Board Meetings: How They Should Be Conducted

Today's blog is about notice, quorum, the right to speak, the right to record meetings, handling disruptive attendees and meeting minutes.

Notice Requirements:

The notice requirements for a meeting are contained in the Bylaws and/or Articles of Incorporation of the association.  Sometimes they are even contained in the Declarations if special notice is required to decide a particular piece of business, such as increases in assessments which require membership approval.

The Florida Statutes provide a default notice procedures if the documents are silent. The default notice procedures are as follows:

• Regular board meetings must be "posted in a conspicuous place in the community at least 48 hours in advance of the meeting, except in an emergency."  

• If notice is not posted, then the association is required to mail notice to each member at least seven (7) days before the meeting.

• Any meeting in which assessments will be levied must be noticed with a statement assessments will be considered and the nature of the assessments. This includes levying annual assessments, even if assessments are not increased. While this sentence in the statute does not state 14 days advanced notice is required, it is in the same subsection that requires 14 days notice for meetings to consider special assessments and amendments to rules affecting parcel use.  My opinion is to provide 14 days advance notice and that seems to be the industry standard.

• Any meeting in which special assessments will be considered must be noticed by mailing the notice to each homeowner at least 14 days in advance of the meeting and the notice must state assessments will be considered and the nature of the assessment.  This includes levying annual assessments, even if assessments are not increased.

• Any meeting in which amendments to rules affecting parcel use must be noticed by mailing the notice to each homeowner at least 14 days in advance of the meeting

Quorum Requirements:

Whenever a majority of the board meets, even if it is at a picnic, and discusses board business, it is a board meeting and must be noticed and open to all members.  

For membership meetings, the quorum is the number of owners listed in the bylaws or other association document.  Florida Statutes provide a default of 30% if the documents do not provide for a quorum.

Members' Right to Speak, Right to Record Meetings and Disruptive Attendees:

It is truly amazing how many associations try to circumvent these two rights.  Either they are misinformed, are unaware of the law regarding these rights, or have gone rogue.

Every member has the right to speak at least three minutes at a meeting on any item on the agenda. This law used to have requirements the member had to provide advance notice, which meant the members were not given an opportunity to speak if the agenda was not published in advance. The laws have changed.  The board can adopt reasonable rules on how to comply with this and control disruptions, but not to the point members are denied their rights. Many associations still use the technique of holding all member commentary until the end of the meeting in an open forum, but this could be troublesome eventually. If there is a topic which has generated a lot of controversy, the members should be allowed to speak as long as they remain orderly. Robert's Rules of Order help in these situations.  Appointing a parliamentarian to keep the meeting in order is helpful too. If you do not want your meetings to go on all night, plan them out specifically. If you know you have a controversial topic, allow a specific amount of time to discuss it.  If you know you have someone who will want to talk three minutes on every topic, limit the number of times a member can speak, but make it reasonable. Use a timer for the three minutes so no one will accuse anyone of not allowing the full three minutes.  If the discussion is still heated and taking quite a bit of time, consider tabling the topic for a special meeting and plan for a longer amount of time to discuss.  If the topic is that important to the membership, the board should be paying attention to their concerns.

NOTE:  Any changes to the way meetings are conducted, including adopting Robert's Rules of Order, should be adopted as a policy by the board through a resolution, which can be written, voted upon, recorded in the public records if necessary, and published to the membership.  This will avoid any accusations of making up the rules as you go along.

Florida law allows members to record board meetings. IT IS THE LAW! They can use either video or audio recording and do not have to provide notice the meetings are being recorded. There is no expectation of privacy in an association meeting and board members do not have to give their consent.  Assume all meetings are being recorded. The board of directors can adopt rules to make sure any cameras are not interfering with the meeting, such as blocking the view of other members. Caution should be taken to not create a rule under the right to adopt rules just to make sure the members do not get a good recording and especially do not adopt a rule requiring the member to provide notice the meeting will be recorded.  Do not put your association at risk of a lawsuit for treading on the members rights.  They have very few, but the few they have they will fight aggressively to protect. If the board is not doing anything illegal or unethical there should be no concern with meetings being recorded.

(10) RECORDING.—Any parcel owner may tape record or videotape meetings of the board of directors and meetings of the members. The board of directors of the association may adopt reasonable rules governing the taping of meetings of the board and the membership.

While an association has the right to remove a member from a meeting if they are being too disruptive, the trend to have law enforcement issue a trespass warning against an owner in order to keep them out of all future meetings is just plain dumb.  All meetings must be open to all members, so if an association trespasses an owner from their clubhouse, then the association will need to move the meeting to another location where the owner can attend.  Putting up physical barriers to prevent owners from attending is not a good idea either, especially the disabled.  You would think common sense would not make this an issue, but it became necessary for one homeowner to actually lobby our elected officials to amend Fla. Stat. 720.303(2) to include "A meeting of the board must be held at a location that is accessible to a physically handicapped person if requested by a physically handicapped person who has a right to attend the meeting."  His association spent over $100,000 in litigation costs because the association refused to hold any meetings where he could attend in his wheelchair.  He wasn't even asking for all meetings to be moved, just when there was a agenda item that was important to him.

 Meeting Minutes:

This is a very important topic because all too often the minutes do not reflect enough information about the meeting.  Each topic discussed, whether it was on the agenda or not, should be reflected in the minutes.  Each board vote should list specifically how the board members voted by name.  The only exception is if a vote is unanimous, which could be stated as "motion passed by unanimous vote."  Each item should have a motion to present the item for a vote and a second.

