

 

 

 

 

 

 

 

 

 

E-mails

 

 

KAREN: HERE’S AN E-MAIL FROM MIKE IN WEST PALM BEACH  AND MIKE SAYS: OUR BOARD IS CALLING A SPECIAL MEETING TO DISCUSS PERSONNEL REPLACEMENT (OFFICE STAFF). CAN WE LIST THIS AS A CLOSED MEETING, DUE TO THE SENSITIVE NATURE OF WHAT IS TO BE DISCUSSED?

 

 

ERIC: Yes you can Mike.  A few years ago the statute was amended to allow for closed door meetings if personnel matters were to be discussed.  Certainly, replacement of office staff falls into that category.  You may ask why does the Legislature allow these meetings to be behind closed doors, and the answer is simply that if an employee is doing a bad job, the Board shouldn’t have to air their dirty laundry in front of the entire community.

 

 

ERIC: Question from the owner:
Our ballot has three slots and four candidates.

May members vote for only two and have a valid ballot?
Can the board invalidate the whole ballot if only two votes are cast?

 

 

 

 

ERIC: As I say all the time here on Condo Craze and HOAs —- we are truly blessed to have some wonderful sponsors of the show — who really make it possible for our listeners to hear us each week and attend our educational events.  And one of those wonderful sponsors is with us today in the studio — and it’s a new sponsor – CITY NATIONAL BANK.  And from City National Bank we have Greg Managram and Jeffrey Mariner.  Welcome gentlemen and thanks so much to City National Bank for becoming a sponsor of the show.

 

 

RESPONSE:

 

ERIC: Tell our listeners a little bit about City National Bank and specifically what each of you do there.  Where are your branches located?

 

 

RESPONSE:

 

 

ERIC: I have to tell you……there is definitely a perception out there that the banking industry is just not as personal as it once was.  People always knew their branch manager by first name — if they had a problem, they could come in and take care of it face to face.  Now, many people feel that if they have a problem, they have to call customer service and dial “1” for deposits, “2” for withdrawals, “3” for English — and associations are really looking for a more personal relationship with their bank.  How does City National Bank try to prevent customers from feeling lost?

 

 

RESPONSE:

 

 

 

ERIC:  Let’s talk about some of the very specific services that you can offer associations and we can start with checking accounts and maintaining reserve accounts.

 

 

RESPONSE:

 

 

 

ERIC: What about the ability for City National Bank to receive the monthly or quarterly assessments from the unit owners directly and keep track of who paid and who didn’t?

 

 

RESPONSE:

 

 

ERIC: Let’s talk about what so many associations really want to hear — how do they get their hands on a big fat loan from City National Bank?  Lots of associations are now facing 40 year recertifications that can be really expensive — many are faced with massive construction or balcony restoration projects — and many of these associations never bothered to fund a reserve account.  So —they’re broke.  They don’t want to pass a special assessment and a bank loan may be the only option.

 

 

RESPONSE:

 

 

 

 

 

 

ERIC: Over the last few years — and even today — the rates have never been lower — and borrowing money really is not a bad idea.  But I have to tell you…….some banks over the last few years are so afraid of getting burned again that they have made lending to associations almost impossible.  For example — I’ve heard that some banks won’t loan to an association if more than 5% of the units are delinquent.  I have to tell you that it today’s day and age — if an association only has a 5% delinquency rate — that’s outstanding.  So my question is…..while these loan programs may be out there – is it impossible to qualify for?

 

 

RESPONSE:

 

 

 

ERIC: I want to change course for a moment.  It seems like week in and week out on this show we unfortunately talk about associations that get stolen from by either their management company or by Board members directly.  From the bank’s perspective — what tips can you give our Boards out there and unit owners to make sure they don’t get stolen from or even become a victim of identity theft?

 

RESPONSE:

 

ERIC: If some Boards out there need some money or have questions with what to do with their existing money and they want to get in touch with City National Bank — how should they get in touch with you guys?  (Give phone numbers and web site addresses)

 

RESPONSE:

 

ERIC:  Gentlemen: I really want to thank each of you for being on the show today and I really want to thank City National Bank for being a sponsor of the show.

