New Neighborhoods–Long-Term Guests and Mandating Flood Insurance Coverage

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Posted on January 23, 2012 by Ryan Poliakoff

New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Long-Term Guests and Mandating Flood Insurance Coverage

Our condo documents state that guests can visit a resident for up to 30 consecutive days without being considered residents, themselves. People in our building have had guests or caregivers stay with them for 30 consecutive days, then leave for a day and return for another guest pass and another 30 consecutive days. This mostly happens in the winter when an elderly person comes down for a few months with his or her nurse. Our board has been making these guests go thru the owner and resident security check and application process at the cost of $150.00, even though, according to the by-laws, these guests have to be here over 30 consecutive days to be considered a resident. I that feel that this is a dual interpretation of the by-laws. Signed, J.B.

Dear J.B.,

First, you did not indicate whether the rule limiting guests to “30 consecutive days” is a board-made rule, or a restriction contained within your condominium documents. If it is a board made rule, it must be reasonable to be valid, while a rule found in your original documents can be somewhat unreasonable so long as it does not violate a fundamental right.

Second, there is a difference between a “guest” and a “caregiver.” Most authorities agree that a caregiver is not subject to limitations on guest rules, nor are they counted against individuals below the age of 55 in communities for older persons.

Now, that having been said, assuming that the rule is valid and enforceable, then there would be nothing which would preclude someone from leaving for a day and returning for an additional 30 days, as you’ve described. That is why it is critically important that all rules and regulations be written in a clear and concise manner.  Your board probably does not have the power to force these guests to go through the owner/resident application process, even if they are using a loophole to get around the association rules.  The only solution would be to amend the documents and close the loophole.

Dear Poliakoffs,

I read in a recent column that it is up to unit owners to convince their boards to provide flood insurance for their associations, as the Florida statute does not make flood coverage mandatory.  Our board provides 80% coverage, but my mortgage provider requires 100% coverage, and has force-placed a flood policy on my behalf.  If I get a lawyer and pursue the issue for the extra 20%, do I stand a chance of winning?  I’m just asking because I’m already way underwater with my condo, trying to do right by my mortgage commitment as I slowly deplete my retirement savings.  So, I really don’t want to spend the money for a lawyer if I’m going to lose.  However, I would like to take a stance and, maybe if I win, the Florida legislature would amend the statute to require 100% flood insurance coverage in FEMA-specified flood areas.  Signed, J.S.

Dear J.S.,

The question, really, is what would you gain through your lawsuit?  Let’s assume that you are successful in forcing your condominium to secure the extra 20% coverage you require.  The money required for this new insurance policy would be passed directly through to the owners in the form of higher maintenance charges, and it would likely be the exact same amount it would require for you to purchase the policy yourself.  It’s six of one, a half-dozen of another.  Ultimately, you’re going to pay for the flood coverage, whether it’s paid to your mortgage provider or to the association itself.  The issue is with your mortgage provider, and the federal government.

Here’s the breakdown on flood coverage in condominiums.  Nearly all flood insurance is provided through the National Flood Insurance Program, or NFIP.  The NFIP provides either 100% replacement coverage on a unit or $250,000 worth of coverage, whichever is lower.  In your case, it sounds as if your unit is worth less than $250,000, and the association has decided to purchase only 80% coverage per unit (80% coverage is generally the minimum required for other, more complex reasons).  By federal law, any property that is covered by a federally-insured mortgage must be protected by a maximum-value flood policy.  So it’s actually the federal government that is mandating that you buy flood insurance, not Florida.  Now, we agree that it’s absurd for any mortgagee to require a condominium unit owner to buy flood insurance when that is ultimately the obligation of the association, especially if the unit is not on the first floor of the building. But the Florida Legislature cannot resolve this issue. All Florida could do is mandate that condominiums purchase these maximum policies, which would simply result in all unit owners paying higher maintenance fees.  What you really need is for congress to change the federal flood insurance requirements for borrowers and lenders.  Do note, however, that force-placed policies may be more expensive than what you can buy through an insurance broker—you should contact one to get the best price on the extra 20% coverage you need.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, Condo Rules, HOAs, Homeowner's Association, Insurance, New Neighborhoods Column, Renters, Renting / Subletting Tagged , , , , ,

New Neighborhoods–Parking Rules, Non-Owner Boards and Multi-Condominium Funds

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Posted on January 9, 2012 by Ryan Poliakoff

New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Parking Rules, Non-Owner Boards and Multi-Condominium Funds

Dear Poliakoffs,

We live in a 135-townhouse HOA development.  Since the development opened, there has been one nine-space parking lot used for overflow parking for residents and tenants.  Recently, the HOA declared this lot can only be used for “guest parking”.  Others are subject to towing.  No guidelines were ever published, and some guests have been ticketed.  In one case, the security guard and a guest nearly came to blows because the guard did not believe that the person was a guest since the car had been in the parking area a “long time”.  Nothing in the original documents designate this lot as being for guests only.  Can the HOA declare what was once a common area off limits to residents and tenants?  If so, can the residents be compelled to pay for an area for which they do not have access?  Is there an option to appeal to local or state agencies? Signed, A.K.

Dear A.K.,

It is within the board’s discretion, absent a provision in the covenants, conditions and restrictions to the contrary, to pass reasonable rules and regulations governing the common areas; that would include a parking lot.  The truth is that few communities were designed with sufficient parking spaces to accommodate multiple family cars, handicap parking and parking for guests.  To be honest, assigning nine parking spaces for guest-only use only does not sound particularly unreasonable.  Assuming this is association-owned property, local and state agencies are unlikely to get involved.