Now some words of caution.  The Florida Statutes have been revised to allow board members to "communicate" by email, but votes may not be taken by email. While this has always been the method used to provide information to board members about an upcoming agenda item, there has been a rise in the number of associations who obviously are discussing agenda items in detail in emails and then simply voting on the item at a meeting without discussion, thus circumventing the rights of members to be informed about the details of an issue. This will certainly cause a rise in litigation and is not in the best interest of the association.

The bottom line is board members and owners alike need to use common sense.  Board members should not look for creative ways to hide things from the owners and owners need to communicate in a reasonable manner at meetings.  Shouting at someone will not get them to agree with you.

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.

I'm Back....And the Topic Today is Conducting Board Business in HOAs & COAs

It has been a while since my last blog.  I attribute this to the summer peak in business.  I don't know if it's the hot weather, adults dealing with children home from school for a couple of months, or the people from the North leaving the state and not being around to keep an eye on their association, but business is always brisk in the summer with associations behaving badly.

The topic for today is a change in the law stipulating to how board members can conduct board business. It is one I think will generate more litigation because board members can discuss board business by email and leave the homeowners out of the discussions. A new provision in the Florida Statutes allows board members to conduct and discuss board business through email, but any voting must be done at a meeting.  What we are now seeing is board meetings that last 15 minutes and under because the board members walk in and sit down, make a motion to vote on a topic, second the motion, vote and done.  Homeowners are not even aware of what the issues are much less get a chance to speak on the matter.

I recently read meeting minutes where the board voted to approve a contract with XYZ Landscaping.  No mention of two other bids or voting to see which landscaping company they should vote on -- it was already a done deal and they were just ratifying their decision. What does it matter anyway, right? With no state agency regulating HOAs there is no penalty for cheating unless the homeowner has deep pockets to sue.

Associations -- There is a Better Way!

It's no secret I have been an advocate for homeowners embroiled in disputes with their associations.  I originally went to law school to practice employment law.  I changed directions when I bought my home in a HOA and my welcome to the neighborhood consisted of a volley of "f-bombs" from someone claiming to be the HOA president.

In the past couple of years I have changed direction in my practice of community association law.  Not only did I realize individual owners suing an association is difficult for my clients, both emotionally and financially, but creates a hostile environment for everyone that often lingers even after the dispute is resolved. I now focus my attention on representing the associations.  I figure I can make a difference by helping associations proactively avoid litigation rather than helping the owners litigate.  Not all disputes can avoid litigation. There will always be those one or two homeowners in every community that will be stubborn or even aggressive and want to fight, but litigation should be a last resort.

Let's face it -- if your association has a bad reputation it will affect property values and the resale of homes. Desirable associations attract home buyers.

The ingredients for a good association are education, communication, the right CAM and the right lawyer.

Most homeowners do not intentionally violate the covenants.  Just because the homeowner received a copy of the governing documents, doesn't mean they understand them.  If they did, most members who are past due in their assessments would realize the association can lien and foreclose on their home and would keep the assessments current.  I come across homeowners every day who believe if the bank is foreclosing the association cannot foreclose.  They are surprised when their homes are sold by the association with a bank foreclosure pending.

There is a simple fix to this.  The association should have a website the provisions of the governing documents can be explained, broken down in individual topics, and then promote this website regularly. Make sure new owners receive the web address right away.  Encourage members to review the website before undertaking improvements to property.  There are a number of services out there which help those technology-challenged individuals build a website.  If a website isn't feasible, create a newsletter!  Now you have education and communication!

Another point about communications -- confrontational notices do not work.  It is human nature to become defensive when being harshly reprimanded.  I believe the first notice to a homeowner should be a gentle reminder and an invitation to discuss the issue at a meeting if necessary.  The old saying "you catch more flies with honey" is true. You will get more owner cooperation if you acknowledge they either did not know better or forgot and have a chance to remedy the situation.  Threatening to send them to the association lawyer if they do not obey demands only ends up costing the association and owners more money for legal fees.

The right CAM is important.  Identifying the right CAM is not so easy and there is no one size fits all.  Some associations need the CAM to be very involved and some only need a CAM to collect assessments, pay bills and send out violation notices.  The right CAM will meet your expectations and work well with the association.  The wrong CAM will partner with the lawyer to increase billable hours for both of them by fueling disputes.  The wrong CAM will control the association funds and keep board members out of financial decisions.  The wrong CAM will make board decisions without the board members being involved. The wrong CAM will think it's their job to run the association, not the board.  

The same applies to the lawyers.  The right lawyer will answer the board's questions and encourage the resolution of disputes early.  The wrong lawyer will lead the board to believe they have the ultimate power and cannot lose a dispute. The wrong lawyer will bully and abuse homeowners.

Associations should be proactive when dealing with violations and collections.  Identify the problem areas and work on them proactively.  Make sure your owners know not paying assessments means they risk losing their home and usually quickly.  Let them know the association doesn't want their home, but has a duty to collect assessments from everyone.  Let them know financial hardship is not a defense the courts will entertain.  Offer a payment plan to help out those who are already past due, but be aware that if the association lawyer handles the payment there are outrageous fees to set it up and process payments.  The association can facilitate the payment plan so it stands a better chance of success.  If your association has authority to impose fines, make sure the members know about the process and don't try to rig it by appointing members to the fining committee who are friends and supporters of the board or biased against the owner.  Make it a fair hearing before the fining committee or the association will most likely end up in litigation.  Make sure all members are aware of the process for applying for approval to implement improvements to their property.  Communicate on a regular basis those items that require approval as well as those that do not.  

There is a better way to have an association and not make everyone in it miserable.  It's not easy because most members of the association don't care to be involved or hear about it, but it is possible.

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.