The number of board members is determined by the Declarations, Articles of Incorporation and Bylaws. There must be a minimum of three by state law (Fla. Stat. 617 or 607); however, the governing documents of the association often provide for a range -- three to five or three to nine, etc.
If the documents provide for a minimum of three and some other number as a maximum, the number is increased by a vote. Either the Articles or Bylaws will list the initial number of directors and the document must be amended according to the amendment provisions of the document, meaning it could be either by a board vote or a membership vote.
By law, condo board members cannot be paid a salary and cannot enter into contracts between a business owned by the board member and the association unless the membership is notified and, if anyone objects, the membership ratifies the contract by vote. It is slightly different for HOA board members and the new law, enacted July 1, 2010, has been the subject of debate by association lawyers. My take is the literal meaning, which is no board member cannot "receive financial gain." Benefitting from a contract is financial gain as far as I am concerned
While the association is required to have an annual meeting and an election (the governing documents will provide the month), if there is no quorum of members present at the annual meeting, the election does not occur and the previous board stays in power or can appoint their replacements. The governing documents provide the number of members necessary for a quorum and if no number is specified it is 30%.
This is why it is important for owners to get out and vote!!! Don't complain if you don't participate!!
CONDO & HOA LAW BLOG: The latest news on Florida laws regulating condominiums and homeowner associations.
Sunday, November 25, 2012
HOA & Condo Liens - Saving Your Home
Frequently I am asked to help homeowners settle their past due assessments with their condo or homeowners association. This is a very serious situation because the association can and will foreclose much faster than any mortgage company or bank.
Frequently homeowners make the mistake of assuming that 1) if the mortgage company or bank is foreclosing, the association cannot; 2) if the homeowner pays the past due assessments, but not the interest, late fees or attorneys' fees, the association cannot foreclose; 3) sending a check to the property manager will stop the foreclosure; 4) the homeowner can withhold assessments if the association is not doing their job and 5) the association can waive some of the past due assessments and charges.
These are all incorrect and a big mistake. Trying to get around these issues will only increase the attorneys' fees and other charges the association is entitled by law to correct.
It is very important to note that BY LAW, any payments are applied to attorneys' fees and costs FIRST, interest and late fees NEXT and assessments LAST. Unless you pay the full amount being demanded, you will always be past due in assessments and the association can foreclose.
Your options, if you cannot pay the full amount demanded, are:
1) Negotiate a payment plan;
2) File Chapter 13 bankruptcy.
The first option may not be the ideal solution because many association law firms charge $250 to set up the payment plan and $50 per month to process payments, which adds considerably to the amount due and owing.
Chapter 7 bankruptcy is not an option for saving the home. The discharge of association assessments in a Chapter 7 applies only to assessments that came due prior to filing bankruptcy and only extinguish the debt to the person, not the property. This means the association can still foreclose against the property. Also, the homeowner is still liable for assessments that come due after filing bankruptcy.
If a homeowner wants to avoid the foreclosure of the pre-petition assessment lien, the homeowner will have to pay off the pre-petition debt (either in full or through a settlement with the association) even though that debt has been discharged, or file a Chapter 13 bankruptcy which will allow the homeowner to spread the debt over a five-year payment plan. The association may or may not be entitled to 100% of the charges and if the association fails to file a claim, they will not receive any pre-petition assessments and charges.
Frequently homeowners make the mistake of assuming that 1) if the mortgage company or bank is foreclosing, the association cannot; 2) if the homeowner pays the past due assessments, but not the interest, late fees or attorneys' fees, the association cannot foreclose; 3) sending a check to the property manager will stop the foreclosure; 4) the homeowner can withhold assessments if the association is not doing their job and 5) the association can waive some of the past due assessments and charges.
These are all incorrect and a big mistake. Trying to get around these issues will only increase the attorneys' fees and other charges the association is entitled by law to correct.
It is very important to note that BY LAW, any payments are applied to attorneys' fees and costs FIRST, interest and late fees NEXT and assessments LAST. Unless you pay the full amount being demanded, you will always be past due in assessments and the association can foreclose.
Your options, if you cannot pay the full amount demanded, are:
1) Negotiate a payment plan;
2) File Chapter 13 bankruptcy.
The first option may not be the ideal solution because many association law firms charge $250 to set up the payment plan and $50 per month to process payments, which adds considerably to the amount due and owing.
