Saturday, July 18, 2015

Fines Authorized by Statute?

The great debate:  Can the HOA fine if the governing documents do not authorize it but Fla. Stat. 720.305(2) establishes procedures for fining? 

Many community association lawyers and community association managers say yes.

My answer is no despite many of my colleagues disagreeing with me. The statute starts out "The association may levy reasonable fines of up to $100 per violation....." which my colleagues have interpreted to mean the association has a statutory right to levy fines. 

My argument is the Florida Constitution prohibits retroactive application of a statute to change an existing contract (Declarations, bylaws and articles of incorporation are contracts) as reinforced by Cohn v. The Grand Condominium. Additionally, S&T Anchorage v. Lewis held an association cannot act in any way not authorized by its governing documents. The exception to the retroactive application is statutes which are public policy (such as the Florida Friendly Landscaping Act), statutes which are remedial or curative (the recall statute) and statutes which are procedural. The fining statute is procedural, but the part that would allow for a statutory right to fine is not nor was it a public policy statute. 

From Haven Fed. Savings and Loan v. Kirian: “Substantive law has been defined as that part of the law which creates, defines, and regulates rights, or that part of the law which courts are established to administer. It includes those rules and principles which fix and declare the primary rights of individuals with respect towards their persons and property. On the other hand, practice and procedure 'encompass the course, form, manner, means, method, mode, order, process or steps by which a party enforces substantive rights or obtains redress for their invasion. 'Practice and procedure' may be described as the machinery of the judicial process as opposed to the product thereof." It is the method of conducting litigation involving rights and corresponding defenses.” 

My colleagues disagree and until an appellate court rules on the subject we will not know who is right. Does your HOA want to foot the bill for an appellate case to figure this out? My suggestion is err on the side of caution.

Friday, July 10, 2015

BUYER BEWARE!! Your HOA Answers to No One!!

The question I get several times a day asks who can the owner go to in order to file a complaint against their HOA.  The unfortunate answer is: NO ONE.  Unlike condominiums (COAs), the HOAs answer to NO ONE.

Florida does not regulate HOAs.  There has been legislation posed the past two years authorizing the Department of Business & Professional Regulation to create a division to oversee HOAs, but the legislation failed so far both years.  All we can do is try again next year.

Where does that leave the owner?  Digging deep into their pockets to fund a private lawsuit, which can, for a 3-day trial, take 3-4 years and $135,000 - $150,000 to complete.  Often the owner figures they will file the lawsuit and the HOA will settle quickly.  That is a dangerous strategy because the HOAs don't settle all that often and if you drop the lawsuit, you owe the HOA it's legal fees and costs.

You best approach to your problem is to educate yourself about HOAs and attend board meeting, or better yet, don't buy a house in a HOA.