Dear Poliakoffs,

Our HOA documents state that a board member must be an owner and resident of the community.  Does “owner” include a spouse if that spouse’s name is not on the deed or tax record?  Does the term resident refer to being a legal Florida resident (homesteader) or just residing in the unit on the property?

If someone is currently serving on a board and does not qualify under the terms of the documents what are the recourses available to the unit owners with regard to removing the person and reversing any actions, contracts, expenditures or other matters that the person authorized in any way while serving in the unauthorized position?  Since all board members signed that they have read and understood the statues and documents would there be any possibility of criminal charges?

We have an election coming up so I would appreciate a reply to these questions as soon as possible.  Thank you for all your past advice and any assistance you can provide now.  Signed, M.O.

Dear M.O.,

In a situation where the governing documents require that a member of the board be an “owner,” the spouse of a record title owner whose name is not on deed would not qualify to serve on the board. If a person is currently serving on the board who is not otherwise qualified, they are deemed to not be a board member; period. They cannot serve, and any action that they take, such as voting, would be deemed null and void. Now, a third party has the right to rely on the legitimacy of an association president being a valid decision-maker in signing contracts—so if the board member was the president, the contracts he or she entered into on behalf of the association would still be enforceable.  Otherwise, those would be unenforceable, as well.

In so far as what constitutes a “resident” where the documents are otherwise silent, it would be a person who’s primary residence is the unit, whether or not they have filed for a homestead exemption. Serving without authority on a board would be a civil, not criminal, violation of the law.

Dear Poliakoffs,

We are a multi-condominium with three buildings and three budgets. Can the operations account monies be commingled with expenses for one condo building that doesn’t have the funds to pay for certain damages? I was under the impression that my condo fee was for my building repairs and my building’s reserve funds. The building in question opted out of the reserves for one year and now doesn’t have the funds needed to do the repairs. I understand that common element expenses are shared, but can a single association in the multi-condominium use funds from the other buildings for their own expenses?  Signed, D.S.

Dear D.S.,

Although the operating funds and reserves of separately declared condominiums operated by a single association (a multi-condominium association) can be commingled into a single account, the association must maintain separate books and records for each condominium it operates, including the reserve funds, and it cannot use the operating funds or reserves of one condominium to pay for expenses of one of the other condominiums. There should be four separate budgets; one for each of the condominiums and one for the shared expenses of the three condominiums. A unit owner of one condominium should not be paying the cost of operation of another of the condominiums.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, HOAs, Homeowner's Association, New Neighborhoods Column, Owner Rights, Parking Tagged , , ,

New Neighborhoods–Apathy, Covenant Enforcement and Renter Rights

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Posted on January 3, 2012 by Ryan Poliakoff

New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Apathy, Covenant Enforcement and Renter Rights

Dear Poliakoffs,

We have a situation at our condominium–only one person has served on the board for several years, as no one else was interested.  When nothing was being done to maintain the building, we asked to see the financial records.  Two months later, with no response, we sought arbitration from the state and it was approved.  The president then hired counsel who sent a letter stating the property manager (who was fired after all this started) had not been given all the paperwork from the state.  Since then the attorney is refusing to cooperate.  What is our recourse?   Signed, D.M.

Dear D.M.,

Unfortunately, the shared ownership concept cannot work if unit owners are not willing to volunteer their time to serve on boards and committees.  The apathy that you are seeing at your property is the same apathy that we typically see in the broader national democratic process.  And, the answer is not simply to hire a management company to run the property.  It’s the board’s job to create the policies that a property manager follows.  If this doesn’t happen, buildings deteriorate due to the lack of maintenance, property values drop, and no one can account for association funds.

As the old saying goes, “It is better to light a single candle than to cure the darkness.” Become a leader in your community.  Organize a slate of directors to run for the board, and recall the sole sitting board member.  Once elected, bring in fresh, unbiased professionals to get your books and records in order and your property back to the standard you expected when you purchased your home.  The only way to solve this problem is for someone to take the bull by the horns and just do the work that’s required.

Dear Poliakoffs,

Our HOA is enforcing a landscape covenant requiring three palm trees in the front of each home as the builder and core communities (now defunct) had designed.  Over the years, the palm trees have died, and the landscape committee has approved some homeowners to replace the three trees with a single Christmas palm with three trunks.  This approval was later rescinded.  When our home was built, the landscaper put in one palm tree, which he stated was the requirement for our street as the home fronts are small.  Now that we are selling our home, we were sent an inspection report via the buyer’s title company that we are not in compliance.  The HOA is assuming that all homes on all streets in the community must have three palm trees in front.  Almost every home has one palm tree, except for those that were resold.  The HOA is requesting removal of the one palm and replacement with three new palms, to include permit fees and other costs.  Is this legal?     Signed, J.B.

Dear J.B.,

The Florida Homeowners’ Associations Act (Chapter 720) has very stringent guidelines when it comes to architectural controls and homeowners’ rights and privileges.  First and foremost, the authority of an HOA or architectural control committee to review and approve plans for architecture or other improvements located on a parcel is limited to the extent that the covenants, conditions and restrictions (CC&Rs) grant the board or the architectural control committee such power. In doing so, they must conform with the general principles of waiver and selective enforcement—if an association waits to enforce a rule against owners for a long period of time, or if they enforce the rule against some owners, but not others, that rule generally becomes unenforceable.  While the board might be able, prospectively, to require future landscaping to be in conformity to the initial landscape plan by declaring their intention to abide by the CC&Rs from a stated time forward, it is doubtful that the board, given the passage of time, could retroactively require any property owner to remove previously placed landscaping.

