Rental Restrictions

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

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

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

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

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

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

Mandatory versus Voluntary - Are You Ruled by a HOA?

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

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

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

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

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

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

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

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

Eligibility for the Board of Directors

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

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

Conflicts - What Motivates Board Decisions

No matter how nice your community is now, it doesn't take much to change your little slice of heaven into a nightmare.  A new board of directors, a new property manager, a new association attorney, or the neighbors from hell can all wreak havoc on a community and create misery for everyone.  The misery comes in the form of higher assessments for legal fees, those intimidating covenant violation notices and possible fines, past due assessments which spiral out of control with legal fees, interest and late charges, or what I refer to as "neighbor wars," often fueled by one or the other claiming the association supports their position.

Avoiding conflict is best achieved by understanding the governing documents, understanding how an association functions and operates, understanding the various people managing and operating the association, and understanding common problems that may arise between owners or owners and the association.

The biggest complaint I hear are owners who feel victimized by their associations, the association's attorneys, or the property manager.  While it does happen and unfortunately frequently, knowing what motivates the actions and conduct of your association helps to keep you out of the crosshairs.  Once you have that target on your back there is little chance of ever living in peace.  Even if you are successful in litigation, chances are, unless you move, you won't enjoy living in the community and there will always be animosity. 

It takes all kinds of personalities to make up a community and you cannot not possibly get along with everyone or make everyone like you.  Add to the mix a board of directors of a private corporation with a contract you entered into waiving many of your property rights and you have a recipe for disaster if you are not prepared and informed.

While a have a theory the worst of board members are those who failed at their careers and decided to run your association so they can have their egos stroked, many board members start out with good intentions. Some have what it takes to do a good job without making enemies, but many are just average people with the same stresses in life as everyone else -- jobs, family, finances, mortgages, health concerns, etc.  Board members take on a voluntary job (at least they better not be paid or they are violating state law) and try to manage the community with limited funds.  The association, nine times out of ten, has a revenue stream that is generated by assessments only.  Many owners lose sight of that fact and assume it's a corporation with profits and a fat bank account.  Nothing is further from the truth.  Most associations are non-profit organizations with a limited budget based on the amount of assessments per household and an average of 25% to 40% of those households are not paying the assessments and are in a mortgage foreclosure.  Think of it like this -- what would you do if your paycheck was cut 40%?  Ouch!  On top of that you have everyone in the community complaining assessments are too high and at the same time complaining the pool needs repairs, the clubhouse needs a new roof, the entrance sign needs a face lift -- the list goes on and on. It's no wonder these volunteers reach their burn out level quickly.

Now consider the fact associations are either not regulated at all or have little regulation.  Currently the State of Florida does not regulate homeowners associations except for elections. Hopefully that changes in 2014. The State does regulate residential condominiums, but not commercial condominiums and hotel condominiums.  The regulation that does exist is limited and cannot include claims for personal damages or an assessment dispute.  Add to this lack of regulation a property manager who is required to take 18 hours of class work to get a license, if they have a license.  State law requires the property manager, or community association manager (CAM) and the manager's firm to each be licensed, but there are a number of unlicensed managers in the industry.  I am not trying to bash the CAMs -- there are a number of excellent CAMs out there who are hard working and have high ethical standards, but just like lawyers their profession gets a bum rap for the bad apples in the bunch.

Next added to the mix of things is the association attorney.  Associations want aggressive attorneys because the board members are afraid of being personal sued despite being protected by the Business Judgment Rule.  The Business Judgment Rule protects morons, idiots and those who just make plain honest mistakes. It also protects the association to an extent.  There are some overly aggressive association attorneys who count on owners not having the $100,000 or so it takes to fund a lawsuit.  Without state regulation of the association and a high price tag on justice, its the perfect storm.  Every day I get calls from people who ask me to take their case on a contingency because its a good case, it will generate publicity for me or its extremely unjust.  Its not easy for me to tell them a) I don't have the resources to fund their case and b) unless you have a physical injury that generates big money damages no law firm will take it on a contingency because it just not a good business decision to tie you your working capital with no return on investment, if any.

So how do you avoid the perfect storm?  Let's break it down into two categories:  1) past due assessments and 2) violations.

