Question: We have a small condominium association (20 units), and our documents require three directors. There is basically no one who wants to be on the board. What happens under Florida law if we have no board? D.K. (via e-mail)
Answer: Nothing good.
Although mainstream media often portrays condominium associations as a menagerie of ego maniacs clawing over each other to get on the board and have a little power, the reality is quite the opposite. Your situation is not uncommon, and even many larger associations have a hard time getting people to run for the board.
There are many reasons for this problem, including liability concerns, a disdain for dealing with other peoples’ problems, and the challenges of physical absence in communities with high concentrations of investor owners or short-term seasonal residents.
Notwithstanding all of the above, your association must maintain an active corporate status, which requires a board. If you do not, and there is some problem (for example, a personal injury on the property), it is likely that every unit owner would be sued. Further, without an association, no one would have purchased insurance. The Florida Condominium Act does allow any unit owner to petition to have a “receiver” operate the condominium when a board cannot be seated. While this is certainly an option, it is a very expensive one.
My advice is to get a full-service professional management company and entrust most of the day-to-day operation of the association to them. While the board members cannot delegate their fiduciary duty, serving on the board of an association when there is proactive management should not be overly burdensome.
Question: Our association wants to charge a late fee for delinquent assessments. Is this legal? M.C. (via e-mail)
Answer: All of Florida’s housing laws (Chapter 718 for condominium associations, Chapter 719 for cooperative associations, and Chapter 720 for homeowners’ associations) provide that the authority to charge a late fee must be contained in the declaration, bylaws, or certain other governing documents. The board cannot impose a late fee without the underlying authority in the governing documents.
A late fee may not exceed the greater of $25.00, or five percent of the amount of each installment that is paid past the due date.
Question: I am a new board member in a small condominium association. We have a management company. Am I required to take an educational course in order to be a director? M.P. (via e-mail)
Answer: Section 718.112(2)(d)4.b of the Florida Condominium Act provides that 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 condominium documents 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 director may submit a certificate of having satisfactorily completed an educational course from a provider who has been approved by the State. Those so-called “board certification” courses are typically put on by law firms or management companies, usually free of charge. You can find a list of approved providers on the website of the DBPR at http://www.myfloridalicense.com/dbpr/lsc/condominiums/CondoEducation.html
Question: Our neighborhood does not have a homeowners’ association, but we do have a voluntary neighborhood civic association. There is a dispute as to whether renters should be allowed to be members of the association, and serve on the board. What do you think? J.B. (via e-mail)
Answer: I assume your civic association is set up as a not-for-profit corporation. As such, it is governed by Chapter 617 of the Florida Statutes, known as the Florida Not-For-Profit Corporation Act. Section 617.0601(7) of that statute states that where the articles of incorporation expressly limit membership to property owners within specific measurable geographic boundaries, no property owner may be denied membership. However, the law does not extend a similar protection to renters. Therefore, I believe the articles of incorporation could prohibit non-owners, including renters from serving on the board.
As far as my personal opinion, I see no good reason why a renter should be precluded from participation in a voluntary civic association, including board service, if they are willing to donate their time and talent.
Question: Does the board need a vote of the owners to install a pool heater? L.A. (via e-mail)
Answer: If your community is a condominium, then the addition of a new pool heater (assuming the pool is currently unheated) would likely be considered a “material alteration or substantial addition” to the common elements. Section 718.113(2) of the Florida Condominium Act states that there shall be no material alterations or substantial additions to the common elements except in the manner provided in the declaration of condominium. If the declaration of condominium is silent, then the law requires approval of seventy-five percent of all voting interests (there is typically one voting interest per unit).
In the homeowners’ association context, the law is a bit murkier. There is no “material alteration” clause in Chapter 720 of the Florida Statutes, commonly known as the Florida Homeowners’ Association Act. Rather, most attorneys seem to agree that an HOA board’s authority to improve common property is subject to the authority granted in the governing documents. If the documents allow the board to “improve” common property, then such language might be sufficient.
In either case, given the consequences of a potential legal challenge, your board should consult with the association’s legal counsel. This should be a fairly straightforward question for them to answer.
Question: Our homeowners’ association wants to ban smoking at the outdoor pool. Our governing documents do not address smoking, but they do give the board rulemaking authority regarding the use of the common areas. Does the board have the authority to institute a rule banning smoking at the outdoor pool given that the Florida Clean Indoor Air Act only prohibits smoking in “enclosed indoor workplaces”? J.G. (via e-mail)
Answer: As I have noted in earlier columns, and as you correctly note, the Florida Clean Indoor Air Act does not apply to outdoor common areas, such as parking lots or open swimming pool areas. However, it is my opinion that if the board of directors is granted rulemaking authority over the common areas, which you have indicated is the case with your Association, the board can adopt a rule banning smoking in outdoor common areas as well.
