Florida Condo & HOA Legal Blog : Florida Condo Lawyer & Attorney : Becker & Poliakoff Law Firm : Condominium & HOA Law Blog

The Continental Group recently held informational sessions throughout the state to bring community association board members up to date on legislation passed during the 2011 Florida legislative session.  The next event is scheduled for Tuesday, August 30th in Highland Beach. 

Information regarding the event and registration information can be found in this PDF.  Board members and community leaders are welcome to join us to discuss the 'behind the scenes' legislative process and how these new laws impact your community association operations.   There will be ample time for questions during the presentation and immediately after wards.

Travis Moore devotes a substantial amount of his practice to community association issues.  He works with Community Associations Institute, a national organization with close to 30,000 members.  In 2011 work at both the national and local level in Florida helped preserve the community management profession throughout the state. By pooling their resources together, CAI, its Florida Chapters, The Continental Group, CALL and the Florida Bar were able to work with community leaders and legislators to prevent deregulation of community association managers.

We will discuss changes to statutes governing collection of rent from tenants, board member eligibility issues,  official records requirements and other association concerns.

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While it is important. serving on the association's board is time consuming and can often become frustrating.  You have a multitude of issues competing for your attention - whether its adopting the budget, monitoring performance and renewing service contracts, insurance renewals, supervision/hiring and retention of employees or collecting delinquent assessments.  Board members are also faced with the task of enforcing rules and regulations.  How many times have you heard the following as a board member?

•  "Rules Are Made to Be Broken"
• "You Can't Tell Me What to Do - Its My Property"
• "Mind Your Own Business"; or
• "I Don't Care - You Can't Do Anything About it Anyway"

Rules and Regulations set forth the standard of conduct expected of community residents. Rule enforcement preserves the aesthetic quality of the neighborhood, maintains order and enhances community living.  Many people buy a condominium or a home in a neighborhood because they like the way the grounds look, the parking garage isn't full of owner's junk, paint isn't peeling off the houses, people aren't blasting their radios late at night and guests have to register at the entrance.  However, they become annoyed or downright argumentative when the board instructs them to pressure clean the roof, turn down the radio at night, discontinue parking a truck on the property and to get rid of a dog or cat where pets are against the rules.

Rule violations bring on additional complaints from the compliant owners.  Then you hear "why haven't you done anything" or "when are you going to stop so-and-so from x, y or z".  Some boards give up after writing letters and issuing warnings thinking they cannot enforce the rules effectively, but that is not the case.  With careful planning, careful rule making and a policy of consistent enforcement, owners are forced to comply with rules and, in many cases, must pay reasonable attorney's fees and costs as a result.  Here are some tips:

1. Document the violation;
2. Notify the owner of the offensive activity in writing (and tenant if applicable) and demand they cease and desist within a reasonable time and, should the violation continue, that legal action will be taken;
3. Cite to the section of the documents or rule being violated;
4. Issue a demand letter from the association’s legal counsel warning the owner (and tenant, if applicable) if the objectionable activity does not cease within a reasonable period, formal legal action to obtain compliance with the governing documents and for an award of attorney’s fees and costs will be taken;
5. Commence mandatory, non-binding arbitration to require the unit owner’s compliance if applicable; or
6. Commence an action in court (after demand for pre-suit mediation if applicable) seeking an order requiring that the non-complying and/or offensive activity cease and for an award of the association’s attorney’s fees and costs for bringing the action.

2010 changes to the condominium and homeowners' association statutes provide for additional remedies.  The association may levy fines and/or suspend use rights under certain circumstances.  

If your rules are important then don't be afraid to enforce those rules.  If the rules are no longer relevant to your community, change the rules.  Community association regulations are designed to change as a result of changes in the community.  Some changes can be made at the board level while other changes require membership approval.
  

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Associations have new enforcement mechanisms available - due process requires careful planning & paperwork for associations to take advantage of these new remedies effectively.

 Condominium Associations:

Up until now condominium associations had to have authority to levy fines in the recorded governing documents and did not have the ability to tell delinquent owners to stay out of the pool or gym.  That changes as a result of SB 1196.