Most owners do not realize there is almost no defense to not paying your assessments.  Its your absolute duty to pay your assessments, even if you think the association failed to properly notice a meeting to vote on an increase or is misappropriating (stealing) funds.  The only defenses available are if you paid the assessments and can prove it, the association refused your payments, the association did not provide notice before filing a lien or foreclosing, the board met in secret to impose the  increase or the board did not notify the community of the increase.  Even with those defenses it is hard to win against the association.

If you get past due in assessments you will always be past due until you pay the total amount due!

I leave that as a stand alone statement so everyone can understand the importance of this.  By state law any payments are credited to all charges other than assessments first.  Assessments are credited last, so anything less than 100% of the amount demanded means you are past due and the association can lien and foreclose on your home.  There is no minimum amount.  Even though you may owe them $100 and your neighbor owes them $10,000, they can foreclose on you first.  Its all about which owner the association is most likely to recover from with the least amount of legal fees expended.  Or it could be they don't like you, but the court recognizes the association does not have the funds to go after everyone at once and will let them pick and choose who to go after without any consequences for their selections.  Before you jump to any conclusions, look at it unemotionally.  Is it smarter to go after the owner who owes $100, is current in the mortgage, has a job and generally pays any debts or go after the owner who owes $10,000, is in a mortgage foreclosure, has no job and is likely to file bankruptcy?  Even if the association forecloses, if there is a mortgage on the property it is only a matter of time before the bank forecloses on whoever buys the property at the foreclosure auction, which is often the association.  If there is already an active mortgage foreclosure the bank can file a motion and get the property from the association in six to eight weeks where it takes years to get it from the homeowner.

What's the deal with all that interest, late fees, administrative charges and attorneys' fees?  Well, as I said before, the only source of revenue an association has is assessments and there has to be consequences to not paying assessments or everyone would withhold them.  The association cannot waive the attorneys' fees or they are passing on costs you generated to your neighbors and your neighbors could bring a lawsuit against the association.  Assessments can definitely not be waived or the association could be sued for not enforcing the declarations.  Do associations abuse this and over charge these fees?  Yes, but I don't blame the associations themselves as much as I blame the property managers and the lawyers.  Like I said -- its the perfect storm -- an unregulated business where those who do business with the association are guaranteed to get paid.  All the association has to do to pay its bills is increase assessments.  Greed is a problem.  Owners and board members alike have to watch out for property managers working with attorneys to generate billable hours for both.

A word of caution -- don't try to plead financial hardship, death, disability, job loss or any other personal issues.  The courts cannot consider this when they rule on these cases. These claims are not a defense to not paying assessments.  If you want to keep the roof over your head pay the mortgage and the association.  I would rather skip a mortgage payment then the association payment. At least you can negotiate with the bank -- eventually.

Next on the list is covenant violations.  The best way to avoid them is to know the rules! Period!

You need approval of your association to change anything.  If you make that assumption you should stay out of trouble.  Its better to ask for permission and not need it then to not ask and try to get a lawyer's forgiveness.  You can count on the lawyer being involved.

Some of the newer rules, or rather laws of the state:

1. An association cannot prohibit or prevent an owner from installing Florida Friendly Landscaping.  Its a matter of public policy and important to conserving our natural resources.  You are still required to get your association's approval.  No one has figured out how to deal with the issue of what to do when the association denies your application and the law says you can do it anyway.  There are cases pending in court over this.  Some associations have been wise enough to realize their lawyers were probably looking at generating billable hours and its a losing proposition for them -- they dismissed their cases.  Other aren't so smart.

2. You have a right to a hearing with 14 days advance notice of the hearing before you can be fined.  While this part of the statute was passed as a matter of public policy the statute is written as if to imply associations have a right by statute to fine owners.  The previous rule, before this statute was passed, was an association could only fine you if the Declarations, Bylaws and Articles of Incorporation authorized fines.  My position is this is still true and there is no pubic policy reason for imposing fines by statute, but its a lot cheaper to pay the fine than to fight in court and possibly an appeal.  Many associations also believe if you don't show up to for the hearing the fining committee can impose the fine without having the hearing.  Wrong!!!  But again, is it feasible to spend lots of money to fight a fine?

