Association Collections and Bankruptcy - Info for Board Members

One of the biggest issues facing associations is the ability to collect from delinquent owners who have filed bankruptcy.   It is critical an association has an attorney experienced in creditor bankruptcy law in order to avoid waiving the right to collect those assessments from the delinquent owners, which often is thousands of dollars.  Below is some general guidance for associations:

• Whenever the association receives notice an owner has filed bankruptcy, immediately send the notice to the association attorney, who should file a claim with the bankruptcy court on behalf of the association.  Make sure the claim is filed.  For some reason not all attorneys file these claims on behalf of associations.

• The bankruptcy court issues an "automatic stay," meaning the association cannot contact the owner to collect a debt.  Leave the collections to the association attorney.

• Owners have a duty to pay assessments as they come due after filing.  If the owner does not pay, notify the association attorney, who can file a motion to lift the automatic stay.

• Bankruptcy does not mean the past due assessments cannot be collected. It simply means the association cannot go after the owner personally by garnishing wages or other collection measures.  The association can still foreclose on the property "in rem," meaning against the property only, not "in personam," which is against the person.

• Delinquent owners can strip the association lien in a Chapter 13 bankruptcy if the first mortgage exceeds the value of the property.  It is important for the association attorney to monitor the case and properly object to lien stripping.  There has to be a credible valuation of the property with a thorough survey.

• If the bankruptcy case is dismissed, the automatic stay is lifted, usually 15 days after the order is entered, and the association can pursue it assessments, interest, late fees, attorneys' fees and costs as normal.

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.

Tips & Tricks for Living in a Florida HOA (or COA)

Our firm limits its practice to community association law, which is the technical term for the field of law dealing with homeowner associations (HOAs) and condominium associations (COAs).  We also handle work with other types of communities, such as mobile home parks.  We represent both associations and individual homeowners, so we see both sides of the problems.  Everyday we receive multiple calls from homeowners who have problems with their association, often after they have gotten into trouble.  We have blogged about this topic numerous times, but since the laws are revised each year, the advice is subject to change, although not much.  More importantly, we feel the need to say it over and over to help as many people as possible.

Tip No. 1:

Read your association documents and not just the ones you were given. You should have Declarations of Covenants, Conditions and Restrictions (aka Decs or CCRs) or a Declaration of Condominium plus Bylaws, Articles of Incorporation and most likely Rules and Regulations or Architectural Guidelines (or both).  Go to the official records for your county, by searching on the name of your county and Official Records.  Look for a link to search the official records and search for amendments, supplements, modifications, restrictions, bylaws, articles, and notices for any new restrictions or amendments and modifications to the originals, plus any notice of preservation if the original Declarations are approaching thirty years old.  This applies to HOAs only, not COAs.  Read every document carefully and if you are unsure of the meaning and it may have some effect on you or your property, ask a lawyer to interpret it for you.  The best way to stay out of trouble is to know the rules and obey the rules.  The best way to keep your association from becoming corrupt is to know the rules and make it obey the rules.

Tip No. 2:

Read the Florida statutes governing your association (Chapter 720 for HOAs, Chapter 718 for COAs and Chapter 723 for mobile home park lot tenancies where you own the home, but rent the lot).  Familiarize yourself with the relevant statutes, but do not try to cite them and cram them down your Board of Directors throat, at least not without asking a lawyer if your interpretation of them is correct. Knowing the law helps protect you, but misquoting or misinterpreting the law makes you look like a troublemaker and a nut job.  Plus, there is case law (judge's rulings) which interpret the statutes and give them a meaning other than what a layperson would think they mean.  Not all judges interpret them the same way and different jurisdictions (courts in different counties) could have different rulings.  Even the appellate courts (there are five in Florida) do not always agree on the meaning.  The law is not always black and white.  That would be too easy.

Tip No. 3:

Never withhold your assessments (aka dues, maintenance fees).  The law does not permit it.  Here is where the law is black and white.  If you do not agree with the way the association is being operated or managed, either recall the Board of Directors, elect new board members, or seek legal advice.  Withholding your assessments will result in you being foreclosed on and losing your home.

Tip No. 4:

Always pay your assessments.  While this sounds like Tip No. 3, it is not.  Often owners experience some kind of hardship, whether it is financial, family, or physical.  Your association cannot give you a break because you cannot afford to pay and the courts are not allowed to give you a break either.  Inability to pay is not a defense and the association can foreclose on your property a lot faster than any bank.  It can also foreclose even though the bank is foreclosing too.

