Pre-Suit Mediation or Not?

A homeowner asked the question on www.avvo.com if moving from the community would mean he no longer needed to provide his HOA with an offer of pre-suit mediation.

Moving would not circumvent the pre-suit mediation requirement because the suit would, I assume, be based on acts that occurred while you were a homeowner.  Pre-suit mediation is not just for homeowners either.  It covers members, vendors, invitees, licensees, and guests.


Not all disputes require pre-suit mediation.  FS 720.311(2)(a) provides:

Disputes between an association and a parcel owner regarding use of or changes to the parcel or the common areas and other covenant enforcement disputes, disputes regarding amendments to the association documents, disputes regarding meetings of the board and committees appointed by the board, membership meetings not including election meetings, and access to the official records of the association shall be the subject of a demand for presuit mediation served by an aggrieved party before the dispute is filed in court.

A dispute over a financial obligation or enforcement of a settlement agreement are not subject to pre-suit mediation.  Also, any dispute in which a party seeks an emergency injunction is not subject to pre-suit mediation.  It is important to note that what you may think is an emergency is usually not one in the eyes of the court.

I don't recommend going to pre-suit mediation without a lawyer.  The HOAs usually have veteran lawyers who are very good at bulldozing over unrepresented parties.

Revitalization Question

Today I answered a question on www.avvo.com regarding the revitalization process and I think it is important to post the question and my response in this blog for those who do not or have not visited the Avvo website.

Question:

Our HOA's CC&R's have expired and an attempt is being made to revitalize the Declaration. In the interim, I am told we are a voluntary association and a not-for-profit corporation governed under FS617. 

Can the previous Board simply "take over" the corporation and run it without ratification by the owners? There is no confidence in the current Board and their continuing possession of documents, control over Management Company and bank accounts is regarded as hostile. Do owner/shareholders have a right to reorganize under any law?

Response: 

Here's a crash course on the Marketable Record Title Act (MRTA) and revitalization process governed by Fla. Stat. 720.403 - 720.407: 

1. It is possible for the Declarations to be valid against some lots, but not all. The Declarations can be preserved by being specifically referenced in a deed by the Official Record Book and Page Number or by reference to a plat that has the deed restrictions recorded on the plat. An analysis of each lot is required to determine if the deed restrictions have been extinguished by MRTA against that lot because the last reference is more than 30 years old. 

2. Revitalization can be used to breathe new life into the Declarations if they have ceased to govern one or more lots. 

3. The Declarations have no force and effect against those lots where the deed restrictions have expired and there is no duty to obey the restrictions or pay assessments. If the Declarations are revitalized they are not retroactive -- meaning the HOA cannot go back and collect assessments for the period of time between expiration and revitalization. 

4. It takes at least a majority of the homeowners to approve revitalization. It could be more if the Declarations require more than a simple majority to approve amendments to the Declarations. 

5. Revitalization is a very strict process which requires the HOA to appoint an organizing committee and to have a court reporter present at a meeting to vote on revitalization. While written consents can be used to gather the votes, if the bylaws and articles of incorporation do not provide for written consent the HOA is required to hold a meeting so homeowners can vote in person or by proxy (if proxies are allowed). 

6. If revitalization is approved by the homeowners the HOA has to apply to the Dept. of Economic Opportunity (DEO) for revitalization and, if granted by DEO, re-record the Declarations, index them against each lot and deliver a copy of the revitalized Declarations to each homeowner. The revitalized Declarations cannot be more restrictive than the original Declarations, although there are a few exceptions in the statute. 

To answer your question, in the interim the HOA still has bylaws and articles of incorporation which must be honored, including having elections and annual meetings. 

The revitalization statute was recorded in 2004. My opinion is this statute presents a constitutional issue on property rights and contract impairment for anyone who purchased their property before the statute was enacted. Statutes cannot be applied retroactively to change existing contracts and the Declarations, bylaws and articles are contracts between the HOA and the homeowner. This issue has not, to my knowledge, been litigated. 

If you feel your HOA is not following the procedures for revitalization properly you should consult with a HOA lawyer for an opinion. If revitalization is granted by DEO and you feel the HOA did not follow the procedures in the statute and any requirements in the Declarations, bylaws and articles (which is required by the revitalization statute), you have a very short period of time to petition DEO for an administrative hearing to challenge the revitalization.

CAMs in Control

In the past few weeks I have been contacted by community associations regarding issues they have with their community association managers (“CAM”) making decisions on behalf of the association without the board of directors being involved.  This seems to be an alarming new trend as certain CAM firms have started their own maintenance companies and terminate contracts with vendors to give their own companies the contract for services – all without the board’s knowledge or approval.  In one instance a CAM actually refused to allow a board member to vote and provided a legal opinion the board member was ineligible, which is clearly the unlicensed practice of law.  In another instance, which I have seen before, a CAM took it upon himself to take action against an owner despite the board voting to table the issue until they had a chance to talk to the association’s lawyer.

A CAM does not have the authority to make board decisions.  The CAM works for the Board of Directors, not in place of it.  CAM contracts have indemnification clauses, which means the association is liable for the CAMs actions and must pay for a legal defense should someone try to sue the CAM.  Owners cannot sue the CAM in most circumstances because the owners are not in “privity of contract” to sue the CAM, as established in the case of Greenacre Properties. v. Rao, 933 So. 2d 19(Fla. Dist. Ct. App. 2d Dist.2006), meaning the owners are not a party to the CAM contract.  This shield against liability means there are not many consequences for the CAM acting outside their scope of authority.