 

RESPONSE:

RECALL PITFALLS

As many of you already know, just because your next election is far off into the future, this doesn’t mean that in the interim, the current board members can’t be removed from office.  The “recall” process is a procedure that can be used in both condominiums and HOAs.  In simple terms, a majority of the owners must sign separate “ballots” in which they agree to “recall” or “retain” the current members of the Board.  It sounds simple enough, but in reality it is far more difficult than it sounds.  I have met with countless numbers of people over the years that worked for months getting the members of their communities to agree to recall some or all of the current board members, only to learn that they wasted their time because of the following common errors:

  1. They did not use the proper form: Use the form that the Department of Business and Professional Regulation provides for this purpose. It can be found at: http://www.myfloridalicense.com/dbpr////lsc/ARB/SampleWrittenRecallAgreementBallot7Lines2012.pdf  Do not try and re-invent the wheel and prepare your own “petition.”  They are almost always insufficient as they fail to give the voter the option to “retain” the board member and not just “recall” them.  They often times also fail to name a unit owner representative.
  2. They incorrectly marked one ballot that checked off the “recall” boxes for the board members —- photocopied them — and had the unit owners sign the photocopied ballots. This is a big error. Do not photocopy pre-marked ballots.  Everyone must actually vote his or her ballot.
  3. The ballots were voted by people who were not authorized to vote for the home or unit. Only the owner of the unit can execute the ballot, not the renter if the unit or home is being rented. If the property is owned by more than one person, your association may require a voting certificate to be on file with the association that must be signed by all owners, and which specifically identifies the owner who is allowed to cast the ballot for that property.  Make sure only that person authorized in the voting certificate is the one executing the recall ballot.  If you are not sure if a voting certificate is already on file with the association or what it may say, execute a new one and submit it with your recall ballot.
  4. The ballot failed to include replacement candidates. Look at the recall ballot. As you will see, if less than a majority of the Board members are being recalled, the ballot does not need to name replacement candidates who are willing to serve.  However, if a majority of the Board members are being recalled, replacement candidates must be named.
  5. The ballots were served on the Board too early or too late. The law now provides that a recall arbitration petition cannot be filed for the first sixty (60) days following the election and not within sixty (60) days of an upcoming election.

Assuming that all is now done properly, and a majority of the owners voted in favor of the recall, the ballots get served on the Board.  Within five (5) days of service, the Board must hold a meeting to determine whether or not to “certify” the recall.  If the Board and their attorney disqualify enough ballots and the result is that a majority of the owners did not vote to recall the Board members, the Board will vote not to certify the recall.  By law, the association now has five (5) days to file a petition for arbitration with the Department of Business and Professional Regulation.  The case will be assigned to an arbitrator and a final hearing will ultimately be held to determine if the Board members stay or go.

Again, the process in theory sounds simple……get a majority of the people to vote someone off the Board.  In practice it is often difficult, time consuming and frustrating.  This is one area of the law where hiring an attorney with experience in this area may prove beneficial.

WHEN YOUR BELONGINGS

AND YOUR DOCS GO OUT THE WINDOW

 

It’s officially hurricane season here in Florida.  Pretty soon, the media will be trying to scare the bejesus out of us the minute  a single cloud rolls off of Africa’s west coast.  We all know how lucky we’ve been for close to a decade now, but one day our luck will again run out.  Imagine for a moment that your condo is extensively damaged and following the laws and rules are much more difficult that ordinary.  Florida law contemplates these scenarios and grants Boards some extraordinary powers when disaster strikes.  Here is the statute:

 

The board of administration, in response to damage caused by an event for which a state of emergency is declared pursuant to s. 252.36 in the locale in which the condominium is located, may, but is not required to, exercise the following powers:

(a) Conduct board meetings and membership meetings with notice given as is practicable. Such notice may be given in any practicable manner, including publication, radio, United States mail, the Internet, public service announcements, and conspicuous posting on the condominium property or any other means the board deems reasonable under the circumstances. Notice of board decisions may be communicated as provided in this paragraph.