Tip No. 5:

Always ask permission before making changes to your property.  If you are unsure if you need permission, check your documents.  If you are not positive whether permission is required or not, ask an attorney to review the documents.

Tip No. 6:

Never proceed with an improvement if your application has been denied -- even if you think the association is wrong.  The law requires you to get a court order, called a declaratory judgment, determining who is right and who is wrong.  Proceeding despite a denial will just result in a lawsuit against you.

Tip No. 7:

Always keep you property maintained.  The courts cannot consider financial hardship.  When you purchased a property in an association, you agreed to keep it maintained.  The excuse you were unaware there was an association is not a defense.

Tip No. 8:

Participate in meetings and even campaign to be a board member. Get your neighbors involved. If no one is watching what is going on it is very easy for an association to become a corrupt organization.  If you do not agree with the way the association is being operated and managed, become a board member or recall the Board of Directors.  Legal fights are expensive. Volunteering is not.

Tip No. 9:  Whenever you apply to your Architectural Review Committee (ACC or ARB), save a copy and when you get it back approved, save that copy FOREVER.  More importantly, make sure you get it back.

The Importance of Insurance for Condominium Owners

I continue to be amazed by the number of condominium owners who contact me after they have lost everything in a disaster and had no insurance to cover their personal property and the improvements in their unit, such as kitchen cabinets, or to protect them from liability for damages to adjacent units.  The "this will never happen to me" mentality can result in financial devastation.

If a fire were to destroy everything, the condo association ("COA") is not liable, in most instances, to fully restore your unit, especially if the fire is caused by another owner or tenant.  In most instances, the COA is only liable to restore the unit to bare floors, walls and ceilings -- no fixtures, no cabinets, no floor coverings, not even paint on the walls.   This scenario gets even worse if your the unit owner liable for the fire when an appliance or electrical outlet short circuits.  You could be on the receiving end of a lawsuit by every other unit owner affected and their insurance companies. 

The same problems would occur if there is a water leak, which are very common in condominiums -- toilets overflow, air conditioning units leak, and pipes under the sink can fail.  In this scenario, not only are you liable for your damages, and your tenant if you rent, but you are also liable for any water leaking into or flooding an adjacent unit.

Get that insurance!

My Email Regarding HOA Reform Bill and Affordable Legal Representation

I wrote this to Senator Alan Hayes, House Representative Mike La Rosa, Florida Bar President Ramon Abadin and my friend, Jan Bergemann of Cyber Citizens for Justice (www.ccfj.net):

Gentleman,

I am writing to you today, as an attorney who represents both homeowners’ associations and homeowners who are being victimized by their associations. The HOA Reform bill is critical at this point and comes at a time when the president of the Florida Bar, Mr. Ramón Abadin, has pointed out, in the November issue of the Florida Bar Journal, the need for a new business model because the working class cannot afford an attorney and do not qualify for legal aid.  I see this injustice every day in my practice as I have to tell clients the high legal fees and costs they would incur to hire me to protect them from being another HOA victim.  These cases are not the type that are done on a contingency because rarely has someone been physically injured.  I turned down at least one case a day, sometimes as many as five.  Yesterday it was three.   Most firms won’t represent the homeowners because the associations are a “cash cow.” 

The homeowners’ associations are unregulated and the condominium associations have limited regulation with the Dept. of Business and Professional Regulation (“DBPR”) not having jurisdiction over assessments, which is the biggest source of abuse for homeowners.  Even the appellate courts, in a case called Ocean Two Condo. v Kliger, where the Court stated “Because of the statutory lien rights and the power to prosecute the foreclosure action, an association and its attorneys have ample leverage, and the unit owners have very little. Every telephone call, meeting, or hearing regarding the genesis of the dispute and the amount due produces an incremental unit of attorney billings, and every day until resolution of the dispute increases the interest tariff.” 