After July 1, 2010 (the effective date of the new law), condominium associations will be able to levy fines as a result of violations of the governing documents or rules.  Of course the association must still provide 14 days written notice of the violation and the opportunity for a hearing before a committee of unit owners before imposing any fines,  The fine cannot be levied or imposed if the committee does not agree.

Delinquent condominium owners have more to worry about than fines - the new laws will allow the association to suspend voting rights and use of common, recreational facilities if they are more than ninety (90) days past due in paying a monetary obligation.  The term "monetary obligation" is not defined  - it could include non-assessment obligations such as late fees, fines, transfer approval or screening fees and the like.  The association cannot suspend the use of limited common elements (such as the balcony attached to the unit), nor may it suspend portions of the property necessary to access the unit - such as hallways, elevators, parking spots, etc.  The association cannot suspend utilities.

Homeowners Associations:

The new laws actually limit homeowners' associations powers when it comes to suspensions.  In the past, suspensions could be imposed in the HOA context for either use violations (violations of the governing documents or rules) or delinquencies.  After July 1, 2010, suspensions may only be imposed by HOAs when a member is more than ninety (90) days past due. While it doesn't make sense (especially since Section 720.3085 limits late fees for delinquent assessments), the changes arguably limit fining as well.  Fourteen (14) days written notice and an opportunity for a hearing before a committee is required in either case.  If the committee (by majority vote) does not agree with the fine or suspension, it may not be imposed. 

HOAs cannot suspend use of portions of the property necessary to access the parcel (roads, etc.) or utility services. 

The law prohibits the HOA from filing a lien if the fine is less than $1,000 - does that mean that it can lien for fines of $1,000 or more?  Well, that remedy certainly needs to be included in the governing documents - so check with counsel.  If you're governing documents limit the amount of the fine, now is a good time to consider amendments.

Fines and suspensions must be considered at a properly noticed meeting.  Written notice of the fine or suspension (voting or use) must be furnished to the owner (and occupant if applicable).

Will these new procedures and remedies work?  Its hard to say, but attempting to take advantage of these remedies without following the required procedures is certainly likely to lead to disputes and may expose the association to liability.  Proceed with caution.

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The Regular Session ends April 30th.  We've previously highlighted changes in SB 1196 and HB 561 that would impact Condos & Co-Ops, here is some information for HOA leaders and managers: 

Records Access:   §720.303(5)

• Owner entitled to presumption that Association willfully denied record access after 10 business days if owner submits request via certified mail, return receipt requested.  Doesn't address what happens if no one picks up the certified letter.
• Association may charge "reasonable costs" in addition to photocopy fees to reimburse it or a vendor for the lost employee time associated with duplicating the records.
• Personnel records for the association's employees will not be subject to inspection (including disciplinary, payroll, health, insurance).
• Personal identifying data of members (ss #, credit card #, emergency contact info, etc.) will not be subject to inspection, although the address used for association mailings is still part of the roster list and subject to inspection.
• Passwords used to safeguard data and software and/or operating systems will not be subject to inspection.

Budgets & Reserves:  §720.303(6)

• Disclosure in financial report must notify owners of vote necessary to mandate reserves.
• If budget does include 'voluntary reserves', financial report must disclose that the funds may be used for non-reserve purposes and not calculated by statutory method.
• 'Statutory' reserves are reserve accounts established by the developer or created by membership vote.

Director Compensation:  §720.303(12)

Salary or compensation is generally prohibited for performing services as director, officer or committee member unless:

• the financial benefit of a lawful board action will benefit all or a significant number of members;
• the payment is reimbursement for out-of-pocket expenses (each association should adopt procedures or protocols for expense reimbursement, limits and types of expenditures that will be reimbursed);
• the payment is for recovery of insurance proceeds;
• the salary or compensation is authorized by the governing documents;
• the fee, salary or compensation is authorized by membership vote in advance; and/or
• a developer appointee may benefit financially from service to the association.

Fines/Suspensions of Use Rights:  §720.305

• Fines & Suspensions authorized if the member is delinquent for more than 90 days;
• Fines less than $1,000 cannot become a lien (doesn't specifically say that liens are permitted for fines exceeding $1,000);
• Suspensions cannot apply to utility services or property used to access the parcel;
• Written notice to the person fined or suspended is required.