(b) Cancel and reschedule any association meeting.

(c) Name as assistant officers persons who are not directors, which assistant officers shall have the same authority as the executive officers to whom they are assistants during the state of emergency to accommodate the incapacity or unavailability of any officer of the association.

(d) Relocate the association’s principal office or designate alternative principal offices.

(e) Enter into agreements with local counties and municipalities to assist counties and municipalities with debris removal.

(f) Implement a disaster plan before or immediately following the event for which a state of emergency is declared which may include, but is not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.

(g) Based upon advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine any portion of the condominium property unavailable for entry or occupancy by unit owners, family members, tenants, guests, agents, or invitees to protect the health, safety, or welfare of such persons.

(h) Require the evacuation of the condominium property in the event of a mandatory evacuation order in the locale in which the condominium is located. Should any unit owner or other occupant of a condominium fail or refuse to evacuate the condominium property where the board has required evacuation, the association shall be immune from liability or injury to persons or property arising from such failure or refusal.

(i) Based upon advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine whether the condominium property can be safely inhabited or occupied. However, such determination is not conclusive as to any determination of habitability pursuant to the declaration.

(j) Mitigate further damage, including taking action to contract for the removal of debris and to prevent or mitigate the spread of fungus, including, but not limited to, mold or mildew, by removing and disposing of wet drywall, insulation, carpet, cabinetry, or other fixtures on or within the condominium property, even if the unit owner is obligated by the declaration or law to insure or replace those fixtures and to remove personal property from a unit.

(k) Contract, on behalf of any unit owner or owners, for items or services for which the owners are otherwise individually responsible, but which are necessary to prevent further damage to the condominium property. In such event, the unit owner or owners on whose behalf the board has contracted are responsible for reimbursing the association for the actual costs of the items or services, and the association may use its lien authority provided by s. 718.116 to enforce collection of the charges. Without limitation, such items or services may include the drying of units, the boarding of broken windows or doors, and the replacement of damaged air conditioners or air handlers to provide climate control in the units or other portions of the property.

(l) Regardless of any provision to the contrary and even if such authority does not specifically appear in the declaration of condominium, articles, or bylaws of the association, levy special assessments without a vote of the owners.

(m) Without unit owners’ approval, borrow money and pledge association assets as collateral to fund emergency repairs and carry out the duties of the association when operating funds are insufficient. This paragraph does not limit the general authority of the association to borrow money, subject to such restrictions as are contained in the declaration of condominium, articles, or bylaws of the association.

(2) The special powers authorized under subsection (1) shall be limited to that time reasonably necessary to protect the health, safety, and welfare of the association and the unit owners and the unit owners’ family members, tenants, guests, agents, or invitees and shall be reasonably necessary to mitigate further damage and make emergency repairs.

 

So what do you think?  Should the rules be relaxed after a disaster?

CAN ONE RENEGADE BOARD MEMBER BIND THE ENTIRE BOARD?

 

Many of you have seen outgoing board members sign long term contracts with a vendor just before getting off the Board.  Often times, these contracts were executed by a single board member without any vote of the board whatsoever.  The question is……is the contract still an obligation of the association even though it was signed and approved by only a single member of the board.  Can the association now get out of this contract without penalty?  The answer is MAYBE.

Under Florida law, if an officer of a corporation has the apparent authority to enter into a contract or an agreement, such contract may be binding on the corporation even though the contract was not made by authority of any resolution of the board of directors.

So what is apparent authority?  Basically, it’s a good faith belief by the other party that the person signing the contract on behalf of the corporation had the authority to do so, and as a result, the other party reasonably relied upon that signature and changed their position.