A more challenging issue is the HOA’s compliance with the Florida Friendly Landscaping Law.  That law prohibits HOAs from denying a homeowner the right to install Florida-native landscaping that is compliant with the law.  Florida Friendly Landscaping is found when Florida-appropriate native or habitat-friendly plants are used in the right places, watering is done efficiently, fertilizing is done appropriately, mulch is used, wildlife is attracted, yard pests are managed responsibly, yard waste is recycled, and storm water runoff is significantly reduced.  The law is designed to reduce the use of water and reduce water pollution.

Dear Poliakoffs,

Could you please advise where I can find the law stating that usage rights are transferred to a tenant when a condominium is rented?    Signed, R.D.

Dear R.D.,

Florida Statute 718.106(4) provides that when a unit is leased, a tenant should have all use rights in the association property and those common elements otherwise readily available for use generally by unit owners, and that the unit owner should not have such rights except as a guest, unless the tenant waives these rights in writing.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, Covenants, HOAs, Homeowner's Association, New Neighborhoods Column, Renters, Renting / Subletting Tagged , , , ,

New Neighborhoods Column–New Feature!

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Posted on December 27, 2011 by Ryan Poliakoff

Hi everyone!  I’m going to start a new feature this week–I’ll be reprinting the question and answer column that I write with my father, Gary A. Poliakoff, and that appears in newspapers and magazines throughout Florida.  It’s called New Neighborhoods, just like our book.  If you have any questions for the column, feel free to send them to me through this website, or at the email listed at the bottom of each column.  I hope you enjoy this new weekly feature!

New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Self-Management and Sidewalk Repairs

Dear Poliakoffs,

I live in a 152-unit condominium complex in Boynton Beach, Florida.  Due to the hard economic climate, our board of directors wants to “self-manage” the complex.  They are soliciting unit owners who have experience in bookkeeping, accounting, information technology, law, billing, reception, etc. to submit resumes to the board.  These would be paid positions.  Is it legal to self-manage a condo complex? Is it legal to solicit paid help from unit owners in the complex? Is a CAM license needed to self-manage the condo complex?  This sounds very risky to me.  We have always had professional management companies with an on-site, licensed property manager.  Signed, D.S.

Dear D.S.,

People assume that property management is fairly simple—in fact, it’s a very complex profession.  As you note above, it involves issues of finance, law, politics and real estate.  So it’s important to understand that the question of whether it’s legal to self-manage a property has to be kept separate from the question of whether it’s prudent to do so.

It is, in fact, perfectly legal to self-manage your condominium.  However, in our book, we do recommend that larger communities, such as ones of your size, consider a professional manager or management company, because property management is a very specialized job that benefits significantly from training and experience.  It is simply not a task that lay people can typically perform.  However, as a question of condo law, volunteer unit owners are allowed to operate a condominium.

Where this gets tricky, however, is the question of licensing, and the nature and scope of the work being performed.  Florida Statute 468 (Community Association Management) defines “community association management” as the performance of certain defined functions, for pay, for an association of over 10 units and a budget in excess of $100,000.  Those functions include controlling or disbursing funds of an association, assisting in the noticing or conduct of community association meetings, and coordinating maintenance and other day-to-day services for the property.  Any person performing these tasks must be licensed by the state.  Licensing requires taking a two-day course and passing a written exam—not a serious burden, but still a basic threshold that should be met by any residential property manager.  While a volunteer who performs strictly ministerial functions under the direction of a licensed manager does not need to be separately licensed, an owner or resident being paid to do any of the proscribed tasks would need to be licensed by the state.  If in doubt, we’d recommend you speak to someone at the Department of Business and Professional Regulations, the agency that governs licensed community association managers.

Dear Poliakoffs,

The sidewalks in our small homeowner’s association need repair due to roots from oak trees planted by a previous board.  Some believe that these trees were planted illegally. We were given an option of either just repairing the sidewalks, or getting a town-approved plan to both replace the trees with a different variety and to then repair the sidewalks.  The membership voted in favor of repairing the sidewalks.  Does the board need to have a special meeting to discuss this repair, even though it has already been approved?   Also, what can we do to avoid this situation in the future?   Signed, J.G.

Dear J.G.,

First, while it’s not something you mention in your letter, volunteer board members who serve on condominium, co-operative and homeowner association boards are granted significant leeway in their decision making under the business judgment rule and will generally not be found personally liable for their actions absent a show of self-dealing or fraud.  Accordingly, we would not waste time debating the decision of whether or not the oak trees should have been planted in the first instance—what’s done is done.

As for avoiding this situation in the future, it is self-evident that the trees were either planted too close to the sidewalks or were an inappropriate tree for the application if the root system is tearing up the sidewalks; so realize that this problem is likely to recur.  The board may want to hire a horticulturalist to determine if the roots can be pruned, or if the trees can be relocated elsewhere on the property.  If the association will not replace the trees, than you have to simply accept that this is a problem that will likely crop up again.

Now, as to the board discussing and approving the repair.  It’s hard to tell from your letter why the membership was voting on the issue in the first place, unless your documents require a membership vote for large projects.  Repairs that are not material alterations of the property would typically be left to the board’s discretion.  We would probably have the board meet to approve the project, if only to ratify the decision of the owners.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, Condo Management, HOAs, Homeowner's Association, New Neighborhoods Column Tagged , , , , ,

Back in the Saddle!

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Posted on December 15, 2011 by Ryan Poliakoff

Hello again!  My apologies for my brief delay in writing this blog–it’s been an incredibly active fall for me.  Let me get everyone up to speed.

For the past year I had served as the president of a property management company in Weston, Florida that specialized in homeowner’s associations.  It was my intent to purchase that company and turn it into a boutique, full service management firm dedicated to top-quality performance.

