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.

This Could Be You!!!

RESIDENTS AT WINDMILL VILLAGE MOBILE HOME PARK IN DAVENPORT PROTEST UNREASONABLE LOT RENT INCREASES.

When you buy a manufactured or mobile home and rent the lot, there are no guarantees your rent will remain at an affordable level. READ THE FINE PRINT!!!!

The War Is On - Florida Friendly Landscaping Battle with Florida HOA

Please visit this website to help Renee Parker fight the Summerport HOA in Windermere, Florida. http://www.indiegogo.com/Florida-Friendly/emal

In 2009 former governor Charlie Crist signed into law a revision to the Homeowner Association Act, Fla. Stat. 720.3075(4), which states "may not prohibit or be enforced so as to prohibit any property owner from implementing Florida-friendly landscaping …"

This law is very important as Florida faces droughts and is considering importing water from the State of Georgia due to water shortages, yet Florida homeowner associations are still taking homeowners to court claiming they cannot implement their Florida-Friendly plans. The HOA attorneys claim they are not prohibiting the Florida-Friendly landscaping, but have the right to regulate it. The problem is their "regulation" of the landscaping plans does indeed inhibit it.

Keep your eye on this case -- Summerport Homeowners Association v Jeff and Renee Parker. It's a very important battle.

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!!

HOA & Condo Liens - Saving Your Home

Frequently I am asked to help homeowners settle their past due assessments with their condo or homeowners association. This is a very serious situation because the association can and will foreclose much faster than any mortgage company or bank.

Frequently homeowners make the mistake of assuming that 1) if the mortgage company or bank is foreclosing, the association cannot; 2) if the homeowner pays the past due assessments, but not the interest, late fees or attorneys' fees, the association cannot foreclose; 3) sending a check to the property manager will stop the foreclosure; 4) the homeowner can withhold assessments if the association is not doing their job and 5) the association can waive some of the past due assessments and charges.

These are all incorrect and a big mistake. Trying to get around these issues will only increase the attorneys' fees and other charges the association is entitled by law to correct.

It is very important to note that BY LAW, any payments are applied to attorneys' fees and costs FIRST, interest and late fees NEXT and assessments LAST. Unless you pay the full amount being demanded, you will always be past due in assessments and the association can foreclose.

Your options, if you cannot pay the full amount demanded, are:

1) Negotiate a payment plan;

2) File Chapter 13 bankruptcy.

The first option may not be the ideal solution because many association law firms charge $250 to set up the payment plan and $50 per month to process payments, which adds considerably to the amount due and owing.

Chapter 7 bankruptcy is not an option for saving the home. The discharge of association assessments in a Chapter 7 applies only to assessments that came due prior to filing bankruptcy and only extinguish the debt to the person, not the property. This means the association can still foreclose against the property. Also, the homeowner is still liable for assessments that come due after filing bankruptcy.

If a homeowner wants to avoid the foreclosure of the pre-petition assessment lien, the homeowner will have to pay off the pre-petition debt (either in full or through a settlement with the association) even though that debt has been discharged, or file a Chapter 13 bankruptcy which will allow the homeowner to spread the debt over a five-year payment plan. The association may or may not be entitled to 100% of the charges and if the association fails to file a claim, they will not receive any pre-petition assessments and charges.

Nuisance Rules in Covenants and Restrictions

Many HOA and condominium documents contain a restriction that reads "an owner shall not cause anything to be done which will interfere with the rights of other owners and the enjoyment of their property," or something similar. I get a lot of questions from owners being disturbed by their neighbors asking why that rule is not enforced by the association. The problem is the rule is very broad, vague and hard to enforce. In fact, many times the courts refuse to enforce

The board of directors has the power to create reasonable rules. They cannot create new covenants and restrictions, but can clarify existing covenants and restrictions by creating reasonable rules and regulations. The association should address specific nuisances by creating a reasonable rule to specifically address the nuisance.

The key is figuring out what is reasonable. The courts use a "reasonable person" standard and there's lots of court cases to define that standard, but there is not any one definition for every set of facts and circumstances.

Are the Declarations of Covenants, Conditions & Restrictions the only enforceable restrictions?