3.  A buyer is liable for the past due assessments of any previous owner.  The statute only addresses assessments and not late fees, interest and attorneys' fees.  While it is industry practice to charge all these to any buyer, there are cases pending challenging this.  Stay tuned.  One pet peeve I do have is charging a new owner the attorneys fees for the association attorney's involvement in a mortgage foreclosure.  Associations are named as a defendant in a mortgage foreclosure because they have a competing lien and the bank cannot claim the 12-month cap on liability if the association is not named.  There is no rule of civil procedure that allows one defendant to assess their legal fees against another.  I would think the Florida Bar would have issues with this as well.  It has also been the industry practice to not write off any past due assessments and other charges after the bank pays their 12-month cap and hold this for the next buyer.  The Third District Court of Appeals ruled against that on August 14, 2013.  It sends a clear message.

4. No stealing by board members!  Finally!!!  If a board member is arrested for a crime involving the association the board member is automatically removed from office as a matter of law.  Did I hear a big "WOOHOO" out of Davenport, Florida?  I am eternally grateful to the Polk County State Attorneys' Office for a job well done.

5. Old law, but important:  before you can sue your association you must engage in pre-suit mediation for homeowner associations and arbitration for condominium associations.  There are exceptions as noted above for assessment disputes and, for arbitration, personal damages.

6. Another old law that's important:  if your board of directors is doing a lousy job you can initiate a recall and remove them.  This is much easier and less expensive than a lawsuit.

Remember pay your assessments and ask permission.  Do those two things and you can avoid a lot of heartache and legal fees.  While it goes against my anti-establishment nature, most association battles are not worth it emotionally and financially.

While I didn't touch on neighbor-on-neighbor disputes, which are virtually impossible to resolve, my only advice is to put yourself in their shoes and ask yourself would you be annoyed living next door to you?

Good luck and next time buy farmland.

Recorded Deed Restrictions and Other Documents

For any HOA organized after October 1, 1995, the Bylaws, Declarations (also called CC&R's) and Articles of Incorporation have to be recorded in the county records where the HOA is located. Prior to that only the Declarations were required to be recorded.  An appellate court issued a ruling stating no restriction can be enforced against a lot owner unless the document is recorded in the county records, so as a precaution most HOAs have recorded their Bylaws and Articles even if they were created prior to 1995.  Subsequent rulings have caused HOAs to record their "Rules and Regulations" as well.  Rules and Regulations, which can be created by a vote of the board of directors, without a member vote, are meant to clarify restrictions and cannot create new restrictions.

To make things more complicated, the courts have said a lot owner is on notice to check for deed restrictions if it is obvious from the general scheme of the neighborhood certain things may not be permitted.  For instance, if every house has clay tile roofs you are on notice you cannot have a different type of roof.  Also, if there is a sign on the entrance with the name of the subdivision, that is a clear sign you should ask about deed restrictions and is sufficient notice.

One issue that comes up often is the waiver of enforcement of restrictions.  When an association fails to enforce a restriction it can lose the right to enforce it in the future through the Doctrine of Waiver.  Some courts have held the period of time to be one year (Third District Court of Appeals), some have held it is a five-year period (Fourth District Court of Appeals), while the Fifth District Court of Appeals said it could be either based on the type of claim sued upon (injunctive relief for specific performance or breach of contract).

An association can enforce a previously waived restriction by issuing what is called a "Chattel Shipping Letter," named after a case by the same name.  It requires the association to pass a resolution by board vote to start enforcing the restriction again and to send a copy of the resolution to all owners.  As a word of caution association should also record such a resolution in the county records.

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.

Architectural Review and Staying Out of Trouble with Your HOA

In my practice it is very common for clients to come to me after their homeowners association has issued them a fine or filed a lawsuit against them for completing improvements on their home without approval of the Architectural Review Board ("ARB") or Architectural Review Committee ("ARC").

Often these clients submitted an application to the ARB or ARC and did not receive a response.  After waiting a considerable amount of time they then proceeded with the work on their home.

Many associations have a provision in the Declarations or Bylaws stating if approval or denial is not received in thirty (30) or, sometimes, sixty (60) days the application is automatically approved.  

If your documents have such language, you will need to be prepared to prove you submitted an application. My recommendation is to send any application by certified mail and be sure to keep a copy of it.