Unfortunately, as is often the case in the current market, the bank that was doing the financing got cold feet and after some soul searching I decided to pull out of the deal.  As you can imagine, that time period was particularly stressful and overwhelming, and I pulled back on writing this column for a bit.

Happily, I have now settled with a company that I have always respected tremendously, AKAM On-Site, a property management company in Florida that specializes in high-end properties with site managers.  I am serving as the Vice President of Management for Akam, and my job is to help oversee our dozens of clients and to make sure that the managers are all well trained and supported.  It’s a fantastic job with a fantastic company, and I couldn’t be happier.

This also means that I will now be back in the blog saddle, reporting to you on the issues that you as board members and volunteers will need to address regularly.  You’ll see articles on voting and annual meetings, special projects, crazy residents and boards that just need a little love to get along.  In addition, I’ll be posting the weekly newspaper column that I write with my father, Gary Poliakoff, featuring questions and answers from homeowners and board members.  So thank you for understanding my brief hiatus, and look for my first new post within the next week!

Posted in Shared Ownership Guide

Stucco Blues: How One Condominium Deals With a Construction Emergency, Part 3

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Posted on October 6, 2011 by Ryan Poliakoff

Welcome again to Stucco Blues!  If you recall the last two columns, our subject condominium, only a few years old, had discovered that large pieces of stucco were falling off of the building.  So the board shut down the majority of exterior areas around the building (including the pool, tennis court and recreation deck) and immediately began interviewing contractors for a very large and expensive restoration/reconstruction project.  When we left off, the board had chosen the final contractor and was waiting to begin work.

It is now almost two months into our restoration project, and it has been a doozy.  Up to five swing stages (those large mobile platforms you see dropped along the sides of buildings) are operating on a constant basis, and this is only to complete a small portion of the building (the side that faces the pool, so that we can reopen this extremely important South Florida amenity).  Still, as with any large project, you tend to run into unforeseen issues.  For example, upon removing large areas of stucco it became evident that the stucco had been used to “square up” the building in areas where the concrete wasn’t poured exactly right.  For example, one corner of the building may have only come to an 85 degree angle, instead of a 90 degree perpendicular edge.  Now, obviously you can’t build a building and leave it cockeyed.  Most of the time the non-square areas would have been built up square with structural cement–in this case they were built with stucco.  We have seen areas where the stucco is six or more inches thick, huge slabs that were hanging onto the building by no more than caulk.  Normally, stucco is meant to be applied as a thin sheet, perhaps no more than a quarter inch.  The way the stucco was applied in these areas was completely untenable, and justified the board’s decision to go ahead with the full reconstruction.  It does also raise the basic reality that any construction or restoration project will have unforeseen costs.  In this case, the board can’t leave the building off-kilter–the non-square areas will now need to be built up with structural material, and THEN covered with a thin layer of finishing stucco–adding to the cost of the project.

Nothing ever goes quite as quickly as expected, either.  We’ve had a couple of near misses from hurricanes this season, and each time it looks close the contractor has to secure their equipment and swing stages and stop working.  Between that, and dealing with the frequent Florida rains, we’re perhaps a couple of weeks behind our original schedule.  But things are looking up–as early as this weekend management feels that they will be able to open the pool on Saturday and Sunday, when the contractors are not working!  This will be a gigantic boon to residents, who have been without their favorite amenity for many months now, through almost the entire summer.  But the board and the contractor’s initial reticence to open up the pool proved to be a fair decision–not only has the restoration project created significant debris, some of which has fallen around the pool area, the dog walk and even reportedly on the neighbor’s parking lot (very small, lightweight pieces, yes, but debris all the same), but the deconstruction uncovered areas of stucco that we even thicker and less attached too the building than initially expected.

So as we approach the second phase of our project (the post-removal restoration) what are some of the lessons that we’ve learned?

1) Trust the opinion of your engineer.  Your association hires an engineer because they want an expert opinion–don’t second guess that expert opinion because it’s inconvenient or unpleasant.

2) Expect the unexpected.  No construction project of any kind goes the way it was planned.  If it’s a deconstruction project, you will always find something underneath the surface that needs to be analyzed or fixed.  If you plan on your project taking 2 weeks, assume it will take 4.  If a month, plan on 2.

3) Expect some homeowners to give the board a difficult time, no matter what the outcome.  In addition to the fact that some homeowners will always feel that remediation projects are unnecessary (often despite voluminous evidence to the contrary) even supportive homeowners will be inconvenienced by the construction.  For example, every balcony being resurfaced has been shut down for an extended period, with no owner access, and owners were required to remove all of their furniture from their balconies, as well.  Management should be sympathetic to these inconveniences and try to ameliorate them whenever possible, but also understand that the responsibility of both management and the board is to do what is proper for the building and the common elements as a whole–not to be bullied by any fraction of unhappy homeowners.  Still, management should make sure that they are always keeping owners well informed of the progress of the project, and that includes notifying out of town residents as well (whether by mail, email or phone calls if necessary).  So be respectful, responsible, but also be confident in the decisions of the board.

In the next installment I’ll update readers about the resurfacing process, as well as detail any difficulties that arose in our attempts to reopen the pool area.

Posted in Common Areas, Condo Associations, Developers / Construction, Property Maintenance, Shared Ownership Guide Tagged , ,

Basic Covenant Enforcement Principles for Condos and HOAs

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Posted on September 21, 2011 by Ryan Poliakoff

As many of you know, I write an article with my father, Gary A. Poliakoff (co-author of New Neighborhoods), that appears in over a dozen newspapers throughout Florida.  Our column this week was the result of a question sent to me through my blog, so I wanted to share our answer with my readers.  Enjoy!