In my opinion, CAM firms being allowed to set up their own maintenance companies to provide services to the associations is not a good idea.  There is an inherent conflict of interest.  The CAM usually controls the association’s bank account.  The CAM will then make sure their maintenance company is paid, even if the work is not satisfactory.  I have come across instances where the work was not satisfactory, but the board was not aware of the issue because the CAM did not inform the board.  Why would they complain about their own work?

When the associations hire a CAM it is now important to inquire if the CAM firm has its own maintenance company and review the contract thoroughly to see how much control the board will relinquish to the CAM in hiring vendors or other actions which create liability for the association.  Many CAM contracts also provide the CAM with a “bonus” of 10% of the value of the contract for procuring a contract on behalf of the board.  I think it’s more of kickback then a bonus, but this is a common practice in Florida.

Selecting a CAM is an important task for associations.  It is up to the board of directors to perform their due diligence and make sure the contract is clear regarding decision-making activities.  The actions of an overzealous CAM could be costly and lead to litigation against the association.

Secret Board & Committee Meetings

I know it's been a long time since I wrote a blog, but I have to say it's not due to laziness, but rather success.  I have come up with a creative way to deal with HOAs and COAs (condo associations) pre-suit and business has been brisk.  I did answer an interesting question on www.avvo.com just now and I feel I need to share this one.  Here it is:

My HOA has recently enacted a "fine committee" after the recent change in law (720.305)2). I have tried in vain to find any details of what this committee does, its scope of work, a list of violations and fines and who the members are. There is nothing in meeting minutes and nothing has been added to the documents of the association that I can find. Does the HOA have the obligation to notify all homeowners and post the detailed information and process of each committee it forms? Or can it operate in secret on a need to know basis? They have done something similar with a very brief bullet in one newsletter that refers to a "stated late fee and collections Board policy" none of which I can find anywhere. Neither issue is covered in the rules and regs. Thank you for your time.

Your question set off numerous red flags for me when I read it.  The whole purpose behind many of the revisions to Chapter 720 of the Florida Statutes, the Homeowners Association Act, was to create transparency.  When governments operate in secret there is a chance for corruption and dictatorships to form.  The same goes for HOAs, which despite court rulings, rule like quasi-governments.

First, your HOA cannot impose fines against the owners unless the authority to do so is included in the governing documents (Declarations, Bylaws and Articles of Incorporation).  An older version of the statute provided rules for fining "if the governing documents so provide."  The statute was revised to remove the language allowing fines to become liens and foreclosures if unpaid.  Later it was revised to add that language back in if unpaid fines were more than $1000, but it also did not include "if the governing documents so provide."  This did two things.  The HOAs began claiming they had a right to fine by statute and instead of fines being $100, we now see fines of $1000 and more.  The HOAs do not have a right to fine by statute.  The statute in existence at the time the HOA was formed governs unless there is language in the HOA documents which say it is governed by Chapter 720 "as amended for time to time" or something similar.

All committees are required to keep minutes and if the committee has decision-making authority, then the meetings must be open to members and properly noticed.  The exception is fining committee hearings, which are not meetings, in which an owner is requested to appear and the committee will consider a fine. 

Board meetings and committee meetings which will consider and adopt policies must be open and properly noticed.  Any meeting which will adopt a policy or rules and regulations affecting parcel use must be noticed by sending the owners individual notices to their address of record 14 days in advance of the meeting.  Policies and rules cannot be adopted without an open board meeting.

If the Board of Directors is meeting in secret to adopt policies and rules, or adopting these by corresponding with email, they are violating state law.  The problem is there is no agency to regulate the HOAs and their violations are a civil matter, not a criminal matter.  Your only recourse is to ask for pre-suit mediation and then sue them if they don't settle, or start talking to your neighbors to get involved -- they need to wake up and pay attention to what is going on now.   If they wait until it affects them personally, they are liable to find themselves on the wrong end of a court 

A Win for the Homeowners in a Mortgage Foreclosure

Pineda v. Wells Fargo, 2014 WL 3608886 (Fla. 3d DCA 2014); decision rendered July 23, 2014 

The homeowners received a discharge in bankruptcy, releasing them from personal liability from all debts including their first and second mortgages.  A foreclosure sale was held on the second mortgage.  A third party bidder purchased the property, subject to the first mortgage, for nearly $100,000 more than the second mortgage’s foreclosure judgment. Pursuant to Florida Statute § 45.032(2) the owner was supposed to get the nearly $100,000 surplus.

However, the third party purchaser petitioned for the surplus and promised to use the money to pay down the first mortgage.  The purchaser argued that the owners would be unjustly enriched if they received the surplus because they no longer had any liability for the first mortgage note and would keep the money.  The trial court, claiming it was equitable,agreed and ordered the surplus disbursed to the purchaser with the requirement that the purchaser to use the money to pay down the first mortgage.

The District Court of Appeals held  the case was a “cautionary tale to bidders at foreclosure sales” and reversed because “[t]he statute is clear: the owner of record at the time of the recording of the lis pendens is entitled to any surplus proceeds.” The bankrupt owners are to receive the nearly $100,000 surplus and they can spend it anyway they want to.

I'm Back....And the Topic Today is Conducting Board Business in HOAs & COAs

It has been a while since my last blog.  I attribute this to the summer peak in business.  I don't know if it's the hot weather, adults dealing with children home from school for a couple of months, or the people from the North leaving the state and not being around to keep an eye on their association, but business is always brisk in the summer with associations behaving badly.