In my practice I have witnesses law firms that have paralegals do all the work, yet the homeowners are billed attorneys’ fees, not paralegal fees.  I have witnessed a law firm give sales pitches to associations during hiring interviews and state that “95% of the homeowners can’t afford to sue you and the 5% that can will soon learn that money can be used for a vacation, their children’s college, or retirement and will give up.”  Unfortunately, this is true.  I have seen a law firm give homeowners a letter stating they could not call or come to their office to resolve their assessment delinquency, but could fax their credit card or email and then are given the email address of a former staff member.  Once I got involved the charges ballooned from $795 to over $3,600 with the attorney telling me he had to read all those emails the owner sent trying to get a response.  This is outrageous and had I not gotten involved he would have forced the homeowner to pay those ridiculous legal fees.

The industry not only needs more regulation, but more affordable legal representation. Let’s give DBPR jurisdiction to arbitrate assessment disputes.  This is the biggest source of abuse.  Arbitration is less expensive for the homeowner and the threat of arbitration might help tamper the abuse.

Regulation of the homeowners’ associations is needed to help curtail the abuse of out of control board members.

Right now there is a rise in homeowners’ associations setting up their own corporations to perform work normally performed by vendors.   This results in the board of directors putting their family members on the board of these corporations as paid directors, if not themselves in some cases; the board members receiving free services, the members being denied access to see accounting records of these corporations even though their assessments paid to set up this corporation and bought any equipment, furniture or other assets.  Several times I have witnesses where these corporations are either owned or operated by a board member or have contracts with a board member.  Some associations set up these companies to operate a receivership or rental program to take control of homes in foreclosure, which is needed, but instead funnel the rental income to themselves or the corporation without the association getting a dime.

There is also a rise in the community association management firms setting up their own corporations to perform work normally performed by vendors.  These corporations are then paid top dollar and paid promptly with no one given a chance to dispute an invoice.

There is a rise in the number of cases in which deed restrictions have expired under the Marketable Record Title Act but the HOAs continue to operate as mandatory associations and threaten to foreclose on owners who refuse to pay because they know the chances of the owner affording an attorney are slim.

I have witnessed board members targeting homeowners they do not like.  This targeting sometimes includes criminal activity, which is hard to prove.  Any witnesses refuse to get involved because they know they will be targeted.

The Village Condominium Association in Orlando was taken over by a board member who slowly was able to get rid of anyone who did not agree with him and then proceeded to give himself the management contract, the security contract (with armed security despite not having the proper licenses), and the maintenance contract.  This board member marked all the board members’ assessments as paid each month despite no payment.  He was able to take approximately $40,000 a month from the association (which we documented), depleted the reserves and diverted money from insurance claims to his own pocket. A receiver was eventually appointed to take over and the board removed.

I could write a book on the atrocities committed against homeowners, including cars being set fire, fake bombs on lawns, handicapped owners in wheelchairs being refused to attend meetings and harassed, racial discrimination, sex discrimination, discrimination against veterans.  I have witnessed homeowners being evicted from their homes for past due assessments when their home was in a trust and the association demands the rent be paid to them from the “tenant.”  And let’s not forget the Higgins v. Timber Springs case in which Mr. Higgins was foreclosed upon while on active duty in the military.  Our firm was able to get the foreclosure reversed.  We took the case pro bono, one of the few we could afford to handle as a small firm, because Mr. Higgins could not afford an attorney and was trying to deal with this situation while deployed. 

The sad part is when I have to give these homeowners a quote of the fees to litigate they decide it’s easier to sell their home and move, sometimes to another state.

I apologize this email is so long, because I know your time is valuable, but I appreciate the efforts each of you are making in trying to protect the rights of our citizens.  So many of them lose their homes, not because they can’t afford them, but because they upset their HOA, became a victim, and cannot afford an attorney.  Thank you!

Regards,

Barbara Billiot Stage, Esq.

Tenants Attending HOA Meetings!

A common question I run into involves HOAs and condo associations (COAs) denying tenants attendance at meetings.  This is a big mistake for the associations.

The problem started with revisions to the Florida Statutes. Years ago Chapter 720 (HOAs) and Chapter 718 (COAs) used to provide rights for the members or "their authorized representatives" to attend meetings.  Over the years revisions to the statutes removed that language and the HOAs now erroneously believe they can ban non-owners from meetings.

This thinking runs afoul of the Fair Housing Act because Fla. Stat. 720.305(1) requires members, their tenants, guests and invitees to all comply with the governing documents and Chapter 720.  The FHA requires associations to provide those governed by the HOA access to attend meetings

How An Association Can Get Into Trouble Over Assessments - BOARD MEMBERS PAY ATTENTION!