A unique question from a reader was received this week and I thought it would be interesting to share. A 1987 case, Young v Tortoise Island Homeowners Ass'n Inc., was about a homeowner wanting to install a roof that the HOA did not approve. There was nothing in the Declarations (CCR's) prohibiting the roof. While the court sided with the homeowner and allowed the roof, the court pointed out a very interesting rule of law. The court commented restrictions can be enforced that ARE NOT in the Declarations when there is a "unified scheme" in the community and the homeowner should know that variations are not allowed. The court stated that had the community had homes with only one type of roof (let's use a flat roof as an example), then the homeowner is on notice that no other types of roofs are allowed. This comes up occasionally with chain link fences. If you do not see a chain link fence in your neighborhood then you are on notice chain link fences are not allowed even if they are not mentioned in the Declarations.

Mobile Homeowner Associations

One of my favorite legal websites is www.avvo.com, where readers can post interesting questions.  Today a reader asked me about how to form a homeowners association for mobile home parks, which are voluntary associations under Fla. Stat. 723.  Here's my answer:

There is a special statute for mobile home park lot tenancies, Fla. Stat. Chapter 723. You can organize a HOA, which is voluntary and different from a HOA under Chapter 720 for homes on owned lots. You would need a majority of the members to approve having the HOA represent their interest and it's really a good thing, especially when those lot rent increases come in every year. The Department of Business and Professional Regulations and the Federation of Mobile Home Owners both have materials to help you organize. There are sections of the Florida Administrative Code that also govern the parks and supplement the statutes. You can also partner with other associations in other parks for help. I know most of the associations are willing to be helpful. Check outwww.fmo.org for the Federation of Mobile Home Owners and DBPR's website for the statutes, rules and other materials:http://www.myfloridalicense.com/dbpr/lsc/index.html.

Buying a Foreclosed Property

The most frequent question I am asked lately concerns the unpaid assessments on a foreclosed property being sold by a bank.  Anyone buying a foreclosed property must really do their homework and not only check county records for liens, but check with any homeowner or condominium association to find out the balance of unpaid assessments.  This debt is not extinguished in a foreclosure.

Condominium associations and homeowner associations have a continuing lien that runs with the land.  The safe harbor provisions of Fla. Stat. 718.116(1) (for condominiums)  and 720.3085(1) (homeowner associations) apply to the banks only and not any third party purchasing from the bank.  The balance of the assessments is due and payable by any buyer.  You can go after the previous owner for the debt, but chances are they do not have sufficient assets to pay.

There is one thing you can do.  Insist on an itemized statement with no lump sums.  This is one area that is subject to over billing practices because the previous owner is not around to dispute the debt.  There is disagreement in the legal profession on whether or not legal expenses for the association defending the foreclosure can be attached to the debt, but until someone has a lot of money to litigate this issue and then possibly appeal the decision, the only recourse against these fees is to ask the association to consider waiving them.

Your Mortgage Trust May No Longer Exist

If your mortgage is held in a securitized trust (the Plaintiff is a trustee) you should search the Securities & Exchange Commission website using their EDGAR database.  The lastest discovery in foreclosure defense is that the trust may no longer exist!  If the trust does not exist, the bank cannot be a trustee.

To find out if your mortgage trust has been dissolved, find the name of your trust in the database and then click on the links to the documents that have been filed.  If the trust has filed a form 15-15D there is a good possibility it no longer exists because this form is used to suspend financial reporting requirements.  You will need to submit an inquiry to the SEC to determine if the trust still exists because there are other reasons for filing the form, but it is definitely worth the trouble if you can get the foreclose dismissed because the Plaintiff Bank lacks standing and capacity.

Estoppel Scams

Buyer Beware -- especially if you purchase at a foreclosure auction.  The latest scam is to inflate amounts due for past due assessments by claiming excessive fines, attorneys fees for the mortgage foreclosure work and excessive costs for collections.

The HOAs are protected because the debt runs with the land.  While you can collect the past due assessments from the previous owner, you are liable for any assessments currently due. Whether or not you able to collect from the previous owner is always a challenge.

This does not mean you are completely without defenses. There is a new trend for HOAs to lump on all kinds of charges to run the bill up and many may or may not be legal. The problem is it could easily run way more to fight them.