The topic for today is a change in the law stipulating to how board members can conduct board business. It is one I think will generate more litigation because board members can discuss board business by email and leave the homeowners out of the discussions. A new provision in the Florida Statutes allows board members to conduct and discuss board business through email, but any voting must be done at a meeting.  What we are now seeing is board meetings that last 15 minutes and under because the board members walk in and sit down, make a motion to vote on a topic, second the motion, vote and done.  Homeowners are not even aware of what the issues are much less get a chance to speak on the matter.

I recently read meeting minutes where the board voted to approve a contract with XYZ Landscaping.  No mention of two other bids or voting to see which landscaping company they should vote on -- it was already a done deal and they were just ratifying their decision. What does it matter anyway, right? With no state agency regulating HOAs there is no penalty for cheating unless the homeowner has deep pockets to sue.

HOA Emergency Powers - Legislative Update FS 720.316

There is trouble brewing on the horizon and it doesn't come from a hurricane, but the effects will be felt after a hurricane or some other natural disaster passes through.  I'm talking about the provisions in House Bill 807, which is now state law (FS 720.316) effective July 1, 2014, which give homeowner associations emergency powers in case of a natural disaster.  Those powers include levying special assessments, borrow money or pledge assets as collateral without a vote of the membership.  You want to know why I think it's a bad idea? Subsection (2) of the law states the authority granted in subsection (1), which I stated above, is "limited to that time reasonably necessary...."  Any time you see the word "reasonable" in a statute it will take a judge, at least two lawyers and close to $200,000 or more in legal fees and expenses to determine what is "reasonable."

Why would the Florida Legislature think giving HOAs a free pass on this is a good idea?  Do they really think life in a HOA is perfect for most people and all will be okay? These are the same people who could not get a bill passed to allow for a state agency to regulate HOAs -- they should know giving them more power will only add to the corruption and abuse that goes on in an unregulated industry.  My only guess is someone spiked the refreshments on Capitol Hill. This is why my friend, Jan Bergemann of CyberCitizens for Justice, thinks the HOA statute is the "Attorney Employment Act."  It will surely keep me busy for years to come.  

Let's revisit this after a hurricane hits Florida.  I would like any HOA or member of a HOA hit by a hurricane to let me know how this new law worked out for you.  Please prove me wrong.

And speaking of new laws....we now have a challenge under the Florida Constitution for retroactive application of a new law to an existing contract.  The law doesn't say it is intended to be applied to existing associations.  In the section authorizing special assessments, it comes slightly close. In subsection (1)(j) with "Notwithstanding a provision to the contrary, and regardless of whether such authority does not specifically appear in the declarations..."  Wait a minute -- the first part says the HOA can't do it if there is a provision in the association documents prohibiting it, but the part after the comma says the HOA can regardless of what's in the governing documents!  More billable hours for all attorneys! 

This one really disappoints me......

Community Association Law 2014 Legislative Updates

The information below is copied word for word from the summary of House Bill 807 located at http://www.flsenate.gov/Committees/BillSummaries/2014/html/728.  I will discuss each revision in the next coming weeks.

The provisions related to condominium associations include:

• Authorizes the associations to enter an abandoned unit to inspect the unit and adjoining common elements, to make specific repairs, and to maintain the unit, and permits the association to charge the unit owner for expenses incurred by the association,
• Provides the circumstances in which a unit may be considered abandoned;
• Provides that the insurance responsibility of the association or unit owners for reconstruction, repair, or replacement in the absence of an insurable event shall be determined by the provisions of the declaration or bylaws;
• Permits board and committee members to participate, including voting, in a meeting via telephone, real-time videoconferencing, or similar real-time electronic or video communication, and for such participation to count towards a quorum;
• Provides that the previous owner does not include an association that acquires the title to a delinquent property through foreclosure or by deed in lieu of foreclosure. The present unit owner’s liability for these costs associated with the collection process is limited to the amounts that accrued before the association acquired the title to the delinquent property.
• Prohibits condominium associations from recording a termination of condominium that failed to receive the required approval (80 percent of the voting interesting and 80 percent of the original principal amount of outstanding recorded mortgage liens of timeshare estates in the condominium, unless the declaration provides for a lower voting percentage). It provides that a new attempt to terminate the condominium may not be proposed at a meeting or by solicitation for joinder and consent for 180 days after the date the failed plan was first given to all unit owns;
• Repeals the Community Association Living Study Council; and
• Extends the time period to be classified as a bulk buyer or bulk assignee from July 1, 2015 to July 1, 2016.

For cooperative associations, the bill:

• Revises the financial reporting requirements by increasing from 60 days to 90 days the time to prepare a financial statement, or to contract with a third party to prepare the financial statement;
• Specifies the type of financial reporting required based on the association’s total annual revenue amounts;
• Limits the financial reporting requirement, for associations of fewer than 50 units, regardless of the association’s annual revenues, to the preparation of a report of cash receipts and expenditures, unless otherwise required by the declaration or other recorded governing documents;
• Provides that persons who have been suspended or removed by the division or who are delinquent in the payment of any monetary obligation due to the association are not eligible to be a candidate for board membership and may not be listed on the ballot; and
• Provides for the removal from office of a director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property.

In regard to homeowners’ associations, the bill:

• Requires that meetings of the board of directors of a homeowners' association and meetings of the association’s membership must be held at locations that are accessible to physically handicapped persons; and
• Provides that an association does not have to provide members with copies of an amendment to the governing documents after it is approved by the membership if a copy of the proposed amendment was previously provided to the members before the vote on the amendment and the proposed amendment was not changed before the vote.

In regard to condominium and cooperative associations, the bill requires outgoing board or committee members to relinquish all official records and property of the association in their possession or control to the incoming board within five days after the election. The bill provides that an outgoing board or committee member who violates this requirement is personally subject to a civil penalty by the Division of Florida Condominiums, Timeshares, and Mobile Homes. It also prohibits a board member from voting by e-mail.