With the volatile economy more and more associations are changing property management firms and law firms, but there are some problems which can arise and the association would probably be on the losing end of litigation.

Many owners contact me because their associations have made these changes and now they are unable to pay their assessments because the information regarding where to send payments is not timely distributed to the members.  When a member's check or electronic payment is returned, this is a refusal of a tendered payment, which is not permitted by Florida law.  Should the association attempt to lien and foreclose, the member not only has a valid defense, but could also bring a counter claim for breach of contract.

It is imperative for associations to notify their members immediately of any changes to make sure payments are not being rejected.

Change Your Address with the Association!!

All too often I am asked for advice on dealing with associations filing a lien or foreclosing on a home and the first statement the homeowner makes is "I never received a notice."  Unfortunately, rarely will that work as a defense to save your home from being sold at a foreclosure auction by your association.  

You have to give your association your address where you receive your mail!  It's foolish to think if you don't update your address to get notices and payment coupons a judge not order a sale of your home.  You have a duty to notify the association of your most current address.  You also have a duty to ask for the amount due if you don't receive a notice or payment coupon.  The courts have ruled against homeowners consistently on these issues because if you live in a community that has a sign with the communities name on it at the entrance, you have notice your community is governed by an association and you pay assessments to that association.

Avoiding the mail or a summons does not work either.  All the association has to do is prove they mailed the notice to the correct address. If you avoid a summons the courts allow the associations to serve you by publishing a notice in some obscure small newspaper no one reads.  Its usually too late by the time you find out you have been served by publication because the court can then enter a default judgment against you.  Plus this just adds to the attorney's fees you are required by state law to reimburse the association (that's if you can come up with the money to pay off the demand or judgment and save your home).

The bottom line is don't be foolish.  If you can't afford to pay the association, call them and try to make payment arrangements.  The association can foreclose on your home quickly and faster than a bank because the association is the original creditor and not a third party who took it by assignment.

Community Association Managers (CAMs)

Laws Regulating CAMs

Fla. Stat. 468.431 requires a CAM to be licensed when "the association served contains more than 10 units or have an annual budget or budgets in excess of $100,000." The management firm is required to have a license as well. CAMs are limited in what duties they can perform by statute as well as an advisory opinion issued by the Florida Supreme Court. 

The advisory opinion has designated activities which would constitute the unlicensed practice of law, such as drafting amendments to documents, drafting proxies, preparing liens, advising anyone how the law applies to a set of facts or circumstances, interpreting statutes, administrative code, the governing documents of an association or contracts, drafting contracts or drafting legal notices. CAMs are licensed and regulated by the Department of Business and Professional Regulation ("DBPR"). Effective July 1, 2013 laws were enacted to create more regulation of CAMs and penalties for violating the regulations. A CAM can be subject to penalties for any violation of Chapters 718, 719 and 720 of the Florida Statutes.

But the Real Problem Is.....

There seems to be a rise in the number of complaints I hear from associations who state their CAM who make decisions without consulting the Board of Directors ("BOD") or take actions against homeowners without BOD approval. I frequently come across liens and foreclosures for trivial amounts against homes which the BOD will claim they did not authorize. I often expect the BOD is not being honest and is throwing the CAM under the bus, but there have been some instances I have investigated where the lien or foreclosure is not in any meeting minutes and the CAM made the decision on their own. I have heard from several associations the CAM handles all the finances, including which bills to pay and when. I have even come across associations claiming the CAM will not let them have access to the association funds. Even more troubling is when the CAM is making board decisions without input from the BOD. The courts have judicially dissolved associations which delegate the board duties to a CAM. It rarely happens, but has happened. Or worse yet, the court can appoint a receiver, which makes assessments skyrocket. Board members need to know their fiduciary duty is to operate and manage the association, including making financial decisions and signing checks. If no one is watching the checkbook except for the person who gets paid regularly with checks, you are not doing your duty! Don't get me wrong -- there are some wonderful CAMs out there, but the BOD should know what their CAM is doing because the association is responsible for the CAMs actions.

Single Biggest Mistake Is.....