 

For example, in the arbitration case of Miami Beach Club Motel Condominium Association, Inc. v. Escar Case No. 93-0162, a unit owner made  request to the Secretary of the association for permission to install an air conditioning unit after she “notified all Board members.”  The secretary never received the vote of the other board members but gave permission to install the air conditioner anyway.  Of course, a majority of the board then wanted the air conditioner unit removed.  The arbitrator held that:

In order to determine whether the approval form signed by the Secretary could be imputed to the Board, it must be determined whether, as to the Respondents, the Secretary had the apparent authority to sign the approval form. In other words, was it reasonable for the Respondents to believe that the Secretary had obtained the approval of the board prior to her signing the approval form and was it reasonable for them to have relied on it. The letter, which was sent to the Board of Directors, notified the Board that the Respondents wished to install an air conditioner and directed the Secretary to either grant or deny approval after notifying all board members. The language of the letter indicates that the Respondents were aware that the Secretary, acting alone, could not grant permission for the air conditioner, but that the decision would have to be made by a majority of the board of directors. Respondent Domingo Escar was a member of the board at the time. However, he testified that he did not attend the board meeting at which the issue of the air conditioner would have been brought up. [FN5] Therefore, when he received the approval form, he assumed that the Secretary had obtained the approval of the Board prior to signing the approval form.  Respondents’ reliance on the Secretary’s apparent authority was reasonable in light of the Association’s method of approving alterations at the time. For instance, Mr. San Jose testified that he had changed the number of windows in his unit from three to two and had moved the air conditioner from below the windows to higher up and next to the windows. That alteration was accomplished around the same time as the time that Mr. Escar installed his air conditioner. Mr. San Jose further testified that he did not obtain prior approval from the Board because at the time, the unit owners believed that if they were making a “small” alteration, they did not have to obtain approval or they would ask a board member whether it would be acceptable. Therefore, even if Respondents were aware that no board meeting was held in order to discuss the approval of the air conditioner, it was still reasonable for them to rely on the representation of the Secretary that the air conditioner had been approved because of the Board’s method of approval of alterations.

However, in Lensa Corp. v. Poinciana Gardens Association, Inc., 765 So.2d 296 (4th DCA, 2000) the court held that a President of the association did not have the apparent authority to execute a contract that would have sold association land to a developer.  The court specifically said:

Three elements are needed to establish an apparent agency: (1) a representation by the purported principal; (2) reliance on that representation by a third party; and (3) a change in position by the third party in reliance upon such representation.   The reliance of a third party on the apparent authority of a principal’s agent must be reasonable and rest in the actions of or appearances created by the principal, and “not by agents who often ingeniously create an appearance of authority by their own acts.”. As to acts in the ordinary course of business, courts have consistently recognized that a presumption of authority exists in the case of acts made or done by presidents.

 

This sale was not made in the course of the corporation’s ordinary business and there is no basis for concluding that the sale of all or substantially all of Association’s assets could be presumed to be within the President’s authority. For an agent to act with apparent authority requires, as previously noted, that the principal create the appearance of the agent’s apparent authority. Here, reliance on the signature of the president and on the minutes were insufficient to create apparent authority. The statute mandates that only the board has the power to authorize a sale. Here, the board did not make any representations or take any actions signifying either its consent or the president’s authority to act.

 

Perhaps a sophisticated developer is also held to a higher standard than a typical unit owner.  In any event, if you want to avoid litigating disputes like these……no contract should ever be signed without a vote of a majority of a quorum of the Board.

 

APATHY CAN BE MORE DANGEROUS TO A COMMUNITY THAN YOU THINK

We always talk about apathy in community associations.  Nobody wants to run for the Board.  Nobody wants to serve on a committee.  Nobody wants to even vote in the annual election. Usually, apathy is more prevalent in communities where the populace believes all is OK.  If the place generally looks good, the assessments are stable and the cable never goes out, owners believe there is simply no need to get involved with the headache of running the community by serving on the board.  In fact, they are happy that there are others who are willing to step up and take the responsibility.

Here’s the problem with that way of thinking.  Most community associations who have been stolen from were thought by their owners to be operating smoothly and efficiently for years on end.  Then, all of a sudden, massive theft is uncovered by someone, and it happened because of apathy.  It happened because nobody was watching.  Nobody cared to actually take a look at a bank statement.  Nobody bothered to ask to see a copy of the audit.  Nobody bothered to ask how the assessments are being spent.