For cooperative and homeowners’ associations, the bill authorizes boards to exercise specified emergency powers in response to the declaration of a state of emergency, including the authority to implement a disaster plan, mitigate damages, and borrow money with the approval of the membership.

In regard to condominium, cooperative, and homeowners’ associations, the bill provides that unit owners may consent in writing to the disclosure of contact information to which other owners are prohibited from having access.

HOAs - Don't Mess with the Disabled!!!

It's that time of year when all the community association law firms start blogging about the legislative updates to the Florida Statutes that will be enacted July 1, 2014.  It's interesting to read the various blogs because they always include what the writer interprets the meaning of the new statute will be and, if you read more than one blog, you get a more than one interpretation (flag on the play -- litigation imminent!).

Here's one that should be real clear and I credit John and Kim Whitt for standing firm and seeking justice. They proposed to our elected leaders to add two words to Fla. Stat. 720.303(2), which requires meetings to be open to all members. Those two words "and accessible" make a world of difference to people like John who is confined to a wheelchair.  Common sense and compassion for other human beings would lead you to think this is not necessary; after all, the Fair Housing Act requires HOAs to provide reasonable accommodations for those who request it in order to attend meetings. Well, no one goes around accusing HOA board members of using common sense with any regularity.  In fact, all I hear all day is about conduct that is not only senseless, but unreasonable, offensive, insensitive and ruthless.  But I digress.  While those two words didn't make it into the statute, a version of it did:  "A meeting of the board must be held at a location that is accessible to a physically handicapped person if requested by a physically

handicapped person who has a right to attend the meeting."

This was no simple task and I congratulate the Whitts and our political leaders for accomplishing this. At this point I bet you're wondering what led to this.  I am here to tell their story -- the real story.  Not some version with a spin on it to make the people think it was an innocent mistake.

John and Kim Whitt are wonderful people.  They are nice people.  They are not troublemakers.  When they bought their home in 2009 in a beautiful, rural community in Pasco County life for them changed. The community is comprised of 45 or so well-kept spacious homes on spacious lots, many of which are adjacent to wetlands.  Everyone's dream home, right?  The Whitts were eager to be involved in the community and to get to know their neighbors.  One obstacle faced them.  The HOA held it's meetings, as it did for a number of years, in a vacant lot with a cattle grate, livestock fence and extremely soft soil.  The meetings are held in a far back corner under trees with roots that made it impossible and still make it impossible for John to attend the meetings.  John asked the board if the meetings, not all, but at least some, could be held somewhere so he could attend and even offered his house.  He was refused.  A former board member, who is a contractor, offered to install a concrete pad a no charge to accommodate John's request.  The board voted against this. Of course in their version they offered to install the concrete pad and John refused, but that's just the usual HOA spin on facts to try and get people to believe they meant well.  John even offered the HOA to remove him from membership and the deed restrictions so the HOA would not have to comply. It's not like he was going to start a pig farm at his beautiful home.  Pig farms are prohibited by zoning ordinances in this area, but more on that later.  The HOA spins the tale the Whitts never wanted to be part of the community and when their request to be excused was denied they resorted to pushing the access to meetings as the issue.

Here we are five years later. The Whitts sued the HOA, but lost. I won't rant about that until I'm ready to relinquish my license to practice law.  The former board member/contractor and two other couples who own homes in the community sued the HOA because the deed restrictions had expired while the Whitts were litigating and were not properly amended to extend them.  They won on summary judgment.  No HOA.  The HOA is appealing, but going through the revitalization process as the same time. They are promoting revitalization by claiming if the deed restrictions are not revitalized they will be a community with pig farms.  I don't think any of the owners have a pot-bellied pig, much less a pig farm, which is illegal in this particular area anyway.  On top of that, the HOA has held the Whitts out in ill will to the neighbors every chance they get, blaming them for the high legal fees they incurred with a huge unpaid balance.  No one really knows what that balance is because not only will they not show the owners the amount due and the balance changes frequently.  If they think the HOA won, how come they owe so much money in legal fees?  

The Whitts may have lost the case, but evidently a lot of people, including members of the Florida Legislature and some decent people in their community, thought they shouldn't.  They were successful in getting the statute amended despite the HOA attorney saying they wanted to create the "Homeowners Association with Disabilities Act."  They have suffered for it.  Homeowners in their community who do not even know them despise them based on the tale the HOA spins about this -- a HOA that has been ruled to not have deed restrictions.  

And just for giggles -- the HOA now claims it is still a mandatory association without deed restrictions because the Articles of Incorporation and the Bylaws are still valid.  

Covenant Violations and the Fining Process - What Your Rights Are as a Homeowner

This is the time of year where our firm gets a lot of calls about covenant violations, mostly lawns that took a beating during the winter months.  The Florida climate, which goes from almost freezing to tropical in a 24-hour period, tends to be harsh on lawns, but I digress.  That's a blog about Florida-Friendly Landscaping.

There are several things the homeowner should know about the fining process because if you know what the law provides, it is less likely you will be taken advantage of by your HOA.  Remember -- knowledge is power.

A board of directors cannot impose a fine against a homeowner.  The HOA is required to have a committee of at least three (3) members, who are independent and are no relation to the board of directors, the property manager, officers, agents or employees of the HOA.  The committee should be comprised of an odd number to avoid a tie vote.  The odd number of members is industry standard and not part of the statute.  The committee has to agree by a majority vote to impose a fine, which cannot be retroactive, and the board of directors cannot override the vote to impose a fine, but can override the vote to withhold a fine being imposed.