Whenever there is a turnover of board members due to an election or other events, the CAMs are naturally concerned because the new BOD can terminate their contract. All too often I come across CAMs who will continue to work with the former BOD to try and oust the new BOD. I have seen CAMs sabotage records and meetings and provide former board members with privileged documents. I have seen CAMs try to circumvent the election process. Associations need to know if their CAM is engaging in this behavior the association needs to replace the CAM because the potential risk of litigation against the association is high in these situations.

Conclusion

Board members need to communicate with their CAMs at the slightest hint of these problems. Sometimes the BOD is sending mixed signals and the CAM needs clear instructions. Anytime there is a change in board members, the board should meet with the CAM to discuss expectations. If something does happen, the board should provide the CAM with a letter outlining the situation and an opportunity to cure the situation. The BOD-CAM relationship is supposed to be a partnership and not a battle of egos.

Assessments Current But The Association Insists Assessments Are Past Due - Who Is Right?

What do you do when the association claims you are past due with your assessments and your records indicate you are current?   

Answer:  Address this immediately because the association can lien and foreclose on your property!  

Don't ignore that first Intent to Lien Notice!!  It will not resolve itself or go away.

You need to attempt to resolve this now before a foreclosure gets recorded because even if you win, it still shows up in the public records and court records and cannot be removed. 

Here's the things you need to check for:

The association is required to send you two copies of the Intent to Lien Notice and then, after filing the lien, two copies of the Intent to Foreclose Notice before foreclosing.  Each notice is sent by regular mail and certified mail.  Avoiding signing for the certified mail will do more harm than good because most judges will consider the mail received if you leave it unclaimed.

The notices are sent 45 days in advance for homeowner associations and 30 days in advance for condominium associations.

While you have a good defense if this procedure is not followed, you are risking losing your home.  Better to be proactive and get it resolved rather than waiting for a summons to be served by the sheriff.

Check to see if you were late.  If you were late with any payments, the HOA is entitled to the interest, late fees and attorneys' fees. So while you may think you are paid up to date, if you were ever late and only paid the assessment, you are past due because all the other charges are paid first and the HOA last.  Do not submit the assessment payment to the association thinking you can pay the interest, late fees and attorneys' fees later.  Once your account is with the attorney, you are liable for all of the charges.  State law protects the associations on this issue and provides for payments to be applied to assessments last.

If, after all these issues are considered, you still are certain you do not owe the additional fees, I suggest you pay what they are asking and then sue the HOA. If there is a property manager (CAM) and/or attorney involved, I suggest filing a complaint against their licenses if you are certain you were never liable for additional charges. It's not unusual for HOAs to stand firm even when they are wrong because they figure you can't afford to sue them (it is expensive). 

Time to Pay Assessments - Even If You Don't Receive a Bill

One of the biggest issues my clients have with their associations is past due assessments because they did not receive a bill from the association.   Don't make the mistake of thinking you have a defense if they do not send out a bill.  The state laws protect associations and do not require them to send the bill.

Florida courts have ruled an owner is on notice of assessments due by virtue of purchasing property subject to an association and it is the duty of the owner to make sure those assessments are paid.  If you have not received your bill for your assessments, it is your duty to contact the association to find out if the amount has changed and to remit payment.

Also, remember -- the association is entitled by law to all interest, late fees and attorneys' fees and costs if you are past due.  IF YOU HAVE BEEN TURNED OVER TO THE ASSOCIATION ATTORNEY FOR COLLECTION, SEND PAYMENT TO THE ASSOCIATION ATTORNEY.  Attempting to avoid these fees by sending the assessments to the association directly will only cause you to incur more fees and costs.  The association will either return your payment (even though they are required to accept it) or forward it to the attorney.  No matter how they handle it, by law, the payment is applied to everything but assessments and if there is any leftover then it is applied to assessments.  Until you pay the full amount you will always be past due.

Bottom line -- you cannot get out of paying the assessments because the association may not have sent a bill or, because of mail service, you didn't receive the bill and the association can LIEN and FORECLOSE on your property for non-payment.

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.

What's Constitutes A Board Meeting?

Board meetings are a big source of complaints when it comes to HOAs and condo associations.  Fla. Stat. 718.111 governs BOD meetings of condo associations or COAs and Fla. Stat. 720.303(2) governs meetings of HOAs or homeowner associations.

