Tenants Attending HOA Meetings!

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

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

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

CAMs in Control

In the past few weeks I have been contacted by community associations regarding issues they have with their community association managers (“CAM”) making decisions on behalf of the association without the board of directors being involved.  This seems to be an alarming new trend as certain CAM firms have started their own maintenance companies and terminate contracts with vendors to give their own companies the contract for services – all without the board’s knowledge or approval.  In one instance a CAM actually refused to allow a board member to vote and provided a legal opinion the board member was ineligible, which is clearly the unlicensed practice of law.  In another instance, which I have seen before, a CAM took it upon himself to take action against an owner despite the board voting to table the issue until they had a chance to talk to the association’s lawyer.

A CAM does not have the authority to make board decisions.  The CAM works for the Board of Directors, not in place of it.  CAM contracts have indemnification clauses, which means the association is liable for the CAMs actions and must pay for a legal defense should someone try to sue the CAM.  Owners cannot sue the CAM in most circumstances because the owners are not in “privity of contract” to sue the CAM, as established in the case of Greenacre Properties. v. Rao, 933 So. 2d 19(Fla. Dist. Ct. App. 2d Dist.2006), meaning the owners are not a party to the CAM contract.  This shield against liability means there are not many consequences for the CAM acting outside their scope of authority.

In my opinion, CAM firms being allowed to set up their own maintenance companies to provide services to the associations is not a good idea.  There is an inherent conflict of interest.  The CAM usually controls the association’s bank account.  The CAM will then make sure their maintenance company is paid, even if the work is not satisfactory.  I have come across instances where the work was not satisfactory, but the board was not aware of the issue because the CAM did not inform the board.  Why would they complain about their own work?

When the associations hire a CAM it is now important to inquire if the CAM firm has its own maintenance company and review the contract thoroughly to see how much control the board will relinquish to the CAM in hiring vendors or other actions which create liability for the association.  Many CAM contracts also provide the CAM with a “bonus” of 10% of the value of the contract for procuring a contract on behalf of the board.  I think it’s more of kickback then a bonus, but this is a common practice in Florida.

Selecting a CAM is an important task for associations.  It is up to the board of directors to perform their due diligence and make sure the contract is clear regarding decision-making activities.  The actions of an overzealous CAM could be costly and lead to litigation against the association.

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.

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.