The HOA is required to give the homeowner notice of a hearing to be held to vote on the fines.  The HOA is required to give the owner at least 14 days notice. Now here's where many HOAs get it wrong.  The statute, Fla. Stat. 720.305(2)(b) states "A fine or suspension may not be imposed without at least 14 days’ notice to the person sought to be fined or suspended...."  The statute does not say mailed at least 14 days in advance, IT REQUIRES THE NOTICE TO BE GIVEN TO THE OWNER AT LEAST 14 DAYS IN ADVANCE.

The statute also provides this is a hearing, not a meeting.  The HOA should not be noticing the hearing to the membership to attend as a lynch mob.  Hearings do not require notice.  The only people that should be present are the homeowners, the committee and if the HOA is going to present the case to the committee, a representative of the HOA.  This is usually the property manager or a board member.  The representative of the HOA should not be sitting in on deliberations and voting by the committee.  This would prevent the committee from making an independent decision.

If you find yourself in front of the committee, bring a recorder.  You have the right to do so, although the committee will probably say you don't.  Even board meetings are cut short and adjourned because board members tend to think you have no statutory right to record meetings.

You are entitled to obtain a copy of the minutes from the hearing.  The committee should create minutes and record the vote, listing the vote of each committee member.

If a fine is imposed, you should pay it and then challenge the decision.   Never risk your home.  If you pay the fine, the risk to your home is removed and you can challenge the decision without worrying about losing your home to a foreclosure.  Unpaid fines in excess of $1,000 can be the source of a lien and foreclosure.

Now, off topic, if you have one of those troublesome lawns that doesn't thrive no matter what you try to do to save it (you know, those St. Augustine lawns), then look into Florida-Friendly Landscaping (FFL).  You still have to submit an application to the ARC or ACC or whatever your HOA calls it, but by law the HOA cannot prohibit you from implementing FFL.  Check out the website by the University of Florida's IFAS extension at floridayards.org. 

As far as other violations go, please do not make improvements to your home without filing the ARC/ACC application and please do not store boats, trailers, RVs, 4-wheelers, jet skis and other recreational items on your property.  These are the biggest sources of fines in HOAs.

Buyer Beware - You Are About To Be A HOA Victim

NOTICE:  New out-of-state home buyers -- welcome to Florida and please turn over your new home to the HOA.

This has been going on for a while, but the number of owners contacting me because they have been victimized is increasing at a steady pace

Here's the scenario:

-  You sign a purchase agreement to buy a home in a HOA
-  Your closing documents have charges to pre-pay the HOA; sometimes for a couple of months,
    sometimes til the end of the year
-  You expect to get a coupon book to pay your assessments; sometimes you do, sometimes you don't
-  You receive an intent to lien notice for past due assessments despite not getting a coupon book or even
    paying your assessments
- You call the property management firm who tells you a) the bookkeeping hasn't posted all the payments
   b) it's not a mistake on their part and just send the money and they will fix it or c) they didn't receive your
   payment but send it in and they will take care of it
-  The property management firm doesn't tell you that you have incurred interest and late fees and maybe
   even attorneys' fees and any payment goes to the fees first and assessments last so you will continue to
   be past due
- The issue then snowballs into a dispute that involves the HOA attorney, who liens your house and then
   sends a notice to foreclose
-  Every phone call, email or letter to the HOA attorney generates more legal fees

What's really going on:

-  Unscrupulous property managers and attorneys work together to generate billable hours for both
-  You may have pre-paid assessments but the management company did not properly credit them
-  You were given an incorrect amount
-  Your payment was "lost" because there is no way to prove you did send it and a payment dispute
    means more money for the HOA manager and attorney
-  You are told they will fix the problem while they are really preparing a lawsuit to foreclose

The problem:

There is no defense to non-payment of assessments unless you can prove you did actually pay them and the HOA made a mistake, which is rare to have the proof necessary for this defense.

How to avoid the problem:

Ask you real estate agent or title company the name and address to send payments.  The title company should get this from the estoppel request they are required to send to the HOA.  Pay your assessments in advance at least until the first of the new year so you can be certain you get a coupon book.  Use a bill pay service so you have proof of processing and delivery of the payment.

Of course the best solution is to not buy a home with a HOA.