There must be a quorum (majority) of the BOD present in person (or by telephone conference as long as the attendees can hear the member appearing by phone or Skype) in order to have a board meeting and to conduct board business.  Secret voting and proxies are not allowed for board members to vote or attend.  If there is not a quorum present, then the BOD cannot conduct business and any actions would be null and void.  It would also be a breach of fiduciary duty to conduct a meeting without a quorum.

You are entitled to record all board meetings and the board cannot prohibit this.  They also cannot ask why you are recording.  If a board meeting is being conducted in violation of the statutes, you should record the meeting and object to the meeting being conducted.

Avoiding Trouble with Your Association

A big source of disputes between owners and their associations concerns claims by the association the owner made changes or improvements to their property or unit without permission of the association. The owners often claim they sent an application to the association and after not receiving a response for more than thirty (30) days, proceeded with the changes or improvements, believing approval was automatic if the association failed to respond.

This is a big mistake! At one time there was a statute providing automatic approval if no response was received and many association documents also contain language for the same, but the dispute arises when the association claims it did not receive the application. The owner must be able to prove the application was submitted. This can be done by submitting all applications by certified mail, return receipt in order to track delivery of the request.

Make sure any approval is in writing. Quite often a board member or property manager will give verbal approval only to deny it later when other board members object.

Also, check your Declarations and Bylaws before assuming no response equates to automatic approval. If there is no language granting automatic approval, then you have to take steps to obtain the written approval. This is especially important now that the Florida Legislature has put back the statute allowing associations to lien and foreclose on fines. If your association imposes a fine against you for unapproved changes or improvements, you could lose your home. Even without the language, your association could sue you to obtain an injunction forcing you to return your property or unit to its original state. Even more important, once you are labeled a troublemaker by your association they will make your life miserable. Unfortunately they have a lot of power to do just that.

In summary, always submit an application by certified mail, return receipt and, if you do not hear from the association within thirty (30) days, contact them to find out when your application will be reviewed. Make sure to get the approval in writing and do not rely on verbal approvals.

Do Members Get to Speak At Meetings?

One of the most misunderstood statutes governing community associations (homeowner and condo) is the statute giving owners the right to speak at board meetings or members’ meetings.

Members, under Fla. Stat. 720.303 (homeowner associations) and Fla. Stat. 718.112(2)(c) (condo associations) have a right to speak at meetings on any agenda item. The association has the right; however, to adopt “reasonable” rules regarding frequency, duration and manner. There’s that term again – reasonable. I equate reasonable to requiring costly litigation to define the term.

Industry practice has been to allow owners to speak for up to three minutes at the end of a meeting, which was how the statutes read. This is counter-intuitive because the agenda items have been discussed and voted upon by the board. It negates any impact the speaker has in voicing their opinion. The statutes have been changed to be more flexible, but the associations have not.

Playing devil’s advocate, I can understand the need to conduct business this way. Every association has at least one member who could be a filibuster in the Florida Legislature. They will challenge every topic and monopolize the meeting. This means meetings last hours and other owners quit attending.

I urge the associations to adopt rules regarding the owners’ right to speak at meetings and adopt something reasonable. Here’s an idea – any topic that requires the board to vote should allow the owners to speak for three minutes, speak only once on that topic, and the speaker will be timed.

Community Association Living [Part 4:Staying Out of Trouble]

My practice consists mostly of representing homeowners against their HOA (single-family homes) or COA (condos) and about half of my clients retain my services because they are being sued or about to be sued by their association. The problem is most homeowners do not understand their associations are in a superior position. Most people do not respond well to the covenant violation notices or intent to lien notices. The first reaction is usually "this can't be legal, this has to be wrong." Unfortunately, common sense doesn't dictate right or wrong in these cases and the law is very much on the side of the associations.

The first step to staying out of trouble with your association is to attend board meetings. Keep an eye on what's going on and what your board of directors are doing. If no one is holding them accountable they will think they can do and get away with anything. Even the most well-intentioned board members can lose sight of reality and what is legal if they are contributing a lot of their time to manage the association and no one cares to question their actions.

So what do you do if you are already in trouble? Do not ignore those notices!!! The problem will not go away. Even if you think the notice is wrong, rarely do the associations say they are wrong, they made a mistake and please forgive them. In fact, some will even tell you not to worry, its a mistake and then file a lawsuit to take your home.