Question: I own a home in a homeowners’ association with a five member board. Currently there is a vacancy on the board and the board is in the process of appointing someone to fill that vacancy. The board is currently made up of four women and we understand that they intend to appoint a fifth woman to the board. Isn’t this discrimination if they will not appoint a male member to the board who has volunteered and offered to serve on the board? D.V. (via e-mail)
Answer: Probably not. For a homeowners’ association, the requirements for board service are contained in Section 720.306(9)(a), which states that “all members of the association are eligible to serve on the board of directors …” Further, any member is entitled to nominate themselves at the meeting where the election is held or in advance if the election process allows for nominations in advance of the meeting. The statute goes on to provide that an individual who is more than ninety days delinquent in the payment of any monetary obligation to the association is not eligible for board membership nor is any person who has been convicted of any felony and who has not had their civil rights restored for at least five years as of the date at which they seek election to the board. Otherwise there are no other statutory requirements concerning the composition of the board. Accordingly, it would likely not be discriminatory for the current members of the board to refuse to nominate any specific person to a vacancy even if doing so would constitute a board made up of entirely men or women or otherwise.
With regard to a condominium association, Section 718.112(d), provides that any unit owner in a condominium is eligible to serve on the board, unless they have been determined to be ineligible to serve, either due to delinquency in the payment of any monetary obligation to the association, removal or suspension by the Division pursuant to the Condominium Act, or they have been convicted of a felony and have not had their civil rights restored for at least five years.
Otherwise, there is no provisions in either the Homeowners’ Association Act or the Condominium Act, that mandate any specific composition of the board of directors.
Question: I purchased a property at a tax deed sale in July 2013. The notifications were sent out to all concerned parties by the county. When I informed the association that I wanted to set up an account to start paying the new dues, they sent me a collection notice for all the past due assessments. It is my understanding that previous non-governmental liens do not survive a tax deed sale. R.L. (via e-mail)
Answer: On September 20, 2013, the District Court of Appeal for the Second District (which includes Lee and Collier Counties) provided the answer in a case entitled Cricket Properties, LLC v. Nassau Pointe at Heritage Isles Homeowners Ass’n, Inc. The appellate court ruled that any lien for unpaid assessments by a community association does not survive the issuance of a tax deed. The court held that Florida Statute Section 197.573, while providing that covenants and restrictions running with the land survive a tax deed sale, any lien created by those covenants to secure unpaid assessments does not.
The court also stated that the language of Section 197.573 overrode language in Section 720.3085 of the Florida Homeowners’ Association Act that provides that a purchaser of property in a HOA is jointly and severally liable for all past due assessments with the previous owner because a tax sale is not a transfer of title, but actually creates a new deed in the name of the purchaser. In short, a tax deed sale wipes out all liens and encumbrances, including liens securing unpaid assessments, but does not otherwise exempt a property from the community’s governing documents, including the duty to pay assessments after taking title.
Question: We own a unit in a small condominium association. There are 20 units and we have a board with three directors. However, there is a concern that at the next annual meeting the three directors who are currently serving will not seek re-election and no one else wants to serve on the board. What happens when no one wants to serve on the board of directors of a condominium association? D.K. (via e-mail)
Answer: Yours is not a unique problem. We see many associations have member apathy in voting in elections as well as a lack of interest in running for the board. As such, it is not uncommon to see individuals serve on the board of their condominium association for a number of years because no one else wishes to run. Your proposed scenario is rather extreme, in that you are asserting that there may come a point when no one wishes to serve on the board.
That being said, the Florida Condominium Act does address what happens under the circumstance when a condominium association cannot constitute a board of directors. Specifically, Section 718.1124, Florida Statutes discusses what happens when an association fails to fill vacant seats on the board of directors with sufficient individuals to constitute a quorum of the board. If an association fails to seat enough board members to constitute a quorum, any unit owner is entitled to petition the circuit court in the county where the condominium exists for the appointment of a receiver to manage the affairs of the association. Once the petition for the appointment of a receiver is filed, if the association does not fill the vacancies on the board within thirty days of filing the petition, the unit owner may proceed with a hearing on the petition in order for the court to appoint a receiver. Once a receiver is appointed, he or she has the authority to manage the affairs of the association. Further, once appointed, the association is responsible for paying the salary of the receiver and all related court costs and attorney’s fees. As such, having a receiver appointed can become very expensive for the association.
Given the seriousness of having the court appoint a receiver to oversee the affairs of the association, it is rather unusual for the situation to get that bad. However, your concerns are well founded, in that many associations have persistent trouble in obtaining volunteers who are willing to serve on their boards. The best solution is to seek to involve other unit owners in the operation of the association and educate them as to how important it is for all owners in the association to participate in the governance of the association to the benefit of everyone.
After years of little to no activity, new condominium construction is now red hot. There are reportedly 40 new condo towers planned for the Miami downtown area alone. Our feature article, Top 10 Questions Regarding Condominium Construction Defects is a must-read for new purchasers.
As explained in our CALL Alerts and our 2013 Legislative Guides, new statutes are in place to protect design professionals from liability. If there is a construction project in your future, please read Contracting with a Design Professional Requires New Considerations.
We often hear of projects designed to increase energy efficiency or reduce utility costs, but what assurances are in place? We address some important aspects of contracting for these projects in Promises, Promises …. “Green” Warranties in Construction Contracts.