OPEN LETTER TO GOVERNOR SCOTT

Governor Rick Scott; This legislative session has clearly shown what you - as Florida's  Governor - areall about: A promoter for special interests with little  concern for Florida's citizens and consumers. When it comes to  homeowner association reform, your agenda has been anti- consumer and especially anti-homeowner.  As a registered Republican who has voted for the Republican ticket  all my life, I am plainly disgusted with your vision of Florida. You, with  the help of "Speaker" Weatherford -- speaker in the meaning of  speaking for special interest, have killed the single most important  consumer protection bill that was filed - or forbidden to be filed - during  this legislative session... a House companion to Senator Hays'  SB 1348. Are you really convinced that you can buy the votes of us citizens by  promising to decrease our annual car-registration fees by $25? Word had it at the beginning of the legislative session that only  non-controversial bills would pass and signed by you because of  the upcoming election. In the past few weeks it became obvious  that non-controversial was supposed to mean that the bill would be  ok if not opposed by special interest. You obviously didn't care if  the bill would be very controversial in the eyes of Florida's citizens.    Do you honestly believe that collecting campaign funds from special  interests will buy you back the Governor's mansion? Do you honestly  believe that all registered Republicans will vote for you despite you  having trampled on their rights and needs with feet?    Your desire to achieve a sound bite of "no new fees" or "no increase  of government", will allow - minimum for another year - the inability for  homeowners to file a simple complaint with your DBPR in the same  way a condominium owner can when abusive association leaders act  illegally.    Your actions will allow greedy investors to continue to kick families out  of their homes who did everything their contracts asked for (H 1061  didn't even get a committee hearing). And the list of consumer-friendly  bills killed behind closed doors goes on! The anti-owner bill H807/S798 is passing with flying colors with more  nonsense added in committees! Under the cover of clarifying existing  laws this bill will do nothing but create more lawsuits - lawsuits Florida's homeowners and condo owners can ill afford. The tag team of  Moraitis/Ring has created more financial damages to Florida's  homeowners and condo owners than the hurricanes in the last ten years  together! I guess many Republican homeowners and condo owners will remember  the good old times when we had a governor who helped passing  owner-friendly bills and signed them into law: GOVERNOR CHARLIE CRIST  SIGNING COMMUNITY  ASSOCIATION BILL H 995 From left: Rep. Kevin Ambler, Rep. Julio Robaina, Rep. Franklin Sands,  Rep. Yolly Roberson,  Rep. Joe Gibbons, Senator Alex Villalobos,  Rep. Juan Zapata ------------------------------------------------------------------------------------------------------------  After this for homeowners and condo owners disastrous legislative  session many of Florida's homeowners (est. 2,5 million) and condo  owners (est. 1.45 million) and their families will definitely remember  the good old times. I guess it's time for Florida's citizens to work on  much needed changes on November 4. My advice to all these  voters (using your words): "LET'S GET TO WORK!" Regards, Jan Bergemann, President Cyber Citizens For Justice, Inc.

Letter to Governor Rick Scott

Dear Governor Scott,

It was very disappointing to not have the bill this year to create an agency to regulate homeowner associations. 

Despite what the courts have ruled, a high percentage of these associations are dictatorships who widely abuse homeowners.  As my friend Scott Gardner said 'I doubt our founding fathers ever envisioned any private corporation having so much power over the citizens of this country."  Valuable property rights are gone. 

While the courts hold the position these people entered into a contract and they had a choice not to, this contract is one-sided. One-sided contracts are thrown out all the time. 

What people don't agree to in these contracts are to be ruled by boards who steal money or use the money for private vendettas. 

What these people don't agree to is being victimized by attorneys and community association managers who work I'm collusion to fuel disputes and billable hours. 

What these people do not agree to is having thousands of dollars of unregulated attorneys fees assessed against them if they are a couple days late with a payment or if their payment is lost.  

What these people don't agree to is being sued for exercising statutory rights such as implementing Florida Friendly Landscaping. 

These people entered into these contracts thinking if something went wrong the State of Florida would protect them.  The State has failed our citizens. 

The State of Florida has aided and abetted the creation of a system more corrupt than any government.  

Regards
Barbara Billiot Stage, Esq. 

Sent from my iPhone

Abuse of Power -- Living Miserably in a Florida Association

If I had to briefly describe Florida community associations (COAs, HOAs, Mobile Home Parks) I would sum it up to "abuse of power."  

A majority of the associations in the State of Florida abuse the power granted to them by the statutes and the governing documents (Declarations, Bylaws, Articles of Incorporation, and Rules and Regulations) of the association.  In the early to mid0-2000s, House Representative Julio Robaina, who was head of the House Select Committee on Condominium and HOA Reform set up town hall meetings all over the state to listen to the complaints by owners regarding their associations.  Hundreds of people attended these town hall meetings and only one or two people ever spoke up to say they were happy with their association.  As you can guess these one or two people were board members.

Don't get me wrong; there are a number of good associations out there who do their job without abusing the owners.  I know because the associations I represent operate their communities that way or I would not be representing them.

The problem lies with the association attorneys, as well as the courts and the Florida Bar for letting the association attorneys behave badly.  The problem lies with the Florida Legislature for not enacting more laws to protect the owners or creating an agency to properly regulate the associations.  Homeowner associations are not regulated at all.  The other types of associations that are regulated do not provide adequate protection for the owners or do not have jurisdiction to investigate the biggest problems, such as assessment disputes.  This means the only remedy available to homeowners is costly litigation and the attorneys know this.  They advise their clients the likelihood of someone litigating against the association is slim and even if they do chances are they will drop the case when they realize the money it will take, which is between $100,000 and $150,000 on average to get a case to court.  In fact one association law firm gave a  sales presentation that I sat in on and stated that 95% of the homeowners cannot afford to litigate against you. Their motto was "do now, defend later."  The board members, once educated on this fact, then start to abuse the power they have to suppress the property rights of the owners. 

Tactics include censorship of those outspoken owners and litigation against them if possible.  Associations will foreclose on an owner who is past due a few hundred dollars and is outspoken rather than foreclose on someone who owes more but doesn't make trouble.

Attorneys' fees are the biggest problem with association abuse.  The statutes actually provide for the owner to reimburse the association the attorneys' fees without a court action!  Even worse, any payments are applied to interest, late fees and attorneys' fees first.  Payments are applied to assessments last, so if you are past due, unless you pay the amount in full, you will always be at risk of foreclosure.  Knowing this, the law firms representing the associations pad their bills heavily.  A recent case I was involved in, where the association lost the client's monthly payment of $160 resulted in almost $800 the first month and $62.50 each month, minimum, just for handling an account in collections and processing the payment.  This client paid in advance several months at a time and there was only one month in dispute, but the association sold off the debt to a finance company who then applied hundreds of dollars in legal fees almost every month on top of the legal fees the association attorney charged.  The attorneys' fees reached $20,000 quickly despite one $160 payment being in dispute.

