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.
CONDO & HOA LAW BLOG: The latest news on Florida laws regulating condominiums and homeowner associations.
Tuesday, April 30, 2013
Saturday, April 20, 2013
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.
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.
Wednesday, April 10, 2013
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.
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.
Sunday, March 17, 2013
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.
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.
Tuesday, March 12, 2013
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.
Thursday, March 7, 2013
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.
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.
Wednesday, March 6, 2013
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.
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.
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