Chapter 7 bankruptcy is not an option for saving the home. The discharge of association assessments in a Chapter 7 applies only to assessments that came due prior to filing bankruptcy and only extinguish the debt to the person, not the property. This means the association can still foreclose against the property. Also, the homeowner is still liable for assessments that come due after filing bankruptcy.
If a homeowner wants to avoid the foreclosure of the pre-petition assessment lien, the homeowner will have to pay off the pre-petition debt (either in full or through a settlement with the association) even though that debt has been discharged, or file a Chapter 13 bankruptcy which will allow the homeowner to spread the debt over a five-year payment plan. The association may or may not be entitled to 100% of the charges and if the association fails to file a claim, they will not receive any pre-petition assessments and charges.
Saturday, November 24, 2012
Nuisance Rules in Covenants and Restrictions
Many HOA and condominium documents contain a restriction that reads "an owner shall not cause anything to be done which will interfere with the rights of other owners and the enjoyment of their property," or something similar. I get a lot of questions from owners being disturbed by their neighbors asking why that rule is not enforced by the association. The problem is the rule is very broad, vague and hard to enforce. In fact, many times the courts refuse to enforce
The board of directors has the power to create reasonable rules. They cannot create new covenants and restrictions, but can clarify existing covenants and restrictions by creating reasonable rules and regulations. The association should address specific nuisances by creating a reasonable rule to specifically address the nuisance.
The key is figuring out what is reasonable. The courts use a "reasonable person" standard and there's lots of court cases to define that standard, but there is not any one definition for every set of facts and circumstances.
The board of directors has the power to create reasonable rules. They cannot create new covenants and restrictions, but can clarify existing covenants and restrictions by creating reasonable rules and regulations. The association should address specific nuisances by creating a reasonable rule to specifically address the nuisance.
The key is figuring out what is reasonable. The courts use a "reasonable person" standard and there's lots of court cases to define that standard, but there is not any one definition for every set of facts and circumstances.
Sunday, November 11, 2012
Living in a Florida Community Association for Dummies
That's the name of the book I would like to write one day, but it seems time is in short supply and I would have to retire to find the time. That's not happening any time soon -- I like what I do.
Since that book may be a long time off, let's go over some basic rules.
First, board members -- try not to be a bully!! It's all in the approach. If you attack people, they will get defensive. It's human nature. Do not pick on your neighbors to boost your own self-esteem. You will soon become the most hated person in your community and might get your association in legal trouble. Once the lawyers get involved things tend to get unpleasant for a long time. There are times when you do have to be tough. Everyone has to pay their assessments and there are always those that just refuse. Everyone has to obey the restrictions, but there are always those that refuse. Don't confuse these people with the ones that are just not aware of the rules! A friendly letter first rather than a threat gets more done. Save the threats for those that do not respond or refuse to comply. Then there are the ones that just want to argue and cause trouble no matter who is on the board. These people have usually been victimized already by a HOA, maybe not yours. There is a legitimate diagnosis called HOA Syndrome that is a form of post traumatic stress disorder. I'm not telling you to go out and coddle you neighbors, just try to understand the situation before jumping in with both feet.
Next, homeowners -- the rest of these are for you so you can live in your community and hopefully stay out of trouble.
1. Read, read, read. Education is the best defense against oppression! At least in an association.
2. Read your Declarations, Bylaws and Articles of Incorporation. Yes, they are for the most part boring, but make sure you understand the rules. Not everything in those documents is legal, so if something doesn't seem right, check it out. You can find great information about Florida associations on websites such as CyberCitizens for Justice (www.ccfj.net), Avvo (www.avvo.com) or the websites of law firms representing the associations. Many of the association firms have blogs that are an excellent source of information. I read them daily myself!
3. Read the Florida Statutes governing your association if you can. Don't worry if you can't understand it all, but see if you can understand the basics, like the notice requirements for meetings. Condos are governed by Fla. Stat. 718, homeowner associations by Fla. Stat. 720, mobile home park lot tenancies by Fla. Stat. 723. All of them are governed by Fla. Stat. 617 if they are non-profit and Fla. Stat. 607 if they are not or Fla. Stat. 617 and 718,720, or 723 are silent on the issue. If you are not sure if you live in a condo association or a homeowners association, look to the first page of each governing document for a statute or a definition of the legal name of the association.
4. Go to meetings!!! The biggest problem in associations are the owners who become complacent and do not attend meetings or votes. Then they want to complain when their constitutional rights are taken away by rules and restrictions in the documents and amendments to the documents. Those documents are subject to amendment! The more owners paying attention to what is going on with the association, the less likely the board members will evolve into bullies. Board members are not paid (or shouldn't be) and volunteer their time. It takes a lot more time than anyone can imagine. Over time even the nicest board members can become cynical when the owners do not care enough to be involved in the association.