I recently became involved in a high profile case here in South Florida.  The bottom line is that decisions of a prior board put the community in harm’s way.  As a result, the entire community was slapped with a massive special assessment to pay a legal settlement.  The new Board allowed every attendee to speak at the special assessment meeting.  Many owners were rightfully upset that they had to now pay for the wrongful actions of a few prior Board members.  More than one swore never to pay the assessment.  The interesting part of the meeting came when one of the owners stood up and said that it was too easy to blame the prior Board for the financial mess everyone is now in.  Instead, she thought the blame lied elsewhere.  She thought the blame lied with all of the people in the room who were now at a board meeting for the first time in years.  She looked everyone in the face and said that if everyone routinely showed up to meetings like they did that night, the prior Board would never have been able to take the actions they did.  A part of me believes she is right.

Apathy can be very costly, even when it appears all is well.  Has apathy harmed your community?

 

RULES, RULES, RULES

 

Last week we blogged about how apathy can harm a community in many different ways.  Everyone’s comments were great.  This week I want to take the conversation in the opposite direction.  Is it a good idea for the Board or community to be zealous or perhaps overly zealous in enforcing the governing documents and/or creating rules and regulations that many say sterilize a community?  Are there rules and regulations that are simply “on the books” but should not be enforced?  Does strict enforcement of the rules lead to an increase in value of the homes or condos, as claimed by every condo or HOA President ever known for being a disciplinarian in their community?  Or…..is that just a line they throw out to justify their crack down in the community?

What are some of the rules that you think are not justified, silly, harmful or just not worth the paper they’re written on?  For example…..everyone must park their car with the front end facing the same way.  Some people like to back in.  Does it matter?  Should you be towed for backing in?  That’s just one example.  What about leaving your garbage cans out over night?  Remember the HOA fiasco last year when the Board stole everyone’s garbage cans?  Was that the right thing to do?  What is reasonable and what isn’t?

Nobody would argue that there needs to be some rules and regulations in place in order to keep the property looking good.  However, are some rules simply stupid and not worth the fight?

 

RETURNING HOME

 

There was lots of news last week about Lebron James coming back home to Cleveland.  Well….Lebron isn’t the only person coming back home.  It’s happening in alarming numbers.  College graduates, graduate school graduates and even some with professional licenses and degrees are returning home to their parents in record numbers.  They are quickly learning that there aren’t enough jobs out there, their student loans are now due and life is simply very expensive.  So…..for the time being….they’re coming back home too.

What does this mean for our Florida community associations?  In 55 and over communities, the association is allowed to prevent children from living in the community.  However, once you turn 18, you are no longer considered a child.  So…not even 55 and over communities can prevent families from reuniting.

The housing crisis has also caused many extended families to live together.  Brothers, sisters and cousins are living together as well.  As the population of our country ages, lots of kids are now living with Grandma and Grandpa because long term care or nursing homes are unaffordable as well.

Other than perhaps not having enough parking spaces, it’s difficult to see how this trend negatively effects community associations, unless the youngsters start having late night loud parties with loud music.  It’s true that this might indicate that perhaps for the first time in our nation’s history, children are not expected to do as well as their parents.  But in terms of association life, it may be interesting to simultaneously have mah jong games, senior citizen clubs  and tot lots for the nursery school kids to play.

Have any of you seen the trend or been part of the trend in coming home?  Mind sharing some stories?  What does it say about the direction our country is heading?

SERVICE ANIMALS AND EMOTIONAL SUPPORT ANIMALS

It seems like the biggest issue today for community associations is whether or not “no-pet” communities have the authority to question individuals that request exemptions, so they can reside with animals that are medically necessary. Before we get into the authority of associations, it’s important that you understand the definitions of some of the terms, which casually get thrown around by people, regarding these animals, and their distinctions.