Voting for Directors by Secret Ballot:  §720.306(8)

Adopts 'condo-like' double envelope procedure.

Collecting Rent from Tenants:  §720.3085(8)

Association may demand rent directly from tenant if owner is delinquent.

Acquisition of Recreational Leaseholds or Other Property/Property Use Rights:  §720.31(6)

Similar to §718.114 (condo act).  Allows association to enter agreements to acquire leaseholds, memberships or other possessory or use rights in lands and facilities.  Must be fully described in the declaration or if the action is not taken within 12 months of recording, the declaration must authorize said action as a material alteration/substantial improvement or at least 75% of the members must vote in favor of the action.

Special Assessments by Developer (before turnover):  §720.315

Pre-transition, developer controlled association may not levy special assessments without the approval of a majority vote of non-developer interests.  Vote must take place at duly-called meeting at which a quorum has been attained.

These are just brief bullet points, please refer to the actual legislation for more detail.  Committee amendments are still being filed and considered.

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In these pressing economic times, Board members are trying to do whatever it takes to save money. While this mindset is certainly prudent, Boards need to be careful about being "penny wise and pound foolish." Clients regularly call and ask what they can do to stop owners from violating the association's use restrictions. This inquiry is typically followed with a caveat that the Board cannot spend a lot of money on legal fees to procure compliance. In other words, get these people to comply with our rules but do it cheaply.  Hence, the fining process.  

Imposing fines may indeed be an inexpensive alternative to filing lawsuits or arbitration petitions but does it actually help in curing violations or deterring owners from violating the association's use restrictions?  

First, associations cannot even consider this option unless the authority to impose fines is found within the governing documents (e.g declaration of condominium, declaration of restrictive covenants or the bylaws). If the board indeed has the power to impose fines, it must establish a separate (fining) committee. The committee must consist of at least 3 owners who are not board members, not related to board members and do not live in the same household as a board member. Then, before any fine may be imposed, the Board must provide the offending owner with reasonable advance notice (i.e. 14 days) of the date, time and location for the owner to appear before the fining committee. The offending owner must be given the opportunity to explain to the committee why a fine should not be levied. If the fining committee determines not to impose a fine, no fine may be imposed. The Board cannot overrule the fining committee and levy a fine where the committee votes not to impose a fine.Even if the committee votes to fine an offending owner, the fine cannot exceed $100.00 per day for a continuing violation and no fine in a condominium may exceed $1,000.00 for any single violation. Homeowners associations actually have the ability to levy fines in excess of $1,000.00 but may only do so if the specific fine amount is described within its governing documents.

But, do fines really work? In both condominiums and homeowners associations, no fine (if unpaid) may become a lien against the owner's home or unit. Therefore, if a unit owner fails to pay a fine, the association’s recourse to collect the fine would be to file a claim for damages in small claims court. Also, and perhaps most importantly, the imposition of a fine does not automatically cure the underlying violation. A fine does not force the owner to comply. Indeed, many owners would gladly pay a $1,000.00 fine in order to keep their dog or continue with that fourth-story addition on their home. Thus, while imposing fines may seem like an attractive and cost-effective solution, it does not guaranty an owner's compliance with the association's governing documents. If an owner refuses to abide by the rules, the Board's only realistic option may be to file suit (or an arbitration petition as the case may be) and seek the entry of an injunction against the non-complying owner. If successful, the association is entitled to an award of its reasonable attorney's fees and costs. Then, if such owner fails to comply, the judge may levy sanctions, hold the owner in contempt of court or ultimately issue a bench warrant for the owner's arrest.            

So, does the fining process really work?  

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Attention Residents in Broward, Palm Beach and Miami-Dade Counties:  

Broward County's Permitting, Licensing and Consumer Protection Division issued a warning to residents not to be misled if they receive a letter from “National Department of Renewable Resources”.  Apparently this organization says it is authorized to obtain compensation for recycling shortfalls. 

This organization claimed that State of Florida passed a law that allows fines to be levied against homeowners who fail to follow the mandatory recycling policies enacted by Broward, Palm Beach and Miami-Dade counties.  Full information about Florida's recycling laws may be obtained from the Florida Department of Environmental Protection.

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