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Florida Condo & HOA Legal Blog

News & Updates on Condo & HOA Laws & Legislation in the State of Florida

Associations Must Make Financial Statements Available to Members

Posted in Budgets, Reserves & Financial, Reader Q&A

ThinkstockPhotos-459435587Question: I belong to a voluntary property owners’ association which has raised money for various projects within our community. However, I did not renew my membership this year by paying the annual dues because I was dissatisfied with the association’s prior accounting of its funds. Is there any way to force a voluntary association to give its members an accounting of its funds?  J.H. (via e-mail)

Answer: Possibly. A voluntary association, assuming it is incorporated, would only be subject to the provisions of Chapter 617 of the Florida Statutes, the Florida Corporation Not For Profit Act. Chapter 617 provides that if the articles of incorporation limit membership in the corporation to property owners within a specific geographic area, every such property owner must be permitted to join the association so long as they abide by the terms and condition of membership. It appears that the terms and condition of membership in your association is paying the annual dues. To the extent that failing to pay your annual dues resigned to your membership, you may currently have no right to inspect the finances of the corporation.

Members of an incorporated voluntary property owners’ association have the right to inspect certain records of the association pursuant to Section 617.1602 of the Florida Statutes, including the accounting records for the corporation. Further, pursuant to Section 617.1605 of that law, the corporation, upon a members’ written demand, must furnish a copy of its most recent annual financial statement.

Florida HOA Act Allows Owners to Speak for at Least 3 Minutes at Annual Meetings

Posted in Meetings, Operations, Reader Q&A

ThinkstockPhotos-508420190Question: I recently attended our annual homeowners’ association members meeting. We were asked to vote on several proposed amendments to the declaration of covenants. The changes were substantial and I had a number of comments I wanted to make at the meeting. However, when I was given an opportunity to speak, I was told that I could only speak for 2 minutes on the amendments as a whole even though there were seven separate amendments being considered.  Was this proper? N. C.  (via e-mail)

Answer: No. The Florida Homeowners’ Association Act (Chapter 720, Florida Statutes) provides that all owners are entitled to attend membership meetings and, as attendees at the meeting, are also entitled to speak with reference to all items opened for discussion or included on the agenda.  The HOA Act authorizes the board of directors to adopt rules regulating the owners’ participation in meetings. These rules, which must be reasonable, may expand the right of members to speak and may govern the frequency, duration, and other manner of member statements.  However, the HOA Act specifically provides that, regardless of the rules, all members must be given the right to speak for at least 3 minutes on any item on the agenda of a members meeting.

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Are Criminal Background Checks for New Purchasers and Renters in a Community Association Discriminatory?

Posted in Discrimination/Fair Housing, Rental

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This post originally appeared in The Community Association Law Blog.

Most community associations screen potential purchasers and potential renters. In fact, when surveyed, many board members state that screening community occupants is one of their primary functions.

What is the #1 item that typically presents a red flag on a screening application? If you said evidence of a criminal history you would be correct and it follows closely on the heels of financial red flags such as prior bankruptcies.

HUD’s General Counsel, Helen R. Kanovsky, issued a Guidance Memo which warns that looking at the criminal background of applicants may have a disparate impact on minorities who may have been subject to different scrutiny under the criminal justice system. According to the memo, as many as 100 million Americans (or 1/3 of the population) has a criminal record of some sort.

http://portal.hud.gov/hudportal/documents/huddoc?id=HUD_OGCGuidAppFHAStandCR.pdf

When your board is presented with a background check that reveals a criminal history, there is more to consider than just the fact that the applicant has a record. If a background check reveals that the applicant has previously been arrested or convicted of a crime you must ask experienced association counsel the following questions:

  • Did the crime involve theft or violence?
  • Was the applicant charged with a misdemeanor or a felony?
  • How long ago was the crime committed?
  • Did the crime involve an attack on a minor?
  • Did the crime result in a conviction?

Certainly, an applicant who committed a white-collar crime twenty years ago presents less of a security concern for a community association than  an applicant who was arrested for rape or another violent crime within the last five years.  Denying applications for any reason requires a conversation with association counsel. Denying applications based on criminal background is an even more compelling reason to have that conversation.

HUD’s General Counsel concluded:

The Fair Housing Act prohibits both intentional housing discrimination and housing practices that have an unjustified discriminatory effect because of race, national origin or other protected characteristics. Because of widespread racial and ethnic disparities in the U.S. criminal justice system, criminal history-based restrictions on access to housing are likely disproportionately to burden African Americans and Hispanics. While the Act does not prohibit housing providers from appropriately considering criminal history information when making housing decisions, arbitrary and overbroad criminal history-related bans are likely to lack a legally sufficient justification. Thus, a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.