Dear Poliakoffs,

I have lived in a Florida HOA community now for a year and a half, and other residents have lived there over two years. Although the bylaws do state that no trucks over one-half ton are allowed on the property (which is basically any truck), the new board wants to begin enforcing that bylaw while ignoring other types of violations, even by the board members themselves.

Can the board just now start enforcing this rule, and what about their own violations? How can we ensure that the board members themselves are following the rules?  What the board has now done is to draw up a community rule book with changes to the rules–to us it seems that this would require modification of the documents, which would require a majority vote.  Signed, R.H.

Dear R.H.,

Your letter raises a number of separate issues about covenants and how those rules are enforced.  Let’s deal with the last issue first. Rules that govern owner conduct can be found in several different documents relating to a community association, including the declaration of covenants, conditions and restrictions (or declaration of condominium), the bylaws (which are a separate document that usually specifies how the association is governed) and in a separate set of rules and regulations.  Most association boards have the power to promulgate new rules to be followed by members, although those rules cannot override rights granted in the more-senior documents.  Remember that all community documents follow a hierarchy–the declaration is the most important, then the articles of incorporation, then the bylaws and then the rules and regs.  So, for example, if your declaration were to state that owners are allowed to keep pets, a board could not pass a “rule and regulation” prohibiting pets.  To change that rule would require an amendment of the declaration.

So, on your last point, you say that the board has promulgated a new rule book.  If the board is changing rules that were written by the board of directors in the first place, or if they are adding new rules that do not conflict with the other documents, that would be fine, assuming that they have given the owners proper notice of the rules changes and an opportunity to discuss the changes at an open board meeting before a vote (check out Florida Statute section 720 for more information on access to HOA board meetings and notice requirements.  We also discuss this issue in detail in our book).

Now, as for the trucks; you state that the rule prohibiting trucks is in the community bylaws.  There are generally two defenses to application of a rule–selective enforcement and waiver.  Selective enforcement means that the board is enforcing a specific rule against some owners, but not others.  The defense would not, however, take into account the board’s enforcement of other unrelated rules, just the rule that is being challenged.  Waiver occurs when a board fails to enforce a rule for so long that it is deemed to have abandoned enforcement of that rule.  It sounds like your community is fairly new, so waiver might not come into play.  It is perfectly legal and proper for a board to begin enforcing a rule that has been ignored by other past boards.  If too long a period has passed (and “too long” is a legal decision to be made by a judge or jury based on the specifics of the dispute) then the board can announce to the community that it will begin enforcing the rule, and any who have been violating the rule up until that point would be “grandfathered” in, and not have to follow the rule.

As far as the board failing to enforce other rules, even against themselves, there are a few issues.  First, if the board is specifically ignoring their own violation of a rule, but they then try to enforce it against another owner, that person would have a selective enforcement defense.  If the board is enforcing certain rules against everyone, but ignoring others, well, that’s pretty common.  Every unit owner has the right to avail itself of the court system to enforce community covenants  against other individual owners.  But barring that, the only options available to owners-at-large would either be to attend a board meeting and convince the board of the need to enforce the rule, or, if they refuse, to recall the board and replace them with a board that is willing to follow the covenants.  A condo or HOA board can generally be recalled by a majority of owners at any time, for any reason–and it can even be done by written petition.  Recalling a board is actually quite easy under Florida law.  Getting the agreement of a majority of owners, however, can prove far more difficult.  Good luck!

Posted in Back to Basics, Condo Associations, HOAs, Homeowner's Association, Rule Enforement and Fines Tagged , , ,

A Flagstaff Community Experience: The Down Housing Market Affects a Small Condo Complex and the Stress of a Self-Managed HOA Makes Matters Worse

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Posted on September 1, 2011 by Ryan Poliakoff

For today’s blog, we have something a bit different.  Laura, from Flagstaff, Arizona, wrote a very nice article that I wanted to share with you that details some of her own frustrations in moving into a new home in a shared ownership community (not the one pictured, by the way).

For me, the entire purpose of this blog is to allow people to share ideas and comments that help us navigate the complex, and not always positive, world of shared ownership.  Frustrations and negative experiences are certainly part of that experience, and I’m happy to be able to share the thoughts of one of my readers.  Once you’ve read Laura’s article I encourage you to post your own comments or suggestions to help Laura and her community get back on the right track.  Is Laura’s story just one of a bad SOC with bad neighbors, or is it a failure of the system?  In my next blog I’m going to provide my own thoughts, but first I am interested in seeing what our readership has to say.  Fair warning, though–I’m going to remove any comments that are either ad-hominem attacks on SOC’s or even blind praise.  This isn’t a cheerleading contest for one side or the other in this ever-present debate–it’s an opportunity to constructively help a frustrated owner, using our own experiences as a guide.  So I hope you all enjoy this experiment, and if you would like your own condo or HOA story posted, please email it to me through the website–I’d be happy to consider all articles for future publication.  I don’t make a dime off of this blog–I do it purely for the sake of doing so.  So all thoughts and comments are welcome!

A Flagstaff Community Experience

by Laura

When my husband and I first moved to Flagstaff we were filled with expectations that we would be raising our son in a community environment with lots of safe activities, friends, and great schools. At the time, the housing market was booming and looking for a house that we could afford was difficult. Our choices were an older home in lower Greenlaw that may or may not have turned into a money pit and a brand new condo on the edge of Sunny Side that would have a home warranty.

Having never lived in an apartment or a condominium, the prospect of being so close to our neighbors did not sound appealing; but the community that was being built had promise. All of the people who lived in the complex of only 11 units were professionals, they were around our age, and the ones that had already moved in had formed friendships. We were looking forward to becoming friends with them and becoming a part of the community.