First off, for most community associations in Florida, the primary law that deals with this issue is the Fair Housing Act, and its related regulations (there is a Florida FHA too, but we’re going to just deal with the federal law here). The FHA is, among other things, the law that protects individuals from discrimination in housing settings. In regards to individuals with disabilities that live in community associations, the FHA ensures that disabled people are able to live their homes as comfortably as their neighbors, and derive the same use and enjoyment from their communities as everyone else.

For some disabled individuals, “assistance animals” may be medically necessary for them to use and enjoy their homes; thus, the FHA provides protection. The label “assistance animal” is a pretty vague term and it’s not defined in the FHA, but it’s generally recognized to encompass all of the other terms we hear in the news these days (e.g., emotional support animal, therapy dog, service animal). One thing that isn’t vague or uncertain in any way is that legitimate assistance animals are not “pets,” and should not be treated as pets by associations.

The term service animal (or service dog) has been around for a while, and most people think they understand what it means. Just as a refresher for everyone, and put as simply as possible, a service animal is a dog (or in some cases a small horse) that has received some sort of training to provide a specific service or benefit to an individual with a disability. The FHA does not define this term either, but the Americans with Disabilities Act provides the law here. While the ADA does not govern a large portion of the communities in Florida, make no mistake about it, the FHA protects individuals that require service animals too. The most familiar example of service animals are guide dogs for the blind. But, as the definition implies, the term service animal can include various other dogs (yes, basically only dogs can be considered service animals) that have been trained. For instance I’ve come across dogs trained to open doors and even detect seizures. These dogs have received extensive training, and when I’ve seen them in public always appear to be well-behaved companions that provide an essential service to our neighbors. For our purposes though, the most important thing to remember is that if a dog has not been trained to provide a “service” it’s not a service animal. Most associations with no-pet communities that I represent, do not object when service animals are brought into their communities. From what I’ve seen, when a request is made to an association, regarding a service animal, the need for it is usually pretty clear. It’s been my experience that the abuses causing many of problems for people, who legitimately need assistance animals, are not due to fraudulent service animals attempting to be passed off as the real thing.

 

Next let’s talk about emotional support animals. These furry guys are not required to be trained, in stark contrast to service animals. Fundamentally, under the FHA, an individual must only demonstrate that her animal (not necessarily a dog) is required to ameliorate a symptom of her disability, in order to be exempted from any no-pet rules. Also, unlike service animals, emotional support animals, and the laws and regulations that protect their use, are currently being abused. In order to prove the need for an emotional support animal, all a resident in a no-pet community is required, under the law, to show her association is, essentially, a note from a healthcare provider that states that her patient requires her animal. While I’ve seen legitimate requests for emotional support animals, as the need for these assistance animals is real, I’ve also seen far too many fraudulent, laughable requests that make a mockery of the FHA. For every legitimate letter from a treating physician that prescribes an emotional support animal, demonstrating a clear need for resident-patient, I’ve probably read a dozen letters from Botox injectors, chiropractors and pay-for-prescription internet websites trying to scam an association with a fake emotional support animal. Under the current law no training is necessary for an emotional support animal, but there are reputable nonprofits out there that do train dogs to assist individuals that really require assistance for an emotional disability. It’s the lax regulation of emotional support animals that has created the negative stigma for individuals, who really need them, and individuals with service dogs, who are sometimes grouped in with emotional support animals. This is the biggest problem for associations, and while there may not be a great solution right now, there are ways of dealing with it.

In terms of an association requesting medical records from a resident, if the individual’s disability is apparent, and the need for the animal is obvious (i.e., guide dogs for the blind), an association cannot ask for such records. However, especially in terms of requests to keep an animal by a person with emotional disabilities, a disability may not be readily apparent and therefore an association can ask for medical documentation.

Many of you recently read all about the case in Broward County, where a woman who suffered from multiple sclerosis sued her condominium for refusing to make an accommodation to its pet rules for her service animal. The judge in that case wrote a scathing opinion in the disabled individual’s favor. However, read what else the judge said about the issue regarding emotional support animals:

 

[t]he court realizes that there is some reason to be skeptical of requests to keep a dog as an accommodation for a disability in certain cases, particularly where the dog assists a disabled person by rendering emotional support . . . . there is a growing problem of people using fake service dogs . . . .

