New Neighborhoods–Covering Non-Paying Owners and Confidential Personnel Information

New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Covering Non-Paying Owners and Confidential Personnel Information

Dear Poliakoffs,

My HOA in Jupiter has informed us that, although this year our quarterly assessments will not increase, because many delinquent owners do not pay their rightful share we may have to pay a “special assessment” toward the end of the year in order to make up for the “dead beats.”

Now, the powers that be will not take anyone here to court for any reason, stating that “the association does not have the money,” although we seem to doing just fine in our reserve account.  The board does not enforce rules–if a condo rule is not being followed a letter is sent but the owner may or may not abide by the “request” as nothing is done to change the situation.  This of course includes the delinquent quarterly assessments.   I would like to go to the next meeting and state that this neither fair nor legal.  Is this indeed legal?  Signed, P.M.

Dear P.M.,

According to a recent newspaper article, 23% of Florida’s homes are delinquent in their mortgages or are in foreclosure, the most of any state. Of course, owners who are delinquent in paying their mortgages often do not pay their association fees, either.  Your experience, and the hardship placed on those unit owners who are paying their assessments, is impacting millions of residents in the state.  Boards that do nothing are only compounding the problem.  It is certainly legal, and in fact common, for an association to specially assess paying owners to cover delinquencies.  However, it is arguably a breach of the board members fiduciary duty to in turn ignore the non-paying owners and make no attempts to collect their maintenance payments.

As property values decline due to the failure to maintain the common areas and overall appearance of the community, all unit owners suffer.  For example, we know of a case where a unit owner who owned her home “free and clear” lost the home to her association when she was unable to pay a large special assessment to cover delinquent unit owners. It is almost always in the association’s interest to foreclose on delinquent unit owners as early as possible, take title and rent out the units until the banks get around to foreclosing. There are even cases in which the banks have extinguished their mortgages, allowing associations to take clear title to the units. While bringing lawsuits against non-paying owners carries a cost, the cost to the community of ignoring the problem is much greater.

The sad reality is there isn’t any short-term solution. The key to condominiums and HOAs surviving the current economic crisis is having boards in place that make prudent business decisions which benefit the unit owners, which includes aggressively pursuing non-paying owners.

Dear Poliakoffs,

Unlike the previous year, a 2012 proposed budget for my townhome association was recently presented to homeowners at the annual budget meeting without a breakdown of the present management company salaries for office and maintenance personnel.

The total cost of the 2012 management contract was increased by $20,000 from 2011.  When asked questions about the increase and why a breakout was not provided, the board claimed that they decided to budget and present the cost of the management services contract as a lump sum, because homeowners would be confused by providing more detail, like fringe benefits, etc.

When three or four homeowners pressed for clarification and asked for more specifics, the board held firm and proceeded to approve the increased budget without sufficiently breaking out personnel costs.  Homeowners who wanted more specific budget information were unprofessionally directed to individually send the property manager an email message requesting the break out of the personnel and management services contract costs, and the office staff would compile it for them.

Based on the scenario described above, was the board operating within the spirit of the statute outlined below?

If not, what action (if any) can homeowners take to report the violation?  Signed, B.D.

HOMEOWNERS ASSOCIATIONS

§720.303(5)(c), F.S.

  • Clarifies that “personnel records” are not accessible to owners; however, written employment agreements with an Association employee or budgetary or financial records that indicate the compensation paid to an Association employee are accessible to owners

Dear B.D.,

The Condominium Act was recently amended to exclude the salaries of individual employees from the “official records,” limiting unit owner access to a bulk line item for the manager, management company employees and association employees.  Thus far, the HOA Act has not followed suit and, as cited by you, the HOA Act allows the association members the right to inspect the financial records including the salaries paid to its employees.  However, it sounds as if your board was not preventing access to this information, they simply were not comfortable publishing it in the annual budget.  So what they are doing (directing owners to send a document request to the management office) is probably not illegal.

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.

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