Another thing that made an impact on our decision was the fact that the complex had an owner’s association with a set of Conditions, Covenants, and Restrictions–otherwise known as CC&Rs. Having been a part of an HOA down in Phoenix we thought that having CC&Rs would keep the property looking nice and provide for neighbors who wouldn’t get, in our view, “too crazy”. That’s what we thought, but that is not what happened.

My first encounter with our neighbors was actually an encounter with their dogs. Before we moved in to our new place my husband and I wanted to paint the walls. So every day I would go over to the condo, park in the community parking spot outside our unit, and take my son upstairs to play with his toys while I painted the walls. One day my 2-year-old son was not feeling well so I carried him back down to the car. As I reached the door two small dogs came tearing out into the driveway and jumped up at me and my son. My son started crying as the couple who owned the dogs came out of their unit, called the dogs to them, looked at me like “who the hell is that,” and then turned and walked down the drive to take their dogs on a walk. I put my son in his car seat and picked up his sock that one of the dogs had taken off of his foot. In the commotion I thought that he had started crying because he was startled awake by the dogs but as I put his sock on I discovered that the dog had bitten his foot and left a mark.

Now, the CC&Rs that we all signed when we moved in says that all pets must be on a leash, but I didn’t even know the couple’s names yet and I wanted to fit in and be a part of this community. I didn’t want to start off on the wrong foot by picking a fight over their lack of leashes. Besides, my son was fine, they never broke the skin; they were just over-excited dogs. Right? Yeah, well, that’s what I thought. And I regret my decision to keep my mouth shut every day.

My next encounter with this community was after we had moved in. My husband had painted the garage floor, so we were parking in the parking space by our unit until it dried. One of the neighbors that I had met when we were looking at the place came over and knocked on my door. She asked me if I could move my car because she had company coming and told me that “they,” meaning all the units who moved in before us, had agreed that those spaces were to be for guests only. I politely agreed to move my car and suggested that we clean up the empty garages of the two units still under construction and use those for additional parking. In fact I decided that I could show how I was a good neighbor by cleaning out the garages myself and letting whoever needed them to park there.

When my husband came home and I told him what had transpired that day he was not happy at all. What I didn’t know at the time was that the woman’s husband’s car was parked in the parking spaces for two weeks while we were trying to move in. I had to haul boxes from the street to the condo because our garage was filled with construction stuff, and his car and one of the workers were parked every day in the spaces that they all agreed would be for guest parking. On top of all of this, after I cleaned out both of the garages he pulled his car out of his garage and parked it in the freshly swept garage.

These kinds of situations, though small, have plagued us for the past five years. The owner’s association is run by the homeowners, and so none of the rules are enforced and complaints as to breaking the rules are brought up based on who is liked or disliked. Some people get a free pass because of who they are and some people don’t. It’s the small things that add up, the little indecencies that people do to you that wear you down until you can’t go outside anymore because you don’t want to see or have to interact with your neighbors.

I have two children now and I feel like a prisoner in my own home. I don’t want the kids to play outside because I’m afraid the neighbors will accuse them of breaking something. My husband won’t work on any projects because he is afraid that we will receive complaints about noise or probing questions about what he is working on and people would begin to tell him he can’t work on certain things in his own garage. As I am writing this our neighbor is playing with their dog in the common area that is up against our unit. If I were still asleep I might be annoyed at his yelling and I could mention the infraction if I wanted to. After all quiet time doesn’t end until 8 am, but I have learned that it’s okay for him to do whatever he wants to do and if I say something I will just end up black balling myself even more.

Is there hope for this community? Normally I would say yes, but we are dealing with a community that wants to be isolated from all reasoning and the few who are smart are bailing ship before it sinks. 80% of the condos in our complex have lost value to the point that they are upside-down. Everyone knows it because one of the units that was bought before the market boomed sold for what was owed on it. One person managed to get a loan on another house, moved and is now walking away from their condo. Another person is trying to sell their house as a short sale. Loans are hard to come by for condos. You can’t get an FHA loan on them, which means you have to put a rather large down payment on one and you can’t refinance because you’re upside-down. Foreclosures and short sales are just going to make that worse. The only option for someone who wants to get out of this upside-down community is to rent out their condo but we can’t do that either.

When the period of declarant control was over and the owner’s began to rule themselves in this inconsistent discriminatory manner a motion was made to add an amendment to the CC&Rs to prohibit the renting of units. No one knew if the association could do this but one of the neighbors who was a lawyer insisted that we could. He made a motion to change the CC&Rs and those objecting were outnumbered. The lawyer neighbor was entrusted with drafting the new amendment along with the rest of the board. Instead of the board discussing the language of the amendment and having it approved by the membership, he drafted the document and had the president of the association sign it and filed it with the county. For years, all of us thought that we had done the vote correctly and that the amendment could not be changed unless another vote was taken with 75% of the members in agreement. That is, until one of our neighbors discovered that the Arizona Revised Statutes says that our right to rent could not be taken away without the vote to do so being unanimous. The amendment should have never been filed because a proper vote was never taken, but the lawyer/neighbor went ahead and did so.