If you are implementing Florida-Friendly Landscaping, please keep in mind you still need to submit an ARB or ARC application.  While the Association cannot prohibit FFL, it can go after you for not completing the forms.

Florida Friendly Landscaping & Your HOA

In 2009 the Florida Legislature enacted revisions to Fla. Stat. 720.3075(4), which prohibits homeowner associations from enforcing deed restrictions as to prohibit the implementation of Florida Friendly Landscaping.  This language is recited again in Fla. Stat. 373.185, which is the initiative for Florida Friendly Landscaping as a means to reduce water consumption and prevent further pollution of the environment with pesticides, herbicides and fertilizers.

Prior to the enactment of the 2009 revisions, the same statute prohibited such conduct if the association's documents were recorded after October 1, 2001, but with increasing water shortages and the State of Florida considering importing water from other states, the Florida Legislature found greater protections were necessary as a matter of public policy.

Seems clear, right?  It is if your a homeowner, but associations and their attorneys have a different idea.  The right of the association to require an application to the architectural review board or committee (ARB or ARC) still exists, although many homeowners do not realize this.  Why? Because it doesn't make sense. Technically, the association cannot deny your application unless it does not comply to Florida Friendly principles and I have yet to meet a board of directors with the qualifications to make such a determination. But rules and rules and owners need to submit applications.

What happens next though defies all reason.  Of course, I have never heard anyone brag about their board members being reasonable.

The owner implements FFL with or without an application and the association starts sending those nasty violation letters.  Don't get me started on those.  Do they really need to be so nasty?  Do the associations really think the tone of the letter is going to result in the homeowner responding with an apology and a promise to follow the dictatorship of the association?

What reasons do the associations give for violating the FFL yards?  I have heard everything from the association has the right to regulate FFL to the declarations require St. Augustine and state law cannot invalidate the Declarations.  I was recently told a client could maintain a nice St. Augustine or Zoysiagrass lawn if the client would just pay a lawn service a monthly fee.  Really?  Apply chemicals monthly?  Isn't this not the exact thing FFL tries to avoid?  MORE CHEMICALS????

I have heard over and over St. Augustine is FFL.  That is true in some areas of Florida, mostly coastal regions, but FFL is not about any one plant, grass, shrub, tree or groundcover being FFL no matter where the lot is located in Florida.

FFL is about the right plant in the right place for the site conditions.  It is about soil composition, soil pH, drainage, light, temperature, pests and even residual chemicals in the soil.  To argue my point, I have two plants which are exactly the same and were purchased at the same time from the same store. One plant was installed on one side of my backyard and the other on the other side.  One plant is now about 25' high and the other is still the same size as it was when I bought it 15 years ago.  The site conditions are obviously different on the same lot 60 feet or so apart.

To recap, we have a law with a clear initiative to reduce water consumption and the application of chemicals to our environment.  We have a clear law allowing homeowners the right to protect the environment by implementing FFL without interference from homeowner associations.  We have volumes of material available online educating the citizens of Florida regarding FFL and the nine principles. It's obvious from the materials it takes a lot of work and money to implement FFL and a good understanding of horticultural principles to obtain a fair understanding of FFL.  It is clear board members, who are unpaid volunteers giving up their time to help manage the community, are not generally knowledgeable enough to make a determination of what is or is not FFL.  Anyone besides me see the problem here?

What Florida homeowners need are some elected officials to push for an agency to provide a neutral party to certify yards as FFL.  Until we have this the associations will continue to violate homeowners and even impose fines, which can result in liens and foreclosure if unpaid.  The associations have an unfair advantage in  litigating these disputes because homeowners have no agency regulating homeowner associations and cannot afford the costly litigation.  The associations see this and engage in disputes they would normally lose because they know they will win purely as a matter of economics. They have a license to be the bully of the neighborhood.

I encourage those associations who support FFL, or do not approve of the bully mentality as a way to rule the neighborhood, to step up and adopt FFL guidelines, obtain and understand the materials, and let your members know you support FFL.  Don't end up being labeled a "bad" HOA.

Board Members Behaving Badly Over Florida Friendly Landscaping

Board Meeting

Click on the link above to watch this outrageous response to a homeowners' application for Florida Friendly Landscaping.