5. When you approach your association with a problem, try to have a solution to offer. That goes for board members and anyone else too. It's easy to complain, but you get more cooperation if you can help solve the problem.
6. Ask for those copies of the financial reports. Each year the association is required to either distribute the reports or send you a notice the reports are available. Get a copy and look at them. No one can waste the assessments or even embezzle them if there are people watching. Do not count of the property manager to be the guard. They often do not have enough time to watch as closely as they should or they may think the waste is okay.
Finally, for everyone -- just try to have some common sense and consideration of your neighbors. One of the best classes I ever took was during my Disney days and was called "inclusive communication." It was all about listening to what the other person is saying and trying to understand their point of view. It works! If it doesn't try the other Disney mantra -- put a smile in your voice. People have a hard time being rude and nasty if you don't return the same attitude.
Good luck and best wishes for community living.
Since that book may be a long time off, let's go over some basic rules.
First, board members -- try not to be a bully!! It's all in the approach. If you attack people, they will get defensive. It's human nature. Do not pick on your neighbors to boost your own self-esteem. You will soon become the most hated person in your community and might get your association in legal trouble. Once the lawyers get involved things tend to get unpleasant for a long time. There are times when you do have to be tough. Everyone has to pay their assessments and there are always those that just refuse. Everyone has to obey the restrictions, but there are always those that refuse. Don't confuse these people with the ones that are just not aware of the rules! A friendly letter first rather than a threat gets more done. Save the threats for those that do not respond or refuse to comply. Then there are the ones that just want to argue and cause trouble no matter who is on the board. These people have usually been victimized already by a HOA, maybe not yours. There is a legitimate diagnosis called HOA Syndrome that is a form of post traumatic stress disorder. I'm not telling you to go out and coddle you neighbors, just try to understand the situation before jumping in with both feet.
Next, homeowners -- the rest of these are for you so you can live in your community and hopefully stay out of trouble.
1. Read, read, read. Education is the best defense against oppression! At least in an association.
2. Read your Declarations, Bylaws and Articles of Incorporation. Yes, they are for the most part boring, but make sure you understand the rules. Not everything in those documents is legal, so if something doesn't seem right, check it out. You can find great information about Florida associations on websites such as CyberCitizens for Justice (www.ccfj.net), Avvo (www.avvo.com) or the websites of law firms representing the associations. Many of the association firms have blogs that are an excellent source of information. I read them daily myself!
3. Read the Florida Statutes governing your association if you can. Don't worry if you can't understand it all, but see if you can understand the basics, like the notice requirements for meetings. Condos are governed by Fla. Stat. 718, homeowner associations by Fla. Stat. 720, mobile home park lot tenancies by Fla. Stat. 723. All of them are governed by Fla. Stat. 617 if they are non-profit and Fla. Stat. 607 if they are not or Fla. Stat. 617 and 718,720, or 723 are silent on the issue. If you are not sure if you live in a condo association or a homeowners association, look to the first page of each governing document for a statute or a definition of the legal name of the association.
4. Go to meetings!!! The biggest problem in associations are the owners who become complacent and do not attend meetings or votes. Then they want to complain when their constitutional rights are taken away by rules and restrictions in the documents and amendments to the documents. Those documents are subject to amendment! The more owners paying attention to what is going on with the association, the less likely the board members will evolve into bullies. Board members are not paid (or shouldn't be) and volunteer their time. It takes a lot more time than anyone can imagine. Over time even the nicest board members can become cynical when the owners do not care enough to be involved in the association.
5. When you approach your association with a problem, try to have a solution to offer. That goes for board members and anyone else too. It's easy to complain, but you get more cooperation if you can help solve the problem.
6. Ask for those copies of the financial reports. Each year the association is required to either distribute the reports or send you a notice the reports are available. Get a copy and look at them. No one can waste the assessments or even embezzle them if there are people watching. Do not count of the property manager to be the guard. They often do not have enough time to watch as closely as they should or they may think the waste is okay.
Finally, for everyone -- just try to have some common sense and consideration of your neighbors. One of the best classes I ever took was during my Disney days and was called "inclusive communication." It was all about listening to what the other person is saying and trying to understand their point of view. It works! If it doesn't try the other Disney mantra -- put a smile in your voice. People have a hard time being rude and nasty if you don't return the same attitude.
Good luck and best wishes for community living.
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