I have had clients who are turned over to the association attorney for collections and they are told they cannot go by the law firm and cannot call.  They are given the email address of a contact person to discuss settlement.  Guess what?  That person no longer works there and the owner is given two or three email addresses of former employees.  While I complained about this to the law firm several years ago, I recently discovered the firm is still engaging in this practice.  When they finally do read the emails the owner sent, they want to bill the owner for all the emails sent despite no one reading them when they were sent.

Violations are another area of abuse.  If your association doesn't like you, you will be targeted with violation notices and possibly fines, which then can be a lien and foreclosure on your home if the fines exceed $1,000 and are unpaid.

Life in an association does not have to be this way.  There is a better way of operating these associations, but until the State of Florida wises up and realizes they are promoting a "cash cow," not just for the attorneys, but for the community association managers, as well, life in an association will be a living hell with a dictatorship form of government.  By the way, the courts have ruled long ago associations are not governments or quasi-governments.

Community Association Living - Notice Requirements for Board Meetings and Member Meetings

Very rarely is a statute clear enough to avoid debate by lawyers taking different positions. Even if the law seems to be clear, it will still generate lots of questions with lawyers taking different positions.  The notice requirements in Fla. Stat. 720.303(2)(c) are a good example.

This statute provides the Bylaws will determine the notice requirements and if they do not then the following apply....  The statute then goes on to state BOD meetings are to be posted 48 hours in advance of the meeting in a conspicuous place in the community.  Exceptions to this are meetings to "levy" assessments or to change rules governing parcel use, which require fourteen (14) days notice to the members by U.S. mail to their home address.

The confusion comes in because the statute reads:

"An assessment may not be levied at a board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature of the assessments. Written notice of any meeting at which special assessments will be considered or at which amendments to rules regarding parcel use will be considered must be mailed, delivered, or electronically transmitted to the members and parcel owners and posted conspicuously on the property or broadcast on closed-circuit cable television not less than 14 days before the meeting."

Breaking this down, you can see the confusion.  First, what is the meaning of "an assessment may not be levied.."  It is unbelievable how much you can debate if an increase to an existing assessment is levying an assessment.  My opinion is each year when you set the rate of assessments you are "levying" an assessment. The next issue is the second sentence states the fourteen (14) day written notice is required for "special assessments" and ignores regular assessments.

Leave it to the lawyers to muck it up, right?  Just use common sense!  Play it safe and use the fourteen (14) day notice.  If your Bylaws have a longer period (many have fifteen days), then use that.  Out of precaution, don't use less even if the Bylaws permit it.  Industry practice has been to use the fourteen (14) day notice as a guideline.  When in doubt, be conservative!

Victory for Homeowners! No Deed Restrictions!

Yesterday was a good day for the homeowners who scored a victory in their fight over deed restrictions in Bayhead Landings.  It was a tough battle with me, being the only attorney with my firm handling HOA cases, against Becker & Poliakoff.  For those of you who do not know B&P, they are the biggest association law firm in Florida.  

This battle was over deed restrictions which included a specific expiration date without any of the usual automatic renewals.  In order to extend the deed restrictions, 75% of the owners and mortgagees had to vote to amend the expiration date.

The issue in this case was the method for obtaining the approval.   For this community it meant just one method -- voting in person or by proxy at a meeting.  This was the method provided for in the bylaws. Additionally, Fla. Stat. 720.306(1)(a) states "Unless otherwise provided in this chapter or in the articles of incorporation or bylaws, decisions that require a vote of the members must be made by the concurrence of at least a majority of the voting interests present, in person or by proxy, at a meeting at which a quorum has been attained."

The HOA didn't follow these rules and instead collected ballots door-to-door.  Their argument was one we see a lot.  Fla. Stat. 617.0701, governing not-for-profit corporations, allows voting by written consent.  The problem is this conflicts with Fla. Stat. 720.306 and Fla. Stat. 617.1703 states in the event of a conflict with Chapter 720, Chapter 720 will prevail.

The funny thing is this case was not about not wanting deed restrictions.  My clients actually supported keeping the deed restrictions.  What they could not support was the way the HOA went about doing it.  It's pretty much a safe bet to say that if a HOA doesn't follow the rules and procedures for one issue, they tend to ignore the rules and procedures for dealing with other issues.  This wasn't about not wanting deed restrictions, but about playing by the rules.

How To Tell If You Bought Into A "Bad" HOA (Or Condo Association)

When potential clients tell me they think they made a mistake and bought into a "bad" HOA or COA, if it's a condo association, I tell them right away, without hearing their issues, they have a 95% chance they are thinking correctly.

So how do you tell if your association is "bad?"  Most of the time you can't tell until it's too late, but here are a few signs:

1.  The Declarations are more than 20 pages (sign of over regulation by the association);

2.  The Rules and Regulations have more restrictions than the Declarations (sign you have contracted away any constitutional property rights you think you have);

3. The association owns its own maintenance company, landscaping company, rental company, security company, or any other for-profit company (sign of corruption and/or fraud);

4. A board member is the community association manager (CAM), a.k.a. property manager, or any other paid position (sign of corruption and/or fraud plus harassment and bullying);

5. The board members' homes look nicer than everyone else's (sign the board are getting freebies from contractors, such as free landscaping);

6. Board decisions are made on an issue by simply voting with no discussion of the issue at the board meeting (sign the board is conducting business by closed meetings -- most likely email, which is a violation of Florida law);

7. Your board tells you that you will do as they say, when they say it (sign the board has a really nasty law firm representing them and you life as you know it is over. Welcome to Hell. This is otherwise referred to as a dictatorship if you could convince the State of Florida these really are quasi-governments. At this point items 1 - 5 probably apply.);

8. You're welcome to the neighborhood is loaded with F-bombs (I should have sold my home and moved then, which was three days after my move-in date). Oh yeah, this is a sign your board is made up of people who failed miserably at their careers and they get an ego boost by thinking they can intimidate you.