Stand Your Ground Law Abused Again

I think our legislators in Florida need to review the Stand Your Ground Law. I doubt they were thinking of HOA drama when they passed the bill, but we are about to have another Trayvon Martin issue.

I represent a client in a voluntary HOA. They refused to admit they were voluntary until I stepped in to represent the client. Another homeowner is friends with my client and accompanied her to the mediation (these are elderly and/or disabled people and a co-pilot was needed for the drive). We thought all was worked out, but evidently the HOA has some hot heads in the community.

The client and her friend were followed by the HOA president and two board members. When they arrived home this man began a verbal altercation with the friend. Later that day the HOA president sees the friend and her husband headed for their evening bike ride to the common areas and not only locks them out of the common areas, but pulls a gun on them when they asked him if he was going to unlock the gate. Using his cell phone to tape the incident, he announced "I fear for my life" and pulls out the gun.

If this guy feared for his life by two disabled people, both smaller than him, then why did he go to their home earlier? Why did he follow them when he saw them on their bikes? Why didn't he leave after locking the gate?

Yes, the law has no duty to retreat, but I don't think it was intended for you to stalk people either.

2013 HOA Legislation Highlights

Last week the House of Representatives and the Senate passed Bill 7119 providing many needed amendments to Florida Statute 720, the statute regulating homeowner associations. We are now waiting for the governor to sign the bill into law, which would go into effect July 1, 2013.

One of the most important amendments to the statute removes a director or officer from the Board of Directors of an association if the director or officer has been accused of committing a crime of theft or embezzlement involving the association. The bill also includes an amendment to Chapter 468, which regulates community association managers ("CAM"), and calls for discipline by the Department of Business & Professional Regulation ("DBPR") if the CAM commits violations of Florida Statutes 720, 718 and 719, if the CAM contracts on behalf of an association with any entity in which the CAM has a financial interest without disclosure, obtaining a license or certification by fraud, misrepresentation or concealment, being convicted of or pleading no contest to a felony, violation of any DBPR order or rule, committing gross misconduct or gross negligence, or any other violation of Fla. Stat. 468.436.

Directors and officers of a HOA board, if the bill is signed by the governor, will now be required to certify in writing they have read the Declarations, Bylaws, Articles of Incorporation and any other rules and policy of the HOA or complete a certificate attesting they have completed a state-approved educational course. The bill also requires directors and officers to disclose their financial interest in any entity submitting a bid for a contract with the HOA and if a member objects to the contract, the contract must be put to a vote by the membership for approval. Additional language requires the HOA to insure and bond anyone handling HOA funds prohibits kickbacks. Yes, good old common sense needed to be put into the HOA statutes, but I wonder if those people affected by this law will actually care to stop accepting kickbacks!

Associations would now be required to keep the official records within 45 miles of the community or within the county where the community is located. (I predict we will have some legal battles over the use of the word "or" here.) There should never be a choice in a statute. Associations, at their discretion, can provide the records electronically by posting them on the Internet or allowing members to read them on a computer screen and then requesting a printed copy. If the HOA has a copy machine it must provide the copies if the request is 25 pages or less. The association could still charge 25 cents per page (down from 50 cents) for copies made with the HOA copier or, if the request exceeds 25 pages, the actual cost of copies plus any reasonable hourly fee NOT TO EXCEED $20 PER HOUR) for a vendor or employee to make the copies. No personnel charges are allowed if the request is under 25 pages. The HOA is also required to provide the member with a copy of the vendor's invoice for outside copying services. The new bill requires the HOA to allow members to scan documents with any portable device they may have or otherwise make electronic copies.

The new bill would require a developer to designate reserve funds by components rather than one general fund if the developer provides for reserves.

The new bill would require associations to register with DBPR. This is the first step to future legislation to regulate HOAs. Currently no one knows for certain how many HOAs are operating in the State of Florida.

The new bill would also require associations to provide copies of an amendment to its members within 30 days of recording an amendment.

One provision I do not like is HOAs would no longer be required to allow members to be nominated from the floor at elections if there is a process for nominations prior to the election. The HOAs will not be required to hold an election if the number of candidates is equal to or less than the vacancies. While this would save the HOAs money because of the expense involved, it takes away some of the power of the members if they cannot nominate at the election and they don't realize until the election not enough people stepped forward to be elected. Expect a lot of improper conduct with this one. If ever the members of associations needed to be motivated to be involved with their HOA, this provision of the bill should do it.

