Rental Restrictions

A popular topic among association dwellers is the right of an association to restrict rental of property.  This is one of the areas where it is important to distinguish between a COA (condo association) and a HOA (single family homes).  Each association is governed by different laws.  Fla. Stat. Chapter 718 governs COAs and Fla. Stat. Chapter 720 governs HOAs.

Condo rental restrictions are common and receive the most attention.  A few years back a judicial ruling supported condo rental restrictions which were created by a membership vote, noting when a person buys a condo they are on notice the rules and restrictions of the COA can be amended.  In response to the ruling, the Florida Legislature enacted Fla. Stat. §718.110(13), which states any amendment to restrict rentals is only effective against those owners who voted for the amended and those purchasing property after the amendment is recorded.

HOAs have traditionally been treated differently than COAs when it comes to rental restrictions.  The reason being COAs have members living in very close proximity to each other whereas a majority of HOAs have stand alone housing (the exception being townhomes, which are more like condos, but formed as HOAs).

The court cases involving HOAs have for the most part ruled the right to sell, lease or otherwise transfer property is a vested right which cannot be taken away without consent of the owner.  A vested right is any right which would be a deal-breaker for the reasonable buyer if the rule prohibiting it were in existence at the time of purchase.  In other words, if the restriction existed when you were considering your purchase you would have not purchased the property.  

The issue members of HOAs have in asserting this right is the rulings are at the appellate level and if an owner does not know to argue this at the trial level and cite the appellate rulings, the judges will consider the condo rulings because the HOA lawyers will use those to promote their position the HOA can create rental restrictions.

The lack of a significant amount of case law governing HOAs means judges and lawyers turn to the condo cases for guidance.  In a majority of the issues, the law is the same, but there are still differences between the two.  This is why it is important to have a lawyer for these types of cases and one that is experienced in HOA and condo law.  Not only are there nuances in the law, but both types of associations have special procedures for litigating.

Mandatory versus Voluntary - Are You Ruled by a HOA?

Many times I receive questions from people asking if they have a mandatory homeowners association.  What makes an association mandatory?  There are several factors to consider and a complete review of the governing documents of the association are required to provide a definitive answer.  There is no one size fits all answer to this question.

First, in order to create a mandatory association there has to be 100% participation in the association.  That is to say the deed restrictions creating an association must have been recorded before any property was sold to a buyer or any property which was sold would have to sign a consent and joinder agreeing to be a member of the association.  A mandatory association cannot have less than 100% participation because that would mean not everyone is a mandatory member.  

In addition to having recorded deed restrictions, those deed restrictions must include language of the intent to create a mandatory association and preferably contains language assigning the rights to enforce those restrictions and impose assessments from the developer to the association after turnover (i.e., the developer turns over control of the association to the membership).  

Many older deed restrictions do not contain this language and a recorded assignment is required to authorize the association to impose assessments and enforce restrictions.  Many of these older deed restrictions are nothing more than land use restrictions (no livestock, no chainlink fencing, etc.) and do not have language authorizing the creation of an association.  Many associations with these older documents claim to be mandatory and get away with it because homeowners are unaware of the requirements for creating an association.  After 1995 Florida law required associations to record the Declarations (deed restrictions), bylaws and articles of incorporation in the county where the association is located.  Subsequent case law provided unrecorded documents are not binding and enforceable against homeowners because they lack notice of the documents.

A mandatory association can be created after the fact (after the sale of lots) if 100% of the lot owners agree to be bound to the association.

Buying property in a development requires a careful reading of the documents.  Often developers create and record the documents for a mandatory membership, but never actually start the association until it is time to turn it over to the members or sell to a subsequent developer.  Homeowners will be caught unaware when all of a sudden the association comes into existence.  The developer can take up to five years to set up the association as long as the language is in the documents manifesting the intent.  The courts have upheld the validity of associations under these circumstances.

Homeowners should also be careful when there is a missing assignment.  The courts have allowed out-of-business developers to assign their rights to an association long after the developer ceased doing business. There is one case on record in which the developer was allowed to assign the rights eight years after he went out of business.

If you think your association might not actually be a mandatory association, hire a condo/HOA lawyer to review the governing documents (Declarations, Bylaws and Articles of Incorporation), as well as performing a research of the county records to look for missing documents.  If you are thinking of purchasing in a development, pay the extra money to have a review. 

Eligibility for the Board of Directors

Confusion often arises over who is eligible to run as a candidate for the board of directors of an association.  The answer is in the governing documents of the association; the Declarations, Bylaws and Articles of Incorporation.  The information is usually found in the Bylaws, but can be in other documents.  Unless the governing documents require a candidate to be an owner or member of the association, anyone is eligible.  While condominium documents usually require a candidate to be a unit owner, homeowner association documents do not usually have this requirement.

Both types of associations require, by state law, that any owner be current in any monetary obligations due to the association in order to be a candidate.  This means all financial obligations must be current at the time the election is conducted.  State law further prohibits a  candidate for the board who has been convicted of a felony is not eligible to be a candidate unless the felon's civil rights have been restored.  State law also provides a board member charged with a felony involving the association is automatically removed from office by operation of law.

Property Managers Behaving Badly

Quite often I receive complaints from homeowners about the behavior of the property manager, or community association manager (CAM) who manages the community.  These complaints can range from sloppy bookkeeping resulting in liens when there are no past due assessments to personal vendettas against a homeowner that lead to false police reports against the owner.

The first step to resolving these disputes, if negotiations with the CAM or the board of directors for the association are unsuccessful, is to verify the CAM and the company the CAM work for are licensed by the State of Florida.  You can do this by going to www.myfloridalicense.com/dbpr and clicking on the "Verify A License" link at the top of the page.

If the CAM or the CAM firm is not licensed, that will be the primary complaint, with the poor behavior secondary.

Some pointers for filing a complaint:

1. Keep it simple -- do not ramble on.  If you need to vent, write it all down on a piece of paper and then fill out the complaint with only the critical points.

2. Attach any documents which are evidence of the bad behavior.

In 2013 the Florida Legislature enacted laws which provide for more stringent penalties for "any violation of Fla. Stat. Chapter 718, 719, and 720, as well as contracting on behalf of the association with any entity in which the CAM has a financial interest, and any conduct which is considered gross negligence or gross misconduct.  The threshold for proving gross negligence or gross misconduct is high.   See Chapter 468, Part IV of the Florida Statutes at:

http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0468/0468PartVIIIContentsIndex.html&StatuteYear=2013&Title=-%3E2013-%3EChapter%20468-%3EPart%20VIII


The complaint forms  to file a complaint against a CAM are available at:

 http://www.myfloridalicense.com/dbpr/pro/cam/documents/cam_complaint_package.pdf.

The complaint forms to file a complaint against a condominium association, mobile home park or timeshare are available at:

http://www.myfloridalicense.com/dbpr/lsc/division/LSCMHComplaintFormIndex.html.

NOTE:  At this time the State of Florida does not regulate homeowner associations.  Please support the 2014 bill to create a regulatory agency, which will be proposed shortly.