Thursday, April 4, 2019

Transparency in Community Associations

It's been quite the busy year so far, so I apologize my blog posts have been few and far between.  Trying to make a difference in Florida community associations is a major task, but comes with some rewards. Our firm was again a winner of the Florida Community Association Journal's Readers' Choice Awards.

The topic for today's blog is transparency.  Transparency is a good thing.  Associations should recognize if they want their members to pay their assessments on time, keep their property maintained and volunteer to help the community, then transparency is the place to start.  The Florida Legislature has started pushing for this with the recent legislative updates to the Condominium Act, Chapter 718, Florida Statutes, by requiring condominium associations with 150 units or more to have a website and post a good number of the official records on the website.  This statute has not been enacted in Chapter 720 governing homeowner associations, but maybe we will see this in the future.

Some of the biggest complaints I hear from homeowners are about transparency --  the HOA will not provide them copies of the records, the records are not easily obtained, the HOA is hiding something.  Now I will be the first to admit this is a red flag for me and I suspect something fishy is going on with the money if the HOA is fighting too hard to keep the members from seeing the financials.  I also recognize some board members do not understand their duties, do not know what records to keep or how to keep them, which records can be disclosed and not disclosed, or how to set up a website to store the documents so members can see them without going through the certified letter, return receipt process.  Those are the HOAs I am eager to represent so I can train their board members on the right protocol.  

The homeowners need to understand the HOA has no duty to respond to a request to send copies to them.  There is a duty to provide access to the official records and allow the members to make copies at the inspection.  

Often this request makes even honest board members suspicious.  It's only natural to get defensive when a request is received and perceived as an attempt to catch you doing something wrong.  And board members make mistakes while homeowners tend to accuse them of intentional wrong-doing.  If everyone would just be respectful of each other and act in a civil manner a good number of these disputes would not even be disputes.

My advice is:

  • HOAs put your official records on a website if possible or set up one of the free software applications like Google Docs or Dropbox to share documents with members.  Not only is it easier, but it takes out the possibility of confrontations if one side just can't be civil and respectful.
  • Homeowners use the certified letter, return receipt in order to obtain access to records so that you document your request and everyone knows the deadline (10 business days from the date the receipt is signed).  Also, make your request clear and if possible exact.  Asking for "all official records" is your legal right, but it is creates some difficulties because the HOA may have boxes and boxes of records which you will have to go through and may be required to pay for a management person to assist in going through with you.  In addition, it comes across as a fishing expedition and like all fishing trips, you may have to keep casting lots of times before you get the fish you want.  If you are looking for a specific financial transaction, narrow down the description of your request.
  • HOAs remember you cannot ask the homeowner why they want the document.
  • Everyone keep in mind the HOA does not have to produce a document it does not have.  This means no creating special reports if the reports are not used in the normal course of running the HOA.  If there is a document the HOA should have and can reasonably obtain it without any undue hardship, then the HOA should get it after the first request so it is available should a second request be made for that document.

Wednesday, February 13, 2019

Working with an Attorney to Solve Your HOA Horror

Everyday I receive calls from homeowners with horrific stories of how they are being treated or things their association is doing which violates state law.  If I didn't have my assistant running interference I would be on the phone all day and not working, i.e., making any money to keep the firm going.  Most people get upset when they find out we don't offer free consultations or they can't speak to me to ask "just one question."

I would love to provide everyone with free help, but then I would be out of business before the end of the month.  Free advice is not something lawyers should give out.  While the person asking means well, they are only providing limited facts, which can change the answer had I known all the facts. Even worse, if someone misunderstands our advice, acts on what they think I said, and it doesn't turn out well, they will want to sue me for malpractice.

The reality of the situation is these cases do not qualify for a contingency fee arrangement (pay only if you win) because no one was physically hurt (in most cases) and even if you win you are only entitled to reasonable attorneys' fees, which is not usually 100% of your attorneys' fees. It's not that our fees aren't reasonable.  Judges just do not tend to award fees for items like excessive telephone calls between the attorney and the client because the client initiates lots of calls (what the judges call "excessive hand-holding"), and travel time to and from the courthouse, just to give a few examples.

This leaves the homeowner faced with paying an attorney their hourly rate as the work is performed. Unfortunately, most homeowners cannot afford this.  Even if they could, is it wise to spend upwards of $100,000 fighting over your landscaping or attorneys' fees for past due assessments?  For some I can tell you the answer is "yes!"  For others I can tell you they either do not want to spend the money or cannot even afford it.  The associations count on most people not being able to afford it or not wanting to risk this amount of money.  Even worse yet, if the owner loses (and someone has to lose), the owner is faced with reimbursing the association its reasonable attorneys' fees, making it less likely an owner will sue their association.

My advice, as I have stated over and over again, is to read your governing documents (Declarations, bylaws, articles of incorporation, rules and regulations) from the first page to the last page and commit them to memory so you don't risk violating the restrictions and you know your rights.  Also, read the chapter of the Florida Statutes governing your association (Chapter 718 for condominiums and Chapter 720 for homeowner associations).  Finally, GO TO MEETINGS!!!  If no one is watching then no one is accountable.  It's very easy for boards to take a short cut in their duties if no one cares.  Then one short cut leads to more short cuts.

If all else fails, gather your evidence carefully.  Submit those requests to inspect the official records and when you go to the records inspection make sure you make readable copies.  Use a scanning program on your phone or tablet.  Pictures are quick and easy but often distorted and useless.  Go to meetings and audio or videotape them.  Take photographs and videos of the community if the issue involves conditions around the community.  Make sure you bring these to any attorney you hire to represent you or even if you are just paying for a consultation.

Monday, February 4, 2019

The Marketable Record Title Act ("MRTA")

There's been lots of discussions regarding the Marketable Record Title Act ("MRTA") lately with some of the most back and forth discussions coming from the Real Property, Probate and Trust Law ("RPPTL") section of the Florida Bar.  This piece of legislation is very complicated and it is nothing short of amazing how different facts can produce different legal opinions. 

Recently Chapter 720 of the Florida Statutes, also known as the Homeowners' Association Act ("the Act"), was revised to provide for a more expeditious process to file a Notice of Preservation.  The Notice of Preservation is done before the covenants expire against any lots, which is usually the 30th anniversary of the date the covenants were recorded.  Note the word "usually."  I'll get back to that later.

The Act also contains a section for revitalization of expired covenants, which is a whole different process from preservation.  Once covenants have expired against any lot a homeowners' association is left with only revitalization to try and breathe new life into the old covenants.

The hard part for most non-lawyers to understand is covenants can expire against just one lot, but not all the lots.  It's not as simple as saying the covenants are 30 years old and because no Notice of Preservation was filed, they cease to exist.  Covenants can be preserved in a number of ways, including a reference on a recorded plat by the Official Records Book and Page.  Covenants recorded on a plat in such a way do not expire which is why I used the word "usually" with caution.

Covenants can also be preserved in the chain of title to a lot by the recording of a deed which references the covenants by the Official Records Book and Page within the last 30 years.  This is why a title search is necessary before an opinion can be rendered whether or not the covenants expired against that particular lot.  

Once covenants have expired against a lot the HOA cannot enforce those covenants against that lot or usually cannot collect assessments from that owner. There's that pesky word "usually" again.  The exception to this rule regarding the collection of assessments would be very fact specific and based on a theory of unjust enrichment.  An example would be when an association owns the roads and the lot owner uses those roads to get to and from their home.  It would be unfair for the owner to use the roads but not be required to contribute to the repair and maintenance of those roads, which is called unjust enrichment.  The court would have to make such a determination based on the facts specific to that lot.