 

 

 

Along these lines, in one particular case that I worked on, two different doctors testified at deposition that they wrote a medical note for a unit owner simply because they were asked to do so. The idea for a pet was not there medical diagnosis, but simply the suggestion of their patient. These doctors did not follow up to see if the pet was relieving the disability and had no idea if it was working. They simply did a favor for a patient, which happens far more often than should seem possible. These doctors, or any healthcare professional for that matter, should know that these favors to their patients costs associations thousands of dollars in legal fees and court costs, when they decide to fight what are clearly bogus disability claims.

 

So where are we at? Well, it should be obvious that true service animal should never be turned away from a condominium if that animal was trained and assists a disabled person in using his or her condominium; that’s a no brainer. The more difficult issue is dealing with emotional support animals, when the resident has no outward physical disabilities, and even works all day while the animal remains at home. Until more of those types of cases are decided by our courts, and until healthcare professionals experience some consequences for, essentially, writing fake prescriptions, rest assured this issue will be around for a while.

 

While I don’t like saying this (or maybe I do), associations should consult with their attorneys before making any decision regarding requests for accommodations to no-pet rules. Each request needs to be dealt with on a case-by-case basis, because the last thing an association should do is summarily deny a legitimate request, just because there are a lot of frauds currently going around.

 

ACCESS TO E-MAILS

 

Listeners of our Condo Craze and HOAs radio show know that we just discussed a new law for condominium associations that lets directors communicate, but not vote, by e-mail.

On its face, I don’t find it objectionable that directors can communicate by e-mail.  Of course board members need to exchange ideas, thoughts and concerns and it is often times not practical to do so only at a properly noticed Board meeting.

The problem I have is that at present, no matter how many times the Board members communicate to each other from their computers about the operation of the association, these e-mails are not “official records” of the association and therefore cannot be seen by any of the other unit owners.  Here’s why….

In Humphrey v. Carriage Park Condominium Association, the arbitrator ruled as follows in regards to a unit owner’s request to see e-mails amongst and between the board members:

 

The e-mails requested in this case are those existing, if at all, on the personal computers of the individual directors.  These are not official records of the condominium association.  The property of an individual director does not become the property of the association because of his office on the board.

 

Just as a statement by an individual director cannot bind the board, an e-mail from or to a director, is not a record of the association.  Even if directors communicate amongst themselves by e-mail strings or chains, about the operation of the association, the status of the electronic communication on their personal computer would not change.

 

Similarly, an e-mail to an individual director on to all directors as a group, addressed only to their personal computers, is not written communication to the association.  This must be so because there is no obligation for a director to turn on the personal computer with any regularity, or to open and read e-mails before deleting them.

This conclusion may be different if the association owns a computer on which management conducts business including e-mails (analogous to government public records); or if e-mails are printed up and passed around for discussion at a board meeting.

 

I disagree with the opinion.  Why should it matter on what computer the e-mail was written on?  It’s either relevant to the operation of the association as required by statute, or it isn’t.  According to this opinion, board members can discuss crucial terms of a contract including price, make modifications to that contract, and despite the fact that these e-mail communications clearly effect the operation of the association, unit owners are not allowed to see them, simply because of where the person was drafting the e-mail at the time it was sent.  If it was sent from their home, it’s off limits. But, if it was sent from a desk top computer in the office, unit owners can see it.  Makes no sense.

I don’t want the personal computers of directors searched.  That is not what I am suggesting.  However, if board members are going to make certain decisions by e-mail, and discuss the operation of the association by e-mail, they should be aware of the fact that these communications are not subject to some sort of privilege and can be seen by the other owners.  What possible expectation of privacy can a director say they were entitled to when writing to another director about an association matter?

I’m in favor of making these communications available for the other owners to see.  Am I off base or is anyone else out there with me?