The new bill has provisions for forcing the turnover of control of the association to the members if the developer abandons its responsibility to maintain or complete amenities, files for Chapter 7 bankruptcy, loses or gives up title to common areas through foreclosure or pre-foreclosure, or a receiver is appointed. The bill also provides the members the right to elect at least one board member when 50% of the properties are no longer owned by the developer and also limits the rights of the developer to amend the governing documents.

Finally, the bill would not wipe out any past due assessments on a property if the HOA takes title to the property to foreclose its own lien. Any buyer would be liable for the past due assessments; however, any assessments accruing while the HOA has title are the responsibility of the HOA.

If you support this bill, please send Governor Rick Scott an email asking him to sign the bill into law. His email address is rick.scott@eog.myflorida.com.

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.

Community Association Living [ [Part 3: Has Your HOA Died?]

Your homeowners association may have died a natural death and you are not aware of it. The Marketable Record Title Act, or MRTA (pronounced “marta”), was enacted to remove clouds and encumbrances on deeds and titles after thirty years. The effect of this legislation is to extinguish deed restrictions after thirty years by operation of law unless there are record title transactions preserving them some way. If your association was organized and the Declaration of Restrictive Covenants (also known deed restrictions, CC&Rs, covenants) were recorded more than thirty years ago, then there are a few things you should research to see if you should contact an attorney for further review.

Keep in mind MRTA analysis must be done by individual lots because there could be a title transaction in your chain of title that preserves the restrictions. A title transaction is a transfer of interest in real property.

First, you will need to research the county records. You can do this by putting the name of your county with “official records” behind it in your search engine, or Google. For instance, residents of Orange County can enter “Orange County Official Records.”

You will need to review your Declaration of Restrictive Covenants to check if the date they were recorded was more than thirty years ago. You will also need to check if there have been any “Restated and Amended” declarations recorded that are not more than thirty years old. While filing restated declarations may preserve the restrictions another thirty years, there could be defects that do not make this an automatic preservation. You will also need to look for a document called a “Notice of Preservation,” which also preserves the restrictions for another thirty years.

You will want to look for a copy of your deed. Check your deed to see if it refers to covenants or restrictions by OR Book and Page Number. A specific reference to restrictions by book and page number is sufficient to preserve the restrictions against your lot. Fla. Stat. 712.01.

If there is no reference to the book and page number containing restrictions, you will need to look at the Plat Book containing the plat of your community. The plat is referenced in your deed in the legal description of the property. Not all counties have their plat books online, so you may need to take a trip to the county records office. If the recorded plat contains restrictions or refers to the covenants or restrictions by book and page number on the plat, this will also preserve the restrictions.

If your deed or your plat does not reference the restrictions by book and page number, the next step is to research the deeds in your chain of title, going backwards. If there are any deeds referencing the restrictions by book and page number, chances are the restrictions are not extinguished by MRTA. If you do not find any, then you should consult with an attorney who is experienced in MRTA analysis. This is a special area of law not practiced by all real estate attorneys, so you will need to obtain a referral or do some research into attorneys providing this type of service.


Copyright ©2013 Law Offices of Stage & Associates P.A.

This communication is not intended to create an attorney/client relationship. It is always recommended you consult an attorney in person to discuss your case. The Law Offices of Stage & Associates practices state-wide and represents homeowners and community associations. Please visit our website at www.stagelaw.com.
ociations. Please visit our website at www.stagelaw.com.

Community Association Living [Part 2 - Mandatory versus Voluntary HOA]

This blog is all about homeonwer associations. Condo associations are rarely invalidated or dissolved.

It is important to review your association's governing documents and research your homeowners' association for yourself. Your association will not admit to you it is not a mandatory association and may even lie to your face and claim it is mandatory when, in fact, it is not. You could spend $100,000 or more fighting with them over this issue and run the risk of losing some valuable defenses against mandatory membership if the problem is allowed to persist.