This does not mean that your board should discontinue the responsible screening of potential purchasers and prospective renters; in fact, abandoning careful screening could subject the association to significant liability. In order to walk the tightrope between screening applications and avoiding a discriminatory effect from such screening, your Board must address each application on a case by case basis and prove that your approval decision is justified and is necessary to achieve a substantial, legitimate, nondiscriminatory interest of the community.

HOA Documents Determine Who is Obligated to Replace Landscaping

Posted in Maintenance & Repair, Reader Q&A

ThinkstockPhotos-104782792Question: I live in a homeowners’ association where the association maintains the landscaping on all of the individual lots. Recently, I had a number of plants, including hedges and palm trees die, and I do not know who is responsible to pay for their replacement. Because the association maintains the landscaping, is the association responsible for replacing the landscaping? F.T. (via e-mail)

Answer: The answer depends on the language contained in your governing documents. It is not uncommon for homeowners’ associations to mow lawns and maintain some level of landscaping on the individual lots as part of the common expenses paid by all owners. While the documents may give the association the responsibility to “maintain” landscaping, many documents also provide that in the event any portion of the landscaping must be replaced, including hedges, trees, turf, etc., the homeowner is responsible for payment. If the documents are silent, it is not clear whether “maintenance” and “replacement” are two separate obligations. I do not believe there are any court precedents on point. A court would likely look to the dictionary definition of “maintain” to decide whether “replacement” in a certain context was included.

If you could show that the association was negligent in undertaking maintenance, the association may be responsible. For example, if the association’s landscape contractor runs over your hedges with a riding lawn mower, it makes sense that the association should be responsible for the replacement (and of course the association could make a claim against the contractor).

Condominium Directors “At Large” Have the Right to Vote

Posted in Reader Q&A

Mature businesswoman in office, portrait, close-upQuestion: I was recently elected to the board of my condominium association as a “director at large.”  In doing my due diligence since being elected, I have been researching what my duties and responsibilities as a director at large will be. I do not find anything in the Florida Condominium Act and I am getting conflicting opinions from those I speak to. Some people have said that, as a director at large, I can vote just as any other director, but others are saying that I will only get to vote in the event of a tie. Can you please clarify this for me? K.A. (via e-mail)

Answer: Reference to directors “at large” often refers to a particular seat for which a director is elected. For example, in multi-condominium associations (where there are multiple condominiums, but only one association), the bylaws may establish a scheme whereby each condominium elects certain directors to the board, and the whole community elects the “at large” directors.

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Election Ballots Can Only Counted by an Impartial Committee

Posted in Elections, Reader Q&A

ThinkstockPhotos-511031510(1)Question: I attended our recent condominium annual meeting and election. There were quite a bit of shenanigans during the meeting. One of the most disturbing issues was the opening of the envelopes and counting of the ballots by a committee of three people. One of the members of the committee was the wife of a the board vice president, who was also up for reelection. Also, the committee counted the ballots behind closed doors. Did they violate the law? H.C. (via e-mail)

Answer: Yes. The Florida Administrative Code provides that an “impartial committee” must be appointed to open the envelopes and count the ballots (this rule does not apply to proxy votes). The rule specifically prohibits current directors, officers, and candidates from serving on the impartial committee. Spouses of these individuals are likewise disqualified.

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Florida Community Associations are Obligated to Provide Financial Reports to Owners

Posted in Budgets, Reserves & Financial, Operations, Reader Q&A

ThinkstockPhotos-81749044Question: At the recent annual meeting for my condominium association the owners were presented with a question asking whether the association should waive the requirement to have an audit of the association financial records conducted. The same question has been asked for the past few years. I looked and our bylaws specifically require an audit to be conducted every year. Is my condominium association following the law? D.T. (via e-mail)

Answer: Florida community associations are statutorily obligated to provide owners some type of year-end financial report. There are different types of financial reports which can be prepared: (i) a statement of cash receipts and expenditures, (ii) a compilation, (iii) a review, and (iv) an audit. The type and level of year-end financial report a community association is required to prepare is dependent on the size of the association, the language of the governing documents, and the association’s annual revenue.

The first place to start the analysis is your governing documents. If your condominium association’s governing documents specifically require that an audit be prepared each year, you must comply with this requirement and your association doesn’t have the option to vote to “waive down” to a “lower level” financial report, such as a review or compilation. I recommend you confirm that the yearly obligation to conduct an audit is, in fact, contained in your association’s governing documents. Such a mandatory, yearly requirement can impose a financial burden on an association. Many of my community association clients who had similar requirements contained within their governing documents have sought my assistance to have this requirement “amended out” of the governing documents.

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Amendments are Often Reconsidered by HOA and Condominium Boards

Posted in Association Documents, Reader Q&A

ThinkstockPhotos-122571470Question: How many times can a board of directors request a vote on an amendment after it has already been voted down? L.W. (via e-mail)

Answer: To my knowledge, there is no limit in the law. Most governing documents for condominiums and homeowners’ associations permit proposed amendments to be initiated by action of the board, or a petition submitted by some specified percentage of the association’s members. As long as the proper action (board vote or petition) precedes the vote on the amendment, I do not think there is any limit.