If you have a notice for past due assessments, pay it in full. If you don't have the money, get a loan. If you can't get a loan, consider Chapter 13 bankruptcy. Chapter 7 will not save the home, but if you have income, Chapter 13 will save your home. If the notice came from an attorney, don't try to pay the association directly thinking you can avoid the attorneys' fees. You can't. By law any payments are applied to attorneys' fees first, then late fees and interest plus any other collection costs, and the assessments last!! While the association may accept your payment, the payment will be forwarded to the attorney and you will still be past due in paying your assessments. Even if you are past due $5, legally, the association can foreclose on your home. Trying to call the attorney and set up a payment plan will only incur more attorneys' fees. You can send the attorney a written offer of a payment plan, which is what the attorney will request anyway, but most law firms charge $250 or more to set up the payment plan and around $50 to process each payment. That's a lot of money to add to an already past due bill. Most associations have required the bill to be paid in two to six months, but with the state of the economy, many are considering one year payment plans and some will offer two years. Just keep in mind the extra fees the law firm charges for handling a payment plan. Also remember your association can foreclose even if your mortgage company is already foreclosing.

If you have received a notice of a covenant violation, do not ignore that either. Many times owners receive a notice for something that may have existed, but was recently corrected. Still do not ignore the notice!! Let the association know the condition was recently cured!! If your association is threatening a fine please note you are entitled to a hearing before a three member independent committee (no relation to board members or property managers) and the association has to give you fourteen (14) days notice of the hearing. You will have a chance to present your case and the committee has to vote whether or not to fine you. If they choose not to impose a fine, the board of directors cannot override the decision. If you have not fixed the violation they are accusing you of, then contact the association and let them know how soon you can fix it. Don't make the mistake of thinking they cannot force you to fix it. Most of the time they can.

Finally, always get approval from the association before making changes to your property. This is required in every association and the association has the right to make you restore your property to the original condition.

You have to keep in mind you gave up valuable property rights purchasing property subject to an association. You entered into a contract, even though you may not have known it at the time, and you are bound by the terms of that contract (the Declarations, Bylaws and Articles of Incorporation.)

While you can litigate against your association, it is very expensive and the loser has to reimburse the winner their attorneys' fees. These cases are not the type a lawyer will handle on a contingency because there are no physical injuries that would warrant big judgments. If you find an attorney who says they will take the case on a contingency, there is a high chance they have never handled an association case before. There are many procedural requirements to litigating against associations and a mistake could be very costly.

There are very few defenses to a lawsuit by your association. There is no excuse for not paying assessments, even if the board members are stealing money. The only possible defense is if the assessment imposed is invalid, which is rare. There are few defenses to not obtaining the association's permission before making improvements to your property.

Know the rules, play by the rules and make sure your association plays by the rules. If they don't your best and most inexpensive option is to organize a recall of the board.

Last but not least, pay attention to any bills that are being voted on by the Florida Legislature. Every year several bills are introduced and make their way through both houses. Contact your elected officials and let them know why they should or should not vote for a bill. A good example is the hard work my group of colleagues did years ago to remove the right of associations to lien and foreclose on homes for unpaid fines. The law was re-enacted, with a requirement the fine has to exceed a $1000, a couple of years later because the associations put pressure on the politicians. The change didn't help homeowners because now the associations just make sure your fine exceeds $1,000.

Does this sound all doom and gloom? If it got your attention and made you realize your association has way more power than our Constitution intended, then my job is done. Protect yourself by getting involved. Know what your board of directors is doing and know what your legislators are doing. The only way to stop the abuse is to hold everyone accountable.

Does State Law Prevail Over Declarations? - It Depends

The typical answer to any legal question is "it depends." There are no simple answers. Ever.

When dealing with a community association (HOA or condo) and there is a conflict in state law and the governing documents (Declarations, Bylaws, Articles of Incorporation and Rules and Regulations) state law prevails, unless the documents were recorded before the law, but not if the law is remedial, curative or enacted as public policy. There are several cases dealing with this which have established case law or judge-made law, the most recent being Cohn v. The Grand Condominium, but the rule is based on the Florida Constitution, which provides no new law may be applied retroactively to change a contract. The governing documents are contracts between the association and the members.Thus, it depends.

When the documents conflict with each other, Declarations prevail over Articles, Articles prevail over Bylaws And Bylaws prevail over Rules and Regulations.

Associations & Board of Directors

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!!