There are several ways an association can be a voluntary association rather than a mandatory association. They can even start out as a mandatory association and then lose their status if the Marketable Record Title Act extinguishes the deed restrictions after thirty (30) years. The Marketable Record Title Act, or MRTA (pronounced "Marta") will be the topic of another blog because it is a pretty complicated issue.

The first step to creating a mandatory association requires the declarant, usually the developer, to make such a proclamation in the Declaration of Restrictive Covenants (also called Decs, Covenants, CCRs, Restrictions, Deed Restrictions). There are a number of communities in existence which have recorded land use restrictions (no cows, no cattle fences, no mobile homes, etc.). These are not the same and,absent any language designating an association and declaring membership is a mandatory condition when purchasing property, these land use restrictions do not create an association.

An association must have its documents recorded and be properly formed before any lots are sold in the community. While lots sold after documents are recorded can create a duty on the owner to comply with those documents, a community in which not all lots are subject to mandatory membership loses its status as a mandatory association. The statutes define a mandatory association as one in which membership is a mandatory condition of lot ownership and each lot owner is responsible for paying their pro rata share of assessments. The very definition of a mandatory association fails under the statute if not all of the lots are required to participate.

An association can lack authority to enforce deed restrictions if the Declarations do not contain language for the rights and duties of the developer to pass to the association when the members are given control of the association or the developer fails to execute an assignment giving the association all the rights and duties held by the developer.

An association can lack authority to require mandatory membership if there are defects in the documents, such as the legal description of the property being omitted, signatures omitted, or an amendment that fails to state it was properly approved and executed.

Sometimes it is obvious an association is not mandatory, but sometimes it is a very complex issue and not easily determined.

Stay tuned for a later post which will include a checklist of provisions and clauses to look for in the governing documents.

Association Living 101 [Part 1: Your Governing Documents]

I have always wanted to write a book about HOAs and COAs, otherwise known as homeowner associations and condominium associations. I even considered titles like "HOAs for Dummies" or "Welcome to Flori-duh" (inspired by my friend who founded CyberCitizens for Justice). Since my busy professional life makes it unlikely I will ever finish the book, I figured a would start a series of blogs to pass on the information. Let's see how often I get to post the blogs.

Here's the first blog: Know Your Governing Documents!!!

The governing documents of any association (HOA or COA) are the Declarations (also known as Decs, CC&Rs, covenants, deed restrictions, etc.), the Bylaws, the Articles of Incorporation and any published (preferably recorded) Rules & Regulations.

Rule #1:Statutes trump Decs, Decs trump Articles, Articles trump Bylaws and Bylaws trump Rules and Regulations when there is a conflict between the laws and the documents or between the documents themselves.

Exception to the Rule: When determining if the statutes overrule the documents, you have to check the first few paragraphs of the Decs, Bylaws and Articles to see if any of them state the association was formed and organized pursuant to Florida Statute 720, 718, 617 or 607 "as amended from time to time."

This is important because your documents are a contract and disputes are resolved by the courts by applying contract theory. The Florida Constitution prohibits the application of new laws to retroactively change contracts. If the documents do not include those magic words "as amended from time to time," then you have to look to the version of the statute that existed in the year your documents were recorded. This is a rule reinforced by the Florida Supreme Court in the awe of Cohn v. The Grand Condominium, which was created by earlier condo cases.

Exception to the Exception: If a statute is enacted as a matter of public policy, or is remedial or curative, it can still overrule a contract.


Rule #2: What statutes apply? If you live in a HOA, then Fla. Stat. 720 (the HOA Act) applies as well as Fla. Stat. 617 if your HOA is a not-for-profit corporation, and Fla.Stat. 607 if it is a for-profit corporation. Most are non-profit, but not all. Also portions of Fla. Stat. 607 could apply to non-profits if Fla. Stat. 617 is silent on the issue and the specific provision does not affect non-profit status. Other statutes could apply as well, such as the prohibition to publishing "dead beat lists" in the Florida Consumer Credit Practices Act (Fla. Stat. 559).

If you live in a condo, Fla. Stat. 718 (the Condo Act) takes the place of Fla. Stat. 720.

Other statutes govern mobile home parks, co-ops and timeshares.

Townhomes are usually organized as HOAs even though the have the features of a condo.