Wonderful Websites for Homeowners

I just received notice of a posting recommending a good website for homeowners to obtain information. There are a number of websites for Florida homeowners on both the local level and the national level.  I recommend using a website call "Feedspot" (www.feedspot.com) to link all of these websites to one page and you can get updates by accessing this one website.

The one recommended was www.hoawarrior.com.

I also recommend www.avvo.com and search for legal opinions by "HOA" or "Condo." You can limit your search to Florida or leave the location blank and see what's going on in the rest of the country. Same thing, different place.

I also recommend www.ccfj.net, which is a Florida organization with lots of information and they report the latest court rulings.

For those fighting their HOA with Florida Friendly Landscaping, which is a right provided in the Florida statutes:  www.floridayards.org and https://fyn.ifas.ufl.edu/

Believe it or not some of the top association law firms distribute some of the best information. I don't always agree with their blogs, but they are  for the most part usually truthful.  After all if you don't know what the other side is saying, how are you going to fight to protect your rights?

http://www.floridacondohoalawblog.com/

http://www.hoalawblog.com

More good websites (names are self-explanatory):

http://blogs.sun-sentinel.com/condoblog/

http://feeds.feedburner.com/CondolawByDonnaDimaggioBergerEsq

http://www.thehoaprimer.org/

http://www.tahrc.com/

http://www.condoassociation.com/

Associations -- There is a Better Way!

It's no secret I have been an advocate for homeowners embroiled in disputes with their associations.  I originally went to law school to practice employment law.  I changed directions when I bought my home in a HOA and my welcome to the neighborhood consisted of a volley of "f-bombs" from someone claiming to be the HOA president.

In the past couple of years I have changed direction in my practice of community association law.  Not only did I realize individual owners suing an association is difficult for my clients, both emotionally and financially, but creates a hostile environment for everyone that often lingers even after the dispute is resolved. I now focus my attention on representing the associations.  I figure I can make a difference by helping associations proactively avoid litigation rather than helping the owners litigate.  Not all disputes can avoid litigation. There will always be those one or two homeowners in every community that will be stubborn or even aggressive and want to fight, but litigation should be a last resort.

Let's face it -- if your association has a bad reputation it will affect property values and the resale of homes. Desirable associations attract home buyers.

The ingredients for a good association are education, communication, the right CAM and the right lawyer.

Most homeowners do not intentionally violate the covenants.  Just because the homeowner received a copy of the governing documents, doesn't mean they understand them.  If they did, most members who are past due in their assessments would realize the association can lien and foreclose on their home and would keep the assessments current.  I come across homeowners every day who believe if the bank is foreclosing the association cannot foreclose.  They are surprised when their homes are sold by the association with a bank foreclosure pending.

There is a simple fix to this.  The association should have a website the provisions of the governing documents can be explained, broken down in individual topics, and then promote this website regularly. Make sure new owners receive the web address right away.  Encourage members to review the website before undertaking improvements to property.  There are a number of services out there which help those technology-challenged individuals build a website.  If a website isn't feasible, create a newsletter!  Now you have education and communication!

Another point about communications -- confrontational notices do not work.  It is human nature to become defensive when being harshly reprimanded.  I believe the first notice to a homeowner should be a gentle reminder and an invitation to discuss the issue at a meeting if necessary.  The old saying "you catch more flies with honey" is true. You will get more owner cooperation if you acknowledge they either did not know better or forgot and have a chance to remedy the situation.  Threatening to send them to the association lawyer if they do not obey demands only ends up costing the association and owners more money for legal fees.

The right CAM is important.  Identifying the right CAM is not so easy and there is no one size fits all.  Some associations need the CAM to be very involved and some only need a CAM to collect assessments, pay bills and send out violation notices.  The right CAM will meet your expectations and work well with the association.  The wrong CAM will partner with the lawyer to increase billable hours for both of them by fueling disputes.  The wrong CAM will control the association funds and keep board members out of financial decisions.  The wrong CAM will make board decisions without the board members being involved. The wrong CAM will think it's their job to run the association, not the board.  

The same applies to the lawyers.  The right lawyer will answer the board's questions and encourage the resolution of disputes early.  The wrong lawyer will lead the board to believe they have the ultimate power and cannot lose a dispute. The wrong lawyer will bully and abuse homeowners.

Associations should be proactive when dealing with violations and collections.  Identify the problem areas and work on them proactively.  Make sure your owners know not paying assessments means they risk losing their home and usually quickly.  Let them know the association doesn't want their home, but has a duty to collect assessments from everyone.  Let them know financial hardship is not a defense the courts will entertain.  Offer a payment plan to help out those who are already past due, but be aware that if the association lawyer handles the payment there are outrageous fees to set it up and process payments.  The association can facilitate the payment plan so it stands a better chance of success.  If your association has authority to impose fines, make sure the members know about the process and don't try to rig it by appointing members to the fining committee who are friends and supporters of the board or biased against the owner.  Make it a fair hearing before the fining committee or the association will most likely end up in litigation.  Make sure all members are aware of the process for applying for approval to implement improvements to their property.  Communicate on a regular basis those items that require approval as well as those that do not.  

There is a better way to have an association and not make everyone in it miserable.  It's not easy because most members of the association don't care to be involved or hear about it, but it is possible.