Wednesday, April 10, 2013

"My HOA is Governed by Chapter 617, Not 720" - And Other Lies Your HOA Tells You!

Your homeowners’ association tells you it was created a long time ago under Chapter 617 of the Florida Statutes and Chapter 720 does not apply – that they do not need to follow Chapter 720. What they are telling you is partially true. Actually, it is 100% true if they want to declare they are a voluntary association and you are not a mandatory member required to pay them assessments. Voluntary associations are not governed by Chapter 720. Since I doubt they will do so, let’s look at what is true and what is not true.

Chapter 720 did not exist before the year 2000. Certain language in Chapter 720 did exist prior to that in Chapter 617, as sections 617.301 to 617.306, but those sections were not enacted until the mid-1990s.

Your association is correct it was created under Chapter 617. Your association is correct Chapter 617 applies. All associations are governed by Chapter 617, which covers “not for profit” corporations, unless they were organized as a “for profit” corporation under Chapter 607. Both Chapter 720 and Chapter 617 govern homeowner associations and if the two conflict Chapter 720 prevails. Chapter 617 even states in some sections the section does not apply to community associations (homeowner associations and condo associations).

The association is twisting the ruling in a recent case, Cohn v. The Grand Condominium, which reinforces an earlier case, Pomponio v. Claridge of Pompano Condo., Inc., which held Article I, Section 10 of the Florida Constitution prohibits new laws from being applied retroactively to change existing contracts.

Your Declarations, Articles of Incorporation and Bylaws are contracts between homeowners and the association.

This means you must look to the statutes that were in effect the year your association documents were recorded and those statutes are applicable.

But….there’s always exceptions to the rule, especially in the practice of law.

If a statute is passed as a matter of public policy or was enacted as a remedial measure or a curative measure (to fix a problem), the new law is applicable. That covers most of sections 617.301 to 617.306, which were passed as a matter of public policy and with the intent of regulating ALL homeowner associations in the State of Florida. That’s right out of the committee notes when the bill was voted on by the Senate.

So now that we have established your association has told you a big lie, let’s look at the other lies based on the big lie:

• We are not required to provide notice of meetings or have open meetings to allow all members to attend.

TRUTH: Fla. Stat. §720.303(2), which was passed as a matter of public policy, requires all associations governed by Chapter 720 to post notice in a conspicuous place at least 48 hours in advance of a meeting and all meetings must be open to all members. This includes meetings of committees as well as board meetings. If the meeting will include imposing an assessment or discussing rules affecting parcel use, then the association is required to mail notice to each member’s address fourteen (14) days in advance of the meeting and the notice must include a disclaimer of the nature of the meeting.

• We are not required to have elections.

TRUTH: Fla. Stat. §720.303(2) states the association shall hold an annual meeting in accordance with the Bylaws and the election of directors, if one is required to be held, must be held at or in conjunction with the annual meeting. If you read your Bylaws you will find annual elections are required unless your association allows directors to serve more than one year and there are no terms expiring.

REALITY: Voter turnout for association elections is low. If you and your neighbors do not go to the annual meeting to vote, chances are there is no quorum. There must be a certain number of members present to establish a quorum. If no quorum is established the election is canceled and the previous board of directors gets to reappoint themselves or their replacements. THIS DOES NOT MEAN THE ASSOCIATION CAN ASSUME THERE WILL BE NO QUORUM AND IS NOT REQUIRED TO AT LEAST TRY TO HAVE AN ELECTION. They have to at least try!

• We are not required to give you access to our records.

TRUTH: Fla. Stat. §720.303(5) was another public policy statute and requires the association to provide you access to the official records within ten (10) days of receipt of a certified letter requesting access. If you want copies they can charge you a reasonable fee. Pretty much everything is an official record requiring the association to allow you access to view the records. The exceptions are personal contact information for members, social security numbers and certain personnel information (but not wages – wages are not protected from disclosure!!)

• We can have closed board meetings.

TRUTH: Fla. Stat. §720.303(2)(a) allows the board to have closed board meetings if the association attorney is present and the purpose of the meeting is to discuss pending or potential litigation. Not all board meetings attended by the attorney can be closed and any closed board meeting better have the attorney in attendance.

• We can conduct board business by email or telephone.

TRUTH: Fla. Stat. §720.303(2)(a) states any time a majority of the board members gather and discuss board business it is a board meeting that must be noticed and open to the members. Logic will tell you members cannot attend sessions held by email and telephone. Furthermore, Fla. Stat. §720.303(2)(c)(3) states board members cannot vote by proxy or secret ballot. If it’s not cast in front of the members, then it’s being cast in secret!!! This same section states this applies specifically to committees and other similar bodies, decisions on expenditures of funds, and any body with the power to approve or deny architectural decisions.

7 comments:

  1. We have people in our park who say we are governed by 617 and they voted to allow the membership to choose officers and directors. I thought there was a section 617.0817 that said "the board" is responsible for all activities of the association. So, shouldn't the elected board pick their own officers.

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  2. What is your fee structure ?

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  3. What is your fee structure ?

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  4. can an HOA have a reserve at the end of fiscal year and it is not designated for anything--in fact it shows under Liabilities on balance sheet??

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  5. If a statute is passed as a matter of public policy or was enacted as a remedial measure or a curative measure (to fix a problem), the new law is applicable. Ambiguous "a statute" and the "new Law" no antecedent basis. Which comes first?

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