It is not unusual for amendments to be reconsidered after failure. Sometimes, amendments fail due to low voter turnout or a misunderstanding of the proposed intent or effect of the amendment. Clearly, at some point, if the members are not going to approve an amendment, the association should realize that beating a dead horse never moves it forward.

HOA Documents Govern How Assessments are Allocated

Posted in Assessment Collection, Reader Q&A

Question: Our subdivision has 20 platted lots. At the time of initial development, one owner purchased two lots and built one home on the combined lots. Our homeowners’ association has only assessed this owner as if he only owns one lot. Shouldn’t the members be assessed based on the number of lots owned as opposed to the number of homes built on those lots? S.J. (via e-mail)

Answer: It depends.

The Florida Homeowners’ Association Act provides that assessments levied pursuant to the annual budget or special assessment must be in the member’s proportional share of expenses. While the statute further provides that the member’s proportional share of expenses is as described in the governing documents, it goes on to state that the share may be different if the lots are different. Factors to consider in determining whether the lots are different include the state of development and level of services received by the owners of the lots. For example, it is not uncommon to see governing documents that provide that vacant lots pay less than improved lots or lots on which villas have been constructed pay less than those with single family homes.

It is also important to look to at the governing documents to see how the term “lot” is defined, and how assessments are allocated. It is likely that the definition of “lot” includes a reference to the lots as created by the subdivision plat. If the governing documents then impose assessments on those “lots,” merely combining two lots into a single family residence does not in and of itself relieve an owner of paying two assessments, nor having two votes for that matter. It is also important to know what the law had to say about the issue when the subdivision was created, as that may play some role in the scope of permissible amendments to the declaration of covenants, if necessary, to address this issue.

Some counties or municipalities will not approve a lot combination without the association’s approval. In those cases, the association has the opportunity to require that the owner address the matter, which is usually documented by a covenant recorded in the public records.

Becker & Poliakoff Announces Launch Of Proprietary ‘BPBALLOT’ Voting Software For Community Associations

Posted in Elections, Official Records

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Law firm becomes first in Florida offering proprietary online voting software to address long-standing challenges for managed communities

FORT LAUDERDALE, Fla. – March 22, 2016 – The law firm of Becker & Poliakoff today announced the launch of BPBALLOT, a proprietary, secure online voting software for community associations. As the only law firm in Florida providing this type of software solution, Becker & Poliakoff developed BPBALLOT under an exclusive private label following a July 2015 change in Florida law that permits association members to cast votes electronically. While the software is available to both clients and non-clients of the firm, associations which are currently on retainer with Becker & Poliakoff can obtain the product at a reduced price.

The software is expected to help solve a long-standing challenge for private residential communities: generating sufficient membership participation to obtain the required number of membership votes. Traditionally, voting on issues such as the waiver of reserves, amending the governing documents or electing the board of directors required members to vote in-person at meetings or use proxies or paper ballots. However, following the recent change in Florida law, community association members are now able to cast their votes electronically to empower more community members to participate in important membership votes and enable boards  to conduct business in a more timely, efficient manner.

“BPBALLOT is emblematic of the strategic nature of Becker & Poliakoff’s partnerships with our clients. Beyond providing legal and business counsel, we work closely with our clients to identify and create innovative approaches to help overcome their obstacles and everyday problems, and maximize their opportunities,” said Kenneth Direktor, shareholder and chair of the firm’s Community Association practice.

Donna DiMaggio Berger, a shareholder in the Community Association practice at Becker & Poliakoff who spearheaded the BPBallot initiative added, “As part of our commitment as the leading community association law firm in Florida, Becker & Poliakoff is proud to become the state’s only law firm offering a proprietary voting software solution to address a long-standing issue for community associations and enable them to operate more effectively.”

More information about BPBALLOT is available at www.bpballot.com.

About Becker & Poliakoff
Becker & Poliakoff is a multi-practice, multi-state commercial law firm that provides strategic counsel to its clients, a diverse array of public, private, and nonprofit organizations, and individuals. Established in 1973, the law firm currently includes more than 150 attorneys, lobbyists, and other professionals in 18 offices in Florida, New Jersey, New York, Virginia, and Washington, D.C. Its key practice areas include: Business Litigation; Real Estate; Community Association; Construction Law and Litigation; Government Law and Lobbying; Corporate; Customs and International Trade; and Intellectual Property & Emerging Technologies. Many of the firm’s attorneys are credentialed through industry and legal organizations, including more than 25 who are board certified as experts in their respective areas of law. For more about the firm, visit www.bplegal.com or visit www.bplegal.com/blogs.aspx to access the firm’s issue forums providing perspectives on timely legal and business issues.