Rule #3: in HOAs, the restrictions must be recorded in the Declarations. The Bylaws can clarify. The restrictions contained in the Decs, but they can't contain restrictions not in the Decs and cannot grant authority to the HOA not in the superior document, the Declarations. This rule was created by the case of S&T Anchorage v. Lewis. This means, as an example, if the Decs don't grant the HOA authority to impose assessments, then that right cannot be created by putting it in the Bylaws.

This rule does not apply to condo docs. The courts have held condo Bylaws can create new restrictions, like prohibiting pets. The courts only explanation for this has been to proclaim condominium associations "are creatures of statute" meaning they are created by statute. I don't get the logic here, but there are differences between the two types of associations in multiple areas while some sections of 720 and 718 are identical.

Rule #4: For a document to be enforceable against an owner, it must be recorded. This is so the document is "in the chain of title" of the association members and they have notice of the document. Decs and Bylaws are recorded in the official records of the county where the land is located and the Articles are recorded with the State of Florida Division of Corporations (www.sunbiz.org). After 1995 associations were required to record all documents in the county records, so it is not uncommon to see one recording in the county records containing all three documents.

Myth #1: Despite popular belief, the State of Florida does not approve these documents are make any determination if a HOA is mandatory or voluntary. Their job is to record your corporate filing, not rule on the content.

Myth #2: The county clerks do not check documents to see if they are legal or contain necessary provisions and clauses. Their job is to record your associations documents and collect a fee for doing so. Their job is not to give legal advice or make a determination if the language in the documents is legal or if the document has been executed properly. A search of county records in any county will reveal a lot of recorded garbage. There are a number of HOAs claiming to have supreme power over your constitutional rights when, in fact, they have no authority. Condos don't usually have this problem because their documents are not subject to termination by the Marketable Record TitleAct, Fla. Stat. 712. That's a whole other chapter.

Reading and understanding your documents and the statutes are your best defense against a dictatorship of an association. Participation in meetings is the next best defense. Don't wait for a problem to get involved or read the documents. By then it's usually too late.

Stay tuned for more blogs!

Barbara Billiot Stage, Esq.

Declarations, Bylaws & Articles of Incorporation

Fla. Stat. 720.305(c) of the Homeowners Association Act limits the cost of copies to $0.50 per page unless they have to send them out to be copied, in which case they can charge a reasonable fee for staff to bring the documents to a vendor for copying. The same statute requires them to keep sufficient copies of the governing documents (Declarations, Bylaws, Articles of Incorporation) on hand to provide members with copies. While the statute doesn't outright say these documents must be provided free of charge, industry practice has been to provide them for free.

You could always go online and download them for free. Search on your county's "Official Records" and once you're on the website search by your association's name. You will also want to restrict the search to Condo documents, restrictions, plat-related, and assignments so you don't get too many results.

You should check them online anyway to make sure you have the latest documents and they are recorded. There are many associations that do not reord their documents, either due to an oversight or because they isn't get member approval, but they will enforce these documents as if they are recorded because most of the time they can get away with it without anyone challenging them.

If you are in a condo association, Fla. Stat. 718.112 has a similar provision.

Is Your HOA Mandatory or Voluntary?

A very common assumption people make when they it purchase a home in a community managed by a homeowners association is that membership in the association is mandatory. Why wouldn’t they when the association asserts it is and demands payment?

The truth is the association is not going to tell you if it has lost status as a mandatory association or, worse yet, was never mandatory. The State of Florida does not regulate homeowner associations and does not certify them as mandatory, despite many associations telling their members the State has approved them or certified them. The State’s only involvement is to accept their corporation registration if the filing fee is paid.

All homeowners need to read the governing documents of their association: the Declarations, Bylaws and Articles of Incorporation. A review of these documents is necessary to check if the association was properly created to form a mandatory association prior to property being sold or to check if the documents may have expired under the Marketable Record Title Act (MRTA), which extinguishes deed restrictions after 30 years unless certain actions are taken to preserve them.

Other problems I have encountered in my practice of law include associations formed to enforce land use restrictions that fail to designate an association, older documents that fail to assign the developer’s rights to operate the community to an association, and illegal amendments to the governing documents.

Anyone who doubts the status of their association as a mandatory association should consult with a competent HOA or condo lawyer to review the documents.