Now the already financially broke association is facing the prospect of a lawsuit and it’s not a matter of if a lawsuit will happen, it’s a matter of when. Our neighbor who discovered the error is buying a new place and is going to rent his condo. If the association tries to enforce the amendment he will take them to court. If the association does not enforce the amendment one of the other neighbors that are against renting will take the association to court. We presented this dilemma to the association and asked for the amendment to be repealed since it was done illegally, to save everyone the hassle of a lawsuit. Besides, renting would give those people who are struggling an option other than foreclosure, and that would be beneficial to everyone. The vote was 6 to 5 in favor of repealing the amendment but we need 75% in agreement in order to change the CC&Rs. The kicker is that the neighbor who is short selling their place voted against being able to rent. Apparently they would rather foreclose on their property and turn away potential buyers who want to rent out the condo in order to keep the community that they are leaving rent free.

Now I ask you. How do you reason with a person like that? Someone who is willing to strap a bomb to their chest and blow up their credit? Is it done out of spite? Are they thinking, “If I can’t get a new place no one will without feeling the hurt?” I don’t know and it boggles my mind. My husband and I want to get a house as well. We have two growing boys who need more space and we want neighbors who don’t feel like they are entitled to tell you how to live our lives. But we don’t have money for a lawyer. We barely have enough for a down payment because my husband is a teacher and I am going to school to finish my degree.  This semester I am planning on putting my youngest in daycare so that I can get a part time job to help pay for school. Paying for daycare will take half of my paycheck. So for now we will try to hold up our heads while we walk the green mile down the driveway to the mail box and back wondering if we will ever be able to move on away from this place and come home to a house of peace instead of a condo with eyes and ears that is ready to pounce on every wrong move.

Posted in Condo Associations, HOAs, Homeowner's Association, Owner Stories Tagged , , ,

Stucco Blues: How One Condominium Deals With a Construction Emergency, Part 2

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Posted on August 7, 2011 by Ryan Poliakoff

First, I have to apologize for the delay between columns–I had been dealing with a family emergency, but now I should be back on schedule.  Today’s entry is nice and long to make up for things.

In my last column, I discussed how the board at my own condominium has been dealing with a construction defect that has allowed pieces of stucco to fall from the building, some large enough to badly injure a resident if anyone were to be hit.  So of course, we have been treating this as a true building emergency.  As a result our pool, a key asset of any resort-style condominium, has been closed as we sought expert advice on the falling stucco, and commissioned an engineering report detailing the problem and the recommended solution (in this case, removing all of the stucco from the building and re-do the work properly).

Once we had determined that we had no choice but to tackle this huge construction project, it was time to solicit and select a contractor to do the work.  While we had worked with a stucco contractor in the past on small projects, there is a big difference between patching some stucco and re-stuccoing an entire 40 story building.  We wanted this contractor to bid on the project, but we had a responsibility to bring in other bidders and analyze their capacities.

The first step when sending a large project out to bid is preparing a detailed Specification of Work, or “SOW”.  This SOW is usually attached to an RFP, a Request For Proposal.  Having a rock-solid SOW for large contracts is absolutely essential.  There is no way to determine contractor pricing unless all contractors are bidding on the exact same services.  Otherwise, the numbers don’t mean anything.  One contractor may bid on an entire project in a lump sum that seems low, but on closer inspection you may find that they don’t include essential costs like permitting (in many cases amounting to tens of thousands of dollars on a large construction project), or perhaps they backload the contract with high prices for change orders.

An SOW could be prepared by a knowledgeable board or management company, but in the case of a construction project it’s best to have an engineer prepare the specification.  They will be able to really lock down the specifics that contractors understand and care about, and help to guide the bid competition into an apples-to-apples comparison (which is the only way to compare bids accurately).

Once the SOW is complete the board should review it thoroughly to make sure that the specification matches the work that the board is planning on completing.  For example, in our case we wanted the specification to very clearly split the project into four phases, one for each side of the building.  Our key priority to start was to repair the east side, facing the pool.  Once we deconstructed that side we felt we would have more information about the overall condition of the building, and could make a more accurate decision about whether to proceed with the entire project.  We also wanted to make sure that the contractor we hired bid work for our post-tension cables, as well.  In a post-tension cable construction, long cables of steel are run through the concrete and are tightened to give additional support and structure to the building (especially on balconies).  In the case of our property, some of the caps that covered the PT cables were never closed or sealed properly, and the ends of some cables had been left longer than specified.  PT cable work is fairly specialized, and often requires a sub-contractor, but we knew there was no way to properly analyze the bids unless pricing for them was included.

Once we had settled on our SOW, we called a half-dozen contractors to the building for a pre-bid meeting with the engineer.  At this meeting the engineer, under the supervision of our property manager and two board members, instructed the potential bidders on the scope of the project and the specifics of the SOW.  After inspecting the property they were sent off to prepare individual, sealed bids for the project.

A week or so later all bids had been submitted, and they were opened by the property manager and board.  Not a single contractor had bid the project properly.  Now, this might seem incredible, but I can assure you from experience that it’s quite common for contractors to ignore an SOW.  The only step to take if this happens is to have the engineer reinstruct the contractors on the SOW and have them reproduce their bids accordingly.  It’s an annoyance that you should expect to deal with in any large project.

Finally, a few days later we received accurate bids that were all on the same playing field (or, close enough that it was now possible to analyze their proposals).  The next step was to hold a dog-and-pony show–an in-person meeting between the board (open to residents, of course) and several of the top bidders.  At this meeting the board questioned the contractors on their qualifications, the number of other large projects they had recently completed, their capacity for doing the work in a timely manner, their use of subcontractors on the project and anything else that we felt was relevant based on their proposal.  After discussing all of the contractors, the board was able to narrow down our choices to two favorites–one the contractor who had done stucco work for the building in the past, and one who was a large, high-capacity stucco specialist.  There were a few oranges spread between the apples in these two proposals, so we sent them back for some revisions and asked for final proposals within a few days.  At the next board meeting (and note, at this point we had been meeting twice a week, every week for a month) the board selected it’s top bidder and began negotiating a final contract.