You should pay them a reasonable fee ($75-$125) for an estoppel and demand an itemized accounting of all charges (no lump sum amounts). By law they have 15 days to provide this or you can file summary proceedings in court.

Demand any fines be documented with proof of notice that the owner was notified of a covenant violation and an independent fining committee met and voted to impose any fines. This is one of the most abused items.

There are no court cases on point, but I argue legal fees for the HOA as a named defendant in a mortgage foreclosure are the costs of doing business. No where in the Florida Statutes or the Rules of Civil Procedure do I find any authority for a defendant to pass on the costs of litigation to a co-defendant without a court order. HOA attorneys do this anyway. Because they are entitled to attorneys fees for the collection of past due assessments without a court action filed, they believe the statute gives them the right to pass on all attorneys fees without court action. I disagree!

Check if the HOA is allowed to charge late fees and what the maximum interest they are allowed to charge. This information is in their Declarations and Bylaws. Many overcharge!

Florida Friendly Landscaping - It's the Law!

July 1, 2009 the Florida Legislature enacted a new law, Fla. Stat. 720.3075(4)(a) and (b), which makes it unlawful for any association to prohibit the implementation of Florida Friendly Landscaping. Florida Friendly landscaping is defined as any landscaping that conserves water and reduces the use of pesticides, herbicides and fertilizers.

Despite this wonderful new law some association attorneys are still demanding owners plant St. Augustine grass, which is not Florida Friendly in most locations, especially Central Florida.  These overzealous attorneys claim that while the associations cannot prohibit Florida Friendly Landscaping, they are entitled to regulate it and can still require a percentage of the lot be sod.  While the statute does not address the need for owners to  submit applications to their Architectural Review Boards (or committees), good common sense would suggest the application be completed and submitted.  This does not, however, give the association the right to deny the landscaping and to suggest the association can regulate and require certain grasses and percentages of the lot to be sod goes against the very clear meaning and wording of the statute.

The Florida Friendly Landscaping website, which is hosted by the University of Florida and the Southwest Florida Water Management District, have an interactive database.  You can select the type of plant according to the amount of sun, water, soil type and salt content of the soil.

The website also has a list of plants and their requirements for growth.  For example, Bermuda grass and Bitter Panic grass on the only two grass listed for dry conditions. St. Augustine grass is listed as requiring wet soil. Other grasses, such as Zoysia, Centipede and Lopsided Indian requrie moist-dry conditions.  This clearly establishes St. Augustine does not conserve water and landscaping companies recommend watering St. Augustine grass four times a week!

The problem with the association attorneys is they are counting on you not spending the money on huge legal bills to fight for your rights.

The Lien and Foreclosure Process in Florida

The association is required to give notice to the homeowner prior to filing the lien by sending two copies of the notice, one by regular mail and one by certified mail, that includes the amount due and the deadline for payment. For HOAs this is 45 days and for condos this is 30 days. If you missed payments, the lien will include the assessments, interest, attorneys fees, and if the governing documents allow, late fees. Once you are turned over to an attorney for collections any payments are applied to all the fees first and assessments last. 

After the lien is recorded the association must then go through the same process to foreclose before filing to foreclose on your home. Once you receive a summons, you have 20 days to file an answer and affirmative defenses or a motion to dismiss. The association will file a motion for summary judgment, which means there are no disputed facts and the association should get your home without a trial. 

DO NOT ATTEMPT TO HANDLE THIS WITHOUT AN ATTORNEY. Your best option is to negotiate a payment plan or file Chapter 13 bankruptcy to put this in a 5-year payment plan. Chapter 7 will not save the home. 

If you missed any payments, fighting over the amount with the association is useless in almost all instances because it will generate attorneys fees that you are liable for and must be paid to keep your home. The courts will award the attorneys 100% of their attorneys fees if you are at fault, even if it's a small amount and their numbers are wrong. 

The courts are facing having their funding cut thanks to the foreclosure cases clogging up the dockets. In many cases good case law is being ignored to move the cases out of the courts and owners are being denied justice and due process because of budget concerns. This has changed the owners slim chance to virtually no chance, but that's my personal opinion.