ARE THINGS REALLY THAT BAD?

 

You look around the world and see that bombs are falling in neighborhoods throughout the Middle East, violent demonstrations are happening in European countries and tornadoes and floods seems to be destroying towns across the United States.  Those are difficult problems to live with day in and day out.

So here we are in Florida.  Many of you reading this column live in a beautiful home or condominium.  Many of you wake up to views on the ocean or a lake.  The sun always seems to be shining.  There’s no threat of your house being leveled by an explosive today.  There won’t be any violent demonstrations in your town either.  So…..this begs the question……should we stop the complaining and be thankful for what we got?

Week after week, not only here, but in blogs, newspaper columns and TV shows across the country there are endless debates about just how bad it is to live in a community association.  Words like “concentration camps” often work their way into descriptions of these communities.  But…..when you look around at what’s going on all over the planet, are things really that bad in your Florida condominium or homeowner’s association?  Do we complain too much and need to be more content with what we have?

Remember that feeling when you first moved into your condo or HOA?  Admit it.  Most of you thought you just bought your very own piece of heaven.  You were so proud.  Doesn’ anybody still have that feeling about their home, their community, their neighbors?

IT’S ALL IN THE PLANNING — OR LACK THEREOF

Every year, I am lucky enough to take my family on a trip to another city, whether it be here in the United States or even in a foreign country.  It seems that every city I go to was planned far better than South Florida.  On the contrary, it seems as if all of South Florida was built with no plan whatsoever and solely with the concept of pleasing as many residential developers as possible.

Every city, except for South Florida seems to have a main downtown area filled with parks, restaurants, museums, theaters and night life.  Even the stadiums for the local sports teams are located there.  There is no question that the heart and soul of the city is located in the downtown area.

For example, New Yorkers have Manhattan.  The Gas Lamp area of San Diego is sensational.  Atlanta’s downtown area is great with its museums and cultural and educational centers.  Chicago has the downtown area and the Navy Pier.  Philadelphia has a wonderful historic district that is simply a source of pride for the community.  Do I even need to mention Washington DC, Boston, San Francisco and the endless amount of culture there?

It seems as if much thought went into the designing of each of these cities.  Their downtown areas were created to be the source and center of attention and to leave no doubt.  So I ask each you….where is the heart and soul of South Florida?  Is it South Beach?  Give me a break.  A few restaurants (all with no view of the water) does not make a cultural city.  Is it the Miami downtown area?  Not if you expect something more than going to a Miami Heat game.  There isn’t even a good restaurant in the area.  Is it Fort Lauderdale almost 30 miles away?  One block of some shops and bars on Las Olas also presents little in the way of culture.

Ask yourself…..if a friend from another city was coming to visit South Florida for five days, other than the beach, what places would you tell them are the “must sees.”  I’m dying to know your answers.  It really is difficult to think of almost anything.

Here’s what we do have though….an endless view of condos, condos and more condos.  Along with the condos, we now have tremendous traffic congestion.   To make matters worse, there is no doubt in my mind that we have the absolute worst public transportation system of any city in the country.  If your tourist friend doesn’t rent a car, they see nothing and go nowhere.  How can you call yourself a major city without sufficient public transportation?

Instead of building a city center where all of our stadiums are located, we have them spread out from Sunrise to Miami Gardens to downtown Miami and Hialeah.  Other than those stadiums, there is nothing to attract visitors to those cities, unless we say Sawgrass Mills shopping in Sunrise is the type of culture we are offering.   Over the years,  we became all about cramming as many people as we can into as many buildings as we can.  We don’t have a single world class museum.  Even more embarrassing is the fact that it is impossible to believe that the most tropical city in the entire country does not even have an Aquarium for visitors to see!  Toronto just completed a world class aquarium and 7 months a year it’s probably below freezing there.  They put tropical fish on display, we can’t.

We have other priorities here it seems.  Build more bars for people to drink in.  Build more casinos for people to gamble in and build more condos to cram more people in.  So tell me……other than the weather……… what’s the draw to South Florida?

 

 

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