This last phase of the process can’t be ignored.  Just because a contractor has prepared an attractive proposal does not mean that the legal contract to be signed by the board satisfies its needs.  In the case of large construction projects there is generally a standard contract that has been approved by an association of engineers, but even so there are often changes or riders that must be added, depending on the work to be done.

Any large contract should be reviewed by the association’s attorney before it is signed.  A lot of associations  skip this step, thinking to save money, but you do not want to save $1000 of legal review on a contract worth tens of thousands, or even millions, of dollars.  Protect yourself and let your lawyer do the job you pay him or her for.

Finally, after nearly three months of investigation, destructive testing, bid preparation and negotiation we were ready to begin our reconstruction project.  Now, if you are a board member facing this kind of reconstruction, and especially if it’s a construction problem that has affected unit owners’ use of the common elements, you can guarantee that a large number of residents are going to be angry with board members.  There will be some who don’t want to spend money on the building, no matter the problem.  There will be those who feel that it should take no more than a week or two to chose a contractor for a seven-figure expenditure, despite that they have never actually personally completed such a project.  Some owners will simply disagree with the direction taken by the board of directors (perhaps they want the board to pursue a repair strategy that they feel would be cheaper, for example).  You will have private contractors who have built a small building or two who feel that they know exactly what the building needs, regardless of the advice of the paid engineering consultant.  In our building, we even had a number of residents who doubted the severity of the issue, and questioned why we could not open a portion of the pool to residents (in our county, the law doesn’t allow a pool to be only partially opened).  Just understand at the outset that this is one of those prototypical “no-win” situations for boards, and you will not be popular for the decisions you make, even if they are the right ones for the building.  Simply do your job to the best of your judgement and ability, and try to roll with the punches.

I hope that our experience helps other boards that have to go through this very difficult and contentious project.  Good luck!

Posted in Condo Associations, Developers / Construction, HOAs, Homeowner's Association Tagged , , ,

Stucco Blues: How One Condominium Deals With A Construction Emergency, Part 1

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Posted on July 5, 2011 by Ryan Poliakoff

Some of you may remember months ago that I wrote a series of articles about how the board of directors of my condominium handled a black water (ie, sewage) leak that destroyed 2 units in our building and required a complex and expensive emergency response effort.  Today I’m going to begin a series of articles dealing with another type of emergency–a construction defect that has threatened the safety of our residents and has required the board to take a host of unpopular steps to protect our residents, including the temporary closure of our pool and pool deck.  I hope that this story helps if you or the board members of your community ever find yourselves in a similar situation because, well, stuff happens, and this is part of the job of being a board member.

Like many new properties, our building is currently embroiled in a lawsuit against our developer, the general contractor and certain subcontractors concerning various construction defects on the property.  Most of these defects are long term issues that will require remediation, but have not yet required emergency action.

That changed a few months ago, when a large piece of stucco fell off of the side of the building and landed on the pool deck.  At least one piece of stucco landed directly in the pool, and the rest scattered onto various areas of the deck.

Now, if you’re like me, your first thought upon hearing that a piece of stucco fell from the building is to assume that we’re talking about a paper-thin coating of cosmetic material, one that would be unlikely to harm a resident or affect the safety of owners.  But stucco is essentially cement and sand, and it can be quite thick and heavy–the pieces that fell were several inches thick and could be measured in pounds, not ounces.  A piece of stucco that big could clearly hurt or even kill someone if it fell from a great enough height–and in our case the building is nearly 40 stories tall.

The first line of response to the situation was the management office.  After notifying the board, the manager, consulting with our insurance agent, determined that the best course of action would be to temporarily close the pool and the deck while we determined the various courses of action available to the board.  The insurance company then sent out risk management experts who confirmed that the only prudent course of action would be to close the area until an examination of the stucco on the building could be conducted.

Even at this very early stage, a number of residents were apoplectic at the thought of the pool being closed.  And I can certainly sympathize–we are a resort-type property, and our pool and beach are certainly essential elements of the property.  This anger was compounded with the general lack of understanding of the nature of the danger posed by falling stucco.  The board was quickly accused of being overly cautious.

This is always the first hurdle when a board of directors has to make decisions that are not popular with residents.  It’s hard to stand in front of your neighbors and explain why you are taking away one of their key amenities.  But luckily our entire board recognized that our duty, as directors, is to protect the common elements of the property and the life and safety of residents, even when doing so requires unpopular action.

Still, we as a board also knew that this was an emergency situation, both because of the possibility of damage to the building (water intrusion, more falling stucco) as well as the affect on our owner’s ability to use the premises.  So we immediately brought in an engineering firm to examine the stucco on the building, knowing that it would cost us several thousand dollars to test and sound even a portion of the property.  We chose to test the area of the building that directly faces the pool, as that would be our first target of repair should there prove to be a larger construction issue.

The news given to us by our engineers was not promising.  In their opinion, the stucco was improperly mixed, applied and bonded.  They removed a number of areas of stucco from the facade that were hanging on by a thread (literally, there were large chunks of concrete held to the side of the building by caulk), and found other areas that sounded hollow, and in their opinion could delaminate at any time.  Their recommendation was our worst-case scenario–remove the stucco from the building and re-do the job.  We knew this would be a large, expensive and time consuming process, and that nothing we could do as a board would assuage the concerns of owners who were quickly loosing their summer usage of the pool.

In my next article, we’ll discuss the search for a contractor, as well as discuss how to pay for such a large emergency remediation project.

Posted in Condo Associations, Emergency Planning, HOAs, Homeowner's Association Tagged , ,